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, 2001


[ ]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 0-13530

                      DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.
                   (Name of small business issuer in its charter)

         Delaware                                               62-1181565
(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:

                      Units of Limited Partnership Interest
                                (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.  $9,574,000

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, 2001. 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

                                     PART I

Item 1.     Description of Business

Davidson  Diversified Real Estate I, L.P. (the "Registrant" or "Partnership") is
a Delaware limited  partnership  organized in January 1983. The general partners
of the  Partnership  are  Davidson  Diversified  Properties,  Inc.,  a Tennessee
corporation  ("Managing  General  Partner");  Diversified  Equities,  Limited, a
Tennessee limited partnership ("Associate General Partner"); and David W. Talley
("Individual  General  Partner")  (collectively,  the "General  Partners").  The
Managing  General  Partner was wholly owned by MAE GP Corporation  ("MAE") until
February  25,  1998,  at which time MAE GP was merged into  Insignia  Properties
Trust  ("IPT"),  a subsidiary of Apartment  Investment  and  Management  Company
("AIMCO"),  a publicly traded real estate investment  trust.  Thus, the Managing
General Partner is now wholly-owned by AIMCO. The Partnership Agreement provides
that the  Partnership  is to terminate on December 31, 2007,  unless  terminated
prior to such date.

The offering of the Partnership's  limited partnership units ("Units") commenced
on November 16, 1983,  and  terminated  on September 14, 1984.  The  Partnership
received  gross  proceeds from the offering of  $15,008,000  and net proceeds of
$13,507,200.  Since its initial offering,  the Partnership has not received, nor
are limited partners required to make, additional capital contributions.

The Partnership's business is to own and operate existing real estate properties
for investment.  The Partnership  does not engage in any foreign  operations nor
derive any income from foreign sources.  All of the net proceeds of the offering
were invested in six properties,  four of which had been sold or foreclosed upon
prior to the calendar year 2000. On July 12, 2001, the Partnership  sold another
of its investment properties, Ashley Woods Apartments. The Partnership continues
to own and  operate  one  investment  property.  See  "Item  2.  Description  of
Property".

The  Partnership  receives  income  from its  property  and is  responsible  for
operating  expenses,  capital  improvements  and  debt  service  payments  under
mortgage  obligations  secured by the  property.  The  Partnership  financed its
property primarily through non-recourse debt. Therefore, if the Partnership were
to default on its loan, the lender, with certain exceptions,  can generally only
look to the subject property for recovery of amounts due.

The Partnership  has no employees.  Management and  administrative  services are
provided by the  Managing  General  Partner and agents  retained by the Managing
General  Partner.  An affiliate of the Managing  General  Partner  provided such
management services for the years ended December 31, 2001 and 2000.

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 of similar  properties  resulting  from  various  market
conditions, increases/decreases in unemployment or population shifts, changes in
the availability of permanent mortgage funds, 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 property
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.

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 at the  Partnership's  property 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 the total apartment units in
the United States and  competition  for the  apartments  is local.  In addition,
various limited  partnerships  have been formed by the Managing  General Partner
and/or  affiliates  to engage in  business  which  may be  competitive  with the
Partnership.

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

Item 2.     Description of Property

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

<TABLE>
<CAPTION>

                                Date of
Property                        Purchase          Type of Ownership           Use

Versailles on the Lake
<S>                             <C>   <C>
 Apartments                     04/05/84    Fee ownership subject to      Apartment
  Ft. Wayne, Indiana                        first and second mortgages.   156 units
</TABLE>

Sale of Property

On July 12, 2001, the Partnership  sold Ashley Woods  Apartments to an unrelated
third party, for a gross sales price of $12,015,000.  The net proceeds  realized
by the Partnership were approximately  $3,655,000 after payment of closing costs
and the  assumption of the mortgage  encumbering  the property by the purchaser.
The Partnership  realized a gain of approximately  $7,366,000 as a result of the
sale.  In addition,  the  Partnership  recorded an  extraordinary  loss on early
extinguishment of debt of approximately  $82,000 as a result of the write-off of
unamortized loan costs.

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    Useful               Federal
Property                   Value    Depreciation     Life    Method     Tax Basis
                              (in thousands)                         (in thousands)

Versailles on the Lake
<S>                       <C>          <C>         <C>                    <C>
 Apartments               $ 5,038      $ 3,276     5-25 yrs    S/L        $ 857
</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 Property Indebtedness

The  following  table  sets  forth  certain  information  relating  to the loans
encumbering the Registrant's property.

<TABLE>
<CAPTION>

                           Principal                                      Principal
                           Balance At    Stated                            Balance
                          December 31,  Interest   Period     Maturity      Due At
        Property              2001        Rate    Amortized     Date     Maturity (2)
                         (in thousands)                                 (in thousands)
Versailles on the Lake
 Apartments
<S>                         <C>          <C>      <C>         <C>   <C>    <C>
  1st mortgage              $ 2,163      7.60%    21.42 yrs   11/15/02     $ 2,071
  2nd mortgage                   88      7.60%       (1)      11/15/02          88
                              2,251                                        $ 2,159
Less unamortized
  discounts                     (22)
  Total                     $ 2,229
</TABLE>

(1)   The loan requires interest only payments.

(2)   See "Item 7. Financial  Statements - Note B" for information  with respect
      to the Registrant's ability to prepay the loans and other specific details
      about the loans.

The Partnership exercised an interest rate buy-down option for Versailles on the
Lake  Apartments  reducing the stated rate from 8.76% to 7.60% during 1992.  The
fee for the interest  rate  reduction  was  approximately  $205,000 and is being
amortized as a loan discount using the effective  interest  method over the term
of the loan.  The discount fee is reflected as a reduction of the mortgage  note
payable and increases the effective rate of the debt to 8.76%.

Rental Rates and Occupancy

Average annual rental rates and occupancy for 2001 and 2000 for the property:

                                           Average Annual           Average
                                            Rental Rates           Occupancy
                                             (per unit)
 Property                                 2001        2000      2001       2000

 Versailles on the Lake Apartments       $6,783      $6,548      90%        94%

The Managing General Partner  attributes the decrease in occupancy at Versailles
on the Lake  Apartments  to increased  market  competition  and  increased  home
purchases due to lower interest rates.

As noted under "Item 1.  Description of Business",  the real estate  industry is
highly   competitive.   The  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 property is an apartment
complex which leases units for terms of one year or less. No residential  tenant
leases 10% or more of the  available  space.  The  property is in good  physical
condition,  subject to normal  depreciation and  deterioration as is typical for
assets of this type and age.

Real Estate Taxes and Rates

Real estate taxes and rates in 2001 for the property were:

                                                 2001            2001
                                                 Taxes           Rate
                                            (in thousands)

Versailles on the Lake Apartments                $ 83*           9.01%

*Amount per 2000 billings.  Taxes are paid a year in arrears.

Capital Improvements

Ashley Woods Apartments

Prior to its sale, the Partnership completed  approximately  $117,000 of capital
improvements at the property, consisting primarily of water heater replacements,
cabinet and countertop replacements, appliances, floor covering replacement, and
structural  improvements.  These  improvements  were funded from  operations and
replacement  reserves.  The  Partnership  sold this property to an  unaffiliated
third party on July 12, 2001.

Versailles on the Lake Apartments

During the year ended December 31, 2001, the Partnership completed approximately
$118,000  of capital  improvements  at the  property,  consisting  primarily  of
plumbing upgrades,  interior building improvements,  air conditioning units, and
floor covering  replacement.  These improvements were funded from operations and
replacement  reserves.  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 $300 per unit or $46,800.  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.

The capital improvements planned for the year 2002 at the Partnership's property
will be  incurred  only to the  extent of cash  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.

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. (the "Nuanes action") 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  Managing  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 series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged  into AIMCO.  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.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Managing General Partner and affiliated  defendants filed a
demurrer to the fourth amended complaint,  which was heard on December 11, 2001.
On February 2, 2002,  the Court served its order  granting in part the demurrer.
The  Court has  dismissed  without  leave to amend  certain  of the  plaintiffs'
claims.  On February 11, 2002,  plaintiffs  filed a motion  seeking to certify a
putative  class  comprised of all  non-affiliated  persons who own or have owned
units  in  the  partnerships.   The  Managing  General  Partner  and  affiliated
defendants  intend  to  oppose  the  motion  and are  scheduled  to  file  their
opposition  brief on March 26, 2002. A hearing on the motion has been  scheduled
for April 29, 2002. The Court has set the matter for trial in January 2003.

During the third  quarter of 2001, a complaint  (the "Heller  action") was filed
against  the same  defendants  that are named in the  Nuanes  action,  captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended  complaint.  The first amended complaint in the Heller action is
brought as a purported  derivative  action,  and asserts  claims for among other
things  breach  of  fiduciary  duty;  unfair  competition;   conversion,  unjust
enrichment;  and judicial  dissolution.  Plaintiffs in the Nuanes action filed a
motion to  consolidate  the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed  without  leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Managing  General  Partner and affiliated
defendants  moved to strike the first  amended  complaint  in its  entirety  for
violating  the Court's July 10, 2001 order  granting in part and denying in part
defendants'  demurrer in the Nuanes action, or alternatively,  to strike certain
portions of the complaint based on the statute of limitations.  Other defendants
in the action  demurred to the fourth  amended  complaint,  and,  alternatively,
moved to strike the complaint. On December 11, 2001, the court heard argument on
the motions  and took the matters  under  submission.  On February 4, 2002,  the
Court  served  notice of its order  granting  defendants'  motion to strike  the
Heller complaint as a violation of its July 10, 2001 order in the Nuanes action.

The Managing  General Partner does not anticipate that any costs,  whether legal
or  settlement  costs,  associated  with  these  cases will be  material  to the
Partnership's overall operations.

The Partnership is unaware of any 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, 2001, no matters were submitted to a vote
of Unit holders through the solicitation of proxies or otherwise.


                                     PART II

Item 5.     Market for the Partnership Equity and Related Partner Matters

The Partnership,  a publicly-held  limited partnership,  offered and sold 751.84
Limited  Partnership  Units  aggregating  $15,008,000.  As of December 31, 2001,
there were 583 holders of record owning an aggregate of 751.59 Units. Affiliates
of the Managing General Partner owned 313 units or 41.65% at December 31, 2001.

The following table sets forth the distributions made by the Partnership for the
years ended December 31, 2001 and 2000 and subsequent to December 31, 2001:

                                                  Distributions
                                            Aggregate        Per Unit
                                          (in thousands)

          01/01/00 - 12/31/00              $   430 (1)       $ 546.84
          01/01/01 - 12/31/01                3,653 (2)        4,832.42
         Subsequent to 12/31/01                385 (3)          512.25

(1)   Consists of approximately $381,000 of cash from operations  (approximately
      $362,000 to the limited partners) and  approximately  $49,000 of a portion
      of the previously undistributed net proceeds from the mortgage refinancing
      of Ashley Woods Apartments  during 1997 which was paid entirely to limited
      partners.

(2)   Consists of approximately $411,000 of cash from operations  (approximately
      $390,000 to the limited partners) and approximately $3,242,000 of proceeds
      from the sale of  Ashley  Woods  Apartments,  all of which was paid to the
      limited partners.

(3)   Consists  of  previously  undistributed  proceeds  from the sale of Ashley
      Woods Apartments, all of which was paid to the limited partners.

Future cash  distributions  will depend on the levels of net cash generated from
operations, the availability of cash reserves and the timing of debt maturities,
refinancings,  and/or  property sale. The  Partnership is currently  planning on
refinancing  the debt  encumbering  its sole  investment  property  prior to its
November 2002 maturity.  The  Partnership's  cash available for  distribution is
reviewed  on a monthly  basis.  There  can be no  assurance,  however,  that the
Partnership  will  generate  sufficient  funds from  operations  after  required
capital improvements to permit additional  distributions to its partners in 2002
or subsequent  periods.  Distributions  may be restricted by the requirements to
deposit net operating  income (as defined in the mortgage note) into the Reserve
Account until the Reserve Account is funded in an amount equal to $400 to $1,000
per apartment unit for Versailles on the Lake  Apartments for a total of $62,400
to  $156,000.  As  of  December  31,  2001,  the  Partnership  had  deposits  of
approximately $63,000 in the Reserve Account.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership, AIMCO and its affiliates owned 313 limited partnership units in the
Partnership representing 41.65% of the outstanding units at December 31, 2001. 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  voting on certain  amendments to the  Partnership  Agreement and
voting to remove the Managing General  Partner.  As a result of its ownership of
41.65% of the  outstanding  units,  AIMCO is in a position to influence all such
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
disclosures  contained in this Form 10-KSB and other filings with the Securities
and Exchange Commission made by the Registrant from time to time. The discussion
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
operation.  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  Partnership  realized net income of  approximately  $7,004,000 for the year
ended December 31, 2001 compared to a net loss of approximately  $19,000 for the
year ended  December 31, 2000. The increase in net income is primarily due to an
increase  in total  revenues  resulting  from the gain on sale of  Ashley  Woods
Apartments in July 2001 partially offset by the extraordinary  loss on the early
extinguishment  of debt of  Ashley  Woods  Apartments.  On July  12,  2001,  the
Partnership  sold Ashley Woods  Apartments  to an unrelated  third party,  for a
gross sale price of  $12,015,000.  The net proceeds  realized by the Partnership
were approximately  $3,655,000 after payment of closing costs and the assumption
of the mortgage  encumbering  the  property by the  purchaser.  The  Partnership
realized  a gain  of  approximately  $7,366,000  as a  result  of the  sale.  In
addition,   the  Partnership   recorded  an  extraordinary  loss  on  the  early
extinguishment of debt of approximately  $82,000 as a result of the write-off of
unamortized loan costs.

Excluding the impact of the sale of Ashley Woods  Apartments and that property's
operations for 2001 and 2000, the  Partnership  had net losses of  approximately
$238,000 for the year ended December 31, 2001 and approximately $197,000 for the
year ended December 31, 2000.  This increase in net loss is due to a decrease in
total  revenues.  Total  revenues  decreased  due to a decrease in rental income
which was  partially  offset  by an  increase  in other  income.  Rental  income
decreased  primarily due to increased  concessions  and  decreased  occupancy at
Versailles  on the Lake  Apartments,  partially  offset  by an  increase  in the
average  rental rate at the property.  The increase in other income is primarily
due to increases in utility reimbursements and interest income, partially offset
by a decrease in lease cancellation fees at the property.

Excluding  the impact of the sale and  operations  of Ashley  Woods  Apartments,
total  expenses  remained  relatively  constant for the year ended  December 31,
2001, as an increase in depreciation expense was offset by decreases in interest
and  general  and  administrative   expenses.   Depreciation  expense  increased
primarily due to property  improvements and replacements  placed into service at
the property during 2001.  Interest expense decreased primarily due to scheduled
payments  made on the  mortgages  encumbering  the  property,  which reduced the
carrying balance of the Partnership's  mortgage debt. General and administrative
expenses  decreased due to a decrease in legal fees and  decreased  professional
expenses associated with the management of the Partnership.  Included in general
and  administrative  expenses at both December 31, 2001 and 2000 are  management
reimbursements  to the General Partner allowed under the Partnership  Agreement.
Also included in general and  administrative  expenses are costs associated with
the quarterly and annual  communications  with investors and regulatory agencies
and the annual  audit  required  by the  Partnership  agreement.  Operating  and
property tax expenses remained relatively constant for the comparable periods.

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 expenses.  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 to offset softening market conditions, there is no guarantee that the
Managing General Partner will be able to sustain such a plan.

Liquidity and Capital Resources

At  December  31,  2001,  the  Partnership  had  cash and  cash  equivalents  of
approximately  $474,000 compared to approximately $681,000 at December 31, 2000.
The decrease in cash and cash  equivalents of  approximately  $207,000 is due to
approximately  $3,810,000  of  cash  used  in  financing  activities  which  was
partially  offset by  approximately  $3,440,000  of cash  provided by  investing
activities and approximately  $163,000 of cash provided by operating activities.
Cash provided by investing activities consisted of net proceeds from the sale of
Ashley  Woods  Apartments  and, to a lesser  extent,  net  receipts  from escrow
accounts  maintained  by the  mortgage  lender,  partially  offset  by  property
improvements  and  replacements.  Cash used in  financing  activities  consisted
primarily of  distributions to the partners,  and to a lesser extent,  principal
payments made on the mortgages  encumbering  the  Registrant's  properties.  The
Partnership 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 property to adequately maintain the physical assets
and other operating  needs of the Registrant and to comply with Federal,  state,
and local  legal and  regulatory  requirements.  The  Partnership  is  currently
evaluating the capital  improvement needs of its property for the upcoming year.
The  minimum  amount to be  budgeted is expected to be $300 per unit or $46,800.
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.  The capital  expenditures will be incurred only
if cash is available from operations or from 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 and the upcoming  maturity of debt) of
the Registrant.  The mortgage indebtedness of approximately  $2,229,000,  net of
discount,  is  amortized  over 21 years with balloon  payments due in 2002.  The
Managing General Partner will attempt to refinance such indebtedness and/or sell
the property prior to such maturity  date. If the property  cannot be refinanced
or sold for a sufficient  amount,  the Registrant will risk losing such property
through foreclosure.

During the year ended December 31, 2001, the Partnership  paid  distributions of
approximately  $3,653,000  (approximately  $3,632,000 to the limited partners or
$4,832.42  per  limited  partnership  unit)  of  which  approximately   $411,000
(approximately   $390,000  to  the  limited  partners  or  $518.90  per  limited
partnership unit) represented cash from operations and approximately  $3,242,000
($4,313.52 per limited  partnership unit) represented  proceeds from the sale of
Ashley  Woods  Apartments  in July 2001 which was paid  entirely  to the limited
partners.  Subsequent to December 31, 2001, the Partnership  declared and paid a
distribution  from  previously  undistributed  proceeds  from the sale of Ashley
Woods Apartments of  approximately  $385,000,  ($512.25 per limited  partnership
unit),  all paid to the limited  partners.  During the year ended  December  31,
2000,   the   Partnership   paid   distributions   of   approximately   $430,000
(approximately   $411,000  to  the  limited  partners  or  $546.84  per  limited
partnership unit) of which approximately $49,000 ($65.19 per limited partnership
unit)  represented a portion of the previously  undistributed  net proceeds from
the mortgage  refinancing of Ashley Woods Apartments  during 1997 which was paid
entirely to the  limited  partners  and  approximately  $381,000  (approximately
$362,000 to the limited  partners or $481.65 per limited  partnership  unit) was
paid from operations. Future cash distributions will depend on the levels of net
cash generated from operations, the availability of cash reserves and the timing
of debt  maturities,  refinancings,  and/or  property sale.  The  Partnership is
currently  planning on  refinancing  the debt  encumbering  its sole  investment
property prior to its November 2002 maturity.  The Partnership's  cash available
for  distribution  is reviewed on a monthly  basis.  There can be no  assurance,
however,  that the Partnership  will generate  sufficient  funds from operations
after required capital  improvements to permit  additional  distributions to its
partners in 2002 or subsequent  periods.  Distributions may be restricted by the
requirements  to deposit net operating  income (as defined in the mortgage note)
into the Reserve  Account until the Reserve Account is funded in an amount equal
to $400 to $1,000 per apartment unit for Versailles on the Lake Apartments for a
total of $62,400 to  $156,000.  As of December  31, 2001,  the  Partnership  had
deposits of approximately $63,000 in the Reserve Account.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership, AIMCO and its affiliates owned 313 limited partnership units in the
Partnership representing 41.65% of the outstanding units at December 31, 2001. 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  voting on certain  amendments to the  Partnership  Agreement and
voting to remove the Managing General  Partner.  As a result of its ownership of
41.65% of the  outstanding  units,  AIMCO is in a position to influence all such
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.

Recent Accounting Pronouncements

In August 2001, the Financial  Accounting  Standards  Board issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived  Assets".  SFAS No. 144
provides  accounting  guidance for  financial  accounting  and reporting for the
impairment or disposal of long-lived  assets.  SFAS No. 144 supersedes  SFAS No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to be Disposed Of". SFAS No. 144 is effective for fiscal years  beginning
after December 15, 2001. The Managing  General  Partner does not anticipate that
its adoption will have a material effect on the financial position or results of
operations of the Partnership.

Item 7.     Financial Statements

DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.

LIST OF FINANCIAL STATEMENTS

      Report of Ernst & Young LLP, Independent Auditors

      Consolidated Balance Sheet - December 31, 2001

      Consolidated Statements of Operations - Years ended December 31, 2001 and
      2000

      Consolidated  Statement  of Changes  in  Partners'  Deficit - Years  ended
      December 31, 2001 and 2000

      Consolidated Statements of Cash Flows - Years ended December 31, 2001 and
      2000

      Notes to Consolidated Financial Statements


                 Report of Ernst & Young LLP, Independent Auditors



The Partners
Davidson Diversified Real Estate I, L.P.


We  have  audited  the  accompanying  consolidated  balance  sheet  of  Davidson
Diversified  Real  Estate I, L.P.  as of  December  31,  2001,  and the  related
consolidated  statements of operations,  changes in partners' deficit,  and cash
flows for each of the two years in the period ended  December  31,  2001.  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  Davidson
Diversified  Real Estate I, L.P.  at December  31,  2001,  and the  consolidated
results  of its  operations  and its cash flows for each of the two years in the
period  ended  December 31,  2001,  in  conformity  with  accounting  principles
generally accepted in the United States.



                                                            /s/ERNST & YOUNG LLP



Greenville, South Carolina
February 15, 2002

                      DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.

                           CONSOLIDATED BALANCE SHEET
                          (in thousands, except unit data)

                                December 31, 2001


<TABLE>
<CAPTION>

Assets
<S>                                                            <C>           <C>
   Cash and cash equivalents                                                 $  474
   Receivables and deposits                                                      10
   Restricted escrow                                                             63
   Other assets                                                                  18
   Investment property (Notes B & F):
      Land                                                     $  191
      Buildings and related personal property                   4,847
                                                                5,038
      Less accumulated depreciation                            (3,276)        1,762

                                                                            $ 2,327
Liabilities and Partners' Deficit

Liabilities
   Accounts payable                                                           $  18
   Tenant security deposit liabilities                                           13
   Accrued property taxes                                                        83
   Other liabilities                                                             59
   Due to affiliate (Note E)                                                    321
   Mortgage notes payable (Note B)                                            2,229

Partners' Deficit
   General partners                                             $ --
   Limited partners (751.59 units issued and
      outstanding)                                               (396)         (396)

                                                                            $ 2,327

            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

                      DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                          (in thousands, except unit data)



                                                             Years Ended
                                                             December 31,
                                                            2001       2000

Revenues:
  Rental income                                           $ 1,985     $ 3,139
  Other income                                                 223        289
  Gain on sale of investment property (Note D)               7,366         --
         Total revenues                                      9,574      3,428

Expenses:
  Operating                                                  1,103      1,462
  General and administrative                                   178        191
  Depreciation                                                 507        722
  Interest                                                     522        809
  Property taxes                                               178        263
         Total expenses                                      2,488      3,447

Income (loss) before extraordinary item                      7,086       (19)
Extraordinary loss on early extinguishment of debt             (82)        --

Net income (loss)                                          $ 7,004     $ (19)

Net income (loss) allocated to general
  partners                                                 $   166     $  (1)
Net income (loss) allocated to limited
  partners                                                   6,838       (18)

                                                           $ 7,004     $ (19)
Per limited partnership unit:
  Income (loss) before extraordinary item                $9,207.15   $(23.95)
  Extraordinary loss on early extinguishment
   of debt                                                 (109.10)        --

Net income (loss)                                        $9,098.05   $(23.95)

Distributions per limited partnership unit               $4,832.42    $546.84



            See Accompanying Notes to Consolidated Financial Statements

                      DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.

              CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
                          (in thousands, except unit data)


<TABLE>
<CAPTION>

                                         Limited
                                       Partnership    General     Limited
                                          Units       Partners   Partners     Total

<S>                                       <C>           <C>       <C>        <C>
Original capital contributions            751.84        $ 1       $15,008    $15,009

Partners' deficit at
  December 31, 1999                       751.59       $ (125)    $(3,173)   $(3,298)

Distributions to partners                     --          (19)       (411)      (430)

Net loss for the year ended
  December 31, 2000                           --           (1)        (18)       (19)

Partners' deficit at
  December 31, 2000                       751.59         (145)     (3,602)    (3,747)

Distributions to partners                     --          (21)     (3,632)    (3,653)

Net income for the year ended
  December 31, 2001                           --          166       6,838      7,004

Partners' deficit at
  December 31, 2001                       751.59        $ --      $ (396)     $ (396)


            See Accompanying Notes to Consolidated Financial Statements
</TABLE>


                      DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (in thousands)

<TABLE>
<CAPTION>

                                                                      Years Ended
                                                                      December 31,
                                                                    2001        2000
Cash flows from operating activities:
<S>                                                               <C>          <C>
  Net income (loss)                                               $ 7,004      $ (19)
  Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:
     Depreciation                                                     507          722
     Amortization of discounts and loan costs                          47           60
     Extraordinary loss on early extinguishment of debt                82           --
     Gain on sale of investment property                           (7,366)          --
     Change in accounts:
      Receivables and deposits                                         13          179
      Other assets                                                     24           (3)
      Accounts payable                                                (53)          11
      Tenant security deposit liabilities                              (1)          24
      Accrued property taxes                                          (89)          10
      Other liabilities                                                (5)         107

        Net cash provided by operating activities                     163        1,091

Cash flows from investing activities:
  Property improvements and replacements                             (235)        (604)
  Net receipts from restricted escrows                                 20          120
  Proceeds from sale of investment property, net                    3,655           --

        Net cash provided by (used in) investing activities         3,440         (484)

Cash flows from financing activities:
  Payments on mortgage notes payable                                 (157)        (177)
  Distributions to partners                                        (3,653)        (430)

        Net cash used in financing activities                      (3,810)        (607)

Net decrease in cash and cash equivalents                            (207)          --
Cash and cash equivalents at beginning of period                      681          681
Cash and cash equivalents at end of period                         $ 474        $ 681

Supplemental disclosure of cash flow information:
  Cash paid for interest                                           $ 522        $ 704
Supplemental disclosure of non-cash activity:
  Extinguishment of debt and other liabilities upon sale of
   Ashley Woods Apartments                                        $ 8,007       $ --


            See Accompanying Notes to Consolidated Financial Statements
</TABLE>


                      DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2001


Note A - Organization and Significant Accounting Policies

Organization:  Davidson  Diversified  Real Estate I, L.P. (the  "Partnership" or
"Registrant"),  is a Delaware limited partnership organized on January 14, 1983,
to acquire and operate  residential real estate  properties.  As of December 31,
2001, the Partnership operates one residential  property,  located in Ft. Wayne,
Indiana.  The  Partnership's  managing  general partner is Davidson  Diversified
Properties,  Inc. (the "Managing General Partner"). The Managing General Partner
is a subsidiary of Apartment  Investment and  Management  Company  ("AIMCO"),  a
publicly traded real estate  investment  trust. The director and officers of the
Managing  General  Partner  also  serve as  executive  officers  of  AIMCO.  The
Partnership  Agreement provides that the Partnership is to terminate on December
31, 2007 unless terminated prior to such date.

Principles of Consolidation:  The consolidated  financial statements include the
Partnership's  100% membership  interest in Ashley Woods L.L.C. As a result, the
Partnership  consolidates  its interest in Ashley Woods  whereby all accounts of
Ashley  Woods are  included  in the  consolidated  financial  statements  of the
Partnership with inter-entity accounts being eliminated.

Allocations to Partners: Net income (loss) of the Partnership and taxable income
(loss) are allocated 95% to the limited partners and 5% to the general partners.
Distributions  of  available  cash (cash flow) are  allocated  among the limited
partners and the general  partners in  accordance  with the agreement of limited
partnership.

Allocation of net income for tax purposes, arising from the occurrence of a sale
or refinancing shall be allocated as follows:

      First, an amount equal to the aggregate deficit in the capital accounts of
      the general and limited partners having deficits in their capital accounts
      shall be  allocated  to each such partner in the same ratio as the deficit
      such  partner's  capital  account  bears  to the  aggregate  of  all  such
      partner's deficits.

      Second, to the limited partners in an amount equal to the cash distributed
      to them from a sale or refinancing.

      Third,  the remainder,  if any, 5% to the general  partners and 95% to the
      limited partners.

Distributions  of cash from sales or  refinancings  shall be  distributed in the
following order of priority.

      First,  to the limited  partners,  an amount which when added to all prior
      distributions  of cash  from  sales  or  refinancings  shall  equal  their
      original invested  capital,  plus an amount which, when added to all prior
      distributions to the limited partners  (excluding  distributions which are
      deducted in the calculation of adjusted invested  capital),  will equal 8%
      per annum  cumulative  noncompounded on their adjusted  invested  capital,
      commencing  the last day of the  calendar  quarter in which  each  limited
      partner is admitted to the Partnership through the date of payment.

      Second,  to an affiliate of the general  partners,  an amount equal to its
      subordinated real estate  commission,  which fee is equal to the lesser of
      (i) 3% of the gross  sales  price of a property  or (ii)  one-half  of the
      competitive commission, as defined, but may only be paid after the limited
      partners have received  their priority  distributions  as discussed in the
      previous paragraph.

      Third, 85% of the remaining cash from sales or refinancings to the limited
      partners and 15% of the remaining cash from sales or  refinancings  to the
      general partners.

Depreciation:  Depreciation  is  provided by the  straight-line  method over the
estimated lives of the investment  property and related personal  property.  For
Federal income tax purposes,  the  accelerated  cost recovery method is used for
real property over 18 years 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. 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  additions  over 27 1/2 years,  and (2) personal  property
additions over 5 years.

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.  For the years ended
December  31,  2001 and  2000,  no  adjustments  for  impairment  of value  were
necessary. See "Recent Accounting Pronouncements" below.

Cash and Cash Equivalents: Includes cash on hand and in banks. At certain times,
the amount of cash deposited at a bank may exceed the limit on insured deposits.
Cash  balances  included  approximately  $467,000 at December  31, 2001 that are
maintained by the affiliated management company on behalf of affiliated entities
in cash concentration accounts.

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

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.

Advertising:  The  Partnership  expenses the costs of  advertising  as incurred.
Advertising expense,  included in operating expenses,  was approximately $56,000
and $76,000 for the years ended December 31, 2001 and 2000, respectively.

Restricted Escrow:

      Reserve  Account:  The  Partnership  has a  general  reserve  account  for
      Versailles  on  the  Lake  Apartments  to  cover  necessary   repairs  and
      replacements  of  existing  improvements,   debt  service,   out-of-pocket
      expenses  incurred for ordinary and necessary  administrative  tasks,  and
      payment of real  property  taxes and insurance  premiums.  At December 31,
      2001, this reserve totaled approximately $63,000.

Loan Costs: At December 31, 2001, loan costs of approximately  $112,000,  net of
accumulated amortization of approximately $102,000, are included in other assets
and are being  amortized on a straight-line  basis as interest  expense over the
term of the respective loan.

Leases: The Partnership  generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. In addition,
it is the  Partnership's  policy to offer rental  concessions  during periods of
declining  occupancy  or in response  to heavy  competition  from other  similar
complexes  in the  area.  Concessions  are  charged  against  rental  income  as
incurred.

Fair Value of Financial Instruments: SFAS No. 107, "Disclosures about Derivative
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  amount of its  financial  instruments  (except for long term
debt)  approximates  their fair value due to the short  term  maturity  of these
instruments.  The  fair  value  of  the  Partnership's  long  term  debt,  after
discounting the scheduled loan payments to maturity,  approximates  its carrying
balance.

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 required that those enterprises report selected information about
operating segments in interim financial reports.  It also established  standards
for related disclosures about products and services, geographic areas, and major
customers.  As defined in SFAS No. 131, the  Partnership has only one reportable
segment.  The Managing General Partner believes that  segment-based  disclosures
will  not  result  in a  more  meaningful  presentation  than  the  consolidated
financial statements as currently presented.

Recent Accounting Pronouncements

In August 2001, the Financial  Accounting  Standards  Board issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived  Assets".  SFAS No. 144
provides  accounting  guidance for  financial  accounting  and reporting for the
impairment or disposal of long-lived  assets.  SFAS No. 144 supersedes  SFAS No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to be Disposed Of". SFAS No. 144 is effective for fiscal years  beginning
after December 15, 2001. The Managing  General  Partner does not anticipate that
its adoption will have a material effect on the financial position or results of
operations of the Partnership.

Note B - Mortgage Notes Payable

<TABLE>
<CAPTION>

                          Principal     Monthly                           Principal
                         Balance At     Payment     Stated                 Balance
                        December 31,   Including   Interest   Maturity      Due At
       Property             2001        Interest     Rate       Date       Maturity
                             (in thousands)                             (in thousands)
Versailles on the Lake
 Apartments
<S>                        <C>           <C>        <C>       <C>   <C>    <C>
  1st mortgage             $ 2,163       $  22      7.60%     11/15/02     $ 2,071
  2nd mortgage                  88       $   1(1)   7.60%     11/15/02          88
                             2,251       $  23                             $ 2,159
Less unamortized
  Discounts                   (22)

Totals                     $ 2,229
</TABLE>

(1)   Interest only payments

The  mortgage  notes  payable  are  non-recourse  and are secured by the related
property and  improvements of the Partnership and by pledge of revenues from the
apartment  property.  The notes require prepayment  penalties if repaid prior to
maturity and prohibit resale of the property subject to existing indebtedness.

The Partnership exercised an interest rate buy-down option for Versailles on the
Lake  Apartments  reducing the stated rate from 8.76% to 7.60% during 1992.  The
fee for the interest  rate  reduction  was  approximately  $205,000 and is being
amortized as a loan discount using the effective  interest  method over the term
of the loan.  The discount fee is reflected as a reduction of the mortgage  note
payable and increases the effective rate of the debt to 8.76%.

Scheduled  principal  payments  of the  mortgage  notes  payable  subsequent  to
December 31, 2001, are as follows (in thousands):

                               2002          $ 2,251

The  Partnership  is  currently  planning on  refinancing  the debt  encumbering
Versailles on the Lake Apartments prior to its November 2002 maturity.

Note C - Income Taxes

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

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

                                                2001          2000
Net income (loss) as reported               $    7,004       $ (19)
Add (deduct):
  Depreciation differences                         (27)         (25)
  Unearned income                                  (63)          --
  Miscellaneous                                     37           11
Gain on sale of property                           818           --
Federal taxable income (loss)               $    7,769       $ (33)
Federal taxable income (loss) per
  limited partnership unit                  $10,075.73      $(41.83)

The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net liabilities at December 31, 2001 (in thousands):

                                                         2001
Net  liabilities  as  reported  $ (396)  Differences  in  basis  of  assets  and
liabilities:
  Buildings and land                                       100
  Accumulated depreciation                              (1,005)
  Other                                                    104
Net liabilities - Federal tax basis                   $ (1,197)

Note D - Sale of Investment Property

On July 12, 2001, the Partnership  sold Ashley Woods  Apartments to an unrelated
third party, for a gross sale price of $12,015,000. The net proceeds realized by
the Partnership were approximately $3,655,000 after payment of closing costs and
the assumption of the mortgage  encumbering  the property by the purchaser.  The
Partnership realized a gain of approximately $7,366,000 as a result of the sale.
In  addition,   the  Partnership   recorded  an  extraordinary   loss  on  early
extinguishment of debt of approximately  $82,000 as a result of the write-off of
unamortized loan costs.

Note E - 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.  Affiliates  of the Managing  General  Partner  provide
property  management  services to the  Partnership.  The  Partnership  Agreement
provides for (i) 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  affiliates of the Managing  General
Partner during each of the years ended December 31, 2001 and 2000:

                                                   2001        2000
                                                    (in thousands)
Property management fees (included in
   operating expenses)                             $125        $174

Reimbursement for services of affiliates
   (included in investment properties and
   general and administrative expenses)             154         114

During the years ended  December 31, 2001 and 2000,  affiliates  of the Managing
General  Partner were entitled to receive 5% of gross  receipts from both of the
Partnership's  properties  as  compensation  for providing  property  management
services.  The Partnership  paid to such affiliates  approximately  $125,000 and
$174,000 for the years ended December 31, 2001 and 2000, respectively.

Affiliates of the Managing General Partner received reimbursement of accountable
administrative expenses amounting to approximately $154,000 and $114,000 for the
years ended December 31, 2001 and 2000, respectively.  Included in these amounts
are fees related to construction management services provided by an affiliate of
the Managing General Partner of  approximately  $49,000 and $6,000 for the years
ended  December 31, 2001 and 2000,  respectively.  The  construction  management
service fees are  calculated  based on a percentage of current and certain prior
year additions to investment property and are being depreciated over 15 years.

The  Partnership  is liable to an  affiliate  of the  Managing  General  Partner
through  common  ownership  for  real  estate  commissions  in  the  amounts  of
approximately  $125,000 for Revere Village Apartments and approximately $196,000
for Essex  Apartments  which were sold in previous  years.  The total  amount of
approximately  $321,000 is included on the consolidated balance sheet as "Due to
affiliate".  Payment of the commissions  will not be made to the affiliate until
the  limited  partners  have  received  distributions  equal to  their  original
invested capital,  plus 8% per annum cumulative  non-compounded  return on their
adjusted invested capital  commencing on the last day of the calendar quarter in
which each limited partner was admitted to the  Partnership  through the date of
payment.

Beginning in 2001, the  Partnership  began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally  self-insured for a
portion of losses and  liabilities  related  to workers  compensation,  property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO  limits  through  insurance  policies  obtained  by  AIMCO  from  insurers
unaffiliated  with the Managing General Partner.  During the year ended December
31, 2001, the Partnership  paid AIMCO and its affiliates  approximately  $41,000
for insurance coverage and fees associated with policy claims administration.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership, AIMCO and its affiliates owned 313 limited partnership units in the
Partnership representing 41.65% of the outstanding units at December 31, 2001. 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  voting on certain  amendments to the  Partnership  Agreement and
voting to remove the Managing General  Partner.  As a result of its ownership of
41.65% of the  outstanding  units,  AIMCO is in a position to influence all such
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 F - Real Estate and Accumulated Depreciation

<TABLE>
<CAPTION>

                                                 Initial Cost
                                                To Partnership
                                                (in thousands)

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

Versailles on the Lake
<S>                           <C>           <C>          <C>              <C>
 Apartments                   $ 2,251       $ 191        $ 3,847          $ 1,000
</TABLE>

<TABLE>
<CAPTION>

                        Gross Amount At Which
                               Carried
                         At December 31, 2001
                            (in thousands)

                              Buildings
                                 And                           Date of
                               Personal          Accumulated  Construc-   Date    Depreciable
     Description       Land    Property   Total  Depreciation   tion    Acquired  Life-Years
                                               (in thousands)
Versailles on the
<S>                        <C>     <C>       <C>       <C>          <C>       <C>        <C>
Lake Apartments            $ 191   $ 4,847   $ 5,038   $ 3,276      1970      04/84      5-25
</TABLE>

Reconciliation of "Real Estate and Accumulated Depreciation" (in thousands):

                                               Year Ended December 31,
                                                 2001          2000
Investment Properties

Balance at beginning of year                    $14,929       $14,325
    Sale of investment property                 (10,126)           --
    Property improvements                           235           604
Balance at end of year                          $ 5,038       $14,929

Accumulated Depreciation

Balance at beginning of year                    $ 8,599       $ 7,877
    Sale of investment property                  (5,830)           --
    Depreciation expense                            507           722
Balance at end of year                          $ 3,276       $ 8,599


The  aggregate  cost of the real  estate  for  Federal  income tax  purposes  at
December  31,  2001  and  2000  is  approximately  $5,138,000  and  $15,178,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at  December  31, 2001 and 2000 is  approximately  $4,281,000  and  $10,959,000,
respectively.

Note G - Distributions

During the year ended December 31, 2001, the Partnership  paid  distributions of
approximately  $3,653,000  (approximately  $3,632,000 to the limited partners or
$4,832.42  per  limited  partnership  unit)  of  which  approximately   $411,000
(approximately   $390,000  to  the  limited  partners  or  $518.90  per  limited
partnership unit) represented cash from operations and approximately  $3,242,000
($4,313.52 per limited  partnership unit) represented  proceeds from the sale of
Ashley  Woods  Apartments  in July 2001 which was paid  entirely  to the limited
partners.  Subsequent to December 31, 2001, the Partnership  declared and paid a
distribution  from  previously  undistributed  proceeds  from the sale of Ashley
Woods  Apartments of  approximately  $385,000  ($512.25 per limited  partnership
unit),  all paid to the limited  partners.  During the year ended  December  31,
2000,   the   Partnership   paid   distributions   of   approximately   $430,000
(approximately   $411,000  to  the  limited  partners  or  $546.84  per  limited
partnership unit) of which approximately $49,000 ($65.19 per limited partnership
unit)  represented a portion of the previously  undistributed  net proceeds from
the mortgage  refinancing of Ashley Woods Apartments  during 1997 which was paid
entirely to the  limited  partners  and  approximately  $381,000  (approximately
$362,000 to the limited  partners or $481.65 per limited  partnership  unit) was
paid from  operations.  Distributions  may be restricted by the  requirements to
deposit net operating  income (as defined in the mortgage note) into the Reserve
Account until the Reserve Account is funded in an amount equal to $400 to $1,000
per apartment unit for Versailles on the Lake  Apartments for a total of $62,400
to  $156,000.  As  of  December  31,  2001,  the  Partnership  had  deposits  of
approximately $63,000 in the Reserve Account.

Note H - 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. (the "Nuanes action") 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  Managing  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 series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged  into AIMCO.  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.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Managing General Partner and affiliated  defendants filed a
demurrer to the fourth amended complaint,  which was heard on December 11, 2001.
On February 2, 2002,  the Court served its order  granting in part the demurrer.
The  Court has  dismissed  without  leave to amend  certain  of the  plaintiffs'
claims.  On February 11, 2002,  plaintiffs  filed a motion  seeking to certify a
putative  class  comprised of all  non-affiliated  persons who own or have owned
units  in  the  partnerships.   The  Managing  General  Partner  and  affiliated
defendants  intend  to  oppose  the  motion  and are  scheduled  to  file  their
opposition  brief on March 26, 2002. A hearing on the motion has been  scheduled
for April 29, 2002. The Court has set the matter for trial in January 2003.

During the third  quarter of 2001, a complaint  (the "Heller  action") was filed
against  the same  defendants  that are named in the  Nuanes  action,  captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended  complaint.  The first amended complaint in the Heller action is
brought as a purported  derivative  action,  and asserts  claims for among other
things  breach  of  fiduciary  duty;  unfair  competition;   conversion,  unjust
enrichment;  and judicial  dissolution.  Plaintiffs in the Nuanes action filed a
motion to  consolidate  the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed  without  leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Managing  General  Partner and affiliated
defendants  moved to strike the first  amended  complaint  in its  entirety  for
violating  the Court's July 10, 2001 order  granting in part and denying in part
defendants'  demurrer in the Nuanes action, or alternatively,  to strike certain
portions of the complaint based on the statute of limitations.  Other defendants
in the action  demurred to the fourth  amended  complaint,  and,  alternatively,
moved to strike the complaint. On December 11, 2001, the court heard argument on
the motions  and took the matters  under  submission.  On February 4, 2002,  the
Court  served  notice of its order  granting  defendants'  motion to strike  the
Heller complaint as a violation of its July 10, 2001 order in the Nuanes action.

The Managing  General Partner does not anticipate that any costs,  whether legal
or  settlement  costs,  associated  with  these  cases 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  Accountants  on  Accounting  and
            Financial Disclosure

            None.

                                    PART III

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

Davidson Diversified Real Estate I, L.P. (the "Partnership" or "Registrant") has
no officers or directors.  Davidson Diversified Properties,  Inc. (the "Managing
General   Partner")  manages  and  controls  the  Partnership  and  has  general
responsibility and authority in all matters affecting its business.

The  names of the  director  and  executive  officers  of the  Managing  General
Partner,  their ages and the nature of all positions  presently held by them are
set forth below. There are no family relationships between or among any officers
and director.

         Name                     Age     Position

         Patrick J. Foye           44     Executive Vice President and Director

         Martha L. Long            42     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 accounting  principles
generally accepted in the United States,  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 auditing standards  generally accepted in the United States. 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, 2001 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 audit services of  approximately
$39,000  and  non-audit  services  (principally  tax-related)  of  approximately
$20,000.

Item 10.    Executive Compensation

Neither the officers nor director of the Managing  General Partner  received any
remuneration from the Registrant.

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  owners  of more  than 5% of the  Limited  Partnership  Units  of the
Registrant as of December 31, 2001.

                        Entity                     Number of Units    Percentage

      AIMCO Properties, L.P.                            208.60           27.76%
        (an affiliate of AIMCO)
      Cooper River Properties, LLC                       85.65           11.40%
        (an affiliate of AIMCO)
      Insignia Properties, LP                            18.50            2.46%
        (an affiliate of AIMCO)
      Davidson Diversified Properties, Inc.                .25            0.03%
        (an affiliate of AIMCO)

Cooper  River  Properties,  L.L.C.,  Insignia  Properties,  L.P.,  and  Davidson
Diversified  Properties,  Inc. are indirectly  ultimately owned by AIMCO.  Their
business address is 55 Beattie Place, Greenville, SC 29602.

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

As of December 31, 2001, no director or officer of the Managing  General Partner
owns,  nor do the  director or officers as a group own any of the  Partnership's
Units. No such director or officer had any right to acquire beneficial ownership
of additional Units of 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.  Affiliates  of the Managing  General  Partner  provide
property  management  services to the  Partnership.  The  Partnership  Agreement
provides for (i) 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  affiliates of the Managing  General
Partner during each of the years ended December 31, 2001 and 2000:

                                                   2001        2000
                                                    (in thousands)
Property management fees                           $125        $174
Reimbursement for services of affiliates            154         114

During the years ended  December 31, 2001 and 2000,  affiliates  of the Managing
General  Partner were entitled to receive 5% of gross  receipts from both of the
Partnership's  properties  as  compensation  for providing  property  management
services.  The Partnership  paid to such affiliates  approximately  $125,000 and
$174,000 for the years ended December 31, 2001 and 2000, respectively.

Affiliates of the Managing General Partner received reimbursement of accountable
administrative expenses amounting to approximately $154,000 and $114,000 for the
years ended December 31, 2001 and 2000, respectively.  Included in these amounts
are fees related to construction management services provided by an affiliate of
the Managing General Partner of  approximately  $49,000 and $6,000 for the years
ended  December 31, 2001 and 2000,  respectively.  The  construction  management
service fees are  calculated  based on a percentage of current and certain prior
year additions to investment property and are being depreciated over 15 years.

The  Partnership  is liable to an  affiliate  of the  Managing  General  Partner
through  common  ownership  for  real  estate  commissions  in  the  amounts  of
approximately  $125,000 for Revere Village Apartments and approximately $196,000
for Essex  Apartments  which were sold in previous  years.  The total  amount of
approximately  $321,000 is included on the consolidated balance sheet as "Due to
affiliate".  Payment of the commissions  will not be made to the affiliate until
the  limited  partners  have  received  distributions  equal to  their  original
invested capital,  plus 8% per annum cumulative  non-compounded  return on their
adjusted invested capital  commencing on the last day of the calendar quarter in
which each limited partner was admitted to the  Partnership  through the date of
payment.

Beginning in 2001, the  Partnership  began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally  self-insured for a
portion of losses and  liabilities  related  to workers  compensation,  property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO  limits  through  insurance  policies  obtained  by  AIMCO  from  insurers
unaffiliated  with the Managing General Partner.  During the year ended December
31, 2001, the Partnership  paid AIMCO and its affiliates  approximately  $41,000
for insurance coverage and fees associated with policy claims administration.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership, AIMCO and its affiliates owned 313 limited partnership units in the
Partnership representing 41.65% of the outstanding units at December 31, 2001. 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  voting on certain  amendments to the  Partnership  Agreement and
voting to remove the Managing General  Partner.  As a result of its ownership of
41.65% of the  outstanding  units,  AIMCO is in a position to influence all such
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 13.    Exhibits and Reports on Form 8-K

            (a)   Exhibits:

                  None.

            (b)   Reports on Form 8-K:

                  None filed during the quarter ended December 31, 2001.

                                   SIGNATURES



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


                                    DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.


                                    By:   Davidson Diversified Properties, Inc.,
                                          Its 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: March 26, 2002


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


/s/Patrick J. Foye      Executive Vice President      Date: March 26, 2002
Patrick J. Foye         and Director


/s/Martha L. Long       Senior Vice President         Date: March 26, 2002
Martha L. Long          and Controller

                     DAVIDSON DIVERSIFIED REAL ESTATE I, LP

                                  EXHIBIT INDEX



Exhibit           Description

2    Agreement  and Plan of Merger,  dated as of October 1, 1998, by and between
     AIMCO  and IPT;  incorporated  by  reference  to  Exhibit  2.1  filed  with
     Registrant's Current Report on Form 8-K dated October 1, 1998.

3A   Partnership  Agreement  dated January 14, 1983 is incorporated by reference
     to Exhibit A to the Prospectus of the  Partnership  dated November 16, 1983
     as filed with the Commission pursuant to Rule 424(b) under the Act.

3B   Amendment  No. 1 dated  January  1, 1986 to the  Partnership  Agreement  is
     incorporated by reference to Exhibit 3B to the Partnership's  Annual Report
     on Form 10-K for the fiscal year ended December 31, 1985.

4    Certificate of Limited  Partnership  dated December 2, 1982 is incorporated
     by reference to Exhibit 4 to the  Partnership's  Annual Report on Form 10-K
     for the fiscal year ended December 31, 1987.

4A   Certificate of Amendment of Certificate of Limited  Partnership dated March
     24, 1983 is  incorporated  by reference to Exhibit 4A to the  Partnership's
     Annual Report on Form 10-K for the fiscal year ended December 31, 1987.

4B   Restated   Certificate  of  Limited  Partnership  dated  June  8,  1983  is
     incorporated by reference to Exhibit 4B to the Partnership's  Annual Report
     on Form 10-K for the fiscal year ended December 31, 1987.

4C   Amended and Restated  Certificate of Limited  Partnership  dated January 1,
     1986 is incorporated by reference to Exhibit 4C to the Partnership's Annual
     Report on Form 10-K for the fiscal year ended December 31, 1987.

10A  Agent's Agreement dated November 1, 1983 between the Partnership and Harvey
     Freeman & Sons,  Inc. is  incorporated  by  reference to Exhibit 10B to the
     Partnership's Annual Report on Form 10-K for the fiscal year ended December
     31, 1983.

10B  Agreement among Agents dated November 1, 1983 by and among Harvey Freeman &
     Sons, Inc., Harvey Freeman & Sons, Inc. of Arkansas, Harvey Freeman & Sons,
     Inc. of Florida,  Harvey Freeman & Sons, Inc. of Georgia,  Harvey Freeman &
     Sons,  Inc. of Indiana,  Harvey  Freeman & Sons,  Inc. of Kentucky,  Harvey
     Freeman & Sons, Inc. of  Mississippi,  Harvey Freeman & Sons, Inc. of North
     Carolina,  Harvey Freeman & Sons,  Inc. of Ohio, and Harvey Freeman & Sons,
     Inc. of South Carolina,  is incorporated by reference to Exhibit 10C to the
     Partnership's Annual Report on Form 10-K for the fiscal year ended December
     31, 1983.

10C  Acquisition  and  Disposition  Services  Agreement  dated  October  3, 1983
     between the  Partnership  and Criswell  Freeman  Company is incorporated by
     reference to Exhibit 10D to the  Partnership's  Annual  Report on Form 10-K
     for the fiscal year ended December 31, 1983.

10D  Contract for Sale of Real Estate for Versailles on the Lake dated March 16,
     1984  between  Versailles  on the  Lake  Associates,  an  Illinois  limited
     partnership  and Tennessee  Trust  Company,  Trustee,  is  incorporated  by
     reference to Exhibit 10(b) to the Partnership's  Current Report on Form 8-K
     dated April 4, 1984.

10E  Assignment of Contract for Sale dated April 2, 1984 between Tennessee Trust
     Company,  Trustee and the  Partnership  (relating to Versailles on the Lake
     Apartments)   is   incorporated   by   reference  to  Exhibit  10L  to  the
     Partnership's Annual Report on Form 10-K for the fiscal year ended December
     31, 1984.

10F  Note  dated  November  19,  1984  executed  by the  Partnership  payable to
     American Fletcher National Bank and Trust Company relating to Versailles on
     the Lake  Apartments  is  incorporated  by  reference to Exhibit 10W to the
     Partnership's Annual Report on Form 10-K for the fiscal year ended December
     31, 1985.

10G  Real Estate  Mortgage,  Assignment  of Rents and Security  Agreement  dated
     November 19, 1984 executed by the Partnership  payable to American Fletcher
     National  Bank and Trust  Company  relating  to  Versailles  on the Lake is
     incorporated  by  reference  to Exhibit  10EE to the  Partnership's  Annual
     Report on Form 10-K for the fiscal year ended December 31, 1985.

10H  Memorandum of Understanding among SEC Realty Corp.,  Tennessee  Properties,
     L.P., Freeman Mortgage Corporation, J. Richard Freeman, W. Criswell Freeman
     and Jacques-Miller Properties, Inc. is incorporated by reference to Exhibit
     10BB to the  Partnership's  Annual  Report on Form 10-K for the fiscal year
     ended December 31, 1988.

10I  Partnership   Administration  and  Consultation   Agreement  among  Freeman
     Properties,  Inc., Freeman Diversified Properties,  Inc., Residual Equities
     Limited and Jacques-Miller Properties, Inc. is incorporated by reference to
     Exhibit 10CC to the Partnership's Annual Report on Form 10-K for the fiscal
     year ended December 31, 1988.

10J  Partnership  Agreement of Ashley Woods  Associates dated May 16, 1990 owned
     99.9% by the Partnership relating to refinancing of Ashley Woods Apartments
     is  incorporated by reference to Exhibit 10EE to the  Partnership's  Annual
     Report on Form 10-K for the fiscal year ended December 31, 1991.


10K  Multifamily Note with Addendum dated June 14, 1990 executed by Ashley Woods
     Associates  payable to PW Funding Inc.  relating to Ashley Woods Apartments
     is  incorporated by reference to Exhibit 10FF to the  Partnership's  Annual
     Report on Form 10-K for the fiscal year ended December 31, 1991.

10L  Multifamily  Open-end  Mortgage  with Rider dated June 14, 1990 executed by
     Ashley  Woods  Associates  in favor of PW Funding  Inc.  relating to Ashley
     Woods  Apartments  is  incorporated  by  reference  to Exhibit  10GG to the
     Partnership's Annual Report on Form 10-K for the fiscal year ended December
     31, 1991.

10M  Termination Agreement dated December 31, 1991 among  Jacques-Miller,  Inc.,
     Jacques-Miller Property Management,  Davidson Diversified Properties, Inc.,
     and Supar,  Inc.  is  incorporated  by  reference  to  Exhibit  10HH to the
     Partnership's Annual Report on Form 10-K for the fiscal year ended December
     31, 1991.

10N  Assignment of Limited  Partnership  Interest of Freeman Equities,  Limited,
     dated December 31, 1991 between Davidson Diversified  Properties,  Inc. and
     Insignia Jacques-Miller,  L.P. is incorporated by reference to Exhibit 10II
     to the  Partnership's  Annual Report on Form 10-K for the fiscal year ended
     December 31, 1991.

10O  Assignment of General Partner Interests of Freeman Equities, Limited, dated
     December 31, 1991 between Davidson Diversified Properties,  Inc. and MAE GP
     Corporation   is   incorporated   by  reference  to  Exhibit  10JJ  to  the
     Partnership's Annual Report on Form 10-K for the fiscal year ended December
     31, 1991.

10P  Stock  certificate,  dated  December  31, 1991  showing  ownership of 1,000
     shares of Davidson  Diversified  Properties,  Inc. by MAE GP Corporation is
     incorporated  by  reference  to Exhibit  10KK to the  Partnership's  Annual
     Report on Form 10-K for the fiscal year ended December 31, 1991.

10Q  Contracts related to refinancing of debt:

(a)  First Deed of Trust and Security  Agreement  dated October 28, 1992 between
     Davidson   Diversified  Real  Estate  I,  Limited   Partnership  and  First
     Commonwealth Realty Credit Corporation,  a Virginia  Corporation,  securing
     Versailles on the Lake is  incorporated  by reference to Exhibit 10Q (a) to
     the  Partnership's  Annual  Report on Form 10-KSB for the fiscal year ended
     December 31, 1992.

(b)  Second Deed of Trust and Security  Agreement dated October 28, 1992 between
     Davidson   Diversified  Real  Estate  I,  Limited   Partnership  and  First
     Commonwealth Realty Credit Corporation,  a Virginia  Corporation,  securing
     Versailles on the Lake is  incorporated  by reference to Exhibit 10Q (b) to
     the  Partnership's  Annual  Report on Form 10-KSB for the fiscal year ended
     December 31, 1992.

(c)  First  Assignment  of Leases  and Rents  dated  October  28,  1992  between
     Davidson   Diversified  Real  Estate  I,  Limited   Partnership  and  First
     Commonwealth Realty Credit Corporation,  a Virginia  Corporation,  securing
     Versailles on the Lake is  incorporated  by reference to Exhibit 10Q (c) to
     the  Partnership's  Annual  Report on Form 10-KSB for the fiscal year ended
     December 31, 1992.

(d)  Second  Assignment  of Leases and Rents  dated  October  28,  1992  between
     Davidson   Diversified  Real  Estate,  I  Limited   Partnership  and  First
     Commonwealth Realty Credit Corporation,  a Virginia  Corporation,  securing
     Versailles on the Lake is  incorporated  by reference to Exhibit 10Q (d) to
     the  Partnership's  Annual  Report on Form 10-KSB for the fiscal year ended
     December 31, 1992.

(e)  First  Deed  of  Trust  Note  dated  October  28,  1992  between   Davidson
     Diversified Real Estate I Limited Partnership and First Commonwealth Realty
     Credit  Corporation,  relating to Versailles on the Lake is incorporated by
     reference  to Exhibit 10Q (e) to the  Partnership's  Annual  Report on Form
     10-KSB for the fiscal year ended December 31, 1992.

(f)  Second  Deed  of  Trust  Note  dated  October  28,  1992  between  Davidson
     Diversified  Real  Estate I,  Limited  Partnership  and First  Commonwealth
     Realty   Credit   Corporation   relating  to  Versailles  on  the  Lake  is
     incorporated  by reference to Exhibit 10Q (f) to the  Partnership's  Annual
     Report on Form 10-KSB for the fiscal year ended December 31,1992.

10R  Promissory  Note dated  November 20,  1997,  by and between  Ashley  Woods,
     L.L.C., a South Carolina  limited  liability  company,  and Lehman Brothers
     Holdings, Inc., a Delaware corporation.

10S  Purchase and Sale Contract for Ashley Woods Apartments  between  Registrant
     and Ashley Woods Limited Partnership,  related to the sale of Ashley Woods.
     (Incorporated by reference to Exhibit 10S, filed on Form 8-K dated July 12,
     2001.)

10T  First Amendment to Purchase and Sale Contract for Ashley Woods  Apartments,
     related to the sale of Ashley Woods.  (Incorporated by reference to Exhibit
     10T, filed on Form 8-K dated July 12, 2001.)

10U  Second Amendment to Purchase and Sale Contract for Ashley Woods Apartments,
     related to the sale of Ashley Woods.  (Incorporated by reference to Exhibit
     10U, filed on Form 8-K dated July 12, 2001.)

10V  Assignment of Purchase and Sale Contract between Equity Investments,  Inc.,
     a Nebraska  Corporation  and Ashley Woods Limited  Partnership,  a Nebraska
     Limited Partnership,  related to the sale of Ashley Woods. (Incorporated by
     reference to Exhibit 10V, filed on Form 8-K dated July 12, 2001.)