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 June 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | JUNE 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 June 30, 2006 and March 31, 2006)
General Partners
  Total Partners' Equity
    Total Liabilities and Partners' Equity | $  374,087 
77,549 
-----------
451,636 
76,376 
620,044 
-----------
$1,148,056 
===========
$   54,074 
-----------
54,074 
-----------
665,935 
-----------
515,045 
(86,998)
-----------
428,047 
-----------
$1,148,056 
=========== | $  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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | JUNE 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 June 30, 2006 and March 31, 2006)
General Partners
  Total Partners' Equity
    Total Liabilities and Partners' Equity | $  287,350 
73,826 
24,220 
-----------
385,396 
73,232 
416,400 
-----------
$  875,028 
===========
$   44,745 
-----------
44,745 
-----------
706,677 
-----------
209,995 
(86,389)
-----------
123,606 
-----------
$  875,028 
=========== | $  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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | JUNE 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 June 30, 2006 and March 31, 2006)
General Partners
  Total Partners' Equity
    Total Liabilities and Partners' Equity | $  210,417 
41,381 
-----------
251,798 
80,396 
535,224 
-----------
$  867,418 
===========
$   25,733 
-----------
25,733 
-----------
440,973 
-----------
451,541 
(50,829)
-----------
400,712 
-----------
$  867,418 
=========== | $  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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | JUNE 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 June 30, 2006 and March 31, 2006)
General Partners
  Total Partners' Equity
    Total Liabilities and Partners' Equity | $  140,533 
30,975 
-----------
171,508 
92,197 
1,338,644 
-----------
$1,602,349 
===========
$   28,472 
-----------
28,472 
-----------
53,543 
-----------
1,549,309 
(28,975)
-----------
1,520,334 
-----------
$1,602,349 
=========== | $  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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | JUNE 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 June 30, 2006 and March 31, 2006)
General Partners
  Total Partners' Equity
    Total Liabilities and Partners' Equity | $  192,838 
36,349 
-----------
229,187 
103,489 
1,931,368 
-----------
$2,264,044 
===========
$    9,783 
-----------
9,783 
-----------
2,277,709 
(23,448)
-----------
2,254,261 
-----------
$2,264,044 
=========== | $  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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | JUNE 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 June 30, 2006 and March 31, 2006)
General Partners
  Total Partners' Equity
    Total Liabilities and Partners' Equity | $ 1,205,225 
260,080 
24,220 
------------
1,489,525 
425,690 
4,841,680 
-----------
$ 6,756,895 
===========
$   162,807 
-----------
162,807 
-----------
1,867,128 
-----------
5,003,599 
(276,639)
-----------
4,726,960 
-----------
$ 6,756,895 
=========== | $ 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 JUNE 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 | $    4,626 
-----------
4,626 
-----------
21,509 
23,938 
2,883 
8,721 
-----------
57,051 
-----------
(52,425)
(8,794)
6,903 
-----------
$  (54,316)
===========
$  (53,773)
(543)
-----------
$  (54,316)
===========
$    (5.17)
===========
10,395 
=========== | $    4,363 
-----------
4,363 
-----------
21,612 
17,902 
5,561 
1,553 
-----------
46,628 
-----------
(42,265)
(27,286)
6,071 
-----------
$  (63,480)
===========
$  (62,845)
(635)
-----------
$  (63,480)
===========
$    (6.05)
===========
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 JUNE 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 | $    7,529 
-----------
7,529 
-----------
22,372 
26,393 
2,621 
3,206 
-----------
54,592 
-----------
(47,063)
7,220 
5,727 
-----------
$  (34,116)
===========
$  (33,775)
(341)
-----------
$  (34,116)
===========
$    (3.38)
===========
9,980 
=========== | $    9,521 
-----------
9,521 
-----------
22,477 
19,738 
5,998 
567 
-----------
48,780 
-----------
(39,259)
4,683 
5,359 
-----------
$  (29,217)
===========
$  (28,925)
(292)
-----------
$  (29,217)
===========
$    (2.90)
===========
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 JUNE 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 
-----------
12,325 
14,731 
1,220 
3,013 
-----------
31,289 
-----------
(26,480)
(11,605)
4,198 
-----------
$  (33,887)
===========
$  (33,548)
(339)
-----------
$  (33,887)
===========
$    (5.36)
===========
6,254 
=========== | $    3,042 
-----------
3,042 
-----------
12,377 
11,017 
4,211 
594 
-----------
28,199 
-----------
(25,157)
(23,218)
3,651 
-----------
$  (44,724)
===========
$  (44,277)
(447)
-----------
$  (44,724)
===========
$    (7.08)
===========
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 JUNE 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 
-----------
8,420 
9,207 
1,445 
6,027 
-----------
25,099 
-----------
(23,718)
(9,512)
3,690 
-----------
$  (29,540)
===========
$  (29,245)
(295)
-----------
$  (29,540)
===========
$    (5.80)
===========
5,043 
=========== | $    1,380 
-----------
1,380 
-----------
8,455 
6,886 
2,179 
1,191 
-----------
18,711 
-----------
(17,331)
(20,054)
3,315 
-----------
$  (34,070)
===========
$  (33,729)
(341)
-----------
$  (34,070)
===========
$    (6.69)
===========
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 JUNE 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 | $        0 
-----------
0 
-----------
6,938 
7,365 
933 
8,374 
-----------
23,610 
-----------
(23,610)
15,180 
4,680 
-----------
$   (3,750)
===========
$   (3,712)
(38)
-----------
$   (3,750)
===========
$     (.72)
===========
5,127 
=========== | $      987 
-----------
987 
-----------
7,005 
5,508 
2,010 
1,477 
-----------
16,000 
-----------
(15,013)
(24,224)
4,147 
-----------
$  (35,090)
===========
$  (34,739)
(351)
-----------
$  (35,090)
===========
$    (6.78)
===========
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 JUNE 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 | $   18,345 
-----------
18,345 
-----------
71,564 
81,634 
9,102 
29,341 
-----------
191,641 
-----------
(173,296)
(7,511)
25,198 
-----------
$ (155,609)
===========
$ (154,053)
(1,556)
-----------
$ (155,609)
=========== | $   19,293 
-----------
19,293 
-----------
71,926 
61,051 
19,959 
5,382 
-----------
158,318 
-----------
(139,025)
(90,099)
22,543 
-----------
$ (206,581)
===========
$ (204,515)
(2,066)
-----------
$ (206,581)
===========

See accompanying notes to financial statements.

---

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

|SERIES 7                                                                                                                | Limited
Partners
---------                                                                                                | General
Partners
--------                                                                                     | Total
-----                                                                                                             
|----------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------
|Balance at March 31, 2005
Net Loss
Balance at June 30, 2005
Balance at March 31, 2006
Net Loss
Balance at June 30, 2006 | $ 1,031,936 
(62,845)
------------
$   969,091 
============
$   568,818 
(53,773)
------------
$   515,045 
============ | $  (81,777)
(635)
-----------
$  (82,412)
===========
$  (86,455)
(543)
------------
$  (86,998)
============ | $   950,159 
(63,480)
-----------
$   886,679 
============
$   482,363 
(54,316)
------------
$   428,047 
============

See accompanying notes to financial statements.

---

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

|SERIES 8                                                                                                                | Limited
Partners
---------                                                                                                | General
Partners
--------                                                                                     | Total
-----                                                                                                             
|----------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------
|Balance at March 31, 2005
Net Loss
Balance at June 30, 2005
Balance at March 31, 2006
Net Loss
Balance at June 30, 2006 | $   458,094 
(28,925)
------------
$   429,169 
============
$   243,770 
(33,775)
------------
$   209,995 
============ | $  (83,883)
(292)
-----------
$  (84,175)
===========
$  (86,048)
(341)
------------
$  (86,389)
============ | $   374,211 
(29,217)
-----------
$   344,994 
============
$   157,722 
(34,116)
------------
$   123,606 
============

See accompanying notes to financial statements.

---

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

|SERIES 9                                                                                                                | Limited
Partners
---------                                                                                                | General
Partners
--------                                                                                     | Total
-----                                                                                                          
|----------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------
|Balance at March 31, 2005
Net Loss
Balance at June 30, 2005
Balance at March 31, 2006
Net Loss
Balance at June 30, 2006 | $   822,760 
(44,277)
------------
$   778,483 
============
$   485,089 
(33,548)
------------
$   451,541 
============ | $  (47,079)
(447)
-----------
$  (47,526)
===========
$  (50,490)
(339)
------------
$  (50,829)
============ | $  775,681 
(44,724)
------------
$  730,957 
============
$  434,599 
(33,887)
------------
$  400,712 
============

See accompanying notes to financial statements.

---

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

|SERIES 10                                                                                                               | Limited
Partners
---------                                                                                                | General
Partners
--------                                                                                     | Total
-----                                                                                                              
|----------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------
|Balance at March 31, 2005
Net Loss
Balance at June 30, 2005
Balance at March 31, 2006
Net Loss
Balance at June 30, 2006 | $ 1,930,927 
(33,729)
------------
$ 1,897,198 
============
$ 1,578,554 
(29,245)
------------
$ 1,549,309 
============ | $  (25,121)
(341)
-----------
$  (25,462)
===========
$  (28,680)
(295)
------------
$  (28,975)
============ | $ 1,905,806 
(34,070)
------------
$ 1,871,736 
============
$ 1,549,874 
(29,540)
------------
$ 1,520,334 
============

See accompanying notes to financial statements.

---

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

|SERIES 11                                                                                                            | Limited
Partners
---------                                                                                               | General
Partners
--------                                                                                    | Total
-----                                                                                                            
|-------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------ | -----------------------------------------------------------------------------------------------------------------------
|Balance at March 31, 2005
Net Loss
Balance at June 30, 2005
Balance March 31, 2006
Net Loss
Balance at June 30, 2006 | $ 3,049,825 
(34,739)
------------
$ 3,015,086 
============
$ 2,281,421 
(3,712)
------------
$ 2,277,709 
============ | $  (15,649)
(351)
-----------
$  (16,000)
===========
$  (23,410)
(38)
------------
$  (23,448)
============ | $ 3,034,176 
(35,090)
-----------
$ 2,999,086 
============
$ 2,258,011 
(3,750)
------------
$ 2,254,261 
============

See accompanying notes to financial statements.

---

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

|TOTAL SERIES 7 - 11                                                                                                     | Limited
Partners
---------                                                                                                  | General
Partners
--------                                                                                         | Total
-----                                                                                                               
|----------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------
|Balance at March 31, 2005
Net Loss
Balance at June 30, 2005
Balance at March 31, 2006
Net Loss
Balance at June 30, 2006 | $ 7,293,542 
(204,515)
------------
$ 7,089,027 
============
$ 5,157,652 
(154,053)
------------
$ 5,003,599 
============ | $ (253,509)
(2,066)
-----------
$ (255,575)
===========
$ (275,083)
(1,556)
------------
$ (276,639)
============ | $ 7,040,033 
(206,581)
-----------
$ 6,833,452 
============
$ 4,882,569 
(155,609)
------------
$ 4,726,960 
============

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 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
     Net Cash 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 | $  (54,316)
8,721 
(2,821)
8,794 
(4,626)
15,493 
----------
(28,755)
----------
8,812 
----------
8,812 
----------
(19,943)
394,030 
----------
$  374,087 
=========== | $  (63,480)
1,553 
(3,949)
27,286 
(4,363)
22,386 
----------
(20,567)
----------
5,876 
----------
5,876 
----------
(14,691)
383,342 
----------
$  368,651 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWSFOR THE THREE MONTHS ENDED JUNE 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
     Net Cash 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 | $  (34,116)
3,206 
(2,549)
(7,220)
(7,529)
15,753 
----------
(32,455)
----------
10,487 
----------
10,487 
----------
(21,968)
309,318 
-----------
$  287,350 
=========== | $  (29,217)
567 
(3,546)
(4,683)
(9,521)
22,594 
----------
(23,806)
----------
9,521 
----------
9,521 
----------
(14,285)
325,662 
-----------
$  311,377 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 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
     Net Cash 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 | $  (33,887)
3,013 
(1,898)
11,605 
(4,809)
7,991 
----------
(17,985)
----------
5,409 
----------
5,409 
----------
(12,576)
222,993 
----------
$  210,417 
=========== | $  (44,724)
594 
(2,381)
23,218 
(3,042)
11,576 
----------
(14,759)
----------
3,042 
----------
3,042 
----------
(11,717)
229,897 
----------
$  218,180 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 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
     Net Cash 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 | $  (29,540)
6,027 
(2,156)
9,512 
(1,381)
5,217 
----------
(12,321)
----------
8,157 
----------
8,157 
----------
(4,164)
144,697 
----------
$  140,533 
=========== | $  (34,070)
1,191 
(2,520)
20,054 
(1,380)
8,326 
----------
(8,399)
---------
4,580 
----------
4,580 
----------
(3,819)
142,638 
----------
$  138,819 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 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
    Decrease in Payable to General Partners
     Net Cash Used in Operating Activities
Cash Flows from Investing Activities:
   Distributions Received from Project
   Partnerships
     Net Cash 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 | $   (3,750)
8,374 
(2,595)
(15,180)
0 
0 
(3,288)
----------
(16,439)
----------
1,787 
----------
1,787 
----------
(14,652)
207,490 
----------
$  192,838 
=========== | $  (35,090)
1,477 
(3,033)
24,224 
(987)
6,620 
0 
----------
(6,789)
----------
1,787 
----------
1,787 
----------
(5,002)
199,931 
----------
$  194,929 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 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
     Net Cash 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 | $  (155,609)
29,341 
(12,019)
7,511 
(18,345)
0 
41,166 
----------
(107,955)
----------
34,652 
----------
34,652 
----------
(73,303)
1,278,528 
----------
$1,205,225 
=========== | $  (206,581)
5,382 
(15,429)
90,099 
(19,293)
6,620 
64,882 
----------
(74,320)
----------
24,806 
----------
24,806 
----------
(49,514)
1,281,470 
----------
$1,231,956 
===========

See accompanying notes to financial statements.

---

GATEWAY TAX CREDIT FUND III LTD.(A Florida Limited Partnership)NOTES TO FINANCIAL STATEMENTS
JUNE 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 June 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.
   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 will be 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 will be 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.  There was no impairment expense in the quarter ended June 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 June 30, 2006 Balance Sheets include Investment in Securities consisting of U.S. Treasury Security Strips which represents their cost, plus accreted interest income of $98,616 for Series 7, $89,228 for Series 8, $66,761 for Series 9, $71,749 for Series 10 and $83,547 for Series 11. The Investment in Securities are commonly held in a brokerage account with Raymond James and Associates, Inc.  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  | $  157,751                                   | $  153,925                                    | $   3,826                                           
|Series 8  | 150,188                                      | 147,058                                       | 3,130                                               
|Series 9  | 124,297                                      | 121,777                                       | 2,520                                               
|Series 10 | 127,242                                      | 123,172                                       | 4,070                                               
|Series 11 | 147,177                                      | 139,838                                       | 7,339                                               

As of June 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                       | $  77,549           | $  73,826           | $  41,381          
|After 1 year through 5 years            | 76,376              | 73,232              | 80,396             
|                                        | ---------           | ---------           | ---------          
|Total Amount Carried on
  Balance Sheet | $ 153,925
========= | $ 147,058
========= | $ 121,777
=========



|                                        | Series 10
--------  | Series 11
--------  | Total
--------       
|--------------------------------------- | ------------------- | ------------------- | ---------------------
|Due within 1 year                       | $  30,975           | $  36,349           | $  260,080           
|After 1 year through 5 years            | 92,197              | 103,489             | 425,690              
|                                        | ---------           | ---------           | ---------            
|Total Amount Carried on
  Balance Sheet | $ 123,172
========= | $ 139,838
========= | $  685,770
==========

---

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 June 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              $ 21,509         $ 21,612
  Series 8                22,372           22,477
  Series 9                12,325           12,377
  Series 10                8,420            8,455
  Series 11                6,938	           7,005
                        --------         --------
  Total                 $ 71,564         $ 71,926
                        ========	         ========   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.

Series 7             $  23,938        $  17,902
  Series 8                26,393           19,738
  Series 9                14,731           11,017
  Series 10                9,207            6,886
  Series 11                7,365            5,508
                        --------         --------
  Total                 $ 81,634	        $ 61,051
                        ========         ========

---



|SERIES 7                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | JUNE 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 
(7,233,293)
(245,933)
-----------
252,863 
793,335 
(232,959)
(193,195)
-----------
$   620,044 
============ | $ 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 $4,902,587 for the period ended June 30, 2006 and cumulative suspended losses of $4,825,409 for the year ended March 31, 2006 are not included.

---

NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):   As of June 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 Project Partnerships as of:

|SERIES 8                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | JUNE 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 
(7,407,463)
(177,537)
-----------
1,105 
549,773 
(134,478)
-----------
$   416,400 
============ | $ 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 $5,631,244 for the period ended June 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):   As of June 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 Project Partnerships as of:

|SERIES 9                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | JUNE 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 
(4,271,703)
(149,361)
-----------
493,052 
244,087 
(74,383)
(127,532)
-----------
$   535,224 
============ | $ 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 $1,826,839 for the period ended June 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):   As of June 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 Project Partnerships as of:

|SERIES 10                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | JUNE 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 
(2,328,432)
(198,311)
-----------
1,387,929 
196,738 
(89,329)
(156,694)
-----------
$ 1,338,644 
============ | $ 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 $366,239 for the period ended June 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):   As of June 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 Project Partnerships as of:

|SERIES 11                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | JUNE 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 
(1,588,983)
(174,352)
-----------
2,364,707 
290,335 
(122,872)
(600,802)
-----------
$ 1,931,368 
============ | $ 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 $578,093 for the period June 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):   The following is a summary of Investments in Project Partnerships as of:

|TOTAL SERIES 7 - 11                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | JUNE 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 
(22,829,874)
(945,494)
-----------
4,499,656 
2,074,268 
(654,021)
(1,078,223)
-----------
$ 4,841,680 
============ | $ 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):   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 
March 31, of each year:

|SERIES 7                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 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 | $ 4,300,344 
26,900,820 
25,042 
------------
$31,226,206 
============
$   768,482 
35,642,423 
------------
36,410,905 
------------
(4,825,013)
(359,686)
------------
(5,184,699)
------------
$31,226,206 
============
$ 1,304,172 
------------
832,477 
190,539 
368,230 
------------
1,391,246 
------------
$   (87,074)
============
$      (871)
============
$   (86,203)
77,409 
------------
$    (8,794)
============ | $ 3,956,965 
28,256,793 
34,628 
------------
$32,248,386 
============
$   792,471 
35,849,766 
------------
36,642,237 
------------
(4,086,257)
(307,594)
------------
(4,393,851)
------------
$32,248,386 
============
$ 1,235,354 
------------
828,857 
191,406 
373,930 
------------
1,394,193 
------------
$  (158,839)
============
$    (1,588)
============
$  (157,251)
129,965 
------------
$   (27,286)
============

---

NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):   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 
March 31, of each year:

|SERIES 8                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 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 | $ 4,183,619 
28,271,381 
23,720 
------------
$32,478,720 
============
$ 1,152,589 
37,532,816 
------------
38,685,405 
------------
(5,498,091)
(708,594)
------------
(6,206,685)
------------
$32,478,720 
============
$ 1,319,978 
------------
819,121 
207,697 
371,398 
------------
1,398,216 
------------
$   (78,238)
============
$    (1,605)
============
$   (76,633)
83,853 
------------
$     7,220 
============ | $ 3,800,475 
29,521,019 
88,819 
------------
$33,410,313 
============
$ 1,112,389 
37,745,148 
------------
38,857,537 
------------
(4,806,849)
(640,375)
------------
(5,447,224)
------------
$33,410,313 
============
$ 1,234,172 
------------
790,119 
210,203 
377,958 
------------
1,378,280 
------------
$  (144,108)
============
$    (2,183)
============
$  (141,925)
146,608 
------------
$     4,683 
============

(1)  An affiliate of the General Partner is the operating general partner in one of the Project Partnerships included above.  The Project Partnership's financial information for the periods ending March 2006 and March 2005 is as follows:

|                       | March 2006 | March 2005
|---------------------- | ---------- | ----------
|                       |            |           
|Total Assets           | $ 575,107  | $ 570,237 
|Total Liabilities      | 821,138    | 820,792   
|Gateway Equity         | (129,742)  | (134,220) 
|Other Partner's Equity | (116,289)  | (116,334) 
|Total Revenue          | 28,302     | 23,346    
|Net Loss               | $  (3,471) | $  (5,637)

---

NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):   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 
March 31, of each year:

|SERIES 9                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 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 | $ 2,212,844 
16,277,735 
4,391 
------------
$18,494,970 
============
$   279,015 
19,934,839 
------------
20,213,854 
------------
(1,385,582)
(333,302)
------------
(1,718,884)
------------
$18,494,970 
============
$   661,177 
------------
409,484 
106,263 
191,966 
------------
707,713 
------------
$   (46,536)
============
$      (465)
============
$   (46,071)
34,466 
------------
$   (11,605)
============ | $ 2,008,144 
16,968,061 
5,364 
------------
$18,981,569 
============
$   275,176 
20,040,773 
------------
20,315,949 
------------
(1,027,919)
(306,461)
------------
(1,334,380)
------------
$18,981,569 
============
$   644,163 
------------
407,800 
107,979 
196,508 
------------
712,287 
------------
$   (68,124)
============
$      (681)
============
$   (67,443)
44,224 
------------
$   (23,219)
============

---

NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):   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 
March 31, of each year:

|SERIES 10                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 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 | $ 1,848,884 
12,147,196 
4,049 
------------
$14,000,129 
============
$   333,271 
13,054,976 
------------
13,388,247 
------------
1,016,372 
(404,490)
------------
611,882 
------------
$14,000,129 
============
$   436,600 
------------
292,519 
57,893 
116,473 
------------
466,885 
------------
$   (30,285)
============
$      (606)
============
$   (29,679)
20,167 
------------
$    (9,512)
============ | $ 1,810,400 
12,535,693 
3,124 
------------
$14,349,217 
============
$   319,417 
13,126,101 
------------
13,445,518 
------------
1,282,408 
(378,709)
------------
903,699 
------------
$14,349,217 
============
$   437,557 
------------
288,186 
61,355 
117,538 
------------
467,079 
------------
$   (29,522)
============
$      (335)
============
$   (29,187)
9,133 
------------
$   (20,054)
============

---

NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):   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 
March 31, of each year:

|SERIES 11                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 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 | $ 1,050,607 
10,221,972 
297,731 
------------
$11,570,310 
============
$   212,185 
9,847,071 
------------
10,059,256 
------------
1,793,468 
(282,414)
------------
1,511,054 
------------
$11,570,310 
============
$   433,309 
------------
271,722 
53,089 
126,330 
------------
451,141 
------------
$   (17,832)
============
$    (1,644)
============
$   (16,188)
31,368 
------------
$    15,180 
============ | $   967,377 
10,666,726 
322,719 
------------
$11,956,822 
============
$   237,856 
9,982,493 
------------
10,220,349 
------------
2,015,913 
(279,440)
------------
1,736,473 
------------
$11,956,822 
============
$   402,131 
------------
300,798 
54,443 
127,645 
------------
482,886 
------------
$   (80,755)
============
$    (6,013)
============
$   (74,742)
50,518 
------------
$   (24,224)
============

---

NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):   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 
March 31, of each year:

|TOTAL SERIES 7 - 11                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 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 | $ 13,596,298 
93,819,104 
354,933 
------------
$107,770,335 
============
$  2,745,542 
116,012,125 
------------
118,757,667 
------------
(8,898,846)
(2,088,486)
------------
(10,987,332)
------------
$107,770,335 
============
$  4,155,236 
------------
2,625,323 
615,481 
1,174,397 
------------
4,415,201 
------------
$   (259,965)
============
$     (5,191)
============
$   (254,774)
247,263 
------------
$     (7,511)
============ | $ 12,543,361 
97,948,292 
454,654 
------------
$110,946,307 
============
$  2,737,309 
116,744,281 
------------
119,481,590 
------------
(6,622,704)
(1,912,579)
------------
(8,535,283)
------------
$110,946,307 
============
$  3,953,376 
------------
2,615,759 
625,386 
1,193,578 
------------
4,434,723 
------------
$   (481,347)
============
$    (10,800)
============
$   (470,547)
380,448 
------------
$    (90,099)
============

---

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations, Liquidity and Capital Resources
   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 three months ended June 30, 2006 and June 30, 2005.  Equity in Losses of Project Partnerships for the three months ended June 30, 2006 decreased from $90,099 for the three months ended June 30, 2005 to $7,511. The decrease in Equity in Losses of Project Partnerships is a result of decrease in Partnerships'share of net loss of the Project Partnerships.  The General and Administrative Expenses - Other decreased from $19,959 for the three months ended June 30, 2005 to $9,102 for the three months ended June 30, 2006.  The General and Administrative Expenses - General Partner was significantly higher. This increase was due to higher administrative costs of 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") which were purchased with funds set aside for this purpose, and cash distributed to the Series from the operations 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 three months ended June 30, 2006 decreased from $27,286 for the three months ended June 30, 2005 to $8,794 due to an increase in rental revenue at the Project Partnerships and an increase in suspended losses.  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 June 30, 2006, the Series had $374,087 of short-term investments (Cash and Cash Equivalents).  It also had $153,925 in Zero Coupon Treasuries with annual maturities providing $81,000 in the current fiscal year and $86,000 in fiscal year 2008.  Management believes the 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 $54,316 for the three months ended June 30, 2006.  However, after considering the Equity in Losses of Project Partnerships of $8,794 and the changes in operating assets and liabilities, net cash used in operating activities was $28,755.  Cash provided by investing activities totaled $8,812, consisting of cash distributions from the Project Partnerships.   Series 8 - Gateway closed this Series on September 28, 1993 after receiving $9,980,000 from 664 Limited Partner investors.  Equity in Losses of Project Partnerships for the three months ended June 30, 2006 increased from income of $4,683 for the three months ended June 30, 2005 to income of $7,220 as a result of an increase in rental revenue at the Project Partnerships.  At June 30, 2006, the Series had $287,350 of short-term investments (Cash and Cash Equivalents).  It also had $147,058 in Zero Coupon Treasuries with annual maturities providing $77,000 in the current fiscal year and $82,000 in fiscal year 2008.  Management believes the 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 $34,116 for the three months ended June 30, 2006.  However, after considering the Equity in Income of Project Partnerships of $7,220 and the changes in operating assets and liabilities, net cash used in operating activities was $32,455.  Cash provided by investing activities totaled $10,487, consisting of cash distributions from the Project Partnerships.   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 three months ended June 30, 2006 decreased from $23,218 for the three months ended June 30, 2005 to $11,605 as a result of an increase in rental and other income and a decrease in operating expenses.  At June 30, 2006, the Series had $209,583 of short-term investments (Cash and Cash Equivalents). It also had $121,777 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.  Management believes the 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 $34,721 for the three months ended June 30, 2006.  However, after considering the Equity in Losses of Project Partnerships of $11,605 and the changes in operating assets and liabilities, net cash used in operating activities was $17,991.  Cash provided by investing activities totaled $4,581, consisting of cash distributions from the Project Partnerships.
   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 three months ended June 30, 2006 decreased from $20,054 for the three months ended June 30, 2005 to $9,512 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 to warrant a zero balance, additional losses are suspended since the Partnership's accounting policy is to not carry Investments in Project Partnerships below zero.  At June 30, 2006, the Series had $140,533 of short-term investments (Cash and Cash Equivalents). It also had $123,172 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. Management believes the 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 $29,540 for the three months ended June 30, 2006. However, after considering the Equity in Losses of Project Partnerships of $9,512 and the changes in operating assets and liabilities, net cash used in operating activities was $12,321. Cash provided by investing activities totaled $8,157, consisting of cash distributions from the Project Partnerships.
   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 three months ended June 30, 2006 increased from a loss of $24,224 for the three months ended June 30, 2005 to income of $15,180 as a result of higher rental and other income and lower operating expenses.  At June 30, 2006, the Series had $192,838 of short-term investments (Cash and Cash Equivalents).  It also had $139,838 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.  Management believes the 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 $3,750 for the three months ended June 30, 2006.  However, after considering the Equity in Income of Project Partnerships of $15,180 and the changes in operating assets and liabilities, net cash used in operating activities was $16,439.  Cash provided by investing activities totaled $1,787, consisting of cash distributions from Project Partnerships.

---

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 1A. Risk Factors:
   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:
   None.

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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.

Date: August 14, 2006             By:/s/ Ronald M. Diner                                  Ronald M. Diner
                                  President
Date: August 14, 2006             By:/s/ Jonathan Oorlog
                                  Jonathan Oorlog
                                  Vice President and Chief Financial Officer
Date: August 14, 2006             By:/s/ Sandra C. Humphreys
                                  Sandra C. Humphreys
                                  Secretary and Treasurer

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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 quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial information include 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 quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures 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 quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: August 14, 2006             By:/s/ Ronald M. Diner                                  Ronald M. Diner
                                  President

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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 quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial information include 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 quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures 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 quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: August 14, 2006             By:/s/ Jonathan Oorlog
                                  Jonathan Oorlog
                                  Vice President and Chief Financial Officer