FORM 10-KSB--Annual or Transitional Report Under
                             SECTION 13 OR 15(d)
                                   Form 10-KSB

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

                 For the fiscal year ended December 31, 2001


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

               For the transition period _________to _________

                         Commission file number 0-10256

                            SHELTER PROPERTIES II
                (Name of small business issuer in its charter)

      South Carolina                                             57-0709233
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

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

                                 (864) 239-1000
                            Issuer's telephone number

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

                                      None

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

                      Units of Limited Partnership Interest
                                (Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act of 1934 during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. Yes X No___

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

State issuer's revenues for its most recent fiscal year.  $6,399,000

State the aggregate  market value of the voting  partnership  interests  held by
non-affiliates  computed  by  reference  to the price at which  the  partnership
interests  were sold,  or the average bid and asked  prices of such  partnership
interests, as of December 31, 2001. No market exists for the limited partnership
interests of the Registrant,  and,  therefore,  no aggregate market value can be
determined.



                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None


<PAGE>
                                     PART I

Item 1.     Description of Business

Shelter Properties II (the "Registrant" or the "Partnership") was organized as a
limited partnership under the laws of the State of South Carolina on October 10,
1980.  The general  partner  responsible  for  management  of the  Partnership's
business is Shelter Realty II  Corporation,  a South Carolina  corporation  (the
"Corporate General  Partner").  The Corporate General Partner is a subsidiary of
Apartment  Investment and Management Company  ("AIMCO"),  a publicly traded real
estate investment trust. The other general partner is AIMCO Properties, L.P., an
affiliate of the Corporate General Partner and AIMCO. The Partnership  Agreement
provides  that the  Partnership  is to  terminate  on  December  31, 2020 unless
terminated prior to such date.

The  Registrant  is engaged in the  business of  operating  and  holding  real
estate properties for investment.  In 1981, during its acquisition  phase, the
Registrant  acquired  five  existing  apartment  properties.   The  Registrant
continues  to own  and  operate  three  of  these  properties.  See  "Item  2.
Description of Properties".

Commencing February 2, 1981, the Registrant offered,  pursuant to a Registration
Statement filed with the Securities and Exchange Commission,  up to 27,400 Units
of Limited Partnership  Interest (the "Units") at a purchase price of $1,000 per
Unit with a minimum  purchase of 5 Units ($5,000),  or 1.5 Units ($1,500) for an
Individual  Retirement  Account.  An additional  100 Units were purchased by the
Corporate General Partner.  Since its offering, the Registrant has not received,
nor are limited partners required to make, additional capital contributions.

The offering terminated on April 30, 1981. Upon termination of the offering, the
Registrant  had accepted  subscriptions  for 27,500  Units,  including 100 Units
purchased by the Corporate General Partner, for an aggregate of $27,500,000. The
Registrant invested approximately  $21,000,000 of such proceeds in five existing
apartment  properties.  Prior to December 31,  2001,  the  Partnership  sold one
property and lost one property to the lender through foreclosure.

The Registrant  has no employees.  Management  and  administrative  services are
provided  by the  Corporate  General  Partner  and  by  agents  retained  by the
Corporate General Partner.

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

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

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

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

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

Item 2.     Description of Properties

The following table sets forth the Registrant's investments in properties:
<TABLE>
<CAPTION>

                                 Date of
Properties                       Purchase         Type of Ownership           Use

<S>                              <C>   <C>
Parktown Townhouses              03/01/81    Fee ownership, subject to   Apartment
Deer Park, Texas                             first mortgage              309 units

Raintree Apartments              04/30/81    Fee ownership, subject to   Apartment
Anderson, South Carolina                     first mortgage              176 units

Signal Pointe Apartments         06/30/81    Fee ownership, subject to   Apartment
Winter Park, Florida                         first mortgage              368 units

Schedule of Properties
</TABLE>

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

                               Gross
                             Carrying    Accumulated                       Federal
Properties                     Value     Depreciation   Rate   Method     Tax Basis
                                  (in thousands)                        (in thousands)

<S>                           <C>          <C>          <C>                <C>
Parktown Townhouses           $11,944      $ 6,136      5-35     S/L       $ 6,530
Raintree Apartments             4,652        3,352      5-38     S/L           774
Signal Pointe Apartments       12,839        8,985      5-37     S/L         2,391

          Totals              $29,435      $18,473                         $ 9,695
</TABLE>

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

Schedule of Property Indebtedness

The  following  table  sets  forth  certain  information  relating  to the loans
encumbering the Registrant's properties.
<TABLE>
<CAPTION>

                               Principal
                               Balance At       Stated
                              December 31,     Interest       Period        Maturity
Property (1)                      2001           Rate        Amortized        Date
                             (in thousands)
Parktown Townhouses
<S>                              <C>             <C>          <C>           <C>   <C>
  1st mortgage                   $ 7,635         7.21%        20 yrs        01/01/21

Raintree Apartments
  1st mortgage                     2,990         7.22%        20 yrs        01/01/21

Signal Pointe Apartments
  1st mortgage                     8,687         7.22%        20 yrs        01/01/21

           Total                 $19,312
</TABLE>

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

On December 15, 2000,  the  Partnership  refinanced  the  mortgages  encumbering
Parktown  Townhouses.   The  refinancing  replaced  first  and  second  mortgage
indebtedness of approximately $2,910,000 with a new mortgage of $7,800,000.  The
mortgage was refinanced at a rate of 7.21% compared to a prior rate of 7.60% and
matures on January 1, 2021 at which time it will be fully amortized. Capitalized
loan costs  incurred for the  refinancing in 2000 were  approximately  $206,000.
Additional  capitalized  loan costs of  approximately  $13,000 were  incurred in
2001. The Partnership wrote off approximately  $95,000 in unamortized loan costs
and mortgage  discount and paid prepayment  penalties of approximately  $105,000
resulting  in  an  extraordinary  loss  on  early   extinguishment  of  debt  of
approximately $200,000.

On December 15,  2000,  the  Partnership  refinanced  the  mortgage  encumbering
Raintree  Apartments.   The  refinancing  replaced  first  and  second  mortgage
indebtedness of approximately $1,292,000 with a new mortgage of $3,055,000.  The
mortgage was  refinanced at a rate of 7.22%  compared to the prior rate of 7.60%
and  matures  on  January  1,  2021 at which  time it will be  fully  amortized.
Capitalized  loan costs incurred for the refinancing in 2000 were  approximately
$74,000.  Additional  capitalized  loan  costs  of  approximately  $12,000  were
incurred in 2001. The Partnership wrote off approximately $45,000 in unamortized
loan costs and mortgage discount and paid prepayment  penalties of approximately
$46,000  resulting in an extraordinary  loss on early  extinguishment of debt of
approximately $91,000.

On December 15, 2000, the Partnership refinanced the mortgage encumbering Signal
Pointe   Apartments.   The  refinancing   replaced  first  and  second  mortgage
indebtedness of approximately $3,857,000 with a new mortgage of $8,875,000.  The
mortgage was  refinanced at a rate of 7.22%  compared to the prior rate of 7.60%
and  matures  on  January  1,  2021 at which  time it will be  fully  amortized.
Capitalized  loan costs incurred for the refinancing in 2000 were  approximately
$244,000.  Additional  capitalized  loan  costs of  approximately  $13,000  were
incurred  in  2001.  The  Partnership  wrote  off   approximately   $117,000  in
unamortized  loan costs and mortgage  discount and paid prepayment  penalties of
approximately   $141,000   resulting   in  an   extraordinary   loss  on   early
extinguishment of debt of approximately $258,000.

Rental Rates and Occupancy

Average  annual  rental rate per unit and  occupancy  for 2001 and 2000 for each
property:

                                       Average Annual               Average
                                        Rental Rate                Occupancy
                                         (per unit)

 Properties                          2001         2000          2001        2000

 Parktown Townhouses (1)            $9,090       $8,852         49%          95%
 Raintree Apartments                 6,414        6,106         94%          94%
 Signal Pointe Apartments (2)        7,733        7,378         92%          95%

   (1)      During June 2001, Parktown Townhouses was damaged by severe flooding
            which  affected  certain  areas of Texas.  The property has incurred
            extensive  damage as a result of the  flooding  causing  100% of the
            property to be unavailable for occupancy at December 31, 2001. It is
            expected that most of the damage will be covered by  insurance.  The
            Corporate General Partner is currently redeveloping the property.

   (2)      The  Corporate   General   Partner   attributes  the  decrease  in
            occupancy to softening of the rental market in the area.

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

Real Estate Taxes and Rates

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

                                                2001            2001
                                               Billing        Rate (1)
                                           (in thousands)

       Parktown Townhouses                      $186            2.43%
       Raintree Apartments                        80           41.36%
       Signal Pointe Apartments                  182            1.76%

(1)   The  rates  are  based  on the  local  authority's  assessed  value of the
      investment properties.

Capital Improvements

Parktown Townhouses

During June 2001,  Parktown  Townhouses incurred extensive damage as a result of
severe flooding which affected certain areas of Texas. The estimated  damages to
the  property  include   approximately   $7,600,000  for  mold  remediation  and
approximately $4,100,000 for reconstruction of the property. These costs will be
covered by insurance. As of December 31, 2001,  approximately $7,600,000 of mold
remediation  expenses have been incurred and  approximately  $2,700,000 has been
spent on reconstruction  of the property.  As the mold remediation costs will be
covered by insurance,  the expenses are included in receivables  and deposits on
the accompanying balance sheet. As the repairs are not yet complete, no casualty
gain or loss is being recognized at this time. In addition,  due to the property
being 100%  physically  vacant since August 2001,  interest,  property taxes and
certain  operating  expenses  totaling  approximately  $353,000,  $131,000,  and
$139,000  have been  capitalized  as of  December  31,  2001,  respectively.  In
addition,  approximately  $1,144,000 in lost rents for business interruption has
been  accrued  in 2001 and is  included  in rental  income in the  statement  of
operations.

As of December 31, 2001, the Partnership has completed approximately  $3,461,000
of capital  improvements  consisting  primarily  of  structural  and parking lot
improvements,  plumbing fixtures,  appliances and floor covering replacement and
air  conditioning  unit  improvements.   These  improvements  were  funded  from
operating cash flow, insurance proceeds and Corporate General Partner loans. The
Partnership  is  currently  evaluating  the  capital  improvement  needs  of the
property  for  the  upcoming  year.  In  addition  to the  capital  improvements
necessitated by the flood damage,  the minimum amount to be budgeted is expected
to be $300 per unit or $92,700.  Additional  improvements  may be considered and
will depend on the physical  condition  of the  property as well as  anticipated
cash flow generated by the property.

Raintree Apartments

As of December 31, 2001, the Partnership has completed approximately $209,000 of
capital  improvements  consisting  primarily  of floor  covering  and  appliance
replacement,   roof   replacement,   wall  coverings,   air  conditioning   unit
replacement, major landscaping, and structural improvements.  These improvements
were funded from the  Partnership's  operating  cash flow.  The  Partnership  is
currently  evaluating  the capital  improvement  needs of the  property  for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $52,800.  Additional  improvements  may be considered  and will depend on the
physical condition of the property as well as anticipated cash flow generated by
the property.

Signal Pointe Apartments

As of December 31, 2001, the Partnership has completed approximately $447,000 of
capital  improvements   consisting   primarily  of  structural   upgrades,   air
conditioning  unit replacement,  appliances and floor covering  replacements and
major  landscaping.  These  improvements  were  funded  from  the  Partnership's
operating  cash flow.  The  Partnership  is  currently  evaluating  the  capital
improvement  needs of the property for the upcoming  year. The minimum amount to
be budgeted is expected to be $300 per unit or $110,400. Additional improvements
may be considered  and will depend on the physical  condition of the property as
well as anticipated cash flow generated by the property.

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

Item 3.     Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the Partnership,  its Corporate  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purports  to  assert  claims  on  behalf  of a class  of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  which are named as nominal  defendants,  challenging,  among other
things,  the  acquisition  of interests  in certain  Corporate  General  Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged  into AIMCO.  The  plaintiffs  seek  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal
of the action.  In lieu of responding  to the motion,  the  plaintiffs  filed an
amended complaint.  The Corporate General Partner filed demurrers to the amended
complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December 14, 1999, the Corporate  General Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Corporate  General  Partner and its  affiliates  filed a
demurrer to the third amended  complaint.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Corporate General Partner and affiliated defendants filed a
demurrer to the fourth amended complaint,  which was heard on December 11, 2001.
On February 2, 2002,  the Court served its order  granting in part the demurrer.
The  Court has  dismissed  without  leave to amend  certain  of the  plaintiffs'
claims.  On February 11, 2002,  plaintiffs  filed a motion  seeking to certify a
putative  class  comprised of all  non-affiliated  persons who own or have owned
units  in  the  partnerships.  The  Corporate  General  Partner  and  affiliated
defendants  oppose  the motion and a hearing  has been  scheduled  for April 29,
2002. The Court has set the matter for trial in January 2003.

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

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

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

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

During the quarter ended December 31, 2001, no matter was submitted to a vote of
Unit holders through the solicitation of proxies or otherwise.

                                     PART II

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

The Partnership,  a publicly-held  limited partnership,  offered and sold 27,400
limited partnership units aggregating $27,400,000.  An additional 100 units were
purchased by the Corporate  General Partner.  The Partnership had 886 holders of
record  owning an aggregate of 27,500 Units at December 31, 2001.  Affiliates of
the Corporate  General  Partner owned  19,206.50 units or 69.84% at December 31,
2001.  No public  trading  market has  developed  for the  Units,  and it is not
anticipated that such a market will develop in the future.

The following table sets forth the distributions made by the Partnership for the
years ended December 31, 2000 and 2001. See "Item 6. Management's Discussion and
Analysis  or  Plan  of  Operations"   for   information  on  the  allocation  of
distributions between general and limited partners.

                                                   Distributions
                                                              Per Limited
                                        Aggregate           Partnership Unit
                                     (in thousands)

       01/01/00 - 12/31/00             $11,671 (1)               $423.78
       01/01/01 - 12/31/01               1,978 (2)                 71.20

(1)   Distributions totaling  approximately  $1,697,000 were made from cash from
      operations  and  approximately   $9,974,000  were  made  from  refinancing
      proceeds from all three investment properties.

(2)   Distribution was made from cash from operations.

Future cash  distributions  will depend on the levels of net cash generated from
operations, the availability of cash reserves and the timing of debt maturities,
refinancings,  and/or  property  sales.  The  Partnership's  cash  available for
distribution is reviewed on a monthly basis. There can be no assurance, however,
that the  Partnership  will  generate  sufficient  funds from  operations  after
required  capital  expenditures to permit  distributions  to its partners in the
year 2002 or  subsequent  periods.  See "Item 2.  Description  of  Properties  -
Capital   Improvements"   for  information   relating  to  anticipated   capital
expenditures at the properties.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its affiliates owned 19,206.50 limited partnership units
in the Partnership  representing 69.84% of the outstanding units at December 31,
2001. A number of these units were  acquired  pursuant to tender  offers made by
AIMCO or its  affiliates.  It is  possible  that  AIMCO or its  affiliates  will
acquire additional limited partnership  interests in the Partnership for cash or
in exchange  for units in the  operating  partnership  of AIMCO  either  through
private purchases or tender offers. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters,  which would  include  voting on certain  amendments  to the
Partnership  Agreement and voting to remove the Corporate General Partner.  As a
result  of its  ownership  of  69.84% of the  outstanding  units,  AIMCO is in a
position to control all such voting  decisions  with respect to the  Registrant.
When voting on matters, AIMCO would in all likelihood vote the Units it acquired
in a manner  favorable to the interest of the Corporate  General Partner because
of its affiliation with the Corporate General Partner.

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

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

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

Results of Operations

The  Partnership  realized  net income for the year ended  December  31, 2001 of
approximately  $1,475,000 compared to approximately  $763,000 for the year ended
December  31,  2000.   (See  "Note  C"  of  the  financial   statements   for  a
reconciliation  of these amounts to the  Registrant's  federal taxable  income.)
During  the  year  ended  December  31,  2000,  the  Partnership  recognized  an
extraordinary  loss  on  the  early  extinguishment  of  debt  of  approximately
$549,000.   The  Partnership   realized  income  before  extraordinary  item  of
approximately  $1,475,000  for the year ended  December  31,  2001  compared  to
approximately  $1,312,000  for the year ended December 31, 2000. The increase in
income  before  extraordinary  item  was due to a  decrease  in  total  expenses
partially offset by a decrease in total revenues.  Total revenues  decreased due
to decreased  rental  income  partially  offset by an increase in other  income.
Rental  income  decreased  primarily due to a decrease in occupancy at Parktowne
Townhouses (see  discussion  below)  partially  offset by an increase in average
rental rates at all three of the investment  properties.  Other income increased
primarily due to increased tenant reimbursements  partially offset by a decrease
in lease cancellation fees and interest income.

Total  expenses for the year ended  December 31, 2001 decreased due to decreases
in  operating,  depreciation,  property  tax,  and  general  and  administrative
expenses,  offset  by  an  increase  in  interest  expense.  Operating  expenses
decreased  due to  the  100%  physical  vacancy  at  Parktown  Townhomes  due to
extensive  damage caused by the severe  flooding during June 2001 as well as the
capitalization  of certain  operating  expenses  related to the  reconstruction.
Depreciation  expense  decreased due to no  depreciation  expense being taken at
Parktown  Townhomes since July 2001.  Property tax expense  decreased due to the
capitalization  of the taxes applicable to Parktown  Townhomes.  The increase in
interest expense is due to the refinancing of the mortgage notes emcumbering all
three  investment  properties in December 2000.  This increase was offset by the
capitalization  of interest  applicable to Parktown  Townhomes  since July 2001.
During 2001, the  Partnership  increased the  accumulated  expenditures  used in
calculating  capitalized interest which resulted in a decrease in fourth quarter
interest expense of approximately $76,000,  approximately $18,000 and $58,000 is
related to the second and third quarter of 2001, respectively.

General and administrative  expense decreased primarily due to a decrease in the
cost of services  included in the  management  reimbursements  to the  Corporate
General  Partner as allowed under the  Partnership  Agreement.  Also included in
general and administrative  expenses are costs associated with the quarterly and
annual  communications  with  investors and  regulatory  agencies and the annual
audit required by the Partnership Agreement.

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

Liquidity and Capital Resources

At  December  31,  2001,  the  Partnership  had  cash and  cash  equivalents  of
approximately  $678,000 compared to approximately $949,000 at December 31, 2000.
Cash  and  cash   equivalents   decreased   approximately   $271,000   from  the
Partnership's  previous  year ended  December 31,  2000.  The decrease is due to
approximately  $6,107,000  of  cash  used  in  operating  activities  offset  by
approximately   $4,564,000  of  cash  provided  by  financing   activities   and
approximately $1,272,000 of cash provided by investing activities. Cash provided
by investing  activities  consisted of net insurance  proceeds  received for the
casualty  at  Parktown  Townhouses  and net  withdrawals  from  escrow  accounts
maintained by the mortgage lender partially offset by property  improvements and
replacements. Cash provided by financing activities consisted primarily of loans
from  an  affiliate  of  the  Corporate  General  Partner  partially  offset  by
distributions  to partners,  payments of principal on the mortgages  encumbering
the investment properties, and loan costs associated with the refinancing of the
mortgages encumbering the investment properties in 2000. The Partnership invests
its working capital reserves in interest-bearing accounts.

During June 2001,  Parktown  Townhouses incurred extensive damage as a result of
severe flooding which affected certain areas of Texas. The estimated  damages to
the  property  include   approximately   $7,600,000  for  mold  remediation  and
approximately $4,100,000 for reconstruction of the property. These costs will be
covered by insurance. As of December 31, 2001,  approximately $7,600,000 of mold
remediation  expenses have been incurred and  approximately  $2,700,000 has been
spent on reconstruction  of the property.  As the mold remediation costs will be
covered by insurance,  the expenses are included in receivables  and deposits on
the accompanying balance sheet. As the repairs are not yet complete, no casualty
gain or loss is being recognized at this time. In addition,  due to the property
being 100%  physically  vacant since August 2001,  interest,  property taxes and
certain  operating  expenses  totaling  approximately  $353,000,   $131,000  and
$139,000, respectively, have been capitalized as of December 31, 2001.

The sufficiency of existing  liquid assets to meet future  liquidity and capital
expenditure   requirements   is  directly   related  to  the  level  of  capital
expenditures  required at the  properties  to  adequately  maintain the physical
assets and other  operating  needs of the Registrant and to comply with Federal,
state, and local legal and regulatory requirements. The Partnership is currently
evaluating  the capital  improvement  needs of the  properties  for the upcoming
year.  The  minimum  amount to be  budgeted  is  expected to be $300 per unit or
$255,900.  Additional  improvements  may be  considered  and will  depend on the
physical  condition of the properties as well as anticipated cash flow generated
by the properties.  To the extent that such budgeted  capital  improvements  are
completed,  the Registrant's  distributable  cash flow, if any, may be adversely
affected at least in the short term.

On December 15, 2000,  the  Partnership  refinanced  the  mortgages  encumbering
Parktown  Townhouses.   The  refinancing  replaced  first  and  second  mortgage
indebtedness of approximately $2,910,000 with a new mortgage of $7,800,000.  The
mortgage was refinanced at a rate of 7.21% compared to a prior rate of 7.60% and
matures on January 1, 2021 at which time it will be fully amortized. Capitalized
loan costs  incurred for the  refinancing in 2000 were  approximately  $206,000.
Additional  capitalized  loan costs of  approximately  $13,000 were  incurred in
2001. The Partnership wrote off approximately  $95,000 in unamortized loan costs
and mortgage  discount and paid prepayment  penalties of approximately  $105,000
resulting  in  an  extraordinary  loss  on  early   extinguishment  of  debt  of
approximately $200,000.

On December 15,  2000,  the  Partnership  refinanced  the  mortgage  encumbering
Raintree  Apartments.   The  refinancing  replaced  first  and  second  mortgage
indebtedness of approximately $1,292,000 with a new mortgage of $3,055,000.  The
mortgage was  refinanced at a rate of 7.22%  compared to the prior rate of 7.60%
and  matures  on  January  1,  2021 at which  time it will be  fully  amortized.
Capitalized  loan costs incurred for the refinancing in 2000 were  approximately
$74,000.  Additional  capitalized  loan  costs  of  approximately  $12,000  were
incurred in 2001. The Partnership wrote off approximately $45,000 in unamortized
loan costs and mortgage discount and paid prepayment  penalties of approximately
$46,000  resulting in an extraordinary  loss on early  extinguishment of debt of
approximately $91,000.

On December 15, 2000, the Partnership refinanced the mortgage encumbering Signal
Pointe   Apartments.   The  refinancing   replaced  first  and  second  mortgage
indebtedness of approximately $3,857,000 with a new mortgage of $8,875,000.  The
mortgage was  refinanced at a rate of 7.22%  compared to the prior rate of 7.60%
and  matures  on  January  1,  2021 at which  time it will be  fully  amortized.
Capitalized  loan costs incurred for the refinancing in 2000 were  approximately
$244,000.  Additional  capitalized  loan  costs of  approximately  $13,000  were
incurred  in  2001.  The  Partnership  wrote  off   approximately   $117,000  in
unamortized  loan costs and mortgage  discount and paid prepayment  penalties of
approximately   $141,000   resulting   in  an   extraordinary   loss  on   early
extinguishment of debt of approximately $258,000.

The  Registrant's  current assets are thought to be sufficient for any near term
needs  (exclusive  of capital  improvements)  of the  Registrant.  The  mortgage
indebtedness of  approximately  $19,312,000 is amortized over 240 months with no
required balloon payment at maturity. The Corporate General Partner will attempt
to refinance such indebtedness and/or sell the properties prior to such maturity
date. If the  properties  cannot be refinanced or sold for a sufficient  amount,
the Registrant may risk losing such properties through foreclosure.

During the year ended December 31, 2001, the Partnership paid cash distributions
from operations totaling approximately $1,978,000  (approximately  $1,958,000 to
the limited partners or $71.20 per limited  partnership  unit).  During the year
ended  December  31,  2000,  the   Partnership   paid  cash   distributions   of
approximately $11,671,000  (approximately $11,654,000 to the limited partners or
$423.78 per limited  partnership  unit). These  distributions  consisted of cash
from operations of  approximately  $1,697,000  (approximately  $1,680,000 to the
limited partners or $61.09 per limited  partnership  unit) and proceeds from the
refinancing  of all three  investment  properties  of  approximately  $9,974,000
(approximately  $9,974,000  to the  limited  partners  or  $362.69  per  limited
partnership  unit).  Future cash  distributions will depend on the levels of net
cash generated from operations, the availability of cash reserves and the timing
of debt maturities,  refinancings, and/or property sales. The Partnership's cash
available  for  distribution  is  reviewed on a monthly  basis.  There can be no
assurance,  however,  that the Partnership  will generate  sufficient funds from
operations  after required capital  expenditures to permit  distributions to its
partners in the year 2002 or subsequent  periods.  See "Item 2.  Description  of
Properties  - Capital  Improvements"  for  information  relating to  anticipated
capital expenditures at the properties.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its affiliates owned 19,206.50 limited partnership units
in the Partnership  representing 69.84% of the outstanding units at December 31,
2001. A number of these units were  acquired  pursuant to tender  offers made by
AIMCO or its  affiliates.  It is  possible  that  AIMCO or its  affiliates  will
acquire additional limited partnership  interests in the Partnership for cash or
in exchange  for units in the  operating  partnership  of AIMCO  either  through
private purchases or tender offers. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters,  which would  include  voting on certain  amendments  to the
Partnership  Agreement and voting to remove the Corporate General Partner.  As a
result  of its  ownership  of  69.84% of the  outstanding  units,  AIMCO is in a
position to control all such voting  decisions  with respect to the  Registrant.
When voting on matters, AIMCO would in all likelihood vote the Units it acquired
in a manner  favorable to the interest of the Corporate  General Partner because
of its affiliation with the Corporate General Partner.

Recent Accounting Pronouncements

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

Item 7.     Financial Statements:

SHELTER PROPERTIES II

LIST OF FINANCIAL STATEMENTS


      Report of Ernst & Young, LLP Independent Auditors

      Balance Sheet - December 31, 2001

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

      Statements  of  Changes  in  Partners'  (Deficit)  Capital  - Years  ended
      December 31, 2001 and 2000

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

      Notes to Financial Statements


<PAGE>


              Report of Ernst & Young LLP, Independent Auditors



The Partners
Shelter Properties II


We have audited the  accompanying  balance sheet of Shelter  Properties II as of
December  31,  2001,  and the  related  statements  of  operations,  changes  in
partners'  (deficit)  capital,  and cash  flows for each of the two years in the
period  ended   December  31,  2001.   These   financial   statements   are  the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of Shelter  Properties  II at
December 31, 2001, and the results of its operations and its cash flows for each
of the two years in the period  ended  December  31, 2001,  in  conformity  with
accounting principles generally accepted in the United States.


                                                          /s/ERNST & YOUNG LLP


Greenville, South Carolina
February 15, 2002



<PAGE>




                              SHELTER PROPERTIES II

                                  BALANCE SHEET
                       (in thousands, except unit data)

                                December 31, 2001

<TABLE>
<CAPTION>

Assets
<S>                                                                          <C>
   Cash and cash equivalents                                                 $  678
   Receivables and deposits                                                   6,026
   Restricted escrows                                                         3,388
   Other assets                                                                 600
   Investment properties (Notes B & E):
      Land                                                    $ 1,814
      Buildings and related personal property                   27,621
                                                                29,435
      Less accumulated depreciation                            (18,473)      10,962
                                                                            $21,654

Liabilities and Partners' Deficit
Liabilities
      Accounts payable                                                      $ 3,889
      Tenant security deposit liabilities                                       113
      Accrued property taxes                                                    258
      Due to affiliates                                                       7,067
      Other liabilities                                                         243
      Mortgage notes payable (Note B)                                        19,312

Partners' Deficit
   General partners                                            $ (141)
   Limited partners (27,500 units issued and
      outstanding)                                             (9,087)       (9,228)
                                                                            $21,654

              See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>

                              SHELTER PROPERTIES II

                            STATEMENTS OF OPERATIONS
                       (in thousands, except unit data)


<TABLE>
<CAPTION>

                                                          Years Ended December 31,
                                                             2001          2000
Revenues:
<S>                                                         <C>           <C>
  Rental income                                             $ 6,019       $ 6,092
  Other income                                                  380           354
      Total revenues                                          6,399         6,446

Expenses:
  Operating                                                   2,329         2,658
  General and administrative                                    246           298
  Depreciation                                                  828         1,007
  Interest                                                    1,193           744
  Property taxes                                                328           427
      Total expenses                                          4,924         5,134

Income before extraordinary item                              1,475         1,312
Extraordinary loss on early extinguishment of debt               --          (549)

Net income                                                  $ 1,475        $ 763

Net income allocated to general partners (1%)                $ 15           $ 8
Net income allocated to limited partners (99%)                1,460           755
                                                            $ 1,475        $ 763
Per limited partnership unit:
  Income before extraordinary item                          $ 53.09       $ 47.23
  Extraordinary loss on early extinguishment of debt             --        (19.78)

Net income                                                  $ 53.09       $ 27.45

Distributions per limited partnership unit                  $ 71.20       $423.78

              See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>


                              SHELTER PROPERTIES II

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

<TABLE>
<CAPTION>

                                         Limited
                                       Partnership    General     Limited
                                          Units       Partners   Partners      Total

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

Partners' (deficit) capital at
  December 31, 1999                       27,500       $ (127)    $ 2,310     $ 2,183

Distribution to partners                      --          (17)    (11,654)     (11,671)

Net income for the year ended
  December 31, 2000                           --            8         755          763

Partners' deficit at
  December 31, 2000                       27,500         (136)     (8,589)      (8,725)

Distribution to partners                      --          (20)     (1,958)      (1,978)

Net income for the year ended
  December 31, 2001                           --           15       1,460        1,475

Partners' deficit at
  December 31, 2001                       27,500       $ (141)   $ (9,087)    $ (9,228)

              See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>

                              SHELTER PROPERTIES II

                            STATEMENTS OF CASH FLOWS
                                (in thousands)
<TABLE>
<CAPTION>

                                                                 Years Ended December 31,
                                                                     2001         2000
Cash flows from operating activities:
<S>                                                                 <C>           <C>
  Net income                                                        $ 1,475       $ 763
  Adjustments to reconcile net income to net
   cash (used in) provided by operating activities:
      Depreciation                                                      828        1,007
      Amortization of discounts and loan costs                           27          109
      Casualty gain                                                     (14)          --
      Extraordinary loss on early extinguishment of debt                 --          549
      Change in accounts:
        Receivables and deposits                                     (8,745)        (478)
        Other assets                                                     (5)          (2)
        Accounts payable                                                355           65
        Tenant security deposit liabilities                             (19)         (18)
        Accrued property taxes                                           11           52
        Due to affiliate                                                 11           --
        Other liabilities                                               (31)        (110)
          Net cash (used in) provided by operating activities        (6,107)       1,937

Cash flows from investing activities:
  Property improvements and replacements                             (2,387)        (681)
  Net withdrawals from (deposits to) restricted escrows                 884         (523)
  Insurance proceeds received                                         2,775           --
          Net cash provided by (used in) investing activities         1,272       (1,204)

Cash flows from financing activities:
  Payments on mortgage notes payable                                   (418)        (295)
  Repayments of mortgage notes payable                                   --       (8,059)
  Proceeds from mortgage notes payable                                   --       19,730
  Debt extinguishment costs                                              --         (292)
  Loan costs paid                                                       (38)        (524)
  Advances from affiliates                                            6,998           --
  Distributions to partners                                          (1,978)     (11,671)
          Net cash provided by (used in) financing
            activities                                                4,564       (1,111)

Net decrease in cash and cash equivalents                              (271)        (378)

Cash and cash equivalents at beginning of period                        949        1,327

Cash and cash equivalents at end of period                           $ 678        $ 949

Supplemental disclosure of cash flow information:
  Cash paid for interest                                            $ 1,389       $ 687

Supplemental disclosure of non-cash activity:
  Property improvements and replacements in accounts
   payable                                                          $ 1,730       $ 105
  Insurance proceeds held by mortgage lender                        $ 3,364       $ --
  Repairs to be covered by insurance in accounts payable            $ 1,656       $ --

              See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>

                              SHELTER PROPERTIES II

                          NOTES TO FINANCIAL STATEMENTS

                                December 31, 2001


Note A - Organization and Significant Accounting Policies

Organization:  Shelter  Properties II (the  "Partnership" or  "Registrant")  was
organized as a limited partnership under the laws of the State of South Carolina
on October 10, 1980.  The general  partner  responsible  for  management  of the
Partnership's  business  is  Shelter  Realty II  Corporation,  a South  Carolina
corporation (the "Corporate General Partner").  The Corporate General Partner is
a  subsidiary  of Apartment  Investment  and  Management  Company  ("AIMCO"),  a
publicly traded real estate investment trust. The other general Partner is AIMCO
Properties,  L.P., an affiliate of the Corporate  General Partner and AIMCO. The
directors and officers of the Corporate  General Partner also serve as executive
officers of AIMCO. The Partnership Agreement provides that the Partnership is to
terminate  on  December  31,  2020  unless  terminated  prior to such date.  The
Partnership commenced operations on March 1, 1981, and completed its acquisition
of  apartment  properties  on June 30,  1981.  The  Partnership  operates  three
apartment properties located in the South and Southeast.

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

Allocation of Cash  Distributions:  Cash  distributions  by the  Partnership are
allocated between general and limited partners in accordance with the provisions
of the Partnership  Agreement.  The Partnership Agreement provides that net cash
from operations  means revenue received less operating  expenses paid,  adjusted
for certain  specified items which primarily  include mortgage payments on debt,
property improvements and replacements not previously reserved,  and the effects
of other  adjustments to reserves  including reserve amounts deemed necessary by
the  Corporate  General  Partner.  In  the  following  notes  to  the  financial
statements,  whenever  "net cash  provided by  operations"  is used,  it has the
aforementioned  meaning.  As required by the  Partnership,  the  following  is a
reconciliation  of "Net cash (used in) provided by operating  activities" in the
accompanying statement of cash flow to "Net cash from operations", as defined in
the Partnership  Agreement.  However,  "net cash from operations"  should not be
considered  an  alternative  to net income as an indicator of the  Partnership's
operating performance or to cash flows as a measure of liquidity.
<TABLE>
<CAPTION>

                                                         Years Ended December 31,
                                                             2001          2000
                                                              (in thousands)
Net cash (used in) provided by operating activities        $(6,107)      $ 1,937
<S>                                                         <C>             <C>
  Property improvements and replacements                    (2,387)         (681)
  Payments on mortgage notes payable                          (418)         (295)
  Advances from affiliates for operations                      400            --
  Changes in reserves for net operating liabilities          8,423           491
  Changes in restricted escrows, net                           884          (523)
  (Additional) release of operating reserves                  (795)          583

      Net cash from operations                               $ --        $ 1,512
</TABLE>

In 2001, the Corporate General Partner believed it to be in the best interest of
the  Partnership to reserve an additional  $795,000 to fund  continuing  capital
improvement needs in order for the properties to remain competitive.

During the year ended December 31, 2001, the Partnership paid cash distributions
from operations totaling approximately $1,978,000  (approximately  $1,958,000 to
the limited partners or $71.20 per limited  partnership  unit).  During the year
ended  December  31,  2000,  the   Partnership   paid  cash   distributions   of
approximately $11,671,000  (approximately $11,654,000 to the limited partners or
$423.78 per limited  partnership  unit). These  distributions  consisted of cash
from operations of  approximately  $1,697,000  (approximately  $1,680,000 to the
limited partners or $61.09 per limited  partnership  unit) and proceeds from the
refinancing  of all three  investment  properties  of  approximately  $9,974,000
(approximately  $9,974,000  to the  limited  partners  or  $362.69  per  limited
partnership unit).

The Partnership  Agreement  provides that 99% of  distributions of net cash from
operations  are  allocated to the limited  partners  until they receive net cash
from  operations  for such  fiscal  year equal to 7% of their  adjusted  capital
values (as  defined in the  Partnership  Agreement),  at which point the general
partners will be allocated all net cash from operations until they have received
distributions equal to 10% of the aggregate net cash from operations distributed
to partners  for such fiscal  year.  Thereafter,  the general  partners  will be
allocated 10% of any  distributions  of remaining net cash from  operations  for
such fiscal year.

All  distributions of distributable  net proceeds (as defined in the Partnership
Agreement) from property  dispositions and refinancings will be allocated to the
limited  partners  until each limited  partner has received an amount equal to a
cumulative 7% per annum of the average of the limited partners' adjusted capital
value,   less  any  prior   distributions   of  net  cash  from  operations  and
distributable net proceeds, and has also received an amount equal to the limited
partners' adjusted capital value. Thereafter, the general partners receive 1% of
the selling prices of properties sold where they acted as a broker, and then the
limited  partners  will  be  allocated  85% of any  remaining  distributions  of
distributable net proceeds and the general partners will receive 15%.

Prior to December 15, 2000,  distributions were restricted by the requirement to
deposit net  operating  income  into a reserve  account  until such  account was
funded in an  amount  equal to a minimum  of $400 and a  maximum  of $1,000  per
apartment unit for all three  properties.  With the refinancing of the mortgages
encumbering  each of the  properties  (see "Note B - Mortgage Notes Payable" for
further discussion), this requirement is no longer in effect. The release of the
reserve account occurred during the year ended December 31, 2001.

Allocation  of Profits,  Gains and  Losses:  Profits,  gains,  and losses of the
Partnership  are allocated  between  general and limited  partners in accordance
with the provisions of the Partnership Agreement.

Profits, not including gain from property dispositions, are allocated as if they
were distributions of net cash from operations.

Any gain from property  dispositions  attributable to the excess, if any, of the
indebtedness relating to a property immediately prior to the disposition of such
property  over  the  Partnership's  adjusted  basis  in the  property  shall  be
allocated to each partner  having a negative  capital  account  balance,  to the
extent of such negative  balance.  The balance of any gain shall be treated on a
cumulative basis as if it constituted an equivalent  amount of distributable net
proceeds  and shall be  allocated  to the  general  partners  to the extent that
general  partners would have received  distributable  net proceeds in connection
therewith; the balance shall be allocated to the limited partners.  However, the
interest  of the general  partners  will be equal to at least 1% of each gain at
all times during the existence of the Partnership.

All  losses,  including  losses  attributable  to  property  dispositions,   are
allocated  99%  to  the  limited  partners  and  1%  to  the  general  partners.
Accordingly,  net income as shown in the statements of operations and changes in
partners'  (deficit)  capital for 2001 and 2000 was allocated 99% to the limited
partners and 1% to the general partners. Net income per limited partnership unit
for 2001 and 2000 was  computed as 99% of net income  divided by 27,500  average
units outstanding.

Fair Value of Financial Instruments: Statement of Financial Accounting Standards
("SFAS") No. 107,  "Disclosures about Fair Value of Financial  Instruments",  as
amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and
Fair  Value  of  Financial  Instruments",  requires  disclosure  of  fair  value
information  about  financial  instruments,  whether  or not  recognized  in the
balance sheet, for which it is practicable to estimate fair value. Fair value is
defined in the SFAS as the amount at which the instruments could be exchanged in
a  current  transaction  between  willing  parties,  other  than in a forced  or
liquidation  sale.  The  Partnership  believes  that the carrying  amount of its
financial  instruments (except for long term debt) approximates their fair value
due to the short  term  maturity  of these  instruments.  The fair  value of the
Partnership's  long term debt, after  discounting the scheduled loan payments to
maturity, approximates its carrying balance.

Other Reserves:  The general  partners may designate a portion of cash generated
from operations as "other  reserves" in determining net cash used in operations.
Per the Partnership Agreement, the general partners designated as other reserves
an  amount  equal  to the  net  liabilities  related  to the  operations  of the
apartment properties during the current fiscal year that are expected to require
the use of cash  during the next  fiscal  year.  The  changes in other  reserves
during 2001 and 2000 were a increase of approximately $8,423,000 and an increase
of  approximately  $491,000,  respectively,  which  amounts were  determined  by
considering  changes in the balances of receivables and deposits,  other assets,
accounts   payable,   tenant  security   deposits,   accrued  taxes,  and  other
liabilities.  At this time, the Corporate General Partner expects to continue to
adjust  other  reserves  based on the net change in the  aforementioned  account
balances.

Cash and cash equivalents: Includes cash on hand and in banks. At certain times,
the amount of cash deposited at a bank may exceed the limit on insured deposits.
Cash  balances  include  approximately  $629,000 at  December  31, 2001 that are
maintained by the affiliated management company on behalf of affiliated entities
in cash concentration accounts.

Restricted escrows: At December 31, 2001,  approximately $3,364,000 of insurance
proceeds was on deposit with the mortgage holder of Parktown Apartments.

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

Loan Costs: Loan costs of approximately $562,000, less accumulated  amortization
of approximately  $27,000,  are included in other assets and are being amortized
on a straight-line basis over the life of the loans.

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

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

Investment   Properties:   Investment  properties  consist  of  three  apartment
complexes and are stated at cost.  Acquisition fees are capitalized as a cost of
real estate. In accordance with SFAS No. 121,  "Accounting for the Impairment of
Long-Lived  Assets and for Long-Lived Assets to Be Disposed Of", the Partnership
records  impairment  losses on long-lived  assets used in operations when events
and   circumstances   indicate  that  the  assets  might  be  impaired  and  the
undiscounted  cash flows estimated to be generated by those assets are less than
the carrying  amounts of those assets.  Costs of apartment  properties that have
been  permanently  impaired  have  been  written  down to  appraised  value.  No
adjustments  for  impairment of value were recorded in the years ended  December
31, 2001 or 2000. See "Recent Accounting Pronouncements" below.

Segment Reporting:  SFAS No. 131, Disclosure about Segments of an Enterprise and
Related  Information  established  standards  for the way that  public  business
enterprises  report  information  about operating  segments in annual  financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports.  It also establishes  standards
for related disclosures about products and services, geographic areas, and major
customers.  As defined in SFAS No. 131, the  Partnership has only one reportable
segment.  The Corporate General Partner believes that segment-based  disclosures
will not result in a more meaningful  presentation than the financial statements
as currently presented.

Advertising:  The  Partnership  expenses the costs of  advertising  as incurred.
Advertising expense,  included in operating expenses,  was approximately $74,000
and $83,000 for the years ended December 31, 2001 and 2000, respectively.

Reclassification:  Certain 2000 amounts have been  reclassified  to conform to
the 2001 presentation.

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

Note B - Mortgage Notes Payable

The principal terms of mortgage notes payable are as follows:
<TABLE>
<CAPTION>

                                Principal        Monthly
                                Balance At       Payment       Stated
                               December 31,     Including     Interest     Maturity
                                   2001          Interest       Rate         Date
                                     (in thousands)
Properties
Parktown Townhouses
<S>                              <C>               <C>         <C>         <C>   <C>
  1st mortgage                   $ 7,635           $ 61        7.21%       01/01/21
Raintree Apartments
  1st mortgage                     2,990              24       7.22%       01/01/21
Signal Pointe Apartments
  1st mortgage                     8,687              70       7.22%       01/01/21

           Total                 $19,312          $ 155
</TABLE>

On December 15, 2000,  the  Partnership  refinanced  the  mortgages  encumbering
Parktown  Townhouses.   The  refinancing  replaced  first  and  second  mortgage
indebtedness of approximately $2,910,000 with a new mortgage of $7,800,000.  The
mortgage was refinanced at a rate of 7.21% compared to a prior rate of 7.60% and
matures on January 1, 2021 at which time it will be fully amortized. Capitalized
loan costs  incurred for the  refinancing in 2000 were  approximately  $206,000.
Additional  capitalized  loan costs of  approximately  $13,000 were  incurred in
2001. The Partnership wrote off approximately  $95,000 in unamortized loan costs
and mortgage  discount and paid prepayment  penalties of approximately  $105,000
resulting  in  an  extraordinary  loss  on  early   extinguishment  of  debt  of
approximately $200,000.

On December 15,  2000,  the  Partnership  refinanced  the  mortgage  encumbering
Raintree  Apartments.   The  refinancing  replaced  first  and  second  mortgage
indebtedness of approximately $1,292,000 with a new mortgage of $3,055,000.  The
mortgage was  refinanced at a rate of 7.22%  compared to the prior rate of 7.60%
and  matures  on  January  1,  2021 at which  time it will be  fully  amortized.
Capitalized  loan costs incurred for the refinancing in 2000 were  approximately
$74,000.  Additional  capitalized  loan  costs  of  approximately  $12,000  were
incurred in 2001. The Partnership wrote off approximately $45,000 in unamortized
loan costs and mortgage discount and paid prepayment  penalties of approximately
$46,000  resulting in an extraordinary  loss on early  extinguishment of debt of
approximately $91,000.

On December 15, 2000, the Partnership refinanced the mortgage encumbering Signal
Pointe   Apartments.   The  refinancing   replaced  first  and  second  mortgage
indebtedness of approximately $3,857,000 with a new mortgage of $8,875,000.  The
mortgage was  refinanced at a rate of 7.22%  compared to the prior rate of 7.60%
and  matures  on  January  1,  2021 at which  time it will be  fully  amortized.
Capitalized  loan costs incurred for the refinancing in 2000 were  approximately
$244,000.  Additional  capitalized  loan  costs of  approximately  $13,000  were
incurred  in  2001.  The  Partnership  wrote  off   approximately   $117,000  in
unamortized  loan costs and mortgage  discount and paid prepayment  penalties of
approximately   $141,000   resulting   in  an   extraordinary   loss  on   early
extinguishment of debt of approximately $258,000.

The  mortgage  notes  payable are  nonrecourse  and are secured by pledge of the
respective  apartment  properties  and by pledge of revenues from the respective
apartment properties.  Prepayment penalties are incurred if the notes are repaid
prior to maturity.  Further,  the properties may not be sold subject to existing
indebtedness.  The principal  balance is being amortized over 240 months with no
balloon payments due at maturity.

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

                               2002              $ 489
                               2003                 525
                               2004                 564
                               2005                 607
                               2006                 652
                            Thereafter           16,475
                                                $19,312

Note C - Income Taxes

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

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

                                                     2001         2000

Net income as reported                             $ 1,475       $ 763
Add (deduct):
   Depreciation differences                            117          272
   Change in prepaid rental                             (5)           2
   Other                                              (289)          45

Federal taxable income                             $ 1,298      $ 1,082

Federal taxable income per limited
   partnership unit                                $ 46.73      $ 38.94

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

                  Net liabilities as reported              $(9,228)
                     Buildings and land                      4,929
                     Accumulated depreciation               (6,196)
                     Syndication fees                        3,111
                     Other                                    (867)
                  Net liabilities - tax basis              $(8,251)

Note D - Transactions with Affiliated Parties

The  Partnership  has no employees  and is dependent  on the  Corporate  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
Partnership  activities.  The Partnership Agreement provides for (i) payments to
affiliates for services and (ii)  reimbursement of certain expenses  incurred by
affiliates on behalf of the Partnership.  Balances and other  transactions  with
affiliates of the  Corporate  General  Partner for the years ended  December 31,
2001 and 2000 are as follows:

                                                         2001       2000
                                                         (in thousands)
Property management fees (included in operating
  expenses)                                             $ 324      $ 320
Reimbursement for services of affiliates
  (included in operating expense, general and
  administrative expense, and investment
  properties)                                              399        253
Due to affiliates                                        7,067         58

During the years ended  December 31, 2001 and 2000,  affiliates of the Corporate
General  Partner were  entitled to receive 5% of gross  receipts from all of the
Registrant's  properties  as  compensation  for  providing  property  management
services.  The Partnership  paid to such affiliates  approximately  $324,000 and
$320,000 for the years ended December 31, 2001 and 2000, respectively.

Affiliates  of  the  Corporate   General  Partner   received   reimbursement  of
accountable  administrative  expenses  amounting to  approximately  $399,000 and
$253,000 for the years ended December 31, 2001 and 2000, respectively.  Included
in these amounts are fees related to construction  management  services provided
by an affiliate of the Corporate  General Partner of approximately  $223,000 and
$69,000  for the years  ended  December  31,  2001 and 2000,  respectively.  The
construction  management  service fees are  calculated  based on a percentage of
current and certain prior year  additions to the  investment  properties and are
being depreciated over 15 years.

In accordance with the Partnership Agreement,  the Corporate General Partner has
loaned  the  Partnership   approximately   $6,998,000   during  2001.  Of  this,
approximately  $6,598,000  was used to assist in the  redevelopment  required at
Parktown  Townhouses due to flood damage and approximately  $400,000 was used to
assist in  operations at Signal  Pointe  Apartments.  Interest is charged at the
prime rate plus 2%.  Interest  expense was  approximately  $107,000 for the year
ended December 31, 2001.

During  1983,  a payable to the general  partners of  approximately  $58,000 was
accrued for sales  commissions  earned.  Pursuant to the Partnership  Agreement,
this liability cannot be paid until certain levels of return are received by the
limited  partners.  As of December 31, 2001,  the level of return to the limited
partners has not been met.

Beginning in 2001, the  Partnership  began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally  self-insured for a
portion of losses and  liabilities  related  to workers  compensation,  property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO  limits  through  insurance  policies  obtained  by  AIMCO  from  insurers
unaffiliated with the Corporate General Partner.  During the year ended December
31, 2001, the Partnership  paid AIMCO and its affiliates  approximately  $65,000
for insurance coverage and fees associated with policy claims administration.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its affiliates owned 19,206.50 limited partnership units
in the Partnership  representing 69.84% of the outstanding units at December 31,
2001. A number of these units were  acquired  pursuant to tender  offers made by
AIMCO or its  affiliates.  It is  possible  that  AIMCO or its  affiliates  will
acquire additional limited partnership  interests in the Partnership for cash or
in exchange  for units in the  operating  partnership  of AIMCO  either  through
private purchases or tender offers. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters  which  would  include  voting on certain  amendments  to the
Partnership  Agreement and voting to remove the Corporate General Partner.  As a
result  of its  ownership  of  69.84% of the  outstanding  units,  AIMCO is in a
position to control all such voting  decisions  with respect to the  Registrant.
When voting on matters, AIMCO would in all likelihood vote the Units it acquired
in a manner  favorable to the interest of the Corporate  General Partner because
of its affiliation with the Corporate General Partner.

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

                                                    Initial Cost
                                                   To Partnership
                                                   (in thousands)

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

<S>                              <C>            <C>         <C>            <C>
Parktown Townhouses              $ 7,635        $ 1,095     $ 5,329        $ 5,520
Raintree Apartments                2,990            184       3,184          1,284
Signal Pointe Apartments           8,687            535       8,062          4,242

          Totals                 $19,312        $ 1,814     $16,575        $11,046
</TABLE>


                     Gross Amount At Which
                            Carried
                      At December 31, 2001
                         (in thousands)
<TABLE>
<CAPTION>

                            Buildings
                               And
                             Related
                             Personal          Accumulated    Date of     Date   Depreciable
Description          Land   Properties Total  Depreciation  ConstructionAcquired Life-Years
                                              (in thousands)
<S>                <C>       <C>       <C>       <C>           <C>      <C>   <C>   <C>
Parktown           $ 1,095   $10,849   $11,944   $ 6,136       1969     03/01/81    5-35
Townhouses
Raintree               184     4,468               3,352     1972-1974  04/30/81    5-38
Apartments                             4,652
Signal Pointe
  Apartments           535    12,304               8,985       1970     06/30/81    5-37
                                       12,839

      Totals       $ 1,814   $27,621   $29,435   $18,473
</TABLE>

Reconciliation of "Real Estate and Accumulated Depreciation":

                                               Years Ended December 31,
                                                   2001         2000
                                                    (in thousands)
Investment Properties
Balance at beginning of year                      $27,467      $26,946
    Property improvements                           4,117          521
    Disposals of property                          (2,149)          --
Balance at end of year                            $29,435      $27,467

Accumulated Depreciation
Balance at beginning of year                      $18,891      $17,884
    Additions charged to expense                      828        1,007
    Disposals of property                          (1,246)          --
Balance at end of year                            $18,473      $18,891

The  aggregate  cost of the real  estate  for  Federal  income tax  purposes  at
December  31,  2001 and 2000,  is  approximately  $34,364,000  and  $30,342,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at December 31, 2001 and 2000, is  approximately  $24,669,000  and  $23,959,000,
respectively.

Note F - Casualty Event

During June 2001,  Parktown  Townhouses incurred extensive damage as a result of
severe flooding which affected certain areas of Texas. The estimated  damages to
the  property  include   approximately   $7,600,000  for  mold  remediation  and
approximately $4,100,000 for reconstruction of the property. These costs will be
covered by insurance. As of December 31, 2001,  approximately $7,600,000 of mold
remediation  expenses have been incurred and  approximately  $2,700,000 has been
spent on reconstruction  of the property.  As the mold remediation costs will be
covered by insurance,  the expenses are included in receivables  and deposits on
the accompanying balance sheet. As the repairs are not yet complete, no casualty
gain or loss is being recognized at this time. In addition,  due to the property
being 100%  physically  vacant since August 2001,  interest,  property taxes and
certain  operating  expenses  totaling  approximately  $353,000,   $131,000  and
$139,000,  respectively,  have been  capitalized  as of December  31,  2001.  In
addition,  approximately  $1,144,000 in lost rents for business interruption has
been  accrued  in 2001 and is  included  in rental  income in the  statement  of
operations.

Note G - Fourth Quarter Adjustment

During 2001, the  Partnership  increased the  accumulated  expenditures  used in
calculating  capitalized interest which resulted in a decrease in fourth quarter
interest expense of approximately $76,000.  Approximately $18,000 and $58,000 is
related to the second and third quarter of 2001, respectively.

Note H - Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the Partnership,  its Corporate  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purports  to  assert  claims  on  behalf  of a class  of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  which are named as nominal  defendants,  challenging,  among other
things,  the  acquisition  of interests  in certain  Corporate  General  Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged  into AIMCO.  The  plaintiffs  seek  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal
of the action.  In lieu of responding  to the motion,  the  plaintiffs  filed an
amended complaint.  The Corporate General Partner filed demurrers to the amended
complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December 14, 1999, the Corporate  General Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Corporate  General  Partner and its  affiliates  filed a
demurrer to the third amended  complaint.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Corporate General Partner and affiliated defendants filed a
demurrer to the fourth amended complaint,  which was heard on December 11, 2001.
On February 2, 2002,  the Court served its order  granting in part the demurrer.
The  Court has  dismissed  without  leave to amend  certain  of the  plaintiffs'
claims.  On February 11, 2002,  plaintiffs  filed a motion  seeking to certify a
putative  class  comprised of all  non-affiliated  persons who own or have owned
units  in  the  partnerships.  The  Corporate  General  Partner  and  affiliated
defendants  oppose  the motion and a hearing  has been  scheduled  for April 29,
2002. The Court has set the matter for trial in January 2003.

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

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

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


Item 8.     Changes in and  Disagreements  with  Accountants on Accounting and
            Financial Disclosure

            None.

                                    PART III

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

Shelter  Properties II (the  "Partnership" or  "Registrant")  has no officers or
directors.  The names and ages of, as well as the positions and offices held by,
the  executive  officers  and  director of Shelter  Realty II  Corporation  (the
"Corporate   General  Partner")  are  set  forth  below.  There  are  no  family
relationships between or among any officers or directors.

     Name                    Age    Position

     Patrick J. Foye          44    Executive Vice President and Director

     Martha L. Long           42    Senior Vice President and Controller

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

Martha L. Long has been Senior Vice  President  and  Controller of the Corporate
General  Partner since October 1998 as a result of the  acquisition  of Insignia
Financial  Group,  Inc. As of February 2001, Ms. Long was also appointed head of
the service  business for AIMCO.  From June 1994 until January 1997, she was the
Controller for Insignia, and was promoted to Senior Vice President - Finance and
Controller in January 1997,  retaining that title until October 1999.  From 1988
to June 1994,  Ms. Long was Senior Vice  President and  Controller for The First
Savings Bank, FSB in Greenville, South Carolina.

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

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

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

The executive  officers and director of the Corporate  General Partner discussed
with the  Partnership's  independent  auditors  the overall  scope and plans for
their audit. In reliance on the reviews and discussions  referred to above,  the
executive  officers and director of the Corporate  General  Partner has approved
the  inclusion of the audited  financial  statements  in the Form 10-KSB for the
year  ended  December  31,  2001 for filing  with the  Securities  and  Exchange
Commission.

The Corporate  General Partner has reappointed  Ernst & Young LLP as independent
auditors to audit the financial  statements of the  Partnership  for the current
fiscal year. Fees for the last fiscal year were audit services of  approximately
$47,000  and  non-audit  services  (principally  tax-related)  of  approximately
$23,000.

Item 10.    Executive Compensation

No  directors  and  officers  of the  Corporate  General  Partner  received  any
remuneration from the Registrant.

Item 11.    Security Ownership of Certain Beneficial Owners and Management

Except as noted below,  no person was known to be the  beneficial  owner of more
than 5% of the Limited  Partnership  Units of the  Registrant as of December 31,
2001.

           Entity                          Number of Units      Percentage

           Cooper River Properties, LLC        1,958.5             7.12%
             (an affiliate of AIMCO)
           Insignia Properties, LP             9,128.0            33.19%
             (an affiliate of AIMCO)
           AIMCO Properties, LP                8,120.0            29.53%
             (an affiliate of AIMCO)

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

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

No director or officer of the  Corporate  General  Partner  owns any units.  The
Corporate  General  Partner  owns 100  Units  as  required  by the  terms of the
Partnership  Agreement.  AIMCO  Properties,  LP, the other general partner,  has
acquired 8,120 units as the result of one or more tender offers.


Item 12.    Certain Relationships and Related Transactions

The  Partnership  has no employees  and is dependent  on the  Corporate  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
Partnership  activities.  The Partnership Agreement provides for (i) payments to
affiliates for services and (ii)  reimbursement of certain expenses  incurred by
affiliates on behalf of the Partnership.  Balances and other  transactions  with
affiliates of the  Corporate  General  Partner for the years ended  December 31,
2001 and 2000 are as follows:

                                                         2001       2000
                                                         (in thousands)

Property management fees                                $ 324      $ 320
Reimbursement for services of affiliates                   399        253
Due to affiliates                                        7,067         58

During the years ended  December 31, 2001 and 2000,  affiliates of the Corporate
General  Partner were  entitled to receive 5% of gross  receipts from all of the
Registrant's  properties  as  compensation  for  providing  property  management
services.  The Partnership  paid to such affiliates  approximately  $324,000 and
$320,000 for the years ended December 31, 2001 and 2000, respectively.

Affiliates  of  the  Corporate   General  Partner   received   reimbursement  of
accountable  administrative  expenses  amounting to  approximately  $399,000 and
$253,000 for the years ended December 31, 2001 and 2000, respectively.  Included
in these amounts are fees related to construction  management  services provided
by an affiliate of the Corporate  General Partner of approximately  $223,000 and
$69,000  for the years  ended  December  31,  2001 and 2000,  respectively.  The
construction  management  service fees are  calculated  based on a percentage of
current and certain prior year  additions to the  investment  properties and are
being depreciated over 15 years.

In accordance with the Partnership Agreement,  the Corporate General Partner has
loaned  the  Partnership   approximately   $6,998,000   during  2001.  Of  this,
approximately  $6,598,000  was used to assist in the  redevelopment  required at
Parktown  Townhouses due to flood damage and approximately  $400,000 was used to
assist in  operations at Signal  Pointe  Apartments.  Interest is charged at the
prime rate plus 2%.  Interest  expense was  approximately  $107,000 for the year
ended December 31, 2001.

During  1983,  a payable to the general  partners of  approximately  $58,000 was
accrued for sales  commissions  earned.  Pursuant to the Partnership  Agreement,
this liability cannot be paid until certain levels of return are received by the
limited  partners.  As of December 31, 2001,  the level of return to the limited
partners has not been met.

Beginning in 2001, the  Partnership  began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally  self-insured for a
portion of losses and  liabilities  related  to workers  compensation,  property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO  limits  through  insurance  policies  obtained  by  AIMCO  from  insurers
unaffiliated with the Corporate General Partner.  During the year ended December
31, 2001, the Partnership  paid AIMCO and its affiliates  approximately  $65,000
for insurance coverage and fees associated with policy claims administration.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its affiliates owned 19,206.50 limited partnership units
in the Partnership  representing 69.84% of the outstanding units at December 31,
2001. A number of these units were  acquired  pursuant to tender  offers made by
AIMCO or its  affiliates.  It is  possible  that  AIMCO or its  affiliates  will
acquire additional limited partnership  interests in the Partnership for cash or
in exchange  for units in the  operating  partnership  of AIMCO  either  through
private purchases or tender offers. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters  which  would  include  voting on certain  amendments  to the
Partnership  Agreement and voting to remove the Corporate General Partner.  As a
result  of its  ownership  of  69.84% of the  outstanding  units,  AIMCO is in a
position to control all such voting  decisions  with respect to the  Registrant.
When voting on matters, AIMCO would in all likelihood vote the Units it acquired
in a manner  favorable to the interest of the Corporate  General Partner because
of its affiliation with the Corporate General Partner.

Item 13.    Exhibits and Reports on Form 8-K

      (a)   Exhibits:

            None.

      (b)   Reports on Form 8-K filed in the fourth  quarter of calendar  year
            2001:

            None.


<PAGE>


                                   SIGNATURES


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


                                    SHELTER PROPERTIES II LIMITED PARTNERSHIP


                                    By:   Shelter Realty II Corporation
                                          Corporate General Partner


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


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


                                      Date:


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


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


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



<PAGE>


                                  EXHIBIT INDEX


Exhibit

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

  3               See Exhibit 4(a)

  4               (a)   Amended and  Restated  Certificate  and  Agreement  of
                        Limited  Partnership  [included  as  Exhibit  A to the
                        Prospectus  of  Registrant   dated  February  2,  1981
                        contained   in   Amendment   No.  1  to   Registration
                        Statement No. 2-69507 of Registrant  filed February 2,
                        1981 (the  "Prospectus")  and  incorporated  herein by
                        reference].

                  (b)   Subscription  Agreements  and  Signature  Pages [Filed
                        with  Amendment  No. 1 of  Registration  Statement No.
                        2-69507,  of  Registrant  and  incorporated  herein by
                        reference].

                  (c)   Promissory  Note  and  Deed of  Trust  between  Joe A.
                        McDermott,  Inc. and the Mischer  Corporation  and New
                        York Life  Insurance  Company.  General  Warranty Deed
                        between Parktown Realty,  N.V. and Shelter  Properties
                        II to acquire Parktown Apartments.*

                  (d)   Mortgage Note and Mortgage Deed between  Mutual  Benefit
                        Life Insurance Company and Foxcroft Investors,  Limited.
                        Purchase  Money Note and  Purchase  Money  Mortgage  and
                        Security Agreement between Foxcroft  Investors,  Limited
                        and  Shelter   Properties  II  to  acquire   Squire  One
                        Apartments.*

                  *Filed as Exhibit 4(c) and 4(e), respectively, to Form 10-K of
                  Registrant for year ended  December 31, 1987 and  incorporated
                  herein by reference.

                  (e)   Mortgage  Note between  William C. Dailey and Fidelity
                        Federal  Savings and Loan  Association  and Promissory
                        Note  between  William C.  Dailey  and The  Prudential
                        Insurance   Company   (filed  as   Exhibit   12(E)  to
                        Amendment No. 1 to Registration  Statement No. 2-69507
                        of  Registrant  filed  January  1981 and  incorporated
                        herein by reference).  Modification  and Assumption of
                        Mortgage  between  American  Federal  Savings and Loan
                        Association  and  Shelter  Properties  II  to  acquire
                        Raintree  Apartments  (filed as  Exhibit  4(e) to Form
                        10-K of  Registrant  for year ended  December 31, 1988
                        and incorporated herein by reference).

 10(i)            Contracts   related  to   acquisition   or   disposition  of
                        properties.

                  (a)   Purchase  Agreement  dated December 31, 1980,  between
                        Hubris,  Inc. and U.S. Shelter Corporation to purchase
                        Parktown Townhouse.**

                  (b)   Purchase  Agreement  dated  January 5,  1981,  between
                        Twin   City   Apartments,   Inc.   and  U.S.   Shelter
                        Corporation to purchase The Village Apartments.**

                  (c)   Purchase  Agreement  dated  January  2,  1981  between
                        Carolina    Housing    Partners   and   U.S.   Shelter
                        Corporation to purchase Raintree Apartments.**

                  **Filed as Exhibits 12(b),  12(c), and 12(d),  respectively,
                  to Amendment No. 1 of Registration  Statement No. 2-69507 of
                  Registrant  filed February 2, 1981 and  incorporated  herein
                  by reference.

                  (d)   Purchase  Agreement dated May 28, 1981 between  Foxcroft
                        Investors, Limited and Shelter Properties II to purchase
                        Squire  One   Apartments.   [Filed   with  Form  8-K  of
                        Registrant dated June 8, 1981 and incorporated herein by
                        reference.]

                  (e)   Sales  Agreement dated December 30, 1983 between Shelter
                        Properties  II and Security  Investors,  Ltd.-II to sell
                        Cambridge Station  Apartments.  [Filed with Form 10-K of
                        Registrant   for  year  ended   December  31,  1983  and
                        incorporated herein by reference.]

   (ii)           Form of Management  Agreement with U.S. Shelter  Corporation
                  subsequently  assigned  to Shelter  Management  Group,  L.P.
                  (now known as Insignia  Management Group,  L.P.) [filed with
                  Amendment No. 1 to Registration  Statement,  No. 2-69507, of
                  Registrant and incorporated herein by reference].

   (iii)          Contracts related to refinancing of debt:

                  (a)   First Mortgage and Security Agreements dated October 28,
                        1992 between Shelter  Properties II Limited  Partnership
                        and Joseph Philip Forte (Trustee) and First Commonwealth
                        Realty  Credit  Corporation,   a  Virginia  Corporation,
                        securing    the    following    properties:    Raintree,
                        Parktown/Center Court, and Squire One.***

                  (b)   Second  Mortgage and Security  Agreements  dated October
                        28,  1992   between   Shelter   Properties   II  Limited
                        Partnership  and Joseph Philip Forte (Trustee) and First
                        Commonwealth  Realty  Credit  Corporation,   a  Virginia
                        Corporation,    securing   the   following   properties:
                        Raintree, Parktown/Center Court, and Squire One.***

                  (c)   First  Assignments of Leases and Rents dated October 28,
                        1992 between Shelter  Properties II Limited  Partnership
                        and Joseph Philip Forte (Trustee) and First Commonwealth
                        Realty  Credit  Corporation,   a  Virginia  Corporation,
                        securing    the    following    properties:    Raintree,
                        Parktown/Center Court, and Squire One.***

                  (d)   Second Assignments of Leases and Rents dated October 28,
                        1992 between Shelter  Properties II Limited  Partnership
                        and Joseph Philip Forte (Trustee) and First Commonwealth
                        Realty  Credit  Corporation,   a  Virginia  Corporation,
                        securing    the    following    properties:    Raintree,
                        Parktown/Center Court, and Squire One.***

                  (e)   First  Deeds of  Trust  Notes  dated  October  28,  1992
                        between  Shelter  Properties II Limited  Partnership and
                        First Commonwealth Realty Credit  Corporation,  relating
                        to the following properties:  Raintree,  Parktown/Center
                        Court, and Squire One.***

                  (f)   Second  Deeds of Trust  Notes  dated  October  28,  1992
                        between  Shelter  Properties II Limited  Partnership and
                        First Commonwealth Realty Credit  Corporation,  relating
                        to the following properties:  Raintree,  Parktown/Center
                        Court, and Squire One.***

                  ***Filed as Exhibit 10(iii) (a) through (f), respectively,  to
                  Form 10-KSB of Registrant for the year ended December 31, 1992
                  and incorporated herein by reference.

                  (g)   Multifamily  Note  dated  December  15,  2000,  by and
                        between  Registrant and Reilly Mortgage  Group,  Inc.,
                        for Parktown Townhouses Apartments.****

                  (h)   Multifamily  Note  dated  December  15,  2000,  by and
                        between  Registrant and Reilly Mortgage  Group,  Inc.,
                        for Raintree Apartments.****

                  (i)   Multifamily  Note  dated  December  15,  2000,  by and
                        between  Registrant and Reilly Mortgage  Group,  Inc.,
                        for Signal Pointe Apartments.****

                  ****Filed as Exhibit 10(iii) (g) through (i), respectively, to
                  Form 10-KSB of Registrant for the year ended December 31, 2000
                  and incorporated herein by reference.

 99               Prospectus of Registrant  dated  February 2, 1981  [included
                  in  Registration  Statement No.  2-69507 of  Registrant  and
                  incorporated herein by reference].