UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC  20549FORM 10-Q

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

For the quarterly period ended September 30, 2006

OR

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

For the transition period from  to Commission File Number:  0-21762

Gateway Tax Credit Fund III Ltd.             (Exact name of Registrant as specified in its charter)Florida                                      59-3090386 (State or other jurisdiction of                    (IRS Employer No.)
 incorporation or organization)880 Carillon Parkway,  St. Petersburg,  Florida    33716          (Address of principal executive offices)          (Zip Code)
Registrant's Telephone Number, Including Area Code:(727) 567-1000

Indicate by check mark whether the Registrant: (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act 
of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.
                                              YESX      NO
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ]  Accelerated filer [ ]  Non-accelerated filer [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes [ ]     No [X]

---

PART I - Financial Information

Item 1.  Financial Statements

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)BALANCE SHEET

|SERIES 7                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | SEPTEMBER 30,
2006  
----------
(Unaudited)                                                                                                                                                                                                | MARCH 31,
2006  
---------
(Audited)                                                                                                                                                                                                     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ASSETS
Current Assets:
 Cash and Cash Equivalents
 Investments in Securities
  Total Current Assets
 Investments in Securities
 Investments in Project Partnerships, Net
    Total Assets
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
 Payable to General Partners
  Total Current Liabilities
Long-Term Liabilities:
 Payable to General Partners
Partners' Equity (Deficit):
Limited Partners (10,395 units for Series 7 at September 30, 2006 and March 31, 2006)
General Partners
  Total Partners' Equity
    Total Liabilities and Partners' Equity | $  139,904 
281,320 
-----------
421,224 
77,810 
598,232 
-----------
$1,097,266 
===========
$   58,442 
-----------
58,442 
-----------
687,443 
-----------
439,146 
(87,765)
-----------
351,381 
-----------
$1,097,266 
=========== | $  394,030 
76,135 
-----------
470,165 
74,969 
641,745 
-----------
$1,186,879 
===========
$   60,090 
-----------
60,090 
-----------
644,426 
-----------
568,818 
(86,455)
-----------
482,363 
-----------
$1,186,879 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)BALANCE SHEET

|SERIES 8                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | SEPTEMBER 30,
2006  
---------
(Unaudited)                                                                                                                                                                                                        | MARCH 31,
2006  
--------
(Audited)                                                                                                                                                                                                               
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ASSETS
Current Assets:
 Cash and Cash Equivalents
 Investments in Securities
 Accounts Receivable
  Total Current Assets
 Investments in Securities
 Investments in Project Partnerships, Net
    Total Assets
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
 Payable to General Partners
  Total Current Liabilities
Long-Term Liabilities:
 Payable to General Partners
Partners' Equity (Deficit):
Limited Partners (9,980 units for Series 8 at September 30, 2006 and March 31, 2006)
General Partners
  Total Partners' Equity
    Total Liabilities and Partners' Equity | $  113,572 
201,704 
24,220 
-----------
339,496 
74,530 
405,863 
-----------
$  819,889 
===========
$   49,223 
-----------
49,223 
-----------
729,048 
-----------
128,827 
(87,209)
-----------
41,618 
-----------
$  819,889 
=========== | $  309,318 
72,553 
24,220 
-----------
406,091 
71,956 
415,344 
-----------
$  893,391 
===========
$   51,363 
-----------
51,363 
-----------
684,306 
-----------
243,770 
(86,048)
-----------
157,722 
-----------
$  893,391 
============

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)BALANCE SHEET

|SERIES 9                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | SEPTEMBER 30,
2006  
---------
(Unaudited)                                                                                                                                                                                                 | MARCH 31,
2006  
--------
(Audited)                                                                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ASSETS
Current Assets:
 Cash and Cash Equivalents
 Investments in Securities
  Total Current Assets
 Investments in Securities
 Investments in Project Partnerships, Net
    Total Assets
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
 Payable to General Partners
    Total Current Liabilities
Long-Term Liabilities:
 Payable to General Partners
Partners' Equity (Deficit):
Limited Partners (6,254 units for Series 9 at September 30, 2006 and March 31, 2006)
General Partners
  Total Partners' Equity
    Total Liabilities and Partners' Equity | $   58,285 
168,610 
-----------
226,895 
81,677 
496,928 
-----------
$  805,500 
===========
$   27,969 
-----------
27,969 
-----------
453,298 
-----------
375,827 
(51,594)
-----------
324,233 
-----------
$  805,500 
=========== | $  222,993 
40,745 
-----------
263,738 
79,134 
550,442 
-----------
$  893,314 
===========
$   30,066 
-----------
30,066 
-----------
428,649 
-----------
485,089 
(50,490)
-----------
434,599 
-----------
$  893,314 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)BALANCE SHEET

|SERIES 10                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | SEPTEMBER 30,
2006  
---------
(Unaudited)                                                                                                                                                                                                      | MARCH 31,
2006  
--------
(Audited)                                                                                                                                                                                                           
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ASSETS
Current Assets:
 Cash and Cash Equivalents
 Investments in Securities
  Total Current Assets
 Investments in Securities
 Investments in Project Partnerships, Net
    Total Assets
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
 Payable to General Partners
    Total Current Liabilities
Long-Term Liabilities:
 Payable to General Partners
Partners' Equity (Deficit):
Limited Partners (5,043 units for Series 10 at September 30, 2006 and March 31, 2006)
General Partners
  Total Partners' Equity
    Total Liabilities and Partners' Equity | $   25,190 
132,195 
-----------
157,385 
93,864 
1,289,493 
-----------
$1,540,742 
===========
$   29,992 
-----------
29,992 
-----------
61,963 
-----------
1,478,477 
(29,690)
-----------
1,448,787 
-----------
$1,540,742 
=========== | $  144,697 
30,440 
-----------
175,137 
90,576 
1,360,959 
-----------
$1,626,672 
===========
$   31,675 
-----------
31,675 
-----------
45,123 
-----------
1,578,554 
(28,680)
-----------
1,549,874 
-----------
$1,626,672 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)BALANCE SHEET

|SERIES 11                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | SEPTEMBER 30,
2006  
---------
(Unaudited)                                                                                                                                                                                   | MARCH 31,
2006  
--------
(Audited)                                                                                                                                                                                        
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ASSETS
Current Assets:
 Cash and Cash Equivalents
 Investments in Securities
  Total Current Assets
 Investments in Securities
 Investments in Project Partnerships, Net
    Total Assets
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
 Payable to General Partners
  Total Current Liabilities
Partners' Equity (Deficit):
Limited Partners (5,127 units for Series 11 at September 30, 2006 and March 31, 2006)
General Partners
  Total Partners' Equity
    Total Liabilities and Partners' Equity | $   26,846 
188,528 
-----------
215,374 
105,455 
1,908,041 
-----------
$2,228,870 
===========
$   18,053 
-----------
18,053 
-----------
2,234,699 
(23,882)
-----------
2,210,817 
-----------
$2,228,870 
=========== | $  207,490 
35,682 
-----------
243,172 
101,561 
1,926,349 
-----------
$2,271,082 
===========
$   13,071 
-----------
13,071 
-----------
2,281,421 
(23,410)
-----------
2,258,011 
-----------
$2,271,082 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)BALANCE SHEET

|TOTAL SERIES 7 - 11                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | SEPTEMBER 30,
2006  
---------
(Unaudited)                                                                                                                                                                                                                           | MARCH 31,
2006  
--------
(Audited)                                                                                                                                                                                                                               
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ASSETS
Current Assets:
 Cash and Cash Equivalents
 Investments in Securities
 Accounts Receivable
  Total Current Assets
 Investments in Securities
 Investments in Project Partnerships, Net
    Total Assets
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
 Payable to General Partners
  Total Current Liabilities
Long-Term Liabilities:
 Payable to General Partners
Partners' Equity (Deficit):
Limited Partners (10,395 units for Series 7, 9,980 for Series 8, 6,254 for Series 9, 5,043 for Series 10 and 5,127 for Series 11 at September 30, 2006 and March 31, 2006)
General Partners
  Total Partners' Equity
    Total Liabilities and Partners' Equity | $   363,797 
972,357 
24,220 
------------
1,360,374 
433,336 
4,698,557 
-----------
$ 6,492,267 
===========
$   183,679 
-----------
183,679 
-----------
1,931,752 
-----------
4,656,976 
(280,140)
-----------
4,376,836 
-----------
$ 6,492,267 
=========== | $ 1,278,528 
255,555 
24,220 
-----------
1,558,303 
418,196 
4,894,839 
-----------
$ 6,871,338 
===========
$   186,265 
-----------
186,265 
-----------
1,802,504
-----------
5,157,652 
(275,083)
-----------
4,882,569 
-----------
$ 6,871,338 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(Unaudited)

|SERIES 7                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 2006
----                                                                                                                                                                                                                                                                 | 2005
----                                                                                                                                                                                                                                                               
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Revenues:
 Distribution Income
  Total Revenues
Expenses:
 Asset Management Fee-General Partner
 General and Administrative:
  General Partner
  Other
 Amortization
  Total Expenses
Loss Before Equity in Losses of Project
 Partnerships and Other Income
Equity in Losses of Project Partnerships
 Interest Income
Net Loss
Allocation of Net Loss:
 Limited Partners
 General Partners
Net Loss Per Number of Limited Partnership
Units
Number of Limited Partnership Units
Outstanding | $   11,320 
-----------
11,320 
-----------
21,509 
31,402 
21,778 
7,651 
-----------
82,340 
-----------
(71,020)
(13,056)
7,410 
-----------
$  (76,666)
===========
$  (75,899)
(767)
-----------
$  (76,666)
===========
$    (7.30)
===========
10,395 
=========== | $    8,855 
-----------
8,855 
-----------
21,612 
21,101 
10,135 
1,553 
-----------
54,401 
-----------
(45,546)
(15,453)
6,695 
-----------
$  (54,304)
===========
$  (53,761)
(543)
-----------
$  (54,304)
===========
$    (5.17)
===========
10,395 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(Unaudited)

|SERIES 8                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 2006
----                                                                                                                                                                                                                                                            | 2005
----                                                                                                                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Revenues:
 Distribution Income
 Total Revenues
Expenses:
 Asset Management Fee-General Partner
 General and Administrative:
  General Partner
  Other
 Amortization
  Total Expenses
Loss Before Equity in (Losses) Income of  Project Partnerships and Other Income
Equity in (Losses) Income of Project  Partnerships
 Interest Income
Net Loss
Allocation of Net Loss:
 Limited Partners
 General Partners
Net Loss Per Number of Limited
Partnership Units
Number of Limited Partnership Units
Outstanding | $      800 
-----------
800 
-----------
22,371 
34,623 
22,449 
3,206 
-----------
82,649 
-----------
(81,849)
(6,065)
5,926 
-----------
$  (81,988)
===========
$  (81,168)
(820)
-----------
$  (81,988)
===========
$    (8.13)
===========
9,980 
=========== | $        0 
-----------
0 
-----------
22,477 
23,266 
10,933 
567 
-----------
57,243 
-----------
(57,243)
2,799 
5,808 
-----------
$  (48,636)
===========
$  (48,149)
(487)
-----------
$  (48,636)
===========
$    (4.82)
===========
9,980 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(Unaudited)

|SERIES 9                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 2006
----                                                                                                                                                                                                                                                           | 2005
----                                                                                                                                                                                                                                                       
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Revenues:
 Distribution Income
  Total Revenues
Expenses:
 Asset Management Fee-General Partner
 General and Administrative:
  General Partner
  Other
 Amortization
  Total Expenses
Loss Before Equity in Losses of Project
 Partnerships and Other Income
Equity in Losses of Project Partnerships
 Interest Income
Net Loss
Allocation of Net Loss:
 Limited Partners
 General Partners
Net Loss Per Number of Limited Partnership
Units
Number of Limited Partnership Units
Outstanding | $        0 
-----------
0 
-----------
12,325 
19,325 
13,509 
3,013 
-----------
48,172 
-----------
(48,172)
(32,758)
4,451 
-----------
$  (76,479)
===========
$  (75,714)
(765)
-----------
$  (76,479)
===========
$   (12.11)
===========
6,254 
=========== | $        0 
-----------
0 
-----------
12,377 
12,985 
5,309 
594 
-----------
31,265 
-----------
(31,265)
(23,320)
3,981 
-----------
$  (50,604)
===========
$  (50,098)
(506)
-----------
$  (50,604)
===========
$    (8.01)
===========
6,254 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(Unaudited)

|SERIES 10                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 2006
----                                                                                                                                                                                                                                                          | 2005
----                                                                                                                                                                                                                                                       
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Revenues:
 Distribution Income
  Total Revenues
Expenses:
 Asset Management Fee-General Partner
 General and Administrative:
  General Partner
  Other
 Amortization
  Total Expenses
Loss Before Equity in Losses of Project
 Partnerships and Other Income
Equity in Losses of Project Partnerships
 Interest Income
Net Loss
Allocation of Net Loss:
 Limited Partners
 General Partners
Net Loss Per Number of Limited Partnership
Units
Number of Limited Partnership Units
Outstanding | $        0 
-----------
0 
-----------
8,420 
12,078 
10,578 
6,027 
-----------
37,103 
-----------
(37,103)
(38,392)
3,948 
-----------
$  (71,547)
===========
$  (70,832)
(715)
-----------
$  (71,547)
===========
$   (14.05)
===========
5,043 
=========== | $        0 
-----------
0 
-----------
8,455 
8,115 
4,297 
1,192 
-----------
22,059 
-----------
(22,059)
(34,370)
3,580 
-----------
$  (52,849)
===========
$  (52,321)
(528)
-----------
$  (52,849)
===========
$   (10.37)
===========
5,043 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(Unaudited)

|SERIES 11                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 2006
----                                                                                                                                                                                                                                                             | 2005
----                                                                                                                                                                                                                                                           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Revenues:
 Distribution Income
  Total Revenues
Expenses:
 Asset Management Fee-General Partner
 General and Administrative:
  General Partner
  Other
 Amortization
  Total Expenses
Loss Before Equity in Losses of Project  Partnerships and Other Income
Equity in Losses of Project Partnerships  Interest Income
Net Loss
Allocation of Net Loss:
 Limited Partners
 General Partners
Net Loss Per Number of Limited Partnership
Units
Number of Limited Partnership Units
Outstanding | $    2,182 
-----------
2,182 
-----------
6,938 
9,663 
10,735 
8,374 
-----------
35,710 
-----------
(33,528)
(14,953)
5,037 
-----------
$  (43,444)
===========
$  (43,010)
(434)
-----------
$  (43,444)
===========
$    (8.39)
===========
5,127 
=========== | $    1,195 
-----------
1,195 
-----------
7,005 
6,493 
4,369 
1,477 
-----------
19,344 
-----------
(18,149)
(32,334)
4,503 
-----------
$  (45,980)
===========
$  (45,520)
(460)
-----------
$  (45,980)
===========
$    (8.88)
===========
5,127 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(Unaudited)

|TOTAL SERIES 7 - 11                                                                                                                                                                                                                                                                                                                                                                         | 2006
----                                                                                                                                                                                                                             | 2005
----                                                                                                                                                                                                                          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Revenues:
 Distribution Income
  Total Revenues
Expenses:
 Asset Management Fee-General Partner
 General and Administrative:
  General Partner
  Other
 Amortization
  Total Expenses
Loss Before Equity in Losses of Project
 Partnerships and Other Income
Equity in Losses of Project Partnerships
 Interest Income
Net Loss
Allocation of Net Loss:
 Limited Partners
 General Partners | $   14,302 
-----------
14,302 
-----------
71,563 
107,091 
79,049 
28,271 
-----------
285,974 
-----------
(271,672)
(105,224)
26,772 
-----------
$ (350,124)
===========
$ (346,623)
(3,501)
-----------
$ (350,124)
=========== | $   10,050 
-----------
10,050 
-----------
71,926 
71,960 
35,043 
5,383 
-----------
184,312 
-----------
(174,262)
(102,678)
24,567 
-----------
$ (252,373)
===========
$ (249,849)
(2,524)
-----------
$ (252,373)
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(Unaudited)

|SERIES 7                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 2006
----                                                                                                                                                                                                                                                                       | 2005
----                                                                                                                                                                                                                                                                    
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Revenues:
 Distribution Income
  Total Revenues
Expenses:
 Asset Management Fee-General Partner
 General and Administrative:
  General Partner
  Other
 Amortization
  Total Expenses
Loss Before Equity in Losses of Project
 Partnerships and Other Income
Equity in Losses of Project Partnerships
Interest Income
Net Loss
Allocation of Net Loss:
 Limited Partners
 General Partners
Net Loss Per Number of Limited Partnership
Units
Number of Limited Partnership Units
Outstanding | $   15,946 
-----------
15,946 
-----------
43,018 
55,340 
24,661 
16,372 
-----------
139,391 
-----------
(123,445)
(21,850)
14,313 
-----------
$ (130,982)
===========
$ (129,672)
(1,310)
-----------
$ (130,982)
===========
$   (12.47)
===========
10,395 
=========== | $   13,218 
-----------
13,218 
-----------
43,224 
39,003 
15,696 
3,106 
-----------
101,029 
-----------
(87,811)
(42,739)
12,766 
-----------
$ (117,784)
===========
$ (116,606)
(1,178)
-----------
$ (117,784)
===========
$   (11.22)
===========
10,395 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(Unaudited)

|SERIES 8                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 2006
----                                                                                                                                                                                                                                                                  | 2005
----                                                                                                                                                                                                                                                              
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Revenues:
 Distribution Income
 Total Revenues
Expenses:
 Asset Management Fee-General Partner
 General and Administrative:
  General Partner
  Other
 Amortization
  Total Expenses
Loss Before Equity in Income of Project
 Partnerships and Other Income
Equity in Income of Project Partnerships
Interest Income
Net Loss
Allocation of Net Loss:
 Limited Partners
 General Partners
Net Loss Per Number of Limited
Partnership Units
Number of Limited Partnership Units
Outstanding | $    8,329 
-----------
8,329 
-----------
44,743 
61,016 
25,070 
6,412 
-----------
137,241 
-----------
(128,912)
1,155 
11,653 
-----------
$ (116,104)
===========
$ (114,943)
(1,161)
-----------
$ (116,104)
===========
$   (11.52)
===========
9,980 
=========== | $    9,521 
-----------
9,521 
-----------
44,954 
43,004 
16,931 
1,134 
-----------
106,023 
-----------
(96,502)
7,482 
11,167 
-----------
$  (77,853)
===========
$  (77,074)
(779)
-----------
$  (77,853)
===========
$    (7.72)
===========
9,980 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(Unaudited)

|SERIES 9                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 2006
----                                                                                                                                                                                                                                                                 | 2005
----                                                                                                                                                                                                                                                             
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Revenues:
 Distribution Income
  Total Revenues
Expenses:
 Asset Management Fee-General Partner
 General and Administrative:
  General Partner
  Other
 Amortization
  Total Expenses
Loss Before Equity in Losses of Project
 Partnerships and Other Income
Equity in Losses of Project Partnerships
 Interest Income
Net Loss
Allocation of Net Loss:
 Limited Partners
 General Partners
Net Loss Per Number of Limited Partnership
Units
Number of Limited Partnership Units
Outstanding | $    4,809 
-----------
4,809 
-----------
24,650 
34,056 
14,729 
6,026 
-----------
79,461 
-----------
(74,652)
(44,363)
8,649 
-----------
$ (110,366)
===========
$ (109,262)
(1,104)
-----------
$ (110,366)
===========
$   (17.47)
===========
6,254 
=========== | $    3,042 
-----------
3,042 
-----------
24,754 
24,002 
9,520 
1,188 
-----------
59,464 
-----------
(56,422)
(46,538)
7,632 
-----------
$  (95,328)
===========
$  (94,375)
(953)
-----------
$  (95,328)
===========
$   (15.09)
===========
6,254 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(Unaudited)

|SERIES 10                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 2006
----                                                                                                                                                                                                                                                                  | 2005
----                                                                                                                                                                                                                                                             
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Revenues:
 Distribution Income
  Total Revenues
Expenses:
 Asset Management Fee-General Partner
 General and Administrative:
  General Partner
  Other
 Amortization
  Total Expenses
Loss Before Equity in Losses of Project
 Partnerships and Other Income
Equity in Losses of Project Partnerships
 Interest Income
Net Loss
Allocation of Net Loss:
 Limited Partners
 General Partners
Net Loss Per Number of Limited Partnership
Units
Number of Limited Partnership Units
Outstanding | $    1,381 
-----------
1,381 
-----------
16,840 
21,285 
12,023 
12,054 
-----------
62,202 
-----------
(60,821)
(47,904)
7,638 
-----------
$ (101,087)
===========
$ (100,077)
(1,010)
-----------
$ (101,087)
===========
$   (19.84)
===========
5,043 
=========== | $    1,380 
-----------
1,380 
-----------
16,910 
15,001 
6,476 
2,383 
-----------
40,770 
-----------
(39,390)
(54,424)
6,895 
-----------
$  (86,919)
===========
$  (86,050)
(869)
-----------
$  (86,919)
===========
$   (17.06)
===========
5,043 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(Unaudited)

|SERIES 11                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 2006
----                                                                                                                                                                                                                                                            | 2005
----                                                                                                                                                                                                                                                             
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Revenues:
 Distribution Income
  Total Revenues
Expenses:
 Asset Management Fee-General Partner
 General and Administrative:
  General Partner
  Other
 Amortization
  Total Expenses
Loss Before Equity in Income (Losses) of
 Project Partnerships and Other Income
Equity in Income (Losses) of Project
 Partnerships
 Interest Income
Net Loss
Allocation of Net Loss:
 Limited Partners
 General Partners
Net Loss Per Number of Limited Partnership
Units
Number of Limited Partnership Units
Outstanding | $    2,182 
-----------
2,182 
-----------
13,876 
17,028 
11,668 
16,748 
-----------
59,320 
-----------
(57,138)
227 
9,717 
-----------
$  (47,194)
===========
$  (46,722)
(472)
-----------
$  (47,194)
===========
$    (9.11)
===========
5,127 
=========== | $    2,182 
-----------
2,182 
-----------
14,010 
12,001 
6,379 
2,954 
-----------
35,344 
-----------
(33,162)
(56,558)
8,650 
-----------
$  (81,070)
===========
$  (80,259)
(811)
-----------
$  (81,070)
===========
$   (15.65)
===========
5,127 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(Unaudited)

|TOTAL SERIES 7 - 11                                                                                                                                                                                                                                                                                                                                                                         | 2006
----                                                                                                                                                                                                                              | 2005
----                                                                                                                                                                                                                             
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Revenues:
 Distribution Income
  Total Revenues
Expenses:
 Asset Management Fee-General Partner
 General and Administrative:
  General Partner
  Other
 Amortization
  Total Expenses
Loss Before Equity in Losses of Project
 Partnerships and Other Income
Equity in Losses of Project Partnerships
 Interest Income
Net Loss
Allocation of Net Loss:
 Limited Partners
 General Partners | $   32,647 
-----------
32,647 
-----------
143,127 
188,725 
88,151 
57,612 
-----------
477,615 
-----------
(444,968)
(112,735)
51,970 
-----------
$ (505,733)
===========
$ (500,676)
(5,057)
-----------
$ (505,733)
=========== | $   29,343 
-----------
29,343 
-----------
143,852 
133,011 
55,002 
10,765 
-----------
342,630 
-----------
(313,287)
(192,777)
47,110 
-----------
$ (458,954)
===========
$ (454,364)
(4,590)
-----------
$ (458,954)
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2006 AND 2005:
(Unaudited)

|SERIES 7                                                                                                                          | Limited
Partners
---------                                                                                                  | General
Partners
--------                                                                                         | Total
-----                                                                                                               
|--------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------
|Balance at March 31, 2005
Net Loss
Balance at September 30, 2005
Balance at March 31, 2006
Net Loss
Balance at September 30, 2006 | $ 1,031,936 
(116,606)
------------
$   915,330 
============
$   568,818 
(129,672)
------------
$   439,146 
============ | $  (81,777)
(1,178)
-----------
$  (82,955)
===========
$  (86,455)
(1,310)
------------
$  (87,765)
============ | $   950,159 
(117,784)
-----------
$   832,375 
============
$   482,363 
(130,982)
------------
$   351,381 
============



See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.
(A Florida Limited Partnership)STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2006 AND 2005:
(Unaudited)

|SERIES 8                                                                                                                          | Limited
Partners
---------                                                                                                 | General
Partners
--------                                                                                       | Total
-----                                                                                                             
|--------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------
|Balance at March 31, 2005
Net Loss
Balance at September 30, 2005
Balance at March 31, 2006
Net Loss
Balance at September 30, 2006 | $   458,094 
(77,074)
------------
$   381,020 
============
$   243,770 
(114,943)
------------
$   128,827 
============ | $  (83,883)
(779)
-----------
$  (84,662)
===========
$  (86,048)
(1,161)
------------
$  (87,209)
============ | $   374,211 
(77,853)
-----------
$   296,358 
============
$   157,722 
(116,104)
------------
$   41,618 
============



See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2006 AND 2005:
(Unaudited)

|SERIES 9                                                                                                                          | Limited
Partners
---------                                                                                                 | General
Partners
--------                                                                                       | Total
-----                                                                                                           
|--------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------
|Balance at March 31, 2005
Net Loss
Balance at September 30, 2005
Balance at March 31, 2006
Net Loss
Balance at September 30, 2006 | $   822,760 
(94,375)
------------
$   728,385 
============
$   485,089 
(109,262)
------------
$   375,827 
============ | $  (47,079)
(953)
-----------
$  (48,032)
===========
$  (50,490)
(1,104)
------------
$  (51,594)
============ | $  775,681 
(95,328)
------------
$  680,353 
============
$  434,599 
(110,366)
------------
$  324,233 
============



See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2006 AND 2005:
(Unaudited)

|SERIES 10                                                                                                                         | Limited
Partners
---------                                                                                                 | General
Partners
--------                                                                                       | Total
-----                                                                                                               
|--------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------
|Balance at March 31, 2005
Net Loss
Balance at September 30, 2005
Balance at March 31, 2006
Net Loss
Balance at September 30, 2006 | $ 1,930,927 
(86,050)
------------
$ 1,844,877 
============
$ 1,578,554 
(100,077)
------------
$ 1,478,477 
============ | $  (25,121)
(869)
-----------
$  (25,990)
===========
$  (28,680)
(1,010)
------------
$  (29,690)
============ | $ 1,905,806 
(86,919)
------------
$ 1,818,887 
============
$ 1,549,874 
(101,087)
------------
$ 1,448,787 
============



See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2006 AND 2005:
(Unaudited)

|SERIES 11                                                                                                                      | Limited
Partners
---------                                                                                                | General
Partners
--------                                                                                     | Total
-----                                                                                                             
|------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------
|Balance at March 31, 2005
Net Loss
Balance at September 30, 2005
Balance March 31, 2006
Net Loss
Balance at September 30, 2006 | $ 3,049,825 
(80,259)
------------
$ 2,969,566 
============
$ 2,281,421 
(46,722)
------------
$ 2,234,699 
============ | $  (15,649)
(811)
-----------
$  (16,460)
===========
$  (23,410)
(472)
------------
$  (23,882)
============ | $ 3,034,176 
(81,070)
-----------
$ 2,953,106 
============
$ 2,258,011 
(47,194)
------------
$ 2,210,817 
============



See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2006 AND 2005:
(Unaudited)

|TOTAL SERIES 7 - 11                                                                                                               | Limited
Partners
---------                                                                                                  | General
Partners
--------                                                                                         | Total
-----                                                                                                               
|--------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------
|Balance at March 31, 2005
Net Loss
Balance at September 30, 2005
Balance at March 31, 2006
Net Loss
Balance at September 30, 2006 | $ 7,293,542 
(454,364)
------------
$ 6,839,178 
============
$ 5,157,652 
(500,676)
------------
$ 4,656,976 
============ | $ (253,509)
(4,590)
-----------
$ (258,099)
===========
$ (275,083)
(5,057)
------------
$ (280,140)
============ | $ 7,040,033 
(458,954)
-----------
$ 6,581,079 
============
$ 4,882,569 
(505,733)
------------
$ 4,376,836 
============



See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(Unaudited)

|SERIES 7
--------                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 2006
----                                                                                                                                                                                   | 2005
----                                                                                                                                                                       
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Cash Flows from Operating Activities:
  Net Loss
  Adjustments to Reconcile Net Loss to Net
  Cash Used in Operating Activities:
   Amortization
   Accreted Interest Income on Investments
   in Securities
   Equity in Losses of Project Partnerships
   Distribution Income
   Changes in Operating Assets and Liabilities:
    Increase in Payable to General Partners
     Net Cash Used in Operating Activities
Cash Flows from Investing Activities:
 Distributions Received from Project
 Partnerships
 Investment in Securities
     Net Cash (Used In) Provided by Investing
     Activities
Decrease in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of
Year
Cash and Cash Equivalents at End of Period | $ (130,982)
16,372 
(7,942)
21,850 
(15,946)
41,369 
----------
(75,279)
----------
21,237 
(200,084)
----------
(178,847)
----------
(254,126)
394,030 
----------
$  139,904 
=========== | $ (117,784)
3,106 
(7,971)
42,739 
(13,218)
45,138 
----------
(47,990)
----------
15,774 
0 
----------
15,774 
----------
(32,216)
383,342 
----------
$  351,126 
===========



See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWSFOR THE SIX MONTHS ENDED SEPTEMBER 30,
(Unaudited)

|SERIES 8
--------                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 2006
----                                                                                                                                                                                  | 2005
----                                                                                                                                                                       
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Cash Flows from Operating Activities:
  Net Loss
  Adjustments to Reconcile Net Loss to Net
  Cash Used In Operating Activities:
   Amortization
   Accreted Interest Income on Investments
   in Securities
   Equity in Income of Project Partnerships
   Distribution Income
   Changes in Operating Assets and Liabilities:
    Increase in Payable to General Partners
     Net Cash Used in Operating Activities
Cash Flows from Investing Activities:
 Distributions Received from Project
 Partnerships
 Investment in Securities
     Net Cash (Used In) Provided by Investing
     Activities
Decrease in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of
Year
Cash and Cash Equivalents at End of Period | $ (116,104)
6,412 
(6,548)
(1,155)
(8,329)
42,602 
----------
(83,122)
----------
12,553 
(125,177)
----------
(112,624)
----------
(195,746)
309,318 
-----------
$  113,572 
=========== | $  (77,853)
1,134 
(7,155)
(7,482)
(9,521)
46,375 
----------
(54,502)
----------
10,663 
0 
----------
10,663 
----------
(43,839)
325,662 
-----------
$  281,823 
===========



See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(Unaudited)

|SERIES 9
--------                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 2006
----                                                                                                                                                                                | 2005
----                                                                                                                                                                    
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Cash Flows from Operating Activities:
  Net Loss
  Adjustments to Reconcile Net Loss to Net
  Cash Used in Operating Activities:
   Amortization
   Accreted Interest Income on Investments
   in Securities
   Equity in Losses of Project Partnerships
   Distribution Income
   Changes in Operating Assets and Liabilities:
    Increase in Payable to General Partners
     Net Cash Used in Operating Activities
Cash Flows from Investing Activities:
  Distributions Received from Project
  Partnerships
  Investment in Securities
     Net Cash (Used In) Provided by Investing
     Activities
Decrease in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of
Year
Cash and Cash Equivalents at End of Period | $ (110,366)
6,026 
(5,231)
44,363 
(4,809)
22,552 
----------
(47,465)
----------
7,934 
(125,177)
----------
(117,243)
----------
(164,708)
222,993 
----------
$   58,285 
=========== | $  (95,328)
1,188 
(4,800)
46,538 
(3,042)
25,885 
----------
(29,559)
----------
4,766 
0 
----------
4,766 
----------
(24,793)
229,897 
----------
$  205,104 
===========



See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(Unaudited)

|SERIES 10
--------                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 2006
----                                                                                                                                                                                | 2005
----                                                                                                                                                                   
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Cash Flows from Operating Activities:
  Net Loss
  Adjustments to Reconcile Net Loss to Net
  Cash Used in Operating Activities:
   Amortization
   Accreted Interest Income on Investments
   in Securities
   Equity in Losses of Project Partnerships
   Distribution Income
   Changes in Operating Assets and Liabilities:
    Increase in Payable to General Partners
     Net Cash Used in Operating Activities
Cash Flows from Investing Activities:
  Distributions Received from Project
  Partnerships
  Investment in Securities
     Net Cash (Used In) Provided by Investing
     Activities
Decrease in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of
Year
Cash and Cash Equivalents at End of Period | $ (101,087)
12,054 
(5,492)
47,904 
(1,381)
15,157 
----------
(32,845)
----------
12,889 
(99,551)
----------
(86,662)
----------
(119,507)
144,697 
----------
$   25,190 
=========== | $  (86,919)
2,383 
(5,113)
54,424 
(1,380)
17,401 
----------
(19,204)
---------
6,597 
0 
----------
6,597 
----------
(12,607)
142,638 
----------
$  130,031 
===========



See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(Unaudited)

|SERIES 11
--------                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 2006
----                                                                                                                                                                                 | 2005
----                                                                                                                                                                          
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Cash Flows from Operating Activities:
  Net Loss
  Adjustments to Reconcile Net Loss to Net
  Cash Used in Operating Activities:
   Amortization
   Accreted Interest Income on Investments
   in Securities
   Equity in (Income) Losses of Project
   Partnerships
   Distribution Income
   Changes in Operating Assets and Liabilities:
    Decrease in Accounts Receivable
    Increase in Payable to General Partners
     Net Cash Used in Operating Activities
Cash Flows from Investing Activities:
   Distributions Received from Project
   Partnerships
   Investment in Securities
     Net Cash (Used In) Provided by Investing
     Activities
Decrease in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of
Year
Cash and Cash Equivalents at End of Period | $  (47,194)
16,748 
(6,922)
(227)
(2,182)
0 
4,982 
----------
(34,795)
----------
3,969 
(149,818)
----------
(145,849)
----------
(180,644)
207,490 
----------
$   26,846 
=========== | $  (81,070)
2,954 
(6,123)
56,558 
(2,182)
8,291 
5,900 
----------
(15,672)
----------
3,969 
0 
----------
3,969 
----------
(11,703)
199,931 
----------
$  188,228 
===========



See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(Unaudited)

|TOTAL SERIES 7 - 11
-------------------                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 2006
----                                                                                                                                                                                             | 2005
----                                                                                                                                                                                       
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Cash Flows from Operating Activities:
  Net Loss
  Adjustments to Reconcile Net Loss to Net
  Cash Used in Operating Activities:
   Amortization
   Accreted Interest Income on Investments
   in Securities
   Equity in Losses of Project Partnerships
   Distribution Income
   Changes in Operating Assets and Liabilities:
    Decrease in Accounts Receivable
    Increase in Payable to General Partners
     Net Cash Used in Operating Activities
Cash Flows from Investing Activities:
   Distributions Received from Project
   Partnerships
   Investment in Securities
     Net Cash (Used In) Provided by Investing
     Activities
Decrease in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of
Year
Cash and Cash Equivalents at End of Period | $  (505,733)
57,612 
(32,135)
112,735 
(32,647)
0 
126,662 
----------
(273,506)
----------
58,582 
(699,807)
----------
(641,225)
----------
(914,731)
1,278,528 
----------
$  363,797 
=========== | $  (458,954)
10,765 
(31,162)
192,777 
(29,343)
8,291 
140,699 
----------
(166,927)
----------
41,769 
0 
----------
41,769 
----------
(125,158)
1,281,470 
----------
$1,156,312 
===========



See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(Unaudited)

NOTE 1 - ORGANIZATION:   Gateway Tax Credit Fund III Ltd. ("Gateway" or "Partnership"), a Florida Limited Partnership, was formed October 17, 1991 under the laws of Florida.  Gateway offered its limited partnership interests in Series.  The first Series for Gateway is Series 7.  Operations commenced on July 16, 1992 for Series 7, January 4, 1993 for Series 8, September 30, 1993 for Series 9, January 21, 1994 for Series 10 and April 29, 1994 for Series 11.  Each Series invests, as a limited partner, in other limited partnerships ("Project Partnerships"), each of which owns and operates apartment complexes eligible for Low-Income Housing Tax Credits ("Tax Credits"), provided for in Section 42 of the Internal Revenue Code of 1986.  Gateway will terminate on December 31, 2040 or sooner, in accordance with the terms of the limited partnership agreement.  As of September 30, 2006, Gateway had received capital contributions of $1,000 from the General Partners and $36,799,000 from the investor Limited Partners.
   Raymond James Partners, Inc. and Raymond James Tax Credit Funds, Inc., wholly-owned subsidiaries of Raymond James Financial, Inc., are the General Partner and Managing General Partner, respectively of Gateway.
   Gateway received capital contributions of $10,395,000, $9,980,000, $6,254,000, $5,043,000 and $5,127,000 from the investor Limited Partners in Series 7, 8, 9, 10 and 11, respectively.  Each Series is treated as though it were a separate partnership, investing in a separate and distinct pool of Project Partnerships.  Income or loss and all tax items from the Project Partnerships acquired by each Series are specifically allocated among the limited partners of such Series.
   Operating profits and losses, cash distributions from operations and Tax Credits from each Series are generally allocated 99% to the Limited Partners in that Series and 1% to the General Partners.  Profit or loss and cash distributions from sales of property by each Series are allocated as formulated in the Limited Partnership Agreement.NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:
Basis of Accounting   Gateway utilizes an accrual basis of accounting whereby revenues are recognized as earned and expenses are recognized as obligations are incurred.
   Gateway accounts for its investments as the limited partner in Project Partnerships ("Investments in Project Partnerships"), using the equity method of accounting, because management believes that Gateway does not have a majority control of the major operating and financial policies of the Project Partnerships in which it invests, and reports the equity in losses of the Project Partnerships on a 3-month lag in the Statement of Operations.  Under the equity method, the Investments in Project Partnerships initially include:
   1)  Gateway's capital contribution,
   2)  Acquisition fees paid to the General Partner for services rendered in
       selecting properties for acquisition, and
   3)  Acquisition expenses including legal fees, travel and other
       miscellaneous costs relating to acquiring properties.Quarterly the Investments in Project Partnerships are increased or decreased as follows:
   1)  Increased for equity in income or decreased for equity in losses of
       the Project Partnerships,
   2)  Decreased for cash distributions received from the Project
       Partnerships, and
   3)  Decreased for the amortization of the acquisition fees and expenses.
   For the fiscal year ended March 31, 2006, Gateway changed the period over which the intangible acquisition fees and expenses are amortized.  In all prior years, the period in which such intangible assets had been amortized was 35 years.  In the fiscal year ended March 31, 2006, this amortization period was changed to 15 years to better approximate the period over which the benefits of these investments are realized.  As a result of this change in estimate, an additional amortization expense of $24,835 for Series 7, $10,553 for Series 8, $9,817 for Series 9, $19,964 for Series 10 and $27,587 for Series 11, or $92,756 for all Series of Gateway, was recognized during the year-ended March 31, 2006, as compared to the amortization expense amount which would have been realized had the estimated amortization period not changed during the year.  The amortization expense is shown on the Statements of Operations.
   Pursuant to the limited partnership agreements for the Project Partnerships, cash losses generated by the Project Partnerships are allocated to the general partners of those partnerships.  In subsequent years, cash profits, if any, are first allocated to the general partners to the extent of the allocation of prior years' cash losses.
   Since Gateway invests as a limited partner, and therefore is not obligated to fund losses or make additional capital contributions, it does not recognize losses from individual Project Partnerships to the extent that these losses would reduce the investment in those Project Partnerships below zero.  The suspended losses will be used to offset future income from the individual Project Partnerships.  Any cash distributions received from Project Partnerships which have a zero investment balance are accounted for as distribution income in the period the cash distribution is received by Gateway.
   Gateway reviews its investments in Project Partnerships to determine if there has been any permanent impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable.  If the sum of the expected future cash flows is less than the carrying amount of the investment, Gateway recognizes an impairment loss.  No impairment loss has been recognized in the accompanying financial statements for the six-month period ended September 30, 2006.  For the fiscal year ended March 31, 2006, impairment expense was recognized in the statement of operations in the following Series and in the following amounts: Series 7 - $193,195, Series 9 - $127,532, Series 10 - $156,694, Series 11 - $600,802.  The total impairment expense for all Series in Gateway for fiscal year 2006 was $1,078,223.  Refer to Note 5
- Investment in Project Partnerships for further details regarding the components of the Investment in Project Partnership balance.
   Gateway, as a limited partner in the Project Partnerships, is subject to risks inherent in the ownership of property which are beyond its control, such as fluctuations in occupancy rates and operating expenses, variations in rental schedules, proper maintenance and continued eligibility of tax credits.  If the cost of operating a property exceeds the rental income earned thereon, Gateway may deem it in its best interest to voluntarily provide funds in order to protect its investment.  Gateway does not guarantee any of the mortgages or other debt of the Project Partnerships.Cash and Cash Equivalents   It is Gateway's policy to include short-term investments with an original maturity of three months or less in Cash and Cash Equivalents.  Short-term investments are comprised of money market mutual funds.

---

NOTE 3 - INVESTMENT IN SECURITIES:   The September 30, 2006 Balance Sheets include Investment in Securities consisting of U.S. Treasury Security Strips and U.S. Treasury Notes which represents their cost, plus accreted interest income of $103,737 for Series 7, $93,226 for Series 8, $70,094 for Series 9, $75,085 for Series 10 and $87,874 for Series 11.  The Investment in Securities are commonly held in a brokerage account with Raymond James and Associates, Inc., an affiliate of the General Partners.  A separate accounting is maintained for each series' share of the investments.

|          | Estimated Market
Value
---------------- | Cost Plus 
Accreted Interest
---------------- | Gross Unrealized
Gains and (Losses)
----------------
|--------- | --------------------------------------- | --------------------------------------------- | ----------------------------------------------------
|Series 7  | $  361,137                              | $  359,130                                    | $   2,007                                           
|Series 8  | 278,230                                 | 276,234                                       | 1,996                                               
|Series 9  | 252,319                                 | 250,287                                       | 2,032                                               
|Series 10 | 229,978                                 | 226,059                                       | 3,919                                               
|Series 11 | 300,802                                 | 293,983                                       | 6,819                                               

As of September 30, 2006, the cost and accreted interest of debt securities by contractual maturities is as follows:

|                                        | Series 7
--------   | Series 8
--------   | Series 9
--------  
|--------------------------------------- | ------------------- | ------------------- | -------------------
|Due within 1 year                       | $ 281,320           | $ 201,704           | $ 168,610          
|After 1 year through 5 years            | 77,810              | 74,530              | 81,677             
|                                        | ---------           | ---------           | ---------          
|Total Amount Carried on
  Balance Sheet | $ 359,130
========= | $ 276,234
========= | $ 250,287
=========



|                                        | Series 10
--------  | Series 11
--------  | Total
--------       
|--------------------------------------- | ------------------- | ------------------- | ---------------------
|Due within 1 year                       | $ 132,195           | $ 188,528           | $  972,357           
|After 1 year through 5 years            | 93,864              | 105,455             | 433,336              
|                                        | ---------           | ---------           | ---------            
|Total Amount Carried on
  Balance Sheet | $ 226,059
========= | $ 293,983
========= | $1,405,693
==========

---

NOTE 4 - RELATED PARTY TRANSACTIONS:   The Payable to General Partners primarily represents the asset management fees owed to the General Partners at the end of the period.  It is unsecured, due on demand and, in accordance with the limited partnership agreement, non-interest bearing.  Within the next 12 months, the Managing General Partner does not intend to demand payment on the portion of Asset Management Fees payable classified as long-term on the Balance Sheet.
   Value Partners, Inc., an affiliate of Gateway, acquired the general partner interest in Logan Heights, one of the Project Partnerships in Series 8, in 2003.
   For the three months ended September 30, 2006 and 2005, the General Partners and affiliates are entitled to compensation and reimbursement for costs and expenses incurred by Gateway as follows:   Asset Management Fee - The Managing General Partner is entitled to receive an annual asset management fee equal to the greater of (i) $2,000 for each limited partnership in which Gateway invests, or (ii) 0.275% of Gateway's gross proceeds from the sale of limited partnership interests.  In either event (i) or (ii), the maximum amount may not exceed 0.2% of the aggregate cost (Gateway's capital contribution plus Gateway's share of the Properties' mortgage) of Gateway's interest in properties owned by the Project Partnerships.  The asset management fee will be paid only after all other expenses of Gateway have been paid.  These fees are included in the Statement of Operations. 
                           2006             2005
                          -----	            -----
  Series 7              $ 43,018         $ 43,224
  Series 8                44,743           44,954
  Series 9                24,650           24,754
  Series 10               16,840           16,910
  Series 11               13,876	          14,010
                        --------         --------
  Total                 $143,127         $143,852
                        ========	        ========   General and Administrative Expenses - The Managing General Partner is reimbursed for general and administrative expenses of Gateway on an accountable basis.  This expense is included in the Statement of Operations.
                           2006             2005
                           -----            -----
  Series 7             $  55,340        $  39,003
  Series 8                61,016           43,004
  Series 9                34,056           24,002
  Series 10               21,285           15,001
  Series 11               17,028           12,001
                        --------         --------
  Total                 $188,725	        $133,011
                        ========         ========

---

NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS:SERIES 7   As of September 30, 2006, the Partnership had acquired a 99% interest in the profits, losses and tax credits as a limited partner in 39 Project Partnerships which own and operate government assisted multi-family housing complexes.  Cash flows from operations are allocated according to each Partnership agreement.  Upon dissolution proceeds will be distributed according to each Partnership agreement.
   The following is a summary of Investments in the 39 Project Partnerships as of:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | SEPTEMBER 30,
2006
------------                                                                                            | MARCH 31,
2006
------------                                                                                               
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------
|Capital Contributions to Project Partnerships and purchase price paid for limited partner interests in Project Partnerships
Cumulative equity in losses of Project Partnerships (1)
Cumulative distributions received from Project Partnerships
Investment in Project Partnerships before adjustment
Excess of investment cost over the underlying assets acquired:
 Acquisition fees and expenses
 Accumulated amortization of acquisition
 fees and expenses
 Impairment of Investment in Project
 Partnership
Investments in Project Partnerships | $ 7,732,089 
(7,246,349)
(247,038)
-----------
238,702 
793,335 
(240,610)
(193,195)
-----------
$   598,232 
============ | $ 7,732,089 
(7,224,499)
(241,747)
-----------
265,843 
793,335 
(224,238)
(193,195)
-----------
$   641,745 
============

(1) In accordance with the Partnership's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $5,034,646 for the period ended September 30, 2006 and cumulative suspended losses of $4,825,178 for the year ended March 31, 2006 are not included.

---

NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):SERIES 8   As of September 30, 2006, the Partnership had acquired a 99% interest in the profits, losses and tax credits as a limited partner in 43 Project Partnerships which own and operate government assisted multi-family housing complexes.  Cash flows from operations are allocated according to each Partnership agreement.  Upon dissolution proceeds will be distributed according to each Partnership agreement.
   The following is a summary of Investments in the 43 Project Partnerships as of:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | SEPTEMBER 30,
2006
------------                                                                                 | MARCH 31,
2006
------------                                                                                    
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------
|Capital Contributions to Project Partnerships and purchase price paid for limited partner interests in Project Partnerships
Cumulative equity in losses of Project Partnerships (1)
Cumulative distributions received from Project Partnerships
Investment in Project Partnerships before adjustment
Excess of investment cost over the underlying assets acquired:
 Acquisition fees and expenses
 Accumulated amortization of acquisition
 fees and expenses
Investments in Project Partnerships | $ 7,586,105 
(7,413,528)
(178,803)
-----------
(6,226)
549,773 
(137,684)
-----------
$   405,863 
============ | $ 7,586,105 
(7,414,683)
(174,579)
-----------
(3,157)
549,773 
(131,272)
-----------
$   415,344 
============

(1) In accordance with the Partnership's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $5,749,539 for the period ended September 30, 2006 and cumulative suspended losses of $5,547,391 for the year ended March 31, 2006 are not included.

---

NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):SERIES 9   As of September 30, 2006, the Partnership had acquired a 99% interest in the profits, losses and tax credits as a limited partner in 24 Project Partnerships which own and operate government assisted multi-family housing complexes.  Cash flows from operations are allocated according to each Partnership agreement.  Upon dissolution proceeds will be distributed according to each Partnership agreement.
   The following is a summary of Investments in the 24 Project Partnerships as of:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | SEPTEMBER 30,
2006
------------                                                                                           | MARCH 31,
2006
------------                                                                                              
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------
|Capital Contributions to Project Partnerships and purchase price paid for limited partner interests in Project Partnerships
Cumulative equity in losses of Project Partnerships (1)
Cumulative distributions received from Project Partnerships
Investment in Project Partnerships before adjustment
Excess of investment cost over the underlying assets acquired:
 Acquisition fees and expenses
 Accumulated amortization of acquisition
 fees and expenses
 Impairment of Investment in Project
 Partnership
Investments in Project Partnerships | $ 4,914,116 
(4,304,461)
(151,886)
-----------
457,769 
244,087 
(77,396)
(127,532)
-----------
$   496,928 
============ | $ 4,914,116 
(4,260,098)
(148,761)
-----------
505,257 
244,087 
(71,370)
(127,532)
-----------
$   550,442 
============

(1) In accordance with the Partnership's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $1,900,491 for the period ended September 30, 2006 and cumulative suspended losses of $1,792,373 for the year ended March 31, 2006 are not included.

---

NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):SERIES 10   As of September 30, 2006, the Partnership had acquired a 99% interest in the profits, losses and tax credits as a limited partner in 15 Project Partnerships which own and operate government assisted multi-family housing complexes.  Cash flows from operations are allocated according to each Partnership agreement.  Upon dissolution proceeds will be distributed according to each Partnership agreement.
   The following is a summary of Investments in the 15 Project Partnerships as of:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | SEPTEMBER 30,
2006
------------                                                                                             | MARCH 31,
2006
------------                                                                                                
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------
|Capital Contributions to Project Partnerships and purchase price paid for limited partner interests in Project Partnerships
Cumulative equity in losses of Project Partnerships (1)
Cumulative distributions received from Project Partnerships
Investment in Project Partnerships before adjustment
Excess of investment cost over the underlying assets acquired:
 Acquisition fees and expenses
 Accumulated amortization of acquisition
 fees and expenses
 Impairment of Investment in Project
 Partnership
Investments in Project Partnerships | $ 3,914,672 
(2,366,824)
(203,043)
-----------
1,344,805 
196,738 
(95,356)
(156,694)
-----------
$ 1,289,493 
============ | $ 3,914,672 
(2,318,920)
(191,535)
-----------
1,404,217 
196,738 
(83,302)
(156,694)
-----------
$ 1,360,959 
============

(1) In accordance with the Partnership's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $379,607 for the period ended September 30, 2006 and cumulative suspended losses of $346,072 for the year ended March 31, 2006 are not included.

---

NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):SERIES 11   As of September 30, 2006, the Partnership had acquired a 99% interest in the profits, losses and tax credits as a limited partner in 12 Project Partnerships which own and operate government assisted multi-family housing complexes.  Cash flows from operations are allocated according to each Partnership agreement.  Upon dissolution proceeds will be distributed according to each Partnership agreement.
   The following is a summary of Investments in the 12 Project Partnerships as of:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | SEPTEMBER 30,
2006
------------                                                                                              | MARCH 31,
2006
------------                                                                                                 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------
|Capital Contributions to Project Partnerships and purchase price paid for limited partner interests in Project Partnerships
Cumulative equity in losses of Project Partnerships (1)
Cumulative distributions received from Project Partnerships
Investment in Project Partnerships before adjustment
Excess of investment cost over the underlying assets acquired:
 Acquisition fees and expenses
 Accumulated amortization of acquisition
 fees and expenses
 Impairment of Investment in Project
 Partnership
Investments in Project Partnerships | $ 4,128,042 
(1,603,936)
(174,352)
-----------
2,349,754 
290,335 
(131,246)
(600,802)
-----------
$ 1,908,041 
============ | $ 4,128,042 
(1,604,163)
(172,565)
-----------
2,351,314 
290,335 
(114,498)
(600,802)
-----------
$ 1,926,349 
============

(1) In accordance with the Partnership's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $602,725 for the period September 30, 2006 and cumulative suspended losses of $546,725 for the year ended March 31, 2006 are not included.

---

NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):TOTAL SERIES 7 - 11   The following is a summary of Investments in Project Partnerships as of:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | SEPTEMBER 30,
2006
------------                                                                                                    | MARCH 31,
2006
------------                                                                                                           
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------
|Capital Contributions to Project Partnerships and purchase price paid for limited partner interests in Project Partnerships
Cumulative equity in losses of Project Partnerships (1)
Cumulative distributions received from Project Partnerships
Investment in Project Partnerships before adjustment
Excess of investment cost over the underlying assets acquired:
 Acquisition fees and expenses
 Accumulated amortization of acquisition
 fees and expenses
 Impairment of Investment in Project
 Partnership
Investments in Project Partnerships | $ 28,275,024 
(22,935,098)
(955,122)
-----------
4,384,804 
2,074,268 
(682,292)
(1,078,223)
-----------
$ 4,698,557 
============ | $ 28,275,024 
(22,822,363)
(929,187)
------------
4,523,474 
2,074,268 
(624,680)
(1,078,223)
------------
$  4,894,839 
=============

---

NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):SERIES 7   In accordance with the Partnership's policy of presenting the financial information of the Project Partnerships on a three-month lag, below is the summarized financial information for the Series' Project Partnerships as of 
June 30, of each year:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 2006
----                                                                                                                                                                                                                                                                                                                                                                                                                                 | 2005
----                                                                                                                                                                                                                                                                                                                                                                                                                                
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|SUMMARIZED BALANCE SHEETS
Assets:
  Current assets
  Investment properties, net
  Other assets
    Total assets
Liabilities and Partners' Equity:
  Current liabilities
  Long-term debt
    Total liabilities
Partners' equity (deficit)
  Limited Partner
  General Partners
    Total Partners' equity (deficit)
    Total liabilities and partners' equity
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income
Expenses:
  Operating expenses
  Interest expense
  Depreciation and amortization
    Total expenses
      Net loss
Other partners' share of net loss
Partnerships' share of net loss
Suspended losses
Equity in Losses of Project Partnerships | $ 4,389,278 
26,532,590 
56,584 
------------
$30,978,452 
============
$   673,983 
35,642,424 
------------
36,316,407 
------------
(4,975,425)
(362,530)
------------
(5,337,955)
------------
$30,978,452 
============
$ 2,616,827 
------------
1,732,943 
381,079 
736,460 
------------
2,850,482 
------------
$  (233,655)
============
$    (2,337)
============
$  (231,318)
209,468 
------------
$   (21,850)
============ | $ 4,081,191 
27,882,864 
21,049 
------------
$31,985,104 
============
$   716,603 
35,849,766 
------------
36,566,369 
------------
(4,271,797)
(309,468)
------------
(4,581,265)
------------
$31,985,104 
============
$ 2,472,841 
------------
1,688,423 
382,812 
747,859 
------------
2,819,094 
------------
$  (346,253)
============
$    (3,462)
============
$  (342,791)
300,052 
------------
$   (42,739)
============

---

NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):SERIES 8   In accordance with the Partnership's policy of presenting the financial information of the Project Partnerships on a three-month lag, below is the summarized financial information for the Series' Project Partnerships as of 
June 30, of each year:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 2006
----                                                                                                                                                                                                                                                                                                                                                                                                                                 | 2005
----                                                                                                                                                                                                                                                                                                                                                                                                                                
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|SUMMARIZED BALANCE SHEETS
Assets:
  Current assets
  Investment properties, net
  Other assets
    Total assets
Liabilities and Partners' Equity:
  Current liabilities
  Long-term debt
    Total liabilities
Partners' equity (deficit)
  Limited Partner
  General Partners
    Total Partners' equity (deficit)
    Total liabilities and partners' equity
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income
Expenses:
  Operating expenses
  Interest expense
  Depreciation and amortization
    Total expenses
      Net loss
Other partners' share of net loss
Partnerships' share of net loss
Suspended losses
Equity in Income of Project Partnerships | $ 4,235,582 
27,900,068 
62,851 
------------
$32,198,501 
============
$ 1,010,337 
37,532,816 
------------
38,543,153 
------------
(5,631,359)
(713,293)
------------
(6,344,652)
------------
$32,198,501 
============
$ 2,632,965 
------------
1,679,205 
415,395 
742,626 
------------
2,837,226 
------------
$  (204,261)
============
$    (3,268)
============
$  (200,993)
202,148 
------------
$     1,155 
============ | $ 3,937,978 
29,143,062 
99,780 
------------
$33,180,820 
============
$ 1,045,729 
37,745,148 
------------
38,790,877 
------------
(4,967,719)
(642,338)
------------
(5,610,057)
------------
$33,180,820 
============
$ 2,484,614 
------------
1,615,234 
420,407 
755,915 
------------
2,791,556 
------------
$  (306,942)
============
$    (4,147)
============
$  (302,795)
310,277 
------------
$     7,482 
============

(1)  As discussed in Note 4, an affiliate of the General Partner (Value Partners, Inc.) is the operating general partner in one of the Project Partnerships included above (Logan Heights).  The Logan Heights Project Partnership is not consolidated in Gateway's financial statements as Gateways investment in Logan Heights is accounted for under the equity method.  The information below is included for related party disclosure purposes.  The Project Partnership's financial information for the periods ending June 2006 and June 2005 is as follows:

|                       | June 2006  | June 2005 
|---------------------- | ---------- | ----------
|Total Assets           | $ 576,837  | $ 565,465 
|Total Liabilities      | (823,000)  | 821,647   
|Gateway Equity         | (129,873)  | (139,791) 
|Other Partner's Equity | (116,290)  | (116,391) 
|Total Revenue          | 56,009     | 47,805    
|Net Loss               | $  (3,568) | $ (11,264)

---

NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):SERIES 9   In accordance with the Partnership's policy of presenting the financial information of the Project Partnerships on a three-month lag, below is the summarized financial information for the Series' Project Partnerships as of 
June 30, of each year:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 2006
----                                                                                                                                                                                                                                                                                                                                                                                                                              | 2005
----                                                                                                                                                                                                                                                                                                                                                                                                                             
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|SUMMARIZED BALANCE SHEETS
Assets:
  Current assets
  Investment properties, net
  Other assets
    Total assets
Liabilities and Partners' Equity:
  Current liabilities
  Long-term debt
    Total liabilities
Partners' equity (deficit)
  Limited Partner
  General Partners
    Total Partners' equity (deficit)
    Total liabilities and partners' equity
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income
Expenses:
  Operating expenses
  Interest expense
  Depreciation and amortization
    Total expenses
      Net loss
Other partners' share of net loss
Partnerships' share of net loss
Suspended losses
Equity in Losses of Project Partnerships | $ 2,263,082 
16,085,769 
5,364 
------------
$18,354,215 
============
$   252,977 
19,934,839 
------------
20,187,816 
------------
(1,496,234)
(337,367)
------------
(1,833,601)
------------
$18,354,215 
============
$ 1,288,287 
------------
845,850 
212,526 
383,932 
------------
1,442,308 
------------
$  (154,021)
============
$    (1,540)
============
$  (152,481)
108,118 
------------
$   (44,363)
============ | $ 2,047,879 
16,771,553 
4,868 
------------
$18,824,300 
============
$   220,397 
20,040,773 
------------
20,261,170 
------------
(1,129,384)
(307,486)
------------
(1,436,870)
------------
$18,824,300 
============
$ 1,263,556 
------------
825,196 
215,958 
393,015 
------------
1,434,169 
------------
$  (170,613)
============
$    (1,706)
============
$  (168,907)
122,369 
------------
$   (46,538)
============

---

NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):SERIES 10   In accordance with the Partnership's policy of presenting the financial information of the Project Partnerships on a three-month lag, below is the summarized financial information for the Series' Project Partnerships as of 
June 30, of each year:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 2006
----                                                                                                                                                                                                                                                                                                                                                                                                                     | 2005
----                                                                                                                                                                                                                                                                                                                                                                                                                      
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|SUMMARIZED BALANCE SHEETS
Assets:
  Current assets
  Investment properties, net
  Other assets
    Total assets
Liabilities and Partners' Equity:
  Current liabilities
  Long-term debt
    Total liabilities
Partners' equity (deficit)
  Limited Partner
  General Partners
    Total Partners' equity
    Total liabilities and partners' equity
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income
Expenses:
  Operating expenses
  Interest expense
  Depreciation and amortization
    Total expenses
      Net loss
Other partners' share of net loss
Partnerships' share of net loss
Suspended losses
Equity in Losses of Project Partnerships | $ 1,856,453 
12,030,765 
2,180 
------------
$13,889,398 
============
$   283,456 
13,054,976 
------------
13,338,432 
------------
956,738 
(405,772)
------------
550,966 
------------
$13,889,398 
============
$   874,031 
------------
606,314 
118,098 
232,946 
------------
957,358 
------------
$   (83,327)
============
$    (1,888)
============
$   (81,439)
33,535 
------------
$   (47,904)
============ | $ 1,849,550 
12,418,323 
3,124 
------------
$14,270,997 
============
$   289,768 
13,126,101 
------------
13,415,869 
------------
1,234,655 
(379,527)
------------
855,128 
------------
$14,270,997 
============
$   843,396 
------------
563,954 
122,710 
234,824 
------------
921,488 
------------
$   (78,092)
============
$    (1,152)
============
$   (76,940)
22,516 
------------
$   (54,424)
============

---

NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):SERIES 11   In accordance with the Partnership's policy of presenting the financial information of the Project Partnerships on a three-month lag, below is the summarized financial information for the Series' Project Partnerships as of 
June 30, of each year:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 2006
----                                                                                                                                                                                                                                                                                                                                                                                                                         | 2005
----                                                                                                                                                                                                                                                                                                                                                                                                                         
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|SUMMARIZED BALANCE SHEETS
Assets:
  Current assets
  Investment properties, net
  Other assets
    Total assets
Liabilities and Partners' Equity:
  Current liabilities
  Long-term debt
    Total liabilities
Partners' equity (deficit)
  Limited Partner
  General Partners
    Total Partners' equity
    Total liabilities and partners' equity
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income
Expenses:
  Operating expenses
  Interest expense
  Depreciation and amortization
    Total expenses
      Net loss
Other partners' share of net loss
Partnerships' share of net loss
Suspended losses
Equity in Income (Losses) of Project
Partnerships | $ 1,076,448 
10,095,642 
264,912 
------------
$11,437,002 
============
$   120,269 
9,847,071 
------------
9,967,340 
------------
1,753,082 
(283,420)
------------
1,469,662 
------------
$11,437,002 
============
$   827,452 
------------
527,037 
106,178 
252,660 
------------
885,875 
------------
$   (58,423)
============
$    (2,650)
============
$   (55,773)
56,000 
------------
$       227 
============ | $   963,056 
10,539,081 
323,930 
------------
$11,826,067 
============
$   179,820 
9,982,493 
------------
10,162,313 
------------
1,947,356 
(283,602)
------------
1,663,754 
------------
$11,826,067 
============
$   788,763 
------------
578,062 
108,885 
255,290 
------------
942,237 
------------
$  (153,474)
============
$   (10,174)
============
$  (143,300)
86,742 
------------
$   (56,558)
============

---

NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):TOTAL SERIES 7 - 11   In accordance with the Partnership's policy of presenting the financial information of the Project Partnerships on a three-month lag, below is the summarized financial information for the Series' Project Partnerships as of 
June 30, of each year:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 2006
----                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 2005
----                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|SUMMARIZED BALANCE SHEETS
Assets:
  Current assets
  Investment properties, net
  Other assets
    Total assets
Liabilities and Partners' Equity:
  Current liabilities
  Long-term debt
    Total liabilities
Partners' equity (deficit)
  Limited Partner
  General Partners
    Total Partners' equity (deficit)
    Total liabilities and partners' equity
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income
Expenses:
  Operating expenses
  Interest expense
  Depreciation and amortization
    Total expenses
      Net loss
Other partners' share of net loss
Partnerships' share of net loss
Suspended losses
Equity in Losses of Project Partnerships | $ 13,820,843 
92,644,834 
391,891 
------------
$106,857,568 
============
$  2,341,022 
116,012,126 
------------
118,353,148 
------------
(9,393,198)
(2,102,382)
------------
(11,495,580)
------------
$106,857,568 
============
$  8,239,562 
------------
5,391,349 
1,233,276 
2,348,624 
------------
8,973,249 
------------
$   (733,687)
============
$    (11,683)
============
$   (722,004)
609,269 
------------
$   (112,735)
============ | $ 12,879,654 
96,754,883 
452,751 
------------
$110,087,288 
============
$  2,452,317 
116,744,281 
------------
119,196,598 
------------
(7,186,889)
(1,922,421)
------------
(9,109,310)
------------
$110,087,288 
============
$  7,853,170 
------------
5,270,869 
1,250,772 
2,386,903 
------------
8,908,544 
------------
$ (1,055,374)
============
$    (20,641)
============
$ (1,034,733)
841,956 
------------
$   (192,777)
============

---

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations, Liquidity and Capital Resources
   Overview - The proceeds from Limited Partner investors' capital contributions available for investment are used to acquire interests in Project Partnerships.
   As disclosed on the statement of operations for each Series, interest income is comparable for the six months ended September 30, 2006 and September 30, 2005.  Equity in Losses of Project Partnerships for the six months ended September 30, 2006 decreased from $192,777 for the six months ended September 30, 2005 to $112,735.  The decrease in Equity in Losses of Project Partnerships is a result of a greater increase in rental revenue than operating costs of the Project Partnerships.  The General and Administrative Expenses - Other increased from $55,002 for the six months ended September 30, 2005 to $88,151 for the six months ended September 30, 2006.  The General and Administrative Expenses - General Partner was significantly higher.  This increase was due to higher administrative costs incurred by the General Partner.
   The capital resources of each Series are used to pay General and Administrative operating costs including personnel, supplies, data processing, travel and legal and third-party tax and audit fees associated with the administration and monitoring of Gateway and the Project Partnerships.  The capital resources are also used to pay the Asset Management Fee due the Managing General Partner, but only to the extent that Gateway's remaining resources are sufficient to fund Gateway's ongoing needs.  (Payment of any Asset Management Fee unpaid at the time Gateway sells its interests in the Project Partnerships is subordinated to the investors' return of their original capital contribution.)
   The sources of funds to pay the operating costs of each Series are short-term investments and interest earned thereon, the maturity of U.S. Treasury Security Strips ("Zero Coupon Treasuries") and U.S Treasury Notes (purchased in July 2006) which were purchased with funds set aside for this purpose, and cash distributed to the Series from the operations of the Project Partnerships.
   Due to the rent limitations applicable to the Project Partnerships projects as a result of their qualifying for Low-Income Housing Tax Credits, Gateway does not expect there to be a significant increase in future rental income of the Project Partnerships.
   Series 7 - Gateway closed this series on October 16, 1992 after receiving $10,395,000 from 635 Limited Partner investors.  Equity in Losses of Project Partnerships for the six months ended September 30, 2006 decreased from $42,739 for the six months ended September 30, 2005 to $21,850 due to an increase in rental revenue at the Project Partnerships.  In general, it is common in the real estate industry to experience losses for financial and tax reporting purposes because of the non-cash expenses of depreciation and amortization.  As a result, management expects that this Series, as well as those described below, will report its equity in Project Partnerships as a loss for tax and financial reporting purposes.  Overall, management believes the Project Partnerships are operating as expected and are generating tax credits which meet projections.
   At September 30, 2006, the Series had $139,904 of short-term investments (Cash and Cash Equivalents).  It also had $156,799 in Zero Coupon Treasuries with annual maturities providing $81,000 in the current fiscal year and $86,000 in fiscal year 2008.  In addition, the Series had $202,331 in U.S. Treasury Notes with a maturity value of $203,000 at June 30, 2007.  Management believes these sources of funds are sufficient to meet current and ongoing operating costs for the foreseeable future and to pay part of the Asset Management Fee.
   As disclosed on the statement of cash flows, the Series had a net loss of $130,982 for the six months ended September 30, 2006.  However, after considering the Equity in Losses of Project Partnerships of $21,850 and the changes in operating assets and liabilities, net cash used in operating activities was $75,279.  Cash used in investing activities totaled $178,847, consisting of cash distributions from the Project Partnerships, offset by the purchase of U.S. Treasury Notes in July 2006.   Series 8 - Gateway closed this Series on September 28, 1993 after receiving $9,980,000 from 664 Limited Partner investors.  Equity in Income of Project Partnerships for the six months ended September 30, 2006 decreased from $7,482 for the six months ended September 30, 2005 to $1,155.  At September 30, 2006, the Series had $113,572 of short-term investments (Cash and Cash Equivalents).  It also had $149,651 in Zero Coupon Treasuries with annual maturities providing $77,000 in the current fiscal year and $82,000 in fiscal year 2008.  In addition, the Series had $126,583 in U.S. Treasury Notes with a maturity value of $127,000 at June 30, 2007.  Management believes these sources of funds are sufficient to meet current and ongoing operating costs for the foreseeable future and to pay part of the Asset Management Fee.
   As disclosed on the statement of cash flows, the Series had a net loss of $116,104 for the six months ended September 30, 2006.  However, after considering the Equity in Income of Project Partnerships of $1,155 and the changes in operating assets and liabilities, net cash used in operating activities was $83,122.  Cash used in investing activities totaled $112,624, consisting of cash distributions from the Project Partnerships, offset by the purchase of U.S. Treasury Notes in July 2006.   Series 9 - Gateway closed this Series on December 31, 1993 after receiving $6,254,000 from 406 Limited Partner investors.  Equity in Losses of Project Partnerships for the six months ended September 30, 2006 decreased from $46,538 for the six months ended September 30, 2005 to $44,363.  At September 30, 2006, the Series had $58,285 of short-term investments (Cash and Cash Equivalents). It also had $123,704 in Zero Coupon Treasuries with annual maturities providing $43,000 in the current fiscal year, $45,000 in fiscal year 2008 and $47,000 in fiscal year 2009.  In addition, the Series had $126,583 in U.S. Treasury Notes with a maturity value of $127,000 at June 30, 2007.  Management believes these sources of funds are sufficient to meet current and ongoing operating costs for the foreseeable future and to pay part of the Asset Management Fee.
   As disclosed on the statement of cash flows, the Series had a net loss of $110,366 for the six months ended September 30, 2006.  However, after considering the Equity in Losses of Project Partnerships of $44,363 and the changes in operating assets and liabilities, net cash used in operating activities was $47,465.  Cash used in investing activities totaled $117,243, consisting of cash distributions from the Project Partnerships, offset by the purchase of U.S. Treasury Notes in July 2006.
   Series 10 - Gateway closed this Series on January 21, 1994 after receiving $5,043,000 from 325 Limited Partner investors. Equity in Losses of Project Partnerships for the six months ended September 30, 2006 decreased from $54,424 for the six months ended September 30, 2005 to $47,904 as a result of an increase in suspended losses.  Suspended losses are a direct result of the Investment balance in any single Project Partnership reaching a zero balance.  Since more Project Partnerships have accumulated enough losses resulting in a zero balance, additional losses are suspended since the Partnership's accounting policy is to not carry Investments in Project Partnerships below zero.  At September 30, 2006, the Series had $25,190 of short-term investments (Cash and Cash Equivalents). It also had $125,390 in Zero Coupon Treasuries with annual maturities providing $32,000 in the current fiscal year, $34,000 in fiscal year 2008, $36,000 in fiscal year 2009 and $40,000 in fiscal year 2010.  In addition, the Series had $100,669 in U.S. Treasury Notes with a maturity value of $101,000 at June 30, 2007.  Management believes these sources of funds are sufficient to meet current and ongoing operating costs for the foreseeable future and to pay part of the Asset Management Fee.
   As disclosed on the statement of cash flows, the Series had a net loss of $101,087 for the six months ended September 30, 2006.  However, after considering the Equity in Losses of Project Partnerships of $47,904 and the changes in operating assets and liabilities, net cash used in operating activities was $32,845.  Cash used in investing activities totaled $86,662, consisting of cash distributions from the Project Partnerships, offset by the purchase of U.S. Treasury Notes in July 2006.
   Series 11 - Gateway closed this Series on April 29, 1994 after receiving $5,127,000 from 330 Limited investors.  Equity in Losses of Project Partnerships for the six months ended September 30, 2006 decreased from a loss of $56,558 for the six months ended September 30, 2005 to income of $227 as a result of higher rental and other income and lower operating expenses.  At September 30, 2006, the Series had $26,846 of short-term investments (Cash and Cash Equivalents).  It also had $142,483 in Zero Coupon Treasuries with annual maturities providing $38,000 in the current fiscal year, $40,000 in fiscal year 2008, $42,000 in fiscal year 2009 and $44,000 in fiscal year 2010.  In addition, the Series had $151,500 in U.S. Treasury Notes with a maturity value of $152,000 at June 30, 2007.  Management believes these sources of funds are sufficient to meet current and ongoing operating costs for the foreseeable future and to pay part of the Asset Management Fee.
   As disclosed on the statement of cash flows, the Series had a net loss of $47,194 for the six months ended September 30, 2006.  However, after considering the Equity in Income of Project Partnerships of $227 and the changes in operating assets and liabilities, net cash used in operating activities was $34,795.  Cash used in investing activities totaled $145,849, consisting of cash distributions from Project Partnerships, offset by the purchase of U.S. Treasury Notes in July 2006.

---

Item 3.  Quantitative and Qualitative Disclosure About Market Risk:
   As a small business issuer, no information is required.
Item 4.  Controls and Procedures:
   Within 90 days prior to the filing of this report, under the supervision and with the participation of the Partnership's management, including the Managing General Partner's chief executive and chief financial officers, an evaluation of the effectiveness of the Partnership's disclosure controls and procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of 1934) was performed.  Based on this evaluation, such officers have concluded that the Partnership's disclosure controls and procedures were effective as of the date of that evaluation in alerting them in a timely manner to material information relating to the Partnership required to be included in this report and the Partnership's other reports that it files or submits under the Securities Exchange Act of 1934.  There were no significant changes in the Partnership's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

PART II - Other Information

Item 1.  Legal Proceedings:
   None.
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds:
   None.
Item 3.  Defaults upon Senior Securities:
   None.
Item 4.  Submission of Matters to a Vote of Security Holders:
   None.
Item 5.  Other Information:
   None.
Item 6.  Exhibits:
   31.1 Principal Executive Officer Certification as required by Rule 13a-   14(a)/15d-14(a), filed herewith.
   31.2 Principal Financial Officer Certification as required by Rule 13a-   14(a)/15d-14(a), filed herewith.
   32. Certification of the Chief Executive Officer and Chief Financial Officer    Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of    the Sarbanes-Oxley Act of 2002, filed herewith.

---



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

GATEWAY TAX CREDIT FUND III, LTD.
                                  (A Florida Limited Partnership)
                                  By: Raymond James Tax Credit Funds, Inc.
                                      (Managing General Partner)

Date: November 16, 2006           By:/s/ Ronald M. Diner                                  Ronald M. Diner
                                  President
Date: November 16, 2006           By:/s/ Jonathan Oorlog
                                  Jonathan Oorlog
                                  Vice President and Chief Financial Officer
Date: November 16, 2006           By:/s/ Sandra C. Humphreys
                                  Sandra C. Humphreys
                                  Secretary and Treasurer

---

EXHIBIT 31.1
CERTIFICATIONS*

I, Ron Diner, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Gateway Tax Credit Fund, III, Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 16, 2006          By:/s/ Ronald M. Diner                                 Ronald M. Diner
                                 President
                                 Raymond James Tax Credit Funds, Inc.
                                 (Managing General Partner)

---

EXHIBIT 31.2
CERTIFICATIONS*

I, Jonathan Oorlog, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Gateway Tax Credit Fund, III, Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 16, 2006          By:/s/ Jonathan Oorlog
                                 Jonathan Oorlog
                                 Vice President and Chief Financial Officer
                                 Raymond James Tax Credit Funds, Inc.
                                 (Managing General Partner)

---

EXHIBIT 32

CERTIFICATION PURSUANT TO 
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO 
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Gateway Tax Credit Fund III, Ltd.; (the "Partnership") on Form 10-Q for the period ended September 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

/s/ Ronald M. DinerRonald M. Diner
President
Raymond James Tax Credit Funds, Inc.
(Managing General Partner)
November 16, 2006/s/ Jonathan OorlogJonathan Oorlog
Vice President and Chief Financial Officer
Raymond James Tax Credit Funds, Inc.
(Managing General Partner)
November 16, 2006