Exhibit 99.0



February 15, 2003



Re:   DiVall Income Properties 3, L.P.



Dear Limited Partner:



There has been no progress in finding a purchaser for the remaining property located in Colorado Springs. Between fears of war and uncertainties with the markets, buyers seem to be on the sidelines.



We certainly hope we can have some positive news on the sale and liquidation front next
quarter.



Your Schedule K-1 will be mailed on or before February 28, 2003 and
the Annual Report will be mailed in April 2003.



Should you have any questions
or require any additional information, please feel free to contact our offices toll-free at 800-547-7686 ext 224. Any correspondence should be mailed to: The Provo Group, Inc., 101 W. 11thStreet, Suite 1110, Kansas City, MO 64105.



Sincerely,



Bruce A. Provo



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DIVALL INCOME PROPERTIES 3 L.P.

STATEMENTS OF INCOME AND CASH FLOW CHANGES

FOR THE THREE MONTH PERIOD ENDED
DECEMBER 31, 2002



|                                                                   |  |                        |            |   |                       |   |          |               |  |   |          |  
|------------------------------------------------------------------ |  | ---------------------- | ---------- | - | --------------------- | - | -------- | ------------- |  | - | -------- | -
|                                                                   |  | PROJECTED              |            |   | ACTUAL                |   |          | VARIANCE      | 
|                                                                   |  | 4TH QUARTER 12/31/2002 |            |   | 4THQUARTER 12/31/2002 |   |          | BETTER(WORSE) | 
|OPERATING REVENUES                                                 |  |                        |            |   |                       |   |          |               |  |   |          |  
|Rental income                                                      |  | $                      | 75,875     |   |                       | $ | 0        |               |  | $ | (75,875  | )
|Interest income                                                    |  |                        | 5,400      |   |                       |   | 2,801    |               |  |   | (2,599   | )
|Gain on Sale of Property                                           |  |                        | 0          |   |                       |   | 0        |               |  |   | 0        |  
|Other income                                                       |  |                        | 0          |   |                       |   | 1,290    |               |  |   | 1,290    |  
|                                                                   |  |                        |            |   |                       |   |          |               |  |   |          |  
|TOTAL OPERATING REVENUES                                           |  | $                      | 81,275     |   |                       | $ | 4,091    |               |  | $ | (77,184  | )
|                                                                   |  |                        |            |   |                       |   |          |               |  |   |          |  
|OPERATING EXPENSES                                                 |  |                        |            |   |                       |   |          |               |  |   |          |  
|Insurance                                                          |  | $                      | 1,226      |   |                       | $ | 816      |               |  | $ | 410      |  
|Management fees                                                    |  |                        | 17,757     |   |                       |   | 4,421    |               |  |   | 13,336   |  
|Overhead allowance                                                 |  |                        | 1,434      |   |                       |   | 1,444    |               |  |   | (10      | )
|Advisory Board                                                     |  |                        | 1,314      |   |                       |   | 1,313    |               |  |   | 2        |  
|Administrative                                                     |  |                        | 2,638      |   |                       |   | 2,266    |               |  |   | 372      |  
|Professional services                                              |  |                        | 4,100      |   |                       |   | 7,152    |               |  |   | (3,052   | )
|Auditing                                                           |  |                        | 11,350     |   |                       |   | 30,750   |               |  |   | (19,400  | )
|Legal                                                              |  |                        | 2,250      |   |                       |   | 1,740    |               |  |   | 510      |  
|Real Estate taxes                                                  |  |                        | 39,000     |   |                       |   | 8,335    |               |  |   | 30,665   |  
|Defaulted tenants                                                  |  |                        | 600        |   |                       |   | 600      |               |  |   | (0       | )
|                                                                   |  |                        |            |   |                       |   |          |               |  |   |          |  
|TOTAL OPERATING EXPENSES                                           |  | $                      | 81,669     |   |                       | $ | 58,837   |               |  | $ | 22,832   |  
|                                                                   |  |                        |            |   |                       |   |          |               |  |   |          |  
|INVESTIGATION AND RESTORATION EXPENSES                             |  | $                      | 0          |   |                       | $ | 52       |               |  | $ | (52      | )
|                                                                   |  |                        |            |   |                       |   |          |               |  |   |          |  
|NON-OPERATING EXPENSES                                             |  |                        |            |   |                       |   |          |               |  |   |          |  
|Depreciation                                                       |  | $                      | 14,647     |   |                       | $ | 0        |               |  | $ | 14,647   |  
|Amortization                                                       |  |                        | 264        |   |                       |   | 0        |               |  |   | 264      |  
|                                                                   |  |                        |            |   |                       |   |          |               |  |   |          |  
|TOTAL NON-OPERATING EXPENSES                                       |  | $                      | 14,911     |   |                       | $ | 0        |               |  | $ | 14,911   |  
|                                                                   |  |                        |            |   |                       |   |          |               |  |   |          |  
|TOTAL EXPENSES                                                     |  | $                      | 96,580     |   |                       | $ | 58,889   |               |  | $ | 37,691   |  
|                                                                   |  |                        |            |   |                       |   |          |               |  |   |          |  
|NET (LOSS) INCOME                                                  |  | $                      | (15,305    | ) |                       | $ | (54,798  | )             |  | $ | (39,493  | )
|                                                                   |  |                        |           
|                                                                   |  |                        |            |   |                       |   |          | VARIANCE      | 
|OPERATING CASH RECONCILIATION:                                     |  |                        |            |   |                       |   |          |               |  |   |          |  
|Depreciation and amortization                                      |  |                        | 14,911     |   |                       |   | 0        |               |  |   | (14,911  | )
|Recovery of amounts previously written off                         |  |                        | 0          |   |                       |   | (1,290   | )             |  |   | (1,290   | )
|(Increase) Decrease in current assets                              |  |                        | (27,537    | ) |                       |   | (627     | )             |  |   | 26,910   |  
|Increase (Decrease) in current liabilities                         |  |                        | 37,505     |   |                       |   | 22,551   |               |  |   | (14,954  | )
|(Increase) Decrease in cash reserved for payables                  |  |                        | (37,444    | ) |                       |   | (22,340  | )             |  |   | 15,104   |  
|Advance from future distribution reserve for current distributions |  |                        | 49,100     |   |                       |   | 56,600   |               |  |   | 7,500    |  
|                                                                   |  |                        |            |   |                       |   |          |               |  |   |          |  
|Net Cash Provided From (Used in) Operating Activities              |  | $                      | 21,230     |   |                       | $ | 96       |               |  | $ | (21,134  | )
|                                                                   |  |                        |            |   |                       |   |          |               |  |   |          |  
|CASH FLOWS (USED IN) FROM INVESTING AND FINANCING ACTIVITIES       |  |                        |            |   |                       |   |          |               |  |   |          |  
|Investment in Indemnification Trust (interest earnings)            |  |                        | -4,500     |   |                       |   | -1,449   |               |  |   | 3,051    |  
|Security deposit                                                   |  |                        | 0          |   |                       |   | 0        |               |  |   | 0        |  
|Recovery of amounts previously written off                         |  |                        |            |   |                       |   | 1,290    |               |  |   | 1,290    |  
|                                                                   |  |                        |            |   |                       |   |          |               |  |   |          |  
|Net Cash (used in) from Investing And Financing Activities         |  | $                      | (4,500     | ) |                       | $ | (158     | )             |  | $ | 4,342    |  
|                                                                   |  |                        |            |   |                       |   |          |               |  |   |          |  
|Total Cash Flow For Quarter                                        |  | $                      | 16,731     |   |                       | $ | (62      | )             |  | $ | (16,792  | )
|                                                                   |  |                        |           
|Cash Balance Beginning of Period                                   |  |                        | 232,209    |   |                       |   | 573,184  |               |  |   | 340,975  |  
|Less 3rd quarter distributions paid 11/02                          |  |                        | (15,000    | ) |                       |   | 0        |               |  |   | 15,000   |  
|Change in cash reserved for payables or distributions              |  |                        | (11,656    | ) |                       |   | (34,260  | )             |  |   | (22,604  | )
|                                                                   |  |                        |            |   |                       |   |          |               |  |   |          |  
|Cash Balance End of Period                                         |  | $                      | 222,284    |   |                       | $ | 538,862  |               |  | $ | 316,579  |  
|                                                                   |  |                        |           
|Cash reserved for 4th quarter L.P. distributions                   |  |                        | (15,000    | ) |                       |   | 0        |               |  |   | 15,000   |  
|Cash reserved for future distributions                             |  |                        | 0          |   |                       |   | (382,500 | )             |  |   | (382,500 | )
|Cash reserved for payment of payables                              |  |                        | (72,169    | ) |                       |   | (54,358  | )             |  |   | 17,811   |  
|                                                                   |  |                        |            |   |                       |   |          |               |  |   |          |  
|Unrestricted Cash Balance End of Period                            |  | $                      | 135,115    |   |                       | $ | 102,004  |               |  | $ | (33,110  | )
|                                                                   |  |                        |            |   |                       |   |          |               |  |   |          |  
|                                                                   |  |                        |           
|                                                                   |  | PROJECTED              |            |   | ACTUAL                |   |          | VARIANCE      | 
|*       Quarterly Distribution                                     |  | $                      | 15,000     |   |                       | $ | 0        |               |  | $ | (15,000  | )
|Mailing Date                                                       |  |                        | 02/15/2003 |   |                       |   |          |               |  |   |         |  

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|* | Refer to distribution letter for detail of quarterly distribution.
|- | ------------------------------------------------------------------