FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

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

For the quarterly period ended                        March 31, 2000
                                          ----------------------------------

                                       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
                                     0-16850
                      -------------------------------------


                            CNL Income Fund III, Ltd.
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>


                       Florida                                                        59-2809460
------------------------------------------------------              ------------------------------------------------
(State or other jurisdiction of                                                    (I.R.S. Employer
incorporation or organization)                                                    Identification No.)
<S> <C>

               450 South Orange Avenue
                  Orlando, Florida                                                       32801
------------------------------------------------------              ------------------------------------------------
      (Address of principal executive offices)                                        (Zip Code)


Registrant's telephone number
(including area code)                                                               (407) 540-2000
                                                                    ------------------------------------------------
</TABLE>


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Sections  13 or 15(d)  of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. Yes X No _____




<PAGE>


                                    CONTENTS




                                                                           Page
Part I.

     Item 1.      Financial Statements:

                      Condensed Balance Sheets

                      Condensed Statements of Income

                      Condensed Statements of Partners' Capital

                      Condensed Statements of Cash Flows

                      Notes to Condensed Financial Statements

     Item 2.      Management's Discussion and Analysis of Financial
                      Condition and Results of Operations

     Item 3.      Quantitative and Qualitative Disclosures About
                      Market Risk


Part II.

     Other Information





<PAGE>






                            CNL INCOME FUND III, LTD.
                         (A Florida Limited Partnership)
                            CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                               March 31,             December 31,
                                                                                  2000                   1999
<S> <C>                                                                           -------------------    -------------------
                               ASSETS

   Land and buildings on operating leases, less accumulated
       depreciation of $2,844,057 and $2,771,519, respectively
                                                                                 $ 11,700,228           $ 11,772,766
   Net investment in direct financing leases                                        1,116,096              1,120,608
   Investment in joint ventures                                                     2,405,619              2,418,036
   Cash and cash equivalents                                                          896,283              1,011,733
   Receivables, less allowance for doubtful accounts
       of $8,797 in 1999                                                               10,105                    658
   Due from related parties                                                                --                  2,300
   Prepaid expenses                                                                     3,395                  5,896
   Accrued rental income                                                              127,076                111,167
   Other assets                                                                        29,354                 29,354
                                                                           -------------------    -------------------

                                                                                 $ 16,288,156           $ 16,472,518
                                                                           ===================    ===================

                  LIABILITIES AND PARTNERS' CAPITAL

   Accounts payable                                                                $   29,970             $   76,247
   Escrowed real estate taxes payable                                                  10,223                 12,872
   Distributions payable                                                              500,000                500,000
   Due to related parties                                                             135,447                121,781
   Rents paid in advance                                                               32,922                 27,765
                                                                           -------------------    -------------------
       Total liabilities                                                              708,562                738,665

   Minority interests                                                                 132,213                132,910

   Partners' capital                                                               15,447,381             15,600,943
                                                                           -------------------    -------------------

                                                                                 $ 16,288,156           $ 16,472,518
                                                                           ===================    ===================
See accompanying notes to condensed financial statements
</TABLE>




<PAGE>


                            CNL INCOME FUND III, LTD.
                         (A Florida Limited Partnership)
                         CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>

                                                                                           Quarter Ended
                                                                                             March 31,
                                                                                     2000                1999
<S> <C>                                                                                 --------------     ---------------
Revenues:
    Rental income from operating leases                                             $  385,159           $ 382,878
    Earned income from direct financing leases                                          31,701              43,968
    Contingent rental income                                                            21,728               2,981
    Interest and other income                                                           18,691              16,470
                                                                                 --------------     ---------------
                                                                                       457,279             446,297
                                                                                 --------------     ---------------

Expenses:
    General operating and administrative                                                34,203              34,722
    Professional services                                                                9,308               3,288
    State and other taxes                                                               12,084              12,617
    Depreciation and amortization                                                       72,538              69,280
    Transaction costs                                                                   26,659              30,882
                                                                                 --------------     ---------------
                                                                                       154,792             150,789
                                                                                 --------------     ---------------

Income Before Minority Interest in Income of
Consolidated Joint Venture and Equity in Earnings
    of Unconsolidated Joint Ventures                                                   302,487             295,508

Minority Interests in Income of Consolidated
    Joint Venture                                                                       (4,345 )            (4,345 )

Equity in Earnings of Unconsolidated Joint Ventures                                     48,296              41,459
                                                                                 --------------     ---------------
                                                                                 --------------     ---------------

Net Income                                                                          $  346,438           $ 332,622
                                                                                 ==============     ===============

Allocation of Net Income:
    General partners                                                                 $   3,464           $   3,326
    Limited partners                                                                   342,974             329,296
                                                                                 --------------     ---------------

                                                                                    $  346,438           $ 332,622
                                                                                 ==============     ===============

Net Income Per Limited Partner Unit                                                  $    6.86            $   6.59
                                                                                 ==============     ===============

Weighted Average Number of Limited Partner
    Units Outstanding                                                                   50,000              50,000
                                                                                 ==============     ===============
See accompanying notes to condensed financial statements
</TABLE>



<PAGE>


                            CNL INCOME FUND III, LTD.
                         (A Florida Limited Partnership)
                    CONDENSED STATEMENTS OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>


                                                                             Quarter Ended           Year Ended
                                                                               March 31,            December 31,
                                                                                  2000                  1999
                                                                           -------------------    ------------------
<S> <C>
General partners:
    Beginning balance                                                             $   371,371            $  354,638
    Net income                                                                          3,464                16,733
                                                                           -------------------    ------------------
                                                                                      374,835               371,371
                                                                           -------------------    ------------------

Limited partners:
    Beginning balance                                                              15,229,572            15,515,634
    Net income                                                                        342,974             1,713,938
    Distributions ($10.00 and $40.00 per
       limited partner unit, respectively)                                           (500,000 )          (2,000,000 )
                                                                           -------------------    ------------------
                                                                                   15,072,546            15,229,572
                                                                           -------------------    ------------------

Total partners' capital                                                          $ 15,447,381          $ 15,600,943
                                                                           ===================    ==================
See accompanying notes to condensed financial statements
</TABLE>



<PAGE>


                            CNL INCOME FUND III, LTD.
                         (A Florida Limited Partnership)
                       CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                     Quarter Ended
                                                                                       March 31,
                                                                                2000               1999
                                                                           ---------------     --------------
<S> <C>
Increase (Decrease) in Cash and Cash Equivalents

    Net Cash Provided by Operating Activities                                   $ 389,592          $ 442,021
                                                                           ---------------     --------------

    Cash Flows from Investing Activities:
       Additions to land and building on operating
          lease                                                                        --           (326,996 )
       Investment in direct financing lease                                            --           (612,920 )
                                                                           ---------------     --------------
              Net cash used in investing activities                                    --           (939,916 )
                                                                           ---------------     --------------

    Cash Flows from Financing Activities:
       Distributions to limited partners                                         (500,000 )         (500,000 )
       Distributions to holders of minority interests                              (5,042 )           (4,990 )
                                                                           ---------------     --------------
              Net cash used in financing activities                              (505,042 )         (504,990 )
                                                                           ---------------     --------------

Net Decrease in Cash and Cash Equivalents                                        (115,450 )       (1,002,885 )

Cash and Cash Equivalents at Beginning of Quarter                               1,011,733          2,047,140
                                                                           ---------------     --------------

Cash and Cash Equivalents at End of Quarter                                     $ 896,283         $1,044,255
                                                                           ===============     ==============

Supplemental Schedule of Non-Cash Financing
    Activities:

       Distributions declared and unpaid at end of
          quarter                                                               $ 500,000          $ 500,000
                                                                           ===============     ==============
See accompanying notes to condensed financial statements
</TABLE>

<PAGE>



                                                        13

                            CNL INCOME FUND III, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                     Quarters Ended March 31, 2000 and 1999


1.     Basis of Presentation:

        The  accompanying  unaudited  condensed  financial  statements have been
        prepared in  accordance  with the  instructions  to Form 10-Q and do not
        include  all  of  the  information  and  note  disclosures  required  by
        generally  accepted  accounting  principles.  The  financial  statements
        reflect all  adjustments,  consisting of normal  recurring  adjustments,
        which are, in the opinion of  management,  necessary to a fair statement
        of the results for the interim periods presented.  Operating results for
        the quarter  ended March 31, 2000 may not be  indicative  of the results
        that may be expected for the year ending  December 31, 2000.  Amounts as
        of December 31, 1999,  included in the financial  statements,  have been
        derived from audited financial statements as of that date.

        These unaudited financial  statements should be read in conjunction with
        the financial  statements and notes thereto included in Form 10-K of CNL
        Income Fund III, Ltd. (the  "Partnership")  for the year ended  December
        31, 1999.

        The  Partnership  accounts for its 69.07%  interest in Tuscawilla  Joint
        Venture using the consolidation  method.  Minority interests  represents
        the minority joint venture partners'  proportionate  share of the equity
        in  the  Partnership's   consolidated  joint  venture.  All  significant
        intercompany accounts and transactions have been eliminated.

2.   Concentration of Credit Risk:

       The  following  schedule  presents  total  rental and earned  income from
       individual  lessees,  each  representing  more  than ten  percent  of the
       Partnership's total rental and earned income (including the Partnership's
       share of total  rental and earned  income  from  joint  ventures  and the
       properties  held as  tenants-in-common  with  affiliates  of the  general
       partners) for at least one of the quarters ended March 31:




                                          2000                       1999
                                  -------------------       --------------------

      Golden Corral Corporation             $    80,510             $     80,510
      IHOP Properties, Inc.                      70,189                      N/A



<PAGE>


                            CNL INCOME FUND III, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                     Quarters Ended March 31, 2000 and 1999

2.     Concentration of Credit Risk-Continued:

       In addition,  the  following  schedule  presents  total rental and earned
       income from individual restaurant chains, each representing more than ten
       percent of the  Partnership's  total rental and earned income  (including
       the  Partnership's  share of total  rental and earned  income  from joint
       ventures and the properties held as  tenant-in-common  with affiliates of
       the general partners) for at least one of the quarters ended March 31:

                                           2000                  1999
                                     ----------------     ----------------

      Golden Corral Family
          Steakhouse Restaurants
                                       $     108,004         $    107,972
      IHOP                                    70,189                  N/A
      Pizza Hut                               67,134               62,468
      KFC                                     62,568               52,283


       The information  denoted by N/A indicates that for each period presented,
       the tenant or the chains did not  represent  more than ten percent of the
       Partnership's total rental and earned income.

       Although  the  Partnership's   properties  are   geographically   diverse
       throughout  the United  States and the  Partnership's  lessees  operate a
       variety of restaurant concepts, default by any lessee or restaurant chain
       contributing  more than ten percent of the  Partnership's  revenues could
       significantly  impact the results of operations of the Partnership if the
       Partnership is not able to re-lease the properties in a timely manner.

3.      Termination of Merger:

        On March 1, 2000, the general partners and CNL American Properties Fund,
        Inc.  ("APF")  mutually  agreed to terminate  the  Agreement and Plan of
        Merger entered into in March 1999.  The general  partners are continuing
        to  evaluate  strategic  alternatives  for  the  Partnership,  including
        alternatives to provide liquidity to the limited partners.



<PAGE>



ITEM 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
               RESULTS OF OPERATIONS

         CNL Income Fund III,  Ltd.  (the  "Partnership")  is a Florida  limited
partnership  that was  organized  on June 1, 1987 to  acquire  for cash,  either
directly or through  joint  venture  arrangements,  both newly  constructed  and
existing restaurant  properties,  as well as land upon which restaurants were to
be constructed, which are leased primarily to operators of selected national and
regional  fast-food  restaurant  chains.  The leases  generally  are  triple-net
leases, with the lessees  responsible for all repairs and maintenance,  property
taxes,  insurance and utilities.  As of March 31, 2000, the Partnership owned 28
Properties, which included interests in three Properties owned by joint ventures
in which  the  Partnership  is a  co-venturer  and four  Properties  owned  with
affiliates as tenants-in-common.

Capital Resources

         During the  quarters  ended  March 31, 2000 and 1999,  the  Partnership
generated  cash from  operations  (which  includes  cash  received from tenants,
distributions from joint ventures, and interest and other income received,  less
cash paid for expenses) of $389,592 and $442,021,  respectively. The decrease in
cash from operations for the quarter ended March 31, 2000 was primarily a result
of changes in the Partnership's working capital.

         Currently,  rental income from the Partnership's Properties is invested
in money market accounts or other short-term,  highly liquid investments such as
demand deposit accounts at commercial  banks,  certificates of deposit and money
market accounts with less than a 30-day maturity date, pending the Partnership's
use of such funds to pay Partnership  expenses or to make  distributions  to the
partners.  At March 31, 2000,  the  Partnership  had  $896,283  invested in such
short-term  investments,  as compared to  $1,011,733  at December 31, 1999.  The
decrease in cash and cash  equivalents  was primarily  attributable  to the fact
that during the quarter  ended March 31,  2000,  the  Partnership  paid  certain
liabilities  from December 31, 1999. The funds remaining at March 31, 2000 after
payment  of  distributions  and  other  liabilities  will be  used  to meet  the
Partnership's working capital and other needs.

Short Term Liquidity

         The Partnership's  short-term liquidity  requirements consist primarily
of the operating expenses of the Partnership.

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

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



         The Partnership  generally  distributes cash from operations  remaining
after the payment of operating  expenses of the Partnership,  to the extent that
the general partners  determine that such funds are available for  distribution.
Based on current and  anticipated  future cash from  operations the  Partnership
declared  distributions to limited partners of $500,000 for each of the quarters
ended March 31, 2000 and 1999. This represents  distributions of $10.00 per unit
for each applicable  quarter. No distributions were made to the general partners
for the quarters  ended March 31, 2000 and 1999. No amounts  distributed  to the
limited  partners for the quarters ended March 31, 2000 and 1999 are required to
be or have been treated by the  Partnership  as a return of capital for purposes
of  calculating  the  limited   partners'   return  on  their  adjusted  capital
contributions. The Partnership intends to continue to make distributions of cash
available for distribution to the limited partners on a quarterly basis.

         Total liabilities of the Partnership,  including distributions payable,
decreased  to  $708,562 at March 31,  2000 from  $738,665  at December  31, 1999
primarily as a result of a decrease in accounts  payable at March 31,  2000,  as
compared to December 31, 1999. The general partners believe that the Partnership
has sufficient cash on hand to meet its current working capital needs.

Long-Term Liquidity

                  The  Partnership  has no  long-term  debt or  other  long-term
liquidity requirements.

Results of Operations

         During the  quarter  ended  March 31,  1999,  the  Partnership  and its
consolidated joint venture, Tuscawilla Joint Venture, owned and leased 23 wholly
owned  Properties  (which  included two Properties  which were sold in 1999) and
during the quarter ended March 31, 2000, the  Partnership  and its  consolidated
joint  venture  owned and leased 22 wholly  owned  Properties,  to  operators of
fast-food and family-style  restaurant chains. In connection  therewith,  during
the quarters ended March 31, 2000 and 1999, the Partnership  earned $416,860 and
$426,846, respectively, in rental income from operating leases and earned income
from direct  financing  leases from these  Properties.  Rental and earned income
decreased by  approximately  $55,200 during the quarter ended March 31, 2000, as
compared to the quarter  ended  March 31,  1999,  as a result of the sale of two
Properties  during 1999.  The decrease  was  partially  offset by an increase in
rental and earned  income of  approximately  $45,500 due to the fact that during
January 1999 and October 1999, the Partnership reinvested the net sales proceeds
in two additional Properties.

         During the quarters ended March 31, 2000 and 1999, the Partnership also
earned $21,728 and $2,981, respectively, in contingent rental income. Contingent
rental  income was lower during the quarter ended March 31, 1999 due to the fact
that the Partnership  adjusted  estimated  contingent  rental amounts accrued at
December 31, 1998, to actual amounts during the quarter ended March 31 ,1999.

         For the quarters ended March 31, 2000 and 1999, the  Partnership  owned
and leased three Properties  indirectly  through joint venture  arrangements and
three Properties as  tenants-in-common  with affiliates of the general partners.
In addition,  during the quarter ended March 31, 2000, the Partnership owned and
leased one  additional  Property as  tenants-in-common  with an affiliate of the
general partners. In connection  therewith,  during the quarters ended March 31,
2000  and  1999,  the   Partnership   earned  income  of  $48,296  and  $41,459,
respectively,  attributable to net income recorded by these joint ventures.  The
increase in net income earned by joint  ventures  during the quarter ended March
31,  2000 was  primarily  attributable  to the fact that in  October  1999,  the
Partnership  reinvested a portion of the net sales  proceeds  from the sale of a
Property during 1999, in a Property in Baytown,  Texas, with an affiliate of the
general partners as tenants-in common.

         During the  quarter  ended  March 31,  2000,  two of the  Partnership's
lessees, Golden Corral Corporation and IHOP Properties, Inc., each accounted for
more than ten  percent of the  Partnership's  total  rental  and  earned  income
(including the  Partnership's  share of rental income from  Properties  owned by
joint ventures and Properties  owned with affiliates of the general  partners as
tenant-in-common).  It is anticipated that during the remainder of 2000, each of
these  lessees  will  continue  to  account  for more  than ten  percent  of the
Partnership's  total  rental  and  earned  income  to which the  Partnership  is
entitled  under the terms of the leases.  In addition,  during the quarter ended
March  31,  2000,  four  restaurant  chains,  Golden  Corral  Family  Steakhouse
Restaurants,  IHOP,  Pizza Hut and KFC, each accounted for more than ten percent
of the Partnership's  total rental income (including the Partnership's  share of
rental income from Properties  owned by joint ventures and Properties owned with
affiliates of the general partners as tenants-in-common). It is anticipated that
these four  restaurant  chains  each will  continue to account for more than ten
percent of the total  rental  income  under the terms of its  leases  during the
remainder  of 2000.  Any failure of these  lessees or  restaurant  chains  could
materially  affect the  Partnership's  income if the  Partnership is not able to
re-lease the Properties in a timely manner.

         Operating expenses,  including  depreciation and amortization  expense,
were  $154,792  and  $150,789  for the  quarters  ended March 31, 2000 and 1999,
respectively.

Termination of Merger

         On March 1, 2000,  the general  partners  and CNL  American  Properties
Fund, Inc. ("APF") mutually agreed to terminate the Agreement and Plan of Merger
entered  into in March 1999.  The general  partners are  continuing  to evaluate
strategic  alternatives for the Partnership,  including  alternatives to provide
liquidity to the limited partners

Dismissal of Legal Action

As described in greater detail in Part II, Item 1 ("Legal Proceedings"), in 1999
two groups of limited partners in several CNL Income Funds filed purported class
action suits against the general partners and APF alleging,  among other things,
that the general partners had breached their fiduciary duties in connection with
the proposed Merger.  These actions were later  consolidated into one action. On
April 25, 2000, the judge in the  consolidated  action issued a Stipulated Final
Order of  Dismissal  of  Consolidated  Action,  dismissing  the  action  without
prejudice, with each party to bear its own costs and attorneys' fees.


<PAGE>



Item 3.           Quantitative and Qualitative Disclosures About Market Risk

         Not applicable.


<PAGE>


                           PART II. OTHER INFORMATION

Item 1.      Legal Proceedings.

             On May 11, 1999, four limited partners in several CNL Income Funds
             served a derivative and purported class action lawsuit filed April
             22, 1999 against the general partners and APF in the Circuit Court
             of the Ninth Judicial Circuit of Orange County, Florida,  alleging
             that the general  partners  breached  their  fiduciary  duties and
             violated  provisions of certain of the CNL Income Fund partnership
             agreements in connection with the proposed Merger.  The plaintiffs
             are seeking  unspecified  damages and equitable relief. On July 8,
             1999, the plaintiffs filed an amended complaint which, in addition
             to naming three  additional  plaintiffs,  includes  allegations of
             aiding and abetting and  conspiring  to breach  fiduciary  duties,
             negligence and breach of duty of good faith against certain of the
             defendants and seeks additional  equitable relief. As amended, the
             caption  of the  case is Jon  Hale,  Mary J.  Hewitt,  Charles  A.
             Hewitt,  Gretchen M.  Hewitt,  Bernard J.  Schulte,  Edward M. and
             Margaret  Berol Trust,  and Vicky Berol v. James M.  Seneff,  Jr.,
             Robert  A.  Bourne,  CNL  Realty  Corporation,  and  CNL  American
             Properties Fund, Inc., Case No. CIO-99-0003561.

             On June 22,  1999,  a limited  partner of several CNL Income Funds
             served a  purported  class  action  lawsuit  filed  April 29, 1999
             against the general partners and APF, Ira Gaines, individually and
             on  behalf  of a class  of  persons  similarly  situated,  v.  CNL
             American  Properties Fund,  Inc., James M. Seneff,  Jr., Robert A.
             Bourne,  CNL Realty  Corporation,  CNL Fund  Advisors,  Inc.,  CNL
             Financial  Corporation  a/k/a CNL Financial  Corp.,  CNL Financial
             Services,  Inc. and CNL Group, Inc., Case No. CIO-99-3796,  in the
             Circuit  Court of the Ninth  Judicial  Circuit  of Orange  County,
             Florida,   alleging  that  the  general  partners  breached  their
             fiduciary  duties and that APF aided and abetted  their  breach of
             fiduciary  duties in  connection  with the  proposed  Merger.  The
             plaintiff is seeking unspecified damages and equitable relief.

             On September 23, 1999,  Judge Lawrence  Kirkwood  entered an order
             consolidating  the two cases  under the  caption In re: CNL Income
             Funds  Litigation,  Case No. 99-3561.  Pursuant to this order, the
             plaintiffs  in  these  cases  filed  a  consolidated  and  amended
             complaint on November 8, 1999.  On December 22, 1999,  the general
             partners and CNL Group,  Inc. filed motions to dismiss and motions
             to strike.  On December 28, 1999, APF and CNL Fund Advisors,  Inc.
             filed motions to dismiss.  On March 6, 2000, all of the defendants
             filed a Joint Notice of Filing Form 8-K Reports and  Suggestion of
             Mootness.

             On April 25, 2000,  Judge Kirkwood issued a Stipulated Final Order
             of Dismissal of Consolidated Action, dismissing the action without
             prejudice,  with each  party to bear its own costs and  attorneys'
             fees.

Item 2.      Changes in Securities.  Inapplicable.

Item 3.      Defaults upon Senior Securities.  Inapplicable.

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

Item 5.      Other Information.  Inapplicable.

Item 6.      Exhibits and Reports on Form 8-K.

(a)  Exhibits

                      3.1       Certificate of Limited Partnership of CNL Income
                                Fund  III,  Ltd.  (Included  as  Exhibit  3.1 to
                                Amendment  No. 1 to the  Registration  Statement
                                No.  33-15374  on  Form  S-11  and  incorporated
                                herein by reference.)

                      3.2      Amended and Restated Agreement and Certificate of
                               Limited  Partnership of CNL Income Fund III, Ltd.
                               (Included  as Exhibit 3.2 to Form 10-K filed with
                               the Securities  and Exchange  Commission on April
                               5, 1993, and incorporated herein by reference.)

                      4.1      Certificate of Limited  Partnership of CNL Income
                               Fund  III,  Ltd.  (Included  as  Exhibit  4.1  to
                               Amendment  No. 1 to  Registration  Statement  No.
                               33-15374 on Form S-11 and incorporated  herein by
                               reference.)

                      4.2      Amended and Restated Agreement and Certificate of
                               Limited  Partnership of CNL Income Fund III, Ltd.
                               (Included  as Exhibit 3.2 to Form 10-K filed with
                               the Securities  and Exchange  Commission on April
                               5, 1993, and incorporated herein by reference.)

                      10.1     Property   Management   Agreement   (Included  as
                               Exhibit   10.1  to  Form  10-K   filed  with  the
                               Securities  and Exchange  Commission  on April 5,
                               1993, and incorporated herein by reference.)

                      10.2     Assignment of Property Management  Agreement from
                               CNL   Investment   Company  to  CNL  Income  Fund
                               Advisors,  Inc. (Included as Exhibit 10.2 to Form
                               10-K  filed  with  the  Securities  and  Exchange
                               Commission  on March 30, 1995,  and  incorporated
                               herein by reference.)

                      10.3     Assignment of Property Management  Agreement from
                               CNL  Income  Fund  Advisors,  Inc.  to  CNL  Fund
                               Advisors,  Inc. (Included as Exhibit 10.3 to Form
                               10-K  filed  with  the  Securities  and  Exchange
                               Commission  on April 1,  1996,  and  incorporated
                               herein by reference.)

                      27            Financial Data Schedule (Filed herewith.)


<PAGE>



(b)  Reports on Form 8-K

                      A Current  Report on Form 8-K dated  February 23, 2000 was
                      filed on March 01, 2000, describing the Termination of the
                      proposed  merger  of  the  Partnership  with  and  into  a
                      subsidiary of CNL American Properties Fund, Inc.





<PAGE>




                                   SIGNATURES



         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended,  the  registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

         DATED this 10th day of May, 2000.


                           CNL INCOME FUND III, LTD.

                           By:   CNL REALTY CORPORATION
                                 General Partner


                                 By:          /s/ James M. Seneff, Jr.
                                              ----------------------------------
                                              JAMES M. SENEFF, JR.
                                              Chief Executive Officer
                                              (Principal Executive Officer)


                                 By:          /s/ Robert A. Bourne
                                              ----------------------------------
                                              ROBERT A. BOURNE
                                              President and Treasurer
                                              (Principal Financial and
                                              Accounting Officer)