[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

(Exact name of registrant as specified in its charter)

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

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

LIMITED PARTNERSHIP UNITS

(Title of class)

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

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

State the aggregate market value of the voting stock held by nonaffiliates of the registrant. Not applicable.

The Prospectus of the Registrant dated August 3, 1987 as supplemented and filed pursuant to Rule 424(b) and 424(c) under the Securities Act of 1933 is incorporated by reference in Parts I, II and III of this Annual Report on Form 10-K.

Indicate by a checkmark whether the registrant is an accelerated filer (as defined in Securities Exchange Act Rule 12b-2)          __ Yes           X  No

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INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)


TABLE OF CONTENTS

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PART I

Item 1. Business

Inland's Monthly Income Fund, L.P. was formed on March 26, 1987 to invest in improved residential, retail, industrial and other income producing properties. On August 3, 1987, we commenced an offering of 50,000 (subject to an increase up to 60,000) limited partnership units ("units") pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. The offering terminated on August 3, 1988, after we had sold 59,999 units at $500 per unit, resulting in gross offering proceeds of $29,999,500, not including our general partner's contribution of $500. All of the holders of our units were admitted to our partnership. Inland Real Estate Investment Corporation is our general partner. We acquired seven properties utilizing $25,831,542 of capital proceeds collected. Our limited partners share in the benefits of ownership of our real property investments in proportion to the number of units held. We repurchased 713 units for $356,676 from various limited partners through the unit repurchase prog ram. There are no funds remaining for the repurchase of units through this program.

We are engaged in the business of real estate investment which management considers being a single operating segment. A presentation of information about operating segments would not be material to an understanding of our business taken as a whole.

We acquired fee ownership of the following real property investments:

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1. Reference is made to Note 4 of the Notes to Financial Statements (Item 8 of this Annual Report) for additional descriptions of our real property investments.
2. Reference is made to Notes 4 and 7 of the Notes to Financial Statements (Item 8 of this Annual Report) for the current outstanding principal balance and a description of the long-term mortgage indebtedness.
3. Reference is made to Note 5 of the Notes to Financial Statements (Item 8 of this Annual Report) for a description of the sale of our investment property.

Our real property investments are subject to competition from similar types of properties in the vicinity in which each is located. Approximate occupancy levels for the properties are set forth on a year-end basis in the table in Item 2 below to which reference is hereby made. Our real property investments are located in Illinois, Ohio and Oklahoma. We have no real property investments located outside the United States. We do not segregate revenues or assets by geographic region, and such a presentation would not be material to an understanding of our business taken as a whole.

The following is a list of our significant net operating leases and the revenues from those leases as a percent of our gross income.

During January 2000, the leases with Elite were amended and extended for terms of five years each. As part of the lease extension on the Douglas Living and Retirement Center, Elite requested that they be released from the management of Douglas Towers, the 35-unit retirement apartment center. As Elite did not request any additional consideration, such as a rent reduction, we agreed and took over management of the apartments in May 2000. In August 2001, we sold the apartment center on an installment basis. The installment purchaser defaulted on his payments in 2002. We were appointed mortgagee in possession in December 2002. Foreclosure proceedings were initiated in January 2003. Upon receipt of title to the property, the general partner will market the property for resale.

Elite, the tenant of the Hillside Nursing Home and Douglas Nursing Home, made the deferred rental payment which was due on February 1, 2001. The general partner and Elite entered into revised ten-year lease extensions, which began as of July 1, 2001. Under the new leases, Elite received a 10% rental rate reduction. Effective March 1, 2003, the general partner has executed amendments to the Elite leases, due to economic conditions in the nursing home industry, which eliminate the increases in rent over the term of the leases.

We also compete with many other entities engaged in real estate investment activities in the disposition of property. The ability to locate purchasers for the properties will depend primarily on the operations of the properties and the desirability of the locations of the operating properties.

We had no employees during 2002.

Our general partner and its affiliates provide services to us. The general partner and its affiliates are reimbursed for salaries and expenses of employees of the general partner and its affiliates relating to the administration of the partnership. An affiliate of the general partner receives a property management fee for management and leasing services relating to our properties.

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Item 2. Properties

We own directly the properties referred to under Item 1 above. to which reference is hereby made for a description of said properties.

The following is a list of approximate occupancy levels for our investment properties as of the end of each of the last five years. N/A indicates the property was not owned by us at the end of the year.

The following is a list of average effective annual rents per square foot for our investment properties for each of the last five years:

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The following tables set forth certain information with respect to the amount and expiration of leases for our investment properties:

(*) This store has been vacated by the lessee, however the lessee continues to pay rent.

1. No assumptions have been made regarding the releasing of expired leases. It is the opinion of the general partner that the space will be released at market rates.
2. The general partner has executed an amendment of this lease through September 30, 2013. Annual base rent will be increased from $359,094 to $383,231 per year commencing April 1, 2003. As part of the extension, we will advance $400,000 for tenant improvements and equipment at the property. The modification of this lease is included in the table above.
3. The general partner has executed amendments to the Elite leases, effective March 1, 2003, which eliminate the increases in rent over the term of the leases. The modification of these leases is included in the table above.

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Item 3. Legal Proceedings

We are not subject to any material pending legal proceedings.

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

There were no matters submitted to a vote of our security holders during 2002.

PART II

Item 5. Market for the Partnership's Limited Partnership Units and Related Security Holder Matters

As of December 31, 2002, there were 1,978 holders of our units. There is no public market for units nor is it anticipated that any public market for units will develop. Reference is made to Item 6 below for a discussion of cash distributions made to the limited partners.

Although we have established a unit repurchase program, there are no funds remaining for the repurchase of units through this program.

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Item 6. Selected Financial Data

INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)

For the years ended December 31, 2002, 2001, 2000, 1999 and 1998

(not covered by Independent Auditors' Report)

1. The above selected financial data should be read in conjunction with the financial statements and related notes appearing elsewhere in this annual report.
2. The net income per unit and distribution per unit data is based upon the weighted average number of units outstanding of 59,285.65.
3. This amount represents the total distribution to the limited partners, a portion of which was funded by the general partner.

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

Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this annual report on Form 10-K constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. These factors include, among other things, competition for tenants; federal, state, or local regulations; adverse changes in general economic or local conditions; uninsured losses; and potential conflicts of interest between us and our affiliates, including the general partner.

Liquidity and Capital Resources

On August 3, 1987, we commenced an offering of 50,000 (increased to 60,000) limited partnership units pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. The offering terminated on August 3, 1988, after we had sold 59,999 units at $500 per unit, resulting in gross offering proceeds of $29,999,500, not including the general partner's contribution of $500. All of the holders of our units have been admitted to our partnership. We acquired seven properties utilizing $25,831,542 of capital proceeds collected. During 1994 and 1995, we sold the thirty-eight six-unit condominium buildings comprising the Schaumburg Terrace condominium complex. Also, we sold one of the three lots adjacent to the Hillside Living Center during September 1997. In 2000, we sold McHenry Plaza and the Rantoul Wal-Mart. In 2001, we sold the 35-unit retirement apartment center which was part of the Douglas Living and Retirement Center. As of December 31, 2002, cumulative distributions to limited partners t otaled $45,321,691, including $2,095,863 of supplemental capital contributions from the general partner, which represents distributable cash flow from the properties. We repurchased 713 units for $356,676 from various limited partners through the unit repurchase program. There are no funds remaining for the repurchase of units through this program.

As of December 31, 2002, we had cash and cash equivalents of $1,904,517, which includes approximately $105,000 for the payment of real estate taxes for Douglas and Hillside Living Centers. During 2002, we received prepayments on ten of the twelve mortgage loans receivable outstanding at January 1, 2002. Repayment proceeds from these prepayments and monthly amortization totaled $2,163,315. During 2001, we received prepayments on three of the mortgage loans receivable. Repayment proceeds from these prepayments and monthly amortization totaled $717,044. During 2000, we received prepayments on eight of the thirty-two mortgage loans receivable on the six-unit condominium buildings comprising the Schaumburg Terrace condominium complex. Repayment proceeds from these prepayments and monthly amortization totaled $2,060,693. A portion of these repayment proceeds were included in the distributions to the limited partners in 2002, 2001 and 2000. We intend to use the remaining funds for future distributions and for w orking capital requirements.

The properties owned by us, along with the interest received on the Schaumburg Terrace mortgage receivables, are generating sufficient cash flow to meet the 8% annualized distributions to the Limited Partners (paid monthly), in addition to covering all our operating expenses. To the extent that the cash flow is insufficient to meet our needs, we may rely on supplemental capital contributions from the general partner, advances from affiliates of the general partner, other short-term financing, or may sell one or more of the properties.

The general partner has executed an amendment of the SHS lease through September 30, 2013. Annual base rent will be increased from $359,094 to $383,231 per year commencing April 1, 2003. As part of the extension, we will advance $400,000 for tenant improvements and equipment at the property.

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Results of Operations

As of December 31, 2002, we own four operating properties. All of these properties were leased on a "triple-net" basis which means that all expenses of the property are passed through to the tenant. During 1994 and 1995, we sold the thirty-eight six-unit condominium buildings comprising the Schaumburg Terrace condominium complex. Also, we sold one of the three lots adjacent to the Hillside Living Center during September 1997. In 2000, we sold McHenry Plaza and the Rantoul Wal-Mart.

During January 2000, the leases with Elite were amended and extended for terms of five years each. As part of the lease extension on the Douglas Living and Retirement Center, Elite requested that they be released from the management of the 35-unit retirement apartment center known as Douglas Towers. As Elite did not request any additional consideration at that time, such as a rent reduction, we agreed and took over management of the apartments in May 2000. We sold the apartment center in August 2001 on an installment basis. The installment purchaser defaulted on his payments in 2002. We were appointed mortgagee in possession in December 2002. Foreclosure proceedings were initiated in January 2003. Upon receipt of title to the property, the general partner will market the property for resale.

Elite made the deferred rental payment due February 2001. The general partner and Elite entered into a revised ten-year lease extension, which began as of July 1, 2001. Under the new lease, Elite received a 10% rental rate reduction. Although the annual rent was decreased, the effective annual rent over the term of the new lease increased. Effective March 1, 2003, the general partner has executed amendments to the Elite leases which eliminate the increases in rent over the term of the leases.

The gain on the sale of investment property recorded for the years ended December 31, 2002, 2001 and 2000 is the result of deferred gain of $649,215, $218,349 and $589,358, respectively, from the Schaumburg Terrace condominium sales being recognized as cash is received on the related financing extended by the Partnership to the individual purchasers. The gain on the sale of investment property for the year ended December 31, 2001 is also due to the sale of the Douglas Towers 35-unit apartment center. The gain on the sale of investment property for the year ended December 31, 2000 is also due to the sale of McHenry Plaza and the Rantoul Wal-Mart. We recognized gains on the sales of these two properties of $912,511 and $794,026, respectively. Reference is made to Note 5 of the Notes to Financial Statements (Item 8 of this Annual Report) for a description of the sale of our investment property.

Rental income decreased from $1,642,085 for the year ended December 31, 2001 to $1,559,885 for the year ended December 31, 2002, due to the sale of the Douglas Towers apartment center in 2001. Rental income decreased from $1,861,560 for the year ended December 31, 2000 to $1,642,085 for the year ended December 31, 2001, due to the sale of McHenry Plaza in July, 2000 and the sale of the Rantoul Wal-Mart in November, 2000. In 2001, this decrease was partially offset by an increase in the effective annual rent on the nursing homes and an increase in rent received from the operation of the Douglas Towers 35-unit apartment center.

Interest income decreased from $426,923 in 2000 to $288,219 in 2001 and $187,908 in 2002, due to a decrease in interest income on third party mortgages, as a result of prepayments of mortgage loans receivable and due to a decrease in investment income due to lower interest rates in 2002 and 2001.

Professional services to Affiliates decreased from $26,090 in 2000 to $22,845 in 2001 and $15,273 in 2002, due to a decrease in accounting and legal fees paid to affiliates. Professional services to non-affiliates increased from $31,961 for the year ended December 31, 2000 to $34,333 for the year ended December 31, 2001, due to an increase in accounting fees.

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General and administrative expenses to affiliates decreased from $28,377 for the year ended December 31, 2001 to $24,421 for the year ended December 31, 2002, due to a decrease in postage expense. General and administrative expenses to affiliates decreased from $44,144 for the year ended December 31, 2000 to $28,377 for the year ended December 31, 2001, due to decreases in data processing, postage and investor services expenses. The increase in general and administrative expenses to non-affiliates for the year ended December 31, 2001, as compared to the years ended December 31, 2002 and 2000, is due primarily to an increase in state taxes paid.

Property operating expenses to affiliates and non-affiliates decreased for the years ended December 31, 2002 and 2001, as compared to the year ended December 31, 2000 due to the sale of the Douglas Towers apartment center in 2001 and the sale of McHenry Plaza Shopping Center and the Rantoul Wal-Mart in 2000.

Selected Quarterly Financial Data (unaudited)

The following represents the results of operations for each quarter during the years ended December 31, 2002, 2001 and 2000.

Inflation

Rental income and operating expenses for our properties operated under triple-net leases are not likely to be directly affected by future inflation, since rents are fixed under the leases and property expenses are the responsibility of tenants. The capital appreciation of triple-net-leased properties is likely to be influenced by interest rate fluctuations. To the extent that inflation affects interest rates, future inflation may have an effect on the capital appreciation of triple-net-leased properties.

Item 7(a). Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

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Item 8. Financial Statements and Supplementary Data

INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)



Index

Schedules not filed:

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

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INDEPENDENT AUDITORS' REPORT

To the Partners of
Inland's Monthly Income Fund, L.P.

We have audited the accompanying balance sheets of Inland's Monthly Income Fund, L.P. (a limited partnership) as of December 31, 2002 and 2001 the related statements of operations, partners' capital, and cash flows for each of the three years in the period ended December 31, 2002. Our audits also included the financial statement schedule listed in the Index at Item 14(c). These financial statements and financial statement schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

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

In our opinion, such financial statements present fairly, in all material respects, the financial position of Inland's Monthly Income Fund, L.P. as of December 31, 2002 and 2001, the results of its operations, and its cash flows for each of the three years in the period ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

Deloitte & Touche LLP

January 30, 2003
Chicago, Illinois

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INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)

Balance Sheets

December 31, 2002 and 2001


Assets

See accompanying notes to financial statements.

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 INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)

Balance Sheets
(continued)

December 31, 2002 and 2001

Liabilities and Partners' Capital

See accompanying notes to financial statements.

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INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)

Statements of Operations

For the years ended December 31, 2002, 2001 and 2000

See accompanying notes to financial statements.

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 INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)

Statements of Partners' Capital

For the years ended December 31, 2002, 2001 and 2000

See accompanying notes to financial statements.

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INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)

Statements of Cash Flows

For the years ended December 31, 2002, 2001 and 2000

See accompanying notes to financial statements.

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INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)

Statements of Cash Flows
(continued)

For the years ended December 31, 2002, 2001 and 2000

See accompanying notes to financial statements

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INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)

Notes to Financial Statements

For the years ended December 31, 2002, 2001 and 2000

(1) Organization and Basis of Accounting

Inland's Monthly Income Fund, L.P. (the "Partnership"), was formed on March 26, 1987 pursuant to the Delaware Revised Uniform Limited Partnership Act, to invest in improved residential, retail, industrial and other income producing properties. On August 3, 1987, the Partnership commenced an Offering of 50,000 (subject to an increase up to 60,000) Limited Partnership Units ("Units") pursuant to a Registration under the Securities Act of 1933. The Offering terminated on August 3, 1988, with total sales of 59,999 Units at $500 per Unit, resulting in gross offering proceeds of $29,999,500, not including the General Partner's contribution of $500. All of the holders of these Units were admitted to the Partnership. Inland Real Estate Investment Corporation is the General Partner. The Limited Partners of the Partnership share in the benefits of ownership of the Partnership's real property investments in proportion to the number of Units held. The Partnership repurchased 713 Units fo r $356,676 from various Limited Partners through the Unit Repurchase Program. There are no funds remaining for the repurchase of Units through this program.

The preparation of financial statements in conformity with accounting principals generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Offering costs have been offset against the Limited Partners' capital accounts.

The Partnership considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents which are carried at cost, which approximates market.

Statement of Financial Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS No. 121") requires the Partnership to record an impairment loss on its property to be held for investment whenever its carrying value cannot be fully recovered through estimated undiscounted future cash flows from their operations and sale. The amount of the impairment loss to be recognized would be the difference between the property's carrying value and the properties estimated fair value. As of December 31, 2001, the Partnership had not recognized any such impairment losses under SFAS 121.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", ("SFAS No. 144"). SFAS 144 addresses accounting and reporting for the impairment or disposal of long-lived assets. This statement supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets to be Disposed Of". The provisions of this statement are effective for the Partnership beginning January 1, 2002. SFAS No. 144 established new rules for the recognition, measurement and reporting of long-lived assets which are impaired and either held for sale or in use by the Partnership. The adoption of this statement did not have a material impact on the financial position or results of operations of the Partnership.

Depreciation expense is computed using the straight-line method over the following estimated useful lives. Buildings and improvements are based upon estimated useful lives of 30 to 40 years, while furniture and fixtures are based upon estimated useful lives of 5 to 12 years. Repair and maintenance expenses are charged to operations as incurred. Significant improvements are capitalized and depreciated over their estimated useful lives. Tenant improvements are depreciated over the related lease term.

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INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)

Notes to Financial Statements
(continued)

Rental income is recognized on a straight-line basis over the term of each lease. The difference between rental income earned on the straight-line basis and the cash rent due under the provisions of the lease agreements is recorded as deferred rent receivable.

Deferred leasing fees are amortized on a straight-line basis over the term of the related lease. Deferred loan fees are amortized on a straight-line basis over the term of the related loan.

Loan fees relating to the mortgage loans receivable are deferred and amortized as yield adjustments on a straight-line basis over the life of the related mortgage loan receivable which approximates the effective interest rate method.

No provision for Federal income taxes has been made, as the liability for such taxes is that of the Partners rather than the Partnership.

The Partnership's records are maintained on the accrual basis of accounting in accordance with GAAP. The Federal income tax return has been prepared from such records after making appropriate adjustments relating to depreciation and the Supplemental Capital Contributions to reflect the Partnership's accounts as adjusted for Federal income tax reporting purposes. Such adjustments are not recorded in the records of the Partnership. The net effect of these items is summarized as follows:

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INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)

Notes to Financial Statements
(continued)

A presentation of information about operating segments as required in SFAS No. 131 "Disclosures About Segments of an Enterprise and Related Information" would not be material to an understanding of the Partnership's business taken as a whole as the Partnership is engaged in the business of real estate investment which management considers to be a single operating segment.

Effective January 1, 2001, the Partnerships adopted the provisions of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended by SFAS Nos. 137 and 138. This statement standardizes the accounting for derivative instruments by requiring that an entity recognize those items as assets or liabilities in the statement of financial position and measure them at fair value. It also provides for matching the timing of gain or loss recognition on the hedging instrument with the recognition of (a) the changes in fair value of the hedged asset or liability attributable to the hedged risk or (b) the earnings effect of the hedged forecasted transaction. The net impact of the adoption of SFAS No. 133 had no effect on the Partnership's financial statements.

(2) Partnership Agreement

The Partnership Agreement defines the allocation of distributable available cash and profits and losses. Limited Partners will receive 100% of cash available for distribution until the Limited Partners have received a cumulative preferred return of 8% per annum. Thereafter, the General Partner shall be allocated an amount equal to any Supplemental Capital Contributions outstanding at the time of the distribution and then 95% of cash available for distribution will be allocated to the Limited Partners and 5% will be allocated to the General Partner.

Pursuant to the terms of the Partnership Agreement, the profits and losses of the Partnership from operations are allocated as follows:

1. Depreciation shall be allocated 99% to the taxable Limited Partners and 1% to the General Partner.
2. To the extent the minimum distribution of 8% per annum to the Limited Partners is funded by Supplemental Capital Contributions, the distribution shall be treated as a guaranteed payment, and the resulting deduction shall be allocated to the General Partner.
3. The remaining net profits shall be allocated 100% to the Limited Partners until the Limited Partners have been allocated an amount equal to the distribution required to provide them a cumulative preferred return of 8% per annum.

The Partnership allocates income to Partners such that no Partner group will receive an allocation of income which is greater than the Partnership's net income for the related period.

The General Partner is required to make Supplemental Capital Contributions, if necessary, from time to time in amounts sufficient to allow the Partnership to make distributions to the Limited Partners to provide a noncompounded return on their invested capital equal to 8% per annum. There were no such contributions by the General Partner to fund the cumulative preferred return of 8% per annum for the three-year period ended December 31, 2002. The cumulative amount of such Supplemental Capital Contributions at December 31, 2002 is $2,095,863.

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INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)

Notes to Financial Statements
(continued)

(3) Transactions with Affiliates

The General Partner and its Affiliates are entitled to reimbursement for salaries and expenses of employees of the General Partner and its Affiliates relating to the administration of the Partnership, of which $3,795 and $7,439 remained unpaid at December 31, 2002 and 2001, respectively.

An Affiliate of the General Partner is entitled to receive property management fees for management and leasing services. The Partnership has incurred property management fees of $15,336, $21,461 and $32,634 for the years ended December 31, 2002, 2001 and 2000, respectively. Such fees are included in property operating expenses to Affiliates, all of which have been paid as of December 31, 2002.

(4) Investment Properties

McHenry Plaza, McHenry, Illinois

On October 19, 1987, the Partnership purchased a 56,943 square foot shopping center located in McHenry, Illinois from an Affiliate of the General Partner. The cost of this property to the Partnership was $1,967,200 which includes the purchase price of $1,776,000 and acquisition costs of $191,200. Subsequent to the purchase of this property, approximately $1,595,000, including leasing commissions, was expended to upgrade the property following the July 1989 termination of a lease with Duckwell-Alco Stores, Inc., the tenant which leased 94% of the space in the center at the time the Partnership purchased the property. This upgrade was financed by a line of credit originally secured by the Rantoul Wal-Mart. See Note 5 for further discussion of the sale of this property.

Scandinavian Health Spa, Inc., Westlake, Ohio

On April 20, 1988, the Partnership purchased an existing 26,040 square foot health and racquet club known as Scandinavian Health Spa, located in Westlake, Ohio. The total cost of this property to the Partnership was $3,068,930, which includes the purchase price of $2,760,000 and acquisition costs of $308,930. The lease expires in December 2004 and the tenant has the option to extend the lease for two additional five-year periods. The tenant has leased 100% of the rentable space on a triple-net basis for a current monthly amount of $29,925.

The General Partner has executed an amendment of this lease through September 30, 2013. Annual base rent will be increased from $359,094 to $383,231 per year commencing April 1, 2003. As part of the extension, the Partnership will advance $400,000 for tenant improvements and equipment at the property. See Note 8.

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INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)

Notes to Financial Statements
(continued)

Douglas Living and Retirement Center, Mattoon, Illinois

On January 13, 1988, the Partnership took title to this property, which an Affiliate of the General Partner purchased on behalf of the Partnership from an unaffiliated third party for $3,208,250. The property consists of a 75 bed nursing care facility occupying 27,922 square feet, a 35-unit retirement apartment center occupying 36,389 square feet and a 1,350 square foot retirement duplex. The total cost of this property to the Partnership was $3,574,465, which includes the purchase price of $3,208,250 and acquisition costs of $366,215. The center is currently 100% leased to Elite Care Corporation. The lease is a triple-net lease and expired January 2001. In January 2000, the lessee exercised its rights and extended the lease term for a period of five years through January 2006. As part of the lease extension, Elite requested that they be released from the management of the 35-unit retirement apartment center. As Elite did not request any additional consideration at this time, such as a rent reduction, the Partnership agreed and took over management of the apartments in May 2000. The Partnership sold the apartment center in August 2001 on an installment basis. The installment purchaser defaulted on his payments in 2002. The Partnership was appointed mortgagee in possession in December 2002. Foreclosure proceedings were initiated in January 2003. Upon receipt of title to the property, the General Partner will market the property for resale.

Elite made the deferred rental payment due February 2001. The General Partner and Elite entered into a revised ten-year lease extension, which began as of July 1, 2001. Under the new lease, Elite received a 10% rental rate reduction. Although the annual rent was decreased, the effective annual rent over the term of the new lease increased. The tenant has the right to extend the lease for an additional five-year term. The current rent per annum is $429,935 and adjusts annually. The General Partner has executed an amendment to the Elite lease, effective March 1, 2003, which eliminates the increases in rent over the term of the lease. See Note 8.

Hillside Living Center, Yorkville, Illinois

On January 29, 1988, the Partnership took title to this property which an Affiliate of the General Partner purchased on behalf of the Partnership from an unaffiliated third party for $2,870,000. The property consists of a two-story building with a total of 21,565 square feet. The total cost of this property to the Partnership was $3,195,713, which includes the purchase price of $2,870,000 and acquisition costs of $325,713. The center is currently 100% leased to Elite Care Corporation. The lease is a triple-net lease and expired January 2001. In January 2000, the lessee exercised its rights and extended the lease term for a period of five years through January 2006.

Elite made the deferred rental payment due February 2001. The General Partner and Elite entered into a revised ten-year lease extension, which began as of July 1, 2001. Under the new lease, Elite received a 10% rental rate reduction. Although the annual rent was decreased, the effective annual rent over the term of the new lease increased. The Partnership received the deferred rent totaling $57,438 in July 2001. The tenant has the right to extend the lease for an additional five-year term. The current rent per annum is $384,606 and adjusts annually. The General Partner has executed an amendment to the Elite lease, effective March 1, 2003, which eliminates the increases in rent over the term of the lease. See Note 8.

On September 12, 1997, the Partnership sold one of three lots (.344 acres) adjacent to the Hillside Living Center.

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INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)

Notes to Financial Statements
(continued)

Duncan Wal-Mart, Duncan, Oklahoma

On August 5, 1988, the Partnership purchased a Wal-Mart store in Duncan, Oklahoma from Wal-Mart Properties, Inc. The cost to the Partnership was $3,038,547, which includes acquisition fees of $305,829. The property is situated on approximately 11.5 acres of land and contains a total of 68,907 square feet. The construction of the store was completed in the fall of 1987. The lease expires in January 2014 and the tenant has the option to extend the lease for five additional five-year periods. The tenant has leased 100% of the rentable space on a triple-net basis for a current monthly amount of $22,203. As of September 2000, this store has been vacated by the lessee, however the lessee is obligated to continue to pay rent until the expiration of the lease term under a guarantee of the lease.

Rantoul Wal-Mart, Rantoul, Illinois

On August 5, 1988, the Partnership purchased a Wal-Mart Store in Rantoul, Illinois from Wal-Mart Properties, Inc. The cost to the Partnership was $2,656,568, which includes acquisition fees of $266,834. The property is situated on approximately 11.2 acres of land and contains a total of 65,930 square feet. See Note 5 for a discussion on the sale of this property.

Cost and accumulated depreciation of the above properties as of December 31, are summarized as follows:

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INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)

Notes to Financial Statements
(continued)

(5) Gain on Sale of Investment Property

As of December 31, 1995, the Partnership had sold all of the thirty-eight six-unit condominium buildings comprising the Schaumburg Terrace condominium complex to unaffiliated third parties. The Partnership received $249,596 from one all-cash sale and recorded a gain of $71,865 in 1994. In addition, the Partnership received $823,518 in down payment proceeds, and provided mortgage loans totaling $8,701,439 to the purchasers for the thirty-seven additional sales. The current principal balances of the remaining two loans are approximately $212,900 and $213,300. These loans require monthly principal and interest payments totaling approximately $3,000 based on an interest rate of 8.625% per annum for ten years and a thirty-year amortization period with payment of all remaining principal at the end of that period. The Partnership has recorded $649,215, $218,349 and $589,358 of gain as a result of these installment sales in 2002, 2001 and 2000, respectively. During 2002, the Partnership received prepayments on ten of the remaining twelve mortgage loans receivable on the six-unit condominium buildings comprising the Schaumburg Terrace condominium complex. Repayment proceeds from these prepayments and monthly amortization total $2,163,315 and, accordingly, the Partnership recognized $649,215 of previously deferred gain. The remaining deferred gain of $115,861 as of December 31, 2002 will be recognized over the life of the related mortgage loans as principal payments are received.

On August 24, 2001, the Partnership sold the 35 unit apartment center known as Douglas Towers for approximately $525,000. The Partnership provided a mortgage loan receivable of approximately $462,600 to the buyer and recorded a gain of approximately $10,300.

On July 19, 2000, the Partnership sold McHenry Plaza to an unaffiliated third party for $3,290,000. The Partnership recorded a gain on sale of $912,511 as a result of this sale. Proceeds from the sale were distributed to the Limited Partners in August 2000.

On November 17, 2000, the Partnership sold the Rantoul Wal-Mart to an unaffiliated third party for $2,750,000. The Partnership recorded a gain on sale of $794,026 as a result of this sale. Proceeds of $985,000 were used to paydown the debt secured by the property. Remaining proceeds from the sale were distributed to the Limited Partners in December 2000.

At December 31, 2002 and 2001, the fair market value of the mortgage loans receivable approximated their carrying value.

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 INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)

Notes to Financial Statements
(continued)

(6) Operating Leases

Certain tenant leases contain provisions providing for stepped rent increases. Generally accepted accounting principles require that rental income be recorded for the period of occupancy on a straight-line basis. The accompanying financial statements include an increase of $107,592 and decreases of $67,117 and $144,793 in 2002, 2001 and 2000, respectively, of rental income for the period of occupancy for which stepped rent increases apply and $238,911 and $131,319 in related deferred rent receivable as of December 31, 2002 and 2001, respectively. These amounts will be collected over the terms of the related leases as scheduled rent payments are made.

Remaining lease terms of the Partnership's properties range from nine years to twelve years. Minimum lease payments to be received in the future from operating leases are as follows:

No assumptions have been made regarding the releasing of expiring leases.

Pursuant to the lease agreements, tenants of McHenry Plaza Shopping Center were required to reimburse the Partnership for their pro rata share of the real estate taxes and operating expenses of the property. Such amounts were included in additional rental income.

The following is a list of the Partnership's significant net operating leases and the revenues from those leases as a percent of the Partnership's operating income.

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INLAND'S MONTHLY INCOME FUND, L.P.
(A limited partnership)

Notes to Financial Statements
(continued)

(7) Long-Term Debt

On April 30, 1999, the Partnership refinanced the original $1,700,000 loan collateralized by the Rantoul Wal-Mart. The replacement loan was for $2,500,000 and was collateralized by the Rantoul Wal-Mart and the Duncan Wal-Mart. Due to the sale of the Rantoul Wal-Mart, $985,000 was repaid. The replacement loan bears an interest rate of 6.97% as compared to the interest rate of 9.75% on the original loan. The replacement loan requires monthly interest only payments and matures on April 30, 2004. The Partnership distributed excess refinancing proceeds to the limited partners on June 10, 1999.

The fair market value of mortgages payable is the amount at which the instrument could be exchanged in a current transaction between willing parties. The fair market value of the Partnership's mortgage is estimated to be $1,533,000 and $1,546,000 at December 31, 2002 and 2001, respectively. The Partnership estimates the fair value of its mortgages payable by discounting the future cash flows of each instrument at rates currently offered to the Partnership for similar debt instruments of comparable maturities by the Partnership's lenders.

(8) Subsequent Events, unaudited

On January 10, 2003, the Partnership paid a distribution of $114,175 to the Limited Partners.

The General Partner has executed amendments to the Elite leases, effective March 1, 2003, which eliminates the increases in rent over the term of the lease.

The General Partner has executed an amendment of this lease through September 30, 2013. Annual base rent will be increased from $359,094 to $383,231 per year commencing April 1, 2003. As part of the extension, the Partnership will advance $400,000 for tenant improvements and equipment at the property.

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INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2002

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INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)

Schedule III (continued)

Real Estate and Accumulated Depreciation


December 31, 2002, 2001 and 2000

Notes:

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Item 9. Changes in and Disagreements with Independent Auditors on Accounting and Financial Disclosure

There were no disagreements on accounting or financial disclosure matters during 2002.

PART III

Item 10. Directors and Executive Officers of the Registrant

Our general partner, Inland Real Estate Investment Corporation, was organized in 1984 for the purpose of acting as general partner of limited partnerships formed to acquire, own and operate real properties. The general partner is a wholly-owned subsidiary of The Inland Group, Inc. In 1990, Inland Real Estate Investment Corporation became the replacement general partner for an additional 301 privately-owned real estate limited partnerships syndicated by affiliates. The general partner has responsibility for all aspects of our operations. The relationship of the general partner to its affiliates is described under the caption "Conflicts of Interest" at pages 11 to 13 of the prospectus, a copy of which description is hereby incorporated herein by reference.

Officers and Directors

The officers, directors, and key employees of The Inland Group, Inc. and its affiliates ("Inland") that are likely to provide services to us are as follows:

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    DANIEL L. GOODWIN (age 59) is Chairman of the Board of Directors of The Inland Group, Inc., a billion-dollar real estate and financial organization located in Oak Brook, Illinois. Among Inland's subsidiaries is the largest property management firm in Illinois and one of the largest commercial real estate and mortgage banking firms in the Midwest.

Mr. Goodwin has served as Director of the Avenue Bank of Oak Park and as a director of the Continental Bank of Oakbrook Terrace. He was Chairman of the Bank Holding Company of American National Bank of DuPage. Currently he is the Chairman of the Board of Inland Mortgage Corporation.

Mr. Goodwin has been in the housing industry for more than 30 years, and has demonstrated a lifelong interest in housing-related issues. He is a licensed real estate broker and a member of the National Association of Realtors, the Illinois Association of Realtors and the Northern Illinois Commercial Association of Realtors. He has developed thousands of housing units in the Midwest, New England, Florida, and the Southwest. He is also the author of a nationally recognized real estate reference book for the management of residential properties.

Mr. Goodwin has served on the Board of the Illinois State Affordable Housing Trust Fund for six years and was recently appointed to serve once again by Governor George Ryan. He is an advisor for the Office of Housing Coordination Services of the State of Illinois, and a member of the Seniors Housing Committee of the National Multi-Housing Council. He was appointed Chairman of the Housing Production Committee for the Illinois State Affordable Housing Conference by former Governor Edgar. He also served as a member of the Cook County Commissioner's Economic Housing Development Committee, and he was the Chairman of the DuPage County Affordable Housing Task Force. The 1992 Catholic Charities Award was presented to Mr. Goodwin for his work in addressing affordable housing needs. The City of Hope designated him as the Man of the Year for the Illinois construction industry. In 1989, the Chicago Metropolitan Coalition on Aging presented Mr. Goodwin with an award in recognition of his efforts in making housing more affordable to Chicago's Senior Citizens. On May 4, 1995, PADS, Inc. (Public Action to Deliver Shelter) presented Mr. Goodwin with the affordable housing award, recognizing The Inland Group as the leading corporate provider of transitional housing for the homeless people of DuPage County. Mr. Goodwin also serves as Chairman of New Directions Housing Corporation, which provides affordable housing in the Midwest.

Mr. Goodwin is a product of Chicago-area schools, and obtained his Bachelor's and Master's Degrees from Illinois Universities. Following graduation, he taught for five years in the Chicago Public Schools. His commitment to education has continued through his work with the BBF Family Services' Pilot Elementary School in Chicago, and the development of the Inland Vocational Training Center for the Handicapped located at Little City in Palatine, Illinois. He personally established an endowment which funds a perpetual scholarship program for inner-city disadvantaged youth. In 1990 he received the Northeastern Illinois University President's Meritorious Service Award. Mr. Goodwin holds a Master's Degree in Education and in 1986, he was awarded an Honorary Doctorate from Northeastern Illinois University College of Education. More than 12 years ago, under Mr. Goodwin's direction, Inland instituted a program to educate disabled students about the workplace. Most of those original students are employed at Inland t oday, and Inland continues as one of the largest employers of the disabled in DuPage County. Mr. Goodwin has served as a member of the Board of Governors of Illinois State Colleges and Universities, and he is currently Vice Chairman of the Board of Trustees of Benedictine University. Since January 1996, he has been Chairman of the Northeastern Illinois University Board of Trustees.

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In 1988 Mr. Goodwin received the Outstanding Business Leader Award from the Oak Brook Jaycees and in March 1994 he won the Excellence in Business Award from the DuPage Area Association of Business and Industry. Additionally, he was honored by Little Friends on May 17, 1995 for rescuing their Parent-Handicapped Infant Program. He was the recipient of the 1995 March of Dimes Life Achievement Award and was recognized as the 1998 Corporate Leader of the Year by the Oak Brook Area Association of Commerce and Industry. The Ray Graham Association for People with Disabilities honored Mr. Goodwin as the 1999 Employer of the Year. Also, in 1999, the YWCA DuPage District bestowed the Corporate Recognition Award for Inland's policies and practices that demonstrate a commitment to the advancement of women in the workplace. For many years, he has been Chairman of the National Football League Players Association Mackey Awards for the benefit of inner-city youth and he served as the recent Chairman of the Speakers Club o f the Illinois House of Representatives.

    ROBERT H. BAUM (age 58) has been with The Inland Group, Inc. and its affiliates since 1968 and is one of the four original principals. Mr. Baum is Vice Chairman and Executive Vice President-General Counsel of The Inland Group, Inc. In his capacity as General Counsel, Mr. Baum is responsible for the supervision of the legal activities of The Inland Group, Inc. and its affiliates. This responsibility includes the supervision of The Inland Law Department and serving as liaison with outside counsel. Mr. Baum has served as a member of the North American Securities Administrators Association Real Estate Advisory Committee and as a member of the Securities Advisory Committee to the Secretary of State of Illinois. He is a member of the American Corporation Counsel Association and has also been a guest lecturer for the Illinois State Bar Association. Mr. Baum has been admitted to practice before the Supreme Court of the United States, as well as the bars of several federal courts of appeals and federal district courts and the State of Illinois and is a licensed real estate broker. He has served as a director of American National Bank of DuPage and currently serves as a director of Westbank. Mr. Baum also is a member of the Governing Council of Wellness House, a charitable organization that provides educational and emotional support for cancer patients and their families.

    G. JOSEPH COSENZA (age 58) has been with The Inland Group, Inc. and its affiliates since 1968 and is one of the four original principals. Mr. Cosenza is a Director and Vice Chairman of The Inland Group, Inc. and oversees, coordinates and directs Inland's many enterprises. In addition, Mr. Cosenza immediately supervises a staff of ten persons who engage in property acquisition. Mr. Cosenza has been a consultant to other real estate entities and lending institutions on property appraisal methods. He has directly overseen the purchase of close to $4 billion of income producing real estate from 1968 to the present.

Mr. Cosenza received his B.A. Degree from Northeastern Illinois University and his M.S. Degree from Northern Illinois University. From 1967 to 1968, he taught in the LaGrange, Illinois School District and from 1968 to 1972, he served as Assistant Principal and taught in the Wheeling, Illinois School District. Mr. Cosenza has been a licensed real estate broker since 1968 and an active member of various national and local real estate associations, including the National Association of Realtors and the Urban Land Institute.

Mr. Cosenza has also been Chairman of the Board of American National Bank of DuPage, and has served on the Board of Directors of Continental Bank of Oakbrook Terrace. He was the Chairman and is presently a Director on the Board of Westbank in Westchester, Hillside and Lombard, Illinois.

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    ROBERT D. PARKS (age 59) has been with The Inland Group Inc. ("Inland") and its affiliates since 1968 and is one of the four original principals; Chairman of Inland Real Estate Investment Corporation and Director of Inland Securities Corporation. Mr. Parks is president, chief executive officer, and a director of Inland Real Estate Corporation. He is Chairman, Chief Executive Officer and Affiliated Director of Inland Retail Real Estate Trust, Inc. He is a director of Inland Real Estate Advisory Services, Inc., Inland Investment Advisors, Inc., Partnership Ownership Corp., Inland Southern Acquisitions, Inc. and Inland Southeast Investment Corp., and he is a Trustee of Inland Mutual Fund Trust.

Mr. Parks is responsible for the ongoing administration of existing investment programs, corporate budgeting and administration for Inland Real Estate Investment Corporation. He oversees and coordinates the marketing of all investments and investor relations.

Prior to joining Inland, Mr. Parks was a school teacher in Chicago's public schools. He received his B.A. Degree from Northeastern Illinois University and his M.A. Degree from the University of Chicago. He is a registered Direct Participation Program Limited Principal with the National Association of Securities Dealers, Inc. He is also a member of the Real Estate Investment Association, the Financial Planning Association, the Foundation for Financial Planning, as well as a member of the National Association of Real Estate Investments Trusts, Inc.

    BRENDA G. GUJRAL (age 61) is President and Chief Operating Officer and a director of Inland Real Estate Investment Corporation (IREIC). She is also President and Chief Operating Officer and a director of Inland Securities Corporation (ISC), a member firm of the National Association of Securities Dealers (NASD). Mrs. Gujral is also a director of Inland Investment Advisors, Inc., an investment advisor.

Mrs. Gujral has overall responsibility for the operations of IREIC, including the distribution of checks to over 50,000 investors, review of periodic communications to those investors, the filing of quarterly and annual reports for Inland's publicly registered investment programs with the Securities and Exchange Commission, compliance with other SEC and NASD securities regulations both for IREIC and ISC, review of asset management activities, and marketing and communications with the independent broker/dealer firms selling Inland's current and prior programs. Mrs. Gujral works with internal and outside legal counsel in structuring and registering the prospectuses for IREIC's investment programs and in connection with the preparation of its offering documents and registering the related securities with the Securities and Exchange Commission and state securities commissions.

Mrs. Gujral has been with the Inland organization for 22 years, becoming an officer in 1982. Prior to joining Inland, she worked for the Land Use Planning Commission establishing an office in Portland, Oregon, to implement land use legislation for that state.

She is a graduate of California State University. She holds Series 7, 22, 39 and 63 licenses from the NASD. Mrs. Gujral is a member of the National Association of Real Estate Investment Trusts (NAREIT), the Financial Planning Association (FPA), the Foundation for Financial Planning (FFP) and the National Association for Female Executives.

    CATHERINE L. LYNCH (age 44) joined Inland in 1989 and is the Treasurer of Inland Real Estate Investment Corporation. Ms. Lynch is responsible for managing the Corporate Accounting Department. Prior to joining Inland, Ms. Lynch worked in the field of public accounting for KPMG Peat Marwick since 1980. She received her B.S. Degree in Accounting from Illinois State University. Ms. Lynch is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants and the Illinois CPA Society. She is registered with the National Association of Securities Dealers as a Financial Operations Principal.

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    ROBERTA S. MATLIN (age 58) joined Inland in 1984 as Director of Investor Administration and currently serves as Senior Vice President of Inland Real Estate Investment Corporation ("IREIC") directing the day-today internal operations. Ms. Matlin is a Director of IREIC and of Inland Securities Corporation. Since 1998 she has been Vice President of Administration of Inland Retail Real Estate Trust, Inc. and was Vice President of Administration of Inland Real Corporation from 1995 until 2000. She is President and Director of Inland Investment Advisors, Inc. and Intervest Southern Real Estate Corporation, and a Trustee and Executive Vice President of Inland Mutual Fund Trust.