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, 1997

                                       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      33-24235

                   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
        incorporation or organization)              Identification No.)

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

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

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 ___ No X

     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.

     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, 1997, the  Partnership  has made cash  distributions  to
Limited  Partners of $363,928 for the period April 1, 1989 through  December 31,
1997. 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, 1997,  the  Partnership  had no employees.  Employees of
SPECS,  Inc.  provide  services  to the  Partnership.  James R. Hoyt,  a General
Partner, is a shareholder in SPECS, Inc.



                                        2

<PAGE>



Item 1. Business--Cont'd.

     As of December 31, 1997,  the  Partnership  was  in  negotiation  with  the
mortgage  holder  on KC  Club  Apartments concerning a restructure of that debt.
More favorable  interest rates and possible  principal write  downs  were  under
consideration.  Due to the inability to restructure the debt, on January 7, 1998
the property was lost to foreclosure (as described in Note L).

     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  management believes that general
economic  circumstances and trends and new properties in the vicinity of each of
the Partnership's properties 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.

Item 2. Properties

     The following table sets forth the investment  portfolio of the Partnership
at December 31, 1997:

                                                                     Average
                                Properties at                      Occupancy(*)
Property           Description   Initial Cost     Date Acquired     Percentage

                                                                   1997   1996

KC Club Apartments
Kansas City, MO     200 units   $ 5,070,992       June 14, 1989     84%    88%

Greenhills Bicycle
Club Apartments
Kansas City, MO     312 units   $11,251,613       Oct. 27, 1989     91%    91%


(*) Based upon vacancy amount (in dollars) as a percent of gross possible rents.

The encumbrances against each property are described in Note C.

                                        3

<PAGE>

Item 3. Legal Proceedings.

     As of December 31,  1997,  the  Partnership  was in  negotiations  with the
mortgage  holder on KC Club  Apartments  concerning a restructure  of that debt.
More  favorable  interest  rates and possible  principal  write downs were under
consideration.  Due to the inability to restructure the debt, on January 7, 1998
the property was lost to foreclosure.

     The assets and  liabilities as of December 31, 1997 that were applicable to
the foreclosed property approximated the following:

   Investment properties, net of accumulated depreciation            $3,388,000
   Other assets                                                          84,000
   Mortgage payable, including accrued interest                      (3,992,000)
   Other liabilities                                                   (259,000)

   Rental  revenue for the KC Club  Apartments for the year ended December 31,
1997 was $853,000 while operating expenses (including interest) were $1,160,000.

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

     None


                                     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, 1997,  the  Partnership  had admitted 539 Limited  Partners who
purchased 9,685 units.


             (The remainder of this page intentionally left blank.)














                                        4

<PAGE>



<TABLE> 
Item 6. Selected Financial Data,

<CAPTION>

OPERATING DATA
(In Thousands)                     1997        1996        1995        1994        1993
                                  -----       -----       -----       -----       -----
<S>                                 <C>        <C>         <C>         <C>         <C>
Rents ......................   $  2,791    $  2,768    $  2,697    $  2,299    $  2,261
Interest and earnings on
  investments ..............        196          90         128         106         103
Property operating
  expense ..................      1,473       1,504       1,560       1,454       1,260
Interest expense ...........      1,113       1,126         925         931         974
Depreciation/
   Amortization ............        605         606         512         648         711
                               --------    --------    --------    --------    --------

Partnership Loss ...........       (204)       (378)       (172)       (628)       (581)
                               ========    ========    ========    ========    ========


PER LIMITED PARTNERSHIP UNIT
Partnership Loss (1) .......   $ (20.87)   $ (38.64)   $ (17.54)   $ (64.23)   $ (59.39)
                               ========    ========    ========    ========    ========

Cash Distribution ..........   $   --      $   --      $   --      $   --      $   --
                               ========    ========    ========    ========    ========

<CAPTION>
BALANCE SHEET DATA
(In Thousands)                     1997        1996        1995        1994        1993
                                  -----       -----       -----       -----       -----
<S>                                 <C>        <C>         <C>         <C>         <C>   
Total Assets ...............   $ 11,617    $ 12,749    $ 13,223    $ 14,227    $ 14,779
Mortgage Debt ..............   $ 12,344    $ 12,931    $ 12,851    $ 13,737    $ 13,770


<FN>
     (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).
</TABLE>


                                        5

<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  $2,987,000  compared to
$2,858,000  (4.5%) in 1996. This increased revenue was the result of an increase
in gross  possible  rental rates.  During 1997 the operating and  administrative
costs decreased  $31,000 (2.1%) primarily in the areas of services,  payroll and
marketing.

     Interest expense  decreased from $1,126,000 in 1996 to $1,112,000 (1.2%) in
1997. Depreciation and amortization expense decreased from $606,000 to $605,000.
The 1997 net loss decreased by $174,000 (46.0%).

     Revenue  for  the  Partnership  was  $2,858,000  for  1996 as  compared  to
$2,825,000  (1.2%) in 1995.  During 1996 the operating costs  decreased  $44,000
(3.4%) primarily in the areas of services, marketing, and payroll.

     Interest expense  increased from $925,000 in 1995 to $1,126,000  (21.7%) in
1996. Depreciation and amortization increased from $512,000 to $606,000 (18.3%).
The 1996 net loss increased by $206,000 (120.3%).

     Total expenses  decreased  $56,000 (3.5%) for 1996  operations  compared to
1995  results.  The  decrease in  expenses  was  primarily  due to a decrease in
administrative, marketing, and payroll costs.

     The Partnership anticipates that 1998 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.

     Due to the inability to renegotiate loan terms with the lender, the KC Club
Apartments was foreclosed in 1998. It is anticipated  that this will result in a
decrease in revenue with a corresponding  decrease in expenses.  The 1997 rental
revenue for the KC Club was  $853,000  and expenses  (including  interest)  were
$1,160,000.

     Liquidity and Sources of Capital

     During  1997,  the  primary  source of  working  capital  was  provided  by
investing  activities in the amount of $887,000.  Operations  used $59,000,  and
financing activities used $594,000. During the year accounts payable and accrued
expenses increased by $56,000 and accrued interest decreased by $386,000.


                                        6

<PAGE>

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

     Liquidity and Sources of Capital - Cont'd

     As a result of declining  cash flows for KC Club  Apartments,  on August 1,
1997, the certificate of accrual (as described in note D) 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 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.

     During 1996, the primary source of working capital was provided by existing
cash  balances.  Operations  provided  $49,000,  investing  activities  consumed
$207,000,  and financing activities used $246,000.  During 1996 accounts payable
and accrued expenses  decreased  $339,000 and accrued interest payable increased
by $142,000.

     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).

     In addition,  a second  mortgage  note was signed by the  Partnership.  The
terms of the note were  $400,000  with  interest  paid monthly at the rate of 9%
with a maturity date of July 31, 2001 at which time the principal  shall be due.
The note can be  prepaid  at a  discount.  The  past  due real  estate  taxes on
Greenhills  Bicycle  Club  Apartments  were paid in full  from a portion  of the
proceeds of this note.

     The funds advanced by the Partnership to Secured Investment Resources Fund,
L.P.  began to be repaid,  including 9% interest,  in May, 1995. No principal or
interest  payments were received in 1997,  while interest  accrued into the note
balance was $7,349.

     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.  The 1997 Net  Operating  Income  after  interest
expense of the remaining property,  The Greenhills Bicycle Club Apartments,  was
$395,000.



                                        7

<PAGE>




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

     One Time Gain on Sale of Investment

     The  Partnership  recorded a one time gain on the sale of an  investment of
$114,531.  The  Certificate  of Accrual  (as  described  in Note D.) was sold on
August 1, 1997 for $1,083,068.  The recorded value of the Certificate of Accrual
was $968,537, resulting in a one time gain on the sale of $114,531.

     Year 2000

     The Partnership is currently dependant upon the General Partners and SPECS,
Inc.  ("SPECS") for management and  administrative  services.  It is anticipated
that the General  Partners and SPECS will have to modify or replace  portions of
their software so that the computer systems will function  properly with respect
to dates in the year 2000 and thereafter (the "Year 2000 Issue"). The project is
estimated to be completed no later than January,  1999. It is  anticipated  that
SPECS will install a Year 2000 compliant software system at the property by that
date. The cost of the conversion is not anticipated to be material.  The general
partners believe that with  modifications to existing software and conversion to
new software, the Year 2000 Issue will not pose significant operational problems
for its  computer  systems.  The  General  Partners  also  believe  that if such
conversions are not made, or are not completed timely, the Year 2000 issue would
not have a material impact on the operations of the Partnership.

     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.

     New Accounting Standards

     SFAS No. 130,  "Reporting  Comprehensive  Income," was issued in June 1997.
Comprehensive  income is  defined  as net  income  plus  certain  items that are
recorded directly to shareholders'  equity,  such as unrealized gains and losses
on  available-for-sale  securities.  Components of comprehensive  income will be
included  in a  financial  statement  that  has the  same  prominence  as  other
financial  statements  starting in the first  quarter of fiscal  1999.  SFAS No.
130's disclosure requirements will have no impact on the Partnership's financial
condition or results of operations.




                                        8

<PAGE>


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

     New Accounting Standards - Cont'd.

     SFAS No.  131,  "Disclosure  about  Segments of an  Enterprise  and Related
Information," is effective for financial  statements for periods beginning after
December 15, 1997,  but interim  reporting is not required in 1998. An operating
segment is  defined  under SFAS No. 131 as a  component  of an  enterprise  that
engages in  business  activities  that  generate  revenue  and expense for which
operating  results are  reviewed by the chief  operating  decision  maker in the
determination   of  resource   allocation  and   performance.   The  Partnership
anticipates no impact of SFAS No. 131 on future financial statement disclosures.

     In  April  1998,  the  Accounting   Standards  Executive  Committee  issued
Statement of Position 98-5 "Reporting on the Costs of Start-Up Activities."  SOP
98-5  provides  guidance  on the  financial  reporting  of start  up  costs  and
organization  costs. It requires costs of start-up  activities and  organization
costs to be expensed as incurred.  The SOP broadly defines  start-up  activities
and  provides  examples to help  entities  determine  what costs are and are not
within the scope of this SOP.  The SOP applies to all  nongovernmental  entities
and,  in  general,  is  effective  for  financial  statements  for fiscal  years
beginning after December 15, 1998.

     The  Partnership is not in its start-up phase and thus does not expect this
SOP to have a  significant  effect on its  financial  statement  when it becomes
effective.

     In June 1998,  the Financial  Accounting  Standards  Board Issued SFAS 133,
"Accounting  for  Derivative  Instruments  and  Hedging  Activities."  SFAS  133
requires companies to recognize "all" derivatives  contracts as either assets or
liabilities in the balance  sheet and to measure them at fair value.  If certain
conditions are met, a derivative may be specifically designated as a hedge,  the
objective of which is to match  the  timing  of gain or loss recognition  on the
hedging derivative with the  recognition  of (i) the  changes  in the fair value
of the hedged asset or liability that are attributable  to  the  hedged risk  or
(ii) the earnings effect of the hedged forecasted transaction.  For a derivative
"not" designated as a hedging instrument,  the  gain  or  loss  is recognized in
income in the period of change.  SFAS 133 is effective  for all fiscal  quarters
of fiscal years beginning after June 15, 1999.

     Historically,  the Partnership has not entered into  derivatives  contracts
either to hedge existing risks or for  speculative  purposes.  Accordingly,  the
Partnership  does not expect  adoption of the new standard on January 1, 2000 to
affect its financial statements.

                                        9

<PAGE>





Item 8. Financial Statements and Supplementary Data


                   SECURED INVESTMENT RESOURCES FUND, L.P. III


            Index
                                                                           Page
Independent Auditors' Report                                                11

Financial Statements:

   Consolidated Balance Sheets - December 31,                             12-13
        1997 and 1996

   Consolidated Statements of Operations -
        Years ended December 31, 1997, 1996 and 1995                         14

   Consolidated Statements of Partnership Deficit
        Years ended December 31, 1997, 1996 and 1995                         15

   Consolidated Statements of Cash Flows -
        Years ended December 31, 1997, 1996 and 1995                      16-17

   Notes to Consolidated Financial Statements                             18-27










                                        10

<PAGE>




                          INDEPENDENT AUDITORS' REPORT
The Partners
Secured Investment Resources Fund, L.P. III
Mission, KS

     We have audited the  accompanying  consolidated  balance  sheets of Secured
Investment  Resources Fund, L.P. III and affiliated companies 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 their  operations and their 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



                                       11

<PAGE>




SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED BALANCE SHEETS
                                                        December 31,
                                                    1997            1996
                                                ------------    ------------
ASSETS

INVESTMENT PROPERTIES (Notes B and C)
 Land and buildings ........................    $ 14,591,003    $ 14,569,699
 Furniture, fixtures and equipment .........       1,516,980       1,471,943
                                                ------------    ------------
                                                  16,107,983      16,041,642
    Less accumulated depreciation ...........     (5,273,994)     (4,732,073)
                                                ------------    ------------
                                                  10,833,989      11,309,569



RESTRICTED DEPOSITS
 Certificate of Accrual on
  Treasury Security (Notes C and D)                      --           898,023
 Restricted Reserve Fund .........                     93,553          34,490
                                                 ------------    ------------
                                                       93,553         932,513

Cash ..................................               317,315          82,985
 Rents and other receivables, less
  allowance for doubtful accounts
  of $16,200 in 1997 and
  $12,000 in 1996 .....................                 7,347           5,106
Prepaid expenses and deposits ..........               30,695          29,161
Due from related parties (Notes F and G)
 Notes receivable .....................                85,694          78,345
 Syndication costs ....................                21,751          21,751
Debt issuance costs, net of
 accumulated amortization of
 $94,880 in 1997 and $31,627
 in 1996 ..............................               226,659         289,913
                                                 ------------    ------------
                                                      689,461         507,261
                                                 ------------    ------------
       TOTAL ASSETS .........................    $ 11,617,003    $ 12,749,343
                                                ============    ============

  See notes to consolidated financial statements.

                                       12

<PAGE>



  SECURED INVESTMENT RESOURCES FUND, L.P. III
  CONSOLIDATED BALANCE SHEETS--CONT'D


                                                           December 31,
                                                       1997            1996
                                                   ------------    ------------

LIABILITIES AND PARTNERSHIP DEFICIT

Mortgage debt (Note C) ......................     $ 12,344,460    $ 12,931,003
Accounts payable and accrued expenses --
 (Note H) .................................            300,653         244,253
Accrued interest ..............................        141,133         527,106
Unearned revenue ...........................            14,449          30,360
Tenant security deposits ...................           105,913         102,050
                                                  ------------    ------------

TOTAL LIABILITIES ..........................        12,906,608      13,834,772
                                                  ------------    ------------

PARTNERSHIP DEFICIT
General Partners
 Capital contributions ....................             2,000           2,000
 Partnership deficit ......................           (52,051)        (50,009)
                                                  ------------    ------------
                                                       (50,051)        (48,009)
                                                  ------------    ------------

Limited Partners
 Capital contributions ..................            3,915,084       3,915,084
 Partnership deficit ....................           (5,154,638)     (4,952,504)
                                                  ------------    ------------
                                                    (1,239,554)     (1,037,420)
                                                  ------------    ------------
TOTAL PARTNERSHIP DEFICIT .....................     (1,289,605)     (1,085,429)
                                                  ------------    ------------
TOTAL LIABILITIES & PARTNERSHIP DEFICIT ....      $ 11,617,003    $ 12,749,343
                                                  ============    ============

See notes to consolidated financial statements.






                                       13

<PAGE>



<TABLE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED STATEMENTS OF OPERATIONS

<CAPTION>
                                                    Years Ended December 31,
                                                   1997           1996           1995
                                            -----------    -----------    -----------
<S>                                                <C>            <C>            <C> 
REVENUES
         Rents ..........................   $ 2,790,617    $ 2,767,870    $ 2,697,035
         Interest and other investment
             income .....................       196,127         90,428        128,763
                                            -----------    -----------    -----------
                                              2,986,744      2,858,298      2,825,798
                                            -----------    -----------    -----------

OPERATING AND ADMINISTRATIVE
         EXPENSES
           Property operating
             expenses ...................     1,189,480      1,177,374      1,222,240
           General and
             administrative
             expenses ...................        54,526         70,752         70,672
           Professional services (Note E)        91,873        118,896        136,955
           Management fees (Note E) .....       137,445        137,449        130,229
                                            -----------    -----------    -----------
                                              1,473,324      1,504,471      1,560,096
                                            -----------    -----------    -----------

           NET OPERATING INCOME .........     1,513,420      1,353,827      1,265,702

NON-OPERATING EXPENSES
           Interest .....................     1,112,421      1,126,256        925,019
           Depreciation and
             amortization ...............       605,175        605,578        512,242
                                            -----------    -----------    -----------
                                              1,717,596      1,731,834      1,437,261
                                            -----------    -----------    -----------


PARTNERSHIP LOSS ........................   $  (204,176)   $  (378,007)   $  (171,559)
                                            ===========    ===========    ===========

Allocation of loss
           General Partners .............   $    (2,042)   $    (3,780)   $    (1,715)
           Limited Partners .............      (202,134)      (374,227)      (169,844)
                                            -----------    -----------    -----------

                                            $  (204,176)   $  (378,007)   $  (171,559)
                                            ===========    ===========    ===========

Partnership loss per
limited partnership unit
                                            $  (20.87)   $    (38.64)   $    (17.54)
                                            ===========    ===========    ===========


        See notes to consolidated financial statements.

</TABLE>

                                       14

<PAGE>



SECURED INVESTMENT RESOURCES FUND, L.P. III

CONSOLIDATED STATEMENTS OF PARTNERSHIP DEFICIT

Years Ended December 31, 1997, 1996 and 1995  

                                         General       Limited
                                         Partners      Partners        Total

Balances at January 1, 1995 ......   $   (42,514)   $  (493,349)   $  (535,863)
Partnership loss .................        (1,715)      (169,844)      (171,559)
                                     -----------    -----------    -----------
Balances at December 31, 1995 ....       (44,229)      (663,193)      (707,422)
Partnership loss .................        (3,780)      (374,227)      (378,007)
                                     -----------    -----------    -----------
Balances at December 31, 1996 ....       (48,009)    (1,037,420)    (1,085,429)
Partnership loss .................        (2,042)      (202,134)      (204,176)
                                     -----------    -----------    -----------
Balances at December 31, 1997 ....   $   (50,051)   $(1,239,554)   $(1,289,605)
                                     ===========    ===========    ===========

See notes to consolidated financial statements.












                                       15

<PAGE>


<TABLE>
        SECURED INVESTMENT RESOURCES FUND, L.P. III
        CONSOLIDATED STATEMENTS OF CASH FLOWS

<CAPTION>
                                                       Years Ended December 31,
                                                    1997          1996          1995
<S>                                                  <C>           <C>           <C>
OPERATING ACTIVITIES
    Partnership loss                            (204,176)     (378,007)   $ (171,559)
    Adjustments to reconcile
      partnership loss to net
      cash provided by (used in)
      operating activities:
         Depreciation and
           amortization                          605,175       605,578       512,242
         Gain on sale of certificate of
           accrual on Treasury security         (114,531)         --            --
         Provision for losses on rents
           and other receivables                   4,200         4,850          (664)
         Changes in assets
           and liabilities:
              Rent and other receivables          (6,441)       (6,171)       48,063
              Prepaid expenses and deposits       (1,534)       (1,992)       22,148
              Accounts payable and
                 accrued expenses                 56,400      (339,486)      (12,170)
              Accrued interest                  (385,973)      141,726       240,385
              Unearned revenue                   (15,911)        2,881        17,520
              Tenant security deposits             3,863        19,840         9,751
                                               ---------    ----------    ----------

NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES                                       (58,928)       49,219       665,716

INVESTING ACTIVITIES
    Improvements to investment properties        (66,341)     (102,145)     (164,484)
    Interest earned on certificate
     of accrual on Treasury security             (70,514)      (70,514)      (64,978)
    Proceeds from sale of certificate of
     accrual on Treasury security              1,083,068          --            --
    Restricted deposits                          (59,063)      (34,490)         --
                                              ----------    ----------    ----------
NET CASH PROVIDED BY
(USED IN) INVESTING ACTIVITIES                   887,150      (207,149)     (229,462)
                                              ----------    ----------    ----------
</TABLE>






                                       16

<PAGE>


<TABLE>
  SECURED INVESTMENT RESOURCES FUND, L.P. III
  CONSOLIDATED STATEMENTS OF CASH FLOWS--CONT'D

<CAPTION>
                                                       Years Ended December 31,
                                                       1997         1996         1995
                                                    ---------    ---------    ---------
<S>                                                    <C>          <C>          <C>
FINANCING ACTIVITIES

    Debt issuance costs .........................  $(  --   )   $(321,890)   $    (235)
    Borrowings (payments) on debt ...............   (586,543)      79,621      (14,669)
         Received from related parties ..........       --           --         18,879
         Note receivable from related parties ...     (7,349)      (3,702)     (98,080)
                                                    ---------    ---------    ---------


NET CASH USED IN
FINANCING ACTIVITIES ............................   (593,892)    (245,971)     (94,105)
                                                    ---------    ---------    ---------

INCREASE/(DECREASE) IN CASH .....................    234,330     (403,901)     342,149
CASH BEGINNING OF PERIOD ........................     82,985      486,886      144,737
                                                    ---------    ---------    ---------
CASH END OF PERIOD ..............................  $ 317,315    $  82,985    $ 486,886
                                                    =========    =========    =========


See notes to consolidated financial statements.

</TABLE>






















                                       17

<PAGE>





SECURED INVESTMENT RESOURCES FUND, L.P. III
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A--SIGNIFICANT ACCOUNTING POLICIES

     Organization  and  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.  The
Partnership has invested in two apartment  complexes in the Metropolitan  Kansas
City Missouri area. It extends unsecured credit,  subject to security  deposits,
to its tenants in both complexes.  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  amount to 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.

     Consolidated  Limited  Partnerships--To  satisfy the lender's  requirements
that real estate assets be in single asset partnerships, in 1996 the Partnership
formed a new single asset partnership by the name of Bicycle Club Joint Venture,
L.P.  The  Partnership  retained  the  same  partnership  structure  as  Secured
Investment  Resources  Fund, L.P. III, with Secured  Investment  Resources Fund,
L.P. III being the sole Limited Partner. The result of operations of this single
asset partnership have been consolidated with the Partnership.

     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.

     Income  Taxes--Any tax liabilities or benefits arising from the Partnership
operations  are  recognized   individually  by  the  respective   partners  and,
consequently,  no provision will be made by the  Partnership for income taxes or
income tax benefits.

     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.











                                       18

<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- CONT'D.

NOTE A--SIGNIFICANT ACCOUNTING POLICIES-- CONT'D.


     Debt Issuance  Cost--Loan  costs,  when  incurred,  are  capitalized by the
Partnership. These costs are amortized over the term of the related loans.

     Restricted Deposits--Certificates of Accrual on Treasury Security were sold
August 1, 1997. (As described in note D) These instruments are reported at cost,
adjusted for accretion of discounts  which  approximates  market.  The accretion
adjustment is recognized in interest  income using the interest  method over the
period to maturity.

     Accounting 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 statement and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

     New Accounting  Standards-SFAS No. 130, "Reporting  Comprehensive  Income,"
was issued in June  1997.  Comprehensive  income is  defined as net income  plus
certain  items that are  recorded  directly  to  shareholders'  equity,  such as
unrealized  gains and losses on  available-for-sale  securities.  Components  of
comprehensive income will be included in a financial statement that has the same
prominence as other financial statements starting in the first quarter of fiscal
1999.  SFAS  No.  130's  disclosure  requirements  will  have no  impact  on the
Partnership's financial condition or results of operations.

     SFAS No.  131,  "Disclosure  about  Segments of an  Enterprise  and Related
Information," is effective for financial  statements for periods beginning after
December 15, 1997,  but interim  reporting is not required in 1998. An operating
segment is  defined  under SFAS No. 131 as a  component  of an  enterprise  that
engages in  business  activities  that  generate  revenue  and expense for which
operating  results are  reviewed by the chief  operating  decision  maker in the
determination   of  resource   allocation  and   performance.   The  Partnership
anticipates no impact of SFAS No. 131 on future financial statement disclosures.

     In  April  1998,  the  Accounting   Standards  Executive  Committee  issued
Statement of Position 98-5 "Reporting on the Costs of Start-Up Activities."  SOP
98-5  provides  guidance  on the  financial  reporting  of start  up  costs  and
organization  costs. It requires costs of start-up  activities and  organization
costs to be expensed as incurred.  The SOP broadly defines  start-up  activities
and  provides  examples to help  entities  determine  what costs are and are not
within the scope of this SOP.  The SOP applies to all  nongovernmental  entities
and,  in  general,  is  effective  for  financial  statements  for fiscal  years
beginning after December 15, 1998.

     The  Partnership is not in its start-up phase and thus does not expect this
SOP to have a  significant  effect on its  financial  statement  when it becomes
effective.




                                       19

<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- CONT'D.

NOTE A--SIGNIFICANT ACCOUNTING POLICIES-- CONT'D.

     In June 1998,  the Financial  Accounting  Standards  Board Issued SFAS 133,
"Accounting  for  Derivative  Instruments  and  Hedging  Activities."  SFAS  133
requires companies to recognize "all" derivatives contracts as either assets  or
liabilities in the balance  sheet and to measure them at fair value.  If certain
conditions are met, a derivative may be specifically  designated as a hedge, the
objective of which is to match the  timing  of gain or loss  recognition  on the
hedging derivative with the recognition of (i) the changes  in the fair value of
the hedged asset or liability that are  attributable  to the hedged risk or (ii)
the earnings  effect  of the hedged  forecasted  transaction.  For a  derivative
"not" designated as a hedging instrument,  the gain or  loss  is  recognized  in
income in the period of change. SFAS 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999.

     Historically,  the Partnership has not entered into  derivatives  contracts
either to hedge existing risks or for  speculative  purposes.  Accordingly,  the
Partnership  does not expect  adoption of the new standard on January 1, 2000 to
affect its financial statements.

NOTE B--INVESTMENT PROPERTIES

Investment properties consists of the following:
                                                              December 31,
                                                          1997          1996
                                                     -----------   -----------
Cost (including capital improvements
subsequent to acquisition):

     Greenhills Bicycle                             
     Club Apartments ..............................   $11,045,368   $10,988,697

     KC Club Apartments ...........................     5,050,435     5,040,765

     Office Equipment .............................        12,180        12,180
                                                      -----------   -----------
                                                       16,107,983    16,041,642

Less:
     Accumulated depreciation .....................     5,273,994     4,732,073
                                                      -----------   -----------
                                                      $10,833,989   $11,309,569

     Depreciation  expense was  $541,921,  $529,408,  and $507,242 for the years
ended December 31, 1997, 1996, and 1995 respectively.









                                       20

<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D

NOTE C--NON-RECOURSE MORTGAGE DEBT


Non-recourse mortgage debt consists of the following:

                                                        December 31,
                                                     1997         1996
                                                  ----------   -----------
Collateralized by Investment Property:
First Mortgages:
 Greenhills Bicycle Club Apartments ...........   $ 8,025,084   $ 8,082,102
 KC Club Apartments ...........................   $ 3,922,211   $ 4,451,382

Second Mortgage:
 Greenhills Bicycle Club Apartments ...........   $   397,165   $   397,519
                                                  -----------   -----------
                                                  $12,344,460   $12,931,003
                                                  ===========   ===========

     KC Club Apartments

     The KC Club  Apartments'  mortgage  note payable is  collateralized  by the
apartment  buildings,  personal property and assignment of its leases and rents.
The interest rate for this mortgage as of December 31, 1997 was 8.45%.

     As a result of declining  cash flows for KC Club  Apartments,  on August 1,
1997, the certificate of accrual (as described in note D) 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 current 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. (See note L).




                                       21

<PAGE>




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D

NOTE C--NON-RECOURSE MORTGAGE DEBT

     Greenhills Bicycle Club Apartments

     On July 8, 1996 the  Partnership  refinanced  the matured 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.

     In addition,  a second  mortgage  note was signed by the  Partnership.  The
terms of the new note are $400,000  with interest paid monthly at the rate of 9%
with a maturity date of July 31, 2001 at which time the principal  shall be due.
The past due real estate taxes on Greenhills  Bicycle Club  Apartments were paid
in full from a portion of the proceeds of this note.

     Cash paid for interest totaled $1,498,393,  $984,531,  and $886,813 for the
years ended December 31, 1997, 1996, and 1995, respectively.

     Maturities of mortgage debt are as follows:

                   1998             $3,984,578
                   1999                 68,217
                   2000                 74,616
                   2001              8,217,049
                   Thereafter                0
                                     ---------
                                   $12,344,460
                                   ===========

NOTE D--LEASES

     The Partnership entered into a land lease agreement for the land underlying
the KC Club Apartments for a term of twenty years.  The lease payments for years
1 to 15 are  calculated at 50% of that year's net operating  income in excess of
an ascending scale from $650,000 to $800,000.  During years 16 to 20, the annual
lease payments are 10% of the land's then appraised  value.  For the years ended
December 31, 1997,  1996 and 1995,  the net operating  income did not exceed the
land lease  requirements which resulted in no lease payments.  In addition,  the
Partnership is obligated to pay real estate taxes assessed on the land value.

     At all  times  during  the  term  of the  lease,  the  Partnership  (or its
assignee)  has the right to purchase the land at a price equal to the greater of
$2,000,000 or fair market value at the time the option is exercised.  Should the
buildings and  improvements be sold prior to the end of the land lease agreement
(20  years),  the  Partnership  is under no  obligation  for payment of the land
rental assessments for the remaining portion of the land lease agreement.

     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


                                       22

<PAGE>




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D

NOTE D--LEASES--CONT'D.

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.  The
property was subsequently lost to foreclosure on January 7, 1998.

NOTE E--RELATED PARTY--MANAGEMENT FEES

     SPECS,  Inc.,  a Kansas  corporation  in which  James R.  Hoyt,  a  general
partner,  is a  shareholder,  receives  property  management  fees for providing
property  management  services.  SPECS, Inc. also performs 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:

                              1997       1996       1995
                          --------   --------   --------
Property Management Fee   $137,445   $137,449   $130,229
Professional Services       42,707     45,335     44,000
                          --------   --------   --------
                          $180,152   $182,784   $174,229
                          ========   ========   ========

     The General  Partners are entitled to receive a Partnership  Management Fee
equal to 5% of Cash Flow From  Operations  (as  defined) for managing the normal
operations of the Partnership.  There was no management fee due for years ending
December 31, 1997, 1996 and 1995.

NOTE F--RELATED PARTY--NOTE RECEIVABLE

     On April 12, 1995,  the SIR Partners III,  L.P.  executed a note payable to
the Partnership in the amount of $522,004. Interest during 1995 was 9%. Interest
earnings for the note was $50,509 in 1995.

     On December 28, 1995, the note principal and all accrued  interest  through
that date was retired in full  pursuant to an assumption  agreement  between the
Partnership, SIR Partners III, and James R. Hoyt. In exchange for payment of the
note (and excess  costs/fees  described in Note G), the Managing General Partner
assumed  full  responsibility  for the matured  second  mortgage  on  Greenhills
Bicycle Club  Apartments.  The Partnership was provided with an executed release
of the note and second deed of trust relating to the Greenhills mortgage.











                                       23

<PAGE>





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D

NOTE F--RELATED PARTY--NOTE RECEIVABLE--CONT'D

     Funds advanced to Secured Investment  Resources Fund, L.P. are being repaid
beginning May 1, 1995 including 9% interest.  No principal or interest  payments
were received in 1997. Interest accrued on the note balance was $7,349.

Amounts due from related parties consist of the following:

                                                         December 31,
                                                        1997      1996
Secured Investment Resources                          ------    ------
    Fund, L.P. ...................................   $85,694   $78,345

NOTE G--SYNDICATION FEES AND ACQUISITION FEES

     Because of many factors, the Partnership did not raise the level of capital
anticipated during the offering period. As a result, syndication and acquisition
costs and the Related  Party Note  Receivable,  outlined in Note F, exceeded the
amount allowed per the Partnership Agreement. The General Partners are obligated
to reimburse these excess costs/fees.  James R. Hoyt has agreed to reimburse the
excess costs/fees to the Partnership (as described in Item 11 (c)).

     SIR  Partners  III,  L.P.,  a General  Partner of the  Partnership  (or its
assignee),  has  been  paid an  acquisition  fee of  $680,000.  This fee was for
selecting,  evaluating,  negotiating, and closing services on the acquisition of
KC Club  Apartments and  Greenhills  Bicycle Club  Apartments.  As stated in the
Prospectus,  acquisition  fees may not  exceed  11.5% of the gross  proceeds  of
limited  partnership  interests  issued  ($556,888).  The General  Partners  are
obligated to reimburse these excess costs/fees.

     On December  28,  1995,  the excess  costs and fees were reduced to $21,751
pursuant to an assumption  agreement between the Partnership,  SIR Partners III,
and James R. Hoyt. In exchange for payment of the excess costs and fees (as well
as the note  receivable  described  in Note F),  the  Managing  General  Partner
assumed  full  responsibility  for the matured  second  mortgage  on  Greenhills
Apartments.  The Partnership  was provided with an executed  release of the note
and second deed of trust  relating to the  Greenhills  mortgage.  Subsequent  to
December 31, 1997, the remainder of the excess costs and fees was paid in full.


                                                         December 31,
                                                        1997      1996
General Partners--Excess                              ------    ------
  Syndication Costs:
      Paid by the Partnership ....................   $21,751   $21,751



                                       24

<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D

NOTE H--ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:


                                                               December 31,
                                                              1997       1996
                                                           --------   --------
Vendor Accounts Payable ....................               $ 19,601   $ 15,417
Property Taxes .............................                198,901    127,938
Professional Fees ..........................                 33,804     55,986
Utilities ..................................                 25,713     25,054
Insurance ..................................                  8,429      8,352
Payroll Reimbursement ......................                 14,205     11,506
                                                           --------   --------
                                                           $300,653   $244,253
                                                           ========   ========

As of December 31, 1997,  unpaid  Property Taxes include  $134,900 of delinquent
1995-96 taxes and $57,600 of 1997 taxes related to the KC Club Apartments.

NOTE I--INCOME TAXES

The  Partners'  capital  accounts  differ for financial  reporting  purposes and
federal income tax purposes.  The primary  differences result from depreciation.
The effect of these items is summarized as follows:

                                                          December 31,
                                                        1997            1996
Financial Reporting Basis:                         ------------    ------------
     Total assets ..............................   $ 11,617,003    $ 12,749,343
     Total liabilities .........................    (12,906,608)    (13,834,772)
                                                   ------------    ------------
     Total Partners' (deficit) capital .........   $ (1,289,605)   $ (1,085,429)
                                                   ============    ============
Tax Basis:
     Total assets ..............................   $ 12,000,633    $ 13,139,467
     Total liabilities .........................    (11,798,061)    (12,710,475)
                                                   ------------    ------------
     Total Partners' capital ...................   $    202,572    $    428,992
                                                   ============    ============

                                                Years Ended December 31,
                                              1997         1996         1995
                                          ---------    ---------    ---------
Partnership loss-financial
     reporting purposes ...               $(204,176)   $(378,007)   $(171,559)
                                          ---------    ---------    ---------
Book versus tax differences
     due to:
       Depreciation and
         amortization .....                 (10,694)     (37,354)     (57,303)
       Other ..............                 (11,550)       8,821       27,037
                                          ---------    ---------    ---------
                                            (22,244)     (28,533)     (30,266)
                                          ---------    ---------    ---------
Partnership loss-federal
     income tax purposes ..               $(226,420)   $(406,540)   $(201,825)
                                          =========    =========    =========


                                       25

<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D

NOTE J--CASH DISTRIBUTIONS

     No distributions have been made since July 1990. Future  distributions will
only be made from excess cash flow not needed for working capital reserves.

NOTE K--PARTNERSHIP LIQUIDITY

     The Partnership  operates within the real estate industry and is subject to
its  economic  forces,  which  contributes  additional  liquidity  risk  to  the
Partnership's investment portfolio. These risks include, but are not limited to,
changes in general or local economic  conditions,  changes in interest rates and
the  availability  of  permanent   mortgage   financing  which  may  render  the
acquisition,  sale or  refinancing  of the property  difficult or  unattractive,
changes in real estate and zoning laws,  increases in real estate taxes, federal
or local economic or rent controls,  floods,  earthquakes  and other acts of God
and other  factors  beyond the  control  of the  Partnership's  management.  The
illiquidity of real estate  investments  generally may impair the ability of the
Partnership to respond promptly to changing economic conditions.

     The General  Partners  believe  that  sufficient  working  capital  will be
available to fund known, ongoing operating and capital expenditure  requirements
of the  Partnership  during 1998. The  anticipated  working  capital sources are
payments  received  on notes and  miscellaneous  receivables  and cash flow from
operations  during 1998,  which is expected to improve over that of the previous
year.  Several  factors which could  positively  affect 1998  operations are the
implementation  of  rental  rate  increases  and  decreases  in  the  amount  of
promotional  rent  discounts   allowed  for  the  leasing  of  apartment  units.
Accomplishment  of these  objectives is partially  predicated on the real estate
economic  conditions  discussed  above,  which are  beyond  the  control  of the
Partnership, and will influence the achieved results.

     As a result of the  foreclosure of the KC Club  Apartments (as described in
Note L), 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.  The 1997 Net  Operating
Income after interest expense of the remaining property,  The Greenhills Bicycle
Club Apartments, was $395,000.


NOTE L--SUBSEQUENT EVENT

     As of December 31,  1997,  the  Partnership  was in  negotiations  with the
mortgage  holder on KC Club  Apartments  concerning a restructure  of that debt.
More  favorable  interest  rates and possible  principal  write downs were under
consideration.  Due to the inability to restructure the debt, on January 7, 1998
the property was lost to foreclosure.

     The assets and  liabilities as of December 31, 1997 that were applicable to
the foreclosed property approximated the following:

    Investment properties, net of accumulated depreciation    $3,388,000
    Other assets                                                  84,000
    Mortgage payable, including accrued interest             (3,992,000)
    Other liabilities                                          (259,000)

     Rental  revenue for the KC Club  Apartments for the year ended December 31,
1997 was $853,000 while operating expenses (including interest) were $1,160,000.

                                       26

<PAGE>




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONT'D
 NOTE M--DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

     The carrying  values  reflected in the balance  sheets at December 31, 1997
reasonably  approximate  the fair  values  for cash  and cash  equivalents.  The
Partnership  cannot estimate the fair value of its borrowings  collateralized by
the KC Club  Apartments  at December  31, 1997 as there is no readily  available
market value for instruments  with similar  characteristics.  The estimated fair
value  of  the  borrowings   collateralized   by  the  Bicycle  Club  Apartments
approximate the carrying values.









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                                       27

<PAGE>



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

     None.

                                    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, 1997, these partnerships,  including Secured Investment Resources Fund, L.P.
III, have raised a total of $60,709,750.

     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 1997, The  Partnership  paid $137,445 in fees to related parties for
property  management  services.  The  Partnership  also paid  $42,707 to related
parties for professional services as described in Note E.







                                       28

<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
September 1, 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,  $21,751  of which  will be paid 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  Partners").  Hoyt and SIR Partners III have also agreed
that Nichols,


                                       29

<PAGE>



Item 12.  Security ownership of Certain Beneficial owners and
          Management --Cont'd

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.


Item 13.  Certain Relationships and Related Transactions.

     See Notes to Financial Statements, Notes E, F and G appearing in Item 8.




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                                       30

<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 Auditors' Report                              11

              (ii)  Consolidated Balance Sheets - December 31, 1997
                    and 1996                                               12-13

             (iii)  Consolidated Statements of Operations - Years Ended
                    December 31, 1997, 1996, and 1995                         14

              (iv)  Consolidated  Statements of Partnership Deficit -
                    Years Ended December , 1997, 1996, and 1995               15

               (v)  Consolidated  Statements of Cash Flows - Years
                    Ended December 31, 1997, 1996, and 1995                16-17

              (vi)  Notes to Consolidated Financial Statements             18-27

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

               (i)  Schedule II - Allowance  For  Doubtful  Accounts 
                    Information                                               34

              (ii)  Schedule III - Real Estate and Accumulated
                    Depreciation                                           36-37



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.








                                       31

<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)

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

(26)            (a) Secured Investment Resources Fund, L.P. III Financial Data
                    Schedule at December 31, 1997 and for the year then ended.

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














                                       32

<PAGE>




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

(vii)       Filed herewith.


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

            A Form 8-K was filed on July 31,  1998  (file no.
            000-18475), such Form 8-K incorporated herein by
            reference.

(c)         See Exhibit Index contained herein.

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




                                       33

<PAGE>



                   Secured Investment Resources Fund L.P. III
                  Schedule II - Allowance for Doubtful Accounts
                                December 31, 1997


         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,

1995      $  7,814        $   (664)           $ --             $  7,150

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

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




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                                       34

<PAGE>
                                   SIGNATURES

     Pursuant to 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:  October 22, 1998                      By:  Nichols Resources, Ltd., its
                                                  general partner



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

     SUPPLEMENTAL  INFORMATION  TO BE FURNISHED  WITH REPORTS FILED  PURSUANT TO
SECTION 15(d) OF THE ACT BY  REGISTRANTS  WHICH HAVE NOT  REGISTERED  SECURITIES
PURSUANT TO SECTION 12 OF THE ACT.

     No annual report or 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.

Signature                            Title                  Date


/s/ James R. Hoyt        Individual general partner         October 26, 1998
James R. Hoyt            of the Registrant


/s/ David L. Johnson     Director of Nichols Resources,     October 22, 1998
David L. Johnson         Ltd., a corporate general
                         partner of the Registrant


/s/ John W. Alvey        Director of Nichols Resources,     October 26, 1998
John W. Alvey            Ltd., a corporate general partner
                         of the Registrant


/s/ Daniel W. Pishny     Director of Nichols Resources,     October 22, 1998
Daniel W. Pishny         Ltd., a corporate general partner
                         of the Registrant


                                       35
<PAGE>
<TABLE>
Secured Investment Resource Fund , LP III
Schedule III - Real Estate & Accumulated Depreciation
December 31, 1997
<CAPTION>
 

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

 Green Hills Bike 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)
                         ===========    ========    ===========  ==========      ========     =========



<CAPTION>
                                                       Gross Amount at Which
                                                    Carried at Close of Period
                                 --------------------------------------------------------------
                                     Building &     Furniture                  Accumulated      Date        Depreciation
                          Land      Improvements    Equipment       Total      Depreciation   Acquired          Life
                        ------     -------------   ----------      ------     -------------  ---------     --------------
<S>                       <C>       <C>             <C>             <C>       <C>            <C>           <C>
Garden Apartments:
 KC Club Apartments          0        4,641,246       409,189   5,050,435        1,662,423    06/30/89        30 Yrs(1)
 Kansas City, MO                                                                                               5 Yrs(2)
       
 Green Hills Bike Club 407,226        9,542,531     1,095,611  11,045,368        3,599,391    10/27/89        30 Yrs(1)
 Kansas City, MO                                                                                               5 Yrs(2)

 Other Equipment             0                0        12,180      12,180           12,180                     5 Yrs(2)
                      ---------     ------------   ----------- -----------      -----------
       TOTAL           407,226       14,183,777     1,516,980  16,107,983        5,273,994
                      =========     ===========    =========== ===========    =============

<FN>

     (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 1988 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 guaranteed income relates.

</TABLE>

                                       36
<PAGE>
<TABLE>
Secured Investment Resource Fund , LP III
Schedule III - Real Estate & Accumulated Depreciation
December 31, 1997 --CONT'D

     (c) reconciliation of Real Estate Owned:
<CAPTION>
                                                                     Buildings &      Furniture &
                                     Total             Land          Improvement       Equipment
                                 --------------    ------------    ---------------- ---------------
<S>                                  <C>               <C>            <C>             <C> 
Balance at  January 1, 1995          15,775,013         407,226       14,132,554      1,235,233
 Additions during year:
   Reclassification                           0               0                0              0
   Improvements                         164,484               0           21,756        142,728
                                 --------------    ------------    -------------    -----------

Balance at December 31, 1995         15,939,497         407,226       14,154,310      1,377,961
 Additions during year:
  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                           66,341               0           21,304         45,037
                                 --------------    ------------    -------------    -----------

Balance at December 31, 1997         16,107,983         407,226       14,183,777      1,516,980
                                 ==============    ============    =============    ===========


     (d) Reconciliation of Accumulated Depreciation:

Balance at  January 1, 1995           3,695,423               0        2,574,786      1,120,637
 Additions during year:
  Depreciation Expenses                 507,242                          437,578         69,664
                                 --------------    ------------    -------------    -----------
Balance at December 31, 1995          4,202,665               0        3,012,364      1,190,301
 Additions during year:
  Depreciation Expenses                 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 Expenses                541,921                          462,547         79,374
                                 --------------    ------------    -------------    -----------

Balance at December 31, 1997          5,273,994               0        3,910,902      1,363,092
                                 ==============    ============    =============    ===========

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

                                       37