For The Fiscal Year Ended December 31, 2003

or

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

Commission file #0-16790

Inland's Monthly Income Fund, L.P.
(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 or 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 program. 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 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. As of August 1, 2002, the purchaser of the Douglas Towers apartment center had ceased making the interest payments on the amount due to us. We did not record any additional interest income receivable subsequent to the cessation of interest payments. Our general partner continued to monitor the operations of the property. In December 2002, we took over management responsibilities of the property. Over the next several months, management realized that the expenses to hold and market the property were gr eater than anticipated, and due to poor economic conditions in the property area, it was determined that it would be in the best interest of the investors to sell the property. At that time, management believed that the anticipated sales proceeds would exceed the carrying amount of the mortgage receivable. A foreclosure sale was held on June 11, 2003, and only one bidder expressed interest in the property. Rather than incur significant costs to improve the property, management accepted the offer on the property at the foreclosure sale for approximately $95,000. As a result of this offer, we recorded $367,318 of bad debt expense relating to the mortgage receivable on the property. The sale was completed on July 15, 2003 and we received $89,655, net of prorations.

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We entered into revised ten-year lease extensions with Elite, which began as of July 1, 2001. Under the new leases, Elite received a 10% rental rate reduction. Effective March 1, 2003, we 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.

Our 2004 business plan is to obtain an extension of the existing mortgage secured by the Duncan Wal-Mart property. The mortgage has a maturity date of April 30, 2004. We continue to market the Scandinavian Health Club for sale, and as of March 22, 2004, we have found a buyer and have entered into an agreement to sell this asset. Provided contingencies are met, the buyer performs and the sale closes, a portion of the sales proceeds will be used to payoff the Duncan Wal-Mart debt and make a distribution to investors. We are currently marketing the Duncan Wal-Mart property for sale. We will monitor the status of the tenant of the nursing homes throughout the course of 2004, and evaluate the possibility of marketing the nursing homes for sale in 2005.

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 2003.

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.

Access to Our Information

We electronically file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports with the Securities and Exchange Commission (SEC). The public may read and copy any of the reports that are filed with the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at (800)-SEC-0330. The SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically.

We make available, free of charge through our general partner's website, and by responding to requests addressed to our director of investor relations, the annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports. These reports are available as soon as reasonably practical after such material is electronically filed or furnished to the SEC. Our general partner's website address is www.inland-investments.com. The information contained on this website, or other websites linked to our website, is not part of this document.

Limited Partners wishing to communicate with our general partner can do so by writing to the attention of the general partner care of our partnership at 2901 Butterfield Road, Oak Brook, IL 60523.

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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.

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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

Consistent with our limited partnership agreement, there were no matters submitted to a vote of our security holders during 2003.

PART II

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

As of March 22, 2004, there were 1,954 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 established a unit repurchase program, there are no funds remaining for the repurchase of units through this program.

For the years ended December 31, 2003 and 2002, we paid the following distributions:

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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, 2003, 2002, 2001, 2000 and 1999

(not covered by Independent Auditors' Report)

The above selected financial data should be read in conjunction with the financial statements and related notes appearing elsewhere in this annual report.

The net income per unit and distribution per unit data is based upon the weighted average number of units outstanding of 59,285.65.

The distributions to limited partners represent the total distributions 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.

Critical Accounting Policies

On December 12, 2001, the Securities and Exchange Commission issued Financial Reporting Release or FRR No. 60 "Cautionary Advice Regarding Disclosure About Critical Accounting Policies." A critical accounting policy is one that would materially effect our operations or financial condition, and requires management to make estimates or judgments in certain circumstances. We believe that our most critical accounting policies relate to how we value our investment properties and mortgage loans receivable, recognize revenue, and our cost capitalization and depreciation policies. These judgments often result from the need to make estimates about the effect of matters that are inherently uncertain. The purpose of the FRR is to provide investors with an understanding of how management forms these policies. Critical accounting policies discussed in this section are not to be confused with accounting principles and methods disclosed in accordance with accounting principles generally accepted in the United States of America or GAAP. GAAP requires information in financial statements about accounting principles, methods used and disclosures pertaining to significant estimates. The following disclosure discusses judgments known to management pertaining to trends, events or uncertainties known which were taken into consideration upon the application of those policies and the likelihood that materially different amounts would be reported upon taking into consideration different conditions and assumptions.

Valuation of Investment Properties - On a quarterly basis, in accordance with Statement of Financial Accounting Standards No. 144, we conduct an impairment analysis to ensure that the carrying value of each property does not exceed its estimated fair value. If this were to occur, we would be required to record an impairment loss equal to the excess of carrying value over fair value.

In determining the value of an investment property and whether the property is impaired, management considers several factors such as projected rental and vacancy rates, property operating expenses, capital expenditures and interest rates. The capitalization and discount rates used to determine property valuation are based on the market in which the property is located, length of leases, tenant financial strength, the economy in general, demographics, environment, property location, visibility, age, physical condition and investor return requirements among others. All of the aforementioned factors are considered by management in determining the value of any particular property. The value of any particular property is sensitive to the actual results of any of these uncertain factors, either individually or taken as a whole. Should the actual results differ from management's judgment, the valuation could be negatively or positively affected.

The valuation and possible subsequent impairment of investment properties is a significant estimate that can and does change based on management's continuous process of analyzing each property.

Valuation of Mortgage Loans Receivable - On a quarterly basis, we conduct an analysis to ensure that the carrying value of each mortgage loan receivable is recoverable from the borrower. If we determine that all or a portion of the receivable is not collectible, we would be required to record an allowance for doubtful accounts equal to the amount estimated to be uncollectible.

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In determining the value of mortgage loans receivable, management considers several factors such as projected sales proceeds and expenses related to the property associated with the mortgage. Should the actual results differ from management's judgment, the valuation could be negatively or positively affected.

The valuation and possible subsequent allowance for doubtful accounts is a significant estimate that can and does change based on management's continuous process of analyzing each mortgage loan receivable.

Revenue Recognition - Under GAAP, we are required to recognize rental income based on the effective monthly rent for each lease. The effective monthly rent is equal to the average monthly rent during the term of the lease, not the stated rent for any particular month. The process, known as "straight-lining" rent, generally has the effect of increasing rental revenues during the early phases of a lease and decreasing rental revenues in the latter phases of a lease. If rental income calculated on a straight-line basis exceeds the cash rent due under the lease, the difference is recorded as an increase in deferred rent receivable and included as a component of rental income in the accompanying Statements of Operations. If the cash rent due under the lease exceeds rental income calculated on a straight-line basis, the difference is recorded as a decrease in deferred rent receivable and is also included as a component of rental income in the accompanying Statements of Operations.

Cost Capitalization and Depreciation Policies - We review all expenditures and capitalize any item exceeding $5,000 deemed to be an upgrade or a tenant improvement. If we capitalize more expenditures, current depreciation expense would be higher, however, total current expenses would be lower. Depreciation expense is computed using the straight-line method. Buildings and improvements are depreciated based upon estimated useful lives of 30 to 40 years for buildings and improvements and the remaining life of the related lease for tenant improvements.

On August 3, 1987, we commenced an offering of 50,000 (increased to 60,000) limited partnership units or 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, 2003, cumulative distributions to limited partn ers totaled $47,132,472, 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, 2003, we had cash and cash equivalents of $1,229,895, which includes approximately $109,000 expected to be used for the payment of real estate taxes for Douglas and Hillside Living Centers. As of December 31, 2003, we have received prepayments on 36 of the original 37 mortgage loans receivable relating to the sale of Schaumburg Terrace. A portion of these repayment proceeds were included in the distributions to the limited partners during 2003 and in prior years. We intend to use the remaining funds for future distributions and for working capital requirements.

Our $1,515,000 debt, collateralized by the Duncan Wal-Mart, matures on April 30, 2004. We intend to obtain an extension of this loan. We continue to market the Scandinavian Health Club for sale, and as of March 22, 2004, we have found a buyer and have entered into an agreement to sell this asset. Provided contingencies are met, the buyer performs and the sale closes, a portion of the sales proceeds will be used to payoff the Duncan Wal-Mart debt and make a distribution to investors.

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Due to the payoff of the mortgage receivables relating to the sale of Schaumburg Terrace and additional property expenses incurred relating to Douglas Towers, the properties we own, along with the interest received on the Schaumburg Terrace mortgage receivables, did not generate sufficient cash flow to meet the 8% annualized distributions to the limited partners (paid monthly), in addition to covering all our operating expenses for the year ended December 31, 2003. As a result, we have relied on working capital retained from the principal payoffs of the Schaumburg Terrace receivable to meet our cash requirements. To the extent that future cash flow is insufficient to meet our requirements, we may rely on working capital reserve, supplemental capital contributions from our general partner, advances from affiliates of our general partner, other short-term financing, or may sell one or more of the properties.

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

Transactions with Related Parties

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. Such costs of $68,925, $39,694 and $51,222 are included in professional services to affiliates and general and administrative expenses to affiliates for the years ended December 31, 2003, 2002 and 2001 respectively, of which $11,702 and $3,795 remained unpaid at December 31, 2003 and 2002, 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 $15,656, $15,336 and $21,461 for the years ended December 31, 2003, 2002 and 2001, respectively. Such fees are included in property operating expenses to Affiliates, all of which have been paid as of December 31, 2003.

In connection with the sale of McHenry Plaza Shopping Center on July 19, 2000, the Partnership recorded $68,700 of sales commission payable to an affiliate of the general partner. Such commission has been deferred until the limited partners receive their original capital plus a return as specified in the partnership agreement.

In connection with the sale of Rantoul Wal-Mart on August 5, 2000, the Partnership recorded $82,500 of sales commission payable to an affiliate of the general partner. Such commission has been deferred until the limited partners receive their original capital plus a return as specified in the partnership agreement.

In connection with the sale of Douglas Towers on August 24, 2001, the Partnership recorded $5,635 of sales commission payable to an affiliate of the general partner. This commission was written off against the bad debt expense in 2003.

As of December 31, 2003, 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.

The gain on the sale of investment property recorded for the years ended December 31, 2003, 2002 and 2001 is the result of deferred gain of $59,482, $649,215 and $218,349, 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. In addition, for the year ended December 31, 2001, $10,324 of gain was recognized due to the sale of the Douglas Towers 35-unit apartment center.

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Rental income was $1,465,933, $1,559,885 and $1,642,085 for the years ended December 31, 2003, 2002 and 2001, respectively. The decrease in 2003 is the result of the modification to the Elite leases to eliminate the increases over the term of the leases. This reduced the effective annual rent received. This decrease is partially offset by the increase in the SHS lease as a result of the April 2003 amendment. In 2002, rent decreased due to the sales of the Douglas Towers apartment center in 2001.

We entered into revised ten-year lease extensions with Elite, which began as of July 1, 2001. Under the new lease, Elite received a 10% rental rate reduction. Effective March 1, 2003, due to conditions in the nursing home industry, we executed amendments to the Elite leases which eliminate the increases in rent over the term of the leases.

Interest income was $36,463, $187,908 and $288,219 for the years ended December 31, 2003, 2002 and 2001, respectively. The decrease is 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.

Professional services to Affiliates were $28,290, $15,273 and $22,845 for the years ended December 31, 2003, 2002 and 2001, respectively. The decrease in 2002 was due to a decrease in accounting and legal fees paid to affiliates.

General and administrative expenses to affiliates were $40,635, to $24,421 and $28,377 for the years ended December 31, 2003, 2002 and 2001, respectively. The increase in 2003 is due to increases in investor service expenses, postage and supplies. General and administrative expenses to non-affiliates were $55,858, to $38,727 and $76,888 for the years ended December 31, 2003, 2002 and 2001, respectively. The increase in general and administrative expenses to non-affiliates for the years ended December 31, 2003 and 2001, as compared to the years ended December 31, 2002, is due primarily to an increase in state taxes paid.

Property operating expenses to non-affiliates were $64,743, $1,043 and $189,243 for the years ended December 31, 2003, 2002 and 2001, respectively. Property operating expenses to non-affiliates decreased for the year ended December 31, 2002, as compared to the year ended December 31, 2001 due to the sale of the Douglas Towers apartment center in 2001. During 2003, property operating expenses to non-affiliates increased due to property level expenses relating to Douglas Towers that we paid while in the process of obtaining title to the property.

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Our Partnership Agreement

Our 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, our profits and losses 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.

We allocate income to partners such that no partner group will receive an allocation of income which is greater than our net income for the related period.

Our general partner is required to make supplemental capital contributions, if necessary, from time to time in amounts sufficient to allow us 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, 2003. The cumulative amount of such supplemental capital contributions at December 31, 2003 is $2,095,863.

Off-Balance Sheet Arrangements, Contractual Obligations, Liabilities and Contracts and Commitments

The table below presents our obligations and commitments to make future payments under debt obligations, maintenance contracts and lease agreements as of December 31, 2003.

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Selected Quarterly Financial Data (unaudited)

The following represents the results of operations for each quarter during the years ended December 31, 2003, 2002 and 2001.

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, 2003 and 2002 the related statements of operations, partners' capital, and cash flows for each of the three years in the period ended December 31, 2003. Our audits also included the financial statement schedule listed in the Index at Item 15(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, 2003 and 2002, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, 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

March 26, 2004
Chicago, Illinois

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

Balance Sheets

December 31, 2003 and 2002


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, 2003 and 2002

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, 2003, 2002 and 2001

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, 2003, 2002 and 2001

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, 2003, 2002 and 2001

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, 2003, 2002 and 2001

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, 2003, 2002 and 2001

(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 for $356,676 from var ious 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 principles 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.

On January 1, 2003, the Partnership adopted Financial Accounting Standards Board ("FASB") Interpretation No. 45 ("FIN 45") "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others, an interpretation of FASB Statements No. 5, 57 and 107 and a rescission of FASB Interpretation No. 34". FIN 45 elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. FIN 45 also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken. The adoption of FIN 45 did not have a material effect on the Partnership's financial statements.

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

Notes to Financial Statements
(continued)

In May 2003, the FASB issued Statement No. 150 ("SFAS 150") "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". This statement establishes standards for classifying and measuring certain financial instruments as liabilities that embody obligations of the issuer and have characteristics of both liabilities and equity. SFAS No. 150 is effective for all financial instruments created or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. Management of the Partnership does not anticipate that the provisions of SFAS No. 150 will have an impact on the Partnership's financial condition and results of operations.

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. The Partnership adopted the provisions of this statement 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.

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 Partnership adopted the provisions of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended by SFAS Nos. 137, 138 and 149. This statement standardizes the accounting for derivative instruments by requiring that an entity recognize those items as assets or liabilities in the statements 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.

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. 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.

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.

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

Notes to Financial Statements
(continued)

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 (Note 2) 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)

(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, 2003. The cumulative amount of such Supplemental Capital Contributions at December 31, 2003 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 $11,702 and $3,795 remained unpaid at December 31, 2003 and 2002, 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 $15,656, $15,336 and $21,461 for the years ended December 31, 2003, 2002 and 2001, respectively. Such fees are included in property operating expenses to Affiliates, all of which have been paid as of December 31, 2003.

In connection with the sale of McHenry Plaza Shopping Center on July 19, 2000, the Partnership recorded $68,700 of sales commission payable to an affiliate of the general partner. Such commission has been deferred until the limited partners receive their original capital plus a return as specified in the partnership agreement.

In connection with the sale of Rantoul Walmart on August 5, 2000, the Partnership recorded $82,500 of sales commission payable to an affiliate of the general partner. Such commission has been deferred until the limited partners receive their original capital plus a return as specified in the partnership agreement.

In connection with the sale of Douglas Towers on August 24, 2001, the Partnership recorded $5,635 of sales commission payable to an affiliate of the general partner. This commission was written off against the bad debt expense in 2003.

(4) Investment Properties

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 original lease was scheduled to expire in December 2004 and the tenant had the option to extend the lease for two additional five-year periods.

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

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

Notes to Financial Statements
(continued)

Duncan Wal-Mart, Duncan, Oklahoma

Douglas Living and Retirement Center, Mattoon, Illinois

The Partnership sold the apartment center in August 2001 on an installment basis. As of August 1, 2002, the purchaser of the Douglas Towers apartment center had ceased making the interest payments on the amount due to the Partnership. The Partnership did not record any additional interest income receivable subsequent to the cessation of interest payments. The General Partner continued to monitor the operations of the property. In December 2002, the Partnership was appointed mortgagee in possession and took over management responsibilities of the property. Over the next several months, management realized that the expenses to hold and market the property were greater than anticipated, and due to poor economic conditions in the property area, it was determined that it would be in the best interest of the investors to sell the property. At that time, management believed that the anticipated sales proceeds would exceed the carrying amount of the mortgage receivable. A foreclosure sale was held on June 11, 2003, and only one bidder expressed interest in the property. Rather than incur significant costs to improve the property, management accepted the offer on the property at the foreclosure sale for approximately $95,000. As a result of this offer, the Partnership recorded $367,318 of bad debt expense relating to the mortgage receivable on the property. The sale was completed on July 15, 2003 and the Partnership received $89,655, net of prorations.

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

Notes to Financial Statements
(continued)

Hillside Living Center, Yorkville, Illinois

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 Partnership has recorded $59,482, $649,215 and $218,349 of gain as a result of these installment sales in 2003, 2002 and 2001, respectively, as principal payments were received. As of December 31, 2003, the Partnership has received prepayments on 36 of the original 37 mortgage loans receivable. The current principal balance of the remaining loan is $209,824. This loan requires monthly principal and interest payments totaling approximately $1,800 based on an interest rate of 8.625% per annum and matures October 2004. The remaining deferred gain of $58,121 as of December 31, 2003 will be recognized as principal payments are received on the remaining mortgage loan receivable.

At December 31, 2003 and 2002, the fair market value of the mortgage loans receivable approximated their carrying value.

(6)  Operating Leases

The following is a list of the Partnership's significant 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)

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 a decrease of $16,681 in 2003, an increase of $107,592 in 2002 and a decrease of $67,117 in 2001, of rental income for the period of occupancy for which stepped rent increases apply and $222,230 and $238,911 in related deferred rent receivable as of December 31, 2003 and 2002, respectively. These amounts are expected to 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 seven years to ten 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.

(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 lender has agreed to extend this loan until October 30, 2004.

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 $1,520,000 and $1,533,000 at December 31, 2003 and 2002, 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

The Partnership paid distributions of $110,778, $110,472 and $103,345 on January 10, 2004, February 10, 2004 and March 10, 2004, respectively.

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INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2003