UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                    FORM 10-K

(Mark One)

[x]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934

                   For the fiscal year ended December 31, 1997

                                       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 0-22485

                           CNL INCOME FUND XVII, LTD.
             (Exact name of registrant as specified in its charter)

                      Florida                            59-3295393
          (State or other jurisdiction of   (I.R.S. Employer Identification No.)
          incorporation or organization)

                              400 East South Street
                             Orlando, Florida 32801
          (Address of principal executive offices, including zip code)

       Registrant's telephone number, including area code: (407) 422-1574

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

                 Title of each class:      Name of exchange on which registered:
                         None                         Not Applicable

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

                                      None
                                (Title of class)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the preceding 12 months (or 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 the voting stock held by nonaffiliates of the
registrant:   The  registrant   registered  an  offering  of  units  of  limited
partnership  interest  (the  "Units") on Form S-11 under the  Securities  Act of
1933, as amended. Since no established market for such Units exists, there is no
market value for such Units. Each Unit was originally sold at $10 per Unit.

                      DOCUMENTS INCORPORATED BY REFERENCE:
                                      None


<PAGE>



                                     PART I


Item 1.  Business

         CNL Income Fund XVII, Ltd. (the "Registrant" or the "Partnership") is a
limited  partnership  which was  organized  pursuant to the laws of the State of
Florida on February 10, 1995. The general partners of the Partnership are Robert
A.  Bourne,  James  M.  Seneff,  Jr.  and  CNL  Realty  Corporation,  a  Florida
corporation  (the  "General  Partners").  Beginning on  September  2, 1995,  the
Partnership offered for sale up to $30,000,000 of limited partnership  interests
(the  "Units")  (3,000,000  Units at $10 per Unit)  pursuant  to a  registration
statement on Form S-11 under the Securities  Act of 1933, as amended,  effective
August 11, 1995.  The offering  terminated  on September 19, 1996, at which date
the maximum  offering  proceeds of $30,000,000  had been received from investors
who  were  admitted  to  the  Partnership  as  limited  partners  (the  "Limited
Partners").

         The  Partnership  was organized to acquire both newly  constructed  and
existing  restaurant  properties,  as well as properties upon which  restaurants
were to be  constructed  (the  "Properties"),  which  are  leased  primarily  to
operators of national and regional  fast-food,  family-style  and casual  dining
restaurant  chains (the  "Restaurant  Chains").  Net proceeds to the Partnership
from its  offering of Units,  after  deduction  of  organizational  and offering
expenses,  totalled $26,400,000.  The Partnership acquired its first Property on
December 20, 1995.  During the year ended  December  31, 1996,  the  Partnership
acquired 23  additional  Properties,  including  one  Property  owned by a joint
venture in which the Partnership is a co-venturer and one Property owned with an
affiliate,   as  tenants-in-common,   at  an  aggregate  cost  of  approximately
$23,406,500, including acquisition fees and certain acquisition expenses. During
1997, the Partnership  used the majority of its remaining net offering  proceeds
to acquire two additional  Properties,  as tenants-in-common,  with two separate
affiliates, and to establish a working capital reserve of approximately $258,000
for  Partnership  purposes.  In  addition,  the  Partnership  entered  into  two
additional  joint  ventures,  CNL Mansfield Joint Venture and CNL Kingston Joint
Venture,  with  affiliates  of the  General  Partners.  As a result of the above
transactions,  as of December 31, 1997,  the  Partnership  owned 28  Properties,
including  interests in three  Properties  owned through joint ventures in which
the Partnership is a co-venturer and three  Properties  owned with affiliates as
tenants-in-common.  The Partnership  leases the Properties on a triple-net basis
with the lessees  responsible for all repairs and  maintenance,  property taxes,
insurance and utilities.

         The  Partnership  will hold its Properties  until the General  Partners
determine that the sale or other  disposition of the Properties is  advantageous
in view of the Partnership's investment objectives.  In deciding whether to sell
Properties, the General Partners will consider factors such as potential capital
appreciation,  net cash flow and  federal  income  tax  considerations.  Certain
lessees also have been granted options to purchase Properties,  generally at the
Property's  then fair market  value after a specified  portion of the lease term
has  elapsed.  In  general,  the General  Partners  plan to seek the sale of the
Properties commencing seven to 12 years after their acquisition. The Partnership
has no  obligation  to sell all or any portion of a Property  at any  particular
time,  except as may be required  under  property  purchase  options  granted to
certain lessees.

Leases

         Although there are variations in the specific terms of the leases,  the
following  is  a  summarized   description  of  the  general  structure  of  the
Partnership's  leases.  The leases of the  Properties  provide for initial terms
ranging from 15 to 20 years (the average being 18 years) and expire between 2011
and 2017. All leases are on a triple-net basis, with the lessees responsible for
all repairs and maintenance, property taxes, insurance and utilities. The leases
of the Properties  provide for minimum base annual rental  payments  (payable in
monthly installments) ranging from approximately $66,200 to $248,700. All of the
leases  provide  for  percentage  rent,  based on sales in excess of a specified
amount.  In addition,  the majority of the leases  provide  that,  commencing in
specified  lease years  (generally  the sixth lease year),  the annual base rent
required under the terms of the lease will increase.

         Generally,  the  leases  of the  Properties  provide  for  two to  five
five-year  renewal  options  subject  to the same  terms and  conditions  as the
initial  lease.  Certain  lessees  also have been  granted  options to  purchase
Properties at the Property's then fair market value after a specified portion of
the lease term has elapsed. Under the terms of

                                        1

<PAGE>



certain leases,  the option purchase price may equal the Partnership's  original
cost to purchase the Property  (including  acquisition  costs), plus a specified
percentage  from  the  date  of  the  lease  or a  specified  percentage  of the
Partnership's purchase price, if that amount is greater than the Property's fair
market value at the time the purchase option is exercised.

         The leases also  generally  provide that, in the event the  Partnership
wishes to sell the Property  subject to the terms of the lease,  the Partnership
first must offer the lessee the right to purchase the Property on the same terms
and  conditions,  and for the same price, as any offer which the Partnership has
received for the sale of the Property.

Major Tenants

         During 1997,  four  lessees,  or group of  affiliated  lessees,  of the
Partnership  and its  consolidated  joint  venture,  Golden Corral  Corporation,
National Restaurant  Enterprises,  Inc.,  DenAmerica Corp. and Foodmaker,  Inc.,
each contributed more than ten percent of the Partnership's  total rental income
(including rental income from the Partnership's  consolidated joint venture, the
Partnership's share of rental income from two Properties owned by unconsolidated
joint ventures and three Properties owned with affiliates as tenants-in-common).
As of December 31,  1997,  Golden  Corral  Corporation  and National  Restaurant
Enterprises,   Inc.  were  each  the  lessee  under  leases  relating  to  three
restaurants and DenAmerica Corp. and Foodmaker,  Inc. were each the lessee under
leases relating to four restaurants. It is anticipated that based on the minimum
rental payments required by the leases,  these four lessees each will contribute
more than ten  percent  of the  Partnership's  total  rental  income in 1998 and
subsequent  years.  In addition,  four Restaurant  Chains,  Golden Corral Family
Steakhouse  Restaurants,  ("Golden Corral"),  Jack in the Box, Boston Market and
Burger King, each accounted for more than ten percent of the Partnership's total
rental  income  during  1997  (including  rental  income  from  the  Partnership
consolidated  joint venture,  the Partnership's  share of rental income from two
Properties  owned by  unconsolidated  joint ventures and three  Properties owned
with affiliates as  tenants-in-common).  In subsequent  years, it is anticipated
that these four Restaurant  Chains each will contribute more than ten percent of
the  Partnership's  rental income to which the Partnership is entitled under the
terms of the leases.  Any failure of these  lessees or  Restaurant  Chains could
materially  adversely affect the Partnership's  income. As of December 31, 1997,
no single  tenant  or group of  affiliated  tenants  leased  Properties  with an
aggregate  carrying value,  excluding  acquisition fees and certain  acquisition
expenses, in excess of 20 percent of the total assets of the Partnership.

Joint Venture Arrangements

         In  December  1996,  the  Partnership  entered  into  a  joint  venture
arrangement,  CNL/GC El Cajon  Joint  Venture,  with an  unaffiliated  entity to
purchase and hold one  Property.  In  addition,  during  1997,  the  Partnership
entered into two  additional  joint venture  arrangements,  CNL Mansfield  Joint
Venture and CNL Kingston Joint Venture, with affiliates of the General Partners,
for each joint  venture to purchase and hold one  Property.  Each joint  venture
arrangement provides for the Partnership and its joint venture partners to share
in all costs and benefits  associated  with the joint  venture in  proportion to
each partner's percentage interest in the joint venture. The Partnership and its
joint  venture  partners  are also jointly and  severally  liable for all debts,
obligations and other liabilities of the joint venture.

         Each  joint  venture  has an initial  term of 20 years  and,  after the
expiration of the initial term,  continues in existence from year to year unless
terminated  at the  option of either  of the joint  venturers  or by an event of
dissolution.  Events  of  dissolution  include  the  bankruptcy,  insolvency  or
termination of either of the joint venturers,  sale of the Property owned by the
joint  venture and mutual  agreement of the  Partnership  and its joint  venture
partners to dissolve the joint venture.

         The Partnership has management control of CNL/GC El Cajon Joint Venture
and shares  management  control equally with affiliates of the General  Partners
for CNL  Mansfield  Joint  Venture and CNL  Kingston  Joint  Venture.  The joint
venture agreements  restrict any venturer's ability to sell,  transfer or assign
its joint  venture  interest  without  first  offering  it for sale to its joint
venture partner, either upon such terms and conditions as to which the venturers
may agree or, in the event the  venturers  cannot  agree,  on the same terms and
conditions  as any offer  from a third  party to  purchase  such  joint  venture
interest.


                                        2

<PAGE>



         Net cash flow from  operations  of CNL/GC El Cajon Joint  Venture,  CNL
Mansfield  Joint  Venture  and CNL  Kingston  Joint  Venture is  distributed  80
percent, 21 percent and 60.06%, respectively, to the Partnership and the balance
is  distributed  to each other  joint  venture  partner in  accordance  with its
percentage  ownership in the joint  venture.  Any  liquidation  proceeds,  after
paying joint venture debts and liabilities  and funding  reserves for contingent
liabilities,  will be  distributed  first to the  joint  venture  partners  with
positive  capital  account  balances in proportion  to such balances  until such
balances  equal  zero,  and  thereafter  in  proportion  to each  joint  venture
partner's percentage interest in the joint venture.

         In addition to the above joint venture  arrangements,  in October 1996,
the  Partnership  entered into an agreement to hold a Property in  Fayetteville,
North Carolina, as tenants-in-common  with an affiliate of the General Partners.
The  agreement  provides for the  Partnership  and the affiliate to share in the
profits  and  losses of the  Property  and net cash flow  from the  Property  in
proportion to each co-venturer's percentage interest in the Property.
The Partnership owns a 19.73% interest in this Property.

         In addition,  during 1997, the Partnership  entered into two agreements
to  hold  Properties  in  Corpus  Christi,   Texas  and  Akron,  Ohio,  each  as
tenants-in-common,  with  affiliates  of the General  Partners.  The  agreements
provide  for the  Partnership  and the  affiliates  to share in the  profits and
losses of the Property in proportion to each co-venturer's  percentage interest.
The  Partnership  owns an approximate 27 percent and 37 percent  interest in the
Properties in Corpus Christi, Texas and Akron, Ohio, respectively.

Management Services

         CNL Fund Advisors, Inc., an affiliate of the General Partners, provides
certain  services  relating to management of the  Partnership and its Properties
pursuant to a management  agreement with the Partnership.  Under this agreement,
CNL  Fund  Advisors,   Inc.  is  responsible  for  collecting  rental  payments,
inspecting  the  Properties  and the tenants'  books and records,  assisting the
Partnership  in  responding  to  tenant  inquiries  and  notices  and  providing
information  to  the  Partnership  about  the  status  of  the  leases  and  the
Properties.  CNL Fund  Advisors,  Inc.  also  assists  the  General  Partners in
negotiating the leases.  For these  services,  the Partnership has agreed to pay
CNL Fund Advisors,  Inc. an annual fee of one percent of the sum of gross rental
revenues from Properties  wholly owned by the Partnership plus the Partnership's
allocable  share of gross revenues of joint ventures in which the Partnership is
a co-venturer, but not in excess of competitive fees for comparable services.

         The management agreement continues until the Partnership no longer owns
an interest in any Properties unless terminated at an earlier date upon 60 days'
prior notice by either party.

Competition

         The fast-food,  family-style and casual dining  restaurant  business is
characterized  by intense  competition.  The  restaurants  on the  Partnership's
Properties compete with independently  owned restaurants,  restaurants which are
part of local or regional  chains and restaurants in other  well-known  national
chains, including those offering different types of food and service.

         The  Partnership  also will be in  competition  with other  persons and
entities both to locate suitable  Properties to acquire and to locate purchasers
for its  Properties.  The  Partnership  also will compete  with other  financing
sources  such as  banks,  mortgage  lenders  and  sale/leaseback  companies  for
suitable Properties and tenants.

Employees

         The  Partnership   has  no  employees.   The  officers  of  CNL  Realty
Corporation  and the officers and employees of CNL Fund Advisors,  Inc.  perform
certain  services for the  Partnership.  In addition,  the General Partners have
available to them the  resources  and expertise of the officers and employees of
CNL Group, Inc., a diversified real estate company, and its affiliates,  who may
also perform certain services for the Partnership.




                                        3

<PAGE>



Item 2.  Properties

         As of December  31, 1997,  the  Partnership  owned  either  directly or
through  joint  venture  arrangements,  28  Properties,  located  in 12  states.
Reference  is made to the Schedule of Real Estate and  Accumulated  Depreciation
filed with this  report for a listing of the  Property  and its cost,  including
acquisition fees and certain acquisition expenses.

Description of Properties

         Land. The Partnership's Property sites ranged from approximately 18,200
to 91,400  square  feet  depending  upon  building  size and  local  demographic
factors.  Sites  purchased  by  the  Partnership  are  in  locations  zoned  for
commercial use which have been reviewed for traffic patterns and volume.

         Buildings.  Each of the Properties owned by the Partnership  includes a
building that is one of a Restaurant  Chain's  approved  designs.  The buildings
generally are  rectangular  and are  constructed  from various  combinations  of
stucco,  steel,  wood,  brick and tile. The sizes of the buildings  owned by the
Partnership ranged from approximately 2,100 to 11,300 square feet. All buildings
on Properties  acquired by the  Partnership are  freestanding  and surrounded by
paved  parking  areas.  Buildings  are suitable for  conversion to various uses,
although  modifications  may be required prior to use for other than  restaurant
operations.

         Generally,  a  lessee  is  required,  under  the  terms  of  its  lease
agreement, to make such capital expenditures, as may be reasonably necessary, to
refurbish  buildings,  premises,  signs and equipment,  so as to comply with the
lessee's  obligations,  if applicable,  under the franchise agreement to reflect
the current commercial image of its Restaurant Chain. These capital expenditures
are required to be paid by the lessee during the term of the lease.

         Leases  with Major  Tenants.  The terms of each of the leases  with the
Partnership's  major  tenants as of December  31,  1997 (see Item 1.  Business -
Major Tenants), are substantially the same as those described in Item 1.
Business - Leases.

         Golden Corral Corporation leases three Golden Corral  restaurants.  The
initial  term of each  lease is 15 years  (expiring  in  2011)  and the  average
minimum base annual rent is approximately  $157,100 (ranging from  approximately
$127,800 to $190,000).

         National  Restaurant   Enterprises,   Inc.  leases  three  Burger  King
restaurants.  The initial term of each lease is 20 years (expiring  between 2016
and 2017) and the average  minimum  base annual rent is  approximately  $140,400
(ranging from approximately $123,200 to $155,000).

         DenAmerica  Corp.  leases three Denny's  restaurants and one Black-eyed
Pea  restaurant.  The initial term of each lease is 20 years  (expiring  between
2015 and  2016)  and the  average  minimum  base  annual  rent is  approximately
$118,500 (ranging from approximately $98,700 to $142,600).

         Foodmaker,  Inc. leases four Jack in the Box  restaurants.  The initial
term of each lease is 18 years (expiring  between 2014 and 2015) and the average
minimum base annual rent is approximately  $89,300  (ranging from  approximately
$83,600 to $109,000).

         The General Partners consider the Properties to be well-maintained  and
sufficient for the Partnership's operations.

Item 3.  Legal Proceedings

         Neither the  Partnership,  nor its General Partners or any affiliate of
the General Partners, nor any of their respective properties,  is a party to, or
subject to, any material pending legal proceedings.




                                        4

<PAGE>



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

         Not applicable.



                                     PART II


Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

         As of March 13, 1998,  there were 1,614 holders of record of the Units.
There is no public trading market for the Units,  and it is not anticipated that
a public  market for the Units will develop.  Limited  Partners who wish to sell
their  Units  may  offer  the  Units  for  sale  pursuant  to the  Partnership's
distribution  reinvestment  plan (the "Plan"),  and Limited Partners who wish to
have their  distributions  used to acquire additional Units (to the extent Units
are  available  for  purchase),  may do so  pursuant  to such Plan.  The General
Partners have the right to prohibit  transfers of Units.  Since  inception,  the
price to be paid for any Unit  transferred  pursuant to the Plan has been $10.00
per Unit. The price to be paid for any Unit  transferred  other than pursuant to
the Plan is subject to  negotiation  by the  purchaser  and the selling  Limited
Partner. The Partnership will not redeem or repurchase Units.

         The following table reflects,  for each calendar quarter, the high, low
and average  sales prices for transfers of Units during 1997 and 1996 other than
pursuant to the Plan, net of commissions.
<TABLE>
<CAPTION>

                                                      1997 (1)                           1996 (1)
                                      -------------------------------           ----------------------
<S> <C>
                                            High       Low      Average        High       Low      Average
         First Quarter                        (2)       (2)         (2)          (2)       (2)         (2)
         Second Quarter                       (2)       (2)         (2)          (2)       (2)         (2)
         Third Quarter                        (2)       (2)         (2)          (2)       (2)         (2)
         Fourth Quarter                       (2)       (2)         (2)       $10.00    $10.00      $10.00
</TABLE>

(1)      A total of 4,000 Units were transferred other than pursuant to the Plan
         for the year ended December 31, 1996.

(2)      No transfer of Units took place during the quarter  other than pursuant
         to the Plan.

         The  capital  contribution  per Unit was $10.  All cash  available  for
distribution  will be distributed to the partners  pursuant to the provisions of
the Partnership Agreement.

         For the  years  ended  December  31,  1997 and  1996,  the  Partnership
declared cash distributions of $2,287,500 and $1,166,689,  respectively,  to the
Limited  Partners.  No  amounts  distributed  to  partners  for the years  ended
December  31,  1997 and 1996,  are  required  to be or have been  treated by the
Partnership  as a return of capital  for  purposes  of  calculating  the Limited
Partners' return on their adjusted capital contributions.  No distributions have
been made to the General  Partners to date.  As  indicated  in the chart  below,
these   distributions   were  declared  following  the  close  of  each  of  the
Partnership's  calendar  quarters.  These amounts include monthly  distributions
made in arrears for the Limited Partners electing to receive such  distributions
on this basis.


         Quarter Ended            1997          1996
         -------------         ----------     ------

         March 31                $525,000     $115,044
         June 30                  562,500      211,692
         September 30             600,000      349,869
         December 31              600,000      490,084


                                        5

<PAGE>



         The  Partnership  intends to  continue  to make  distributions  of cash
available  for  distribution  to the  Limited  Partners  on a  quarterly  basis,
although some Limited  Partners,  in  accordance  with their  election,  receive
monthly distributions for an annual fee.


Item 6.  Selected Financial Data
<TABLE>
<CAPTION>

                                                                                              February 10,
                                                                                               1995 (date
                                                                                              of inception)
                                                         Year Ended          Year Ended          through
                                                         December 31,       December 31,        December 31,
                                                            1997                1996              1995 (1)
<S> <C>
Revenues (2)                                             $2,772,714       $  1,444,503         $    12,153
Net income                                                2,203,557          1,095,759               8,351
Cash distributions declared                               2,287,500          1,166,689              28,275
Net income per Unit (3)                                        0.73               0.52                 .02
Cash distributions declared per Unit (3)                       0.76               0.55                 .08

                                                            1997               1996                1995

At December 31:
  Total assets                                          $27,524,148        $28,675,007          $4,878,421
  Partners' capital                                      26,236,203         26,320,146           4,642,233
</TABLE>

(1)      Operations  did not commence until November 4, 1995, the date following
         when  the  Partnership   received  the  minimum  offering  proceeds  of
         $1,500,000, and such proceeds were released from escrow.

(2)      Revenues  include equity in earnings of  unconsolidated  joint ventures
         and minority interest in income of the consolidated joint venture.

(3)      Based  on  the  weighted   average  number  of  Limited  Partner  Units
         outstanding  during the years ended  December 31, 1997 and 1996 and the
         period February 10, 1995 (date of inception) through December 31, 1995.

         The above selected  financial  data should be read in conjunction  with
the financial statements and related notes contained in Item 8 hereof.


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

         The  Partnership  was  organized on February  10, 1995,  to acquire for
cash,  either  directly  or  through  joint  venture  arrangements,  both  newly
constructed  and  existing  restaurant  Properties,  as well as land upon  which
restaurant  Properties  were to be  constructed,  which are leased  primarily to
operators of selected national and regional  fast-food,  family-style and casual
dining Restaurant  Chains.  The leases are triple-net  leases,  with the lessees
generally responsible for all repairs and maintenance, property taxes, insurance
and  utilities.  As of December 31, 1997, the  Partnership  owned 28 Properties,
either directly or through joint venture arrangements.

Liquidity and Capital Resources

         On  September  2, 1995,  the  Partnership  commenced an offering to the
public  of  up  to  3,000,000  Units  of  limited  partnership   interest.   The
Partnership's  offering of Units terminated on September 19, 1996, at which time
the maximum  proceeds of  $30,000,000  (3,000,000  Units) had been received from
investors.  The  Partnership,  therefore,  will  derive  no  additional  capital
resources from the offering.


                                        6

<PAGE>



         Net  proceeds to the  Partnership  from its  offering  of Units,  after
deduction of organizational and offering expenses,  totalled $26,400,000.  As of
December  31,  1995,  approximately  $1,539,000  had been  used to invest in one
Property and to pay acquisition fees and certain  acquisition  expenses.  During
1996, the Partnership acquired 23 additional Properties,  including one Property
owned by a joint  venture  in which the  Partnership  is a  co-venturer  and one
Property,  owned  with  an  affiliate,  as  tenants-in-common,   at  a  cost  of
approximately   $23,406,500,   including   acquisition  fees  and  miscellaneous
acquisition  expenses.  During 1997,  the  Partnership  used the majority of its
remaining  net  offering  proceeds  to acquire  two  additional  Properties,  as
tenants-in-common,  with affiliates of the General  Partners.  In addition,  the
Partnership entered into two joint ventures, CNL Mansfield Joint Venture and CNL
Kingston  Joint  Venture,  with  affiliates of the General  Partners,  to own an
approximate 21 percent interest and 60.06 percent interest, respectively, in two
Properties. As a result of the above transactions,  as of December 31, 1997, the
Partnership  had acquired 28 Properties,  including  three  Properties  owned by
joint ventures in which the  Partnership is a co-venturer  and three  Properties
owned  with  affiliates  as  tenants-in-common,  and had paid  acquisition  fees
totaling  $1,350,000 to an affiliate of the General Partners.  The remaining net
offering proceeds of approximately  $258,000 from the Partnership's  offering of
Units were reserved for Partnership purposes.

         Until  Properties  were acquired by the  Partnership,  all  Partnership
proceeds were held in short-term,  highly liquid  investments  which the General
Partners  believed to have  appropriate  safety of  principal.  This  investment
strategy provided high liquidity in order to facilitate the Partnership's use of
these  funds to  acquire  Properties  at such time as  Properties  suitable  for
acquisition were located.

         Currently,  the  Partnership's  primary  source of capital is cash from
operations  (which includes cash received from tenants,  distributions  from the
joint ventures and interest  received,  less cash paid for expenses).  Cash from
operations  was  $2,495,114,  $1,232,948 and $9,012 for the years ended December
31, 1997 and 1996 and the period  February 10, 1995 (date of inception)  through
December 31, 1995,  respectively.  The increase in cash from  operations  during
1997 and 1996,  each as compared to the previous  year, is primarily a result of
changes in income and expenses as described in "Results of Operations" below.

         None  of  the  Properties  owned  by  the  Partnership  is  or  may  be
encumbered.   Subject  to  certain  restrictions  on  borrowing,   however,  the
Partnership  may borrow  funds but will not encumber  any of the  Properties  in
connection  with any such  borrowing.  The  Partnership  will not borrow for the
purpose of returning capital to the Limited  Partners.  The Partnership will not
borrow  under  arrangements  that  would  make the  Limited  Partners  liable to
creditors of the Partnership. The General Partners further have represented that
they will use their  reasonable  efforts to structure  any  borrowing so that it
will not constitute  "acquisition  indebtedness" for federal income tax purposes
and also will limit the Partnership's  outstanding indebtedness to three percent
of the  aggregate  adjusted  tax  basis  of its  Properties.  In  addition,  the
Partnership  will not borrow  unless it first obtains an opinion of counsel that
such borrowing will not constitute acquisition  indebtedness.  Affiliates of the
General Partners from time to time incur certain operating expenses on behalf of
the  Partnership  for which the  Partnership  reimburses the affiliates  without
interest.

         Currently,  rental income from the  Partnership's  Properties  and cash
reserves  are  invested in money  market  accounts or other  short-term,  highly
liquid  investments   pending  the  Partnership's  use  of  such  funds  to  pay
Partnership expenses or to make distributions to partners. At December 31, 1997,
the  Partnership  had  $1,238,799  invested in such  short-term  investments  as
compared to $4,716,719 at December 31, 1996. The decrease in the amount invested
in  short-term  investments  during  1997,  as compared to 1996,  is primarily a
result  of the  payment  of  construction  costs  during  1997  relating  to the
Properties that were under construction at December 31, 1996 and the acquisition
of  additional  Properties  through  joint  ventures and with  affiliates of the
General  Partners as  tenants-in-common  during  1997.  The funds  remaining  at
December 31, 1997, after payment of distribution and other liabilities,  will be
used to meet the Partnership's working capital and other needs.

         During the year ended  December  31, 1996 and the period  February  10,
1995 (date of inception)  through  December 31, 1995,  affiliates of the General
Partners   incurred  on  behalf  of  the  Partnership   $231,885  and  $356,450,
respectively,  for certain  organizational and offering  expenses.  In addition,
during the years ended  December  31, 1997 and 1996 and the period  February 10,
1995 (date of inception)  through December 31, 1995, the affiliates  incurred on
behalf of the  Partnership  $11,262,  $69,835  and  $30,424,  respectively,  for
certain acquisition expenses and $59,451,  $64,906 and $790,  respectively,  for
certain  operating  expenses.  As of December 31, 1997 and 1996, the Partnership
owed $2,875 and  $17,153,  respectively,  to related  parties for such  amounts,
accounting and administrative

                                        7

<PAGE>



services and  management  fees.  As of February 28, 1998,  the  Partnership  had
reimbursed  the  affiliates  all  such  amounts.  Other  liabilities,  including
distributions  payable,  decreased  to  $865,877  at  December  31,  1997,  from
$2,197,032  at December 31,  1996,  as a result of the payment  during 1997,  of
construction  costs  accrued for certain  Properties  at December 31, 1996.  The
decrease is  partially  offset by an increase  in  distributions  payable to the
Limited Partners and an increase in deferred rental income at December 31, 1997.
The General Partners believe that the Partnership has sufficient cash on hand to
meet its current working capital needs.

         Based on cash from operations,  the Partnership declared  distributions
to the Limited  Partners  of  $2,287,500,  $1,166,689  and $28,275 for the years
ended  December  31,  1997 and 1996 and the period  February  10,  1995 (date of
inception)   through   December  31,   1995,   respectively.   This   represents
distributions  of $0.76,  $0.55 and $0.08 per Unit for the years ended  December
31, 1997 and 1996 and the period  February 10, 1995 (date of inception)  through
December 31, 1995, respectively.  No amounts distributed or to be distributed to
the  Limited  Partners  for the years ended  December  31, 1997 and 1996 and the
period  February 10, 1995 (date of  inception)  through  December 31, 1995,  are
required to be or have been  treated by the  Partnership  as a return of capital
for  purposes of  calculating  the Limited  Partners'  return on their  adjusted
capital contributions. The Partnership intends to continue to make distributions
of cash available for distribution to Limited Partners on a quarterly basis.

         The General Partners believe that the Properties are adequately covered
by  insurance.  In  addition,  the General  Partners  have  obtained  contingent
liability and property coverage for the Partnership.  This insurance is intended
to reduce the  Partnership's  exposure in the event a tenant's  insurance policy
lapses or is insufficient to cover a claim relating to the Properties.

         The Partnership's  investment strategy of acquiring Properties for cash
and  leasing  them under  triple-net  leases to  operators  who  generally  meet
specified financial  standards  minimizes the Partnership's  operating expenses.
The General  Partners  believe that the leases will generate cash flow in excess
of operating expenses.

         Due to low  operating  expenses  and  ongoing  cash flow,  the  General
Partners do not believe that  working  capital  reserves  are  necessary at this
time. In addition,  because all leases of the Partnership's  Properties are on a
triple-net basis, it is not anticipated that a permanent reserve for maintenance
and  repairs  is  necessary  at this  time.  To the  extent,  however,  that the
Partnership has insufficient funds for such purposes,  the General Partners will
contribute to the  Partnership  an aggregate  amount of up to one percent of the
offering  proceeds for  maintenance and repairs.  The General  Partners have the
right to cause the  Partnership  to maintain  reserves if, in their  discretion,
they  determine  such  reserves are required to meet the  Partnership's  working
capital needs.

         The General  Partners have the right,  but not the obligation,  to make
additional capital  contributions if they deem it appropriate in connection with
the operations of the Partnership.

Results of Operations

         No significant  operations commenced until the Partnership received the
minimum offering proceeds of $1,500,000 on November 3, 1995.

         The Partnership  owned and leased one wholly owned Property during 1995
and  22  wholly  owned  Properties  during  1996  and  1997.  During  1996,  the
Partnership owned and leased one Property through a joint venture arrangement in
which the  Partnership is a co-venturer,  and owned and leased one Property with
an  affiliate of the General  Partners,  as  tenants-in-common.  During 1997 the
Partnership was a co-venturer in three joint ventures that each owned and leased
one Property and also owned and leased three  Properties  with affiliates of the
General Partners, as tenants-in-common. As of December 31, 1997, the Partnership
owned,  either  directly or through  joint venture  arrangements,  28 Properties
which are subject to long-term,  triple-net leases. The leases of the Properties
provide  for  minimum   base  annual   rental   payments   (payable  in  monthly
installments) ranging from approximately $66,200 to $248,700.  All of the leases
provide for percentage rent based on sales in excess of a specified  amount.  In
addition, the majority of the leases provide that, commencing in specified lease
years  (generally the sixth lease year), the annual base rent required under the
terms of the lease will increase.  For further  description of the Partnership's
leases and  Properties,  see Item 1.  Business - Leases and Item 2.  Properties,
respectively.


                                        8

<PAGE>



         During the years ended December 31, 1997 and 1996, the  Partnership and
its consolidated joint venture, CNL/GC El Cajon Joint Venture, earned $2,642,743
and $1,185,279,  respectively, in rental income from operating leases and earned
income from direct  financing  leases.  The increase in rental and earned income
during 1997, as compared to 1996, is primarily attributable to the fact that the
majority of the Properties were operational for a full year in 1997, as compared
to a partial year in 1996.  In addition,  for the years ended  December 31, 1997
and 1996, the Partnership earned $100,918 and $4,834, respectively, attributable
to net income earned by  unconsolidated  joint ventures in which the Partnership
is a  co-venturer.  The increase in net income  earned by  unconsolidated  joint
ventures  during 1997,  as compared to 1996,  is primarily  attributable  to the
Partnership  investing in two Properties with affiliates of the General Partners
as  tenants-in-common  and in two joint  ventures in which the  Partnership is a
co-venturer,   during  1997,  as  described  above  in  "Liquidity  and  Capital
Resources."  Net income earned by joint ventures is expected to increase in 1998
as  the  Properties   owned  by  the  joint  ventures  or  with   affiliates  as
tenants-in-common will be operational for a full year during 1998 as compared to
a partial year during 1997.

         During at least one of the years ended  December  31, 1997 and 1996 and
the period February 10, 1995 (date of inception) through December 31, 1995, five
lessees, or group of affiliated  lessees, of the Partnership,  (i) Golden Corral
Corporation, (ii) National Restaurant Enterprises,  Inc., (iii) DenAmerica Corp.
(iv) RTM Indianapolis, Inc. and RTM Southwest Texas, Inc., (hereinafter referred
to as RTM,  Inc.)  and (v)  Foodmaker,  Corp.,  each  contributed  more than ten
percent of the  Partnership's  total rental income  (including rental and earned
income from the Partnership's  consolidated  joint venture and the Partnership's
share of rental income from two Properties owned by unconsolidated joint venture
and three Properties owned with separate affiliates as tenants-in-common). As of
December 31, 1997, RTM, Inc., Golden Corral Corporation and National  Restaurant
Enterprises,  Inc., were each lessee under leases relating to three  restaurants
and  DenAmerica  Corp. and  Foodmaker,  Inc.,  were each the lessee under leases
relating to four restaurants. It is anticipated that based on the minimum rental
payments required by the leases, Golden Corral Corporation,  National Restaurant
Enterprises,  Inc.,  DenAmerica  Corp. and Foodmaker,  Inc. each will contribute
more than ten  percent  of the  Partnership's  total  rental  income in 1998 and
subsequent years. In addition,  six Restaurant  Chains,  Golden Corral,  Arby's,
Denny's,  Burger King, Jack in the Box and Boston Market each accounted for more
than ten percent of the Partnership's total rental income during at least one of
the years  ended  December  31, 1997 and 1996 and the period  February  10, 1995
(date of  inception)  through  December  31, 1995  (including  rental and earned
income from the  Partnership's  consolidated  joint venture,  the  Partnership's
share of  rental  income  from two  Properties  owned  by  unconsolidated  joint
ventures and three  Properties  owned with  separate  affiliates  of the General
Partners as  tenants-in-common).  In subsequent  years,  it is anticipated  that
Golden  Corral,  Jack in the Box,  Burger  King and  Boston  Market,  each  will
contribute more than ten percent of the Partnership's rental income to which the
Partnership  is  entitled  under the terms of the  leases.  Any failure of these
lessees or Restaurant Chains could materially adversely affect the Partnership's
income.

         During  the  years  ended  December  31,  1997 and 1996 and the  period
February 10, 1995 (date of inception) through December 31, 1995, the Partnership
also earned $69,779, $244,406 and $12,153, respectively, in interest income from
investments  in  money  market  accounts  or  other  short-term,  highly  liquid
investments.  The decrease in interest  income during 1997, as compared to 1996,
is primarily  attributable  to the  decrease in the amount of funds  invested in
short-term,  liquid  investments due to the payment during 1997, of construction
costs  accrued at December  31,  1996,  the  acquisition  of two  Properties  as
tenants-in-common with affiliates, and as a result of acquiring interests in two
joint  ventures as described  above in "Liquidity  and Capital  Resources."  The
increase in interest  income  during 1996,  as compared to 1995,  was  primarily
attributable to an increase in the amount of funds invested in short-term liquid
investments as a result of additional Limited Partner contributions during 1996.

         Operating expenses,  including  depreciation and amortization  expense,
were  $569,157,  $348,744  and $3,802 for the years ended  December 31, 1997 and
1996 and the period February 10, 1995 (date of inception)  through  December 31,
1995, respectively.  The increase in operating expenses during 1996, as compared
to 1995, is primarily attributable to an increase in depreciation expense as the
result of the  acquisition  of additional  Properties  during 1996. The increase
during 1997, as compared to 1996, is primarily attributable to the fact that the
Properties  acquired  during 1996 were  operational  for a full year in 1997, as
compared  to a  partial  year  during  1996.  In  addition,  operating  expenses
increased  during 1997 and 1996,  each as compared to the  previous  year,  as a
result of an increase in  management  fees  derived  from the  increased  rental
revenues, as described above.  Operating expenses also increased during 1997, as
compared to 1996, as a result of the Partnership incurring taxes relating to the
filing of  various  state tax  returns  during  1997.  Operating  expenses  also
increased  during  1996,  as  compared  to 1995,  as a result of an  increase in
administrative  expenses  associated  with  operating  the  Partnership  and its
Properties.

                                        9

<PAGE>




         The General Partners of the Partnership are in the process of assessing
and addressing the impact of the year 2000 on their computer  package  software.
The  hardware and  built-in  software  are  believed to be year 2000  compliant.
Accordingly, the General Partners do not expect this matter to materially impact
how the  Partnership  conducts  business  nor its  current or future  results of
operations or financial position.

         The Partnership's leases as of December 31, 1997, are triple-net leases
and contain  provisions that the General  Partners  believe mitigate the adverse
effect of inflation.  Such provisions  include clauses  requiring the payment of
percentage rent based on certain restaurant sales above a specified level and/or
automatic  increases  in base rent at  specified  times  during  the term of the
lease.  Management  expects  that  increases in  restaurant  sales volume due to
inflation  and real sales growth  should  result in an increase in rental income
over  time.  Continued  inflation  also may cause  capital  appreciation  of the
Partnership's Properties.  Inflation and changing prices, however, also may have
an  adverse  impact on the sales of the  restaurants  and on  potential  capital
appreciation of the Properties.


Item 8.   Financial Statements and Supplementary Data

                                       10

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                                    CONTENTS








                                                                  Page

Report of Independent Accountants                                  12

Financial Statements:

  Balance Sheets                                                   13

  Statements of Income                                             14

  Statements of Partners' Capital                                  15

  Statements of Cash Flows                                         16

  Notes to Financial Statements                                    20

                                       11

<PAGE>







                        Report of Independent Accountants




To the Partners
CNL Income Fund XVII, Ltd.


We have audited the financial statements and the financial statement schedule of
CNL Income Fund XVII, Ltd. (a Florida limited  partnership) listed in Item 14(a)
of this Form 10-K. These financial  statements and financial  statement schedule
are the responsibility of the Partnership's management. Our responsibility is to
express  an  opinion  on these  financial  statements  and  financial  statement
schedule based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of CNL Income Fund XVII, Ltd. as
of December 31, 1997 and 1996,  and the results of its  operations  and its cash
flows for each of the years  ended  December  31,  1997 and 1996 and the  period
February 10, 1995 (date of  inception)  through  December 31, 1995 in conformity
with generally accepted accounting principles.  In addition, in our opinion, the
financial  statement  schedule referred to above, when considered in relation to
the  basic  financial  statements  taken as a  whole,  presents  fairly,  in all
material respects, the information required to be included therein.



/s/ Coopers & Lybrand, L.L.P.
-----------------------------


Orlando, Florida
February 4, 1998

                                       12

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                                 BALANCE SHEETS


                                                           December 31,
             ASSETS                                  1997              1996
             ------                               -----------      --------

Land and buildings on operating
  leases, less accumulated
  depreciation                                    $21,328,869      $21,364,032
Net investment in direct financing
  leases                                            3,056,783        1,982,164
Investment in joint ventures                        1,328,067          201,171
Cash and cash equivalents                           1,238,799        4,716,719
Receivables, less allowance for
  doubtful accounts of $14,333
  and $4,469                                              613           63,253
Organization costs, less accumulated
  amortization of $4,309 and $2,309                     5,691            7,691
Accrued rental income                                 460,915          167,216
Other assets                                          104,411          172,761
                                                  -----------      -----------

                                                  $27,524,148      $28,675,007
                                                  ===========      ===========



LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                                  $     2,922      $     2,985
Accrued construction costs payable                     38,834        1,560,712
Distributions payable                                 600,000          490,084
Due to related parties                                  2,875           17,153
Rents paid in advance                                  55,762           52,769
Deferred rental income                                168,359           90,482
                                                  -----------      -----------
  Total liabilities                                   868,752        2,214,185

Minority interest                                     419,193          140,676

Partners' capital                                  26,236,203       26,320,146
                                                  -----------      -----------

                                                  $27,524,148      $28,675,007
                                                  ===========      ===========












                 See accompanying notes to financial statements.

                                       13

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                              STATEMENTS OF INCOME

<TABLE>
<CAPTION>

                                                                                                     February 10,
                                                                                                        1995 (Date
                                                                                                      of Inception)
                                                                     Year Ended                         through
                                                                    December 31,                       December 31,
                                                              1997                1996                    1995
<S> <C>
Revenues:
  Rental income from
    operating leases                                       $2,323,256           $1,054,534             $       -
  Earned income from direct
    financing leases                                          319,487              130,745                     -
  Interest                                                     69,779              244,406                 12,153
  Other income                                                  1,128                9,984                     -
                                                           ----------           ----------             ---------
                                                            2,713,650            1,439,669                 12,153
                                                           ----------           ----------             ----------

Expenses:
  General operating and
    administrative                                            128,168              144,728                  3,360
  Professional services                                        21,877               14,326                    133
  Management fee to related party                              25,377               10,482                     -
  State and other taxes                                         6,443                   -                      -
  Depreciation and amortization                               387,292              179,208                    309
                                                           ----------           ----------             ----------
                                                              569,157              348,744                  3,802
                                                           ----------           ----------             ----------

Income Before Minority Interest
  in Income of Consolidated
  Joint Venture and Equity in
  Earnings of Unconsolidated
  Joint Ventures                                            2,144,493            1,090,925                  8,351

Minority Interest in Income of
  Consolidated Joint Venture                                  (41,854)                  -                      -

Equity in Earnings of
  Unconsolidated Joint Ventures                               100,918                4,834                     -
                                                           ----------           ----------             ---------

Net Income                                                 $2,203,557           $1,095,759             $    8,351
                                                           ==========           ==========             ==========

Allocation of Net Income:
  General partners                                         $     (839)          $     (709)            $       (3)
  Limited partners                                          2,204,396            1,096,468                  8,354
                                                           ----------           ----------             ----------

                                                           $2,203,557           $1,095,759             $    8,351
                                                           ==========           ==========             ==========

Net Income per Limited Partner
  Unit                                                     $     0.73           $     0.52            $     0.02
                                                           ==========           ==========            ==========

Weighted Average Number of Limited
  Partner Units Outstanding                                 3,000,000            2,121,253               340,780
                                                           ==========           ==========            ==========


</TABLE>








                 See accompanying notes to financial statements.

                                       14

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                         STATEMENTS OF PARTNERS' CAPITAL

              Years Ended December 31, 1997 and 1996 and the Period
                      February 10, 1995 (Date of Inception)
                            through December 31, 1995

<TABLE>
<CAPTION>

                               General Partners                          Limited Partners
                                           Accumu-                                    Accumu-
                              Contri-      lated        Contri-         Distri-       lated        Syndication
                              butions      Losses       butions         butions      Earnings         Costs             Total
                              -------     --------    -----------     -----------   ----------     -----------       --------
<S> <C>
Balance at Inception,
  (February 10, 1995)         $    -      $     -     $        -      $        -    $       -      $        -        $        -

  Contributions from
    general partners            1,000           -              -               -            -               -              1,000
  Contributions from
    limited partners               -            -       5,696,921              -            -               -          5,696,921
  Distributions to limited
    partners ($.08 per
    limited partner unit)          -            -              -          (28,275)          -               -            (28,275)
  Syndication costs                -            -              -               -            -       (1,035,764)       (1,035,764)
  Net income                       -            (3)            -               -         8,354              -              8,351
                              -------     --------    -----------     -----------   ----------     -----------       -----------

Balance, December 31, 1995      1,000           (3)     5,696,921         (28,275)       8,354      (1,035,764)        4,642,233

  Contributions from
    limited partners               -            -      24,303,079              -            -               -         24,303,079
  Distributions to limited
    partners ($0.55 per
    limited partner unit)          -            -              -       (1,166,689)          -               -         (1,166,689)
  Syndication costs                -            -              -               -            -       (2,554,236)       (2,554,236)
  Net income                       -          (709)            -               -     1,096,468              -          1,095,759
                              -------     --------    -----------     -----------   ----------     -----------       -----------

Balance, December 31, 1996      1,000         (712)    30,000,000      (1,194,964)   1,104,822      (3,590,000)       26,320,146

  Distributions to limited
    partners ($0.76 per
    limited partner unit)          -            -              -       (2,287,500)          -               -         (2,287,500)
  Net income                       -          (839)            -               -     2,204,396              -          2,203,557
                              -------     --------    -----------     -----------   ----------     -----------       -----------

Balance, December 31, 1997    $ 1,000     $ (1,551)   $30,000,000     $(3,482,464)  $3,309,218     $(3,590,000)      $26,236,203
                              =======     ========    ===========     ===========   ==========     ===========       ===========
</TABLE>


                 See accompanying notes to financial statements.

                                       15

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                                    February 10,
                                                                                                     1995 (Date
                                                                                                     of Inception)
                                                                   Year Ended                          through
                                                                  December 31,                       December 31,
                                                             1997                 1996                   1995
                                                         ------------         ------------          ---------
<S> <C>
Increase (Decrease) in Cash
  and Cash Equivalents:

    Cash Flows From Operating
      Activities:
        Cash received from
             tenants                                     $  2,502,057         $  1,149,196          $          -
        Distributions from
             unconsolidated joint
             ventures                                         106,346                4,985                     -
        Cash paid for expenses                               (183,068)            (165,639)                (3,141)
        Interest received                                      69,779              244,406                 12,153
                                                         ------------         ------------          -------------
            Net cash provided
                    by operating
                    activities                              2,495,114            1,232,948                  9,012
                                                         ------------         ------------          -------------

    Cash Flows From Investing
      Activities:
        Additions to land and
          buildings on
             operating leases                              (1,740,491)         (19,735,346)              (332,928)
        Investment in direct
          financing leases                                 (1,130,497)          (1,784,925)                    -
        Investment in joint
             ventures                                      (1,135,681)            (201,501)                    -
           Increase in other
             assets                                                -                    -                (221,282)
           Other                                                   -                   410                   (410)
                                                         ------------         ------------          -------------
            Net cash used in
                    investing
                    activities                             (4,006,669)         (21,721,362)              (554,620)
                                                         ------------         ------------          -------------

</TABLE>





                 See accompanying notes to financial statements.

                                       16

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                      STATEMENTS OF CASH FLOWS - CONTINUED

<TABLE>
<CAPTION>

                                                                                                    February 10,
                                                                                                     1995 (Date
                                                                                                     of Inception)
                                                                    Year Ended                         through
                                                                   December 31,                      December 31,
                                                             1997                 1996                   1995
                                                         ------------         ------------          ---------
<S> <C>
    Cash Flows From Financing
      Activities:
           Reimbursement of
             acquisition,
             organization and
             syndication costs
             paid by related
             parties on behalf of
             the Partnership                                  (25,444)            (326,483)              (347,907)
           Contributions from
             general partners                                      -                    -                   1,000
           Contributions from
             limited partners                                      -            24,303,079              5,696,921
           Contributions from
             holder of minority
             interest                                         278,170              140,676                     -
        Distributions to
             limited partners                              (2,177,584)            (703,681)                (1,199)
        Distributions to holder
             of minority interest                             (41,507)                  -                      -
        Payment of syndication
             costs                                                 -            (2,407,317)              (604,348)
                                                          -----------          -----------           ------------
            Net cash provided
                    by (used in) fin-
                    ancing activities                      (1,966,365)          21,006,274              4,744,467
                                                          -----------          -----------           ------------

Net Increase (Decrease) in Cash
  and Cash Equivalents                                     (3,477,920)             517,860              4,198,859

Cash and Cash Equivalents at
  Beginning of Period                                       4,716,719            4,198,859                     -
                                                          -----------          -----------           -----------

Cash and Cash Equivalents at
  End of Period                                           $ 1,238,799          $ 4,716,719           $  4,198,859
                                                          ===========          ===========           ============

</TABLE>




                 See accompanying notes to financial statements.

                                       17

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                      STATEMENTS OF CASH FLOWS - CONTINUED

<TABLE>
<CAPTION>

                                                                                                     February 10,
                                                                                                      1995 (Date
                                                                                                     of Inception)
                                                                     Year Ended                        through
                                                                     December 31,                    December 31,
                                                             1997                 1996                   1995
                                                         ------------         ------------          ---------
<S> <C>
Reconciliation of Net Income
  to Net Cash Provided by
  Operating Activities:

    Net income                                            $ 2,203,557          $ 1,095,759            $     8,351
                                                          -----------          -----------            -----------
    Adjustments to reconcile
         net income to net cash
         provided by operating
         activities:
        Depreciation                                          376,973              176,995                     -
        Amortization                                           10,319                2,213                    309
        Minority interest in
          income of consoli-
          dated joint venture                                  41,854                   -                      -
        Equity in earnings of
          unconsolidated joint
          ventures, net of
          distributions                                         5,428                  151                     -
        Decrease (increase) in
          receivables                                          39,518              (40,131)                    -
        Decrease in net invest-
             ment in direct
             financing leases                                  30,454               16,345                     -
        Increase in accrued
             rental income                                   (293,699)            (167,216)                    -
        Increase (decrease) in
          accounts payable and
          accrued expenses                                        (63)               2,985                     -
        Increase (decrease) in
             due to related parties,
             excluding acquisition,
             organization and
             syndication costs paid
             on behalf of the
             Partnership                                          (97)               2,596                    352
        Increase in rents paid
             in advance                                         2,993               52,769                     -
           Increase in deferred
             rental income                                     77,877               90,482                     -
                                                          -----------          -----------            ----------
            Total adjustments                                 291,557              137,189                    661
                                                          -----------          -----------            -----------

Net Cash Provided by Operating
  Activities                                              $ 2,495,114          $ 1,232,948            $     9,012
                                                          ===========          ===========            ===========
</TABLE>


                 See accompanying notes to financial statements.

                                       18

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                      STATEMENTS OF CASH FLOWS - CONTINUED

<TABLE>
<CAPTION>

                                                                                                     February 10,
                                                                                                      1995 (Date
                                                                                                     of Inception)
                                                                   Year Ended                          through
                                                                  December 31,                       December 31,
                                                             1997                 1996                   1995
                                                         ------------         ------------          ---------
<S> <C>
Supplemental Schedule of
  Non-Cash Investing and
  Financing Activities:

    Related parties paid certain
      acquisition, organization and
      syndication costs on behalf of
      the Partnership as follows:
           Acquisition costs                             $     11,262         $     69,836          $      30,424
           Organization costs                                      -                    -                  10,000
           Syndication costs                                       -               231,885                346,450
                                                         ------------         ------------          -------------

                                                         $     11,262         $    301,721          $     386,874
                                                         ============         ============          =============

    Distributions declared
         and unpaid at
         December 31                                     $    600,000         $    490,084          $      27,076
                                                         ============         ============          =============


</TABLE>


                 See accompanying notes to financial statements.

                                       19

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

              Years Ended December 31, 1997 and 1996 and the Period
                      February 10, 1995 (Date of Inception)
                            through December 31, 1995


1.       Significant Accounting Policies:

         Organization  and Nature of Business - CNL Income Fund XVII,  Ltd. (the
         "Partnership") is a Florida limited  partnership that was organized for
         the purpose of acquiring both newly constructed and existing restaurant
         properties,  as well as properties  upon which  restaurants  were to be
         constructed,  which are leased  primarily  to operators of national and
         regional  fast-food,  family-style and casual dining restaurant chains.
         Under the terms of a registration  statement  filed with the Securities
         and Exchange  Commission,  the  Partnership  was  authorized  to sell a
         maximum  of  3,000,000  units   ($30,000,000)  of  limited  partnership
         interest.   A  total  of  3,000,000  units   ($30,000,000)  of  limited
         partnership interest were sold.

         The  Partnership was a development  stage  enterprise from February 10,
         1995  through  November  3,  1995.  Since  operations  had  not  begun,
         activities  through  November 3, 1995,  were devoted to organization of
         the Partnership.

         The general partners of the Partnership are CNL Realty Corporation (the
         "Corporate  General  Partner"),  James M.  Seneff,  Jr.  and  Robert A.
         Bourne.  Mr. Seneff and Mr. Bourne are also 50 percent  shareholders of
         the Corporate General Partner. The general partners have responsibility
         for managing the day-to-day operations of the Partnership.

         Real  Estate  and  Lease  Accounting  -  The  Partnership  records  the
         acquisition of land and buildings at cost,  including  acquisition  and
         closing costs. Land and buildings are leased to unrelated third parties
         on a triple-net basis, whereby the tenant is generally  responsible for
         all operating  expenses  relating to the property,  including  property
         taxes, insurance, maintenance and repairs. The leases are accounted for
         using  either the  direct  financing  or the  operating  methods.  Such
         methods are described below:

                  Direct  financing  method - The leases accounted for using the
                  direct  financing  method are recorded at their net investment
                  (which at the inception of the lease generally  represents the
                  cost of the asset) (see Note 4).  Unearned  income is deferred
                  and  amortized to income over the lease terms so as to produce
                  a constant  periodic rate of return on the  Partnership's  net
                  investment in the leases.

                                       20

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              Years Ended December 31, 1997 and 1996 and the Period
                      February 10, 1995 (Date of Inception)
                            through December 31, 1995


1.       Significant Accounting Policies - Continued:

                  Operating  method - Land and  building  leases  accounted  for
                  using the  operating  method are recorded at cost,  revenue is
                  recognized as rentals are earned and  depreciation  is charged
                  to operations as incurred.  Buildings are  depreciated  on the
                  straight-line  method over their estimated  useful lives of 30
                  years. When scheduled rentals  (including rental payments,  if
                  any,  required  during the  construction  of a property)  vary
                  during the lease term, income is recognized on a straight-line
                  basis so as to produce a constant periodic rent over the lease
                  term commencing on the date the property is placed in service.

                  Accrued  rental  income  represents  the  aggregate  amount of
                  income  recognized  on a  straight-line  basis  in  excess  of
                  scheduled  rental  payments  to date.  In  contrast,  deferred
                  rental income  represents  the  aggregate  amount of scheduled
                  rental payments to date (including  rental payments due during
                  construction  and  prior  to  the  property  being  placed  in
                  service)  in excess of income  recognized  on a  straight-line
                  basis over the lease term  commencing on the date the property
                  is placed in service.

         When  the  properties  are  sold,  the  related  cost  and  accumulated
         depreciation  for operating  leases and the net  investment  for direct
         financing  leases,  plus any accrued rental income,  or deferred rental
         income,  will be removed  from the  accounts  and gains or losses  from
         sales  will  be  reflected  in  income.  The  general  partners  of the
         Partnership review properties for impairment whenever events or changes
         in  circumstances  indicate that the carrying  amount of the assets may
         not be recoverable through  operations.  The general partners determine
         whether an  impairment in value has occurred by comparing the estimated
         future  undiscounted  cash flows,  including the residual  value of the
         property,  with the carrying  cost of the  individual  property.  If an
         impairment is indicated, the assets are adjusted to their fair value.

                                       21

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              Years Ended December 31, 1997 and 1996 and the Period
                      February 10, 1995 (Date of Inception)
                            through December 31, 1995


1.       Significant Accounting Policies - Continued:

         Investment  in Joint  Ventures - The  Partnership  accounts  for its 80
         percent   interest  in  CNL/GC  El  Cajon  Joint   Venture   using  the
         consolidation  method.  Minority interest represents the minority joint
         venture   partner's   proportionate   share  of  the   equity   in  the
         Partnership's  consolidated joint venture. All significant intercompany
         accounts and transactions have been eliminated.

         The  Partnership's  investments  in CNL Kingston  Joint Venture and CNL
         Mansfield  Joint Venture,  and a property in Corpus  Christi,  Texas, a
         property  in  Akron,  Ohio,  and  a  property  in  Fayetteville,  North
         Carolina,  for which each  property is held as  tenants-in-common,  are
         accounted  for using the equity  method  since the  Partnership  shares
         control with affiliates which have the same general partners.

         Cash and Cash Equivalents - The Partnership considers all highly liquid
         investments  with a maturity of three months or less when  purchased to
         be cash  equivalents.  Cash  and cash  equivalents  consist  of  demand
         deposits at commercial banks,  certificates of deposit and money market
         funds  (some  of which  are  backed  by  government  securities).  Cash
         equivalents   are  stated  at  cost  plus   accrued   interest,   which
         approximates market value.

         Cash  accounts  maintained  on  behalf  of the  Partnership  in  demand
         deposits at commercial banks,  certificates of deposit and money market
         funds may exceed federally insured levels; however, the Partnership has
         not  experienced any losses in such accounts.  The  Partnership  limits
         investment of temporary cash investments to financial institutions with
         high credit  standing;  therefore,  the Partnership  believes it is not
         exposed to any significant credit risk on cash and cash equivalents.

         Organization  Costs - Organization  costs are amortized over five years
         using the straight-line method upon commencement of operations.

                                       22

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              Years Ended December 31, 1997 and 1996 and the Period
                      February 10, 1995 (Date of Inception)
                            through December 31, 1995


1.       Significant Accounting Policies - Continued:

         Income Taxes - Under  Section 701 of the  Internal  Revenue  Code,  all
         income,  expenses and tax credit items flow through to the partners for
         tax  purposes.  Therefore,  no  provision  for federal  income taxes is
         provided in the accompanying  financial statements.  The Partnership is
         subject to certain state taxes on its income and property.

         Additionally,  for tax  purposes,  syndication  costs are  included  in
         Partnership equity and in the basis of each partner's  investment.  For
         financial  reporting  purposes,  syndication  costs are netted  against
         partners' capital and represent a reduction of Partnership equity and a
         reduction in the basis of each partner's investment (Note 6).

         Weighted Average Number of Limited Partner Units Outstanding Net income
         and  distributions  per limited partner unit are calculated  based upon
         the weighted  average number of units of limited  partnership  interest
         outstanding during the period the Partnership was operational.

         Use of Estimates - The general  partners of the Partnership have made a
         number of estimates and assumptions relating to the reporting of assets
         and liabilities and the disclosure of contingent assets and liabilities
         to prepare these  financial  statements in  conformity  with  generally
         accepted accounted principles. The more significant areas requiring the
         use of  management  estimates  relate  to the  allowance  for  doubtful
         accounts  and future  cash flows  associated  with  long-lived  assets.
         Actual results could differ from those estimates.

         Reclassification   -  Certain  items  in  the  prior  years'  financial
         statements  have been  reclassified  to conform  to 1997  presentation.
         These  reclassifications  had no effect  on  partners'  capital  or net
         income.



                                       23

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              Years Ended December 31, 1997 and 1996 and the Period
                      February 10, 1995 (Date of Inception)
                            through December 31, 1995


2.       Leases:

         The Partnership  leases its land and buildings to operators of national
         and regional  fast-food and  family-style  restaurants.  The leases are
         accounted for under the provisions of Statement of Financial Accounting
         Standards  No.  13,  "Accounting  for  Leases."  Some of the leases are
         classified  as  operating  leases  and  some of the  leases  have  been
         classified as direct  financing  leases.  For the leases  classified as
         direct financing  leases,  the building portions of the property leases
         are accounted for as direct  financing leases while the land portion of
         the leases are operating leases.  All leases are for 15 to 20 years and
         provide for minimum and  contingent  rentals.  In addition,  the tenant
         pays all property taxes and  assessments,  fully maintains the interior
         and exterior of the building and carries insurance  coverage for public
         liability,  property  damage,  fire and  extended  coverage.  The lease
         options  generally  allow  tenants  to renew the leases for two to four
         successive  five-year  periods subject to the same terms and conditions
         as the initial lease. Most leases also allow the tenant to purchase the
         property  at fair market  value after a specified  portion of the lease
         has elapsed.

3.       Land and Buildings on Operating Leases:

         Land and  buildings on operating  leases  consisted of the following at
         December 31:

                                                 1997              1996
                                              -----------       -----------

                  Land                        $10,357,191       $10,148,827
                  Buildings                    11,525,646        11,168,540
                                              -----------       -----------
                                               21,882,837        21,317,367
                  Less accumulated
                    depreciation                 (553,968)         (176,995)
                                              -----------       -----------
                                               21,328,869        21,140,372
                  Construction in progress             -            223,660
                                              -----------       -----------

                                              $21,328,869       $21,364,032
                                              ===========       ===========

                                       24

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              Years Ended December 31, 1997 and 1996 and the Period
                      February 10, 1995 (Date of Inception)
                            through December 31, 1995


3.       Land and Buildings on Operating Leases - Continued:

         Some leases provide for escalating  guaranteed minimum rents throughout
         the  lease  term.   Income  from  these  scheduled  rent  increases  is
         recognized on a straight-line  basis over the terms of the leases.  For
         the years ended December 31, 1997 and 1996, the Partnership  recognized
         $293,699 and $167,216, respectively, of such rental income.

         The following is a schedule of the future  minimum lease payments to be
         received on noncancellable operating leases at December 31, 1997:

                  1998                            $ 2,160,765
                  1999                              2,173,058
                  2000                              2,185,696
                  2001                              2,279,375
                  2002                              2,336,127
                  Thereafter                       30,028,040
                                                  -----------

                                                  $41,163,061

         Since  lease  renewal  periods  are  exercisable  at the  option of the
         tenant, the above table only presents future minimum lease payments due
         during  the  initial  lease  terms.  In  addition,  this table does not
         include any amounts for future contingent rentals which may be received
         on the leases based on a percentage of the tenant's gross sales.

4.       Net Investment in Direct Financing Leases:

         The  following  lists the  components  of the net  investment in direct
         financing leases at December 31:

                                                   1997             1996
                                               -----------       -----------

                  Minimum lease payments
                    receivable                 $ 7,636,851       $ 4,301,029
                  Estimated residual
                    values                         775,896           499,627
                  Less unearned income          (5,355,964)       (2,818,492)
                                               -----------       -----------

                  Net investment in
                    direct financing
                    leases                     $ 3,056,783       $ 1,982,164
                                               ===========       ===========

                                       25

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              Years Ended December 31, 1997 and 1996 and the Period
                      February 10, 1995 (Date of Inception)
                            through December 31, 1995


4.       Net Investment in Direct Financing Leases - Continued:

         The  following  is a schedule of future  minimum  lease  payments to be
         received on direct financing leases at December 31, 1997:

                  1998                           $  411,927
                  1999                              411,927
                  2000                              411,927
                  2001                              411,927
                  2002                              411,927
                  Thereafter                      5,577,216
                                                 ----------

                                                 $7,636,851

         The above table does not include  future  minimum  lease  payments  for
         renewal  periods or for contingent  rental payments that may become due
         in future periods (see Note 3).

5.       Investment in Joint Ventures:

         In October 1996,  the  Partnership  acquired an  approximate 20 percent
         interest   in  a  property  in   Fayetteville,   North   Carolina,   as
         tenants-in-common,  with an  affiliate  of the  general  partners.  The
         Partnership  accounts for its  investment  in this  property  using the
         equity method since the  Partnership  shares control with an affiliate,
         and amounts  relating to its  investment  are included in investment in
         joint ventures.

         In January 1997,  the  Partnership  acquired an  approximate 27 percent
         interest in a property in Corpus Christi,  Texas, and an approximate 37
         percent   interest   in  a   property   in   Akron,   Ohio,   each   as
         tenants-in-common,   with  affiliates  of  the  general  partners.  The
         Partnership  accounts for its investment in these  properties using the
         equity method since the Partnership shares control with affiliates, and
         amounts  relating to these  investments  are included in  investment in
         joint ventures.

         In  February  1997,  the  Partnership  entered  into  a  joint  venture
         arrangement,  CNL  Mansfield  Joint  Venture,  with an affiliate of the
         Partnership which has the same general partners, to hold one restaurant
         property in Mansfield,  Texas. As of December 31, 1997, the Partnership
         and its  co-venture  partner had  contributed  $163,964  and  $616,245,
         respectively, to the joint

                                       26

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              Years Ended December 31, 1997 and 1996 and the Period
                      February 10, 1995 (Date of Inception)
                            through December 31, 1995


5.       Investment in Joint Ventures - Continued:

         venture to acquire the  restaurant  property.  As of December 31, 1997,
         the  Partnership  and its co-venture  partner owned a 21 percent and 79
         percent interest,  respectively, in the profits and losses of the joint
         venture.  The  Partnership  accounts for its  investment  in this joint
         venture under the equity method since the  Partnership  shares  control
         with the affiliate.

         In  September  1997,  the  Partnership  entered  into a  joint  venture
         arrangement,  CNL  Kingston  Joint  Venture,  with an  affiliate of the
         Partnership which has the same general partners,  to construct and hold
         one restaurant  property.  As of December 31, 1997, the Partnership and
         its  co-venture   partner  had   contributed   $183,241  and  $121,855,
         respectively,  to CNL Kingston Joint Venture to fund construction costs
         relating to the property  owned by the joint venture.  The  partnership
         and its  co-venture  partner  have agreed to  contribute  approximately
         $128,700 and $85,600, respectively, in additional construction costs to
         the joint venture. When construction is completed,  the Partnership and
         its  co-venture  partner  expect  to have a  60.06  and  39.94  percent
         interest, respectively, in the profits and losses of the joint venture.
         As of December 31, 1997, the Partnership owned a 60.06% interest in the
         profits and losses of the joint venture.  The Partnership  accounts for
         its  investment in this joint venture under the equity method since the
         Partnership shares control with an affiliate.



                                       27

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              Years Ended December 31, 1997 and 1996 and the Period
                      February 10, 1995 (Date of Inception)
                            through December 31, 1995


5.       Investment in Joint Ventures - Continued:

         CNL Mansfield  Joint Venture and CNL Kingston  Joint  Venture,  and the
         Partnership  and  affiliates,  as  tenants-in-common  in three separate
         tenancy-in-common  arrangements,  each own and lease one property to an
         operator  of  national  fast-food  or  family-style  restaurants.   The
         following presents the combined,  condensed  financial  information for
         the joint ventures and the properties  held as  tenants-in-common  with
         affiliates at December 31:

                                                        1997          1996
                                                     ----------    -----------

                  Land and buildings on
                    operating leases, less
                    accumulated depreciation         $4,495,671    $  960,732
                  Cash                                    8,936           100
                  Accrued rental income                  65,395         3,929
                  Other assets                            1,931            -
                  Liabilities                           228,896            23
                  Partners' capital                   4,343,037       964,738
                  Revenues                              453,481        29,293
                  Net income                            375,257        24,502

         The Partnership recognized income totalling $100,918 and $4,834 for the
         years ended  December  31, 1997 and 1996 from these joint  ventures and
         the properties held as tenants-in-common with affiliates.

6.       Syndication Costs:

         Syndication  costs  consisting  of  legal  fees,  commissions,   a  due
         diligence  expense  reimbursement  fee,  printing  and  other  expenses
         incurred in connection  with the offering  totalled  $3,590,000.  These
         offering  expenses  were  charged  to  the  limited  partners'  capital
         accounts to reflect the net capital proceeds of the offering.

7.       Allocations and Distributions:

         Generally,  distributions  of net cash flow,  as defined in the limited
         partnership  agreement of the  Partnership,  are made 95 percent to the
         limited  partners and five percent to the general  partners;  provided,
         however,  that for any  particular  year,  the five percent of net cash
         flow to be distributed to the general  partners will be subordinated to
         receipt by the

                                       28

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              Years Ended December 31, 1997 and 1996 and the Period
                      February 10, 1995 (Date of Inception)
                            through December 31, 1995


7.       Allocations and Distributions - Continued:

         limited  partners  in that  year  of an  eight  percent  noncumulative,
         noncompounded return on their aggregate invested capital  contributions
         (the "Limited Partners' 8% Return").

         Generally,  net income  (determined  without regard to any depreciation
         and  amortization  deductions  and  gains and  losses  from the sale of
         properties) is allocated  between the limited  partners and the general
         partners  first,  in  an  amount  not  to  exceed  the  net  cash  flow
         distributed  to the  partners  attributable  to such  year in the  same
         proportions as such net cash flow is distributed;  and  thereafter,  99
         percent  to the  limited  partners  and  one  percent  to  the  general
         partners.   All  deductions  for   depreciation  and  amortization  are
         allocated  99 percent to the  limited  partners  and one percent to the
         general partners.

         Net  sales  proceeds  from the  sale of a  property  generally  will be
         distributed  first to the limited  partners in an amount  sufficient to
         provide them with the return of their invested  capital  contributions,
         plus their cumulative Limited Partners' 8% Return. The general partners
         will then receive a return of their capital  contributions  and, to the
         extent  previously  subordinated and unpaid, a five percent interest in
         all net cash flow distributions.  Any remaining net sales proceeds will
         be distributed  95 percent to the limited  partners and five percent to
         the general partners.

         Any gain from the sale of a property will be, in general,  allocated in
         the same manner as net sales proceeds are distributable.  Any loss will
         be allocated  first,  on a pro rata basis to the partners with positive
         balances in their capital accounts;  and thereafter,  95 percent to the
         limited partners and five percent to the general partners.

         During the years ended December 31, 1997 and 1996 and during the period
         February 10, 1995 (date of inception)  through  December 31, 1995,  the
         Partnership   declared   distributions   to  the  limited  partners  of
         $2,287,500, $1,166,689 and $28,275, respectively. No distributions have
         been made to the general partners to date.

                                       29

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              Years Ended December 31, 1997 and 1996 and the Period
                      February 10, 1995 (Date of Inception)
                            through December 31, 1995

8.       Income Taxes:

         The following is a reconciliation of net income for financial reporting
         purposes to net income for federal  income tax  purposes  for the years
         ended December 31, 1997 and 1996 and the period February 10, 1995 (date
         of inception) through December 31, 1995:
<TABLE>
<CAPTION>

                                                                1997             1996              1995
                                                             ----------       ----------        -------
<S> <C>
                  Net income for financial
                    reporting purposes                       $2,203,557       $1,095,759        $    8,351

                  Depreciation for
                    financial reporting
                    purposes in excess of
                    depreciation for tax
                    reporting purposes                           25,005           13,226                -

                  Direct financing leases
                    recorded as operating
                    leases for tax
                    reporting purposes                           30,454           16,345                -

                  Equity  in  earnings  of
                    unconsolidated joint venture
                    for financial reporting
                    purposes in excess of
                    equity in earnings of
                    unconsolidated joint ventures
                    for tax reporting purposes                   (3,650)            (479)               -

                  Minority interest in
                    timing differences of
                    consolidated joint
                    venture                                         217               -                 -

                  Capitalization of admini-
                    strative expenses for
                    tax reporting purposes                        1,557           11,940             3,493

                  Amortization for tax
                    reporting purposes (in
                    excess of) less than
                    amortization for finan-
                    cial reporting purposes                       1,667           (2,025)              309

                  Accrued rental income                        (293,699)        (167,216)               -

                  Deferred rental income                         80,635           90,482                -

                  Rents paid in advance                           2,993           52,769                -

                  Other                                           9,865            4,163                -
                                                             ----------       ----------        ---------

                  Net income for federal
                    income tax purposes                      $2,058,601       $1,114,964        $   12,153
                                                             ==========       ==========        ==========
</TABLE>

                                       30

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              Years Ended December 31, 1997 and 1996 and the Period
                      February 10, 1995 (Date of Inception)
                            through December 31, 1995


9.       Related Party Transactions:

         One of the individual general partners, James M. Seneff, Jr., is one of
         the principal  shareholders  of CNL Group,  Inc., the parent company of
         CNL Securities Corp. and CNL Fund Advisors,  Inc. James M. Seneff,  Jr.
         is director and chief executive  officer of CNL Securities Corp. and is
         director,  chairman  of the  board of  directors  and  chief  executive
         officer  of CNL  Fund  Advisors,  Inc.  The  other  individual  general
         partner,  Robert A. Bourne, is director and president of CNL Securities
         Corp.,  is  director,  vice  chairman  of the  board of  directors  and
         treasurer  of CNL Fund  Advisors,  Inc.  and served as president of CNL
         Fund Advisors, Inc. through October 31, 1997.

         For the year ended  December 31, 1996 and the period  February 10, 1995
         (Date of Inception) through December 31, 1995, the Partnership incurred
         $2,065,762 and $484,238,  respectively, in syndication costs due to CNL
         Securities  Corp.  for  services in  connection  with  selling  limited
         partnership   interests.   A  substantial   portion  of  these  amounts
         ($2,359,831) was paid as commissions to other broker-dealers.

         In  addition,  for the year  ended  December  31,  1996 and the  period
         February 10, 1995 (Date of Inception)  through  December 31, 1995,  the
         Partnership  incurred  $121,515  and  $28,485,  respectively,  as a due
         diligence  expense  reimbursement  fee due to CNL Securities Corp. This
         fee equals 0.5% of the limited  partner  contributions  of $30,000,000.
         The  majority of this fee was  reallowed  to other  broker-dealers  for
         payment of bona fide due diligence expenses.

         Additionally,  the Partnership incurred $1,093,639 and $256,361 for the
         year ended December 31, 1996 and the period  February 10, 1995 (Date of
         Inception) through December 31, 1995, respectively, in acquisition fees
         due to CNL Fund Advisors, Inc. for services in finding, negotiating and
         acquiring properties on behalf of the Partnership. These fees represent
         4.5% of the limited partner capital contributions of $30,000,000.

         During  the years  ended  December  31,  1997 and 1996,  and the period
         February 10, 1995 (Date of Inception)  through  December 31, 1995,  CNL
         Fund Advisors,  Inc. acted as manager of the  Partnership's  properties
         pursuant to a management agreement with the Partnership.  In connection
         therewith,  the  Partnership  agreed to pay CNL Fund Advisors,  Inc. an
         annual,

                                       31

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              Years Ended December 31, 1997 and 1996 and the Period
                      February 10, 1995 (Date of Inception)
                            through December 31, 1995

9.       Related Party Transactions - Continued:

         management  fee of one  percent  of the  sum  of  gross  revenues  from
         properties  wholly  owned  by the  Partnership  and  the  Partnership's
         allocable share of gross revenues from joint  ventures.  The management
         fee,  which will not  exceed  fees which are  competitive  for  similar
         services in the same geographic area, may or may not be taken, in whole
         or in part as to any year, in the sole discretion of CNL Fund Advisors,
         Inc.  All or any  portion  of the  management  fee not  taken as to any
         fiscal year shall be deferred without interest and may be taken in such
         other  fiscal year as CNL Fund  Advisors,  Inc.  shall  determine.  The
         Partnership  incurred  management  fees of $25,377  and $10,482 for the
         years ended  December 31, 1997 and 1996. No such fees were incurred for
         the period February 10, 1995 (date of inception)  through  December 31,
         1995.

         During the years  ended  December  31, 1997 and 1996 and for the period
         February  10,  1995 (date of  inception)  through  December  31,  1995,
         Affiliates  provided  accounting  and  administrative  services  to the
         Partnership  (including  accounting  and  administrative   services  in
         connection  with the  offering  of units) on a  day-to-day  basis.  The
         expenses incurred for these services were classified as follows:

                                              1997       1996         1995
                                            --------   --------     ------

                  Syndication costs         $     -    $177,683     $133,982
                  General operating
                    and administrative
                    expenses                  90,700     96,729        2,659
                                            --------   --------     --------

                                            $ 90,700   $274,412     $136,641
                                            ========   ========     ========

         The due to  related  parties at  December  31,  1997 and 1996  totalled
         $2,875 and $17,153, respectively.

         During 1996, the  Partnership  acquired from  affiliates of the general
         partners three properties, one of which was held with another affiliate
         as  tenants-in-common,  for an aggregate  purchase price of $1,667,140.
         The  affiliates of the general  partners had purchased and  temporarily
         held title to these  properties in order to facilitate the  acquisition
         of these properties by the Partnership. The purchase prices paid by the
         Partnership  represented  the costs  incurred by the  affiliates of the
         general partners to acquire the properties, including closing costs.

                                       32

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              Years Ended December 31, 1997 and 1996 and the Period
                      February 10, 1995 (Date of Inception)
                            through December 31, 1995


9.       Related Party Transactions - Continued:

         During 1997, the  Partnership  and  affiliates of the general  partners
         acquired two properties as tenants-in-common  for an aggregate purchase
         price of  $718,932  from CNL BB  Corp.,  an  affiliate  of the  general
         partners.  CNL BB Corp.  had  purchased and  temporarily  held title to
         these  properties  in  order  to  facilitate  the  acquisition  of  the
         properties by the Partnership  and the  affiliates.  The purchase price
         paid  by the  Partnership  and the  affiliates  represented  the  costs
         incurred by CNL BB Corp. to acquire and carry the  property,  including
         closing costs.

10.      Concentration of Credit Risk:

         The  following  schedule  presents  total rental and earned income from
         individual lessees, or affiliated groups of lessees,  each representing
         more than ten  percent  of the  Partnership's  total  rental and earned
         income  (including  rental and  earned  income  from the  Partnership's
         consolidated  joint venture,  the Partnership's  share of rental income
         from the unconsolidated joint ventures and the three properties held as
         tenants-in-common with affiliates of the general partners) for at least
         one of the  years  ended  December  31,  1997 and  1996 and the  period
         February 10, 1995 (date of inception) through December 31, 1995:

                                            1997       1996        1995
                                          --------   --------    ------

                  Golden Corral
                    Corporation           $467,275   $286,307    $     -
                  DenAmerica Corp.         427,800    250,535          -
                  National Restaurant
                    Enterprises, Inc.      376,461    197,882          -
                  Foodmaker, Inc.          326,007    116,658          -
                  RTM Indianapolis,
                    Inc. and RTM
                    Southwest, Texas,
                    Inc.                   269,010    133,200          -



                                       33

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              Years Ended December 31, 1997 and 1996 and the Period
                      February 10, 1995 (Date of Inception)
                            through December 31, 1995


10.      Concentration of Credit Risk - Continued:

         In addition,  the following  schedule  presents total rental and earned
         income from individual  restaurant chains,  each representing more than
         ten  percent  of the  Partnership's  total  rental  and  earned  income
         (including rental and earned income from the Partnership's consolidated
         joint venture,  the Partnership's share of total rental income from the
         unconsolidated   joint  ventures  and  the  three  properties  held  as
         tenants-in-common with affiliates of the general partners) for at least
         one of the  years  ended  December  31,  1997 and  1996 and the  period
         February 10, 1995 (date of inception through December 31, 1995):

                                             1997        1996         1995
                                           --------    --------     ------

                  Golden Corral Family
                    Steakhouse Rest-
                    aurants                $680,316    $286,307     $     -
                  Burger King               410,876     197,882           -
                  Jack in the Box           326,007     116,659           -
                  Boston Market             299,744     105,682           -
                  Arby's                    269,010     133,200           -
                  Denny's                   252,968     250,535           -

         Although  the  Partnership's   properties  are  geographically  diverse
         throughout the United States and the  Partnership's  lessees  operate a
         variety of  restaurant  concepts,  default  by any of these  lessees or
         restaurant chains could significantly  impact the results of operations
         of the Partnership. However, the general partners believe that the risk
         of such a default is reduced due to the  essential or important  nature
         of these properties for the on-going operations of the lessees.



                                       34

<PAGE>



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 General Partners of the Registrant are James M. Seneff, Jr., Robert
A.  Bourne  and CNL  Realty  Corporation,  a Florida  corporation.  The  General
Partners  manage  and  control  the  Partnership's   affairs  and  have  general
responsibility   and  the  ultimate  authority  in  all  matters  affecting  the
Partnership's  business.  The  Partnership  has  available  to it the  services,
personnel and experience of CNL Fund Advisors,  Inc., CNL Group,  Inc. and their
affiliates, all of which are affiliates of the General Partners.

         James M. Seneff, Jr., age 51, is a principal  stockholder of CNL Group,
Inc., a diversified  real estate company,  and has served as its Chairman of the
Board of Directors,  director and Chief Executive Officer since its formation in
1980.  CNL Group,  Inc.  is the  parent  company of CNL  Securities  Corp.,  CNL
Investment Company, CNL Fund Advisors,  Inc., CNL Real Estate Advisors, Inc. and
prior to its merger with CNL Fund Advisors, Inc., effective January 1, 1996, CNL
Income Fund Advisors, Inc. Mr. Seneff is Chief Executive Officer, and has been a
director and registered  principal of CNL Securities Corp.,  which served as the
managing dealer in the Partnership's  offering of Units,  since its formation in
1979.  Mr.  Seneff also has held the position of President and a director of CNL
Management  Company,  a registered  investment  advisor,  since its formation in
1976,  has served as Chief  Executive  Officer and  Chairman of the Board of CNL
Investment  Company,  and Chief  Executive  Officer and Chairman of the Board of
Commercial Net Lease Realty,  Inc. since 1992, has served as the Chairman of the
Board and the Chief  Executive  Officer of CNL Realty  Advisors,  Inc. since its
inception in 1991 through  December 31, 1997, at which time CNL Realty Advisors,
Inc.  merged with Commercial Net Lease Realty,  Inc.,  served as Chairman of the
Board and Chief  Executive  Officer of CNL Income Fund Advisors,  Inc. since its
inception in 1994 through December 31, 1995, has served as a director,  Chairman
of the Board and Chief  Executive  Officer of CNL Fund Advisors,  Inc. since its
inception in 1994,  and has held the position of Chief  Executive  Officer and a
director of CNL Institutional  Advisors,  Inc., a registered investment advisor,
since its inception in 1990.  In addition,  Mr. Seneff has served as a director,
Chairman of the Board and Chief  Executive  Officer of CNL  American  Properties
Fund,  Inc. since 1994, and has served as a director,  Chairman of the Board and
Chief Executive  Officer of CNL American Realty Fund, Inc. since 1996 and of CNL
Real Estate Advisors,  Inc. since January 1997. Mr. Seneff  previously served on
the Florida State  Commission on Ethics and is a former member and past Chairman
of the State of Florida  Investment  Advisory  Council,  which recommends to the
Florida  Board  of  Administration  investments  for  various  Florida  employee
retirement  funds.  The Florida  Board of  Administration,  Florida's  principal
investment advisory and money management agency, oversees the investment of more
than $60 billion of retirement funds.  Since 1971, Mr. Seneff has been active in
the  acquisition,  development  and  management  of real  estate  projects  and,
directly or through an  affiliated  entity,  has served as a general  partner or
joint  venturer in over 100 real  estate  ventures  involved  in the  financing,
acquisition,  construction and rental of office buildings,  apartment complexes,
restaurants,  hotels  and other  real  estate.  Included  in these  real  estate
ventures are approximately 65 privately offered real estate limited partnerships
in which Mr.  Seneff,  directly or through an affiliated  entity,  serves or has
served as a general partner. Also included are CNL Income Fund, Ltd., CNL Income
Fund II, Ltd.,  CNL Income Fund III,  Ltd., CNL Income Fund IV, Ltd., CNL Income
Fund V, Ltd.,  CNL Income Fund VI, Ltd.,  CNL Income Fund VII,  Ltd., CNL Income
Fund VIII,  Ltd.,  CNL Income Fund IX, Ltd., CNL Income Fund X, Ltd., CNL Income
Fund XI, Ltd., CNL Income Fund XII, Ltd., CNL Income Fund XIII, Ltd., CNL Income
Fund XIV,  Ltd.,  CNL Income Fund XV,  Ltd.,  CNL Income Fund XVI,  Ltd. and CNL
Income Fund XVIII, Ltd. (the "CNL Income Fund Partnerships"), public real estate
limited  partnerships  with  investment  objectives  similar  to  those  of  the
Partnership,  in which  Mr.  Seneff  serves  as a general  partner.  Mr.  Seneff
received his degree in Business  Administration from Florida State University in
1968.


                                       35

<PAGE>



         Robert A.  Bourne,  age 50, is  President  and  Treasurer of CNL Group,
Inc., President,  a director and a registered principal of CNL Securities Corp.,
President and a director of CNL Investment Company, and prior to its merger with
CNL Fund Advisors,  Inc.,  effective  January 1, 1996, CNL Income Fund Advisors,
Inc., and Chief Investment Officer,  Vice Chairman of the Board of Directors,  a
director  and  Treasurer  of CNL  Institutional  Advisors,  Inc.,  a  registered
investment  advisor.  Mr.  Bourne  served  as  President  of  CNL  Institutional
Advisors,  Inc. from the date of its inception  through June 30, 1997 and served
as President of CNL Fund Advisors,  Inc. from the date of its inception  through
October  1997.  Mr.  Bourne  currently  serves as Vice  Chairman of the Board of
Directors and as Treasurer of CNL Fund Advisors, Inc. Mr. Bourne also has served
as a director  since 1992,  as  President  from July 1992 to February  1996,  as
Secretary and Treasurer  from February  1996 through  December  1997,  and since
February  1996,  served as Vice Chairman of the Board of Directors of Commercial
Net Lease Realty,  Inc. In addition,  Mr. Bourne has served as a director  since
its  inception in 1991,  as President  from 1991 to February  1996, as Secretary
from February 1996 to July 1996, and since  February  1996,  served as Treasurer
and Vice Chairman of CNL Realty  Advisors,  Inc.  through  December 31, 1997, at
which time CNL Realty  Advisors,  Inc.  merged with Commercial Net Lease Realty,
Inc.  In  addition,  Mr.  Bourne has served as  President  and a director of CNL
American  Properties  Fund,  Inc.  since 1994, and has served as President and a
director of CNL  American  Realty Fund,  Inc.  since 1996 and of CNL Real Estate
Advisors, Inc. since January 1997. Upon graduation from Florida State University
in 1970, where he received a B.A. in Accounting,  with honors, Mr. Bourne worked
as a certified public accountant and, from September 1971 through December 1978,
was employed by Coopers & Lybrand,  Certified Public Accountants,  where he held
the  position of tax manager  beginning  in 1975.  From  January 1979 until June
1982, Mr. Bourne was a partner in the accounting firm of Cross & Bourne and from
July 1982  through  January  1987,  he was a partner in the  accounting  firm of
Bourne & Rose, P.A.,  Certified Public  Accountants.  Mr. Bourne, who joined CNL
Securities  Corp.  in 1979,  has  participated  as a  general  partner  or joint
venturer  in  over  100  real  estate   ventures   involved  in  the  financing,
acquisition,  construction and rental of office buildings,  apartment complexes,
restaurants,  hotels  and other  real  estate.  Included  in these  real  estate
ventures are approximately 64 privately offered real estate limited partnerships
in which Mr.  Bourne,  directly or through an affiliated  entity,  serves or has
served as a general partner. Also included are the CNL Income Fund Partnerships,
public real estate limited  partnerships with investment  objectives  similar to
those of the Partnership, in which Mr. Bourne serves as a general partner.

         CNL Realty Corporation is a corporation organized on November 26, 1985,
under the laws of the State of Florida.  Its sole directors and shareholders are
James M. Seneff, Jr. and Robert A. Bourne, the individual General Partners.  CNL
Realty  Corporation  was organized to serve as the corporate  general partner of
real estate limited partnerships,  such as the Partnership,  organized by one or
both of the individual General Partners. CNL Realty Corporation currently serves
as the corporate general partner of the CNL Income Fund Partnerships.

         CNL  Fund  Advisors,  Inc.  provides  certain  management  services  in
connection with the Partnership and its Properties. CNL Fund Advisors, Inc. is a
corporation  organized  in 1994 under the laws of the State of Florida,  and its
principal  office is located at 400 East South Street,  Orlando,  Florida 32801.
CNL Fund  Advisors,  Inc. is a wholly  owned  subsidiary  of CNL Group,  Inc., a
diversified  real  estate  company,   and  was  organized  to  perform  property
acquisition, property management and other services.

         CNL  Group,  Inc.,  which is the parent  company of CNL Fund  Advisors,
Inc.,  was organized in 1980 under the laws of the State of Florida.  CNL Group,
Inc. is a diversified  real estate  company which  provides a wide range of real
estate,  development  and  financial  services to companies in the United States
through the  activities  of its  subsidiaries.  These  activities  are primarily
focused  on the  franchised  restaurant  and  hospitality  industries.  James M.
Seneff,  Jr., an individual General Partner of the Partnership,  is the Chairman
of the Board,  Chief Executive  Officer,  and a director of CNL Group,  Inc. Mr.
Seneff and his wife own all of the outstanding shares of CNL Group, Inc.

         The following persons serve as operating officers of CNL Group, Inc. or
its affiliates or  subsidiaries  in the discretion of the Boards of Directors of
those companies,  but, except as specifically indicated, do not serve as members
of the Boards of Directors of those  entities.  The Boards of Directors have the
responsibility for creating and implementing the policies of CNL Group, Inc. and
its affiliated companies.



                                       36

<PAGE>



         Curtis B. McWilliams,  age 42, joined CNL Fund Advisors,  Inc. in April
1997 and  currently  serves  as  President  of CNL Fund  Advisors,  Inc.  and as
Executive Vice President of CNL American Properties Fund, Inc. In addition,  Mr.
McWilliams  serves  as  Executive  Vice  President  of CNL  Group,  Inc.  and as
President of CNL Financial Services,  Inc. and certain other subsidiaries of CNL
Group,  Inc. From September 1983 through March 1997, Mr. McWilliams was employed
by Merrill  Lynch.  From  January  1991 to August  1996,  Mr.  McWilliams  was a
managing director in the corporate  banking group of Merrill Lynch's  investment
banking division.  During this time, he was a senior  relationship  manager with
Merrill  Lynch and as such was  responsible  for a number of the  firm's  larger
clients.  From February 1990 to February  1993, he also served as co-head of one
of the  Industrial  Banking  Groups within Merrill  Lynch's  investment  banking
division and had administrative responsibility for a group of bankers and client
relationships, including the firm's transportation group. From September 1996 to
March  1997,  Mr.  McWilliams  served as  Chairman  of Merrill  Lynch's  Private
Advisory Services. Mr. McWilliams received a B.S.E. in Chemical Engineering from
Princeton  University  in 1977 and a Masters of Business  Administration  with a
concentration in finance from the University of Chicago in 1983.

         John T. Walker,  age 39, is the Chief  Operating  Officer and Executive
Vice President of CNL Fund Advisors, Inc. and CNL American Properties Fund, Inc.
and serves as Executive Vice President of CNL American Realty Fund, Inc. and CNL
Real  Estate  Advisors,  Inc.  Mr.  Walker  joined CNL Fund  Advisors,  Inc.  in
September  1994,  as  Senior  Vice  President,   responsible  for  Research  and
Development.  From May 1992 to May 1994,  he was  Executive  Vice  President for
Finance and Administration and Chief Financial Officer of Z Music, Inc., a cable
television  network which was  subsequently  acquired by Gaylord  Entertainment,
where he was responsible for overall financial and administrative management and
planning.  From January 1990 through April 1992, Mr. Walker was Chief  Financial
Officer of the First Baptist Church in Orlando, Florida. From April 1984 through
December  1989, he was a partner in the accounting  firm of Chastang,  Ferrell &
Walker,  P.A.,  where he was the  partner  in  charge  of audit  and  consulting
services, and from 1981 to 1984, Mr. Walker was a Senior Consultant/Audit Senior
at  Price  Waterhouse.  Mr.  Walker  is a Cum  Laude  graduate  of  Wake  Forest
University with a B.S. in Accountancy and is a certified public accountant.

         Lynn E. Rose,  age 49, a  certified  public  accountant,  has served as
Chief  Financial  Officer of CNL Group,  Inc. since December 1993, has served as
Secretary of CNL Group,  Inc. since 1987, and served as Controller of CNL Group,
Inc. from 1987 until  December  1993. In addition,  Ms. Rose has served as Chief
Financial Officer and Secretary of CNL Securities Corp. since July 1994. She has
served as Chief Operating Officer, Vice President and Secretary of CNL Corporate
Services,  Inc. since November 1994. Ms. Rose also has served as Chief Financial
Officer and Secretary of CNL Institutional Advisors, Inc. since its inception in
1990, served as a director and Secretary of CNL Realty Advisors,  Inc. since its
inception in 1991 through  December 31, 1997, at which time CNL Realty Advisors,
Inc.  merged with  Commercial  Net Lease Realty,  Inc.,  Treasurer of CNL Realty
Advisors, Inc. from 1991 to February 1996, Secretary and Treasurer of Commercial
Net Lease Realty, Inc. from 1992 to February 1996,  Secretary of CNL Income Fund
Advisors,  Inc.  since its inception in 1994 to December  1995,  and a director,
Secretary and Treasurer of CNL Fund Advisors,  Inc. since 1994 and has served as
a director,  Secretary and  Treasurer of CNL Real Estate  Advisors,  Inc.  since
January  1997.  Ms.  Rose also has  served as  Secretary  and  Treasurer  of CNL
American  Properties  Fund,  Inc.  since 1994,  and has served as Secretary  and
Treasurer of CNL American  Realty Fund, Inc. since 1996. Ms. Rose also currently
serves as Secretary  for  approximately  50  additional  corporations.  Ms. Rose
oversees the management information services, administration,  legal compliance,
accounting,   tenant  compliance,  and  reporting  for  over  300  corporations,
partnerships,  and joint ventures.  Prior to joining CNL, Ms. Rose was a partner
with Robert A. Bourne in the accounting firm of Bourne & Rose,  P.A.,  Certified
Public  Accountants.  Ms. Rose holds a B.A. in Sociology  from the University of
Central Florida. She was licensed as a certified public accountant in 1979.



                                       37

<PAGE>



         Jeanne A. Wall,  age 39, has served as Chief  Operating  Officer of CNL
Investment  Company and of CNL  Securities  Corp.  since  November  1994 and has
served as Executive Vice President of CNL Investment Company since January 1991.
In 1984,  Ms. Wall joined CNL  Securities  Corp.  In 1985,  Ms. Wall became Vice
President of CNL Securities Corp., in 1987, she became Senior Vice President and
in July 1997, she became  Executive  Vice  President of CNL Securities  Corp. In
this  capacity,  Ms. Wall serves as national  marketing  and sales  director and
oversees  the  national  marketing  plan  for the CNL  investment  programs.  In
addition, Ms. Wall oversees product development,  partnership administration and
investor  services for  programs  offered  through  participating  brokers,  and
corporate  communications for CNL Group, Inc. and Affiliates.  Ms. Wall also has
served  as  Senior  Vice  President  of  CNL  Institutional  Advisors,  Inc.,  a
registered  investment  advisor,  from 1990 to 1993,  as Vice  President  of CNL
Realty  Advisors,  Inc.  since  its  inception  in 1991  through  1997,  as Vice
President of  Commercial  Net Lease  Realty,  Inc.  from 1992 through  1997,  as
Executive Vice President of CNL Fund Advisors, Inc. since 1994, and as Executive
Vice President of CNL American  Properties  Fund,  Inc. since 1994. In addition,
Ms. Wall has served as Executive  Vice  President  of CNL Real Estate  Advisors,
Inc. since January 1997 and as Executive  Vice President of CNL American  Realty
Fund,  Inc.  since 1996. Ms. Wall holds a B.A. in Business  Administration  from
Linfield College and is a registered  principal of CNL Securities Corp. Ms. Wall
currently serves as a trustee on the board of the Investment Program Association
and on the Direct  Participation  Program committee for the National Association
of Securities Dealers (NASD).

         Steven D. Shackelford, age 34, has served as Chief Financial Officer of
CNL Fund Advisors,  Inc. since September 1996 and as Chief Financial  Officer of
CNL American  Properties Fund, Inc. since January 1997. Mr.  Shackelford  joined
CNL Fund Advisors,  Inc. in September 1996. From March 1995 to July 1996, he was
a  senior  manager  in the  national  office  of Price  Waterhouse  where he was
responsible  for advising  foreign clients seeking to raise capital and a public
listing in the United  States.  From August  1992 to March 1995,  he served as a
manager  in  the  Price  Waterhouse,   Paris,   France  office  serving  several
multinational  clients. Mr. Shackelford was an audit staff and audit senior from
1986 to 1992 in the Orlando, Florida office of Price Waterhouse. Mr. Shackelford
received  a  B.A.  in  Accounting,  with  honors,  and  a  Masters  of  Business
Administration   from  Florida  State  University  and  is  a  certified  public
accountant.

Compliance with Section 16(A) of the Exchange Act

         Based upon the  Partnership's  review of Forms 3 and 4 furnished to the
Partnership  during the year ended December 31, 1997,  the following  beneficial
owners of more than ten percent (prior to the reported transaction) of interests
in the  Partnership  reported  a  transaction  on  Form 5 which  was  previously
reportable on Form 4: each of James M. Seneff, Jr. and Robert A. Bourne untimely
filed a Form 5 on March 26, 1998, which reported a reportable  transaction which
occurred as of October 31, 1997, for which a Form 4 was not filed.


Item 11.  Executive Compensation

         Other than as  described in Item 13, the  Partnership  has not paid and
does not intend to pay any executive compensation to the General Partners or any
of their affiliates.  There are no compensatory plans or arrangements  regarding
termination of employment or change of control.




                                       38

<PAGE>



Item 12.  Security Ownership of Certain Beneficial Owners and Management

         As of March 13,  1998,  no person was known to the  Registrant  to be a
beneficial owner of more than five percent of the Units.

         The following  table sets forth,  as of March 13, 1998,  the beneficial
ownership interests of the General Partners in the Registrant.


        Title of Class               Name of Partner            Percent of Class

    General Partnership Interests     James M. Seneff, Jr.                45%
                                      Robert A. Bourne                    45%
                                      CNL Realty Corporation              10%
                                                                         ----
                                                                         100%

         Neither the General  Partners,  nor any of their  affiliates,  owns any
interest in the  Registrant,  except as noted above.  There are no  arrangements
which at a subsequent date may result in a change in control of the Registrant.


Item 13.  Certain Relationships and Related Transactions

         The  table  below   summarizes  the  types,   recipients,   methods  of
computation and amounts of compensation,  fees and distributions paid or payable
by the  Partnership  to the General  Partners and their  affiliates for the year
ended  December 31, 1997,  exclusive of any  distributions  to which the General
Partners or their  affiliates  may be entitled by reason of their  purchase  and
ownership of Units.
<TABLE>
<CAPTION>

==========================================================================================================================
                                                                                              Amount Incurred
         Type of Compensation                                                                  For the Year
              and Recipient                       Method of Computation                   Ended December 31, 1997
        -----------------------                   ---------------------                   -----------------------
<S> <C>
Acquisition fees and expenses to         Fees equal to 4.5% of gross                  Acquisition fees:  $ - 0 -
CNL Fund Advisors, Inc.                  offering proceeds to CNL Fund
                                         Advisors, Inc., plus reimburse-
                                         ment to the General Partners and             Acquisition expenses:
                                         their affiliates for expenses                $11,262
                                         actually incurred.

Reimbursement to CNL Fund                Operating expenses are reimbursed            Operating expenses incurred
Advisors, Inc. and affiliates for        at the lower of cost or 90 percent           on behalf of the Partnership:
operating expenses                       of the prevailing rate at which              $59,451
                                         comparable services could have
                                         been obtained in the same                    Accounting and administra-
                                         geographic area.  Affiliates of the          tive services:  $90,700
                                         General  Partners  from  time  to  time
                                         incur  certain  operating  expenses  on
                                         behalf of the Partnership for which the
                                         Partnership  reimburses  the affiliates
                                         without interest.
==========================================================================================================================
</TABLE>



                                       39

<PAGE>


<TABLE>
<CAPTION>


==========================================================================================================================
                                                                                              Amount Incurred
         Type of Compensation                                                                  For the Year
              and Recipient                       Method of Computation                   Ended December 31, 1997
        -----------------------                   ---------------------                   -----------------------
<S> <C>
Annual management fee to CNL             One percent of the sum of gross              $25,377
Fund Advisors, Inc.                      revenues (excluding noncash lease
                                         accounting adjustments) from Properties
                                         wholly  owned by the  Partnership  plus
                                         the  Partnership's  allocable  share of
                                         gross  revenues  of joint  ventures  in
                                         which the Partnership is a co-venturer.
                                         The  management  fee,  which  will  not
                                         exceed  competitive fees for comparable
                                         services in the same  geographic  area,
                                         may or may not be taken, in whole or in
                                         part  as  to  any  year,  in  the  sole
                                         discretion of CNL Fund  Advisors,  Inc.
                                         All or any  portion  of the  management
                                         fee not  taken  as to any  fiscal  year
                                         shall be deferred  without interest and
                                         may be taken in such other  fiscal year
                                         as  CNL  Fund   Advisors,   Inc.  shall
                                         determine. $10,482

Deferred, subordinated real estate       A deferred, subordinated real                $ - 0 -
disposition fee payable to CNL           estate disposition fee, payable
Fund Advisors, Inc                       upon sale of one or more
                                         Properties,  in an amount  equal to the
                                         lesser of (i) one-half of a competitive
                                         real estate  commission,  or (ii) three
                                         percent  of the  sales  price  of  such
                                         Property or Properties. Payment of such
                                         fee  shall  be made  only  if CNL  Fund
                                         Advisors,  Inc.  provides a substantial
                                         amount of services in  connection  with
                                         the sale of a  Property  or  Properties
                                         and shall be  subordinated  to  certain
                                         minimum    returns   to   the   Limited
                                         Partners.  However,  if the  net  sales
                                         proceeds    are    reinvested    in   a
                                         replacement   Property,  no  such  real
                                         estate disposition fee will be incurred
                                         until such replacement Property is sold
                                         and  the   net   sales   proceeds   are
                                         distributed.
==========================================================================================================================
</TABLE>





                                       40

<PAGE>


<TABLE>
<CAPTION>


==========================================================================================================================
                                                                                              Amount Incurred
         Type of Compensation                                                                  For the Year
              and Recipient                       Method of Computation                   Ended December 31, 1997
        -----------------------                   ---------------------                   -----------------------
<S> <C>
General Partners' deferred, sub-         A deferred, subordinated share               $ - 0 -
ordinated share of Partnership net       equal to five percent of
cash flow                                Partnership distributions of net
                                         cash flow, subordinated to certain
                                         minimum returns to the Limited
                                         Partners.

General Partners' deferred, sub-         A deferred, subordinated share               $ - 0 -
ordinated share of Partnership net       equal to five percent of
sales proceeds from a sale or            Partnership distributions of such
sales                                    net sales proceeds, subordinated to
                                         certain minimum returns to the
                                         Limited Partners.


==========================================================================================================================

</TABLE>







                                       41

<PAGE>



                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)      The following documents are filed as part of this report.

         1.  Financial Statements

                  Report of Independent Accountants

                  Balance Sheets at December 31, 1997 and 1996

                  Statements of Income for the year ended  December 31, 1997 and
                  1996 and the period  February  10,  1995  (date of  inception)
                  through December 31, 1995

                  Statements  of Partners'  Capital for the year ended  December
                  31,  1997 and 1996 and the period  February  10, 1995 (date of
                  inception) through December 31, 1995

                  Statements of Cash Flows for the year ended  December 31, 1997
                  and 1996 and the period  February 10, 1995 (date of inception)
                  through December 31, 1995

                  Notes to Financial Statements

         2.  Financial Statement Schedule

                  Schedule  III - Real Estate and  Accumulated  Depreciation  at
                  December 31, 1997

                  Notes  to  Schedule   III  -  Real   Estate  and   Accumulated
                  Depreciation at December 31, 1997

                  All other Schedules are omitted as the required information is
                  inapplicable  or is presented in the  financial  statements or
                  notes thereto.

         3.  Exhibits

               **3.1       Affidavit and  Certificate of Limited  Partnership of
                           CNL Income Fund XVIII,  Ltd. (Filed as Exhibit 3.2 to
                           the Registrant's Registration Statement on Form S-11,
                           No. 33-90998, incorporated herein by reference.)

               **3.2       Amended and Restated Agreement of Limited Partnership
                           of CNL Income Fund XVIII,  Ltd.  (Included as Exhibit
                           4.2 to  Form  10-K  filed  with  the  Securities  and
                           Exchange   Commission   on  March   21,   1996,   and
                           incorporated herein by reference.)

               **4.1       Affidavit and  Certificate of Limited  Partnership of
                           CNL Income Fund XVIII, Ltd.  (Included as Exhibit 3.2
                           to  Registration  Statement No.  33-90998-01  on Form
                           S-11 and incorporated herein by reference.)

               **4.2       Amended and Restated Agreement of Limited Partnership
                           of CNL Income Fund XVIII,  Ltd.  (Included as Exhibit
                           4.2 to  Form  10-K  filed  with  the  Securities  and
                           Exchange   Commission   on  March   21,   1996,   and
                           incorporated herein by reference.)

               **4.3       Form of Agreement  between CNL Income Fund XVII, Ltd.
                           and MMS Escrow and Transfer Agency,  Inc. and between
                           CNL  Income  Fund  XVIII,  Ltd.  and MMS  Escrow  and
                           Transfer  Agency,  Inc.  relating to the Distribution
                           Reinvestment  Plans  (Filed  as  Exhibit  4.4  to the
                           Registrant's Registration Statement on Form S-11, No.
                           33-90998, incorporated herein by reference.)

                                       42

<PAGE>



               **8.3       Opinion  of  Baker  &  Hostetler   regarding  certain
                           material   issues   relating   to  the   Distribution
                           Reinvestment  Plan  of CNL  Income  Fund  XVII,  Ltd.
                           (Filed as Exhibit 8.3 to  Amendment  No. Three to the
                           Registrant's Registration Statement on Form S-11, No.
                           33-90998, incorporated herein by reference.)

               **10.1      Management  Agreement  between CNL Income Fund XVIII,
                           Ltd. and CNL Fund Advisors, Inc. (Included as Exhibit
                           10.1 to Form  10-K  filed  with  the  Securities  and
                           Exchange   Commission   on  March   20,   1997,   and
                           incorporated herein by reference.)

               **10.2      Form of Joint Venture  Agreement  for Joint  Ventures
                           with Unaffiliated  Entities (Filed as Exhibit 10.2 to
                           the Registrant's Registration Statement on Form S-11,
                           No. 33-90998, incorporated herein by reference.)

               **10.3      Form of Joint Venture  Agreement  for Joint  Ventures
                           with  Affiliated  Programs  (Filed as Exhibit 10.3 to
                           the Registrant's Registration Statement on Form S-11,
                           No. 33-90998, incorporated herein by reference.)

               **10.4      Form of Development  Agreement (Filed as Exhibit 10.5
                           to the  Registrant's  Registration  Statement on Form
                           S-11,   No.   33-90998,    incorporated   herein   by
                           reference.)

               **10.5      Form of  Indemnification  and Put Agreement (Filed as
                           Exhibit   10.6  to  the   Registrant's   Registration
                           Statement on Form S-11,  No.  33-90998,  incorporated
                           herein by reference.)

               **10.6      Form  of  Unconditional   Guarantee  of  Payment  and
                           Performance   (Filed   as   Exhibit   10.7   to   the
                           Registrant's Registration Statement on Form S-11, No.
                           33-90998, incorporated herein by reference.)

               **10.7      Form  of  Lease  Agreement  for  Existing  Restaurant
                           (Filed   as   Exhibit   10.8   to  the   Registrant's
                           Registration  Statement on Form S-11,  No.  33-90998,
                           incorporated herein by reference.)

               **10.8      Form  of  Lease   Agreement  for   Restaurant  to  be
                           Constructed   (Filed   as   Exhibit   10.9   to   the
                           Registrant's Registration Statement on Form S-11, No.
                           33-90998, incorporated herein by reference.)

               **10.9      Form of Premises  Lease for Golden Corral  Restaurant
                           (Filed   as   Exhibit   10.10  to  the   Registrant's
                           Registration  Statement on Form S-11,  No.  33-90998,
                           incorporated herein by reference.)

               **10.10     Form of Agreement  between CNL Income Fund XVII, Ltd.
                           and MMS Escrow and Transfer Agency,  Inc. and between
                           CNL  Income  Fund  XVIII,  Ltd.  and MMS  Escrow  and
                           Transfer  Agency,  Inc.  relating to the Distribution
                           Reinvestment  Plans  (Filed  as  Exhibit  4.4  to the
                           Registrant's Registration Statement on Form S-11, No.
                           33-90998, incorporated herein by reference.)

               **10.11     Form of Cotenancy  Agreement with Unaffiliated Entity
                           (Filed as Exhibit  10.12 to Amendment  No. One to the
                           Registrant's Registration Statement on Form S-11, No.
                           33- 90998, incorporated herein by reference.)

               **10.12     Form of Cotenancy  Agreement with  Affiliated  Entity
                           (Filed as Exhibit  10.13 to Amendment  No. One to the
                           Registrant's Registration Statement on Form S-11, No.
                           33- 90998, incorporated herein by reference.)


                                       43

<PAGE>



               **10.13     Form of Registered  Investor Advisor Agreement (Filed
                           as  Exhibit   10.14  to  Amendment  No.  One  to  the
                           Registrant's Registration Statement on Form S-11, No.
                           33-90998, incorporated herein by reference.)

                27         Financial Data Schedule (Filed herewith.)

         (b)      The Registrant  filed no reports on Form 8-K during the period
                  October 1, 1997 through December 31, 1997.


**previously filed


                                       44

<PAGE>



                                   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 26th day of
March, 1998.

                                    CNL INCOME FUND XVII, LTD.

                                    By:      CNL REALTY CORPORATION
                                             General Partner

                                             /s/ Robert A. Bourne
                                             ROBERT A. BOURNE, President


                                    By:      ROBERT A. BOURNE
                                             General Partner

                                             /s/ Robert A. Bourne
                                             ROBERT A. BOURNE


                                    By:      JAMES M. SENEFF, JR.
                                             General Partner

                                             /s/ James M. Seneff, Jr.
                                             JAMES M. SENEFF, JR.


<PAGE>



         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 and on the dates indicated.
<TABLE>
<CAPTION>

==========================================================================================================================
               Signature                                  Title                                    Date
<S> <C>
/s/ Robert A. Bourne                     President,  Treasurer and  Director                  March 26, 1998
---------------------------------------- (Principal  Financial  and Accounting
Robert A. Bourne                         Officer)


/s/ James M. Seneff, Jr.                 Chief Executive  Officer, Chairman                   March 26, 1998
---------------------------------------- and Director (Principal Executive
James M. Seneff, Jr.                     Officer)

==========================================================================================================================
</TABLE>





<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 1997


<TABLE>
<CAPTION>

                                                                                           Costs Capitalized
                                                                                               Subsequent
                                                         Initial Cost                        To Acquisition
                                                                        Buildings
                                      Encum-                              and             Improve-      Carrying
                                     brances           Land           Improvements         ments         Costs
<S> <C>
Property the Partnership
  has Invested in Under
  Operating Leases:

    Arby's Restaurants:
      Muncie, Indiana                     -         $   242,759         $       -        $       -      $     -
      Schertz, Texas                      -             348,245            470,577               -            -
      Plainfield, Indiana                 -             296,025            557,809               -            -

    Boston Market Restaurants:
      Houston, Texas                      -             373,112            477,383               -            -
      Troy, Ohio                          -             327,924            571,730               -            -
      Long Beach, California              -             661,696                 -           217,883           -

    Burger King Restaurants:
      Harvey, Illinois                    -             489,340            734,010               -            -
      Chicago Ridge, Illinois             -             771,965                 -           699,556           -
      Lyons, Illinois                     -             887,767                 -           597,381           -

    Denny's Restaurants:
      Kentwood, Michigan                  -             287,732            626,865               -            -
      Mesquite, Nevada                    -             372,858                 -                -            -
      Pensacola, Florida                  -             305,509            670,990               -            -

    Fazoli's Restaurant:
      Warner Robins, Georgia              -             300,481                 -           421,898           -

    Golden Corral Family
      Steakhouse Restaurants:
        Orange Park, Florida              -             711,838          1,162,406               -            -
        Aiken, South Carolina             -             508,003                 -           987,046           -
        Weatherford, Texas                -             344,610                 -           891,747           -
        El Cajon, California              -             974,793                 -                -            -

    Jack in the Box Restaurants:
      Dinuba, California                  -             324,970                 -           509,982           -
      LaPorte, Texas                      -             355,929                 -           560,485           -
      El Dorado, California               -             617,416                 -           548,188           -

    Popeye's Famous Fried
      Chicken Restaurant:
        Warner Robins, Georgia            -             260,513                 -           330,100           -

    Wendy's Old Fashioned
      Hamburgers Restaurants:
        Knoxville, Tennessee              -             332,003                 -           489,610           -
        Livingston, Tennessee             -             261,703                 -                -            -
                                                    -----------         ----------       ----------     -------

                                          -         $10,357,191         $5,271,770       $6,253,876     $     -
                                                    ===========         ==========       ==========     =======
</TABLE>


<PAGE>










<TABLE>
<CAPTION>

                                                                                                                         Life
                                                                                                                       on Which
                     Gross Amount at Which Carried                                                                  Depreciation
                        at Close of Period (b)                                                                       in Latest
                            Buildings                                                  Date                             Income
                               and                                Accumulated         of Con-          Date          Statement is
          Land             Improvements           Total           Depreciation       struction       Acquired          Computed
       -----------         ------------        -----------        ------------       ---------       --------        ----------
<S> <C>





       $   242,759               (d)           $   242,759           (e)                1995           03/96            (e)
           348,245          $   470,577            818,822          24,045              1996           06/96            (c)
           296,025              557,809            853,834          22,058              1996           10/96            (c)


           373,112              477,383            850,495          24,392              1996           06/96            (c)
           327,924              571,730            899,654          27,425              1996           07/96            (c)
           661,696              217,883            879,579           7,800              1996           12/96            (c)


           489,340              734,010          1,223,350          44,560              1996           03/96            (c)
           771,965              699,556          1,471,521          38,204              1996           03/96            (c)
           887,767              597,381          1,485,148          12,925              1997           11/96            (c)


           287,732              626,865            914,597          37,311              1980           03/96            (c)
           372,858                (d)              372,858            (e)               1996           12/95            (e)
           305,509              670,990            976,499          31,390              1996           08/96            (c)


           300,481              421,898            722,379          16,298              1996           08/96            (c)



           711,838            1,162,406          1,874,244          70,673              1996           03/96            (c)
           508,003              987,046          1,495,049          51,155              1996           04/96            (c)
           344,610              891,747          1,236,357          39,518              1996           03/96            (c)
           974,793                (d)              974,793            (e)               1997           12/96            (e)


           324,970              509,982            834,952          22,926              1996           05/96            (c)
           355,929              560,485            916,414          23,816              1996           07/96            (c)
           617,416              548,188          1,165,604          23,092              1996           07/96            (c)



           260,513              330,100            590,613          13,174              1996           08/96            (c)



           332,003              489,610            821,613          23,206              1996           05/96            (c)
           261,703                (d)              261,703           (e)                1996           06/96            (e)
       -----------          -----------        -----------        --------

       $10,357,191          $11,525,646        $21,882,837        $553,968
       ===========          ===========        ===========        ========

                                       F-1
</TABLE>

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 1997


<TABLE>
<CAPTION>

                                                                                                        Costs Capitalized
                                                                                                            Subsequent
                                                                       Initial Cost                       To Acquisition
                                                                                   Buildings
                                                  Encum-                              and             Improve-      Carrying
                                                 brances            Land          Improvements         ments         Costs
<S> <C>
Property in Which the Partner-
  ship has a 19.73% Interest
  as Tenants-in-Common and has
  Invested in Under an
  Operating Lease:

    Boston Market Restaurant:
      Fayetteville, North Carolina                    -          $  377,800         $  587,700       $       -       $    -
                                                                 ==========         ==========       ==========      ======

Property in Which the Partnership
  has a 27.5% Interest as Tenants-in-Common
  and has Invested in Under an Operating Lease:

    Black-eyed Pea Restaurant:
      Corpus Christi, Texas                           -          $  715,052         $  726,004       $       -       $    -
                                                                 ==========         ==========       ==========      ======

Property in Which the Partnership
  has a 36.97% Interest as
  Tenants-in-Common and has
  Invested in Under an
  Operating Lease:

    Burger King Restaurant:
      Akron, Ohio                                     -          $  355,594         $  517,030       $       -       $    -
                                                                 ==========         ==========       ==========      ======

Property in Which the  Partnership has
  a 21% Interest as Tenants-in-Common and
  has Invested in Under an Operating Lease:

    Jack in the Box Restaurant:
      Mansfield, Texas                                -          $  297,295         $  482,914       $       -       $    -
                                                                 ==========         ==========       ==========      ======

Property in Which the Partnership
  has a 60.06% Interest as
  Tenants-in-Common and has
  Invested in Under an Operating
  Lease:

    Taco Bell Restaurant:
      Kingston, Tennessee                             -          $  180,555         $  332,370       $       -       $    -
                                                                 ==========         ==========       ==========      ======
</TABLE>





<PAGE>









<TABLE>
<CAPTION>


                                                                                                                         Life
                                                                                                                       on Which
                    Gross Amount at Which Carried                                                                   Depreciation
                        at Close of Period (b)                                                                        in Latest
                            Buildings                                                  Date                             Income
                               and                                Accumulated         of Con-          Date          Statement is
          Land             Improvements           Total           Depreciation       struction       Acquired          Computed
       -----------         ------------        -----------        ------------       ---------       --------        ----------
<S> <C>







        $  377,800           $  587,700         $  965,500        $ 24,358              1996           10/96            (g)
        ==========           ==========         ==========        ========







        $  715,052           $  726,004         $1,441,056        $ 22,448              1992           01/97            (c)
        ==========           ==========         ==========        ========








        $  355,594           $  517,030         $  872,624        $ 15,988              1970           01/97            (c)
        ==========           ==========         ==========        ========







        $  297,295           $  482,914         $  780,209        $ 12,866              1997           02/97            (c)
        ==========           ==========         ==========        ========








        $  180,555           $  332,370         $  512,925       $     983              1997           09/97            (c)
        ==========           ==========         ==========       =========

</TABLE>



                                       F-2

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 1997


<TABLE>
<CAPTION>

                                                                                                   Costs Capitalized
                                                                                                        Subsequent
                                                                    Initial Cost                      To Acquisition
                                                                               Buildings
                                              Encum-                              and             Improve-      Carrying
                                             brances            Land          Improvements         ments         Costs
<S> <C>
Properties the Partnership
  has Invested in Under
  Direct Financing Leases:

    Arby's Restaurant:
      Muncie, Indiana                             -                  -             629,847               -            -

    Denny's Restaurant:
      Mesquite, Nevada                            -                  -                  -           898,723           -

    Golden Corral Family
      Steakhouse Restaurant:
        El Cajon, California                      -                  -                  -         1,119,438           -

    Wendy's Old Fashioned
      Hamburgers Restaurant:
        Livingston, Tennessee                     -                  -                  -           455,575           -
                                                             ----------         ----------       ----------      ------

                                                             $       -          $  629,847       $2,473,736      $    -
                                                             ==========         ==========       ==========      ======

</TABLE>

<PAGE>









<TABLE>
<CAPTION>


                                                                                                                         Life
                                                                                                                       on Which
                   Gross Amount at Which Carried                                                                     Depreciation
                       at Close of Period (b)                                                                         in Latest
                            Buildings                                                  Date                             Income
                               and                                Accumulated         of Con-          Date          Statement is
          Land             Improvements           Total           Depreciation       struction       Acquired          Computed
       -----------         ------------        -----------        ------------       ---------       --------        ----------
<S> <C>





                -             (d)                  (d)                 (e)             1995           03/96               (e)


                -             (d)                  (d)                 (e)             1996           12/95               (e)



                -             (d)                  (d)                 (e)             1997           12/96               (e)



                -             (d)                  (d)                 (e)             1996           06/96               (e)



</TABLE>




                                       F-3

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

        NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 1997



(a)      Transactions in real estate and accumulated  depreciation  during 1997,
         1996 and 1995 are summarized as follows:
<TABLE>
<CAPTION>

                                                                                     Accumulated
                                                                      Cost           Depreciation
<S> <C>
                    Properties the Partnership has
                      Invested in Under Operating
                      Leases:

                        Balance, December 31, 1994                $        -          $        -
                        Acquisitions                                  402,244                  -
                        Depreciation expense                               -                   -
                                                                  -----------         ----------

                        Balance, December 31, 1995                    402,244                  -
                        Acquisitions                               21,138,783                  -
                        Depreciation expense                               -              176,995
                                                                  -----------         -----------

                        Balance, December 31, 1996                 21,541,027             176,995
                        Acquisitions                                  341,810                  -
                        Depreciation expense                               -              376,973
                                                                  -----------         -----------

                        Balance, December 31, 1997                $21,882,837         $   553,968
                                                                  ===========         ===========


                    Property in Which the Partnership
                      has a 19.73% Interest as Tenants-
                      in-Common and has Invested in
                      Under an Operating Lease:

                        Balance, December 31, 1995                $        -          $        -
                        Acquisition                                   965,500                  -
                        Depreciation expense                               -                4,768
                                                                  -----------         -----------

                        Balance, December 31, 1996                    965,500               4,768
                        Acquisition                                                            -
                        Depreciation expense                               -               19,590
                                                                  -----------         -----------

                        Balance, December 31, 1997                $   965,500         $    24,358
                                                                  ===========         ===========


                    Property of Joint Venture in Which
                      the Partnership has a 27.5%
                      Interest and has Invested in
                      Under an  Operating Lease:

                        Balance, December 31, 1996                $        -          $        -
                        Acquisition                                 1,441,056                  -
                        Depreciation expense                               -               22,448
                                                                  -----------         -----------

                        Balance, December 31, 1997                $ 1,441,056         $    22,448
                                                                  ===========         ===========


</TABLE>


                                       F-4

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

               NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
                            DEPRECIATION - CONTINUED

                                December 31, 1997
<TABLE>
<CAPTION>


                                                                                          Accumulated
                                                                         Cost             Depreciation
<S> <C>
                    Property in Which the Partnership
                      has a 36.97% Interest as
                      Tenants-in-Common and has
                      Invested in Under an Operating
                      Lease:

                        Balance, December 31, 1996                   $        -            $        -
                        Acquisition                                      872,624                    -
                        Depreciation expense                                  -                 15,988
                                                                     -----------           -----------

                        Balance, December 31, 1997                   $   872,624           $    15,988
                                                                     ===========           ===========


                    Property of Joint Venture in
                      Which the Partnership has
                      an 21% Interest and has
                      Invested in Under an Operating
                      Lease:

                        Balance, December 31, 1996                   $        -            $        -
                        Acquisition                                      780,209                    -
                        Depreciation expense                                  -                 12,866
                                                                     -----------           -----------

                        Balance, December 31, 1997                   $   780,209           $    12,866
                                                                     ===========           ===========


                    Property of Joint Venture in Which
                      the Partnership has a 60.06%
                      Interest and Invested in Under
                      an Operating Lease:

                        Balance, December 31, 1996                   $        -            $        -
                        Acquisition                                      512,925                    -
                        Depreciation expense                                  -                    983
                                                                     -----------           -----------

                        Balance, December 31, 1997                   $   512,925           $       983
                                                                     ===========           ===========
</TABLE>


(b)        As of December 31, 1997, the aggregate  cost of the Properties  owned
           by the  Partnership  and the joint  venture  for  federal  income tax
           purposes was  $24,986,419 and  $2,205,549,  respectively.  All of the
           leases  are  treated  as  operating  leases  for  federal  income tax
           purposes.

(c)        Depreciation expense is computed for buildings and improvements based
           upon estimated lives of 30 years.

(d)        For financial  reporting  purposes,  certain  components of the lease
           relating  to  land  and  building  have  been  recorded  as a  direct
           financing lease.  Accordingly,  costs relating to these components of
           this lease are not shown.




                                       F-5

<PAGE>



                           CNL INCOME FUND XVII, LTD.
                         (A Florida Limited Partnership)

               NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
                            DEPRECIATION - CONTINUED

                                December 31, 1997


(e)        For financial reporting  purposes,  the portion of the lease relating
           to the building has been recorded as a direct  financing  lease.  The
           cost of the building has been  included in net  investment  in direct
           financing leases; therefore, depreciation is not applicable.

(f)        During the year ended  December 31, 1996,  the  Partnership  incurred
           acquisition fees totalling $1,093,639 paid to CNL Fund Advisors, Inc.
           During the years ended  December 31, 1997 and 1996,  the  Partnership
           purchased land and buildings from  affiliates of the  Partnership for
           aggregate   costs   of   approximately   $718,932   and   $1,667,100,
           respectively.  Such  amounts are  included in land and  buildings  on
           operating   leases,   net  investment  in  direct  financing  leases,
           investment in joint ventures and other assets at December 31, 1997.





                                       F-6

<PAGE>



                                    EXHIBITS


<PAGE>



                                  EXHIBIT INDEX


Exhibit Number                                                            Page

    **3.1         Affidavit and Certificate of Limited Partnership of CNL Income
                  Fund XVIII,  Ltd.  (Filed as Exhibit  3.2 to the  Registrant's
                  Registration   Statement   on   Form   S-11,   No.   33-90998,
                  incorporated herein by reference.)

    **3.2         Amended and Restated  Agreement of Limited  Partnership of CNL
                  Income Fund XVIII, Ltd.  (Included as Exhibit 4.2 to Form 10-K
                  filed with the Securities and Exchange Commission on March 21,
                  1996, and incorporated herein by reference.)

    **4.1         Affidavit and Certificate of Limited Partnership of CNL Income
                  Fund XVIII,  Ltd.  (Included  as Exhibit  3.2 to  Registration
                  Statement No. 33-90998-01 on Form S-11 and incorporated herein
                  by reference.)

    **4.2         Amended and Restated  Agreement of Limited  Partnership of CNL
                  Income Fund XVIII, Ltd.  (Included as Exhibit 4.2 to Form 10-K
                  filed with the Securities and Exchange Commission on March 21,
                  1996, and incorporated herein by reference.)

    **4.3         Form of Agreement  between CNL Income Fund XVII,  Ltd. and MMS
                  Escrow and Transfer  Agency,  Inc. and between CNL Income Fund
                  XVIII, Ltd. and MMS Escrow and Transfer Agency,  Inc. relating
                  to the Distribution  Reinvestment  Plans (Filed as Exhibit 4.4
                  to the Registrant's  Registration  Statement on Form S-11, No.
                  33-90998, incorporated herein by reference.)

    **8.3         Opinion of Baker & Hostetler regarding certain material issues
                  relating to the Distribution  Reinvestment  Plan of CNL Income
                  Fund XVII,  Ltd.  (Filed as Exhibit 8.3 to Amendment No. Three
                  to the Registrant's  Registration  Statement on Form S-11, No.
                  33-90998, incorporated herein by reference.)

    **10.1        Management  Agreement  between CNL Income Fund XVIII, Ltd. and
                  CNL Fund Advisors, Inc. (Included as Exhibit 10.1 to Form 10-K
                  filed with the Securities and Exchange Commission on March 20,
                  1997, and incorporated herein by reference.)

    **10.2        Form of  Joint  Venture  Agreement  for  Joint  Ventures  with
                  Unaffiliated   Entities   (Filed  as   Exhibit   10.2  to  the
                  Registrant's   Registration   Statement  on  Form  S-11,   No.
                  33-90998, incorporated herein by reference.)

    **10.3        Form of  Joint  Venture  Agreement  for  Joint  Ventures  with
                  Affiliated Programs (Filed as Exhibit 10.3 to the Registrant's
                  Registration   Statement   on   Form   S-11,   No.   33-90998,
                  incorporated herein by reference.)

    **10.4        Form of  Development  Agreement  (Filed as Exhibit 10.5 to the
                  Registrant's   Registration   Statement  on  Form  S-11,   No.
                  33-90998, incorporated herein by reference.)

    **10.5        Form of  Indemnification  and Put Agreement  (Filed as Exhibit
                  10.6 to the Registrant's  Registration Statement on Form S-11,
                  No. 33-90998, incorporated herein by reference.)


                                        i

<PAGE>


    **10.6        Form of  Unconditional  Guarantee  of Payment and  Performance
                  (Filed  as  Exhibit  10.7  to  the  Registrant's  Registration
                  Statement on Form S-11, No. 33-90998,  incorporated  herein by
                  reference.)

    **10.7        Form of Lease  Agreement  for  Existing  Restaurant  (Filed as
                  Exhibit  10.8 to the  Registrant's  Registration  Statement on
                  Form S-11, No. 33-90998, incorporated herein by reference.)

    **10.8        Form of  Lease  Agreement  for  Restaurant  to be  Constructed
                  (Filed  as  Exhibit  10.9  to  the  Registrant's  Registration
                  Statement on Form S-11, No. 33-90998,  incorporated  herein by
                  reference.)

    **10.9        Form of Premises Lease for Golden Corral  Restaurant (Filed as
                  Exhibit 10.10 to the  Registrant's  Registration  Statement on
                  Form S-11, No. 33-90998, incorporated herein by reference.)

    **10.10       Form of Agreement  between CNL Income Fund XVII,  Ltd. and MMS
                  Escrow and Transfer  Agency,  Inc. and between CNL Income Fund
                  XVIII, Ltd. and MMS Escrow and Transfer Agency,  Inc. relating
                  to the Distribution  Reinvestment  Plans (Filed as Exhibit 4.4
                  to the Registrant's  Registration  Statement on Form S-11, No.
                  33-90998, incorporated herein by reference.)

    **10.11       Form of Cotenancy Agreement with Unaffiliated Entity (Filed as
                  Exhibit  10.12  to  Amendment  No.  One  to  the  Registrant's
                  Registration   Statement   on   Form   S-11,   No.   33-90998,
                  incorporated herein by reference.)

    **10.12       Form of Cotenancy  Agreement with Affiliated  Entity (Filed as
                  Exhibit  10.13  to  Amendment  No.  One  to  the  Registrant's
                  Registration   Statement   on   Form   S-11,   No.   33-90998,
                  incorporated herein by reference.)

    **10.13       Form  of  Registered  Investor  Advisor  Agreement  (Filed  as
                  Exhibit  10.14  to  Amendment  No.  One  to  the  Registrant's
                  Registration   Statement   on   Form   S-11,   No.   33-90998,
                  incorporated herein by reference.)

     27           Financial Data Schedule (Filed herewith.)


**previously filed

                                       ii