FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
                             SECTION 13 OR 15(d)

                                   Form 10-KSB
(Mark One)
[X]   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934 [No Fee Required]

                 For the fiscal year ended December 31, 2000

[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 [No Fee Required]

             For the transition period from _________to _________

                         Commission file number 0-13192

                     ANGELES INCOME PROPERTIES, LTD. III
                (Name of small business issuer in its charter)

         California                                             95-3903984
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)

                          55 Beattie Place, PO Box 1089
                        Greenville, South Carolina 29602
                    (Address of principal executive offices)

                    Issuer's telephone number (864) 239-1000

        Securities registered under Section 12(b) of the Exchange Act:

                                      None

        Securities registered under Section 12(g) of the Exchange Act:

                            Limited Partnership Units
                                (Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.
Yes X  No___

Check if there is no disclosure  of delinquent  filers in response to Item 405
of  Regulation  S-B  contained  in  this  form,  and  no  disclosure  will  be
contained,  to the best of the  registrant's  knowledge in definitive proxy or
information  statements  incorporated  by  reference  in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year.  $923,000

State the aggregate  market value of the voting  partnership  interests  held by
non-affiliates  computed  by  reference  to the price at which  the  partnership
interests  were sold,  or the average bid and asked  prices of such  partnership
interests as of December 31, 2000. No market exists for the limited  partnership
interests of the Registrant,  and,  therefore,  no aggregate market value can be
determined.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None

<PAGE>
                                     PART I

Item 1.     Description of Business

Angeles Income  Properties,  Ltd. III (the  "Partnership"  or "Registrant") is a
publicly held limited partnership organized under the California Uniform Limited
Partnership  Act pursuant to a  partnership  agreement  dated May 26,  1983,  as
amended (hereinafter referred to as "the Agreement"). The Partnership's managing
general  partner is Angeles  Realty  Corporation  II, ("ARC II" or the "Managing
General  Partner") an affiliate of Apartment  Investment and Management  Company
("AIMCO") and previously a wholly-owned  subsidiary of MAE GP Corporation  ("MAE
GP").  Effective  February 25, 1998, MAE GP was merged into Insignia  Properties
Trust  ("IPT"),  which  was an  affiliate  of  Insignia  Financial  Group,  Inc.
("Insignia").  Effective February 26, 1999, IPT was merged into AIMCO. Thus, the
Managing General Partner is now a wholly-owned  subsidiary of AIMCO. The Elliott
Accommodation Trust and the Elliott Family Partnership, Ltd., California limited
partnerships,  were the Non-Managing  General Partners.  Effective  December 31,
1997 the Elliott Family  Partnership,  Ltd.  acquired the Elliott  Accommodation
Trust's  general  partner  interest in the  Registrant.  On June 30,  2000,  the
Elliott Family Partnership sold its remaining interest to AIMCO Properties LP, a
wholly  owned  subsidiary  of  AIMCO.  The  Managing  General  Partner  and  the
Non-Managing General Partner are herein collectively referred to as the "General
Partners".  The  Partnership  Agreement  provides  that  the  Partnership  is to
terminate on December 31, 2038 unless terminated prior to such date.

The  Registrant  is engaged in the business of operating and holding real estate
properties for investment.  In 1984 and 1985, during its acquisition  phase, the
Registrant  acquired  one  existing  apartment  complex,  a mobile home park,  a
shopping center and invested in three joint ventures  which, in turn,  owned two
shopping  centers  and  one  industrial/distribution   complex.  The  Registrant
continues to own and operate the apartment  complex (see "Item 2. Description of
Property").

Commencing  March 7, 1984,  the Registrant  offered,  pursuant to a Registration
Statement filed with the Securities and Exchange Commission, up to 160,000 units
of Limited Partnership  Interest (the "Units"),  at a purchase price of $500 per
Unit with a minimum  purchase of 10 Units  ($5,000),  or 4 Units ($2,000) for an
Individual Retirement Account.

The offering  terminated  March 6, 1985. Upon  termination of the offering,  the
Registrant  sold 86,920  units  aggregating  $43,460,000.  The General  Partners
contributed  capital  in  the  amount  of  $1,000  for  a  1%  interest  in  the
Partnership.  Since its initial offering,  the Registrant has not received,  nor
are limited partners required to make, additional capital contributions.

The  Partnership  has  no  employees.  Property  management  and  administrative
services are provided by the Managing  General Partner and by agents retained by
the Managing General Partner.  Property management services are performed at the
Partnership's  residential  property by an  affiliate  of the  Managing  General
Partner.  However,  since October 1, 1998, such property  management services at
the Registrant's  commercial  property were provided by an unrelated party. This
commercial property was sold December 30, 1999 to an unaffiliated third party.

The  real  estate  business  in which  the  Partnership  is  engaged  is  highly
competitive.  There are other  residential  properties within the market area of
the Partnership's  property.  The number and quality of competitive  properties,
including  those which may be managed by an affiliate  of the  Managing  General
Partner,  in such market area could have a material  effect on the rental market
for apartments  owned by the  Partnership  and the rents that may be charged for
such  apartments.  While the Managing  General  Partner and its  affiliates  own
and/or  control a significant  number of apartment  units in the United  States,
such units represent an insignificant percentage of total apartment units in the
United States and competition for the apartments is local.

Both the income and expenses of operating the property owned by the  Partnership
are subject to factors outside of the Partnership's  control, such as changes in
the supply and demand for  similar  properties  resulting  from  various  market
conditions, increases/decreases in unemployment or population shifts, changes in
the  availability of permanent  mortgage  financing,  changes in zoning laws, or
changes in patterns or needs of users. In addition,  there are risks inherent in
owning  and  operating  residential   properties  because  such  properties  are
susceptible  to the  impact of  economic  and other  conditions  outside  of the
control of the Partnership.

There have been, and it is possible there may be other, Federal, state and local
legislation  and  regulations   enacted   relating  to  the  protection  of  the
environment.  The Partnership is unable to predict the extent,  if any, to which
such new  legislation  or  regulations  might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.

The  Partnership  monitors its property for evidence of  pollutants,  toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental  testing has been performed which resulted in no material  adverse
conditions or liabilities.  In no case has the Partnership  received notice that
it is a potentially  responsible party with respect to an environmental clean up
site.

A further description of the Partnership's  business is included in Management's
Discussion and Analysis or Plan of Operations" included in "Item 6" of this Form
10-KSB.

Transfer of Control

Pursuant  to a series  of  transactions  which  closed  on  October  1, 1998 and
February 26, 1999,  Insignia and IPT merged into AIMCO,  a publicly  traded real
estate  investment  trust,  with AIMCO  being the  surviving  corporation.  As a
result,  AIMCO acquired 100% ownership interest in the Managing General Partner.
The Managing  General Partner does not believe that this  transaction has had or
will have a material effect on the affairs and operations of the Partnership.

Item 2.     Description of Property

The following table sets forth the Partnership's investment in its property:

                              Date of
Property                      Purchase      Type of Ownership       Use

Lake Forest Apartments        06/27/84        Fee ownership   Residential Rental
  Brandon, Mississippi                                        136 units

Schedule of Property

Set forth  below for the  Registrant's  property  is the gross  carrying  value,
accumulated  depreciation,  depreciable life, method of depreciation and Federal
tax basis.
<TABLE>
<CAPTION>

                    Gross
                   Carrying    Accumulated   Depreciable                 Federal
Property            Value      Depreciation      Life       Method      Tax Basis
                       (in thousands)                                (in thousands)

Lake Forest
<S>                <C>           <C>           <C>                       <C>
   Apartments      $ 4,992       $ 3,388       3-40 yrs      S/L         $ 1,727
</TABLE>

See "Note A" of the  consolidated  financial  statements  included  in "Item 7 -
Financial  Statements"  for a  description  of  the  Partnership's  depreciation
policy.

Schedule of Rental Rate and Occupancy

Average annual rental rate and occupancy for 2000 and 1999 for the property:

                                  Average Annual                Average Annual
                                    Rental Rate                   Occupancy
                                    (per unit)
 Property                       2000            1999          2000         1999

 Lake Forest Apartments        $6,881          $6,783         95%           92%

The  Managing  General  Partner  attributes  the  increase in  occupancy  to the
consistent application of sound property and lease management techniques.

As noted under "Item 1.  Description of Business",  the real estate  industry is
highly  competitive.  The Partnership's  property is subject to competition from
other residential  apartment complexes in the area. The Managing General Partner
believes that the property is adequately  insured.  The apartment complex leases
its units for lease terms of one year or less. No residential  tenant leases 10%
or more  of the  available  rental  space.  The  property  is in  good  physical
condition,  subject to normal  depreciation and  deterioration as is typical for
assets of this type and age.

Schedule of Real Estate Tax and Rate

Real estate taxes and rate in 2000 for the property were:

                                    2000             2000
                                  Billing            Rate
                               (in thousands)

Lake Forest Apartments              $38             10.13%

Capital Improvements

Lake Forest  Apartments:  The  Partnership  completed  approximately  $72,000 in
capital  expenditures at Lake Forest  Apartments  during the year ended December
31,  2000,  consisting  primarily  of  floor  covering,   appliance,   and  roof
replacements,  office equipment,  swimming pool improvements,  major landscaping
and other enhancements. These improvements were funded from operating cash flow.
The  Partnership is currently  evaluating the capital  improvement  needs of the
property for the upcoming year. The minimum amount to be budgeted is expected to
be $275 per unit or $37,400.  Additional improvements may be considered and will
depend on the physical condition of the property as well as replacement reserves
and anticipated cash flow generated by the property.

Item 3.     Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial  Group,  Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs  named as defendants,  among others,
the  Partnership,  its Managing  General Partner and several of their affiliated
partnerships  and corporate  entities.  The action  purports to assert claims on
behalf of a class of limited  partners and derivatively on behalf of a number of
limited  partnerships  (including  the  Partnership)  which are named as nominal
defendants,  challenging,  among other things,  the  acquisition of interests in
certain general partner entities by Insignia Financial Group, Inc.  ("Insignia")
and entities which were, at one time, affiliates of Insignia; past tender offers
by the Insignia affiliates to acquire limited  partnership units;  management of
the  partnerships  by the  Insignia  affiliates;  and the Insignia  Merger.  The
plaintiffs  seek  monetary  damages and  equitable  relief,  including  judicial
dissolution of the  Partnership.  On June 25, 1998, the Managing General Partner
filed a motion  seeking  dismissal of the action.  In lieu of  responding to the
motion, the plaintiffs filed an amended complaint.  The Managing General Partner
filed demurrers to the amended complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December 14, 1999, the Managing  General  Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Managing  General  Partner  and its  affiliates  filed a
demurrer to the third amended  complaint.  The Managing General Partner does not
anticipate  that  costs  associated  with  this  case  will be  material  to the
Partnership's overall operations.

The  Partnership is unaware of any other pending or outstanding  litigation that
is not of a routine nature arising in the ordinary course of business.

Item 4.     Submission of Matters to a Vote of Security Holders

During the quarter ended December 31, 2000, no matter was submitted to a vote of
security  holders  of the  Registrant  through  the  solicitation  of proxies or
otherwise.


                                     PART II

Item 5.     Market for the Partnership's Common Equity and Related Security
            Holder Matters

The Partnership,  a publicly-held  limited partnership,  offered and sold 86,920
Limited Partnership Units (the "Units") during its offering period through March
6, 1985, and currently has 86,738 Units  outstanding and 2,026 Limited  Partners
of record.  Affiliates  of the Managing  General  Partner  owned 39,975 units or
46.09% of the  outstanding  Units at December 31, 2000. No public trading market
has developed for the Units,  and it is not anticipated  that such a market will
develop in the future.

The following table sets forth the distributions made by the Partnership for the
years ended  December 31, 1999 and 2000,  and  subsequent  to December 31, 2000.
(See "Item 6.  Management's  Discussion  and Analysis or Plan of Operation"  for
further details):

                                                    Distribution
                                                                  Per Limited
                                       Aggregate                Partnership Unit
                                     (in thousands)
     01/01/99 - 12/31/99               $1,000 (1)                    $11.41
     01/01/00 - 12/31/00                2,341 (2)                     26.72
   Subsequent to 12/31/00                 150 (1)                      1.71

(1)   Distributions were made from cash provided by operations.

(2)   Consists of  approximately  $1,205,000 of proceeds from the sale of Poplar
      Square  Shopping Center and  approximately  $1,136,000 of cash provided by
      operations.

Future cash  distributions  will depend on the levels of net cash generated from
operations,  the  availability of cash reserves,  the timing of financing and/or
property sale. The Partnership's  distribution policy is reviewed on a quarterly
basis.  There can be no assurance that the Partnership will generate  sufficient
funds  from  operations,  after  required  capital  expenditures,  to permit any
additional distributions to its partners in the year 2001 or subsequent periods.
See "Item 2.  Description of Property - Capital  Improvements"  for  information
relating to anticipated capital expenditures at the Partnership's property.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its affiliates  currently own 39,975 limited partnership
units in the Partnership  representing 46.09% of the outstanding units. A number
of these  units were  acquired  pursuant  to tender  offers made by AIMCO or its
affiliates.  It is possible that AIMCO or its  affiliates  will make one or more
additional offers to acquire  additional  limited  partnership  interests in the
Partnership  for cash or in exchange for units in the operating  partnership  of
AIMCO. Under the Partnership  Agreement,  unitholders  holding a majority of the
Units are  entitled to take action with  respect to a variety of matters,  which
would  include  without   limitation,   voting  on  certain  amendments  to  the
Partnership  Agreement and voting to remove the Managing General  Partner.  As a
result  of its  ownership  of  46.09% of the  outstanding  units,  AIMCO is in a
position to  significantly  influence all voting  decisions  with respect to the
Registrant. When voting on matters, AIMCO would in all likelihood vote the Units
it acquired  in a manner  favorable  to the  interest  of the  Managing  General
Partner because of its affiliation with the Managing General Partner.

Item 6.     Management's Discussion and Analysis or Plan of Operation

The  matters  discussed  in this Form  10-KSB  contain  certain  forward-looking
statements  and  involve  risks and  uncertainties  (including  changing  market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained  in this Form 10-KSB and the other  filings  with the  Securities  and
Exchange Commission made by the Registrant from time to time. The discussions of
the Registrant's business and results of operations,  including  forward-looking
statements pertaining to such matters, does not take into account the effects of
any changes to the Registrant's business and results of operations. Accordingly,
actual   results   could  differ   materially   from  those   projected  in  the
forward-looking  statements as a result of a number of factors,  including those
identified herein.

This  item  should  be read  in  conjunction  with  the  consolidated  financial
statements and other items contained elsewhere in this report.

Results of Operations

The   Registrant's  net  income  for  the  year  ended  December  31,  2000  was
approximately $75,000 as compared to net income of approximately  $2,076,000 for
the year ended  December  31,  1999.  The  decrease  in net income is  primarily
attributable  to the gain on sale of  discontinued  operations of  approximately
$2,276,000  realized on the sale of Poplar  Square  Shopping  Center in December
1999 offset by losses from that discontinued operation and an extraordinary loss
on early  extinguishment  of debt  recognized  in  connection  with the sale, as
discussed below.

The Registrant had income from continuing  operations of approximately  $121,000
for the year ended  December  31,  2000 as  compared  to a loss from  continuing
operations of  approximately  $4,000 for the year ended  December 31, 1999.  The
increase  in income is the result of both an increase  in total  revenues  and a
decrease in total expenses.  The increase in total revenues was primarily due to
an increase in rental  revenue.  Rental  revenue  increased  due to increases in
average  rental  rates  and  occupancy  and  decreases  in  vacancy  loss at the
Partnership's investment property.

The  decrease  in  total   expenses   were  due  to  decreases  in  general  and
administrative  expenses.  The decrease in general and  administrative  expenses
were primarily due to decreases in partnership  management fees and legal, audit
and  other  miscellaneous  administrative  expenses.  Included  in  general  and
administrative expenses at December 31, 2000 and 1999, are costs of the services
provided  by the  Managing  General  Partner  as allowed  under the  Partnership
Agreement  associated with its management of the Partnership.  Also included are
costs associated with the quarterly and annual communications with investors and
regulatory agencies and the annual audit required by the Partnership Agreement.

On December 30, 1999, Poplar Square Shopping Center located in Medford,  Oregon,
was sold to an unaffiliated  third party for $5,215,000.  After closing expenses
and other  expenses  (net) of  approximately  $93,000 and the  assumption by the
purchaser of the property's mortgage of $3,660,000, the net proceeds received by
the Partnership were approximately  $1,462,000.  Subsequent to December 31, 1999
approximately  $1,205,000 of the remaining net sale proceeds were distributed to
the  Partners.   The  Partnership   recorded  an  extraordinary  loss  on  early
extinguishment  of debt of  approximately  $92,000  due to the  payment  of loan
assumption  fees and the write off of the remaining  unamortized  loan costs. In
addition  a  gain  on the  sale  of  discontinued  operations  of  approximately
$2,276,000  was  recorded  as a result  of  writing  off the net  assets  of the
property against the net proceeds received from the sale.

Poplar Square was the only  commercial  property  owned by the  Partnership  and
represented one segment of the Partnership's operations. Due to the sale of this
property,  the results of the  commercial  segment  have been shown as loss from
discontinued operations and gain on sale of discontinued operations for 2000 and
1999.  Revenues of this property were approximately  $976,000 for the year ended
December  31,  1999.  Losses from  discontinued  operations  were  approximately
$46,000 and $104,000 for 2000 and 1999,  respectively.  Losses from discontinued
operations  in 2000 related  primarily to the write off of  receivables  for the
segment.

As part of the ongoing  business plan of the  Partnership,  the Managing General
Partner  monitors the rental market  environment of its  investment  property to
assess the feasibility of increasing rents,  maintaining or increasing occupancy
levels and protecting the Partnership from increases in expense. As part of this
plan, the Managing  General Partner attempts to protect the Partnership from the
burden of  inflation-related  increases  in  expenses  by  increasing  rents and
maintaining a high overall  occupancy  level.  However,  due to changing  market
conditions,  which  can  result  in the use of  rental  concessions  and  rental
reductions needed to offset softening market  conditions,  there is no guarantee
that the Managing General Partner will be able to sustain such a plan.

Capital Resources and Liquidity

At  December  31,  2000,  the  Registrant  held  cash  and cash  equivalents  of
approximately  $206,000,  compared to  approximately  $2,253,000 at December 31,
1999,  a  decrease  of  approximately   $2,047,000.   The  decrease  is  due  to
approximately  $2,341,000 of cash used in financing activities and approximately
$72,000 of cash used in investing activities offset by approximately $366,000 of
cash  provided  by  operating  activities.  Cash  used in  financing  activities
consisted of  distributions to the partners.  Cash used in investing  activities
consisted of property improvements and replacements.  The Registrant invests its
working capital reserves in interest bearing accounts.

The sufficiency of existing  liquid assets to meet future  liquidity and capital
expenditure   requirements   is  directly   related  to  the  level  of  capital
expenditures  required at the Partnership's  property to adequately maintain the
physical  assets and other operating needs of the Partnership and to comply with
Federal, state, and local legal and regulatory requirements.  The Partnership is
currently  evaluating  the capital  improvement  needs of the  property  for the
upcoming year. The minimum amount to be budgeted is expected to be $275 per unit
or $37,400.  Additional  improvements  may be considered  and will depend on the
physical condition of the property as well as anticipated cash flow generated by
the property.  The additional capital expenditures will be incurred only if cash
is available from operations and Partnership  reserves.  To the extent that such
budgeted capital improvements are completed the Registrant's  distributable cash
flow, if any, may be adversely affected at least in the short term.

The  Registrant's  current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant.

The  Partnership  paid cash  distributions  from sale  proceeds of Poplar Square
Shopping Center of  approximately  $1,205,000  (approximately  $1,193,000 to the
limited partners or $13.75 per limited  partnership unit) and from operations of
approximately $1,136,000  (approximately  $1,125,000 to the limited partners, or
$12.97 per limited  partnership unit),  during the year ended December 30, 2000.
Cash  distributions of approximately  $1,000,000 were paid during the year ended
December 31, 1999 (approximately  $990,000 to the limited partners or $11.41 per
limited partnership unit).  Subsequent to December 31, 2000, a cash distribution
from operations of approximately $150,000 (approximately $148,000 to the limited
partners or $1.71 per limited  partnership  unit) was declared and paid.  Future
cash  distributions  will  depend  on the  levels  of net  cash  generated  from
operations,  the  availability of cash reserves,  the timing of financing and/or
property sale. The Partnership's  distribution policy is reviewed on a quarterly
basis.  There can be no assurance that the Partnership will generate  sufficient
funds from operations, after required capital expenditures, to permit additional
distributions to its partners in the year 2001 or subsequent periods.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its affiliates  currently own 39,975 limited partnership
units in the Partnership  representing 46.09% of the outstanding units. A number
of these  units were  acquired  pursuant  to tender  offers made by AIMCO or its
affiliates.  It is possible that AIMCO or its  affiliates  will make one or more
additional offers to acquire  additional  limited  partnership  interests in the
Partnership  for cash or in exchange for units in the operating  partnership  of
AIMCO. Under the Partnership  Agreement,  unitholders  holding a majority of the
Units are  entitled to take action with  respect to a variety of matters,  which
would  include  without   limitation,   voting  on  certain  amendments  to  the
Partnership  Agreement and voting to remove the Managing General  Partner.  As a
result  of its  ownership  of  46.09% of the  outstanding  units,  AIMCO is in a
position to  significantly  influence all voting  decisions  with respect to the
Registrant. When voting on matters, AIMCO would in all likelihood vote the Units
it acquired  in a manner  favorable  to the  interest  of the  Managing  General
Partner because of its affiliation with the Managing General Partner.

<PAGE>


Item 7.     Financial Statements

ANGELES INCOME PROPERTIES, LTD. III

LIST OF FINANCIAL STATEMENTS


      Report of Ernst & Young LLP, Independent Auditors

      Consolidated Balance Sheet - December 31, 2000

      Consolidated  Statements of  Operations - Years ended  December 31, 2000
      and 1999

      Consolidated  Statements of Changes in Partners' (Deficit) Capital - Years
      ended December 31, 2000 and 1999

      Consolidated  Statements  of Cash Flows - Years ended  December 31, 2000
      and 1999

      Notes to Consolidated Financial Statements


<PAGE>


              Report of Ernst & Young LLP, Independent Auditors



The Partners
Angeles Income Properties, Ltd. III


We have audited the  accompanying  consolidated  balance sheet of Angeles Income
Properties,  Ltd.  III as of December  31,  2000,  and the related  consolidated
statements of operations, changes in partners' (deficit) capital, and cash flows
for each of the two years in the period ended December 31, 2000. These financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made  by the  Partnership's  management,  as  well  as  evaluating  the  overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial  position of Angeles Income
Properties,  Ltd. III at December 31, 2000, and the consolidated  results of its
operations  and its cash  flows  for each of the two years in the  period  ended
December 31, 2000, in conformity with accounting  principles  generally accepted
in the United States.


                                                          /s/ERNST & YOUNG LLP


Greenville, South Carolina
March 2, 2001



<PAGE>



                     ANGELES INCOME PROPERTIES, LTD. III

                           CONSOLIDATED BALANCE SHEET
                       (in thousands, except unit data)

                                December 31, 2000
<TABLE>
<CAPTION>


Assets
<S>                                                                          <C>
   Cash and cash equivalents                                                 $  206
   Receivables and deposits                                                      29
   Other assets                                                                   8
   Investment property (Note E):
      Land                                                     $  657
      Buildings and related personal property                   4,335
                                                                4,992
      Less accumulated depreciation                            (3,388)        1,604
                                                                            $ 1,847

Liabilities and Partners' (Deficit) Capital
Liabilities
   Accounts payable                                                           $  23
   Tenant security deposit liabilities                                           23
   Accrued property taxes                                                        38
   Other liabilities                                                             83

Partners' (Deficit) Capital
   General partners                                            $ (15)
   Limited partners (86,738 units issued and
      outstanding)                                              1,695         1,680
                                                                            $ 1,847

        See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>


                     ANGELES INCOME PROPERTIES, LTD. III

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                       (in thousands, except unit data)
<TABLE>
<CAPTION>

                                                           Years Ended December 31,
                                                              2000         1999
Revenues:
<S>                                                           <C>           <C>
  Rental income                                               $  861        $ 803
  Other income                                                    62           57
      Total revenues                                             923          860

Expenses:
  Operating                                                      330          329
  General and administrative                                     168          232
  Depreciation                                                   266          264
  Property taxes                                                  38           39
      Total expenses                                             802          864

Income (loss) from continuing operations                         121           (4)
Loss from discontinued operations (Note F)                       (46)        (104)
Gain on sale of discontinued operations (Note F)                  --        2,276

Income before extraordinary loss on early
  extinguishment of debt                                          75        2,168
Loss on early extinguishment of debt (Note F)                     --          (92)

Net income (Note C)                                             $ 75      $ 2,076

Net income allocated to general partners                        $  1        $ 364

Net income allocated to limited partners                          74        1,712

                                                               $  75      $ 2,076
Per limited partnership unit:
  Income (loss) from continuing operations                    $ 1.38      $ (0.05)
  Loss from discontinued operations                            (0.53)       (1.18)
  Gain on sale of discontinued operations                         --        22.02
  Income before extraordinary loss on early
   extinguishment of debt                                       0.85        20.79
  Loss on early extinguishment of debt                            --        (1.05)

Net income per limited partnership unit                       $ 0.85      $ 19.74

Distributions per limited partnership unit                    $26.72      $ 11.41

        See Accompanying Notes to Consolidated Financial Statements
</TABLE>


<PAGE>


                     ANGELES INCOME PROPERTIES, LTD. III

       CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
                       (in thousands, except unit data)
<TABLE>
<CAPTION>



                                         Limited
                                       Partnership    General     Limited
                                          Units       Partners   Partners     Total

<S>                                       <C>          <C>        <C>        <C>
Original capital contributions            86,920       $    1     $43,460    $43,461

Partners' (deficit) capital
   at December 31, 1998                   86,738       $ (347)    $ 3,217    $ 2,870

Net income for the year ended
   December 31, 1999                          --          364       1,712      2,076

Distributions to partners                     --          (10)       (990)    (1,000)

Partners' capital at
   December 31, 1999                      86,738            7       3,939      3,946

Net income for the year ended
   December 31, 2000                          --            1          74         75

Distributions to partners                     --          (23)     (2,318)    (2,341)

Partners' (deficit) capital at
   December 31, 2000                      86,738       $  (15)    $ 1,695    $ 1,680

        See Accompanying Notes to Consolidated Financial Statements
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                     ANGELES INCOME PROPERTIES, LTD. III

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)

                                                              Year Ended December 31,
                                                                  2000        1999
Cash flows from operating activities:
<S>                                                               <C>        <C>
  Net income                                                      $  75      $ 2,076
  Adjustments to reconcile net income to net cash provided
   by operating activities:
     Gain on sale of discontinued operations                         --       (2,276)
     Extraordinary loss on early extinguishment of debt              --           92
     Depreciation                                                   266          687
     Amortization of loan costs and leasing commissions              --           40
     Bad debt                                                        62           --
     Change in accounts:
      Receivables and deposits                                       69           (5)
      Other assets                                                   (1)          11
      Accounts payable                                              (10)          12
      Tenant security deposit liabilities                             3           (1)
      Accrued property taxes                                         (1)         (16)
      Other liabilities                                             (97)          28

          Net cash provided by operating activities                 366          648

Cash flows from investing activities:
  Property improvements and replacements                            (72)        (124)
  Net proceeds from sale of discontinued operations                  --        1,462
  Net deposits to restricted escrows                                 --          (30)

          Net cash (used in) provided by investing
             activities                                             (72)       1,308

Cash flows from financing activities:
  Payments on mortgage note payable                                  --          (50)
  Distributions to partners                                      (2,341)      (1,000)

          Net cash used in financing activities                  (2,341)      (1,050)

Net (decrease) increase in cash and cash equivalents             (2,047)         906

Cash and cash equivalents at beginning of the year                2,253        1,347

Cash and cash equivalents at end of year                         $  206      $ 2,253

Supplemental disclosure of cash flow information:
  Cash paid for interest                                         $   --        $ 339
Supplemental disclosure of non-cash activity
  Extinguishment of debt in connection with the sale of
   discontinued operations                                       $ --        $ 3,660

        See Accompanying Notes to Consolidated Financial Statements
</TABLE>


<PAGE>

                       ANGELES INCOME PROPERTIES, LTD. III

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               December 31, 2000


Note A - Organization and Significant Accounting Policies

Organization:   Angeles  Income  Properties,  Ltd.  III  (the  "Partnership"  or
"Registrant")  is a  California  limited  partnership  organized  in May 1983 to
acquire and operate  residential  and  commercial  real estate  properties.  The
Partnership's  managing  general partner is Angeles Realty  Corporation II ("ARC
II" or the "Managing General Partner"), an affiliate of Apartment Investment and
Management Company ("AIMCO") and previously a wholly-owned  subsidiary of MAE GP
Corporation  ("MAE GP").  Effective  February 25,  1998,  MAE GP was merged into
Insignia Properties Trust ("IPT"),  which was an affiliate of Insignia Financial
Group,  Inc.  ("Insignia").  Effective  February 26,  1999,  IPT was merged into
AIMCO. See "Note B - Transfer of Control".  Thus the Managing General Partner is
now a wholly-owned  subsidiary of AIMCO. The Elliott Accommodation Trust and the
Elliott Family  Partnership,  Ltd.,  California limited  partnerships,  were the
Non-Managing  General Partners.  Effective December 31, 1997, the Elliott Family
Partnership,  Ltd.  acquired the Elliott  Accommodation  Trust's general partner
interest in the  Registrant.  On June 30, 2000, the Elliott  Family  Partnership
sold its remaining interest to AIMCO Properties LP, a wholly owned subsidiary of
AIMCO.  The Managing  General Partner and the  Non-Managing  General Partner are
herein  collectively  referred to as the  "General  Partners".  The  Partnership
Agreement  provides that the  Partnership  is to terminate on December 31, 2038,
unless  terminated  prior to such date. As of December 31, 2000, the Partnership
operates one residential property in Mississippi.

Principles  of  Consolidation:  The  consolidated  financial  statements  of the
Partnership include its 99% limited  partnership  interests in Poplar Square AIP
III, L.P. and Poplar Square GP LP. Poplar Square GP LP is the general partner of
Poplar Square AIP III and ARC II is the general  partner of Poplar Square GP LP.
Both general  partners of the  consolidated  partnerships  may be removed by the
Registrant;  therefore,  the partnerships are controlled and consolidated by the
Partnership. All significant interpartnership balances have been eliminated.

Use of Estimates:  The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Allocations and  Distributions  to Partners:  In accordance with the Partnership
Agreement,  any gain from the sale or other  disposition of  Partnership  assets
will be  allocated  first to the Managing  General  Partner to the extent of the
amount of any  Incentive  Interest  (as  defined  below)  to which the  Managing
General  Partner is entitled.  Any gain remaining  after said allocation will be
allocated to the general  partners and limited  partners in  proportion to their
interests in the Partnership; provided that the gain shall first be allocated to
Partners with negative account balances,  in proportion to such balances,  in an
amount  equal  to  the  sum of  such  negative  capital  account  balances.  The
Partnership  will allocate other profits and losses 0.5% to the Managing General
Partner,  0.5% to the  Non-Managing  General  Partner,  and  99% to the  Limited
Partners.

Except as discussed below, the Partnership will allocate distributions 1% to the
general partners and 99% to the limited partners.

Upon  the  sale  or  other  disposition,  or  refinancing  of any  asset  of the
Partnership, the Distributable Net Proceeds shall be distributed as follows: (i)
First,  to the  Partners  in  proportion  to their  interest  until the  Limited
Partners have  received  proceeds  equal to their  Original  Capital  Investment
applicable  to the  property;  and (ii) Second,  to the Partners  until  Limited
Partners  have  received  distributions  from  all  sources  equal  to  their 6%
Cumulative  Distribution,  (iii) Third, to the Managing General Partner until it
has  received  its  Brokerage  Compensation;  (iv)  Fourth,  to the  Partners in
proportion  to  their  interests  until  the  Limited   Partners  have  received
distributions   from  all  sources  equal  to  their  additional  2%  Cumulative
Distribution;  and (v)  Thereafter,  85% to the Partners in  proportion to their
interests and 15% ("Incentive Interest") to the Managing General Partner.

Depreciation:  Depreciation  is  provided by the  straight-line  method over the
estimated lives of the apartment  property and related  personal  property.  For
Federal income tax purposes,  the  accelerated  cost recovery method is used (1)
for real property  over 15 years for additions  prior to March 16, 1984, 18 year
for  additions  after  March 15,  1984 and before May 9, 1985,  and 19 years for
additions  after May 8, 1985,  and before  January 1, 1987, and (2) for personal
property over 5 years for additions prior to January 1, 1987. As a result of the
Tax Reform Act of 1986,  for  additions  after  December 31, 1986,  the modified
accelerated  cost recovery method is used for  depreciation of (1) real property
over 27 1/2 years and (2) personal property additions over 5 years.

Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and in
banks and money market accounts.  At certain times, the amount of cash deposited
at a bank may exceed  the limit on  insured  deposits.  Cash  balances  included
approximately $174,000 at December 31, 2000 that are maintained by an affiliated
management  company  on  behalf of  affiliated  entities  in cash  concentration
accounts.

Investment  Property:  Investment property consists of one apartment complex and
is stated at cost. Acquisition fees are capitalized as a cost of real estate. In
accordance with Statement of Financial  Accounting  Standards  ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of", the Partnership  records impairment losses on long-lived assets
used in operations when events and circumstances  indicate that the assets might
be impaired and the  undiscounted  cash flows estimated to be generated by those
assets are less than the carrying  amounts of those assets.  No adjustments  for
impairment  of value were  necessary  for the years ended  December  31, 2000 or
1999.

Tenant Security  Deposits:  The Partnership  requires security deposits from all
apartment  lessees for the duration of the lease and such  deposits are included
in receivables and deposits.  The security deposits are refunded when the tenant
vacates  the  apartment  provided  the tenant has not  damaged  the space and is
current on rental payments.

Leases: The Partnership  generally leases apartment units for twelve month terms
or less. The Partnership recognizes income as earned on its leases. In addition,
the Managing  General  Partner's  policy is to offer rental  concessions  during
particularly  slow  months or in  response  to heavy  competition  from  similar
complexes  in the  area.  Concessions  are  charged  against  rental  income  as
incurred.

Fair  Value:  SFAS  No.  107,   "Disclosures   about  Fair  Value  of  Financial
Instruments",  as  amended  by  SFAS  No.  119,  "Disclosures  about  Derivative
Financial  Instruments  and  Fair  Value  of  Financial  Instruments",  requires
disclosure of fair value information about financial instruments, whether or not
recognized in the balance  sheet,  for which it is  practicable to estimate fair
value.  Fair value is defined in the SFAS as the amount at which the instruments
could be exchanged in a current transaction between willing parties,  other than
in a forced or  liquidation  sale.  The  Partnership  believes that the carrying
amounts of its financial  instruments  approximate  their fair values due to the
short term maturity of these instruments.

Segment Reporting: SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related  Information"  established  standards  for the way that public  business
enterprises  report  information  about operating  segments in annual  financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports.  It also establishes  standards
for related disclosures about products and services, geographic areas, and major
customers. See "Note H" for required disclosure.

Advertising:  The  Partnership  expenses  the cost of  advertising  as incurred.
Advertising  costs of  approximately  $23,000  and  $18,000  for the years ended
December 31, 2000 and 1999, respectively, were charged to operating expense.

Note B - Transfer of Control

Pursuant  to a series  of  transactions  which  closed  on  October  1, 1998 and
February 26, 1999,  Insignia and IPT merged into AIMCO,  a publicly  traded real
estate  investment  trust,  with AIMCO  being the  surviving  corporation.  As a
result,  AIMCO acquired 100% ownership interest in the Managing General Partner.
The Managing  General Partner does not believe that this  transaction has had or
will have a material effect on the affairs and operations of the Partnership.

Note C - Income Taxes

The Partnership has received a ruling from the Internal  Revenue Service that it
will  be  classified  as  a  partnership   for  Federal   income  tax  purposes.
Accordingly, taxable income or loss of the Partnership is reported in the income
tax returns of its partners.  Accordingly, no provision for income taxes is made
in the consolidated financial statements of the Partnership.

The  following is a  reconciliation  of reported net income and Federal  taxable
(loss) income (in thousands, except per unit data):

                                          2000          1999

Net income as reported                    $   75      $ 2,076
Add (deduct):
  Depreciation differences                   120          104
  Gain on sale of Poplar Square              (38)      (1,697)
  Other                                      (18)         135
  Northtown Mall JV receivable
    write off                               (587)          --

Federal taxable (loss) income            $  (448)      $  618

Federal taxable (loss) income per
  limited partnership unit               $ (5.18)      $ 7.05

The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):

Net assets as reported                   $ 1,680
Land and buildings                           (61)
Accumulated depreciation                     184
Syndication and distribution costs         5,806
Other                                         93

Net assets - Federal tax basis           $ 7,702

Note D - Transactions with Affiliated Parties

The  Partnership  has no employees  and is  dependent  on the  Managing  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
Partnership  activities.  The  Partnership  Agreement  provides  for (i) certain
payments to affiliates for services and (ii)  reimbursement  of certain expenses
incurred by affiliates on behalf of the Partnership. The following payments were
paid or accrued to the Managing General Partner and affiliates in 2000 and 1999:

                                                              2000       1999
                                                              (in thousands)
 Property management fees (included in
   operating expense)                                         $ 46       $ 43
 Partnership management fees (included in general and
   administrative expense) (1)                                  30         47
 Reimbursement for services of affiliates (included in
   investment properties, operating expense and
   general and administrative expense)                          56         55

(1)   The  Partnership  Agreement  provides  for a fee equal to 10% of "net cash
      flow from operations",  as defined in the Partnership Agreement to be paid
      to  the  Managing   General  Partner  for  executive  and   administrative
      management   services.   This  fee  was  accrued  and  included  in  other
      liabilities in the accompanying consolidated balance sheet at December 31,
      2000.

During the years ended  December 31, 2000 and 1999,  affiliates  of the Managing
General  Partner  were  entitled  to  receive  5% of  gross  receipts  from  the
Registrant's   residential  property  as  compensation  for  providing  property
management  services.  The  Registrant  paid  to such  affiliates  approximately
$46,000  and  $43,000  for  the  years  ended   December   31,  2000  and  1999,
respectively.

An  affiliate  of  the  Managing  General  Partner  received   reimbursement  of
accountable  administrative  expenses  amounting  to  approximately  $56,000 and
$55,000 for the years ended December 31, 2000 and 1999, respectively.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its affiliates  currently own 39,975 limited partnership
units in the Partnership  representing 46.09% of the outstanding units. A number
of these  units were  acquired  pursuant  to tender  offers made by AIMCO or its
affiliates.  It is possible that AIMCO or its  affiliates  will make one or more
additional offers to acquire  additional  limited  partnership  interests in the
Partnership  for cash or in exchange for units in the operating  partnership  of
AIMCO. Under the Partnership  Agreement,  unitholders  holding a majority of the
Units are  entitled to take action with  respect to a variety of matters,  which
would  include  without   limitation,   voting  on  certain  amendments  to  the
Partnership  Agreement and voting to remove the Managing General  Partner.  As a
result  of its  ownership  of  46.09% of the  outstanding  units,  AIMCO is in a
position to  significantly  influence all voting  decisions  with respect to the
Registrant. When voting on matters, AIMCO would in all likelihood vote the Units
it acquired  in a manner  favorable  to the  interest  of the  Managing  General
Partner because of its affiliation with the Managing General Partner.

Note E - Real Estate and Accumulated Depreciation
<TABLE>
<CAPTION>

                                               Initial Cost
                                              To Partnership
                                              (in thousands)

                                                      Buildings         Cost
                                                     and Related    Capitalized
                                                      Personal     Subsequent to
     Description         Encumbrances       Land      Property      Acquisition
                        (in thousands)                             (in thousands)

<S>                          <C>           <C>         <C>             <C>
Lake Forest Apts.            $ --          $ 657       $3,160          $1,175
</TABLE>

<TABLE>
<CAPTION>

                          Gross Amount At Which Carried
                              At December 31, 2000
                              (in thousands)

                               Buildings
                              And Related
                                Personal               Accumulated      Date     Depreciable
    Description        Land     Property     Total     Depreciation   Acquired   Life-Years

<S>                   <C>        <C>         <C>          <C>         <C>  <C>       <C>
Lake Forest Apts.     $ 657      $4,335      $4,992       $3,388      6/27/84        40
</TABLE>

The depreciable  lives included above are for the buildings and components.  The
depreciable lives for related personal property are for 3 to 10 years.

Reconciliation of "Investment Properties and Accumulated Depreciation":

                                                 Years Ended December 31,
                                                   2000           1999
                                                      (in thousands)
Investment Properties
Balance at beginning of year                      $ 4,920        $14,566
  Property improvements and replacements               72            124
  Sale of discontinued operations                      --         (9,770)
Balance at end of year                            $ 4,992        $ 4,920

Accumulated Depreciation
Balance at beginning of year                      $ 3,122        $ 9,940
  Additions charged to expense                        266            687
  Sale of discontinued operations                      --         (7,505)
Balance at end of year                            $ 3,388        $ 3,122

The  aggregate  cost of the real  estate  for  Federal  income tax  purposes  at
December  31,  2000  and  1999,  is  approximately  $4,931,000  and  $4,859,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at December  31, 2000 and 1999,  is  approximately  $3,204,000  and  $3,059,000,
respectively.

Note F - Discontinued Operations and Sale of Discontinued Operations

On December 30, 1999, Poplar Square Shopping Center located in Medford,  Oregon,
was sold to an unaffiliated  third party for $5,215,000.  After closing expenses
and other  payments  (net) of  approximately  $93,000 and the  assumption by the
purchaser of the property's  mortgage of $3,660,000 the net proceeds received by
the Partnership were approximately  $1,462,000.  Subsequent to December 31, 1999
approximately  $1,205,000 of the remaining net sale proceeds were distributed to
the  partners.   The  Partnership   recorded  an  extraordinary  loss  on  early
extinguishment  of debt of  approximately  $92,000  due to the  payment  of loan
assumption fees and the write off of the remaining unamortized loan costs.

Poplar Square was the only  commercial  property  owned by the  Partnership  and
represented one segment of the Partnership's operations. Due to the sale of this
property,  the results of the  commercial  segment  have been shown as loss from
discontinued operations and gain on sale of discontinued operations for 2000 and
1999.  Revenues of this property were approximately  $976,000 for the year ended
December  31,  1999.  Losses from  discontinued  operations  were  approximately
$46,000 and $104,000 for 2000 and 1999,  respectively.  Losses from discontinued
operations  in 2000 related  primarily to the write off of  receivables  for the
segment.

Note G - Distributions

The  Partnership  paid cash  distributions  from sale  proceeds of Poplar Square
Shopping Center of  approximately  $1,205,000  (approximately  $1,193,000 to the
limited partners or $13.75 per limited  partnership unit) and from operations of
approximately $1,136,000  (approximately  $1,125,000 to the limited partners, or
$12.97 per limited  partnership unit),  during the year ended December 30, 2000.
Cash  distributions of approximately  $1,000,000 were paid during the year ended
December 31, 1999 (approximately  $990,000 to the limited partners or $11.41 per
limited partnership unit).  Subsequent to December 31, 2000, a cash distribution
from operations of approximately $150,000 (approximately $148,000 to the limited
partners or $1.71 per limited partnership unit) was declared and paid.

Note H - Segment Reporting

Description of the types of products and services from which reportable  segment
derives its revenues:

The  Partnership  had  two  reportable  segments:   residential  properties  and
commercial properties.  The Partnership's  residential property segment consists
of one apartment complex located in Mississippi. The Partnership rents apartment
units to  tenants  for terms  that are  typically  twelve  months  or less.  The
commercial  property  segment  consisted of a shopping center located in Oregon,
which was sold on December 30, 1999.  As a result of the sale of the  commercial
property during 1999 the commercial segment is shown as discontinued operations.
(See "Note F - Discontinued Operations and Sale of Discontinued  Operations" for
further discussion regarding the commercial property).

Measurement of segment profit or loss:

The  Partnership  evaluates  performance  based on segment  profit (loss) before
depreciation.  The accounting policies of the reportable segment are the same as
those of the  Partnership as described in the summary of significant  accounting
policies.

Factors management used to identify the enterprise's reportable segment:

The  Partnership's  reportable  segments are  investment  properties  that offer
different  products  and  services.  The  reportable  segments  are each managed
separately  because they  provide  distinct  services  with  different  types of
products and customers.

Segment  information  for the years ended December 31, 2000 and 1999 is shown in
the tables below. The "Other" column includes Partnership administration related
items and income and  expense  not  allocated  to the  reportable  segments  (in
thousands).

<TABLE>
<CAPTION>

                 2000                   Residential    Commercial     Other      Totals
                                                     (discontinued)
<S>                                        <C>             <C>          <C>       <C>
Rental income                              $  861          $ --         $ --      $ 861
Other income                                   49            --           13         62
Depreciation                                  266            --           --        266
General and administrative expense             --            --          168        168
Loss from discontinued operations              --           (46)          --        (46)
Segment profit (loss)                         276           (46)        (155)        75
Total assets                                1,818            --           29      1,847
Capital expenditures for investment
  property                                     72            --           --         72


                 1999                   Residential    Commercial     Other      Totals
                                                     (discontinued)
Rental income                              $  803          $ --         $ --      $ 803
Other income                                   25            --           32         57
Depreciation                                  264            --           --        264
General and administrative expense             --            --          232        232
Loss from discontinued operations              --          (104)          --       (104)
Gain on sale of discontinued
  operations                                   --         2,276           --      2,276
Loss on early extinguishment                   --           (92)          --        (92)
  of debt
Segment profit (loss)                         196         2,080         (200)     2,076
Total assets                                2,322            --        1,896      4,218
Capital expenditures for
  investment properties                       124            --           --        124
</TABLE>


Note I - Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial  Group,  Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs  named as defendants,  among others,
the  Partnership,  its Managing  General Partner and several of their affiliated
partnerships  and corporate  entities.  The action  purports to assert claims on
behalf of a class of limited  partners and derivatively on behalf of a number of
limited  partnerships  (including  the  Partnership)  which are named as nominal
defendants,  challenging,  among other things,  the  acquisition of interests in
certain general partner entities by Insignia Financial Group, Inc.  ("Insignia")
and entities which were, at one time, affiliates of Insignia; past tender offers
by the Insignia affiliates to acquire limited  partnership units;  management of
the  partnerships  by the  Insignia  affiliates;  and the Insignia  Merger.  The
plaintiffs  seek  monetary  damages and  equitable  relief,  including  judicial
dissolution of the  Partnership.  On June 25, 1998, the Managing General Partner
filed a motion  seeking  dismissal of the action.  In lieu of  responding to the
motion, the plaintiffs filed an amended complaint.  The Managing General Partner
filed demurrers to the amended complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December 14, 1999, the Managing  General  Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Managing  General  Partner  and its  affiliates  filed a
demurrer to the third amended  complaint.  The Managing General Partner does not
anticipate  that  costs  associated  with  this  case  will be  material  to the
Partnership's overall operations.

The  Partnership is unaware of any other pending or outstanding  litigation that
is not of a routine nature arising in the ordinary course of business.


Item 8.     Changes in and  Disagreements  with  Accountant on Accounting  and
            Financial Disclosures

            None.


<PAGE>


                                    PART III

Item 9.     Directors,  Executive  Officers,  Promoters  and Control  Persons;
            Compliance with Section 16(a) of the Exchange Act

Angeles Income  Properties,  Ltd. III (the "Partnership" or "Registrant") has no
officers  or  directors.   The  Managing   General  Partner  is  Angeles  Realty
Corporation  II  ("ARC  II"  or  "Managing  General   Partner"),   which  was  a
wholly-owned subsidiary of MAE GP Corporation ("MAE GP"). Effective February 25,
1998,  MAE GP was merged  into  Insignia  Properties  Trust  ("IPT").  Effective
February 26,  1999,  IPT was merged into  Apartment  Investment  and  Management
Company  ("AIMCO").  Thus,  the Managing  General  Partner is now a wholly-owned
subsidiary of AIMCO.

The names of the director and  executive  officers of ARC II, their ages and the
nature of all positions with ARC II presently held are as follows:

Name                        Age    Position

Patrick J. Foye              43    Executive Vice President and Director
Martha L. Long               41    Senior Vice President and Controller

Patrick  J.  Foye  has been  Executive  Vice  President  and  Director  of the
Managing  General  Partner  since  October  1,  1998.  Mr.  Foye has served as
Executive  Vice  President  of AIMCO since May 1998.  Prior to joining  AIMCO,
Mr.  Foye was a partner in the law firm of  Skadden,  Arps,  Slate,  Meagher &
Flom LLP from 1989 to 1998 and was  Managing  Partner of the firm's  Brussels,
Budapest and Moscow  offices from 1992 through  1994.  Mr. Foye is also Deputy
Chairman of the Long Island Power  Authority and serves as a member of the New
York State  Privatization  Council.  He received a B.A.  from Fordham  College
and a J.D. from Fordham University Law School.

Martha L. Long has been Senior Vice  President  and  Controller  of the Managing
General  Partner since October 1998 as a result of the  acquisition  of Insignia
Financial  Group,  Inc. As of February 2001, Ms. Long was also appointed head of
the service  business for AIMCO.  From June 1994 until January 1997, she was the
Controller for Insignia, and was promoted to Senior Vice President - Finance and
Controller in January 1997,  retaining that title until October 1998.  From 1988
to June 1994,  Ms. Long was Senior Vice  President and  Controller for The First
Savings Bank, FSB in Greenville, South Carolina.

One or more of the above persons are also directors and/or officers of a general
partner (or general partner of a general partner) of limited  partnerships which
either have a class of  securities  registered  pursuant to Section 12(g) of the
Securities Exchange Act of 1934, or are subject to the reporting requirements of
Section  15(d) of such Act.  Further,  one or more of the above persons are also
directors and/or officers of Apartment Investment and Management Company and the
general  partner  of  AIMCO  Properties,  L.P.,  entities  that  have a class of
securities  registered  pursuant to Section 12(g) of the Securities Exchange Act
of 1934, or are subject to the reporting  requirements of Section 15 (d) of such
Act.

The executive  officers and director of the Managing General Partner fulfill the
obligations  of the Audit  Committee  and  oversee the  Partnership's  financial
reporting process on behalf of the Managing General Partner.  Management has the
primary  responsibility  for the financial  statements and the reporting process
including  the  systems  of  internal  controls.  In  fulfilling  its  oversight
responsibilities,  the executive  officers and director of the Managing  General
Partner reviewed the audited  financial  statements with management  including a
discussion  of the  quality,  not  just  the  acceptability,  of the  accounting
principles,  the  reasonableness  of significant  judgments,  and the clarity of
disclosures in the financial statements.

The executive  officers and director of the Managing  General  Partner  reviewed
with the independent auditors,  who are responsible for expressing an opinion on
the conformity of those audited  financial  statements  with generally  accepted
accounting  principles,  their  judgments  as  to  the  quality,  not  just  the
acceptability, of the Partnership's accounting principles and such other matters
as are required to be discussed with the Audit Committee or its equivalent under
generally  accepted  auditing  standards.   In  addition,  the  Partnership  has
discussed  with  the  independent  auditors  the  auditors'   independence  from
management and the Partnership  including the matters in the written disclosures
required by the Independence Standards Board and considered the compatibility of
non-audit services with the auditors' independence.

The executive  officers and director of the Managing  General Partner  discussed
with the  Partnership's  independent  auditors  the overall  scope and plans for
their audit. In reliance on the reviews and discussions  referred to above,  the
executive officers and director of the Managing General Partner has approved the
inclusion of the audited  financial  statements  in the Form 10-KSB for the year
ended December 31, 2000 for filing with the Securities and Exchange Commission.

The Managing  General Partner has  reappointed  Ernst & Young LLP as independent
auditors to audit the financial  statements of the  Partnership  for the current
fiscal  year.  Fees for the last  fiscal  year were  annual  audit  services  of
approximately  $30,000  and  non-audit  services  (principally  tax-related)  of
approximately $15,000.

Item 10.    Executive Compensation

No direct form of compensation  or  remuneration  was paid by the Partnership to
any officer or director of the Managing General Partner.

Item 11.    Security Ownership of Certain Beneficial Owners and Management

Except as noted below, no person or entity was known by the Registrant to be the
beneficial  owner  of  more  than 5% of the  Limited  Partnership  Units  of the
Registrant as of December 31, 2000.

Entity                                  Number of Units      Percentage
AIMCO Properties LLP
  (an affiliate of AIMCO)                    28,500            32.86%
Cooper River Properties, LLC
  (an affiliate of AIMCO)                    11,470            13.23%
Insignia Properties LP
  (an affiliate of AIMCO)                         5               *

*  Less than 0.01%

Cooper River Properties LLC and Insignia Properties LP are indirectly ultimately
owned by AIMCO. Their business addresses are 55 Beattie Place, Greenville, South
Carolina 29602.

AIMCO Properties LP is indirectly  ultimately  controlled by AIMCO. Its business
address is 2000 South Colorado Boulevard, Denver, Colorado 80222.

No director  or officer of the  Managing  General  Partner  owns any Units.  The
Managing  General  Partner  owns  100  Units  as  required  by the  terms of the
Partnership Agreement governing the Partnership.

Item 12.    Certain Relationships and Related Transactions

The  Partnership  has no employees  and is  dependent  on the  Managing  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
Partnership  activities.  The  Partnership  Agreement  provides  for (i) certain
payments to affiliates for services and (ii)  reimbursement  of certain expenses
incurred by affiliates on behalf of the Partnership. The following payments were
paid or accrued to the Managing General Partner and affiliates in 2000 and 1999:

                                                              2000       1999
                                                              (in thousands)
   Property management fees                                   $ 46       $ 43
   Partnership management fees (1)                              30         47
   Reimbursement for services of affiliates                     56         55

(1)   The  Partnership  Agreement  provides  for a fee equal to 10% of "net cash
      flow from operations",  as defined in the Partnership Agreement to be paid
      to  the  Managing   General  Partner  for  executive  and   administrative
      management   services.   This  fee  was  accrued  and  included  in  other
      liabilities in the accompanying consolidated balance sheet at December 31,
      2000.

During the years ended  December 31, 2000 and 1999,  affiliates  of the Managing
General   Partner  were  entitled  to  receive  5%  of  gross  receipts  of  the
Registrant's   residential  property  as  compensation  for  providing  property
management  services.  The  Registrant  paid  to such  affiliates  approximately
$46,000  and  $43,000  for  the  years  ended   December   31,  2000  and  1999,
respectively.

An  affiliate  of  the  Managing  General  Partner  received   reimbursement  of
accountable  administrative  expenses  amounting  to  approximately  $56,000 and
$55,000 for the years ended December 31, 2000 and 1999, respectively.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its affiliates  currently own 39,975 limited partnership
units in the Partnership  representing 46.09% of the outstanding units. A number
of these  units were  acquired  pursuant  to tender  offers made by AIMCO or its
affiliates.  It is possible that AIMCO or its  affiliates  will make one or more
additional offers to acquire  additional  limited  partnership  interests in the
Partnership  for cash or in exchange for units in the operating  partnership  of
AIMCO. Under the Partnership  Agreement,  unitholders  holding a majority of the
Units are  entitled to take action with  respect to a variety of matters,  which
would  include  without   limitation,   voting  on  certain  amendments  to  the
Partnership  Agreement and voting to remove the Managing General  Partner.  As a
result  of its  ownership  of  46.09% of the  outstanding  units,  AIMCO is in a
position to  significantly  influence all voting  decisions  with respect to the
Registrant. When voting on matters, AIMCO would in all likelihood vote the Units
it acquired  in a manner  favorable  to the  interest  of the  Managing  General
Partner because of its affiliation with the Managing General Partner.

                                     PART IV


Item 13.    Exhibits and Reports on Form 8-K

      (a)   Exhibits:

            None.

      (b)   Reports on Form 8-K filed in the fourth quarter of year 2000:

            None.


<PAGE>


                                   SIGNATURES



In accordance  with Section 13 or 15(d) of the Exchange Act, the  Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                    ANGELES INCOME PROPERTIES, LTD. III
                                    (A California Limited Partnership)
                                    (Registrant)


                                    By:   Angeles Realty Corporation II
                                          Managing General Partner


                                    By:   /s/Patrick J. Foye
                                          Patrick J. Foye
                                          Executive Vice President


                                    By:   /s/Martha L. Long
                                          Martha L. Long
                                          Senior Vice President and
                                          Controller


                                      Date:


In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the Registrant and in the capacities on the date
indicated.

/s/Patrick J. Foye            Executive Vice President      Date:
Patrick J. Foye               and Director


/s/Martha L. Long             Senior Vice President         Date:
Martha L. Long                and Controller


<PAGE>


                     ANGELES INCOME PROPERTIES, LTD. III

                                  EXHIBIT INDEX


Exhibit Number    Description of Exhibit

       3.1        Amended  Certificate and Agreement of the Limited  Partnership
                  file in Form S-11 dated June 2,  1983,  which is  incorporated
                  herein by reference.

      10.1        Agreement of Purchase  and of Real  Property  with  Exhibits -
                  Lake Forest  Apartments  filed in Form 8K dated June 28, 1984,
                  which is incorporated herein by reference

      10.3        Agreement of Purchase and Sale of Real  Property with Exhibits
                  - Poplar Square Shopping Center filed in Form 8K dated May 15,
                  1985, incorporated herein by reference.

      10.4        Agreement of Purchase and Sale of Real  Property with Exhibits
                  - Northtown  Mall filed in Form 8K dated July 15, 1985,  which
                  is incorporated herein by reference

      10.5        General  Partnership  Agreement of Northtown Partners filed in
                  Form 10-K dated October 31, 1986, which is incorporated herein
                  by reference.

      10.11       Promissory  Note -  Northtown  Mall  filed in Form 10-K  dated
                  December 31, 1990, which is incorporated herein by reference.

      10.12       Stock Purchase  Agreement  dated November 24, 1992 showing the
                  purchase of 100% of the  outstanding  stock of Angeles  Realty
                  Corporation II, a subsidiary of MAE GP  Corporation,  filed in
                  Form 8-K dated December 31, 1993, which is incorporated herein
                  by reference.

      10.15       Promissory  Note - dated  October 31, 1996,  between  Poplar
                  Square AIP III. L.P., and Union Capital Investments, LLC.

      10.16       Purchase and Sale Contract between Poplar Square AIP III, L.P.
                  and SB Management  Corporation  dated August 12, 1999 filed in
                  Form 8-K dated December 30, 1999, which is incorporated herein
                  by reference.

      10.17       Amendment to Purchase and Sale Contract  between Poplar Square
                  AIP III, L.P. and SB Management  Corporation filed in Form 8-K
                  dated  December  30,  1999,  which is  incorporated  herein by
                  reference.

      10.18       Second  Amendment to Purchase and Sale Contract between Poplar
                  Square AIP III,  L.P. and SB Management  Corporation  filed in
                  Form 8-K dated December 30, 1999, which is incorporated herein
                  by reference.

      10.19       Third  Amendment to Purchase and Sale Contract  between Poplar
                  Square AIP III,  L.P. and SB Management  Corporation  filed in
                  Form 8-K dated December 30, 1999, which is incorporated herein
                  by reference.

      10.20       Fourth  Amendment to Purchase and Sale Contract between Poplar
                  Square AIP III,  L.P. and SB Management  Corporation  filed in
                  Form 8-K dated December 30, 1999, which is incorporated herein
                  by reference.

      16.1        Letter  from  Registrant's  former  accountant  regarding  its
                  concurrence  with the  statements  made by the  Registrant  is
                  incorporated  by reference to the Exhibit  filed with Form 8-K
                  dated September 1, 1993.