FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
                        THE SECURITIES EXCHANGE ACT OF 1934
                        Quarterly or Transitional Report



                      U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-QSB

(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934


                   For the quarterly period ended March 31, 2002


[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934


                For the transition period from _________to _________

                         Commission file number 0-10260


                             SHELTER PROPERTIES III
         (Exact name of small business issuer as specified in its charter)



         South Carolina                                         57-0718508
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)

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

                                 (864) 239-1000
                           (Issuer's telephone number)


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____

                         PART I - FINANCIAL INFORMATION



ITEM 1.     FINANCIAL STATEMENTS


a)

                             SHELTER PROPERTIES III
                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)
                          (in thousands, except unit data)

                                 March 31, 2002
<TABLE>
<CAPTION>



Assets
<S>                                                                       <C>
   Cash and cash equivalents                                              $    323
   Receivables and deposits                                                    226
   Restricted escrows                                                          136
   Other assets                                                                513
   Investment properties:
      Land                                                 $   1,281
      Buildings and related personal property                 27,774
                                                              29,055
      Less accumulated depreciation                          (18,505)       10,550
                                                                          $ 11,748

Liabilities and Partners' Deficit
Liabilities
   Accounts payable                                                       $     62
   Tenant security deposit liabilities                                          94
   Accrued property taxes                                                      110
   Other liabilities                                                           554
   Mortgage notes payable                                                   14,885

Partners' Deficit
   General partners                                        $   (105)
   Limited partners (55,000 units issued and
      outstanding)                                           (3,852)        (3,957)
                                                                          $ 11,748




            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

<PAGE>




b)

                             SHELTER PROPERTIES III
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                        (in thousands, except per unit data)


<TABLE>
<CAPTION>

                                                                     Three Months Ended
                                                                          March 31,
                                                                      2002        2001
Revenues:
<S>                                                                  <C>         <C>
   Rental income                                                     $1,296      $1,314
   Other income                                                         138         129
      Total revenues                                                  1,434       1,443

Expenses:
   Operating                                                            589         569
   General and administrative                                            87          76
   Depreciation                                                         276         272
   Interest                                                             280         286
   Property taxes                                                       111         108
      Total expenses                                                  1,343       1,311

Net income                                                            $ 91        $ 132

Net income allocated to general partners (1%)                          $ 1         $ 1
Net income allocated to limited partners (99%)                           90         131

                                                                      $ 91        $ 132

Net income per limited partnership unit                              $ 1.64      $ 2.38
Distributions per limited partnership unit                            $ --       $17.28



            See Accompanying Notes to Consolidated Financial Statements
</TABLE>


<PAGE>


c)

                               SHELTER PROPERTIES III
               CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
                                   (Unaudited)
                          (in thousands, except unit data)

<TABLE>
<CAPTION>


                                     Limited
                                     Partnership     General      Limited
                                        Units        Partners    Partners     Total

<S>                                     <C>             <C>      <C>         <C>
Original capital contributions          55,000          $ 2      $27,500     $27,502

Partners' deficit at
   December 31, 2001                    55,000       $  (106)    $(3,942)    $(4,048)

Net income for the three months
   ended March 31, 2002                     --              1         90          91

Partners' deficit at
   March 31, 2002                       55,000        $ (105)    $(3,852)    $(3,957)


            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

<PAGE>


d)

                             SHELTER PROPERTIES III
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                   (in thousands)

<TABLE>
<CAPTION>

                                                                 Three Months Ended
                                                                       March 31,
                                                                  2002        2001
Cash flows from operating activities:
<S>                                                             <C>          <C>
   Net income                                                   $    91      $   132
   Adjustments to reconcile net income to net
     cash provided by operating activities:
        Depreciation                                                276          272
        Amortization of discounts and loan costs                      8            8
        Change in accounts:
            Receivables and deposits                                 12          263
            Other assets                                            (82)         (89)
            Accounts payable                                        (15)         (30)
            Tenant security deposit liabilities                      (3)          --
            Accrued property taxes                                 (175)        (167)
            Other liabilities                                       150           93

               Net cash provided by operating activities            262          482

Cash flows from investing activities:
   Property improvements and replacements                          (106)        (138)
   Net withdrawals from restricted escrows                           --          599

               Net cash (used in) provided by investing
                    activities                                     (106)         461

Cash flows from financing activities:
   Distributions to partners                                         --         (960)
   Payments on mortgage notes payable                               (70)         (58)

               Net cash used in financing activities                (70)      (1,018)

Net increase (decrease) in cash and cash equivalents                 86          (75)

Cash and cash equivalents at beginning of period                    237          665

Cash and cash equivalents at end of period                      $   323      $   590

Supplemental disclosure of cash flow information:
   Cash paid for interest                                       $   213      $   197

            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

<PAGE>




e)

                             SHELTER PROPERTIES III
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note A - Basis of Presentation

The  accompanying   unaudited   consolidated  financial  statements  of  Shelter
Properties  III (the  "Partnership"  or  "Registrant")  have  been  prepared  in
accordance with generally accepted  accounting  principles for interim financial
information  and  with  the  instructions  to Form  10-QSB  and  Item 310 (b) of
Regulation  S-B.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial  statements.  The general  partner  responsible  for management of the
Partnership's  business  is Shelter  Realty III  Corporation,  a South  Carolina
corporation (the "Corporate General Partner").  The Corporate General Partner is
a  subsidiary  of Apartment  Investment  and  Management  Company  ("AIMCO"),  a
publicly  traded real estate  investment  trust. In the opinion of the Corporate
General  Partner,  all  adjustments  (consisting of normal  recurring  accruals)
considered  necessary  for a fair  presentation  have been  included.  Operating
results for the three month  period ended March 31,  2002,  are not  necessarily
indicative  of the  results  that may be  expected  for the fiscal  year  ending
December 31, 2002. For further information,  refer to the consolidated financial
statements and footnotes thereto included in the Partnership's  Annual Report on
Form 10-KSB for the year ended December 31, 2001.

Note B - Reconciliation of Cash Flows

As required by the Partnership  Agreement,  the following is a reconciliation of
"Net cash provided by operating  activities"  in the  accompanying  consolidated
statements  of cash  flows to "Net  cash from  operations",  as  defined  in the
Partnership Agreement.  However, "Net cash provided by operations" should not be
considered  an  alternative  to net income as an indicator of the  Partnership's
operating performance or to cash flows as a measure of liquidity.

<TABLE>
<CAPTION>

                                                        For the Three Months Ended
                                                                March 31,
                                                           2002             2001
                                                              (in thousands)
<S>                                                     <C>                <C>
Net cash provided by operating activities               $   262            $   482
   Payments on mortgage notes payable                       (70)               (58)
   Property improvements and replacements                  (106)              (138)
   Change in restricted escrows, net                         --                599
   Changes in reserves for net operating
      assets                                                113                (70)
   Additional reserves                                      (91)              (391)

      Net cash provided by operations                   $   108            $   424
</TABLE>

The Corporate  General Partner  reserved  approximately  $91,000 and $391,000 at
March 31, 2002 and 2001, respectively,  to fund capital improvements and repairs
at the Partnership's four investment properties.

Note C - Transactions with Affiliated Parties

The  Partnership  has no employees  and is dependent  on the  Corporate  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
partnership  activities.  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.

During  the three  months  ended  March 31,  2002 and  2001,  affiliates  of the
Corporate General Partner were entitled to receive 5% of gross receipts from all
of the Registrant's  properties for providing property management services.  The
Partnership  paid to such affiliates  approximately  $74,000 and $73,000 for the
three months ended March 31, 2002 and 2001,  respectively,  which is included in
operating expenses.

An  affiliate  of  the  Corporate  General  Partner  received  reimbursement  of
accountable  administrative  expenses  amounting  to  approximately  $60,000 and
$46,000 for the three months ended March 31, 2002 and 2001, respectively,  which
is included in general and  administrative  expenses and investment  properties.
Included in these amounts are fees related to construction  management  services
provided by an  affiliate  of the  Corporate  General  Partner of  approximately
$1,000 for the three months  ended March 31,  2002.  There were no such fees for
the three months ended March 31, 2001. The construction  management service fees
are  calculated  based on a percentage  of current year  additions to investment
properties.

During 1986 a liability  of  approximately  $185,000 was incurred to the general
partners for sales commissions  earned.  Pursuant to the Partnership  Agreement,
this  liability  cannot be paid until certain  levels of returns are received by
the limited  partners.  As of March 31, 2002, the level of return to the limited
partners has not been met.

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 Corporate  General Partner.  During the three months ended
March 31, 2002 and 2001, the Partnership was charged by AIMCO and its affiliates
approximately $62,000 and $82,000, respectively, for insurance coverage and fees
associated with policy claims administration.

Note D - 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 Corporate  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  Corporate  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 Corporate General Partner filed a motion seeking dismissal
of the action.  In lieu of responding  to the motion,  the  plaintiffs  filed an
amended complaint.  The Corporate 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 Corporate  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  Corporate  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 Corporate 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  Corporate  General  Partner  and  affiliated
defendants oppose the motion. On April 29, 2002, the Court heard argument on the
motion and ordered  further  briefing  after which time the matter will be taken
under submission. 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 Corporate  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.
On March 27, 2002,  the plaintiffs  filed a notice  appealing the order striking
the complaint.

The Corporate 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.

<PAGE>

Item 2.     Management's Discussion and Analysis or Plan of Operation

The  matters  discussed  in this Form  10-QSB  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-QSB  and the  other  filings  with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussions of the  Registrant's  business and results of operations,  including
forward-looking  statements  pertaining  to such  matters,  does not  take  into
account the effects of any changes to the  Registrant's  business and results of
operations.  Accordingly,  actual  results  could differ  materially  from those
projected in the forward-looking  statements as a result of a number of factors,
including those identified herein.

The Partnership's investment properties consist of four apartment complexes. The
following  table sets forth the average  occupancy of the properties for each of
the three months ended March 31, 2002 and 2001:

                                                            Average
                                                           Occupancy
       Property                                        2002          2001

       Essex Park Apartments
          Columbia, South Carolina                     88%            91%

       Colony House Apartments
          Mufreesboro, Tennessee                       94%            88%

       North River Village Apartments
          Atlanta, Georgia                             82%            88%

       Willowick Apartments
          Greenville, South Carolina                   91%            93%

The Corporate  General  Partner  attributes  the increase in occupancy at Colony
House Apartments to an increase in the student  population  during current year.
The  decrease in  occupancy  at North River  Village  Apartments  and Essex Park
Apartments is due to the  competitive  market of the  apartment  industry in the
Atlanta and Columbia areas.

Results of Operations

The  Registrant's  net  income for the three  months  ended  March 31,  2002 was
approximately $91,000 as compared to approximately $132,000 for the three months
ended March 31,  2001.  The decrease in net income is due to a decrease in total
revenues and an increase in total  expenses.  The decrease in total  revenues is
due to a decrease  in rental  income  partially  offset by an  increase in other
income.  Rental  income  decreased  due to  decreases in occupancy at Essex Park
Apartments and North River Village Apartments partially offset by an increase in
occupancy at Colony House Apartments.  Other income increased due to an increase
in utility  reimbursements  at Essex Park  Apartments  and North  River  Village
Apartments  partially  offset by a decrease  in  interest  income as a result of
lower cash balances cash held in interest bearing accounts for the Partnership.

The  increase in total  expenses was  primarily  due to an increase in operating
expense and general and administrative expense.  Operating expense increased due
to an increase  in property  expense and  insurance  expense.  Property  expense
increased due to an increase in utility costs at Essex Park Apartments and North
River Village  Apartments and corporate  unit expenses at Essex Park  Apartments
partially  offset by a decrease in employee  salaries at Colony House Apartments
and  Willowick  Apartments.  Insurance  expense  increased due to an increase in
insurance premiums at all of the Partnership's investment properties.

General and  administrative  expense increased due to an increase in the cost of
services  included in the  management  reimbursements  to the Corporate  General
Partner  allowed under the Partnership  Agreement.  Also included in general and
administrative  expenses  for the three months ended March 31, 2002 and 2001 are
costs associated with the quarterly and annual communications with investors and
regulatory  agencies  and  the  annual  audit  and  appraisals  required  by the
Partnership Agreement.

As part of the ongoing  business plan of the Registrant,  the Corporate  General
Partner monitors the rental market environments of its investment  properties 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 Corporate  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
Corporate General Partner will be able to sustain such a plan.

Liquidity and Capital Resources

At March 31, 2002, the Registrant had cash and cash equivalents of approximately
$323,000 as compared to approximately  $590,000 at March 31, 2001. Cash and cash
equivalents increased approximately $86,000 for the three months ended March 31,
2002 from the Registrant's year end, primarily due to approximately  $262,000 of
cash  provided  by  operating   activities   which  was   partially   offset  by
approximately  $106,000  and  $70,000 of cash used in  investing  and  financing
activities,  respectively.  Cash  used  in  investing  activities  consisted  of
property  improvements  and  replacements.  Cash  used in  financing  activities
consisted  of  payments  of  principal  made on the  mortgages  encumbering  the
Registrant's properties.  The Registrant invests its working capital reserves in
interest bearing accounts.

The sufficiency of existing  liquid assets to meet future  liquidity and capital
expenditure   requirements   is  directly   related  to  the  level  of  capital
expenditures  required at the investment  properties 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. Capital improvements
completed at each of the Registrant's properties are detailed below.

Essex Park Apartments

The Partnership has completed  approximately  $49,000 in capital expenditures as
of March  31,  2002,  consisting  primarily  of  appliance  and  floor  covering
replacements,  cabinets,  fencing,  plumbing  repairs and  structural  and other
building  improvements.  These improvements were funded primarily from operating
cash flow. The  Partnership has budgeted,  but is not limited to,  approximately
$163,000  for  capital  improvements  during  2002  at  Essex  Park  Apartments,
consisting  primarily  of  appliance  and  floor  covering   replacements,   air
conditioning replacements, and structural improvements.


<PAGE>



Colony House Apartments

The Partnership has completed  approximately  $19,000 in capital expenditures as
of March  31,  2002,  consisting  primarily  of  appliance  and  floor  covering
replacements,  plumbing improvements,  and air conditioning replacements.  These
improvements were funded from operating cash flow. The Partnership has budgeted,
but is not limited to,  approximately  $63,000 for capital  improvements  during
2002 at Colony House  Apartments  consisting  primarily  of appliance  and floor
covering  replacements,  HVAC, mini blinds,  fencing,  major  landscaping,  door
replacement and structural improvements.

North River Village Apartments

The Partnership has completed  approximately  $18,000 in capital expenditures as
of March 31, 2002,  consisting  primarily of office  computers and appliance and
floor  covering  replacements.  These  improvements  were funded  primarily from
operating  cash flow.  The  Partnership  has  budgeted,  but is not  limited to,
approximately  $49,000  for  capital  improvements  during  2002 at North  River
Village  Apartments,  consisting  primarily  of  appliance  and  floor  covering
replacements.

Willowick Apartments

The Partnership has completed  approximately  $20,000 in capital expenditures as
of March  31,  2002,  consisting  primarily  of  floor  covering  and  appliance
replacements. These improvements were funded primarily from operating cash flow.
The Partnership has budgeted,  but is not limited to, approximately  $68,000 for
capital improvements during 2002 at Willowick  Apartments,  consisting primarily
of appliance and floor covering replacements,  HVAC, interior decoration,  major
landscaping and structural improvements.

Additional capital  expenditures will be incurred only if cash is available from
operations and Partnership  reserves.  To the extent that such budgeted  capital
improvements are completed,  the Registrant's  distributable  cash flow, if any,
may be adversely affected at least in the short term.

The  Registrant's  current assets are thought to be sufficient for any near term
needs  (exclusive  of capital  improvements)  of the  Registrant.  The  mortgage
indebtedness of approximately  $14,885,000,  net of discount,  is amortized over
varying periods. A balloon payment of $1,543,000 is due in October 2003 at North
River Village.  All remaining debt is scheduled to be fully amortized in January
2021. The Corporate  General Partner will attempt to refinance such indebtedness
and/or sell the  properties  prior to such  maturity  dates.  If the  properties
cannot be refinanced or sold for a sufficient  amount,  the Registrant will risk
losing such properties through foreclosure.

The Partnership  distributed the following amounts during the three months ended
March 31, 2002 and 2001 (in thousands, except per unit data):

<TABLE>
<CAPTION>

                     Three Months     Per Limited      Three Months     Per Limited
                        Ended         Partnership         Ended         Partnership
                    March 31, 2002        Unit        March 31, 2001        Unit

<S>                    <C>              <C>              <C>               <C>
Operations             $   --           $   --           $ 960             $17.28
</TABLE>

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  sales.  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  planned  capital  improvement  expenditures,  to permit  any
additional  distributions  to its  partners in 2002 or  subsequent  periods.  In
addition,  the Partnership may be restricted  from making  distributions  if the
amount in the reserve account for North River Village  Apartments  maintained by
the mortgage  lender is less than $200 per apartment  unit. As of March 31, 2002
the reserve account was fully funded with approximately  $54,000 on deposit with
the mortgage lender.

In addition to its indirect  ownership of the combined general partner interests
in the Partnership,  AIMCO and its affiliates  owned 34,685 limited  partnership
units in the Partnership  representing  63.06% of the outstanding units at March
31, 2002. 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  general  partners.  As a result  of its
ownership of 63.06% of the outstanding  units, AIMCO is in a position to control
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  Corporate  General  Partner  because of its
affiliation with the Corporate General Partner.


<PAGE>



                           PART II - OTHER INFORMATION


ITEM 1.     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 Corporate  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  Corporate  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 Corporate General Partner filed a motion seeking dismissal
of the action.  In lieu of responding  to the motion,  the  plaintiffs  filed an
amended complaint.  The Corporate 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 Corporate  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  Corporate  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 Corporate 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  Corporate  General  Partner  and  affiliated
defendants oppose the motion. On April 29, 2002, the Court heard argument on the
motion and ordered  further  briefing  after which time the matter will be taken
under submission. 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 Corporate  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.
On March 27, 2002,  the plaintiffs  filed a notice  appealing the order striking
the complaint.

The Corporate 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.


<PAGE>



ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            a) Exhibits:

               None.

            b) Reports on Form 8-K filed  during the  quarter  ended  March 31,
               2002:

               None.


<PAGE>


                                   SIGNATURES



In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.



                             SHELTER PROPERTIES III

                                 By:     Shelter Realty III Corporation
                                         Corporate 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:   May 13, 2002