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, 1996

                                      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  33-90998

                           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, Suite 500
                            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. [x]

         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, which was under construction. During the year ended December
31, 1996, the Partnership completed construction of the Property acquired in
1995, and acquired 23 additional Properties (two of which were under
construction as of December 31, 1996), 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. As a
result of the above transactions, as of December 31, 1996, the Partnership had
acquired 24 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. During the period January 1, 1997, through March 6, 1997, the
Partnership had used the majority of its remaining net offering proceeds to
acquire two additional Properties, as tenants-in-common, with two separate
affiliates. In addition, the Partnership entered into a joint venture, CNL
Mansfield Joint Venture, with an affiliate of the General Partners, to own an
approximate 21 percent interest in the joint venture.

         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 some 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 2016. All leases are on a triple-net basis, with the lessee 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 $240,800. 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

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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.

         The leases for the two Properties acquired between January 1, 1997 and
March 6, 1997, as tenants-in-common, with separate affiliates, and the lease for
the Property acquired by CNL Mansfield Joint Venture, are substantially the same
as those described above.

Major Tenants

         During 1996, four lessees, or group of affiliated lessees, of the
Partnership, (i) Golden Corral Corporation, (ii) National Restaurant
Enterprises, Inc., (iii) DenAmerica Corp. and (iv) RTM Indianapolis, Inc. and
RTM Southwest Texas, Inc., (hereinafter referred to as RTM, Inc.), each
contributed more than ten percent of the Partnership's total rental income. As
of December 31, 1996, Golden Corral Corporation, National Restaurant
Enterprises, Inc., DenAmerica Corp. and RTM, Inc. were each lessee under leases
relating to three restaurants. It is anticipated that based on the minimum
rental payments required by the leases, Golden Corral Corporation, DenAmerica
Corp. and Foodmaker, Inc. each will contribute more than ten percent of the
Partnership's total rental income in 1997 and subsequent years. In addition,
four Restaurant Chains, Golden Corral Family Steakhouse Restaurants, ("Golden
Corral"), Arby's, Denny's and Burger King, each accounted for more than ten
percent of the Partnership's total rental income during 1996. In subsequent
years, it is anticipated that Golden Corral, Jack in the Box, Denny's, 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 affect the Partnership's income. As of December 31, 1996, 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 October 1996, the Partnership entered into an agreement to hold a
Boston Market Property 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 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. The Partnership owns an 80 percent interest
in this joint venture.

         The joint venture arrangement provides for the Partnership and its
joint venture partner to share in all costs and benefits associated with the
joint venture in accordance with their respective percentage interests in the
joint venture. The Partnership and its joint venture partner are also jointly
and severally liable for all debts, obligations and other liabilities of the
joint ventures.

         CNL/GC El Cajon 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
partner to dissolve the joint venture.

         The Partnership has management control of CNL/GC El Cajon Joint
Venture. The joint venture agreement restricts 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

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<PAGE>

the venturers cannot agree, on the same terms and conditions as any offer from a
third party to purchase such joint venture interest.

         Net cash flow from operations of CNL/GC El Cajon is distributed 80
percent to the Partnership and 20 percent to the other joint venture partner.
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 agreements, during the period
January 1, 1997 through March 6, 1997, the Partnership entered into two
agreements to hold a Black-eyed Pea Property and a Burger King Property, 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
Black-eyed Pea and Burger King Properties, respectively. In addition, the
Partnership also acquired a 21 percent interest in CNL Mansfield Joint Venture,
with an affiliate of the General Partners, to purchase and hold one Property.

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, 1996, the Partnership owned 24 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.

         During the period January 1, 1997 through March 6, 1997, the
Partnership acquired two additional Properties, as tenants-in-common, with two
separate affiliates, for cash, at a total cost of approximately $717,300. In
addition, the Partnership entered into a joint venture, CNL Mansfield Joint
Venture, with an affiliate of the General Partners. In conjunction therewith,
the Partnership contributed $163,964 in exchange for an approximate 21 percent
interest in the joint venture. The leases of these three Properties are
substantially the same as the leases described in Item 1. Business - Leases.

Description of Properties

         Land. As of December 31, 1996, 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. As of December 31, 1996, 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, 1996 (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 in 2016) and
the average minimum base annual rent is approximately $141,700 (ranging from
approximately $123,200 to $155,000).

         DenAmerica Corp. leases three Denny's restaurants. The initial term of
each lease is 20 years (expiring between 2015 and 2016) and the average minimum
base annual rent is approximately $110,400 (ranging from approximately $98,700
to $130,000).

         RTM, Inc. leases three Arby's restaurants. The initial term of each
lease is 20 years (expiring in 2016) and the average minimum base annual rent is
approximately $82,300 (ranging from approximately $79,400 to $84,700).

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

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<PAGE>

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.


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 6, 1997, there were 1,613 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 1996 other than pursuant
to the Plan. No transfer of Units took place during the period February 10, 1995
(date of inception) through December 31, 1995. A total of 4,000 Units were
transferred other than pursuant to the Plan for the year ended December 31,
1996.

                                           High      Low     Average
                                          ------   ------   --------
         First Quarter                       (1)      (1)        (1)
         Second Quarter                      (1)      (1)        (1)
         Third Quarter                       (1)      (1)        (1)
         Fourth Quarter                   $10.00   $10.00     $10.00

(1)      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 year ended December 31, 1996 and the period February 10, 1995
(date of inception) through December 31, 1995, the Partnership declared cash
distributions of $1,166,689 and $28,275, respectively, to the Limited Partners.
No amounts distributed to partners for the year ended December 31, 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. 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 following the
first admission of Limited Partners to the Partnership. These amounts include
monthly distributions made in arrears for the Limited Partners electing to
receive such distributions on this basis.

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         Quarter Ended                     1996          1995
         -------------                  ----------     ---------

         March 31                         $115,044   $     -
         June 30                           211,692         -
         September 30                      349,869         -
         December 31                       490,084       28,275

         For the period February 10, 1995 (date of inception) through November
3, 1995, the Partnership did not make any cash distributions because operations
had not commenced.

         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


                                                                 February 10,
                                                                  1995 (date
                                                                 of inception)
                                              Year Ended           through
                                              December 31,        December 31,
                                                  1996              1995 (1)
                                              --------------      ------------

Revenues (2)                                    $  1,444,503      $    12,153
Net income                                         1,095,759            8,351
Cash distributions declared                        1,166,689           28,275
Net income per Unit (3)                                 0.37              .02
Cash distributions declared per Unit (3)                0.39              .08
Weighted average number of Limited Partner
   Units outstanding (3)                           2,999,513          340,780

                                                      As of December 31,
                                                   1996               1995
                                                 ------------     -----------
Total assets                                     $28,675,007       $4,878,421
Partners' capital                                 26,320,146        4,642,233

(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 the joint venture.

(3)      Represents the weighted average number of Units outstanding during the
         period the Partnership was operational.

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

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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 lessee
generally responsible for all repairs and maintenance, property taxes, insurance
and utilities. As of December 31, 1996, the Partnership owned 24 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.

         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 which was under construction at December 31, 1995, and to pay
acquisition fees and certain acquisition expenses. During 1996, the Partnership
completed construction of the Property acquired in 1995 and acquired 23
additional Properties (two which were under construction as of December 31,
1996), 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. As a result of the above
transactions, as of December 31, 1996, the Partnership had acquired 24
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, and paid acquisition fees totalling $1,350,000 to an
affiliate of the General Partners.

         As of March 6, 1997, the Partnership had used the majority of its
remaining net offering proceeds to acquire two additional Properties, as
tenants-in-common, with two separate affiliates. In addition, the Partnership
entered into a joint venture, CNL Mansfield Joint Venture, with an affiliate of
the General Partners, to own an approximate 21 percent interest in the joint
venture. The Partnership is presently negotiating to acquire one additional
Property, but as of March 6, 1997, had not acquired such Property.

         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 venture and interest received, less cash paid for expenses). Cash from
operations was $1,232,948 and $9,012 for the year ended December 31, 1996 and
the period February 10, 1995 (date of inception) through December 31, 1995,
respectively. The increase in cash from operations for the year ended December
31, 1996, is primarily a result of changes in income and expenses as discussed
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

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<PAGE>

certain operating expenses on behalf of the Partnership for which the
Partnership reimburses the affiliates without interest.

         Currently, uninvested offering proceeds and rental income from the
Partnership's Properties 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, 1996, the Partnership had $4,716,719 invested in such short-term
investments as compared to $4,198,859 at December 31, 1995. The increase in the
amount invested in short-term investments reflects Limited Partner contributions
derived from the sale of Units during 1996. The funds remaining at December 31,
1996, after payment of accrued acquisition and construction costs and other
liabilities, will be used to purchase and develop the additional Properties
described above, to pay Limited Partner distributions and to meet the
Partnership's working capital and other needs.

         During 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, $69,835 and $30,424, respectively, for
certain acquisition expenses and $64,906 and $790, respectively, for certain
operating expenses. As of December 31, 1996 and 1995, the Partnership owed
$17,153 and $97,187, respectively, to related parties for such amounts,
accounting and administrative services and management fees. As of March 6, 1997,
the Partnership had reimbursed the affiliates all such amounts. Other
liabilities, including distributions payable, increased to $2,197,032 at
December 31, 1996, from $139,001 at December 31, 1995, as a result of an
increase in distributions payable to Limited Partners, costs incurred with
respect to the Properties under construction and unpaid at December 31, 1996,
and an increase in rents paid in advance and deferred rental income at December
31, 1996. 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 $1,166,689 and $28,275 for the year ended December
31, 1996 and the period February 10, 1995 (date of inception) through December
31, 1995, respectively. This represents distributions of $0.39 and $0.08 per
Unit for each of these periods, respectively. No amounts distributed or to be
distributed to the Limited Partners for the year ended December 31, 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. Partnership net income is expected to increase throughout
1997, as rental income increases, due to the acquisition of additional
Properties and due to the fact that the Properties that were under construction
at December 31, 1996, will become operational. Accordingly, the General Partners
believe that any anticipated decrease in the Partnership's liquidity in 1997,
due to its investment of available net offering proceeds in additional
Properties and the payment of construction costs relating to the Properties
under construction at December 31, 1996, will not have an adverse effect on the
Partnership's operations during 1997.

         Due to low operating expenses, ongoing cash flow and the fact that the
Partnership does not enter into a commitment to purchase a Property until
sufficient cash is available for such purchase, 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.

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<PAGE>

         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. In addition, 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. As of December 31,
1996, the Partnership owned, either directly or through joint venture
arrangements, 24 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
$240,800. 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.

         During the year ended December 31, 1996, the Partnership earned
$1,185,279 in rental income from operating leases, earned income from direct
financing leases and contingent rental income from the 21 wholly owned
Properties which were operational at December 31, 1996. In addition, for the
year ended December 31, 1996, the Partnership earned $4,834 attributable to net
income earned by the unconsolidated joint venture in which the Partnership is a
co-venturer. Because the Partnership did not commence significant operations
until it received the minimum offering proceeds on November 3, 1995, and has not
yet acquired all of its Properties, Partnership revenues for the year ended
December 31, 1996, represent only a portion of revenues which the Partnership is
expected to earn during the full year in which the Partnership's Properties are
operational.

         During the year ended December 31, 1996 and the period February 10,
1995 (date of inception) through December 31, 1995, four lessees, or group of
affiliated lessees, of the Partnership, (i) Golden Corral Corporation, (ii)
National Restaurant Enterprises, Inc., (iii) DenAmerica Corp. and (iv) RTM
Indianapolis, Inc. and RTM Southwest Texas, Inc., (hereinafter referred to as
RTM, Inc.), each contributed more than ten percent of the Partnership's total
rental income. As of December 31, 1996, Golden Corral Corporation, National
Restaurant Enterprises, Inc., DenAmerica Corp. and RTM, Inc. were each lessee
under leases relating to three restaurants. It is anticipated that based on the
minimum rental payments required by the leases, Golden Corral Corporation,
DenAmerica Corp. and Foodmaker, Inc. each will contribute more than ten percent
of the Partnership's total rental income in 1997 and subsequent years. In
addition, four Restaurant Chains, Golden Corral Family Steakhouse Restaurants,
("Golden Corral"), Arby's, Denny's and Burger King, each accounted for more than
ten percent of the Partnership's total rental income during 1996. In subsequent
years, it is anticipated that Golden Corral, Jack in the Box, Denny's, 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 affect the Partnership's income.

         During the year ended December 31, 1996 and the period February 10,
1995 (date of inception) through December 31, 1995, the Partnership also earned
$244,406 and $12,153, respectively, in interest income from investments in money
market accounts or other short-term, highly liquid investments. The increase in
interest income during 1996, as compared to 1995, is primarily attributable to
the increase in the amount of funds invested in short-term liquid investments as
a result of additional Limited Partner contributions during 1996. As of December
31, 1996, the majority of these funds had been invested in Properties;
therefore, the Partnership expects interest income to decrease in 1997.

         Operating expenses, including depreciation and amortization expense,
were $348,744 and $3,802 for the year ended December 31, 1996 and the period
February 10, 1995 (date of inception) through December 31, 1995, respectively.
The increase in operating expenses during 1996 is primarily attributable to an
increase in depreciation expense as the result of the acquisition of additional
Properties during 1996, and the fact that the Property acquired during 1995
became operational during 1996. Operating expenses also increased during 1996,
as compared to 1995,

                                       9

<PAGE>

as a result of an increase in administrative expenses associated with operating
the Partnership and its Properties and an increase in management fees as a
result of the increase in rental revenues, as described above.

         Effective January 1, 1996, the Partnership adopted Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The statement
requires that an entity review long-lived assets and certain identifiable
intangibles, to be held and used, for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. Adoption of this standard had no material effect on the
Partnership's financial position or results of operations.

         The Partnership's leases as of December 31, 1996, 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                                         18

                                       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, 1996 and 1995, and the results of its operations and its cash
flows for the year ended December 31, 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.



Orlando, Florida
February 10, 1997

                                       12

<PAGE>


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

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                  December 31,
             ASSETS                                         1996               1995
             ------                                      -----------       ------------
<S> <C>
Land and buildings on operating
  leases, less accumulated
  depreciation                                           $21,364,032       $   402,244
Net investment in direct financing
  leases                                                   1,982,164                -
Investment in joint venture                                  201,171                -
Cash and cash equivalents                                  4,716,719         4,198,859
Receivables                                                   63,253               410
Organization costs, less accumulated
  amortization of $2,309 and $309                              7,691             9,691
Accrued rental income                                        167,216                -
Other assets                                                 172,761           267,217
                                                         -----------       -----------

                                                         $28,675,007       $ 4,878,421
                                                         ===========       ===========

LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                                         $     2,985       $    42,609
Accrued construction costs payable                         1,560,712            69,316
Distributions payable                                        490,084            27,076
Due to related parties                                        17,153            97,187
Rents paid in advance                                         52,769                -
Deferred rental income                                        90,482                -
                                                         -----------       ----------
  Total liabilities                                        2,214,185           236,188

Commitments (Note 11)

Minority interest                                            140,676                -

Partners' capital                                         26,320,146         4,642,233
                                                         -----------       -----------

                                                         $28,675,007       $ 4,878,421
                                                         ===========       ===========
</TABLE>



                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,
                                                            1996               1995
                                                        ------------       ------------
<S> <C>
Revenues:
  Rental income from operating
    leases                                              $1,029,891          $       -
  Earned income from direct
    financing leases                                       130,745                  -
  Contingent rental income                                  24,643                  -
  Interest                                                 244,406              12,153
  Other income                                               9,984                  -
                                                        ----------          ---------
                                                         1,439,669              12,153
                                                        ----------          ----------

Expenses:
  General operating and
    administrative                                         144,728               3,360
  Professional services                                     14,326                 133
  Management fee to related party                           10,482                  -
  Depreciation and amortization                            179,208                 309
                                                        ----------          ----------
                                                           348,744               3,802
                                                        ----------          ----------

Income Before Equity in Earnings
  of Unconsolidated Joint Venture                        1,090,925               8,351

Equity in Earnings of Unconsoli-
  dated Joint Venture                                        4,834                  -
                                                        ----------          ---------

Net Income                                              $1,095,759          $    8,351
                                                        ==========          ==========

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

                                                        $1,095,759          $    8,351
                                                        ==========          ==========

Net Income Per Limited Partner
  Unit                                                  $     0.37          $     0.02
                                                        ==========          ==========

Weighted Average Number of
  Limited Partner Units
  Outstanding                                            2,999,513             340,780
                                                        ==========          ==========
</TABLE>


                See accompanying notes to financial statements.

                                       14

<PAGE>


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

                        STATEMENTS OF PARTNERS' CAPITAL

                  Year Ended December 31, 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 ($0.39 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
                                     ======   =======      ===========    ===========    ==========    ===========    ===========
</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,
                                                          1996               1995
                                                      ------------       ------------
<S> <C>
Increase (Decrease) in Cash and Cash
  Equivalents:

    Cash Flows From Operating Activities:
      Cash received from tenants                      $  1,149,196      $         -
      Distributions from unconsolidated
        joint venture                                        4,985                -
      Interest received                                    244,406            12,153
      Cash paid for expenses                              (165,639)           (3,141)
                                                      ------------      ------------
          Net cash provided by operating
            activities                                   1,232,948             9,012
                                                      ------------      ------------

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

    Cash Flows From Financing Activities:
      Reimbursement of acquisition, organiza-
        tion and syndication costs paid by
        related parties on behalf of the
        Partnership                                       (326,483)         (347,907)
      Contributions from general partners                       -              1,000
      Contributions from limited partners               24,303,079         5,696,921
      Contributions from minority interest                 140,676                -
      Distributions to limited partners                   (703,681)           (1,199)
      Payment of syndication costs                      (2,407,317)         (604,348)
                                                      ------------      ------------
          Net cash provided by financing
            activities                                  21,006,274         4,744,467
                                                      ------------      ------------

Net Increase in Cash and Cash Equivalents                  517,860         4,198,859

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

Cash and Cash Equivalents at End of Period            $  4,716,719      $  4,198,859
                                                      ============      ============
</TABLE>


                See accompanying notes to financial statements.

                                       16

<PAGE>

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

                      STATEMENT OF CASH FLOWS - CONTINUED

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

    Net income                                                $  1,095,759      $      8,351
                                                              ------------      ------------
    Adjustments to reconcile net income to
      net cash provided by operating
      activities:
        Depreciation                                               176,995                -
        Amortization                                                 2,213               309
        Equity in earnings of unconsolidated
          joint venture, net of distributions                          330                -
        Increase in receivables                                    (40,131)               -
        Decrease in net investment in direct
          financing leases                                          16,345                -
        Increase in accrued rental income                         (167,216)               -
        Increase in accounts payable and
          accrued expenses                                           2,985                -
        Increase in due to related parties,
          excluding reimbursement of
          acquisition, organization and
          syndication costs paid on behalf
          of the Partnership                                         2,596               352
        Increase in rents paid in advance                           52,769                -
        Increase in deferred rental income                          90,482                -
                                                              ------------      -----------
            Total adjustments                                      137,189               661
                                                              ------------      ------------

Net Cash Provided by Operating Activities                     $  1,232,948      $      9,012
                                                              ============      ============

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                                     $     69,836      $     30,424
        Organization costs                                              -             10,000
        Syndication costs                                          231,885           346,450
                                                              ------------      ------------

                                                              $    301,721      $    386,874
                                                              ============      ============

    Distributions declared and unpaid at
      December 31                                             $    490,084      $     27,076
                                                              ============      ============
</TABLE>


                See accompanying notes to financial statements.

                                       17

<PAGE>

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

                         NOTES TO FINANCIAL STATEMENTS

                  Year Ended December 31, 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 had been sold as of December 31, 1996.

         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.

                                       18

<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Year Ended December 31, 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, a loss will be recorded for the amount by
         which the carrying value of the asset exceeds its fair market value.

                                       19

<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

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


1.       Significant Accounting Policies - Continued:

         Investment in Joint Venture - 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 investment in a property in Fayetteville, North
         Carolina, held as tenants-in-common, is 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.

                                       20

<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Year Ended December 31, 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. Actual results could differ from those
         estimates.

         New Accounting Standard - Effective January 1, 1996, the Partnership
         adopted Statement of Financial Accounting Standards No. 121,
         "Accounting for the Impairment of LongLived Assets and for Long-Lived
         Assets to Be Disposed Of." The statement requires that an entity review
         long-lived assets and certain identifiable intangibles, to be held and
         used, for impairment whenever events or changes in circumstances
         indicate that the carrying amount of the asset may not be recoverable.
         Adoption of this standard had no material effect on the Partnership's
         financial position or results of operations.

                                       21

<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Year Ended December 31, 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." Twenty of the leases are
         classified as operating leases and three 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. Substantially 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:

                                            1996             1995
                                         -----------      -----------

         Land                            $10,148,827      $  311,683
         Buildings                        11,168,540              -
                                         -----------      ---------
                                          21,317,367         311,683
         Less accumulated
           depreciation                     (176,995)             -
                                         -----------      ---------
                                          21,140,372         311,683
         Construction in progress            223,660          90,561
                                         -----------      ----------

                                         $21,364,032      $  402,244
                                         ===========      ==========

                                       22

<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Year Ended December 31, 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 year ended December 31, 1996, the Partnership recognized $167,216
         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, 1996:

                  1997                                  $ 1,952,331
                  1998                                    1,959,709
                  1999                                    1,972,275
                  2000                                    1,984,914
                  2001                                    2,041,471
                  Thereafter                             27,891,100
                                                        -----------
                                                        $37,801,800
                                                        ===========

         Sinse 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. These amounts
         do not include minimum lease payments that will become due when
         properties under development are completed. (See Note 11.)

4.       Net Investment in Direct Financing Leases:

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

                                                   1996            1995
                                               -----------      -----------

         Minimum lease payments
           receivable                          $ 4,301,029      $        -
         Estimated residual
           values                                  499,627               -
         Less unearned income                   (2,818,492)              -
                                               -----------      ----------

         Net investment in
           direct financing
           leases                              $ 1,982,164      $        -
                                               ===========      ==========

                                       23

<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Year Ended December 31, 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, 1996:

                  1997                           $   224,495
                  1998                               224,495
                  1999                               224,495
                  2000                               224,495
                  2001                               224,495
                  Thereafter                       3,178,554
                                                  ----------
                                                  $4,301,029
                                                  ==========

         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 Venture:

         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 that is
         leased to an operator of a familystyle restaurant. 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.

         The following presents the combined, condensed financial information
         for the property held as tenants-in-common with an affiliate at
         December 31:

                                                1996               1995
                                              --------           -------

         Land and building on operating
           lease, less accumulated
           depreciation                         $960,732     $     -
         Cash                                        100           -
         Accrued rental income                     3,929           -
         Liabilities                                  23           -
         Partners' capital                       964,738           -
         Revenues                                 29,293           -
         Net income                               24,502           -

                                       24

<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

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


5.       Investment in Joint Ventures - Continued:

         The Partnership recognized income totalling $4,834 for the year ended
         December 31, 1996 from this property held as tenants-in-common with an
         affiliate.

6.       Syndication Costs:

         Syndication costs consisting of legal fees, commissions, the 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 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.

                                       25

<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

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


7.       Allocations and Distributions - Continued:

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

                                       26

<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Year Ended December 31, 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 year
         ended December 31, 1996 and the period February 10, 1995 (date of
         inception) through December 31, 1995:

<TABLE>
<CAPTION>
                                                          1996           1995
                                                       ----------     -------
<S> <C>
         Net income for financial
           reporting purposes                          $1,095,759     $    8,351

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

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

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

         Capitalization of administrative
           expenses for tax reporting
           purposes                                        11,940          3,493

         Amortization for tax reporting
           purposes in (excess of) less
           than amortization for financial
           reporting purposes                              (2,025)           309

         Accrued rental income                           (167,216)            -

         Deferred rental income                            90,176             -

         Rents paid in advance                             52,769             -

         Other                                              4,469             -
                                                       ----------     ---------

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

                                       27

<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Year Ended December 31, 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.  The other individual
         general partner, Robert A. Bourne, is the president of CNL Securities
         Corp. and CNL Fund Advisors, Inc.

         For the years ended December 31, 1996 and 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 years ended December 31, 1996 and 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
         years ended December 31, 1996 and 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, 1996 and 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 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

                                       28

<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

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


9.       Related Party Transactions - Continued:

         interest and may be taken in such other fiscal year as CNL Fund
         Advisors, Inc. shall determine.  The Partnership incurred a management
         fee of $10,482 for the year ended December 31, 1996.

         During the year ended December 31, 1996 and for the period February 10,
         1995 (date of inception) through December 31, 1995, CNL Fund Advisors,
         Inc. and its 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. For the
         year ended December 31, 1996 and the period February 10, 1995 (date of
         inception) through December 31, 1995, the expenses incurred for these
         services were classified as follows:

                                                        1996          1995
                                                      --------      --------

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

                                                      $274,412      $136,641
                                                      ========      ========

                                       29

<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

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


9.       Related Party Transactions - Continued:

         The due to related parties consisted of the following at December 31:

                                                       1996         1995
                                                     --------     ------

         Due to CNL Securities Corp:
           Commissions                               $     -      $ 29,298
           Due diligence expense
             reimbursement fee                             -         1,723
                                                     --------     --------
                                                           -        31,021
                                                     --------     --------

         Due to CNL Fund Advisors, Inc.
           and its affiliates:
             Expenditures incurred on
               behalf of the Partnership               14,312       38,070
             Acquisition fees                              -        15,511
             Accounting and administra-
               tive services                            2,192       12,585
             Management fee                               649           -
                                                     --------     -------
                                                       17,153       66,166
                                                     --------     --------

                                                     $ 17,153     $ 97,187
                                                     ========     ========

         During the year ended December 31, 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.

                                       30

<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

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


10.      Concentration of Credit Risk:

         The following schedule presents total rental and earned income from
         individual lessees, or affiliated groups of lessees, and the respective
         restaurant chains, each representing more than ten percent of the
         Partnership's total rental and earned income for the year ended
         December 31, 1996 and the period February 10, 1995 (date of inception)
         through December 31, 1995:

                                                   1996         1995
                                                 --------     --------

         Golden Corral Corporation
           (operating Golden Corral
           Family Steakhouse
           Restaurants)                          $286,307     $     -
         DenAmerica Corp. (operating
           Denny's Restaurants)                   250,535           -
         National Restaurant
           Enterprises, Inc.(operating
           Burger King restaurants)               197,882           -
         RTM Indianapolis, Inc. and
           RTM Southwest, Texas, Inc.
           (operating Arby's
           Restaurants)                           133,200           -

         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.

         It is expected that the percentage of total rental and earned income
         contributed by these lessees and restaurant chains will decrease as
         additional Properties are acquired and leased during 1997.

                                       31

<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

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


11.      Commitments:

         The Partnership has entered into a development agreement with a tenant
         which provides terms and specifications for the construction of a
         building that the tenant has agreed to lease. The agreement provides a
         maximum amount of development costs (including the purchase price of
         the land and closing costs) to be paid by the Partnership. The
         aggregate maximum development costs the Partnership has agreed to pay
         is approximately $1,396,300, of which approximately $988,300 in land
         and other costs had been incurred as of December 31, 1996. The building
         under construction is currently expected to be operational by April
         1997. The lease agreement for this property has substantially the same
         terms as those described in Note 2.

         In addition, in December 1996, the Partnership acquired an 80 percent
         interest in CNL/GC El Cajon Joint Venture, for which the Partnership
         accounts for this 80 percent interest using the consolidation method.
         In conjunction therewith, the Partnership has agreed to fund 80
         percent, or approximately $1,639,200 in development costs (including
         the purchase price of land and closing costs) relating to the property
         owned by the consolidated joint venture. As of December 31, 1996, the
         Partnership had funded $855,202 of these costs. The building under
         construction is currently expected to be operational by April 1997. The
         lease agreement for this property has substantially the same terms as
         those described in Note 2.

12.      Subsequent Events:

         In January 1997, the Partnership invested in a property in Akron, Ohio,
         and a property in Corpus Christi, Texas, as tenants-in-common, with
         affiliates of the general partners, at a total cost of $717,263. The
         properties were acquired from affiliates of the general partners. In
         connection therewith, the Partnership and its affiliates entered into
         separate agreements whereby each co-venturer will share in the profits
         and losses of these properties in proportion to their applicable
         percentage interest. The Partnership owns an approximate 37% and 27%
         interest in the properties in Akron, Ohio, and Corpus Christi, Texas,
         respectively, held as tenants-in-common with affiliates of the general
         partners.

                                       32

<PAGE>

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

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

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


12.      Subsequent Events - Continued:

         On February 5, 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. The Partnership and its co-venture
         partner each agreed to contribute $163,964 and $616,245, respectively,
         to the joint venture. The Partnership and its co-venture partner expect
         to have a 21 percent and 79 percent interest, respectively, in the
         profits and losses of the joint venture. The Partnership will account
         for its investment in this joint venture under the equity method since
         the Partnership will share control with an affiliate of the general
         partners.

                                       33

<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 50, 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., 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, 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
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 Chairman of the Board and Chief Executive Officer of CNL American
Properties Fund, Inc. since 1994, and has served as 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 $40 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.

         Robert A. Bourne, age 49, is President and Treasurer of CNL Group,
Inc., President, a director and a registered principal of CNL Securities Corp.
(the managing dealer of the offering), President and a director of CNL
Investment Company, CNL Fund Advisors, Inc., and prior to its merger with CNL
Fund Advisors, Inc., effective

                                       34

<PAGE>

January 1, 1996, CNL Income Fund Advisors, Inc., and President, Chief Investment
Officer and a director of CNL Institutional Advisors, Inc., a registered
investment advisor. Mr. Bourne also has served as a director since 1992, as
President from July 1992 to February 1996, and since February 1996, as Vice
Chairman of the Board of Directors, Secretary and Treasurer 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, as Treasurer and Vice
Chairman of CNL Realty Advisors, 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., 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, Suite 500, 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 the managing dealer,
CNL Securities Corp., and CNL Fund Advisors, Inc., is a diversified real estate
corporation organized in 1980 under the laws of the State of Florida. Other
subsidiaries and affiliates of CNL Group, Inc. include a property development
and management company, two investment advisory companies, and seven
corporations organized as strategic business units. 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.

         John T. Walker, age 38, joined CNL Group, Inc. in September 1994, as
Senior Vice President, responsible for Research and Development. He currently
serves as 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. 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

                                       35

<PAGE>

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 48, 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, a director of CNL Realty Advisors, Inc. since its inception
in 1991, Secretary of CNL Realty Advisors, Inc. since its inception in 1991
(excluding February 1996 to July 1996), 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 250 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 and is a
registered financial and operations principal of CNL Securities Corp. She was
licensed as a certified public accountant in 1979.

         Jeanne A. Wall, age 38, has served as Chief Operating Officer of CNL
Investment Company and of CNL Securities Corp. since November 1994 and
previously served as Executive Vice President of CNL Investment Company since
January 1991. In 1984, Ms. Wall joined CNL Securities Corp. as its Partnership
Administrator.  In 1985, Ms. Wall became Vice President of CNL Securities Corp.
and, in 1987, she became a Senior 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 the partnership administration and investor services
for programs offered through participating brokers.  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, as Vice  President of Commercial Net Lease
Realty, Inc. since 1992, as Executive Vice President of CNL Income Fund
Advisors, Inc. from its inception in 1994 to December 1995, 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 33, has served as Chief Financial Officer of
CNL Fund Advisors, Inc. since September 1996. Mr. Shackelford joined CNL Group,
Inc. in September 1996. He also currently serves as the Chief Financial Officer
of CNL American Properties Fund, Inc. 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 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.

                                       36

<PAGE>

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.


Item 12.  Security Ownership of Certain Beneficial Owners and Management

         As of March 6, 1997, 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 6, 1997, the beneficial
ownership interests of the General Partners in the Registrant.

<TABLE>
<CAPTION>
                                                          Amount and Nature of
       Title of Class               Name of Partner       Beneficial Ownership  Percent of Class
      ----------------              ---------------      --------------------  -----------------
<S> <C>
General Partnership Interests     James M. Seneff, Jr.                                45%
                                  Robert A. Bourne                                    45%
                                  CNL Realty Corporation                              10%
                                                                                     ----
                                                                                     100%

Limited Partnership Interests     James M. Seneff, Jr.        2,500 Units           0.08%
                                  Robert A. Bourne            2,500 Units           0.08%
                                                                                    -----
                                                                                    0.16%
                                                                                    =====
</TABLE>

         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, 1996, 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, 1996
      --------------------                   ----------------------                -----------------------
<S> <C>
Selling commissions to CNL              Commissions of 8.5% per Unit               $2,065,762
Securities Corp., as managing           on all Units sold, up to eight
dealer of the Partnership's             percent of which may be
offering of Units                       reallowed to other dealers
                                        with respect to Units sold by
                                        such dealers.

Due diligence expense reim-             Fee equal to 0.5% of gross                 $121,515
bursement fee to CNL                    offering proceeds, a portion
Securities Corp.                        of which may be reallowed to
                                        other dealers and from which
                                        all due diligence expenses
                                        will be paid.
</TABLE>



                                       37


<PAGE>

<TABLE>
<CAPTION>
                                                                                       Amount Incurred
      Type of Compensation                                                               For the Year
          and Recipient                      Method of Computation                 Ended December 31, 1996
      --------------------                   ----------------------                -----------------------
<S> <C>
Reimbursement to General                Actual  expenses  incurred,                $409,568
Partners and their affiliates           except that the General
for organizational and                  Partners will pay all such
offering expenses incurred in           expenses in excess of three
connection with the                     percent of the gross offering
Partnership's offering of               proceeds.
Units

Acquisition fees and expenses           Fees equal to 4.5% of gross                Acquisition fees:
to CNL Fund Advisors, Inc.              offering proceeds to CNL Fund              $1,093,639
                                        Advisors, Inc., plus
                                        reimburse-ment to the General              Acquisition expenses:
                                        Partners and their affiliates              $69,835
                                        for expenses actually
                                        incurred.

Reimbursement to CNL Fund               Operating expenses are                     Operating expenses
Advisors, Inc. and affiliates           reimbursed at the lower of                 incurred on behalf of the
for operating expenses                  cost or 90 percent of the                  Partnership: $64,906
                                        prevailing rate at which
                                        comparable services could have             Accounting and administra-
                                        been obtained in the same                  tive services:  $96,729
                                        geographic area.  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.

Annual management fee to CNL            One percent of the sum of                  $10,482
Fund Advisors, Inc.                     gross 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.

</TABLE>

                                       38

<PAGE>

<TABLE>
<CAPTION>
                                                                                       Amount Incurred
      Type of Compensation                                                               For the Year
          and Recipient                      Method of Computation                 Ended December 31, 1996
      --------------------                   ----------------------                -----------------------
<S> <C>
Deferred, subordinated real             A deferred, subordinated real              $ - 0 -
estate disposition fee payable          estate disposition fee,
to CNL Fund Advisors, Inc.              payable 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.

General Partners' deferred,             A deferred, subordinated share             $ - 0 -
sub-ordinated share of                  equal to five percent of
Partnership net cash flow               Partnership distributions of
                                        net cash flow, subordinated to
                                        certain minimum returns to the
                                        Limited Partners.

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

                                       39

<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, 1996 and 1995

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

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

               Statements of Cash Flows for the year ended December 31, 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, 1996

               Notes to Schedule III - Real Estate and Accumulated Depreciation
               at December 31, 1996

               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 XVII, Ltd. (Included as Exhibit 3.1 to
                        Registration Statement No. 33-90998 on Form S-11 and
                        incorporated herein by reference.)

               4.1      Affidavit and Certificate of Limited Partnership of CNL
                        Income Fund XVII, Ltd. (Included as Exhibit 3.1 to
                        Registration Statement No. 33-90998 on Form S-11 and
                        incorporated herein by reference.)

               4.2      Amended and Restated Agreement of Limited Partnership of
                        CNL Income Fund XVII, 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.)

               10.1     Management Agreement between CNL Income Fund XVII, Ltd.
                        and CNL Fund Advisors, Inc. (Included as Exhibit 10.1 to
                        Form 10-K filed with the Securities and Exchange
                        Commission on March 21, 1996, and incorporated herein by
                        reference.)

               27       Financial Data Schedule (Filed herewith.)

      (b)      The Registrant filed one report on Form 8-K on December 20, 1996,
               reporting property acquisitions.

                                       40

<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, 1997.

                                       CNL INCOME FUND XVII, LTD.

                                       By:      CNL REALTY CORPORATION
                                                General Partner

                                                /s/ James M. Seneff, Jr.
                                                -------------------------------
                                                JAMES M. SENEFF, JR., 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           Vice President,  Secretary,  Treasurer         March 26, 1997
-------------------------      and  Director (Principal  Financial  and
Robert A. Bourne               Accounting  Officer)


/s/ James M. Seneff, Jr.       President and Director (Principal              March 26, 1997
--------------------------     Executive  Officer)
James M. Seneff, Jr.

</TABLE>
<PAGE>

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

            SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                               December 31, 1996
<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                    -             296,070            557,895               -            -

    Boston Market Restaurants:
      Houston, Texas                         -             373,112            477,383               -            -
      Troy, Ohio                             -             327,924            571,730               -            -
      Long Beach, California                 -             455,048                 -           499,731           -

    Burger King Restaurants:
      Harvey, Illinois                       -             489,340            734,010               -            -
      Chicago Ridge, Illinois                -             771,965                 -           699,556           -
      Lyons, Illinois                        -             885,989                 -           152,530           -

    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                 -             974,750                 -            71,130           -

    Jack in the Box Restaurants:
      Dinuba, California                     -             324,970                 -           509,982           -
      LaPorte, Texas                         -             356,127                 -           533,883           -
      El Dorado, California                  -             617,397                 -           550,097           -

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

    Wendy's Old Fashioned
      Hamburgers Restaurants:
        Knoxville, Tennessee                 -             332,036                 -           472,644           -
        Livingston, Tennessee                -             261,551                 -                -            -
                                                       -----------         ----------       ----------      ------
                                             -         $10,148,827         $5,271,856       $6,120,344      $    -
                                                       ===========         ==========       ==========      ======
</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>
Property the Partnership
  has Invested in Under
  Operating Leases:

    Arby's Restaurants:
      Muncie, Indiana                  $   242,759             (h)  $   242,759   $     -           1995      03/96       (e)
      Schertz, Texas                       348,245    $   470,577       818,822      8,359          1996      06/96       (g)
      Plainfield, Indiana                  296,070        557,895       853,965      3,465          1996      10/96       (g)

    Boston Market Restaurants:
      Houston, Texas                       373,112        477,383       850,495      8,480          1996      06/96       (g)
      Troy, Ohio                           327,924        571,730       899,654      8,367          1996      07/96       (g)
      Long Beach, California               455,048        499,731       954,779      1,232          1996      12/96       (g)

    Burger King Restaurants:
      Harvey, Illinois                     489,340        734,010     1,223,350     20,093          1996      03/96       (g)
      Chicago Ridge, Illinois              771,965        699,556     1,471,521     14,885          1996      03/96       (g)
      Lyons, Illinois                      885,989        152,530     1,038,519         (d)           (c)     11/96       (d)

    Denny's Restaurants:
      Kentwood, Michigan                   287,732        626,865       914,597     16,416          1980      03/96       (g)
      Mesquite, Nevada                     372,858             (h)      372,858         -           1996      12/95       (e)
      Pensacola, Florida                   305,509        670,990       976,499      9,023          1996      08/96       (g)

    Fazoli's Restaurant:
      Warner Robins, Georgia               300,481        421,898       722,379      2,235          1996      08/96       (g)

    Golden Corral Family
      Steakhouse Restaurants:
        Orange Park, Florida               711,838      1,162,406     1,874,244     31,926          1996      03/96       (g)
        Aiken, South Carolina              508,003        987,046     1,495,049     18,254          1996      04/96       (g)
        Weatherford, Texas                 344,610        891,747     1,236,357      9,793          1996      03/96       (g)
        El Cajon, California               974,750         71,130     1,045,880         (d)           (c)     12/96       (d)

    Jack in the Box Restaurants:
      Dinuba, California                   324,970        509,982       834,952      5,926          1996      05/96       (g)
      LaPorte, Texas                       356,127        533,883       890,010      4,888          1996      07/96       (g)
      El Dorado, California                617,397        550,097     1,167,494      4,835          1996      07/96       (g)

    Popeye's Famous Fried
      Chicken Restaurant:
        Warner Robins, Georgia             260,513        330,100       590,613      2,171          1996      08/96       (g)

    Wendy's Old Fashioned
      Hamburgers Restaurants:
        Knoxville, Tennessee               332,036        472,644       804,680      6,647          1996      05/96       (g)
        Livingston, Tennessee              261,551             (h)      261,551         -           1996      06/96       (e)
                                       -----------    -----------   -----------   --------
                                       $10,148,827    $11,392,200   $21,541,027   $176,995
                                       ===========    ===========   ===========   ========
</TABLE>


                                      F-1

<PAGE>

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

            SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                               December 31, 1996


<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   $       -    $    -
                                                          ==========    ==========   ==========   ======

Properties the Partnership
  has Invested in Under
  Direct Financing Leases:

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

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

    Wendy's Old Fashioned
      Hamburgers Restaurant:
        Livingston, Tennessee                      -              -             -       469,940        -
                                                          ----------    ----------   ----------   ------
                                                         $       -     $  629,847   $1,368,663   $    -
                                                          ==========    ==========   ==========   =======
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                                                                     Life
                                             Gross Amount at Which Carried                                          on Which
                                                     at Close of Period (b)                                       Depreciation
                                     ----------------------------------------------                                in Latest
                                                   Buildings                                   Date                  Income
                                                      and                      Accumulated     of Con-     Date    Statement is
                                        Land      Improvements      Total      Depreciation   struction  Acquired    Computed
                                     -----------  ------------    ---------    ------------   --------   --------- ------------
<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   $   965,500       $  4,768      1996      10/96      (g)
                                     ===========   ===========   ===========       ========

Properties the Partnership
  has Invested in Under
  Direct Financing Leases:

    Arby's Restaurant:
      Muncie, Indiana                         -             (h)           (h)            (e)     1995       03/96   (e)

    Denny's Restaurant:
      Mesquite, Nevada                        -             (h)           (h)            (e)     1996       12/95   (e)

    Wendy's Old Fashioned
      Hamburgers Restaurant:
        Livingston, Tennessee                 -             (h)           (h)            (e)     1996       06/96   (e)



</TABLE>


                                      F-2

<PAGE>

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

        NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                               December 31, 1996



(a)      Transactions in real estate and accumulated depreciation during 1996
         and 1995 are summarized as follows:

                                                                 Accumulated
                                                       Cost      Depreciation
                                                   -----------   ------------
         Property 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
                                                   ===========    ===========


         Property in Which the Partnership
           has a 19.73% Interest as
           Tenantsin-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
                                                   ===========    ===========


(b)        As of December 31, 1996, the aggregate cost of the Properties owned
           by the Partnership and the joint venture for federal income tax
           purposes was $23,387,006 and $833,230, respectively. All of the
           leases are treated as operating leases for federal income tax
           purposes.

(c)        Scheduled for completion in 1997.

(d)        Property was not placed in service as of December 31, 1996;
           therefore, no depreciation was taken.

(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.
           and purchased land and buildings from affiliates of the Partnership
           for an aggregate cost of approximately $1,667,100. Such amounts are
           included in land and buildings on operating leases, net investment in
           direct financing leases, investment in joint venture and other assets
           at December 31, 1996.

                                      F-3

<PAGE>

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

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

                               December 31, 1996



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

(h)      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-4

<PAGE>

                                    EXHIBITS


<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit Number                                                                          Page
-------------                                                                           ----
<S> <C>
      3.1         Affidavit and Certificate of Limited Partnership of CNL Income
                  Fund XVII, Ltd. (Included as Exhibit 3.1 to Registration
                  Statement No. 33-90998 on Form S-11 and incorporated herein by
                  reference.)

      4.1         Affidavit and Certificate of Limited Partnership of CNL Income
                  Fund XVII, Ltd. (Included as Exhibit 3.1 to Registration
                  Statement No. 33-90998 on Form S-11 and incorporated herein by
                  reference.)

      4.2         Amended and Restated Agreement of Limited Partnership of CNL
                  Income Fund XVII, 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.)

     10.1         Management Agreement between CNL Income Fund XVII, Ltd. and
                  CNL Fund Advisors, Inc. (Included as Exhibit 10.1 to Form 10-K
                  filed with the Securities and Exchange Commission on March 21,
                  1996, and incorporated herein by reference.)

     27           Financial Data Schedule (Filed herewith.)
</TABLE>

                                       i