UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2001

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-17690

Krupp Insured Mortgage Limited Partnership

Massachusetts
(State or other jurisdiction of incorporation or organization)

04-3021395
(IRS employer identification no.)

One Beacon Street, Boston, Massachusetts
(Address of principal executive offices)

02108
(Zip Code)

(617) 523-0066
(Registrant's telephone number, including area code)

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

Title Name of Exchange on which Registered

Shares of Beneficial Interest None

Securities registered pursuant to Section 12(g) of the Act: None

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. [ ].
Aggregate market value of voting securities held by non-affiliates: Not applicable.
Documents incorporated by reference: see Part IV, Item 14
The exhibit index is located on pages 10-11




                                     PART I

This Form 10-K contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934.  Actual  results could differ  materially  from those  projected in the
forward-looking  statements as a result of a number of factors,  including those
identified herein.

ITEM 1.    BUSINESS
------

Krupp  Insured  Mortgage   Limited   Partnership   (the   "Partnership")   is  a
Massachusetts  limited  partnership  which was  formed on March  21,  1988.  The
Partnership  raised  approximately  $299  million  through a public  offering of
limited partner interests  evidenced by units of depositary  receipts ("Units"),
and  used  the  proceeds   available   for   investment   primarily  to  acquire
participating insured mortgages ("PIMs") and mortgage-backed securities ("MBS").
The Partnership  considers  itself to be engaged only in the industry segment of
investment in mortgages.

The  Partnership's  investments in PIMs on multi-family  residential  properties
consist  of a MBS  or an  insured  mortgage  loan  (collectively,  the  "insured
mortgage")  guaranteed  or insured as to  principal  and basic  interest.  These
insured  mortgages  were issued or originated  under or in  connection  with the
housing programs of the Government National Mortgage Association ("GNMA") or the
Department  of  Housing  and  Urban  Development   ("HUD").   PIMs  provide  the
Partnership  with monthly  payments of principal and basic interest and also may
provide the Partnership with  participation in the current revenue stream and in
residual  value,  if any, from the sale or other  realization  of the underlying
property  (participation  interest).  The borrower  conveys  these rights to the
Partnership   through  a  subordinated   promissory   note  and  mortgage.   The
participation features are neither insured nor guaranteed.

The Partnership also has investments in MBS  collateralized by single-family and
multi-family  mortgage  loans issued or  originated  by Fannie Mae,  GNMA or the
Federal Home Loan  Mortgage  Corporation  ("FHLMC").  Fannie Mae, GNMA and FHLMC
guarantee the principal and basic interest of the Partnership's Fannie Mae, GNMA
and FHLMC MBS, respectively.

Proceeds received from prepayments or other realizations of mortgage assets will
be distributed  by the  Partnership  to investors  through  quarterly or special
distributions.

Although the  Partnership  will  terminate no later than December 31, 2028,  the
value of the PIMs may be realized by the Partnership  through  repayment or sale
as early as ten years from the dates of the closing of the  permanent  loans and
the Partnership may realize the value of all its other  investments  within that
time frame.  Therefore,  it is anticipated  that  dissolution of the Partnership
could occur significantly prior to December 31, 2028.

The  Partnership's  investments  are not  expected  to be  subject  to  seasonal
fluctuations.  However,  the future  performance of the Partnership  will depend
upon certain  factors  which  cannot be  predicted.  In  addition,  any ultimate
realization of the participation features of the PIMs will be subject to similar
risks associated with equity real estate investments, including: reliance on the
owner's  operating  skills,   ability  to  maintain  occupancy  levels,  control
operating  expenses,  maintain  the  property  and  provide  adequate  insurance
coverage;  adverse  changes  in  general  economic  conditions,   adverse  local
conditions, and changes in governmental regulations, real estate zoning laws, or
tax laws; and other  circumstances over which the Partnership may have little or
no control.

The  requirements  for compliance with federal,  state and local  regulations to
date have not had an adverse  effect on the  Partnership's  operations,  and the
Partnership does not presently anticipate any adverse effect in the future.

As of  December  31,  2001  there were no  personnel  directly  employed  by the
Partnership.


ITEM 2.    PROPERTIES
------

None.

ITEM 3.    LEGAL PROCEEDINGS
------

There are no material  pending legal  proceedings to which the  Partnership is a
party or to which any of its securities is the subject.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------
None.



                                     PART II

ITEM 5.    MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
------

There currently is no established trading market for the Units.

The number of investors  holding Units as of December 31, 2001 was approximately
12,400.  One of  the  objectives  of the  Partnership  is to  provide  quarterly
distributions  of cash flow  generated  by its  investments  in  mortgages.  The
Partnership  presently  anticipates  that  future  operations  will  continue to
generate cash available for distribution.

During 2000, the Partnership made special distributions  consisting of principal
proceeds,   Shared  Appreciation  Interest  and  prepayment  premiums  from  the
Brookside,  Enclave,  Bell Station,  Salishan,  Saratoga,  and Marina Shores PIM
prepayments and the Patrician MBS prepayment.

The Partnership will make special  distributions in the future as PIMs prepay or
if a  sufficient  amount  of  cash is  available  from  MBS  and  PIM  principal
collections.

The Partnership  made  distributions  to its Partners during the two years ended
December 31, 2001 and 2000 as follows:

                                                          2001                                 2000
                                             ----------------------------          -------------------------------
                                                 Amount         Per Unit               Amount          Per Unit
                                             ---------------  -----------          ----------------  -------------
Quarterly Distributions:
Limited Partners                             $    3,589,632    $      .24          $   5,833,146     $         .39
General Partners                                     78,831         -                    142,320             -
                                              -------------                        -------------
                                                  3,668,463                            5,975,466

Special Distributions:
Limited Partners                                    -          $    -                 53,994,033     $        3.61
                                             --------------                        -------------

                                             $    3,668,463                        $  59,969,499
                                             ==============                        =============














    ITEM 6.SELECTED FINANCIAL DATA
    ------

    The following table sets forth selected financial information regarding the
    Partnership's financial position and operating results. This information
    should be read in conjunction with Management's Discussion and Analysis of
    Financial Condition and Results of Operations and the Financial Statements
    and Supplementary Data, which are included in Items 7 and 8 (Appendix A) of
    this report, respectively.

                                                                Year  Ended  December 31,
                         ------------------------------------------------------------------------------------------------------------------------
                                 2001                 2000                1999              1998                 1997
                                 ----                 ----                ----              ----                 ----

Total revenues           $    3,120,660      $      4,690,857      $    9,806,072    $   11,954,179     $     16,679,293

Net income                    2,511,481             3,879,148           7,502,317         9,100,138           12,188,074


Net income allocated
 to Partners:
  Limited Partners            2,436,137             3,762,774           7,277,247         8,827,134           11,822,432
  Average per Unit                  .16                   .25                 .49               .59                  .79
  General Partners               75,344               116,374             225,070           273,004              365,642

Total assets at
   December 31               41,946,276            42,790,650          98,726,491       135,213,294          161,358,290

Distributions to Partners:
 Quarterly Distributions:
  Limited Partners            3,589,632             5,833,146          12,563,709        13,909,819           17,948,156
  Average per Unit                  .24                   .39                 .84               .93                 1.20
  General Partners               78,831               142,320             260,692           310,079              386,086

 Special Distributions:
  Limited Partners              -                  53,994,033          30,511,863        20,789,946           28,717,048
  Average Per Unit              -                        3.61                2.04              1.39                 1.92


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 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
the Partnership's  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, federal, state or local regulations; adverse changes in general economic
or local  conditions;  pre-payments  of  mortgages;  failure of borrowers to pay
participation  interests due to poor operating results at properties  underlying
the mortgages;  uninsured losses and potential conflicts of interest between the
Partnership and its Affiliates, including the General Partners.

Liquidity and Capital Resources

The most  significant  demand  on the  Partnership's  liquidity  is the  regular
quarterly distribution paid to investors of approximately  $900,000.  Funds used
for the investor  distributions  are generated from interest  income received on
the PIMs,  MBS, cash and short-term  investments  and the principal  collections
received on the PIMs and MBS. The  Partnership  funds a portion of the quarterly
distribution  from principal  collections  causing the capital  resources of the
Partnership to continually decrease. As a result of the decrease, the total cash
inflows to the  Partnership  will also  decrease,  which will result in periodic
adjustments  to the  distributions  paid  to  investors.  The  General  Partners
periodically  review the distribution rate to determine whether an adjustment is
necessary based on projected future cash flows. In general, the General Partners
try to set a distribution rate that provides for level quarterly  distributions.
Based on current  projections  the General  Partners  have  determined  that the
Partnership  will  continue to pay a  distribution  of $.06 per Limited  Partner
interest per quarter for the near future.



The  General  Partners  have also  determined  that the  Partnership  will pay a
special  distribution of $.10 per Limited Partner  interest in the first quarter
of 2002 due to the  prepayment of the single family MBS earlier than  previously
anticipated . In addition to providing  insured or guaranteed  monthly principal
and basic interest payments,  the Partnership's PIM investments also may provide
additional income through its participation feature in the underlying properties
if they  operate  successfully.  The  Partnership  may  receive  a share  in any
operating cash flow that exceeds debt service obligations and capital needs or a
share in any  appreciation  in value when the properties are sold or refinanced.
However,  this  participation  is  neither  guaranteed  nor  insured,  and it is
dependent  upon whether  property  operations or its terminal value meet certain
criteria.

During May 2001,  the  Partnership  received  $19,231 from the  borrowers of the
Richmond Park PIM as a settlement to release the loan's participation  features.
The property was not generating  sufficient  cash flow to pay any  participation
from property  operations nor did it have  sufficient  appreciation  in value to
meet the threshold to pay any  participation  based on value if the property was
sold or refinanced.  Considering the property's  physical  condition,  there was
little  likelihood  that its status would  improve.  Rental rate  increases  and
occupancy  levels had been difficult to achieve.  Consequently,  all of the cash
flow generated by the property went back into operations. While the borrower had
assured that the insured  first  mortgage  debt was  serviced,  no major capital
improvements  were  undertaken  to  enhance  the  property's   leasing  efforts.
Furthermore,  routine  maintenance  and repairs were beginning to be prioritized
according  to need and  available  cash.  The  condition of the property and its
inability to generate sufficient cash flow seriously impaired the ability of the
borrower to either sell the property or refinance it without  taking a loss. The
borrower's business plan was to make a significant investment in the property to
correct  deferred  maintenance and functional  obsolescence and to market it for
leasing in order to reposition the property for a successful  sale or refinance.
The borrowers were unwilling to make the significant investments necessary while
the property was encumbered with the PIM's participation  features. As a result,
the borrowers  requested a release of the  participation  features while keeping
the insured first  mortgage in place until  operations  improve and the property
can be sold or refinanced. The General Partners agreed to this request in return
for the settlement  because there was no expectation that the Partnership  would
be entitled to any participation proceeds now or in the future in the property's
physical  condition.  Upon this  settlement,  the insured first mortgage loan on
Richmond Park was reclassified from a PIM to a MBS as the only remaining portion
of  the  investment  is a GNMA  MBS.  The  Partnership  also  reclassified  this
investment   to  available  for  sale   concurrent   with  the  release  of  the
participation  feature.  The Partnership  will continue to receive the scheduled
principal  and  interest  payments on the first  mortgage  until the property is
refinanced or sold.

On June 2, 2000, the Partnership paid a special distribution of $.93 per Limited
Partner  interest  from the Bell Station and Enclave PIM payoffs  along with the
Shared  Appreciation  Interest  proceeds from the Brookside PIM (see below).  On
March 30,  2000,  the  Partnership  received  $190,239  of  Shared  Appreciation
Interest and $5,973 of Shared Income  Interest from the Bell Station PIM. During
April,  the Partnership  received the principal  proceeds of $4,901,863 from the
Bell Station PIM. During May, the Partnership received the principal proceeds of
$8,508,892  from the Enclave PIM. The underlying  first mortgage loan matured on
May 1, 2000; however, the Borrower was unable to close on his refinancing of the
property in time to payoff the loan on its maturity date.  Consequently,  Fannie
Mae paid off the MBS under its guarantee obligation. Subsequent to the payoff of
the MBS  portion  of the  PIM,  the  Partnership  received  $178,854  of  Shared
Appreciation Interest and $200,398 of Shared Income Interest.

On March 30,  2000,  the  Partnership  paid a special  distribution  of $.31 per
Limited  Partner  interest  from  the  principal   proceeds  in  the  amount  of
$4,531,910,  received  from the Brookside  Apartments  PIM payoff in February of
2000. The underlying  first mortgage loan matured on February 1, 2000;  however,
the Borrower was unable to close on his  refinancing  of the property in time to
payoff the loan on its maturity date. Consequently,  Fannie Mae paid off the MBS
under its guarantee  obligation.  Subsequent to the payoff of the MBS portion of
the PIM, the Partnership  received $130,000 of Shared Appreciation  Interest and
$176,513 of Shared Income Interest.

In addition to the payoffs  mentioned above,  the  Partnership,  received Shared
Income Interest of $24,233 from the Enclave PIM during February 2000 and $34,793
from the Creekside PIM during June 2000.




On January 11, 2000, the  Partnership  paid a special  distribution of $2.37 per
Limited Partner interest from the prepayment  proceeds  received during December
1999 from the  Salishan,  Saratoga  and Marina  Shores  Apartments  PIMs and the
Patrician  MBS. In addition to the  principal  proceeds from the Salishan PIM of
$14,666,235,  the Partnership received $146,662 of prepayment premium income and
$311,650  of  Shared  Income  Interest  and  Minimum  Additional  Interest.  The
Partnership received $6,008,565 of principal proceeds from the Marina Shores PIM
along with  $176,679 of Shared  Appreciation  Interest  and  prepayment  premium
income.  The  principal  proceeds  from the Saratoga PIM and the  Patrician  MBS
prepayments  were $6,204,895 and $7,830,263,  respectively.  The Partnership did
not receive any participation interest on the Saratoga prepayment.

In October  1999,  the  Partnership  received a  repayment  of the Valley  Manor
Apartments PIM of  $4,425,993.  The  Partnership  did not receive any Additional
Interest  as a result  of this  prepayment  because  the  underlying  property's
appraised  value did not exceed the  threshold  required  to realize  additional
interest.  In November 1999 the Partnership paid a special  distribution of $.30
per Limited Partner interest from the Valley Manor proceeds.

In February 1999, the Partnership  received a payoff of the Pope Building PIM in
the amount of $3,176,761.  In addition,  the  Partnership  received  $703,860 of
Shared  Appreciation and prepayment premium income and $218,578 of Shared Income
and Minimum  Additional  Interest  upon the payoff of the  underlying  mortgage.
During March 1999, the Partnership received a payoff of the Remington PIM in the
amount of $12,199,298.  The payoff was the result of a default on the underlying
loan  which  resulted  in the  Partnership  receiving  all  of  the  outstanding
principal balance under the insurance  feature of the PIM.  However,  due to the
default the Partnership did not receive any participation  income from this PIM.
During  May  1999,  the  Partnership  paid a special  distribution  of $1.08 per
Limited Partner interest from the principal proceeds received from the Remington
and Pope  Building  PIMs and the  Shared  Appreciation  and  prepayment  premium
proceeds received from the Pope Building PIM.

During January 1999, the  Partnership  paid a special  distribution  of $.66 per
Limited  Partner  Interest from the principal  proceeds and  prepayment  premium
received from the Cross Creek PIM in 1998. The prepayment of the Cross Creek PIM
remaining  principal  balance amounted to $9,414,586 with Additional  Income (in
lieu of a prepayment premium) of approximately  $318,000 was received along with
Shared Income of approximately $60,000.

The  Partnership  agreed to provide debt service  relief in December of 2000 for
the  Wildflower  PIM due to the  property's  poor  operating  performance in the
competitive  Las Vegas  market.  Occupancy  had  fallen  as low as 80%,  and the
property had been unable to generate  sufficient revenues to adequately maintain
the  property.   Consequently,   a  loan  modification   agreement  between  the
Partnership,  the borrower  entity under the PIM, the principals of the borrower
entity and the affiliated property management agent will provide operating funds
for property  repairs.  Under the  modification,  the principals of the borrower
entity converted  $105,000 of cash advances to a long-term  non-interest-bearing
loan. In addition, an escrow account to be used exclusively for property repairs
was  established  and is under the control of the  Partnership.  The  management
agent made an initial  deposit  into the escrow  equal to 30% of the  management
fees it received during 2000 and will continue to deposit a similar amount until
December 2002. The  Partnership  made an initial deposit into the escrow account
to match  the  $105,000  principals'  loan and the  management  agent's  initial
deposit and will continue to match additional  deposits until December 2002. The
Partnership's contributions to the escrow account will be considered an interest
rebate.  The  principals'  loan and the escrow  deposits made by the  management
agent and the Partnership can be repaid  exclusively out of any Surplus Cash, as
defined by HUD, that the property may generate in future years.  Any  repayments
will be made on a pro rata basis among the parties.

The  Partnership's  other  remaining PIM  investment is backed by the underlying
first mortgage loan on Creekside.  Presently, the General Partners do not expect
Creekside to pay the  Partnership  any  participation  interest or to be sold or
refinanced  during 2002.  However,  if favorable market  conditions  provide the
borrower  an  opportunity  to  sell  the  property,  there  are  no  contractual
obligations  remaining that would prevent a prepayment of the  underlying  first
mortgage.  Creekside, located in the Portland, Oregon area, continues to operate
successfully with occupancy in the mid-90% range.  However,  Clackamas County is
undertaking an extensive road improvement  project adjacent to Creekside,  and a
portion  of the  property  may be taken  during  the  road's  construction.  The
Partnership  does not expect any major changes to the property  during 2002, but
eventually, property operations could be affected by the road project.

The Partnership has the option to call these PIMs by accelerating their maturity
if  they  are not  prepaid  by the  tenth  year  after  permanent  funding.  The
Partnership will determine the merits of exercising the call option for each PIM
as economic  conditions  warrant.  Such  factors as the  condition of the asset,
local market  conditions,  the interest rate  environment  and  availability  of
financing will affect those decisions.

Critical Accounting Policy

The  Partnership's  critical  accounting  policy  relates  primarily  to revenue
recognition  related  to the  participation  feature  of the  Partnership's  PIM
investments. The Partnership's policy is as follows:

Basic  interest  on PIMs  is  recognized  based  on the  stated  rate of the FHA
mortgage  loan (less the  servicer's  fee) or the stated coupon rate of the GNMA
MBS. The Partnership  recognizes interest related to the participation  features
when the amount becomes fixed and the transaction that gives rise to such amount
is consummated.




ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------

Assessment of Credit Risk

The Partnership's investments in mortgages are guaranteed or insured by GNMA,
Fannie Mae, FHLMC or HUD and therefore the certainty of their cash flows and the
risk of material loss of the amounts invested depends on the creditworthiness of
these entities.

Fannie Mae is a federally chartered private corporation that guarantees
obligations originated under its programs. FHLMC is a federally chartered
corporation that guarantees obligations originated under its programs and is
wholly-owned by the twelve Federal Home Loan Banks. These obligations are not
guaranteed by the U.S. Government or the Federal Home Loan Bank Board. GNMA
guarantees the full and timely payment of principal and basic interest on the
securities it issues, which represent interests in pooled mortgages insured by
HUD. Obligations insured by HUD, an agency of the U.S. Government, are backed by
the full faith and credit of the U.S. Government.

The Partnership includes in cash and cash equivalents approximately $3.4 million
of commercial paper, which is issued by entities with a credit rating equal to
one of the top two rating categories of a nationally recognized statistical
rating organization.

Interest Rate Risk

The Partnership's primary market risk exposure is to interest rate risk, which
can be defined as the exposure of the Partnership's net income, comprehensive
income or financial condition to adverse movements in interest rates. At
December 31, 2001, the Partnerships PIMs and MBS comprise the majority of the
Partnership's assets. Decreases in interest rates may accelerate the prepayment
of the Partnership's investments. The Partnership does not utilize any
derivatives or other instruments to manage this risk as the Partnership plans to
hold all of its investments to expected maturity.

The Partnership monitors prepayments and considers prepayment trends, as well as
distribution requirements of the Partnership, when setting regular distribution
policy. For MBS, the Partnership forecasts prepayments based on trends in
similar securities as reported by statistical reporting entities such as
Bloomberg. For PIMs, the Partnership incorporates prepayment assumptions into
planning as individual properties notify the Partnership of the intent to prepay
or as they mature.

The table below provides information about the Partnership's financial
instruments that are sensitive to changes in interest rates. For mortgage
investments, the table presents principal cash flows and related weighted
average interest rates ("WAIR") by expected maturity dates. The expected
maturity date is contractual maturity adjusted for expectations of prepayments.


                                    Expected maturity dates ($ in thousands)


                    2002         2003       2004        2005           2006       Thereafter      Total       Fair
                                                                                                  Face        Value
                                                                                                  Value


Interest-sensitive assets:

MBS               $    917     $    817    $    734     $    666      $   611    $     10,111  $     13,856  $   14,308
WAIR                 7.63%        7.63%      7.63 %        7.63%        7.63%           7.63%         7.63%

PIMs                   309          335         363          393          426          21,898        23,724      24,767
WAIR                 7.94%        7.94%       7.94%        7.94%        7.94%           7.94%         7.94%
                  --------     --------    --------     --------      -------    ------------  ------------ ------------

Total Interest-
sensitive assets  $  1,226     $  1,152    $  1,097     $  1,059      $ 1,037    $     32,009  $     37,580 $     39,075
                  ========     ========    ========     ========      =======    ============  ============ ============



Results of Operations

The following discussion relates to the operation of the Partnership during the
years ended December 31, 2001, 2000 and 1999.



                                                                       (Amounts in thousands)
                                                             2001             2000              1999
                                                             ----             ----              ----

   Interest income on PIMs:
      Basic interest                                      $   2,069        $    2,773         $   6,325
      Participation interest                                     19               941             1,666
   Interest income on MBS                                       902               550             1,206
   Other interest income                                        130               427               609
   Partnership expenses                                        (536)             (674)           (1,006)
   Amortization of prepaid fees and
    expenses                                                    (73)             (138)           (1,298)
                                                           --------        ----------         ---------

          Net income                                       $  2,511        $    3,879         $   7,502
                                                           ========        ==========         =========


Net income  decreased in 2001 when compared to 2000 primarily due to lower basic
interest and participation  interest on PIMs and other interest income. This was
partially  offset by an increase in MBS interest income and decreases in general
and  administrative  expenses,  asset management fees and amortization  expense.
Basic  interest on PIMs  decreased  primarily due to the payoffs of the Enclave,
Bell Station and Brookside PIMs in 2000 and the reclassification of the Richmond
Park PIM to a MBS in May 2001. Participation interest was higher during 2000 due
to amounts collected in connection with the PIM payoffs received. Other interest
income  decreased due to  significantly  lower average  interest rates earned on
cash  balances  available  for  short-term  investing in 2001 versus  2000.  MBS
interest income increased due to the Richmond Park reclassification. General and
administrative expenses were greater during 2000 due to higher processing costs.
The decrease in asset  management  fees is a result of the  Partnership's  asset
base declining from the PIM prepayments. Amortization expense was greater during
2000 as compared to 2001 as a result of the full  amortization  of the remaining
prepaid fees and expenses on the PIM prepayments in 2000.

Net income decreased in 2000 as compared to 1999 due primarily to lower interest
income on PIMs and MBS.  Basic  interest on PIMs decreased due to the payoffs of
the Enclave, Bell Station and Brookside PIMs in 2000 and the Salishan, Saratoga,
Marina Shores and Valley Shores PIMs in 1999.  Participation  interest decreased
due to the PIM payoffs  mentioned  above.  MBS  interest  income  decreased  due
primarily to the payoff of the Patrician MBS in 1999. Expenses decreased in 2000
compared with 1999 due primarily to lower asset management fees and amortization
expenses. The decrease in asset management fees is a result of the Partnership's
asset base  declining.  Amortization  expense was greater in 1999 as compared to
2000 as a result of the full  amortization  of the  remaining  prepaid  fees and
expenses  on  the  1999  PIM  prepayments   being  greater  than  the  2000  PIM
prepayments.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
------

See Appendix A to this report.



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE
------

None.





                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
-------

The Partnership has no directors or executive  officers.  Information as to the
directors and executive  officers of Krupp Plus  Corporation  which is a General
Partner of the  Partnership  and is the  general  partner of  Mortgage  Services
Partners  Limited  Partnership  which  is  the  other  General  Partner  of  the
Partnership, is as follows:

                                                                Position with
            Name and Age                                        Krupp Plus Corporation

            Douglas Krupp (55)                                  President, Co-Chairman of the Board and Director
            George Krupp (57)                                   Co-Chairman of the Board and Director
            Peter F. Donovan (48)                               Senior Vice President
            Ronald Halpern (60)                                 Senior Vice President
            Robert A. Barrows (44)                              Vice President and Treasurer
            Carol J.C. Mills (52)                               Vice President

Douglas Krupp  co-founded and serves as Co-Chairman and Chief Executive  Officer
of The  Berkshire  Group,  an  integrated  real estate  financial  services firm
engaged  in  real   estate   acquisitions,   property   management,   investment
sponsorship,   venture  capital   investing,   mortgage  banking  and  financial
management,  and ownership of two operating  companies  through  private  equity
investments.  Mr. Krupp has held the position of Co-Chairman since The Berkshire
Group was  established  as The Krupp  Companies in 1969 and he has served as the
Chief Executive  Officer since 1992. He is a graduate of Bryant College where he
received an honorary Doctor of Science in Business Administration in 1989.

George Krupp is the  Co-Founder  and  Co-Chairman  of The  Berkshire  Group,  an
integrated  real  estate   financial   services  firm  engaged  in  real  estate
acquisitions,  property  management,  investment  sponsorship,  venture  capital
investing,  mortgage  banking and  financial  management,  and  ownership of two
operating companies through private equity  investments.  Mr. Krupp has held the
position of Co-Chairman  since The Berkshire  Group was established as The Krupp
Companies in 1969. Mr. Krupp has been an instructor of history at the New Jewish
High  School in  Waltham,  Massachusetts  since  September  of 1997.  Mr.  Krupp
attended the  University  of  Pennsylvania  and Harvard  University  and holds a
Master's Degree in History from Brown  University.  Douglas and George Krupp are
brothers.

Peter F. Donovan is Chief Executive Officer of Berkshire  Mortgage Finance which
position he has held since January of 1998 and in this capacity, he oversees the
strategic growth plans of this mortgage banking firm. Berkshire Mortgage Finance
is the 10th largest  commercial  mortgage  servicer in the United  States with a
servicing and asset management portfolio of $14.1 billion.  Previously he served
as President of  Berkshire  Mortgage  Finance from January of 1993 to January of
1998 and in that capacity he directed the  production,  underwriting,  servicing
and asset  management  activities of the firm. Prior to that, he was Senior Vice
President  of  Berkshire   Mortgage   Finance  and  was   responsible   for  all
participating  mortgage  originations.  Before  joining the firm in 1984, he was
Second Vice  President,  Real Estate Finance for Continental  Illinois  National
Bank and Trust,  where he managed a $300 million  construction  loan  portfolio of
commercial  properties.  Mr. Donovan received a B.A. from Trinity College and an
M.B.A. degree from Northwestern University. Mr. Donovan is currently a member of
the Advisory Council for Fannie Mae.

Ronald Halpern is President and COO of Berkshire Mortgage Finance. He has served
in these positions since January of 1998 and in this capacity, he is responsible
for the overall  operations  of the  Company.  Prior to January of 1998,  he was
Executive  Vice  President,   managing  the  underwriting,   closing,  portfolio
management and servicing  departments  for Berkshire  Mortgage  Finance.  Before
joining  the  firm in  1987,  he  held  senior  management  positions  with  the
Department of Housing and Urban  Development in Washington  D.C. and several HUD
regional  offices.  Mr.  Halpern has over 30 years of  experience in real estate
finance which includes his  experience as prior Chairman of the MBA  Multifamily
Housing Committee. He holds a B.A. degree from the University of the City of New
York and J.D. degree from Brooklyn Law School.

Robert A.  Barrows  is Senior  Vice  President  and Chief  Financial  Officer of
Berkshire  Mortgage  Finance.  Mr. Barrows has held several positions within The
Berkshire  Group since joining the company in 1983 and is currently  responsible
for  accounting,  financial  reporting  and  treasury  functions  for  Berkshire
Mortgage  Finance.  Prior  to  joining  The  Berkshire  Group,  he was an  audit
supervisor for Coopers and Lybrand  L.L.P.  in Boston.  He received a B.S.  degree
from Boston College and is a Certified  Public  Accountant.  Carol J.C. Mills is
Senior Vice President for Loan Management of Berkshire  Mortgage  Finance and in
this capacity,  she is responsible  for the Loan Servicing and Asset  Management
functions of Berkshire Mortgage Finance. She manages the estimated $14.1 billion
portfolio  of  loans.  Ms.  Mills  joined  Berkshire  in  December  1997 as Vice
President  and was  promoted  to Senior Vice  President  in January  1999.  From
January  1989  through  November  1997,  Ms.  Mills was Vice  President of First
Winthrop Corporation and Winthrop Financial  Associates,  in Cambridge,  MA. Ms.
Mills  earned  a  B.A.  degree  from  Mount  Holyoke  College  and a  Master  of
Architecture degree from Harvard  University.  Ms. Mills is a member of the Real
Estate  Finance  Association,  New England  Women in Real  Estate,  the Mortgage
Bankers Association and the Servicing Advisory Council for Freddie Mac.


ITEM 11.  EXECUTIVE COMPENSATION
-------

The Partnership has no directors or executive officers.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-------

As of December 31, 2001, no person of record owned or was known by the General
Partners to own beneficially more than 5% of the Partnership's 14,956,796
outstanding Limited Partner interests. The only interests held by management or
its affiliates consist of its General Partner and Corporate Limited Partner
Interests.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------

Information required under this Item is contained in Note F to the Partnership's
Financial Statements presented in Appendix A to this report.


                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
-------

(a)     1.     Financial  Statements - see Index to Financial Statements and
               Schedule included under Item 8, Appendix A, on page F-2 of
               this report.

        2.     Financial Statement Schedule - see Index to Financial Statements
               and Schedule included under Item 8, Appendix A, on page F-2 of
               this report. All other schedules are omitted as they are not
               applicable, not required or the information is provided in the
               Financial Statements or the Notes thereto.

(b)     Reports on Form 8-K

        During the last quarter of the year ended December 31, 2001, the
        Partnership did not file any reports on Form 8-K.

(c)     Exhibits:

        Number and Description
        Under Regulation S-K

        The following reflects all applicable Exhibits required under Item 601
of Regulation S-K:

     (4)    Instruments defining the rights of security holders including indentures:
            ------------------------------------------------------------------------

            (4.1)       Agreement of Limited Partnership dated as of July 19,
                        1988  [Exhibit  A  included  in  Amendment  No. 1 of
                        Registrant's Registration Statement on Form S-11 dated
                        July 20, 1988 (File No. 33-21201)].*

            (4.2)       Subscription Agreement whereby a subscriber agrees to
                        purchase  Units and  adopts  the  provisions  of the
                        Agreement of Limited Partnership [Exhibit D included
                        in Amendment No. 1 of Registrant's  Registration Statement
                        on Form S-11 dated July 20, 1988 (File No. 33-21201)].*

            (4.3)       Copy of First Amended and Restated  Certificate of
                        Limited  Partnership filed with the Massachusetts
                        Secretary of State on July 1, 1988. [Exhibit 4.4 to
                        Amendment No. 1 of Registrant's  Registration  Statement
                        on Form S-11 dated July 20, 1988 (File No. 33-21201)].*


     (10)   Material Contracts:
            ------------------

            (10.1)      Form of  agreement  between the  Partnership  and Krupp
                        Mortgage  Corporation  [Exhibit  10.2 to  Registrant's
                        Registration Statement on Form S-11 dated April 20, 1988
                       (File No. 33-21201)].*

            Richmond Park Apartments

            (10.2)      Prospectus  for GNMA Pool No. 260865 (PL) [Exhibit 1 to
                        Registrant's  report on Form 8-K dated August 30, 1989
                        (File No. 0-17690)].*

            Wildflower Apartments

            (10.3)      Prospectus  for GNMA Pool No.  280652(PL)  [Exhibit
                        10.30 to  Registrant's  Annual Report on Form 10-K for
                        the fiscal year ended December 31, 1989
                        (File No. 0-17690)].*

            (10.4)      Subordinated Multifamily Deed of Trust dated December
                        12, 1989 (including Subordinated Promissory Note)
                        between Lincoln Wildflower Limited Partnership and Krupp
                        Insured Mortgage Limited Partnership [Exhibit 10.31 to
                        Registrant's Annual Report on Form 10-K for the fiscal
                        year ended December 31, 1989 (File No. 0-17690)].*

            (10.5)      Loan Modification Agreement, dated December 21, 2000,
                        between Krupp Insured Mortgage Limited Partnership,
                        Berkshire Mortgage Finance Corporation (formally known
                        as Krupp Mortgage Corporation), Legacy Wildflower
                        Limited Partnership (formally known as Lincoln
                        Wildflower Limited Partnership), Legacy Partners 326
                        Limited Partnership (formally known as Lincoln Property
                        Company #326 Limited) and Legacy Partners Residential,
                        Inc.*

            Creekside Apartments

            (10.6)      Subordinated Promissory Note dated June 28, 1990 between
                        Creekside Associates Limited Partnership and Krupp
                        Insured Mortgage Limited Partnership [Exhibit 19.6 to
                        Registrant's report on Form 10-Q for the quarter ended
                        June 30, 1990 (File No. 0-17690)].*

            (10.7)      Subordinated Multifamily Deed of Trust dated June 28,
                        1990 between Creekside Associates Limited Partnership
                        and Krupp Insured Mortgage Limited Partnership [Exhibit
                        19.7 to Registrant's report on Form 10-Q for the quarter
                        ended June 30, 1990 (File No. 0-17690)].*

            (10.8)      Participation Agreement dated June 28, 1990 between
                        Krupp Mortgage Corporation and Krupp Insured Mortgage
                        Limited Partnership [Exhibit 19.1 to Registrant's report
                        on Form 10-Q for the quarter ended September 30, 1990
                        (File No. 0-17690)].*

            * Incorporated by reference.






                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 22nd day of March,
2002.

                   KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP

                   By: Krupp Plus Corporation, a General  Partner



                   By: /s/ Douglas Krupp
                       --------------------------------------------------------
                       Douglas Krupp, President, Co-Chairman
                       (Principal Executive Officer), and Director of
                       Krupp Plus Corporation



   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated, on the 22nd day of March, 2002.

            Signatures                                          Title(s)


 /s/ Douglas Krupp                             President, Co-Chairman (Principal Executive
----------------------------
Douglas Krupp                                  Officer), and Director of Krupp Plus Corporation, a General Partner



 /s/ George Krupp                              Co-Chairman (Principal Executive Officer)
----------------------------
George Krupp                                   and Director of Krupp Plus Corporation, a General Partner



 /s/ Peter F. Donovan                          Senior Vice President of Krupp Plus
----------------------------
Peter F. Donovan                               Corporation, a General Partner



 /s/ Robert A. Barrows                         Vice President and Treasurer of Krupp Plus
----------------------------
 Robert A. Barrows                             Corporation, a General Partner





                                                      APPENDIX A

                                      KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP











                                           FINANCIAL STATEMENTS AND SCHEDULE
                                                  ITEM 8 of FORM 10-K

                                ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
                                         For the Year Ended December 31, 2001






                                   KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP

                                   INDEX TO FINANCIAL STATEMENTS AND SCHEDULES




Report of Independent Accountants                                                                           F-3

Balance Sheets at December 31, 2001 and 2000                                                                F-4

Statements of Income and Comprehensive Income for the Years Ended December 31, 2001,
2000 and 1999                                                                                               F-5

Statements of Changes in Partners' Equity for the Years Ended
December 31, 2001, 2000 and 1999                                                                            F-6

Statements of Cash Flows for the Years Ended December 31, 2001,
2000 and 1999                                                                                               F-7

Notes to Financial Statements                                                                        F-8 - F-17



All schedules are omitted as they are not applicable or not required, or the
information is provided in the financial statements or the notes thereto.











                        REPORT OF INDEPENDENT ACCOUNTANTS




To the Partners of
Krupp Insured Mortgage Limited Partnership:

In our  opinion,  the  financial  statements  listed in the  accompanying  index
present  fairly,  in all  material  respects,  the  financial  position of Krupp
Insured Mortgage Limited  Partnership (the  "Partnership")  at December 31, 2001
and 2000 and the  results of its  operations  and its cash flows for each of the
three years in the period ended December 31, 2001 in conformity  with accounting
principles  generally accepted in the United States of America.  These financial
statements  are  the  responsibility  of  the  Partnership's   management;   our
responsibility  is to express an opinion on these financial  statements based on
our audits.  We conducted  our audits of these  statements  in  accordance  with
auditing  standards  generally  accepted in the United  States of America  which
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,  assessing the  accounting  principles
used and  significant  estimates made by management,  and evaluating the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.








PricewaterhouseCoopers LLP
Boston, Massachusetts
March 22, 2002





                                      KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP

                                                    BALANCE SHEETS

                                              December 31, 2001 and 2000


                                                        ASSETS

                                                                                  2001                  2000
                                                                                  ----                  ----

   Participating Insured Mortgages ("PIMs")
    (Notes B, C and H)                                                       $  23,723,593         $  33,004,074
   Mortgage-Backed Securities ("MBS")
    (Notes B, D and H)                                                          14,308,403             6,640,398
                                                                              ------------         -------------

        Total mortgage investments                                              38,031,996            39,644,472

   Cash and cash equivalents (Notes B, C and H)                                  3,603,846             2,737,740
   Interest receivable and other assets                                            267,672               292,370
   Prepaid acquisition fees and expenses, net of
     accumulated amortization of $596,986 and
     $544,434 respectively (Note B)                                                 30,656                83,208
   Prepaid participation servicing fees, net of
     accumulated amortization of $195,430 and
     $174,676, respectively (Note B)                                                12,106                32,860
                                                                             -------------         -------------

        Total assets                                                         $  41,946,276         $  42,790,650
                                                                             =============         =============



                                           LIABILITIES AND PARTNERS' EQUITY

   Liabilities                                                               $      17,875         $      17,650
                                                                             -------------         -------------

   Partners' equity (deficit) (Notes A and E):
   Limited Partners                                                             41,833,148            42,986,643
      (14,956,796 Limited Partner interests
         outstanding)

    General Partners                                                              (377,115)             (373,628)

     Accumulated Comprehensive Income  (Note B)                                    472,368               159,985
                                                                             -------------         -------------

        Total Partners' equity                                                  41,928,401            42,773,000
                                                                             -------------         -------------

        Total liabilities and Partners' equity                               $  41,946,276         $  42,790,650
                                                                             =============         =============





                     The accompanying notes are an integral
                        part of the financial statements.




                                   KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP

                                  STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

                              For the Years Ended December 31, 2001, 2000 and 1999



                                                                      2001                2000              1999
                                                                 -------------       -------------      -------------
Revenues (Note B):
 Interest income - PIMs (Note C):
    Basic interest                                               $   2,068,652       $   2,772,996      $   6,324,994
    Participation interest                                              19,231             941,003          1,665,793
 Interest income - MBS (Note D)                                        902,292             549,802          1,205,925
 Other interest income                                                 130,485             427,056            609,360
                                                                 -------------       -------------      -------------

             Total revenues                                          3,120,660           4,690,857          9,806,072
                                                                 -------------       -------------      -------------

Expenses:
  Asset management fee to an affiliate (Note F)                        231,416             318,118            703,699
  Expense reimbursements to affiliates  (Note F)                       118,398             125,247             92,642
  Amortization of prepaid fees and expenses (Note B)                    73,306             138,050          1,298,012
  General and administrative                                           186,059             230,294            209,402
                                                                 -------------       -------------      -------------

             Total expenses                                            609,179             811,709          2,303,755
                                                                 -------------       -------------      -------------

Net income (Note G)                                                  2,511,481           3,879,148          7,502,317

Other comprehensive income:

  Net change in unrealized gain on MBS                                 312,383             156,410           (641,612)
                                                                 -------------       -------------      -------------

Total comprehensive income                                       $   2,823,864       $   4,035,558      $   6,860,705
                                                                 =============       =============      =============

Allocation of net income (Note E):

 Limited Partners                                                $   2,436,137       $   3,762,774      $   7,277,247
                                                                 =============       =============      =============

 Average net income per Limited Partner
  interest (14,956,796 Limited Partner interests outstanding)    $         .16       $         .25      $         .49
                                                                 =============       =============      =============

 General Partners                                                $      75,344       $     116,374      $     225,070
                                                                 =============       =============      =============






                                       The accompanying notes are an integral
                                          part of the financial statements.




                                      KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP

                                       STATEMENTS OF CHANGES IN PARTNERS' EQUITY

                                 For the Years Ended December 31, 2001, 2000 and 1999



                                                                                      Accumulated            Total
                                                     Limited             General     Comprehensive          Partners'
                                                     Partners           Partners         Income              Equity
                                                 --------------        -----------     -----------        -------------

Balance at December 31, 1998                     $  134,849,373        $  (312,060)      $ 645,187        $ 135,182,500

Net income                                            7,277,247            225,070           -                7,502,317

Quarterly distributions                             (12,563,709)          (260,692)          -             (12,824,401)

Special distributions                               (30,511,863)             -               -             (30,511,863)


Change in unrealized
 gain on MBS                                              -                  -            (641,612)           (641,612)
                                                 --------------        -----------      ----------        ------------

Balance at December 31, 1999                         99,051,048           (347,682)          3,575          98,706,941

Net income                                            3,762,774            116,374           -               3,879,148

Quarterly distributions                              (5,833,146)          (142,320)          -              (5,975,466)

Special distributions                               (53,994,033)               -             -             (53,994,033)

Change in unrealized
 gain on MBS                                              -                    -           156,410             156,410

                                                 --------------        -----------      ----------        ------------

Balance at December 31, 2000                         42,986,643           (373,628)        159,985          42,773,000

Net income                                            2,436,137             75,344          -                2,511,481

Quarterly distributions                              (3,589,632)           (78,831)         -               (3,668,463)

Change in unrealized
  gain on MBS                                             -                   -            312,383             312,383
                                                 --------------        -----------     -----------       -------------

Balance at December 31, 2001                     $   41,833,148        $  (377,115)    $   472,368       $  41,928,401
                                                 ==============        ===========     ===========       =============





                     The accompanying notes are an integral
                        part of the financial statements.






                   KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP

                            STATEMENTS OF CASH FLOWS

                                       For the Years Ended December 31, 2001, 2000 and 1999



                                                                              2001                2000                  1999
                                                                              ----                ----                  ----
Operating activities:
   Net income                                                           $   2,511,481        $   3,879,148         $   7,502,317
   Adjustments to reconcile net income to net
    cash provided by operating activities:
      Amortization of prepaid fees and expenses                                73,306              138,050             1,298,012
      Shared Appreciation Interest and prepayment
         premium income                                                       -                   (499,093)           (1,027,201)
         Changes in assets and liabilities:
         Decrease (increase) in interest receivable
            and other assets                                                   24,698             (105,007)              598,802
         Increase (decrease) in liabilities                                       225               (1,900)              (11,244)
                                                                        -------------        -------------         ------------- -

            Net cash provided by operating activities                       2,609,710            3,411,198             8,360,686
                                                                        -------------        -------------         --------------

Investing activities:
   Principal collections on PIMs including
     Shared Appreciation Interest and prepayment premiums
      of $499,093 in 2000, and $1,027,201 in 1999                             330,141           18,885,111            48,587,772
   Principal collections on MBS                                             1,594,718              976,124            10,705,146
                                                                         ------------        -------------         --------------

            Net cash provided by investing activities                       1,924,859           19,861,235            59,292,918
                                                                        -------------        -------------         ------------- -

Financing activities:
   Quarterly distributions                                                 (3,668,463)          (5,975,466)          (12,824,401)
   Special distributions                                                      -                (53,994,033)          (30,511,863)
                                                                        -------------        -------------         ------------- -

            Net cash used for financing activities                         (3,668,463)         (59,969,499)          (43,336,264)
                                                                        -------------        -------------         ------------- -

Net increase (decrease) in cash and
      cash equivalents                                                        866,106          (36,697,066)           24,317,340

Cash and cash equivalents, beginning of year                                2,737,740           39,434,806            15,117,466
                                                                        -------------        -------------         -------------

Cash and cash equivalents, end of year                                  $   3,603,846        $   2,737,740         $  39,434,806
                                                                        =============        =============         =============

Supplemental disclosure of non-cash investing activities:
      Reclassification of investment in a PIM to a MBS                  $   8,950,340        $     -               $    -
                                                                        =============        =============         =============

Non cash activities:
      Increase (decrease) in fair value of MBS                          $     312,383        $     156,410         $    (641,612)
                                                                        =============        =============         =============








                     The accompanying notes are an integral
                        part of the financial statements.





                   KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS


A.     Organization

       Krupp Insured Mortgage Limited Partnership (the "Partnership") was formed
       on March 21, 1988 by filing a Certificate of Limited Partnership in The
       Commonwealth of Massachusetts. The Partnership was organized for the
       purpose of investing in multi-family loans and mortgage backed
       securities. The Partnership issued all of the General Partner Interests
       to two General Partners in exchange for capital contributions aggregating
       $3,000. Krupp Plus Corporation and Mortgage Services Partners Limited
       Partnership are the General Partners of the Partnership and Krupp
       Depositary Corporation is the Corporate Limited Partner. Except under
       certain limited circumstances upon termination of the Partnership, the
       General Partners are not required to make any additional capital
       contributions. The Partnership terminates on December 31, 2028, unless
       terminated earlier upon the occurrence of certain events as set forth in
       the Partnership Agreement.

       The Partnership commenced the public offering of Limited Partner
       interests on July 22, 1988 and completed its public offering on May 23,
       1990 having sold 14,956,696 Limited Partner interests for $298,678,321
       net of purchase volume discounts of $457,599. In addition, Krupp
       Depositary Corporation owns one hundred Limited Partner interests.

B.     Significant Accounting Policies

       The Partnership uses the following accounting policies for financial
       reporting purposes, which may differ in certain respects from those used
       for federal income tax purposes (Note G).

       Basis of Presentation

       The accompanying financial statements have been prepared on the accrual
       basis of accounting in accordance with accounting principles generally
       accepted in the United States of America ("GAAP").

       MBS

       The Partnership, in accordance with Financial Accounting Standards
       Board's Statement 115, "Accounting for Certain Investments in Debt and
       Equity Securities" ("FAS 115"), classifies its MBS portfolio as
       available-for-sale. As such the Partnership carries its MBS at fair
       market value and reflects any unrealized gains (losses) as a separate
       component of Partners' Equity. The Partnership amortizes purchase
       premiums or discounts over the life of the underlying mortgages using the
       effective interest method.

       PIMs

       The Partnership accounts for its MBS portion of a PIM in accordance with
       FAS 115 under the classification of held to maturity. The Partnership
       carries the Government National Mortgage Association (GNMA) MBS at
       amortized cost.

       The insured mortgage portion of its Federal Housing Administration (FHA)
       PIM is carried at amortized cost. The Partnership holds this FHA insured
       mortgage at amortized cost since the loan is fully insured by the FHA.

       Basic interest on PIMs is recognized based on the stated rate of the FHA
       mortgage loan (less the servicer's fee) or the stated coupon rate of the
       GNMA MBS. The Partnership recognizes interest related to the
       participation features when the amount becomes fixed and the transaction
       that gives rise to such amount is consummated.








                                    Continued



                   KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, continued


B.     Significant Accounting Policies, continued

       Cash and Cash Equivalents

       The Partnership includes all short-term investments with maturities of
       three months or less from the date of acquisition in cash and cash
       equivalents. The Partnership invests its cash primarily in commercial
       paper and money market funds with a commercial bank and has not
       experienced any loss to date on its invested cash.

       Prepaid Fees and Expenses

       Prepaid fees and expenses represent prepaid acquisition fees and expenses
       and prepaid participation servicing fees paid for the acquisition and
       servicing of PIMs. The Partnership amortizes prepaid acquisition fees and
       expenses using a method that approximates the effective interest method
       over a period of ten to twelve years, which represents the estimated life
       of the underlying mortgage. Acquisition expenses incurred on potential
       acquisitions which were not consummated were charged to operations.

       The Partnership amortizes prepaid participation servicing fees using a
       method that approximates the effective interest method over a ten-year
       period beginning at final endorsement of the loan if a Department of
       Housing and Urban Development ("HUD") loan or GNMA loan.

       Upon the repayment of a PIM, any unamortized acquisition fees and
       expenses and unamortized participation servicing fees related to such
       loan are expensed.

       Income Taxes

       The Partnership is not liable for federal or state income taxes as
       Partnership income is allocated to the partners for income tax purposes.
       In the event that the Partnership's tax returns are examined by the
       Internal Revenue Service or state taxing authority and the examination
       results in a change in Partnership taxable income, such change will be
       reported to the partners.

       Estimates and Assumptions

       The preparation of financial statements in accordance with GAAP requires
       management to make estimates and assumptions that affect the reported
       amount of assets and liabilities, contingent assets and liabilities and
       revenues and expenses during the period. Actual results could differ from
       those estimates.

C.     PIMs

       At December 31, 2001 and 2000, the Partnership had investments in two and
       three PIMs, respectively. The Partnership's PIMs consist of (a) a GNMA
       MBS representing the securitized first mortgage loan on the underlying
       property or a sole participation interest in the mortgage loan originated
       under HUD's FHA lending program (collectively the "insured mortgages"),
       and (b) participation interests in the revenue stream and appreciation of
       the underlying property above specified base levels. The borrower conveys
       these participation features to the Partnership generally through a
       subordinated promissory note and mortgage (the "Agreement").







                                    Continued



                   KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, continued



C.     PIMs, continued

       The Partnership receives guaranteed monthly payments of principal and
       interest on the GNMA MBS, and HUD insures the FHA mortgage loan. The
       borrower usually cannot prepay the first mortgage loan during the first
       five years and may prepay the first mortgage loan thereafter subject to a
       9% prepayment premium in years six through nine, a 1% prepayment premium
       in year ten and no prepayment premium thereafter. The Partnership may
       receive interest related to its participation interests in the underlying
       property, however, these amounts are neither insured nor guaranteed.

       Generally, the participation features consist of the following: (i)
       "Minimum Additional Interest" which is at the rate of .5% to 1% per annum
       calculated on the unpaid principal balance of the first mortgage on the
       underlying property, (ii) "Shared Income Interest" which is 25% to 35% of
       the monthly gross rental income generated by the underlying property in
       excess of a specified base, but only to the extent that it exceeds the
       amount of Minimum Additional Interest earned during such month and (iii)
       "Shared Appreciation Interest" which is 25% to 35% of any increase in the
       value of the underlying property in excess of a specified base. Payment
       of participation interest from the operations of the property is limited
       in any year to 50% of net revenue or Surplus Cash as defined by Fannie
       Mae or HUD, respectively. The aggregate amount of Minimum Additional
       Interest, Shared Income Interest and Shared Appreciation Interest payable
       by the underlying borrower on the maturity date generally cannot exceed
       50% of any increase in value of the property above certain thresholds.

       Shared Appreciation Interest is payable when one of the following occurs:
       (1) the sale of the underlying property to an unrelated third party on a
       date which is later than five years from the date of the Agreement, (2)
       the maturity date or accelerated maturity date of the Agreement, or (3)
       prepayment of amounts due under the Agreement and the insured mortgage.

       The Partnership, upon giving twelve months written notice, can accelerate
       the maturity date of the Agreement to a date not earlier than ten years
       from the date of the Agreement for (a) the payment of all participation
       interest due under the Agreement as of the accelerated maturity date, or
       (b) the payment of all participation interest due under the Agreement
       plus all amounts due on the first mortgage note on the property.

       During May 2001, the Partnership received $19,231 from the borrowers of
       the Richmond Park PIM as a settlement to release the loan's participation
       features. The property never generated sufficient cash flow to pay any
       participation from property operations nor did it have sufficient value
       to meet the threshold to pay any participation based on value if the
       property was sold or refinanced. The borrowers asked for a release of the
       participation features while keeping the insured first mortgage in place
       until operations improve and the property can be sold or refinanced. The
       General Partners agreed to this request in return for the settlement
       because there was no expectation that the Partnership would be entitled
       to any participation proceeds now or in the future in the property's
       current condition. Upon this settlement, the insured first mortgage loan
       on Richmond Park was reclassified from a PIM to a MBS as the only
       remaining portion of the investment is a GNMA MBS. The Partnership also
       reclassified this investment to available for sale concurrent with the
       release of the participation feature. The Partnership will continue to
       receive the scheduled principal and interest payments on the first
       mortgage until the property is refinanced or sold.






                                    Continued





                   KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, continued


C.     PIMs, continued

       On June 2, 2000, the Partnership paid a special distribution of $.93 per
       Limited Partner interest from the proceeds of the Bell Station and
       Enclave insured mortgage payoffs along with the Shared Appreciation
       Interest proceeds from the Brookside PIM (see below), the Bell Station
       PIM and the Enclave PIM.

       On March 30, 2000, the Partnership received $190,239 of Shared
       Appreciation Interest and $5,973 of Shared Income Interest from the Bell
       Station PIM. During April and May, the Partnership received the principal
       proceeds of $4,901,863 and $8,508,892 from the Bell Station and the
       Enclave PIM, respectively. Subsequent to the payoff of the MBS portion of
       the Enclave PIM, the Partnership received $178,854 of Shared Appreciation
       Interest and $200,398 of Shared Income Interest.

       On March 30, 2000, the Partnership paid a special distribution of $.31
       per Limited Partner interest from the principal proceeds in the amount of
       $4,531,910, received from the Brookside Apartments PIM payoff in February
       of 2000. Subsequent to the payoff of the MBS portion of the Brookside
       PIM, the Partnership received $130,000 of Shared Appreciation Interest
       and $176,513 of Shared Income Interest.

       On January 11, 2000, the Partnership paid a special distribution of $2.37
       per Limited Partner interest from the prepayment proceeds received during
       December 1999 from the Salishan, Saratoga, and Marina Shores Apartments
       PIMs and the Patrician MBS. In addition to the principal proceeds from
       the Salishan PIM of $14,666,235, the Partnership received $146,662 of
       prepayment premium income and $311,650 of Shared Income Interest and
       Minimum Additional Interest. The Partnership also received $6,008,565 of
       principal proceeds from the Marina Shores PIM along with $176,679 of
       Shared Appreciation Interest and prepayment premium income. The principal
       proceeds from the Saratoga PIM and the Patrician MBS prepayments were
       $6,204,895 and $7,830,263, respectively. The Partnership did not receive
       any participation interest on the Saratoga prepayment.

       During November 1999, the Partnership paid a special distribution of $.30
       per Limited Partner interest from the principal proceeds received from
       the Valley Manor PIM of $4,425,993. The Partnership did not receive any
       participation income from this PIM prepayment.

       During May 1999, the Partnership paid a special distribution of $1.08 per
       Limited Partner interest from the principal proceeds, Shared Appreciation
       and prepayment proceeds received from the Remington and Pope Building
       PIMs (see below).

       During March 1999, the Partnership received a payoff of the Remington PIM
       in the amount of $12,199,298. The payoff was the result of a default on
       the underlying loan which resulted in the Partnership receiving all of
       the outstanding principal balance under the insurance feature of the PIM.
       However, due to the default the Partnership did not receive any
       participation income from this PIM.

       During February 1999, the Partnership received a payoff of the Pope
       Building PIM in the amount of $3,176,761. In addition, the Partnership
       received $703,860 of Shared Appreciation Interest and prepayment premium
       income and $218,578 of Shared Income Interest and Minimum Additional
       Interest upon the payoff of the underlying mortgage.

       During January 1999, the Partnership paid a special distribution of $.66
       per Limited Partner interest from the principal proceeds and prepayment
       premium received from the Cross Creek PIM during 1998. On November 16,
       1998, the Partnership received a prepayment of the Cross Creek PIM in the
       amount of $9,414,586. Additional interest in lieu of a prepayment penalty
       of approximately $318,000 along with Shared Income Interest of
       approximately $60,000 was also received during 1998.



                                    Continued




                   KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, continued



C.       PIMs, continued

At  December  31,  2001 and 2000  there were no loans  within the  Partnership's
portfolio that were delinquent as to principal or interest.

The Partnership's PIMs consisted of the following at December 31, 2001 and 2000:


                                                                                   Approximate
                              Original                                               Monthly           Investment Basis at
                                Face            Interest         Maturity            Payment               December 31,
PIMs                           Amount            Rate (a)         Date (f)             (g)             2001           2000
----                           ------            --------         --------         -------------   ------------   -------------

GNMA
Richmond Park Apts. (h)
Richmond Heights,         $   10,000,000             -                -            $     -         $     -        $   8,995,263
OH

Wildflower Apts.
Las Vegas, NV                 17,600,000           7.75%           1/15/25              121,700      15,774,526      16,002,630
                           -------------                                                           ------------   -------------
                                               (b) (e) (i)
                              27,600,000                                                             15,774,526      24,997,893
                           -------------                                                           ------------   -------------
FHA
---
Creekside Apts.
Portland, OR                   8,354,500          8.305%            11/1/31              60,000       7,949,067       8,006,181
                           -------------                                                           ------------   -------------
                                               (b) (c) (d)
      Total                $  35,954,500                                                           $ 23,723,593   $  33,004,074
                           =============                                                           ============   =============
                                                                                                        (j)


(a)  Represents the permanent  interest rate of the GNMA MBS or the  HUD-insured
     first  mortgage less the servicers  fee. The  Partnership  may also receive
     additional interest which consists of (i) Minimum Additional Interest based
     on a percentage of the unpaid  principal  balance of the first  mortgage on
     the property,  (ii) Shared Income Interest based on a percentage of monthly
     gross income generated by the underlying  property in excess of a specified
     base  amount  (but only to the  extent it  exceeds  the  amount of  Minimum
     Additional Interest received during such month),  (iii) Shared Appreciation
     Interest  based  on a  percentage  of  any  increase  in the  value  of the
     underlying property in excess of a specified base value.

(b)  Minimum additional interest is at a rate of .5% per annum calculated on the
     unpaid principal balance of the first mortgage note.

(c)  Shared income  interest is based on 25% of monthly gross rental income over
     a specified base amount.

(d)  Shared  appreciation  interest is based on 25% of any increase in the value
     of the project over the specified base value.

(e)  Shared income  interest is based on 35% of monthly gross rental income over
     a specified base amount and shared appreciation interest is based on 35% of
     any increase in the value of the project over the specified base value.


                                    Continued


                   KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, continued


C.   PIMs, continued

(f)  The  Partnership's  GNMA MBS and HUD direct mortgages have call provisions,
     which allow the Partnership to accelerate their respective maturity dates.

(g)  The normal monthly payment  consisting of principal and interest is payable
     monthly at level  amounts  over the term of the GNMA MBS and the HUD direct
     mortgage.

(h)  During  May 2001,  the  Partnership  received  $19,231 as a  settlement  to
     release the loan's participation  features. The insured first mortgage loan
     was reclassified from a PIM to a MBS.

(i)  The coupon rate of interest on the  Wildflower  Apartments PIM is 7.75% per
     annum.  However,  in December 2000 the  Partnership  agreed to provide debt
     service relief for the Wildflower PIM due to the property's  poor operating
     performance in the  competitive  Las Vegas market.  Occupancy has fallen as
     low as 80%,  and the  property  has  been  unable  to  generate  sufficient
     revenues  to  adequately  maintain  the  property.   Consequently,  a  loan
     modification  agreement between the Partnership,  the borrower entity under
     the PIM, the principals of the borrower entity, and the affiliated property
     management agent will provide operating funds for property  repairs.  Under
     the modification,  the principals of the borrower entity converted $105,000
     of cash advances to a long-term non interest-bearing  loan. In addition, an
     escrow  account  to be used  exclusively  for  property  repairs  has  been
     established  and is under the control of the  Partnership.  The  management
     agent  made  an  initial  deposit  into  the  escrow  equal  to  30% of the
     management  fees it  received  during  2000 and will  continue to deposit a
     similar amount until December 2002. The Partnership made an initial deposit
     into the escrow to match the $105,000  principals'  loan and the management
     agent's  initial  deposit and will  continue to match  additional  deposits
     until December 2002. The Partnership's  contributions to the escrow account
     will be considered to be an interest  rebate.  The principals' loan and the
     escrow  deposits made by the management  agent and the  Partnership  can be
     repaid  exclusively  out of any Surplus  Cash,  as defined by HUD, that the
     property may generate in future years. Any repayments will be made on a pro
     rata basis amongst the parties.  The approximate  monthly payment is before
     the rebate which fluctuates month to month.

(j)  The aggregate cost of PIMs for federal income tax purposes is $23,723,593.


        A reconciliation of the carrying value of PIMs for each of the three
        years in the period ended December 31, 2001 is as follows:

                                                       2001                   2000                 1999
                                                       ----                   ----                 ----

Balance at beginning of period                     $   33,004,074          $  51,390,092        $   98,950,663

Deductions during period:
     Prepayments and
       principal collections                             (330,141)           (18,386,018)          (47,560,571)
     Reclass to MBS                                    (8,950,340)               -                    -
                                                   --------------          -------------        --------------

Balance at end of period                           $   23,723,593          $  33,004,074        $   51,390,092
                                                   ==============          =============        ==============


      The underlying mortgages of the PIMs are collateralized by multi-family
      apartment complexes located in 2 states. The apartment complexes range in
      size from 172 to 540 units.




                                    Continued



                   KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, continued


D.    MBS
      ---

      At December 31, 2001, the Partnership's MBS portfolio had an amortized
      cost of $13,836,035 and gross unrealized gains of $472,368. At December
      31, 2000, the Partnership's MBS portfolio had an amortized cost of
      $6,480,413 and gross unrealized gains and losses of $160,571 and $586
      respectively. The portfolio has maturity dates ranging from 2016 to 2024.

                                                                                          Unrealized
                  Maturity Date                              Fair Value                    Gain/(Loss)
                  -------------                            -------------                 --------------
                  2002 - 2006                              $       -                       $      -
                  2007 - 2011                                      -                              -
                  2012 - 2024                                 14,308,403                        472,368
                                                           -------------                 --------------

                     Total                                 $  14,308,403                 $      472,368
                                                           =============                 ==============

E.    Partners' Equity

      Profits from Partnership operations and Distributable Cash Flow are
      allocated 97% to the Unitholders and Corporate Limited Partner (the
      "Limited Partners") and 3% to the General Partners.

      Upon the occurrence of a capital transaction, as defined in the
      Partnership Agreement, net cash proceeds and profits from the capital
      transaction will be distributed first, to the Limited Partners until they
      have received a return of their total invested capital, second, to the
      General Partners until they have received a return of their total invested
      capital, third, 99% to the Limited Partners and 1% to the General Partners
      until the Limited Partners receive an amount equal to any deficiency in
      the 11% cumulative return on their invested capital that exists through
      fiscal years prior to the date of the capital transaction, fourth, to the
      class of General Partners until they have received an amount equal to 4%
      of all amounts of cash distributed under all capital transactions and
      fifth, 96% to the Limited Partners and 4% to the General Partners. Losses
      from a capital transaction will be allocated 97% to the Limited Partners
      and 3% to the General Partners.

      Upon the occurrence of a terminating capital transaction, as defined in
      the Partnership Agreement, the net cash proceeds and winding up of the
      affairs of the Partnership will be allocated among the Partners first, to
      each class of Partners in the amount equal to, or if less than, in
      proportion to, the positive balance in the Partner's capital accounts,
      second, to the Limited Partners until they have received a return of their
      total invested capital, third, to the General Partners until they have
      received a return of their total invested capital, fourth, 99% to the
      Limited Partners and 1% to the General Partners until the Limited Partners
      have received to any deficiency in the 11% cumulative return on their
      invested capital that exists through fiscal years prior to the date of the
      capital transaction, fifth, to the General Partners until they have
      received an amount equal to 4% of all amounts of cash distributed under
      all capital transactions and sixth, 96% to the Limited Partners and 4% to
      the General Partners.





                                    Continued



                   KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, continued



E.    Partners' Equity, continued

      During 2001, 2000 and 1999 the Partnership made quarterly distributions
      totaling $.24, $.39 and $.84 per Limited Partner interest, respectively.
      The Partnership made special distributions of $3.61 and $2.04 per Limited
      interest in 2000 and 1999, respectively.

      As of December 31, 2001, the following cumulative partner contributions
      and allocations have been made since inception of the Partnership:

                                                        Corporate                            Accumulated
                                                         Limited             General        Comprehensive
                                      Unitholders        Partner            Partners            Income            Total
                                    ----------------    ----------       -------------       ------------    ---------------

Capital
   contributions                    $ 298,678,321      $    2,000        $     3,000         $     -         $  298,683,321

Syndication costs                     (20,431,915)           -                  -                  -            (20,431,915)

Quarterly
   distributions                     (224,056,957)         (1,612)        (4,929,066)              -           (228,987,635)


Special
   distributions                     (159,438,377)         (1,066)             -                   -           (159,439,443)

Net income                            147,081,731           1,023          4,548,951               -            151,631,705

Unrealized
   gains on MBS                            -                -                  -                472,368             472,368
                                    -----------        ----------        -----------         ----------      --------------

Balance,
   December 31, 2001                $41,832,803        $      345        $  (377,115)        $  472,368      $   41,928,401
                                    ===========        ==========        ===========         ==========      ==============


F.     Related Party Transactions

       Under the terms of the Partnership Agreement, the General Partners or
       their affiliates receive an Asset Management Fee equal to .75% per annum
       of the value of the Partnership's invested assets payable quarterly. The
       General Partners may also receive an incentive management fee in an
       amount equal to .3% per annum on the Partnership's Total Invested Assets
       providing the Unitholders receive a specified non-cumulative annual
       return on their Invested Capital. Total fees payable to the General
       Partners as asset management or incentive management fees shall not
       exceed 9.05% of distributable cash flow over the life of the Partnership.

       Additionally, the Partnership reimburses affiliates of the General
       Partners for certain expenses incurred in connection with maintaining the
       books and records of the Partnership, the preparation and mailing of
       financial reports, tax information, other communications to investors and
       legal fees and expenses.





                                    Continued



                   KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, continued



G.     Federal Income Taxes

       The reconciliation of the net income reported in the accompanying
       statement of income with the income reported in the Partnership's 2001
       federal income tax return is as follows:

        Net income per statement of income                                                       $  2,511,481

        Less:  Book to tax difference for amortization of prepaid fees and expenses                  (180,622)
                                                                                                 ------------

        Net income for federal income tax purposes                                               $  2,330,859
                                                                                                 ============


The  allocation  of the 2001 net income for  federal  income tax  purposes is as
follows:

                                                                                                  Portfolio
                                                                                                    Income
                                                                                                 ------------

              Unitholders                                                                        $  2,260,918
              Corporate Limited Partner                                                                    15
              General Partners                                                                         69,926
                                                                                                 -------------

                                                                                                 $  2,330,859

      For the years ended December 31, 2001, 2000 and 1999 the average per unit
      net income to the Unitholders for federal income tax purposes was $.15,
      $.25 and $.36 respectively.

      The basis of the Partnership's assets for financial reporting purposes was
      less than its tax basis by approximately $1,698,000 and $2,191,000 at
      December 31, 2001 and 2000, respectively. The basis of the Partnership's
      liabilities for financial reporting purposes were the same as its tax
      basis at December 31, 2001 and 2000, respectively.

H.    Fair Value Disclosure of Financial Instruments

      The Partnership uses the following methods and assumptions to estimate the
fair value of each class of financial instruments:

      Cash and cash equivalents

      The carrying amount approximates fair value due to the short maturity of
those instruments.

      MBS

      The Partnership estimates the fair value of MBS based on quoted market
      prices. Based on the estimated fair value determined using these methods
      and assumptions, the Partnership's investments in MBS had gross unrealized
      gains of approximately $472,000 at December 31, 2001, and gross unrealized
      gains and losses of approximately $161,000 and $1,000 at December 31,
      2000.





                                    Continued



                   KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS, continued


H.    Fair Value Disclosure of Financial Instruments, continued
      ----------------------------------------------

      PIMs

      As there is no active trading market for these investments, Management
      estimates the fair value of the PIMs using quoted market prices of MBS
      having the same stated coupon rate. Management does not include any
      participation income in the Partnership's estimated fair value arising
      from appreciation of the properties, as Management does not believe it can
      predict the time of realization of the feature with any certainty. Based
      on the estimated fair value determined using these methods and
      assumptions, the Partnership's investments in PIMs had gross unrealized
      gains of approximately $1,043,000 at December 31, 2001, and gross
      unrealized gains and losses of approximately $98,000 and $216,000 at
      December 31, 2000.

      At December 31, 2001 and 2000, the estimated fair values of the
      Partnership's financial instruments are as follows (amounts rounded to
      nearest thousand):


                                                          2001                            2000
                                                          ----                            ----
                                                   Fair            Carrying         Fair         Carrying
                                                   Value             Value          Value           Value
                                                 ----------        ----------     ----------     ---------

  Cash and cash equivalents                      $   3,604         $   3,604      $  2,738       $   2,738

  MBS                                               14,308            14,308         6,640           6,640

  PIMS                                              24,767            23,724        32,886          33,004
                                                 ---------         ---------      --------       ---------

                                                 $  42,679         $  41,636      $ 42,264       $  42,382
                                                 =========         =========      ========       =========










                           Unaudited Distributable Cash Flow and Net Cash Proceeds from Capital Transactions

Shown below is the calculation of Distributable  Cash Flow and Net Cash Proceeds
from Capital Transactions as defined in Section 17 of the Partnership  Agreement
and the source of cash  distributions  for the year ended  December 31, 2001 and
the period from  inception  through  December  31,  2001.  The General  Partners
provide certain of the information below to meet requirements of the Partnership
Agreement  and  because  they  believe  that it is an  appropriate  supplemental
measure of operating performance.  However, Distributable Cash Flow and Net Cash
Proceeds from Capital  Transactions  should not be considered by the reader as a
substitute  to  net  income  as an  indicator  of  the  Partnership's  operating
performance or to cash flows as a measure of liquidity.

                                                                                   Year              Inception
                                                                                  Ended               Through
                                                                                 12/31/01             12/31/01

                                                                         (Amounts in thousands, except per Unit amounts)
Distributable Cash Flow:
-----------------------
Income for tax purposes                                                         $   2,331           $   153,805
Items not requiring or (not providing) the use
   of operating funds:
        Shared Appreciation income                                                 -                     (5,716)
        Amortization of prepaid fees and expenses                                     254                17,094
        Interest rate reduction
           collectible in the future                                               -                     -
        Acquisition expenses paid from offering
           proceeds charged to operations                                          -                        184
        Gain on sale of MBS                                                        -                       (417)
                                                                                ---------           -----------
        Total Distributable Cash Flow ("DCF")                                   $   2,585           $   164,950
                                                                                =========           ===========

        Limited Partners Share of DCF                                           $   2,507           $   160,001
                                                                                =========           ===========

        Limited Partners Share of DCF per Unit (14,956,796)                     $     .17           $     10.70(c)
                                                                                =========           ===========

        General Partners Share of DCF                                           $      78           $     4,949
                                                                                =========           ===========

Net Proceeds from Capital Transactions:
--------------------------------------
        Prepayments and principal collections on PIMs
           including shared appreciation income                                 $     330           $   161,386
        Principal collections on MBS                                                1,595                80,247
        Principal collections on MBS and PIMs
           reinvested                                                              -                    (14,537)
        Gain on sale of MBS                                                       -                         417
                                                                                --------            -----------
        Total Net Proceeds from Capital Transactions                            $   1,925           $   227,513
                                                                                =========           ===========

Cash available for distribution
-------------------------------
     (DCF plus proceeds from Capital
           Transactions)                                                        $   4,510           $   392,463
                                                                                =========           ===========

Distributions:
-------------
        Limited Partners                                                        $   3,590(a)        $   384,396
                                                                                =========           ===========

        Limited Partners Average per Unit                                       $     .24(a)        $     25.70(b)(c)
                                                                                =========           ===========

        General Partners                                                        $      78(a)        $     4,949(b)
                                                                                =========           ===========

                 Total Distributions                                            $   3,668           $   389,345
                                                                                =========           ===========

(a)    Represents all distributions paid in 2001 except the February 2001
        quarterly distribution and includes an estimate of the quarterly
        distribution to be paid in February 2002.
(b)    Includes an estimate of the quarterly distribution to be paid in February 2002.
(c)    Limited Partners average per Unit return of capital as of February 2002
        is $15.00 [$25.70 - $10.70]. Return of capital represents that portion of
        distributions which is not funded from DCF such as proceeds from the sale
        of assets and substantially all of the principal collections received
        from MBS and PIMs.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP 10-K
