FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

For the year ended December 31, 1998

                                       OR

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

For the transition period ________________  to  ________________  
Commission File Number    T3-24235                                       

                   SECURED INVESTMENT RESOURCES FUND, L.P. III
             (Exact name of registrant as specified in its charter)

             Missouri                                 48-6291172           
  (State or other jurisdiction of       (I.R.S. Employer Identification No.)
   incorporation or organization)

    1100 Main, Suite 2100 Kansas City, Missouri                     64105 
     (Address of principal executive offices)                     (Zip Code)

(Registrant's telephone number, including area code)            (816) 421-4670

Securities registered pursuant to Section 12(b) of the Act:

                                      None

Securities registered pursuant to Section 12(g) of the Act:

                     Limited Partnership Interests ("Units")

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12 months  (or such  shorter  periods  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 ___

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K, is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]


                                       1
<PAGE>
                                     PART I

Item 1.   Business

Secured  Investment  Resources  Fund,  L.P.  III  ("Partnership")  is a Missouri
limited  partnership  formed  pursuant to the Missouri  Revised  Uniform Limited
Partnership  Act on April 20, 1988. SIR Partners III,  L.P., a Missouri  limited
partnership,  Nichols Resources Ltd., a Missouri  corporation and James R. Hoyt,
an individual,  are the General Partners.  James R. Hoyt is the Managing General
Partner. The Partnership has no predecessors or subsidiaries.

On July 31, 1998,  Nichols  Resources,  Ltd., a General Partner,  filed Form 8-K
with the SEC describing a Settlement  Agreement and Mutual Release between James
R. Hoyt, Managing General Partner; SIR Partners III, L.P., a General Partner and
Nichols  Resources,  Ltd, also a General Partner.  Under terms of the agreement,
James R. Hoyt and SIR Partners  III have agreed to withdraw as General  Partners
of the  Partnership  (as described in item 12).  This  settlement is expected to
have a positive future impact on the Partnership.

The  Partnership  was formed to engage in the business of acquiring,  improving,
developing,   operating  and  holding  for  investment   income  producing  real
properties   with  the   objectives  of  (  i)  preserving  and  protecting  the
Partnership's capital; (ii) providing cash distributions from operations;  (iii)
providing   capital  growth  through   property   appreciation   of  Partnership
properties; and (iv) increasing equity in property ownership by the reduction of
mortgage  loans on  Partnership  properties.  The term of the  partnership is 60
years from the date of the Partnership Agreement (December 6, 1988), or the date
on which all of the assets acquired by the Partnership are sold and converted to
cash.

On December 7, 1990, the  Partnership  closed its offering having received gross
proceeds  of  $4,842,500  from the sale of 9,685  units of  limited  partnership
interests.

The Partnership acquired two apartment communities in 1989. The General Partners
feel  that  these  properties  met the  Partnership's  investment  criteria  and
objectives.  Because of many factors, the Partnership did not raise the level of
capital anticipated. Accordingly, the General Partners were unable to obtain the
targeted leveraged ratio and a residential/commercial property mix.

As of December 31, 1998, the Partnership has made cash  distributions to Limited
Partners of $364,000 for the period April 1, 1989 through  December 31, 1998. No
distributions have been made since July 1990. Future  distributions will only be
made from excess cash flow not needed for working capital reserves.

As of December 31, 1998, the Partnership  had no employees.  Employees of SPECS,
Inc. have provided property management services to the Partnership (as described
in Note 5 to the  accompanying  Consolidated  Financial  Statements).  Effective
January 1, 1999, the  Partnership has hired Maxus  Properties,  Inc., to provide
property management services to the Partnership.

                                       2
<PAGE>
Item 1.   Business--Cont'd.

Due to the  Partnership's  inability  to  restructure  the  debt  on the KC Club
Apartments  (after  negotiations  to obtain more  favorable  terms  failed),  on
January 7, 1998 the property was lost to foreclosure  (as described in Note 6 to
the accompanying Consolidated Financial Statements).

Competition

The real estate business is highly  competitive,  and the  Partnership  competes
with numerous entities engaged in real estate activities, some of which may have
greater  financial  resources than those of the Partnership.  The  Partnership's
management  believes that success against such competition is dependent upon the
geographic location of the property,  the performance of property managers,  the
amount of new construction in the area and the maintenance and appearance of the
property.  With respect to residential property,  competition is also based upon
the  design  and mix of the  units  and  the  ability  to  provide  a  community
atmosphere for the tenants. The partnership's direct competitors, located within
five miles of the Bicycle Club Apartments,  are Quail Run Apartments,  690 units
built in 1985;  Falcon  Point,  192 units built in 1988;  The Ethans,  606 units
built in 1988;  Camden  Passage,  598 units built in 1989-1998;  The Lakes,  400
units built in 1987 and Kelly  Crossing,  624 units  built in 1998.  The Bicycle
Club Apartments is competitive in terms of square footage per unit and rents for
unit  types.  The  Partnership's   management  believes  that  general  economic
circumstances and trends and new properties in the vicinity of the Partnership's
property will also be competitive factors.

Inflation

The effects of inflation on the Partnership's  operations or investments are not
quantifiable.  Revenues from property operations fluctuate  proportionately with
increases and decreases in housing costs.  Fluctuations in the rate of inflation
also affect the sales values of properties  and,  correspondingly,  the ultimate
gains to be realized by the Partnership from property sales.

                                       3
<PAGE>
Item 2.   Properties

The following  table sets forth the investment  portfolio of the Partnership at
December 31, 1998:

<TABLE>
<CAPTION>
<S> <C>                    <C>                <C>             <C>                 <C>

                                                                               Average
                                        Properties at                         Occupancy(*)
     Property         Description        Initial Cost      Date Acquired       Percentage
     --------         -----------        ------------      -------------       ----------
                                                                              1998    1997
                                                                              ----    ----
Greenhills Bicycle
Club Apartments
Kansas City, MO        312 units         $11,251,613       Oct. 27, 1989      91%     91%
</TABLE>

(*) Based upon vacancy amount (in dollars) as a percent of gross possible rents.
(Gross possible rents is calculated by multiplying  established market rents for
each unit type by the total  unit mix.  Established  market  rents are  budgeted
rents,  established by conducting  market surveys to determine the typical rents
charged for similar  properties  in the area and through  knowledge of the rates
the market will bear for similar unit types.)

The  encumbrances   against  the  property  are  described  in  Note  3  to  the
accompanying Consolidated Financial Statements.


Description of Real Estate:

The Partnership's  remaining  property,  the Greenhills Bicycle Club Apartments,
consists of 312 units of  multi-family  rental real estate.  On July 8, 1996 the
Partnership  refinanced  the matured first  mortgage on Greenhills  Bicycle Club
Apartments.  The terms of the  mortgage are  $8,100,000  at 9.0%  interest  with
monthly  principal  and interest  payments in the amount of $65,000  through the
loan maturity date of August 1, 2001. The outstanding  principal  balance of the
note at  December  31,  1998 is  $7,963,000.  The  balance to be due at maturity
assuming  no payment  has been made on  principal  in advance of its due date is
$7,766,000.  The note can be prepaid with  penalty.  A second  mortgage note was
paid in full at a discount in July, 1998 for $200,000, creating an extraordinary
gain on early extinguishment of debt of $197,000.

Competition:

The real estate business is highly competitive and the Partnership competes with
numerous  entities  engaged in real  estate  activities,  some of which may have
greater  financial  resources than those of the Partnership.  The  Partnership's
management  believes that success against such competition is dependent upon the
geographic location of the property,  the performance of property managers,  the
amount of new construction in the area and the maintenance and appearance of the
property.  With respect to residential property,  competition is also based upon
the  design  and mix of the  units  and  the  ability  to  provide  a  community
atmosphere for the tenants. The Partnership's direct competitors, located within
five miles of the Bicycle Club Apartments,  are Quail Run Apartments,  690 units
built in 1985;  Falcon  Point,  192 units built in 1988;  The Ethans,  606 units
built in 1988; Camden Passage, 598 units built in 1989-1998; The

                                       4
<PAGE>
Item 2.   Properties

Competition - Cont'd

Lakes, 400 units built in 1987 and Kelly Crossing,  624 units built in 1998. The
Bicycle Club  Apartments is  competitive in terms of square footage per unit and
rents  for unit  types.  The  Partnership's  management  believes  that  general
economic  circumstances  and trends and new  properties  in the  vicinity of the
Partnership's  property  will also be  competitive  factors.  The  partnership's
management believes that the property is adequately covered by insurance.


Operating Data:

The occupancy  rate for the Greenhills  Bicycle Club  Apartments for each of the
last five years was:
1994: 92%       1995: 93%        1996: 91%        1997: 91%          1998: 91%

The average effective annual rental per unit for each of the last five years was
1994: $4,870   1995: $5,360    1996: $5,750    1997: $6,000      1998: $6,100

Depreciation:

   Investment  property  is  depreciated  on  a  straight-line  basis  over  the
estimated  useful life of the property (30 years for  buildings  and 5 years for
furniture, fixtures and equipment). Improvements are capitalized and depreciated
over their estimated  useful lives.  Maintenance and repair expenses are charged
to operations as incurred.  Cost (including capital  improvements  subsequent to
acquisition)  of the Greenhills  Bicycle Club Apartments at December 31, 1998 is
$11,193,000.


Item 3.   Legal Proceedings,

Due to the  Partnership's  inability  to  restructure  the  debt  on the KC Club
Apartments  (after  negotiations  to obtain more  favorable  terms  failed),  on
January 7, 1998 the property was lost to foreclosure  (as described in Note 6 to
the  accompanying  Consolidated  Financial  Statements).  Under the terms of the
foreclosure,  net assets with a net book value of $3,143,000 were surrendered to
the KC Club  mortgage  holder and the  Partnership  was relieved of the mortgage
obligation amounting to $3,922,000. The resulting gain amounted to $779,000.


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

None

                                       5
<PAGE>
                                     PART II

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

(A)  There  is no  established  public  trading  market  for  the  Units  of the
Partnership.  (B) There have been no distributions  the last three years. (C) As
of December  31, 1998,  the  Partnership  had admitted 539 Limited  Partners who
purchased 9,685 units.


Item 6.   Selected Financial Data,

<TABLE>
OPERATING DATA
(In Thousands)

<CAPTION>
                            <C>         <C>          <C>         <C>         <C>   
                            1998        1997         1996        1995        1994
                            ----        ----         ----        ----        ----
Revenues                   $1,967     $ 2,791       $2,768     $ 2,697     $ 2,299
Interest and earnings on
  investments                  13         196           90         128         106
Property operating
  expense                   1,421       2,078        2,110       2,072       2,102
Interest expense              741       1,113        1,126         925         931
                            -----       -----        -----       -----       -----

Partnership income (loss)
 before extraordinary items  (182)       (204)        (378)       (172)       (628)
                            -----       -----        -----       -----       -----

Extraordinary items:
  Gain on extinguishment
   of debt                    976         ---          ---         ---         ---
                            -----       -----        -----       -----       -----
Partnership income (loss)  $  794      $ (204)      $ (378)     $ (172)     $ (628)
                            =====      ======        =====       =====       =====

PER LIMITED PARTNERSHIP UNIT  
Partnership income(loss)(1)$81.18     $(20.87)     $(38.64)    $(17.54)    $(64.23)
                            =====      ======        =====       =====       =====

Cash distribution         $   ---     $   ---      $   ---     $   ---     $   ---


BALANCE SHEET DATA          1998        1997         1996        1995        1994
                            ----        ----         ----        ----        ----


(In Thousands)           
Total Assets               $7,690     $ 11,617    $ 12,749    $ 13,223    $ 14,227
Mortgage Debt              $7,963     $ 12,344    $ 12,931    $ 12,851    $ 13,737  
</TABLE>


(1) Partnership  loss per limited  partnership unit is computed by dividing loss
allocated  to the Limited  Partners by the  weighted  average  number of limited
partnership   units  outstanding   (9,685  units  for  each  period).

                                       6
<PAGE>
Item 7.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations

Results of Operations

Revenues for the year ended  December 31, 1998 decreased  $823,000  (29.5%) when
compared to 1997. The majority of the decrease  ($853,000) is due to the loss of
revenue caused by the foreclosure of the KC Club Apartments. Revenue for 1998 at
the Greenhills Bicycle Club Apartments increased $30,000 (1.6%) when compared to
the same period in 1997.  This  increase is primarily  due to  increased  rental
rates for new leases and upon lease  renewals.  These  higher  market  rates are
being achieved with fewer rent concessions.

Total operating and administrative expenses for the year ended December 31, 1998
decreased  $657,000  (31.6%)  compared to 1997. Of the total decrease,  $820,000
relates  to the  foreclosure  of the KC  Club  Apartments.  In  addition,  total
operating and administrative  expenses at the Greenhills Bicycle Club Apartments
increased by $163,000.  The $820,000  decrease related to the foreclosure of the
KC Club  Apartments  is  primarily  due to a decrease  in  expenses  as follows:
property operating $536,000,  general and administrative  $28,000,  professional
services  $31,000,  management  fee $41,000 and  depreciation  and  amortization
$168,000.  The $163,000 increase in total operating and administrative  expenses
relating to the  Greenhills  Bicycle  Club  Apartments  is  primarily  due to an
increase  in  expenses  as  follows:  property  operating  $51,000,  general and
administrative $9,000, professional services $71,000, management fee $17,000 and
depreciation  and  amortization   $15,000.  The  $51,000  increase  in  property
operating expense was due to an increase in general operating expenses including
an increase in periodic  repairs and  maintenance,  marketing and property tax.
The $9,000 increase in general and administrative  expenses was due primarily to
an increase in screening  expense and collection fees. The increase in screening
expense is offset by an increase reported in application income. The increase in
collection  fees is due to  increased  collection  efforts.  License  fees  also
increased due to zoning  requirements for directional signage for the Greenhills
Bicycle Club Apartments.  The $71,000 increase in professional services expenses
was primarily due to legal fees incurred in connection  with the  foreclosure of
the KC Club  Apartments  and other  partnership  related  matters.  The  General
Partners are  entitled to receive a  Partnership  management  fee equal to 5% of
total  operating  cash flows (as defined) for managing the normal  operations of
the  Partnership.  The  $17,000  increase  in  management  fee  expense  was due
primarily to the management fees due to the General  Partners for the year ended
December 31, 1998.  There was no management fee due to the General  Partners for
the years ended December 31, 1997 and 1996. The $15,000 increase in depreciation
and amortization was due primarily to depreciation of capital items added to the
balance sheet in the year ended December 31, 1998.

Interest  expense  for the year ended  December  31,  1998  decreased  $372,000.
$340,000 of the decrease is due to the  foreclosure  of the KC Club  Apartments.
The remainder of the decrease is due to the Bicycle Club Apartments  paying down
the  mortgage  balance on the property  through  normal  principal  and interest
payments.

Interest income for the year ended December 31, 1998 decreased  $183,000 (93.3%)
from 1997. The decrease in interest  income was caused  primarily by the absence
of interest  income from,  and the August 1997 gain realized on the sale of, the
Treasury certificate of accrual held by the Partnership as collateral for the KC
Club Apartments.

                                       7
<PAGE>
Item 7. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations.

Results of Operations--Cont'd

Revenue  for  the  Partnership  increased  in  1997 to  $2,791,000  compared  to
$2,768,000  (0.8%) in 1996. This increased revenue was the result of an increase
in gross possible rental rates.

Interest  income  increased  $106,000  (116.9%) in 1997  compared  to 1996.  The
increase  in  interest  income was  caused  primarily  by the  August  1997 gain
realized  on the  sale  of the  Treasury  certificate  of  accrual  held  by the
Partnership as collateral for the KC Club Apartments.

Total operating and  administrative  expenses  decreased  $32,000 (1.5%) in 1997
compared to 1996 primarily in the areas of services,  payroll and marketing. The
decrease in services,  payroll and marketing was caused by continuing management
initiatives to decrease  administrative  expenses and budgets,  and increase Net
Operating Income.

Interest expense decreased from $1,126,000 in 1996 to $1,112,000 (1.2%) in 1997.
The decrease in interest  expense was due to the reduction in principal  related
to the KC Club  Apartments  mortgage  note of $530,000,  which was paid with the
proceeds of the sale of the  certificate  of accrual (as  described in note 4 to
the   accompanying   Consolidated   Financial   Statements).   Depreciation  and
amortization  expense  decreased  from  $606,000 to $605,000.  The 1997 net loss
decreased by $174,000 (46.0%).

Due to the  inability  to  renegotiate  loan terms with the lender,  the KC Club
Apartments was foreclosed on in 1998 (as described in Note 6 to the accompanying
Consolidated Financial Statements).  This resulted in a decrease in revenue with
a  corresponding  decrease in expenses for 1998. The 1997 rental revenue for the
KC Club was $853,000 and expenses (including interest) were $1,160,000.

The Partnership  anticipates  that 1999 operations will improve as the result of
the  foreclosure of the KC Club  Apartments  and of planned  increases in rental
rates and decreased promotional rental incentives at the Greenhills Bicycle Club
Apartments.  This planned  increase in net rental  income will be coupled with a
close monitoring of costs.

Liquidity and Sources of Capital

During  1998,  cash was  provided  by  operating  activities  in the  amount  of
$244,000.   Investing   activities  used  $112,000,   and  financing  activities
(primarily  principal  payments,  as described in the Consolidated  Statement of
Cash Flows) used $319,000. During the year accounts payable and accrued expenses
decreased by $1,000 and accrued interest decreased by $11,000.

                                       8
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations.

Liquidity and Sources of Capital - Cont'd

The Bicycle Club Apartments was encumbered by a second mortgage (as described in
Note 3 to the accompanying  Consolidated Financial  Statements).  In July, 1998,
the Partnership  settled the remaining  principal balance of $397,000 due on the
second mortgage for $200,000, resulting in a $197,000 gain.

The funds advanced by the Partnership to Secured Investment Resources Fund, L.P.
(a related partnership) were being repaid,  including 9% interest,  beginning in
May,  1995. The balance due from Secured  Investment  Resources  Fund,  L.P. was
$86,000 at December 31, 1997.  The entire balance on the note was repaid in full
in July, 1998.

As a result of the  foreclosure  of the KC Club  Apartments,  the  liquidity and
financial  condition  of the  Partnership  is  expected  to  improve.  The  cash
generated from operations for the KC Club Apartments was insufficient to service
the mortgage on the property.

During  1997,  cash was  provided  by  investing  activities  in the  amount  of
$887,000.  Operations used $59,000, and financing activities (primarily payments
on debt, as described in the accompanying  Consolidated Statement of Cash Flows)
used $594,000.  During the year, accounts payable and accrued expenses increased
by $56,000 and accrued interest decreased by $386,000.

The  Partnership  invested  $500,000  (held as a  Certificate  of Accrual with a
market  value of  $1,037,000  as of  December  31,  1996)  which was  pledged as
collateral on the KC Club Apartments  until the property's net operating  income
achieved  the level of 120% of the debt  service  on the first  mortgages  for a
consecutive  24-month period or May 31, 2004, whichever was earlier. As a result
of  declining  cash  flows  for KC Club  Apartments,  on  August  1,  1997,  the
Certificate  of Accrual was sold.  The proceeds of  $1,083,000  were used to pay
$553,000  of accrued  interest  and  $530,000  of  delinquent  principal  on the
property.  The cash generated from operations for that property was insufficient
to service the mortgage under the existing  payment  requirements.  The Managing
General Partner had ongoing  negotiations  with the lender concerning a complete
restructure  of the mortgage and related debt  service.  The  negotiations  were
unsuccessful and on January 7, 1998 the property was lost to foreclosure.

On July 8, 1996 the Partnership refinanced the matured $8,400,000 first mortgage
on  Greenhills  Bicycle  Club  Apartments.  The  terms of the new  mortgage  are
$8,100,000 at 9.0% interest with monthly  principal and interest payments in the
amount of $65,000 through the loan maturity date of August 1, 2001 (5 years).

                                       9
<PAGE>
Item 7.   Management's  Discussion and Analysis of Financial Condition and
          Results of Operations.

Year 2000

Management is in the process of evaluating the risks  associated  with potential
Year 2000 computer  problems.  It is our opinion that the potential on-site Year
2000 problems at the Greenhills Bicycle Club apartments will not have a material
impact on property operations. The computer and on-site software utilized in the
day to day  operations of the property have been upgraded as of January 12, 1999
at a cost  of  approximately  $4,000  with  Year  2000  compliant  software.  No
additional  material  expenditures  are  planned  at this  time  for  Year  2000
compliance.  There are no known  non-information  technology systems (elevators,
fire alarms,  security  systems  etc.)  on-site that would be impacted by a Year
2000  problem.  There are no  elevators,  central fire alarm  systems or central
security systems on the property.  Management believes that the mission critical
systems  are  prepared  for the Year 2000,  and  non-critical  systems are being
evaluated.

Management   believes  the  worst  case  scenario  that  could  impact  property
operations  would be if third-party  utility  providers  (electricity and water)
failed to provide  services to the  property due to a Year 2000 problem in their
systems.  Management  has  contacted  the utility  providers,  and  received and
reviewed their plans to address potential Year 2000 issues.  Management believes
the likelihood of the utility  companies  failure to provide services is remote,
and as such,  management has not developed  contingency  plans to deal with this
possibility.  Management  believes that if the utility companies fail to provide
services, the failure will by system-wide, and not confined to the property, and
therefore the investment value of the property will not be impacted.

Inflation

The effects of inflation on the Partnership's  operations or investments are not
quantifiable.  Revenues from property operations fluctuate  proportionately with
increases and decreases in housing costs.  Fluctuations in the rate of inflation
also affect the sales values of properties  and,  correspondingly,  the ultimate
gains to be realized by the Partnership from property sales.

Future Changes in Accounting Principle

SFAS No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities,"
was issued in June 1998.  The Statement is effective for all fiscal  quarters of
all fiscal years beginning after June 15, 1999. This  pronouncement  establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts  (collectively referred to as
derivatives) and for hedging activities. The Partnership anticipates no material
impact of SFAS No. 133 on its  consolidated  results of  operations or financial
position.

                                       10
<PAGE>
Item 8.   Financial Statements and Supplementary Data

                  SECURED INVESTMENT RESOURCES FUND, L.P. III
                                 (A Partnership)

                           DECEMBER 31, 1998 AND 1997


                   CONTENTS                                                Page

INDEPENDENT ACCOUNTANTS' REPORT
     Baird, Kurtz & Dobson                                                  12
     BDO Seidman, LLP                                                       13

CONSOLIDATED FINANCIAL STATEMENTS
     Balance Sheets                                                         14
     Statements of Income                                                   16
     Statements of Changes in Partners' Equity (Deficit)                    17
     Statements of Cash Flows                                               18
     Notes to Financial Statements                                          19

                                       11
<PAGE>
                        Independent Accountants' Report

The Partners
Secured Investment Resources Fund, L.P. III
Kansas City, Missouri

We have audited the consolidated  balance sheet of SECURED INVESTMENT  RESOURCES
FUND,  L.P.  III (A  Partnership)  as of  December  31,  1998  and  the  related
consolidated  statements of income,  changes in partners'  equity  (deficit) and
cash  flows  for  the  year  then  ended.  These  financial  statements  are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based upon our audit.

We conducted our audit in accordance with generally accepted auditing standards.
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
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the 1998 financial statements referred to above present fairly,
in all material respects, the financial position of SECURED INVESTMENT RESOURCES
FUND L.P. III (A  Partnership)  as of December 31, 1998,  and the results of its
operations  and its cash  flows  for the year  then  ended  in  conformity  with
generally accepted accounting principles.



                                                  /s/ Baird, Kurtz and Dobson 
                                                  -------------------------- 

Kansas City, Missouri
January 21, 1999
----------------

                                       12
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

The Partners
Secured Investment Resources Fund, L.P. III
Kansas City, Missouri

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Secured
Investment  Resources Fund,  L.P. III and affiliated  company as of December 31,
1997 and 1996, and the related statements of operations, partnership deficit and
cash flows for each of the three years in the period ended December 31, 1997. We
have  also  audited  the  schedules  listed  in the  accompanying  index.  These
financial  statements and schedules are the  responsibility of the Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and schedules based upon our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of Secured Investment
Resources  Fund,  L.P. III at December 31, 1997 and 1996, and the results of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 1997 in conformity with generally accepted accounting principles.

Also in our opinion, the schedules present fairly, in all material respects, the
information set forth therein.

                                                           s/ BDO Seidman LLP


St. Louis, Missouri
February 6, 1998

                                       13
<PAGE>

                   SECURED INVESTMENT RESOURCES FUND, L.P. III
                                 (A Partnership)

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 1998 AND 1997

                                     ASSETS
<TABLE>
<CAPTION>
<S>                                                 <C>              <C> 
                                                    1998             1997
                                                    ----             -----

INVESTMENT PROPERTIES                             $7,219,848     $10,833,989
                                                  ----------      -----------

RESTRICTED DEPOSITS                                  154,853          93,553
                                                  ----------      -----------

CASH                                                 130,061         317,315
                                                  ----------      -----------

OTHER ASSETS
  Rent receivables, less allowance for               
   doubtful accounts of $16,200 in 1997                1,867           7,347
  Prepaid expenses and deposits                       19,525          30,695
  Due from related parties
       Note receivable                                                85,694
       Syndication costs                                              21,751
  Debt issuance costs, less accumulated 
   amortization of $253,015 in 1998 and
   $189,761 in 1997                                  163,405         226,659
                                                  ----------      -----------
                                                     184,797         372,146
                                                  ----------      -----------

     TOTAL ASSETS                                 $7,689,559     $11,617,003
                                                  ==========     ===========

</TABLE>

See Notes to Consolidated Financial Statements

                                       14
<PAGE>
                   SECURED INVESTMENT RESOURCES FUND, L.P. III
                                 (A Partnership)

                       CONSOLIDATED BALANCE SHEETS--CONT'D


                        LIABILITIES AND PARTNERS' DEFICIT

<TABLE>
<CAPTION>
<S>                                                 <C>              <C> 
                                                    1998             1997
Mortgages payable                               $7,962,718        $12,344,460

Accounts payable and accrued expenses               47,913            300,653

Accrued management fees - General Partners          17,549

Accrued interest                                    60,188            141,133

Unearned revenue                                    25,639             14,449

Tenant security deposits                            71,032            105,913
                                                ----------          ---------

TOTAL LIABILITIES                                8,185,039         12,906,608
                                                ----------          ---------

PARTNERS' DEFICIT 
  General Partners (4 units authorized
   and outstanding)
     Capital contributions                           2,000              2,000
     Partnership deficit                           (44,110)           (52,051)
                                                ----------          ---------
                                                   (42,110)           (50,051)
                                                ----------          ---------

Limited Partners (60,000 units authorized;
  9685 units outstanding)
     Capital contributions                       3,915,084          3,915,084
     Partnership deficit                        (4,368,454)        (5,154,638)
                                                ----------          ---------
                                                  (453,370)        (1,239,554)
                                                ----------          ---------
TOTAL PARTNERS' DEFICIT                           (495,480)        (1,289,605)
                                                ----------          ---------

TOTAL LIABILITIES & PARTNERS' DEFICIT          $ 7,689,559        $11,617,003
                                                ==========        ===========

</TABLE>
See Notes to Consolidated Financial Statements.

                                       15
<PAGE>
                  SECURED INVESTMENT RESOURCES FUND, L.P. III
                                 (A Partnership)

                        CONSOLIDATED STATEMENTS OF INCOME

                  YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
<S>                                            <C>            <C>            <C>  
REVENUES                                       1998           1997           1996 
                                               ----           ----           ---- 
   Rents                                $ 1,878,353    $ 2,671,083    $ 2,767,870
   Other income                              88,978        119,534
                                        -----------    -----------    -----------
                                          1,967,331      2,790,617      2,767,870
                                        -----------    -----------    -----------
OPERATING AND ADMINISTRATIVE
  EXPENSES
  Property operating expenses               704,600      1,189,480      1,177,374
  General and administrative expenses        34,864         54,526         70,752
  Professional fees                         132,480         91,873        118,896
  Management fees                           113,098        137,445        137,449
  Depreciation and amortization             436,759        605,175        605,578
                                        -----------    -----------    -----------
                                          1,421,801      2,078,499      2,110,049
                                        -----------    -----------    -----------

OPERATING INCOME                            545,530        712,118        657,821
                                        -----------    -----------    -----------

OTHER INCOME (EXPENSE)
  Interest expense                         (740,776)    (1,112,421)    (1,126,256)
  Interest income                            13,186        196,127         90,428
                                        -----------    -----------    -----------
                                           (727,590)      (916,294)    (1,035,828)
                                        -----------    -----------    -----------

NET LOSS BEFORE EXTRAORDINARY ITEM         (182,060)      (204,176)      (378,007)

EXTRAORDINARY ITEM
  Gain on extinguishment of debt            976,185
                                        -----------    -----------    -----------

NET INCOME (LOSS)                       $   794,125    $  (204,176)   $  (378,007)
                                        ===========    ===========    ===========
ALLOCATION OF INCOME (LOSS)
  General Partners                      $     7,941    $    (2,042)   $    (3,780)
  Limited Partners                          786,184       (202,134)      (374,227)
                                        -----------    -----------    -----------

                                        $   794,125    $  (204,176)   $  (378,007)
                                        ===========    ===========    ===========
PARTNERSHIP INCOME (LOSS) PER
 LIMITED PARTNERSHIP UNIT               $     81.18    $    (20.87)   $    (38.64)
                                        ===========    ===========    ===========
</TABLE>

See Notes to Consolidated Financial Statements.

                                       16
<PAGE>
                   SECURED INVESTMENT RESOURCES FUND, L.P. III
                                 (A Partnership)

        CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)

                  YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
<S>                                         <C>            <C>            <C>
                                            General        Limited
                                            Partners       Partners         Total
                                            --------       --------         -----

PARTNERS' DEFICIT, JANUARY 1, 1996        $   (44,229)   $  (663,193)   $  (707,422)

     Partnership loss                          (3,780)   $  (374,227)      (378,007)
                                          -----------    -----------    -----------

PARTNERS' DEFICIT, DECEMBER 31, 1996          (48,009)    (1,037,420)    (1,085,429)

     Partnership loss                          (2,042)      (202,134)      (204,176)
                                          -----------    -----------    -----------

PARTNERS' DEFICIT, DECEMBER 31, 1997          (50,051)    (1,239,554)    (1,289,605)

     Partnership income (loss)                  7,941        786,184        794,125
                                          -----------    -----------    -----------

PARTNERS' DEFICIT, DECEMBER 31, 1998      $   (42,110)   $  (453,370)   $  (495,480)
                                          ===========    ===========    ===========
</TABLE>

                                       17
<PAGE>
                   SECURED INVESTMENT RESOURCES FUND, L.P. III
                                 (A Partnership)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                  YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
<S>                                                  <C>            <C>            <C>

                                                    1998           1997           1996
                                                    ----           ----           ----

CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)                          $   794,125    $  (204,176)   $  (378,007)
  Items not  requiring (providing) cash:
    Depreciation and amortization                436,759        605,175        605,578
    Extraordinary item                          (976,185)
    Gain on sale of assets                                     (114,531)

  Changes in:
    Rent and other receivables                                   (2,241)        (1,321)
    Prepaid expenses                                 (17)        (1,534)        (1,992)
    Accounts payable and accrued expenses         (1,270)        56,400       (339,486)
    Unearned revenue                              13,255        (15,911)         2,881
    Accrued interest                             (11,177)      (385,973)       141,726
    Tenant security deposits                     (11,964)         3,863         19,840
                                             -----------    -----------    -----------
      Net cash provided by (used in)             243,526        (58,928)        49,219
        operating activities                 -----------    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Repayments from related parties                107,457
  Net change in  restricted  deposits            (71,934)       (59,063)       (34,490)
  Proceeds from sale of assets                                1,083,068
  Income on investments                                         (70,514)       (70,514)
  Purchase of property and equipment            (147,375)       (66,341)      (102,145)
                                             -----------    -----------    -----------
      Net cash provided by (used in)            (111,852)       887,150       (207,149)
       investing activities                  -----------    -----------    -----------

CASH FLOWS FROM FINANCING  ACTIVITIES
  Debt issuance costs                                                         (321,890)
  Principal payments on long-term debt          (262,366)      (586,543)        79,621
  Cash payments on foreclosure                   (56,562)
  Note receivable from related parties                           (7,349)        (3,702)
                                             -----------    -----------    -----------
     Net cash used in financing activities      (318,928)      (593,892)      (245,971)
                                             -----------    -----------    -----------

INCREASE (DECREASE) IN CASH                     (187,254)       234,330       (404,901)

CASH, BEGINNING OF YEAR                          317,315         82,985        486,886
                                             -----------    -----------    -----------

CASH, END OF YEAR                            $   130,061    $   317,315    $    82,985
                                             ===========    ===========    ===========
</TABLE>

See Notes to Consolidated Financial Statements.

                                       18
<PAGE>
                   SECURED INVESTMENT RESOURCES FUND, L.P. III
                                 (A Partnership)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1998 AND 1997

NOTE 1:   NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING 
          POLICIES

Nature of Operations

Secured Investment  Resources Fund, L.P. III (Partnership) is a Missouri limited
partnership formed pursuant to the Missouri Revised Uniform Limited  Partnership
Act on April 20, 1988. The  Partnership  invested in two apartment  complexes in
the metropolitan  Kansas City,  Missouri area (see Note 6). It extends unsecured
credit,  subject  to  security  deposits,  to its  tenants.  Tenant  leases  are
generally  subject  to  annual  renewals.  The  General  Partners'  and  Limited
Partners'  interest in Partnership  earnings or loss initially amounts to 1% and
99%,  respectively.  The  allocation  of the 1%  interest  between  the  General
Partners  is  discretionary.  At such  point in time cash  distributions  to the
Limited  Partners equal their original  invested capital plus interest at a rate
of the greater of 12% (14% for those  investors who  subscribed  for units on or
before 90 days after  December 7, 1988) or the  increase in the  Consumer  Price
Index per annum,  cumulative  non-compounded on their adjusted invested capital,
net income or loss will be allocated 15% to the General  Partners and 85% to the
Limited Partners. Upon dissolution of the Partnership, the General Partners must
have capital  accounts  greater than or equal to 1.01% of the original  invested
capital.  If a deficiency  exists, the General Partners will be required to fund
the  necessary  amounts.  Effective  January 7, 1998,  one of the two  apartment
complexes was foreclosed by the mortgage holder.

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  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

Partnership Loss Per Limited Partnership Unit

Partnership  loss per limited  partnership unit is computed by dividing the loss
allocated  to the Limited  Partners by the  weighted  average  number of limited
partnership  units sold.  The per unit  information  has been computed  based on
9,685 weighted average limited partnership units outstanding.

Principles of Consolidation

The  Partnership  is the sole  limited  partner of a single  asset  partnership,
Bicycle Club Joint Venture,  L.P. The consolidated  financial statements include
the  accounts  of the  Partnership  and Bicycle  Club Joint  Venture,  L.P.  All
significant  intercompany  accounts and  transactions  have been  eliminated  in
consolidation.

                                      19
<PAGE>
                   SECURED INVESTMENT RESOURCES FUND, L.P. III
                                (A Partnership)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1998 AND 1997

NOTE 1:   NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
          POLICIES (Continued)

Depreciation and Amortization

Depreciation and amortization methods and lives are as follows:  

<TABLE>
<CAPTION>
<S>                                 <C>                   <C>
                                    Estimated
                                    Useful Life            Method
                                    -----------            ------
Building and land improvements      30 years           Straight-line
Equipment                            5 years           Straight-line

</TABLE>
Debt issue costs are being amortized over the lives of the related mortgage note
using a method that approximates the interest method.  Amortization  expense was
$63,254,  $75,767 and $98,336 for the years ended  December 31,  1998,  1997 and
1996, respectively.

Impairment

The Partnership  evaluates  long-lived assets to be held and used for impairment
when events or changes in  circumstances  indicate  that the carrying  amount of
such  assets  may not be  recoverable.  Impairment  is  recognized  if  expected
undiscounted  future  cash  flows  are less  than the  carrying  amount of those
assets.

Income Taxes

Income  taxes on the income of the  Partnership  are  assumed by the  individual
partners.  Therefore,  no  provision  for  income  taxes  is  reflected  in  the
accompanying consolidated financial statements.

Restricted Deposits

Restricted  deposits consist of cash accounts held for debt service payments and
repair and replacement costs.

Future Changes in Accounting Principle

SFAS No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities,"
was issued in June 1998.  The Statement is effective for all fiscal  quarters of
all fiscal years beginning after June 15, 1999. This  pronouncement  establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts  (collectively referred to as
derivatives) and for hedging activities. The Partnership anticipates no material
impact of SFAS No. 133 on its  consolidated  results of  operations or financial
position.

                                       20
<PAGE>
                   SECURED INVESTMENT RESOURCES FUND, L.P. III
                                 (A Partnership)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1998 AND 1997

NOTE 1:   NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
          POLICIES  (Continued)

Reclassifications

Certain  reclassifications  have  been  made  to the  1997  and  1996  financial
statements  to  conform  to the 1998  financial  statement  presentation.  These
reclassifications had no effect on net income/loss.


NOTE 2: INVESTMENT PROPERTIES

Major classifications of investment properties, stated at cost, are as follows:

<TABLE>
<CAPTION>
<S>                                                             <C>             <C> 
                                                                1998            1997
                                                                ----            ----
     Greenhills Bicycle Club Apartments                    $11,192,743     $11,045,368
     KC Club Apartments                                                      5,050,435
     Office Equipment                                           12,180          12,180
                                                            ----------     -----------
                                                            11,204,923      16,107,983
     Less accumulated depreciation                           3,985,075       5,273,994
                                                            ----------     -----------
                                                           $ 7,219,848     $10,833,989
                                                           ===========     ===========

Depreciation  expense was $373,505,  $541,921,  and $529,408 for the years ended
December 31, 1998, 1997 and 1996 respectively.


NOTE 3:  MORTGAGES PAYABLE

</TABLE>
<TABLE>
<CAPTION>
<S>                                                              <C>             <C>  
                                                                1998            1997 
                                                                ----            ---- 
     Real Estate Mortgages:
       Greenhills Bicycle Club Apartments (A)              $ 7,962,718     $ 8,025,084
       KC Club Apartments (B)                                                3,922,211
       Greenhills Bicycle Club Apartments (C)                                  397,165
                                                           -----------     -----------
                                                           $ 7,962,718     $12,344,460
                                                           ===========     ===========
</TABLE>
                                       21
<PAGE>
                   SECURED INVESTMENT RESOURCES FUND, L.P. III
                                 (A Partnership)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1998 AND 1997

NOTE 3:  MORTGAGES PAYABLE (Continued)

(A) Mortgage payable, bank, original balance of $8,100,000,  payable in monthly
installments of $65,174 including  principal and interest.  Due August 2001 with
interest at 9%; collateralized by investment property.

(B) Mortgage payable,  bank, original balance of $4,550,000,  payable in monthly
payments  including  interest at 8.45%.  Collateralized by a deed of trust. (see
Note 6)

(C) Mortgage  payable,  bank,  original balance of $400,000,  payable in monthly
payments including interest at 9%. Principal due July 2001. (see Note 6)

The carrying values for the above mortgages payable approximate fair values.

Aggregate  annual  maturities  of  long-term  debt at  December  31, 1998 are as
follows:

            1999          $      68,217
            2000                 74,616
            2001              7,819,885
                          -------------

                          $   7,962,718
                          =============

NOTE 4: LAND LEASE

The Partnership  entered into a land lease agreement for the land underlying the
KC Club Apartments for a term of 20 years.  The lease payments for years 1 to 15
were  calculated  at 50% of that  year's net  operating  income  from the leased
premises in excess of an ascending scale from $650,000 to $800,000. During years
16 to 20, the annual lease payments were 10% of the land's then appraised value.
For the years ended December 31, 1997 and 1996, the net operating income did not
exceed the land lease  requirements,  which resulted in no lease  payments.  The
property  was  lost  to  foreclosure  on  January  7,  1998  and the  lease  was
effectively terminated.

The  Partnership  invested  $500,000  (held as a  Certificate  of Accrual with a
market  value of  $1,037,000  as of  December  31,  1996)  which was  pledged as
collateral  until the property's net operating income achieves the level of 120%
of the debt service on the first mortgages for a consecutive  24-month period or
May 31,  2004,  whichever  is earlier.  The  Certificate  of Accrual was sold on
August 1, 1997 for $1,083,000. The proceeds were used to pay $553,000 of accrued
interest and $530,000 of principal on the KC Club Apartments.

                                       22
<PAGE>
                   SECURED INVESTMENT RESOURCES FUND, L.P. III
                                 (A Partnership)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1998 AND 1997

NOTE 5: RELATED PARTY TRANSACTIONS

Through  December  31, 1998,  SPECS,  Inc.,  a Kansas  corporation  in which the
individual General Partner has a majority interest, received property management
fees for providing  property  management  services.  SPECS,  Inc. also performed
various  professional  services for the  Partnership,  primarily tax accounting,
audit preparation, SEC 10-Q and 10-K preparation, and investor services. Amounts
paid by the Partnership to SPECS, Inc. are as follows:

<TABLE>
<CAPTION>
     <S>                                           <C>            <C>            <C>     
                                                   1998            1997          1996 
                                                   ----            ----          ---- 
     Property Management Fee                    $95,549       $ 137,445     $ 137,449
     Professional Services                       16,672          42,707        45,335
                                              ---------       ---------     ---------
                                              $ 112,221       $ 180,152     $ 182,784
                                              =========       =========     =========
</TABLE>
The General Partners are entitled to receive a Partnership  management fee equal
to 5% of total  operating  cash  flows (as  defined)  for  managing  the  normal
operations of the Partnership.  The Partnership paid partnership management fees
of $17,549 for the year  ended  December  31,  1998.  There was no  partnership
management fee due for years ended December 31, 1997 and 1996.

On January 1, 1999,  the  Partnership  entered  into a new  property  management
agreement with Maxus Properties,  Inc. (Maxus). Under this agreement, Maxus will
provide  management  and other  services  for the  Partnership  similar to those
services  described above. Maxus will be entitled to receive a management fee of
5% of the monthly gross receipts.

Funds due from Secured Investment  Resources Fund, L.P. (a related  partnership)
were being repaid beginning May 1, 1995, including 9% interest.  The balance due
from Secured  Investment  Resources Fund, L.P. was $85,694 at December 31, 1997.
The entire balance on the note was repaid in full in July 1998.

Excess  syndication  costs  paid by the  Partnership  and due from  the  General
Partner of $21,751 were paid in full in July 1998.


NOTE 6: EXTRAORDINARY ITEM

During the year ended  December 31,  1998,  the  Partnership  realized a gain of
$976,185 as the result of the  foreclosure by the mortgage holder on the KC Club
Apartments  in  satisfaction  of the  related  debt (see Notes 1 and 3), and the
exercise of an option to pay off the second  mortgage  related to the Greenhills
Bicycle Club Apartments (see Note 3).

                                       23
<PAGE>
                   SECURED INVESTMENT RESOURCES FUND, L.P. III
                                 (A Partnership)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1998 AND 1997

NOTE 6: EXTRAORDINARY ITEM (Continued)

Under  the  terms  of the  foreclosure,  net  assets  with a net  book  value of
$3,143,191 were  surrendered to the KC Club  Apartments  mortgage holder and the
Partnership was relieved of the mortgage obligation amounting to $3,922,211. The
resulting gain amounted to $779,020.

Under  the  exercise  of the  option,  the  Partnership  settled  the  remaining
principal balance of $397,165 due on the second mortgage of $200,000,  resulting
in a $197,165 gain.


NOTE 7: CASH DISTRIBUTIONS

No distributions have been made since July, 1990. Future distributions,  if any,
will be made from excess cash flow not needed for working capital purposes.


NOTE 8: ADDITIONAL CASH FLOWS INFORMATION

<TABLE>
<CAPTION>
<S>                                                       <C>             <C>           <C>    
                                                         1998             1997          1996   
                                                         ----             ----          ----   
Non-Cash Investing and Financing Activities  

 Net assets surrendered in exchange for 
  debt forgiveness in foreclosure transaction        $3,143,191


Additional Cash Payment Information

 Interest paid                                          740,778       $1,498,393     $984,531

</TABLE>

Item 9.   Changes in and Disagreements with Registrant's Certifying
          Accountants on Accounting and Financial Disclosure.

A Form 8-K was  filed on  November  13,  1998  reporting  the  dismissal  of the
Registrants  auditors,  BDO Seidman,  LLP, and the resulting  selection of Baird
Kurtz & Dobson as auditors for the year ending December 31, 1998.  Amendment No.
1 to such Form 8-K, which included a letter from BDO Seidman, LLP, regarding the
change in certifying accountant, was filed on December 1, 1998.

                                       24
<PAGE>
Part III

Item 10.  Directors and Executive Officers of the Registrant.

The General  Partners of the  Partnership  are James R. Hoyt  (individual),  SIR
Partners III, L.P. (partnership) and Nichols Resources, Ltd. (corporation).

Nichols Resources,  Ltd. (a corporate General Partner) is a Missouri corporation
formed on August  22,  1988 for the  purpose  of acting as a general  partner of
public real estate programs and otherwise  investing in and dealing with limited
partnerships,  property  management  and the real estate  syndication  business.
Nichols  Resources,  Ltd.  was a  wholly-owned  subsidiary  of the J.C.  Nichols
Company  until  January,  1998.  It is  now a  wholly-owned  subsidiary  of  MJS
Associates,  Inc., a Missouri corporation with executive offices located at 1100
Main Street, Ste 2100 Kansas City, Missouri 64105. MJS Associates, Inc. acquired
all of the  outstanding  stock of Nichols  Resources,  Ltd. in January 1998 from
J.C. Nichols  company.  Nichols  Resources,  Ltd. issued 15,000 shares of common
stock for $1,500,000 on August 22, 1988.

James R. Hoyt ( Managing General Partner),  age 60, holds a Bachelor's Degree in
Business  Administration and is a licensed real estate broker in two states. Mr.
Hoyt has been  actively  involved for more than the past twenty years in various
real estate endeavors including  development,  syndication,  property management
and brokerage.

Mr. Hoyt is the  Managing  General  Partner  and  sponsor of Secured  Investment
Resources Fund,  L.P.  (S.I.R.) and Secured  Investment  Resources Fund. L.P. II
(S.I.R.  II). Since 1983,  Mr. Hoyt has been involved as the Individual  General
Partner in ten specified real estate private placement offerings. As of December
31, 1998, these partnerships,  including Secured Investment Resources Fund, L.P.
III,  have  raised a total of  $60,710,000.  Mr.  Hoyt has agreed to withdraw as
Managing  General  Partner,  pursuant  to the  Settlement  Agreement  and Mutual
Release  described in item 12, and has not been active in the  management of the
Partnership since July, 1998.

SIR Partners III, L.P.  f/k/a Hoyt  Partners III,  L.P., (a limited  partnership
General Partner) is a limited  partnership  organized on February 23, 1988 under
the statutes of the State of Missouri. James R. Hoyt is the General Partner. The
Partnership  was  formed  for the  purpose  of acting as a general  partner  and
acquisition agent of Secured Investment Resources Fund, L.P. III.

Item 11.  Management Compensation

During  1998,  The  Partnership  paid  $96,000  in fees to related  parties  for
property  management  services.  The  Partnership  also paid  $17,000 to Nichols
Resources,  Ltd,  for  professional  services  as  described  in  Note  5 to the
accompanying Consolidated Financial Statements.

                                       25
<PAGE>
Item 12.  Security ownership of Certain Beneficial owners and
          Management,

(a)   Security Ownership of certain beneficial owners.

No  individual  or group as  defined  by  Section  13 (b) (3) of the  Securities
Exchange Act of 1934,  known to the registrant is the  beneficial  owner of more
than 5 percent of the registrant's securities.

(b)  Security ownership of Management.

The General  Partners do not own any limited  partner units,  although  together
they own a 1% general  partnership  interest in the Partnership.  As of December
31,  1998,  officers  and  directors  of  Nichols  Resources,  Ltd.  as a  group
beneficially  own  20  limited  partnership  units  of  the  Partnership,  which
represent less than 1% of the outstanding limited partner units.

(c )   Change in Control.

On July 21st, 1998, Nichols Resources Ltd., a general partner of the Partnership
("Nichols"),  Bond Purchase,  L.L.C.  ("Bond") and David L. Johnson ("Johnson ")
and other affiliates of Johnson,  along with the Partnership,  SIR Partners III,
L.P., General Partner of the Partnership ("SIR Partners III"),  SPECS, Inc., the
company  which  provides  the  Partnership   management  and  investor  services
("SPECS")  and  James R.  Hoyt,  Managing  General  Partner  of the  Partnership
("Hoyt"),  entered into a certain  Settlement  Agreement and Mutual Release (the
"Agreement").  The Agreement settled a dispute which had arisen between Nichols,
SIR Partners III and Hoyt,  general  partners of the Partnership over the proper
course of action to be taken for the  Partnership.  This dispute resulted in the
filing of a civil action in the Circuit Court of Jackson County, Missouri.

Pursuant to the Agreement, Nichols has agreed (i) to pay $100,000 in cash to SIR
Partners  III and Hoyt,  $22,000 of which was paid in July,  1998 by Hoyt to the
Partnership to pay a receivable owed by affiliates of the Partnership for unpaid
excess  syndication  costs and  expenses  currently  shown on the  Partnership's
financial  statements and (ii) to dismiss the civil actions  filed.  In exchange
for the $100,000 in cash and the  dismissal of the civil  actions,  SIR Partners
III and Hoyt have agreed (i) to transfer their General Partnership  interests to
Nichols and (ii) to withdraw as Managing  General Partner and general  partners.
Under the Partnership's  Amended and Restated  Agreement of Limited  Partnership
dated  December  6, 1988  (the  "Partnership  Agreement"),  such  transfers  and
withdrawals  are  subject  to the  majority  vote of the  Partnership's  limited
partners (the "Limited

                                       26
<PAGE>
Item 12.  Security ownership of Certain Beneficial owners and
          Management --Cont'd

Partners").  Hoyt and SIR Partners III have also agreed that Nichols, as general
partner of the  Partnership,  shall have the right to designate  the  management
company to manage the assets of the  Partnership and to execute all documents to
effectuate the release of the current management contract.

Nichols,  as a general  partner of the  Partnership,  intends to call for a vote
without a meeting  of the  Limited  Partners,  file a proxy  statement  with the
Securities and Exchange Commission and solicit proxies from the Limited Partners
to seek  approval  from the  Limited  Partners  to the  transfer  of the general
partnership  interests,  the  withdrawal of Hoyt and SIR Partners III as general
partners of the  Partnership  and the  replacement  of Hoyt as Managing  General
Partner in favor of Nichols.  Hoyt and SIR Partners III have agreed to use their
best efforts to assist in obtaining  approval  from the limited  partners of the
withdrawal of Hoyt and SIR Partners III as General  Partners of the partnership.
In the  event the  majority  approval  is  obtained,  Nichols  shall be the sole
general partner of the Partnership. Nichols has been the acting Managing General
Partner of the Partnership since July, 1998.


Item 13.     Certain Relationships and Related Transactions.

See  Notes to  Financial  Statements,  Note 5 to the  accompanying  Consolidated
Financial Statements.

(The remainder of this page left blank intentionally)

                                       27
<PAGE>
                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a)(1) The following Financial  Statements of Secured Investment Resources Fund,
       L.P. III, are included in Item 8:

SECURED INVESTMENT RESOURCES FUND, L.P. III
                                                                            Page

     (i)   Independent Accountants' Report
             Baird, Kurtz & Dobson                                            12
             BDO Seidman, LLP                                                 13

     (ii)  Consolidated Balance Sheets- December 31, 1998 and 1997         14-15

     (iii) Consolidated Statements of Income-Years Ended
           December 31, 1998, 1997, and 1996                                  16

     (iv)  Consolidated   Statements  of  Changes  in  Partnership  Equity
           (Deficit) - Years Ended December 31, 1998, 1997, and 1996          17

     (v)   Consolidated Statements of Cash Flows-Years Ended
           December 31, 1998, 1997, and 1996                                  18

     (vi)  Notes to Consolidated Financial Statements                      19-24


(a)(2) The following Financial Statement Schedules as part of this report:

     (i)   Report of Independent Accountants on Financial
           Statement Schedules                                                32

     (i)   Schedule II - Allowance For Doubtful Accounts Information          33

     (ii)  Schedule III - Real Estate and Accumulated Depreciation         34-35


All schedules  other than those  indicated in the index have been omitted as the
required information is presented in the financial statements,  related notes or
is inapplicable.

                                       28
<PAGE>
(a)(3) The following  Exhibits are Incorporated by Reference and are an integral
       part of this Form 10-K.

Exhibit Number      Description
--------------      -----------

     (3)            (a) Amended and Restated Agreement of Limited Partnership.
                        (iii)

                    (b) Certificate of Limited Partnership. (i)

     (4)            (a) Form of Subscription Agreement. (iii)

                    (b) Form of Certificate evidencing units. (i)

     (10)           (a) Property Management Agreement As amended. (ii)

                    (b) Escrow Agreement between the Partnership and The Mission
                        Bank.  (i)

                    (c) Real Estate Contract of Sale for the Brywood Hills
                        Apartments. (iv)

                    (d) Real Estate Contract of Sale for The Greenhills Bicycle
                        Club (formerly Candlewyck Apartments). (v)

                    (e) Deed of Trust and Promissory Note for Brywood Hills
                        Apartments. (vii)

                    (f) Deed of Trust and Promissory Notes for Greenhills
                        Bicycle Club (formerly Candlewyck Apartments). (vii)

     (16)           (a) Letter regarding change in certifying accountant. (vi)
                    (b) Letter regarding change in certifying accountant. (viii)

     (25)           (a) Power of Attorney. (i)

     (27)           (a) Secured  Investment  Resources  Fund, L.P. III Financial
                        Data Schedule at December 31, 1998 and for the year then
                        ended.

     (28)           (b)  Guarantee of General Partners. (i)

                                       29
<PAGE>
(i)  Previously  filed on September  13, 1988 as an Exhibit to the  Registration
Statement  on Form  S-11  (file  no.  3324235)  such  Exhibit  and  Registration
Statement incorporated herein by reference.

(ii)  Previously  filed on  December  7, 1988 as an Exhibit to  Amendment  #1 to
registration  Statement  of Form S-11 such  Exhibit and  Registration  Statement
incorporated herein by reference.

(iii)  Previously  filed  on  December  7,  1988  as  part  of  Amendment  #1 to
Registration Statement and incorporated herein by reference.

(iv)  Previously  filed as an exhibit to a current report on Form 8-K dated June
12, 1989 which exhibit and Form is incorporated herein by reference.

(v) Previously filed as an exhibit to a current report on Form 8-K dated October
30, 1989 which exhibit and Form is incorporated herein by reference.

(vi)  Previously  filed as an  exhibit  to a  current  report  on Form 8-K dated
December 4, 1989 which exhibit and Form is incorporated herein by reference.

(vii)  Previously  filed as an  exhibit  to an annual  report on Form 10-K dated
December 31, 1989 which exhibit and Form is incorporated herein by reference.

(viii) Previously filed as an exhibit to a current report on Form 8-K (Amendment
No. 1) dated December 1, 1998 which exhibit and Form is  incorporated  herein by
reference.

(b) Report of Form 8-K filed during the fourth quarter.

A Form 8-K was filed on November 13, 1998 (file no. 000-18475), such Form 8-K is
incorporated herein by reference.  Amendment No. 1 to such Form 8-K was filed on
December 1, 1998 (file no.  000-18475),  such  Amendment  No. 1 is  incorporated
herein by reference.

(c ) See Exhibit Index contained herein.

(d)  See (a)(2) above.

                                       30
<PAGE>
SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.


                                             Secured Investment Resources
                                             Fund, L.P., III, a Missouri limited
                                             partnership (Registrant)

Date: March 31, 1999                         By: Nichols Resources, Ltd., its
                                                 general partner

                                                  By:  /s/ Christine A. Robinson
                                                       -------------------------
                                                       Christine A. Robinson
                                                       President

Pursuant to the  requirements  of the  Securities  Exchanged  Act of 1934,  this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant in the capacities and on the dates indicated:

No annual report of proxy material has been sent to security  holders during the
Registrant's  last fiscal year,  but an annual report and proxy material will be
furnished to security  holders  subsequent to the filing of the annual report on
this form.

/s/James R. Hoyt
----------------------------       Individual general            March 31, 1999
James R. Hoyt                      partner of the Registrant


/s/ David L. Johnson
----------------------------       Director of Nichols           March 31, 1999
David L. Johnson                   Resources, Ltd., a
                                   corporate general partner
                                   of the Registrant

/s/ John W. Alvey
---------------------------        Director of Nichols           March 31, 1999
John W. Alvey                      Resources, Ltd., a
                                   corporate general partner
                                   of the Registrant

/s/ Daniel W. Pishny
---------------------------        Director of Nichols           March 31, 1999
Daniel W. Pishny                   Resources, Ltd., a
                                   corporate general partner
                                   of the Registrant

                                       31
<PAGE>
                        Report of Independent Accountants
                        on Financial Statement Schedules


The Partners
Secured Investment Resources Fund, L.P. III
Kansas City, Missouri

In connection with our audit of the consolidated financial statements of Secured
Investment  Resources  Fund,  L.P. III for the year ended  December 31, 1998, we
have also audited the information in the following financial statement schedules
for the year ended December 31, 1998.  These financial  statement  schedules are
the  responsibility of the Partnership's  management.  Our  responsibility is to
express an opinion on these financial statement schedules based on our audits of
the basic  financial  statements.  The  schedules  are presented for purposes of
complying with the Securities and Exchange  Commission's  rules and  regulations
and are not a required part of the consolidated financial statements.

In our  opinion,  the  financial  statement  schedule  referred  to above,  when
considered  in  relation  to the basic  financial  statements  taken as a whole,
present  fairly,  in all  material  respects,  the  information  required  to be
included therein.

                                                 /s/ Baird, Kurtz & Dobson
                                                 -------------------------------


Kansas City, Missouri
January 21, 1999

                                       32
<PAGE>
                   Secured Investment Resources Fund L.P. III
                  Schedule II - Allowance for Doubtful Accounts
                                December 31, 1998


<TABLE>
<CAPTION>
<S>               <C>                  <C>             <C>                     <C>
                   Balance at                          Bad Debt Write          Balance at   
                  Beginning of         Charged to      Offs Deducted              End
                    Period             Operations      From Allowance          of Period
                    ------             ----------      --------------          ---------

For Years Ended December 31,           

   1996          $     7,150          $     4,850       $    ---              $   12,000

   1997          $    12,000          $    62,400       $  58,200             $   16,200

   1998          $    16,200          $      ---        $  16,200             $     ---

</TABLE>

(the remainder of this page left blank intentionally)

                                       33
<PAGE>
                    Secured Investment Resource Fund, L.P. III
               Schedule III Real Estate & Accumulated Depreciation
                                December 31, 1998

<TABLE>
<CAPTION>
<S>                                         <C>                                        <C>
                                            Initial Cost to Partnership (a)            Subsequent to Acquisition
                                            -------------------------------            -------------------------
<S>                           <C>             <C>      <C>             <C>         <C>              <C>
                                                        Building &     Furniture                    Reduction
                              Encumbrances    Land     Improvement     Equipment   Improvements     of Basis (b)
                              ------------    ----     -----------     ---------   ------------     ------------
Garden Apartments:
  KC Club Apartments           3,922,211        0        4,775,465      295,527       195,464        (216,021)
  Kansas City, MO

  Green Hills Bicycle Club     8,422,249   430,937       9,988,057      832,619       379,597        (576,842)
  Kansas City, MO             ----------   -------      ----------    ---------       -------        ---------

Other Equipment                        0         0               0            0        12,180               0
                              ----------   -------      ----------    ---------       -------        ---------
    TOTAL                     12,344,460   430,937      14,763,522    1,128,146       587,241        (792,863)
                              ==========   =======      ==========    =========       =======        ======== 


<S>                       <C>
                                           Gross Amount at Which
                                         Carried at Close of Period
                          ------------------------------------------------------
<S>                       <C>        <C>               <C>               <C>       <C>             <C>        <C>
                                      Building &        Furniture                  Accumulated       Date     Depreciation
                          Land       Improvements      Equipment         Total     Depreciation    Acquired        Life
                          ----       ------------      ---------         -----     ------------    --------        ----

Garden Apartments:
  KC Club Apartments         0                  0               0            0               0     06/30/89     30 Yrs (1)
  Kansas City, MO                                                                                                5 Yrs (2)

  Green Hills Bicycle  407,226          9,605,002       1,180,515   11,192,743      3,972,895      10/27/89     30 Yrs (1)
   Club                                                                                                          5 Yrs (2)
  Kansas City, MO

Other Equipment              0                  0          12,180       12,180         12,180                    5 Yrs (2)
                       -------          ---------       ---------   ----------      ---------
        TOTAL          407,226          9,605,002       1,192,695   11,204,923      3,985,075
                       =======          =========       =========   ==========      =========
</TABLE>
(1)     Estimated useful life of buildings
(2)     Estimated useful life of furniture and fixtures

NOTES:

(a) The initial cost to the Partnership  represents the original  purchase price
of the properties,  including $205,562 and $145,578 of improvements  incurred in
1986 and 1987,  respectively,  which were  contemplated at the time the property
was acquired.

(b)  Receipts  received  under  the terms of  certain  guarantee  agreement  are
recorded by the Partnership as a reduction of the basis of the property to which
the guaranteed income relates.

                                       34
<PAGE>

                    Secured Investment Resource Fund, LP III
          Schedule III Real Estate & Accumulated Depreciation--Cont'd.
                                December 31, 1997

(c) Reconciliation of Real Estate Owned:

<TABLE>
<CAPTION>
<S>                           <C>            <C>            <C>                  <C>
                                                            Buildings &          Furniture
                                 Total         Land         Improvement          Equipment
                                 -----         ----         -----------          ---------

Balance at January 1, 1996    15,939,497     407,226         14,154,310           1,377,961
  Additions during year:
    Reclassification                   0           0                  0                   0
    Improvements                 102,145           0              8,163              93,982
                              ----------     -------          ---------           ---------
Balance at December 31, 1996  16,041,642     407,226         14,162,473           1,471,943
  Additions during year:
    Improvements                 102,145           0             21,304              45,037
                              ----------     -------          ---------           ---------
Balance at December 31, 1997  16,107,983     407,226         14,183,777           1,516,980
  Additions during year:
    Improvements                 147,375           0             62,471              84,904
    Disposition              (50,050,435)          0         (4,641,246)           (409,189)
                              ----------     -------          ---------           ---------
Balance at December 31, 1998  11,204,923     407,226          9,605,002           1,192,695
</TABLE>

(d) Reconciliation of Accumulated Depreciation:

<TABLE>
<CAPTION>
<S>                           <C>            <C>            <C>                  <C>
Balance at January 1, 1996     4,202,665           0          3,012,364           1,190,301
  Additions during year:
    Depreciation Expense         529,408                        435,991              93,417
                              ----------     -------          ---------           ---------
Balance at December 31, 1996   4,732,073           0          3,448,355           1,283,718
  Additions during year:
    Depreciation Expense         541,921                        462,547              79,374
                              ----------     -------          ---------           ---------
Balance at December 31, 1997   5,273,994           0          3,910,902           1,363,092
    Additions during year:
      Depreciation Expense       373,505                        328,148              45,357
        Disposition           (1,662,424)                    (1,315,166)           (347,258)
                              ----------     -------          ---------           ---------
Balance at December 31, 1998   3,985,075           0          2,923,884           1,061,191
                               =========     =======          =========           =========
</TABLE>

(e) The total gross amount of real estate at December 31, 1997 includes $566,888
of acquisition fees paid to affiliates.

                                       35
<PAGE>