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

(Mark One)

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

                   For the fiscal year ended December 31, 1997

                                       OR

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

                        For the transition period from to


                         Commission file number 0-19144

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

                    Florida                              59-2922954
        (State or other jurisdiction of     (I.R.S. Employer Identification No.)
        incorporation or organization)

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

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

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

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

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

              Units of limited partnership interest ($500 per Unit)
                                (Title of class)

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

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [x]

         Aggregate market value of the voting stock held by nonaffiliates of the
registrant:   The  registrant   registered  an  offering  of  units  of  limited
partnership  interest  (the  "Units") on Form S-11 under the  Securities  Act of
1933, as amended. Since no established market for such Units exists, there is no
market value for such Units. Each Unit was originally sold at $500 per Unit.

                      DOCUMENTS INCORPORATED BY REFERENCE:
                                      None


<PAGE>



                                     PART I


Item 1.  Business

         CNL Income Fund VI, Ltd. (the  "Registrant" or the  "Partnership") is a
limited  partnership  which was  organized  pursuant to the laws of the State of
Florida on August 17, 1988. The general  partners of the  Partnership are Robert
A.  Bourne,  James  M.  Seneff,  Jr.  and  CNL  Realty  Corporation,  a  Florida
corporation (the "General Partners"). Beginning on June 8, 1989, the Partnership
offered  for  sale up to  $35,000,000  in  limited  partnership  interests  (the
"Units") (70,000 Units at $500 per Unit) pursuant to a registration statement on
Form S-11 under the Securities Act of 1933, as amended,  effective  December 16,
1988.  The offering  terminated  on January 22, 1990,  at which date the maximum
offering  proceeds of  $35,000,000  had been  received  from  investors who were
admitted to the Partnership as limited partners (the "Limited Partners").

         The  Partnership  was organized to acquire both newly  constructed  and
existing  restaurant  properties,  as well as properties upon which  restaurants
were to be  constructed  (the  "Properties"),  which  are  leased  primarily  to
operators  of  selected   national  and  regional   fast-food  and  family-style
restaurant  chains (the  "Restaurant  Chains").  Net proceeds to the Partnership
from its  offering of Units,  after  deduction  of  organizational  and offering
expenses,  totalled  $30,975,000,  and  were  used  to  acquire  42  Properties,
including  interests  in four  Properties  owned by joint  ventures in which the
Partnership  is a  co-venturer.  During the year ended  December 31,  1994,  the
Partnership  sold its Properties in Batesville and Heber Springs,  Arkansas,  to
the tenant and  reinvested  the net sales proceeds in a Jack in the Box Property
in Dallas,  Texas,  and a Jack in the Box  Property in Yuma,  Arizona,  which is
owned  as  tenants-in-common  with an  affiliate  of the  General  Partners.  In
addition,  during the year ended  December 31, 1995,  the  Partnership  sold its
Property in Little  Canada,  Minnesota,  and  reinvested the majority of the net
sales proceeds in a Denny's Property in Broken Arrow, Oklahoma.  During the year
ended  December 31, 1996,  the  Partnership  reinvested  the remaining net sales
proceeds  from  the sale of the  Property  in  Little  Canada,  Minnesota,  in a
Property  located in Clinton,  North  Carolina,  with  affiliates of the General
Partners as  tenants-in-common.  Also,  during the year ended December 31, 1996,
the  Partnership  sold its  Property  in  Dallas,  Texas.  During the year ended
December 31, 1997,  the  Partnership  reinvested the net sales proceeds from the
sale of the  Property in Dallas,  Texas,  in a  Bertucci's  Property  located in
Marietta, Georgia. In addition, during 1997, the Partnership sold its Properties
in Plattsmouth,  Nebraska;  Venice,  Florida;  Naples,  Florida,  and Whitehall,
Michigan, and the Property in Yuma, Arizona, which was held as tenants-in-common
with an affiliate of the General Partners, and reinvested a portion of these net
sales  proceeds  in two IHOP  Properties,  one in each of Elgin,  Illinois,  and
Manassas,   Virginia,   and  in  a  Property  in   Vancouver,   Washington,   as
tenants-in-common with affiliates of the General Partners. In addition, Show Low
Joint Venture, a joint venture in which the Partnership is a co-venturer with an
affiliate of the General Partners,  sold its Property in Show Low, Arizona.  The
joint venture  reinvested  the net sales  proceeds in a Property in  Greensboro,
North Carolina. As a result of the above transactions,  as of December 31, 1997,
the  Partnership  owned 41 Properties,  including  interests in four  Properties
owned by joint  ventures  in which  the  Partnership  is a  co-venturer  and two
Properties owned with affiliates as tenants-in-common.  During January 1998, the
Partnership  reinvested  the net sales proceeds from the sales of the Properties
in  Whitehall,  Michigan and  Plattsmouth,  Nebraska in one Property in Overland
Park, Kansas and one Property in Memphis, Tennessee, as tenants-in-common,  with
affiliates  of  the  General  Partners.   In  addition,  in  January  1998,  the
Partnership  sold its  Property  in  Deland,  Florida.  In  February  1998,  the
Partnership sold its Properties in Liverpool,  New York and Melbourne,  Florida.
Generally,  the  Properties  are leased on a  triple-net  basis with the lessees
responsible  for all repairs and  maintenance,  property  taxes,  insurance  and
utilities.

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

                                        1

<PAGE>




Leases

         Although there are variations in the specific terms of the leases,  the
following  is  a  summarized   description  of  the  general  structure  of  the
Partnership's  leases. The leases of the Properties owned by the Partnership and
the joint ventures in which the Partnership is a co-venturer provide for initial
terms,  ranging from five to 20 years (the average  being 17 years),  and expire
between 2003 and 2017.  All leases are on a triple-net  basis,  with the lessees
responsible  for all repairs and  maintenance,  property  taxes,  insurance  and
utilities.  The leases of the Properties  provide for minimum base annual rental
payments (payable in monthly installments) ranging from approximately $38,100 to
$185,700.  Generally,  the leases provide for percentage  rent based on sales in
excess of a specified  amount.  In addition,  some of the leases  provide  that,
commencing  in the fourth to sixth lease year,  the  percentage  rent will be an
amount equal to the greater of the percentage  rent  calculated  under the lease
formula or a  specified  percentage  (ranging  from one to five  percent) of the
purchase price or gross sales.

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

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

         The tenant of the Property in Melbourne,  Florida  vacated the Property
in October 1997. The Partnership sold this Property in February 1998.

         During the year ended December 31, 1997, the Partnership reinvested the
net sales proceeds from the sale of its Property in Dallas,  Texas in 1996, in a
Bertucci's Property located in Marietta,  Georgia. In addition, during 1997, the
Partnership  sold its  Properties in  Plattsmouth,  Nebraska;  Venice,  Florida;
Naples,  Florida,  and Whitehall,  Michigan,  and the Property in Yuma, Arizona,
which was held as  tenants-in-common  with an affiliate of the General Partners,
and reinvested a portion of these net sales proceeds in two IHOP Properties, one
in  each of  Elgin, Illinois,  and  Manassas,  Virginia,  and in a  Property  in
Vancouver,  Washington,  as  tenants-in-common  with  affiliates  of the General
Partners as described below in "Joint Venture  Arrangements." In addition,  Show
Low Joint  Venture,  a joint venture in which the  Partnership  is a co-venturer
with an  affiliate  of the  General  Partners,  sold its  Property  in Show Low,
Arizona.  The joint venture  reinvested  the net sales proceeds in a Property in
Greensboro,  North Carolina. The lease terms for all of these new Properties are
substantially the same as the  Partnership's  other leases as described above in
the first three paragraphs of this section.

         During January 1998, the Partnership  reinvested the net sales proceeds
from the  sales of the  Properties  in  Whitehall,  Michigan,  and  Plattsmouth,
Nebraska,  in one Property in Overland Park, Kansas and one Property in Memphis,
Tennessee,  as  tenants-in-common,  with  affiliates of the General  Partners as
described  below in "Joint  Venture  Arrangements."  The  lease  terms for these
Properties  are  substantially  the same as the  Partnership's  other  leases as
described above in the first three paragraphs of this section.

Major Tenants

         During 1997,  three  lessees of the  Partnership  and its  consolidated
joint venture,  Golden Corral Corporation,  Restaurant Management Services, Inc.
and  Mid-America  Corporation,  each  contributed  more than ten  percent of the
Partnership's   total  rental   income   (including   rental   income  from  the
Partnership's   consolidated  joint  venture  in  which  the  Partnership  is  a
co-venturer  and the  Partnership's  share of the rental  income  from the three
Properties owned by unconsolidated  joint ventures and two Properties owned with
affiliates  as  tenants-in-common).  As of  December  31,  1997,  Golden  Corral
Corporation was the lessee under leases relating to five restaurants, Restaurant
Management  Services,  Inc.  was the  lessee  under  leases  relating  to  seven
restaurants and Mid-America  Corporation was the lessee under leases relating to
four  restaurants.  It is anticipated that, based on the minimum rental payments
required by the leases,  these three  lessees each will  continue to  contribute
more than ten  percent  of the  Partnership's  total  rental  income in 1998 and
subsequent  years.  In addition,  four Restaurant  Chains,  Golden Corral Family
Steakhouse  Restaurants  ("Golden Corral"),  Hardee's,  Burger King and Denny's,
each accounted for more than ten percent of the

                                        2

<PAGE>



Partnership's   total  rental  income  in  1997  (including  the   Partnership's
consolidated joint venture and the Partnership's share of the rental income from
the  three  Properties  owned by  unconsolidated  joint  ventures  in which  the
Partnership  is a  co-venturer  and two  Properties  owned  with  affiliates  as
tenants-in-common).  In  subsequent  years,  it is  anticipated  that these four
Restaurant Chains each will continue to account for more than ten percent of the
Partnership's total rental income to which the Partnership is entitled under the
terms of the leases.  Any failure of these  lessees or  Restaurant  Chains could
materially  affect  the  Partnership's  income.  No  single  tenant  or group of
affiliated tenants lease Properties with an aggregate carrying value,  excluding
acquisition fees and certain  acquisition  expenses,  in excess of 20 percent of
the total assets of the Partnership.

Joint Venture Arrangements

         The  Partnership  has entered into a joint  venture  arrangement,  Caro
Joint Venture, with an unaffiliated entity to purchase and hold one Property. In
addition,  the  Partnership  has  entered  into  three  separate  joint  venture
arrangements,  Auburn Joint Venture,  Show Low Joint Venture and Asheville Joint
Venture,  with  affiliates of the General  Partners,  to purchase and hold three
Properties through such joint ventures.  The joint venture  arrangements provide
for the  Partnership  and its joint  venture  partners to share in all costs and
benefits  associated with the joint venture in accordance with their  respective
percentage interests in the joint venture. The Partnership and its joint venture
partners are jointly and severally  liable for all debts,  obligations and other
liabilities of the joint venture.

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

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

         Net cash flow from  operations of Auburn Joint Venture,  Show Low Joint
Venture,  Caro Joint Venture and Asheville  Joint Venture is  distributed  3.9%,
36.0%,  66.0% and 14.0%,  respectively,  to the  Partnership  and the balance is
distributed to each of the other joint venture  partners in accordance  with its
respective  percentage interest in the joint venture. Any liquidation  proceeds,
after  paying  joint  venture  debts and  liabilities  and funding  reserves for
contingent liabilities,  will be distributed first to the joint venture partners
with positive capital account balances in proportion to such balances until such
balances  equal  zero,  and  thereafter  in  proportion  to each  joint  venture
partner's percentage interest in the joint venture.

         In addition  to the above joint  venture  agreements,  the  Partnership
entered   into  an   agreement   to  hold  a  Jack  in  the  Box   Property   as
tenants-in-common  with an  affiliate  of the General  Partners.  The  agreement
provides  for the  Partnership  and the  affiliate  to share in the  profits and
losses of the Property in proportion to each co-venturer's  percentage interest.
As of  December  31,  1996,  the  Partnership  owned a 51.67%  interest  in this
Property.   In   October   1997,   the   Partnership   and  the   affiliate   as
tenants-in-common,  sold  the Jack in the Box  Property  in  Yuma,  Arizona.  In
December 1997, the  Partnership  entered into an agreement to hold a Property in
Vancouver,  Washington,  as  tenants-in-common  with  affiliates  of the General
Partners and in conjunction  therewith,  reinvested its portion of the net sales
proceeds received from the sale of the Property in Yuma, Arizona.  The agreement
provides  for the  Partnership  and the  affiliate  to share in the  profits and
losses of the Property in proportion to each co-venturer's  percentage interest.
The Partnership owns a 23.04% interest in the Property in Vancouver, Washington.

         In addition, in January 1996, the Partnership entered into an agreement
to hold a Golden Corral  Property as  tenants-in-common  with  affiliates of the
General Partners.  The agreement provides for the Partnership and the affiliates
to share in the  profits  and  losses  of the  Property  in  proportion  to each
co-venturer's percentage interest.
The Partnership owns a 17.93% interest in this Property.


                                        3

<PAGE>



         During January 1998, the Partnership  entered into an agreement to hold
an IHOP  Property  in  Overland  Park,  Kansas and an IHOP  Property in Memphis,
Tennessee,  as tenants-in-common,  with affiliates of the General Partners.  The
agreements  provide  for the  Partnership  and the  affiliates  to  share in the
profits and losses of the  Property  and net cash flow from the  Properties,  in
proportion to each  co-venturer's  percentage  interest.  The Partnership owns a
34.74%  and 46.2%  interest  in the  Properties  in  Overland  Park,  Kansas,and
Memphis, Tennessee, respectively.

Certain Management Services

         CNL Income Fund Advisors,  Inc., an affiliate of the General  Partners,
provided  certain  services  relating to management of the  Partnership  and its
Properties  pursuant to a  management  agreement  with the  Partnership  through
September 30, 1995.  Under this  agreement,  CNL Income Fund Advisors,  Inc. was
responsible for collecting  rental  payments,  inspecting the Properties and the
tenants'  books and records,  assisting the  Partnership in responding to tenant
inquiries and notices and providing  information  to the  Partnership  about the
status of the leases and the  Properties.  CNL Income Fund  Advisors,  Inc. also
assisted the General Partners in negotiating the leases. For these services, the
Partnership  had agreed to pay CNL Income Fund  Advisors,  Inc. an annual fee of
one percent of the sum of gross rental revenues from Properties  wholly owned by
the  Partnership  plus the  Partnership's  allocable  share of gross revenues of
joint ventures in which the  Partnership is a co-venturer  and the Property held
as  tenants-in-common  with an affiliate,  but not in excess of competitive fees
for comparable services.  Under the management agreement,  the management fee is
subordinated  to receipt by the Limited  Partners of an aggregate,  ten percent,
cumulative,  noncompounded annual return on their adjusted capital contributions
(the "10% Preferred  Return"),  calculated in accordance with the  Partnership's
limited partnership agreement (the "Partnership Agreement").

         Effective October 1, 1995, CNL Income Fund Advisors,  Inc. assigned its
rights  in,  and its  obligations  under,  the  management  agreement  with  the
Partnership  to CNL Fund  Advisors,  Inc. All of the terms and conditions of the
management agreement,  including the payment of fees, as described above, remain
unchanged.

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

Competition

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

         At the time the Partnership elects to dispose of its Properties,  other
than as a result of the exercise of tenant options to purchase  Properties,  the
Partnership  will be in  competition  with other  persons and entities to locate
purchasers for its Properties.

Employees

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


Item 2.  Properties

         As of December 31, 1997,  the  Partnership  owned,  either  directly or
through  joint  venture  arrangements,  41  Properties  located  in  18  states.
Reference  is made to the Schedule of Real Estate and  Accumulated  Depreciation
filed  with this  report for a listing of the  Properties  and their  respective
costs, including acquisition fees and certain acquisition expenses.


                                        4

<PAGE>



Description of Properties

         Land. The Partnership's  Property sites range from approximately 11,500
to 88,200  square  feet  depending  upon  building  size and  local  demographic
factors.  Sites  purchased  by  the  Partnership  are  in  locations  zoned  for
commercial use which have been reviewed for traffic patterns and volume.

         Buildings.  Each of the Properties owned by the Partnership  includes a
building that is one of a Restaurant  Chain's  approved  designs.  The buildings
generally are  rectangular  and are  constructed  from various  combinations  of
stucco,  steel,  wood, brick and tile.  Building sizes range from  approximately
1,200 to 10,700 square feet.  All buildings on Properties are  freestanding  and
surrounded by paved  parking  areas.  Buildings  are suitable for  conversion to
various uses, although modifications may be required prior to use for other than
restaurant operations.

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

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

         Restaurant  Management  Services leases five Popeyes  restaurants,  one
Church's Fried Chicken restaurant and one other restaurant (formerly operated as
a Captain  D's).  The initial term of each lease is 20 years  (expiring  between
2009 and 2010) and the average minimum base annual rent is approximately $53,000
(ranging from approximately $46,000 to $61,900).

         Golden Corral  Corporation leases five Golden Corral  restaurants.  The
initial term of each lease is 15 years (expiring  between 2004 and 2011) and the
average  minimum  base  annual  rent is  approximately  $152,900  (ranging  from
approximately $88,000 to $185,700).

         Mid-America  Corporation  leases  four  Burger  King  restaurants.  The
initial term of each lease is between 14 and 16 years (expiring between 2004 and
2006)  and the  average  minimum  base  annual  rent is  approximately  $105,000
(ranging from approximately $102,700 to $105,800).

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


Item 3.  Legal Proceedings

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


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

         Not applicable.





                                        5

<PAGE>



                                     PART II


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

         As of March 13, 1998,  there were 2,985 holders of record of the Units.
There is no public trading market for the Units,  and it is not anticipated that
a public  market for the Units will develop.  Limited  Partners who wish to sell
their  Units  may  offer  the  Units  for  sale  pursuant  to the  Partnership's
distribution  reinvestment  plan (the "Plan"),  and Limited Partners who wish to
have their  distributions  used to acquire additional Units (to the extent Units
are  available  for  purchase),  may do so  pursuant  to such Plan.  The General
Partners have the right to prohibit  transfers of Units.  The price paid for any
Unit  transferred  pursuant to the Plan has been $475 per Unit.  The price to be
paid for any Unit  transferred  other  than  pursuant  to the Plan is subject to
negotiation by the purchaser and the selling  Limited  Partner.  The Partnership
will not redeem or repurchase Units.

         The following table reflects,  for each calendar quarter, the high, low
and average  sales prices for transfers of Units during 1997 and 1996 other than
pursuant  to the  Plan,  net of  commissions  (which  ranged  from  zero to 15.5
percent).
<TABLE>
<CAPTION>

                                                      1997 (1)                          1996 (1)
                                        ----------------------------------      ----------------------
<S> <C>
                                            High       Low      Average        High       Low      Average
         First Quarter                       $475      $475        $475         $475      $355        $431
         Second Quarter                       435       361         417          475       372         456
         Third Quarter                        500       415         453          475       400         438
         Fourth Quarter                       475       420         461          416       416         416
</TABLE>

(1)      A total of 311 and 664 Units were  transferred  other than  pursuant to
         the Plan for the years ended December 31, 1997 and 1996, respectively.

         The capital  contribution  per Unit was $500.  All cash  available  for
distribution  will be distributed to the partners  pursuant to the provisions of
the Partnership Agreement.

         For the  years  ended  December  31,  1997 and  1996,  the  Partnership
declared cash distributions of $3,150,000 and $3,220,000,  respectively,  to the
Limited  Partners.  For the quarter  ended  December 31, 1996,  the  Partnership
declared a special  distribution  to the  Limited  Partners  of  $70,000,  which
represented  cumulative  excess operating  reserves.  No amounts  distributed to
partners for the years ended  December 31, 1997 and 1996,  are required to be or
have been  treated by the  Partnership  as a return of capital  for  purposes of
calculating   the   Limited   Partners'   return  on  their   adjusted   capital
contributions.  No distributions have been made to the General Partners to date.
As indicated in the chart below, these  distributions were declared at the close
of each of the Partnership's  calendar  quarters.  These amounts include monthly
distributions  made in arrears  for the  Limited  Partners  electing  to receive
distributions on this basis.

         Quarter Ended                    1997            1996
         -------------                 ----------      ----------
         March 31                        $787,500        $787,500
         June 30                          787,500         787,500
         September 30                     787,500         787,500
         December 31 (1)                  787,500         857,500

(1)      Includes a special  distribution to Limited Partners of $70,000 for the
         quarter ended December 31, 1996.

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



                                        6

<PAGE>



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

                                          1997          1996           1995          1994           1993
                                      ------------  ------------   ------------  ------------  ---------
<S> <C>
Year ended December 31:
   Revenues (1)                        $ 3,456,406   $ 3,565,493    $ 3,438,286   $ 3,468,897    $ 3,635,782
   Net income (2)                        2,899,882     2,803,601      2,861,381     3,095,028      2,955,692
   Cash distributions declared (3)       3,150,000     3,220,000      3,150,000     3,150,000      3,150,000
   Net income per Unit (2)                   41.06         39.65          40.47         43.80          41.80
   Cash distributions declared
      per Unit (2)                           45.00         46.00          45.00         45.00          45.00

At December 31:
   Total assets                        $29,993,069   $30,129,286    $30,442,314   $30,754,999    $30,837,521
   Partners' capital                    28,794,249    29,044,367     29,460,766    29,749,385     29,804,357
</TABLE>

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

(2)      Net income  for the year ended  December  31,  1997 and 1996,  includes
         provision  for loss on land  and  building  of  $263,186  and  $77,023,
         respectively.  In addition, net income for the years ended December 31,
         1997, 1996 and 1995, includes $79,777, $1,706 and $7,370, respectively,
         from a loss on sale of land and  buildings.  Net  income  for the years
         ended  December  31,  1997,  1995 and  1994,  also  includes  $626,804,
         $103,283  and  $332,664,  respectively,  from gains on sale of land and
         buildings.

(3)      Distributions  for the year ended December 31, 1996,  include a special
         distribution  to the Limited  Partners of  $70,000,  which  represented
         cumulative excess operating reserves.

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



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

         The  Partnership was organized on August 17, 1988, to acquire for cash,
either directly or through joint venture  arrangements,  both newly  constructed
and  existing  restaurant  Properties,  as well as land  upon  which  restaurant
Properties  were to be constructed,  which are leased  primarily to operators of
selected national and regional fast-food and family-style Restaurant Chains. The
leases are triple-net  leases,  with the lessees  generally  responsible for all
repairs and maintenance, property taxes, insurance and utilities. As of December
31, 1997, the  Partnership  owned 41 Properties,  either  directly or indirectly
through joint venture arrangements.

Liquidity and Capital Resources

         The  Partnership's  primary  source  of  capital  for the  years  ended
December 31, 1997, 1996 and 1995, was cash from operations  (which includes cash
received from tenants,  distributions from joint ventures and interest received,
less cash paid for expenses).  Cash from operations was  $3,156,041,  $3,310,762
and  $3,222,430  for  the  years  ended  December  31,  1997,   1996  and  1995,
respectively.  The decrease in cash from operations  during 1997, as compared to
1996, and the increase  during 1996, as compared to 1995, are primarily a result
of changes in income and expenses as discussed in "Results of Operations"  below
and changes in the  Partnership's  working capital during each of the respective
years.

         Other  sources and uses of capital  included the  following  during the
years ended December 31, 1997, 1996 and 1995.


                                        7

<PAGE>



         In June 1995,  the  Partnership  sold its  Property  in Little  Canada,
Minnesota,  for $904,000 and received net sales proceeds of $899,503,  resulting
in a gain of $103,283  for  financial  reporting  purposes.  This  Property  was
originally  acquired  by the  Partnership  in  October  1989  and  had a cost of
approximately $823,900, excluding acquisition fees and miscellaneous acquisition
expenses; therefore, the Partnership sold the Property for approximately $75,600
in excess of its  original  purchase  price.  In August  1995,  the  Partnership
reinvested  $724,612 in a Property in Broken Arrow,  Oklahoma.  In addition,  in
August 1995, the Partnership  sold a small parcel of vacant land adjacent to its
Property in Orlando,  Florida,  for  $7,500,  resulting  in a loss of $7,370 for
financial reporting purposes. In connection therewith,  the Partnership accepted
a  promissory  note for $6,000.  The  promissory  note was  collateralized  by a
mortgage on the Property,  bore interest at a rate of nine percent per annum and
was  scheduled  to be  collected  in six monthly  installments  of $1,026,  with
collections  commencing September 1995. Receivables include $3,056 from the note
at December 31, 1995. The receivable was collected in full during 1996.

         In January 1996,  the  Partnership  reinvested  the remaining net sales
proceeds from the 1995 sale of the Property in Little  Canada,  Minnesota,  in a
Golden Corral Property  located in Clinton,  North Carolina,  with affiliates of
the  General  Partners  as  tenants-in-common.   In  connection  therewith,  the
Partnership  and  its  affiliates   entered  into  an  agreement   whereby  each
co-venturer  will share in the profits and losses of the Property in  proportion
to its applicable  percentage interest. As of December 31, 1997, the Partnership
owned a 17.93% interest in this Property.

         In March 1996,  the  Partnership  entered  into an  agreement  with the
tenant of the Properties in Chester,  Pennsylvania,  and Orlando,  Florida,  for
payment of certain rental payment  deferrals the  Partnership had granted to the
tenant through March 31, 1996.  Under the agreement,  the Partnership  agreed to
abate approximately  $42,700 of the rental payment deferral amounts.  The tenant
made payments of  approximately  $18,600 in each of April 1996 and March 1997 in
accordance  with  the  terms  of the  agreement,  and  has  agreed  to  pay  the
Partnership the remaining balance due of approximately  $90,900 in six remaining
annual installments through 2002.

         In December 1996, the Partnership  sold its Property in Dallas,  Texas,
to an unrelated  third party for  $1,016,000  and received net sales proceeds of
$982,980.  This Property was originally acquired by the Partnership in June 1994
and  had a cost  of  approximately  $980,900,  excluding  acquisition  fees  and
miscellaneous acquisition expenses; therefore, the Partnership sold the Property
for  approximately  $2,100 in excess of its original  purchase price. Due to the
fact  that the  Partnership  had  recognized  accrued  rental  income  since the
inception of the lease relating to the  straight-lining of future scheduled rent
increases in accordance  with  generally  accepted  accounting  principles,  the
Partnership  wrote off the  cumulative  balance of such accrued rental income at
the time of the sale of this Property,  resulting in a loss on land and building
of  $1,706  for  financial  reporting  purposes.   Due  to  the  fact  that  the
straight-lining  of  future  rent  increases  over  the  term of the  lease is a
non-cash  accounting  adjustment,  the  write-off of these amounts is a loss for
financial  statement  purposes  only.  As of December  31,  1996,  the net sales
proceeds of  $977,017,  plus  accrued  interest  of $739,  were being held in an
interest bearing escrow account pending the release of funds by the escrow agent
to acquire an additional Property. In February 1997, the Partnership  reinvested
the net sales proceeds,  along with additional  funds, in a Bertucci's  Property
located in Marietta,  Georgia, for a total cost of approximately $1,112,600. The
General Partners believe that the transaction, or a portion thereof, relating to
the sale of the Property in Dallas,  Texas and the reinvestment of the net sales
proceeds will qualify as a like-kind exchange transaction for federal income tax
purposes.  However, the Partnership will distribute amounts sufficient to enable
the Limited  Partners to pay federal and state income taxes,  if any (at a level
reasonably assumed by the General Partners), resulting from the sale.

         In January 1997, Show Low Joint Venture,  in which the Partnership owns
a 36 percent interest,  sold the Property to the tenant for $970,000,  resulting
in a gain to the joint venture of approximately $360,000 for financial reporting
purposes.  The Property was originally  contributed to Show Low Joint Venture in
July 1990 and had a total cost of approximately $663,500,  excluding acquisition
fees and miscellaneous  acquisition expenses;  therefore, the joint venture sold
the  Property  for  approximately  $306,500 in excess of its  original  purchase
price. In June 1997, Show Low Joint Venture reinvested $782,413 of the net sales
proceeds in a Property in Greensboro,  North Carolina.  As of December 31, 1997,
the  Partnership  had received  approximately  $70,000  representing a return of
capital for its pro-rata share of the uninvested net sales proceeds.

         In July 1997, the Partnership sold the Property in Whitehall, Michigan,
to an unrelated  third party,  for $665,000 and received net sales proceeds (net
of $2,981 which  represents  amounts due to the former tenant for prorated rent)
of $626,907, resulting in a loss of $79,777 for financial reporting purposes, as
described below in

                                        8

<PAGE>



"Results of Operations." The net sales proceeds were reinvested in a Property in
Overland   Park,   Kansas,   with   affiliates   of  the  General   Partners  as
tenants-in-common, in January 1998.

         In addition, in July 1997, the Partnership sold its Property in Naples,
Florida,  to an unrelated  third party,  for  $1,530,000  and received net sales
proceeds  (net of $9,945 which  represents  amounts due to the former tenant for
prorated  rent) of  $1,477,780,  resulting in a gain of $186,550  for  financial
reporting purposes.  This Property was originally acquired by the Partnership in
December 1989 and had a cost of approximately $1,083,900,  excluding acquisition
fees and miscellaneous acquisition expenses; therefore, the Partnership sold the
Property for approximately $403,800 in excess of its original purchase price. In
December  1997,  the  Partnership  reinvested  the net sales proceeds in an IHOP
Property in Elgin, Illinois, for a total cost of approximately  $1,484,100.  The
General Partners believe that the transaction, or a portion thereof, relating to
the sale of the Property in Naples,  Florida,  and the  reinvestment  of the net
sales  proceeds  will qualify as a like-kind  exchange  transaction  for federal
income tax purposes. However, the Partnership will distribute amounts sufficient
to enable the Limited Partners to pay federal and state income taxes, if any (at
a level reasonably assumed by the General Partners), resulting from the sale.

         In  addition,  in July  1997,  the  Partnership  sold its  Property  in
Plattsmouth,  Nebraska,  to the tenant,  for  $700,000  and  received  net sales
proceeds  (net of escrow  fees of $1,750) of  $697,650,  resulting  in a gain of
$156,401 for financial reporting purposes. This Property was originally acquired
by the  Partnership  in January 1990 and had a cost of  approximately  $561,000,
excluding acquisition fees and miscellaneous  acquisition  expenses;  therefore,
the Partnership  sold the Property for  approximately  $138,400 in excess of its
original  purchase price.  In January 1998, the  Partnership  reinvested the net
sales proceeds in an IHOP Property in Memphis, Tennessee, with affiliates of the
General  Partners as  tenants-in-common.  The General  Partners believe that the
transaction,  or a portion  thereof,  relating  to the sale of the  Property  in
Plattsmouth,  Nebraska,  and the  reinvestment  of the net sales  proceeds  will
qualify as a like-kind  exchange  transaction  for federal  income tax purposes.
However,  the  Partnership  will  distribute  amounts  sufficient  to enable the
Limited  Partners  to pay  federal and state  income  taxes,  if any (at a level
reasonably assumed by the General Partners), resulting from the sale.

         In June 1997, the  Partnership  terminated the lease with the tenant of
the Property in Greensburg,  Indiana. In connection  therewith,  the Partnership
accepted a  promissory  note from this  former  tenant for  $13,077  for amounts
relating to past due real estate taxes the  Partnership had incurred as a result
of the former tenant's  financial  difficulties.  The promissory  note, which is
uncollateralized,  bears  interest at a rate of ten  percent  per annum,  and is
being  collected in 36 monthly  installments.  Receivables at December 31, 1997,
included  $13,631 of such amounts,  including  accrued interest of $554. In July
1997, the  Partnership  entered into a new lease for the Property in Greensburg,
Indiana,  with a new tenant to operate the Property as an Arby's restaurant.  In
connection  therewith,  the  Partnership  agreed to fund  $125,000 in renovation
costs.  The  renovations  were  completed  in October  1997,  at which time rent
commenced.

         In  September  1997,  the  Partnership  sold its  Property  in  Venice,
Florida,  to an unrelated  third party,  for  $1,245,000  and received net sales
proceeds  (net of $5,048 which  represents  amounts due to the former tenant for
prorated  rent) of  $1,201,648,  resulting in a gain of $283,853  for  financial
reporting purposes.  This Property was originally acquired by the Partnership in
August 1989 and had a cost of approximately  $1,032,400,  excluding  acquisition
fees and miscellaneous acquisition expenses; therefore, the Partnership sold the
Property for approximately $174,300 in excess of its original purchase price. In
December  1997,  the  Partnership  reinvested  the net sales proceeds in an IHOP
Property in Manassas,  Virginia,  for a total cost of approximately  $1,126,800.
The  General  Partners  believe  that the  transaction,  or a  portion  thereof,
relating to the sale of the Property in Venice, Florida, and the reinvestment of
the net sales  proceeds  will qualify as a like-kind  exchange  transaction  for
federal income tax purposes.  However,  the Partnership will distribute  amounts
sufficient to enable the Limited  Partners to pay federal and state income taxes
if any (at a level reasonably assumed by the General  Partners),  resulting from
the sale.

         In   October   1997,   the   Partnership    and   an   affiliate,    as
tenants-in-common,  sold the Property in Yuma, Arizona, in which the Partnership
owned a 51.67% interest,  for a total sales price of $1,010,000 and received net
sales proceeds of $982,025,  resulting in a gain, to the  tenancy-in-common,  of
approximately  $128,400  for  financial  reporting  purposes.  The  Property was
originally acquired in July 1994 and had a total cost of approximately $861,700,
excluding acquisition fees and miscellaneous  acquisition  expenses;  therefore,
the  Property  was sold for  approximately  $120,300  in excess of its  original
purchase price. The Partnership received approximately $455,000,  representing a
return of capital for its pro-rata share of the net sales proceeds.  In December
1997, the Partnership

                                        9

<PAGE>



reinvested  the  amounts  received  as a return of capital  from the sale of the
Yuma,   Arizona   Property,   in  a  Property  in  Vancouver,   Washington,   as
tenants-in-common  with affiliates of the General Partners. The General Partners
believe that the transaction,  or a portion thereof, relating to the sale of the
Property in Yuma,  Arizona and the  reinvestment  of the net sales proceeds will
qualify as a like-kind exchange  transaction  for federal  income tax  purposes.
However,  the  Partnership  will  distribute  amounts  sufficient  to enable the
Limited  Partners  to pay  federal and state  income  taxes,  if any (at a level
reasonably assumed by the General Partners), resulting from the sale.

         In January 1998, the Partnership sold its Property in Deland,  Florida,
to the tenant,  for  $1,250,000  and received net sales  proceeds of $1,234,617,
resulting in a gain of approximately  $345,100 for financial reporting purposes.
The Partnership intends to reinvest the sales proceeds in an additional Property
during 1998. The General  Partners  believe that the  transaction,  or a portion
thereof,  relating  to the sale of the  Property  in  Deland,  Florida,  and the
reinvestment  of the  proceeds  will be  structured  to qualify  as a  like-kind
exchange transaction for federal income tax purposes.

         In February  1998,  the  Partnership  sold its  Property in  Melbourne,
Florida, for $590,000 and received net sales proceeds of $542,477,  resulting in
a loss of $158,239  for  financial  reporting  purposes,  which the  Partnership
recorded at December 31, 1997, as described below in "Results of Operations." In
addition, in February 1998, the Partnership sold its Property in Liverpool,  New
York,  for $157,500 and received net sales proceeds of  approximately  $150,700,
resulting  in a loss of $181,970 for  financial  reporting  purposes,  which the
Partnership  recorded at December  31, 1997,  as described  below in "Results of
Operations." The Partnership intends to reinvest the net sales proceeds from the
sale of both Properties in additional Properties.

         None of the Properties  owned by the  Partnership or the joint ventures
in which the  Partnership  owns an interest is or may be  encumbered.  Under its
Partnership  Agreement,  the  Partnership  is prohibited  from borrowing for any
purpose;  provided,  however,  that the General Partners or their affiliates are
entitled to reimbursement,  at cost, for actual expenses incurred by the General
Partners or their  affiliates  on behalf of the  Partnership.  Affiliates of the
General Partners from time to time incur certain operating expenses on behalf of
the  Partnership  for which the  Partnership  reimburses the affiliates  without
interest.

         Currently,  rental income from the Partnership's Properties is invested
in money market accounts or other short-term,  highly liquid investments pending
the  Partnership's  use of such  funds to pay  Partnership  expenses  or to make
distributions  to the  partners.  At December  31,  1997,  the  Partnership  had
$1,614,759 invested in such short-term  investments as compared to $1,127,930 at
December 31, 1996.  The increase in cash and cash  equivalents  during 1997,  is
primarily due to the receipt of $626,907 in net sales  proceeds form the sale of
the Property in  Whitehall,  Michigan in July 1997.  This  increase is partially
offset  by a  decrease  in cash  and  cash  equivalents  due to the  Partnership
investing  approximately  $134,900 in a Bertucci's Property, as described above.
The funds  remaining at December 31, 1997,  after payment of  distributions  and
other liabilities, will be used to invest in an additional Property as described
above and to meet the Partnership's working capital and other needs.

         During  1997,  1996  and  1995,  affiliates  of the  General  Partners,
incurred  on  behalf  of  the   Partnership   $82,503,   $96,112  and   $95,898,
respectively,  for certain operating expenses. As of December 31, 1997 and 1996,
the Partnership  owed $32,019 and $2,633,  respectively,  to affiliates for such
amounts and accounting and administrative services. As of February 28, 1998, the
Partnership had reimbursed the affiliates all such amounts. Other liabilities of
the Partnership,  including  distributions  payable,  increased to $1,022,326 at
December 31,  1997,  from  $917,704 at December 31, 1996.  The increase in other
liabilities is partially  attributable  to the Partnership  accruing  renovation
costs for the Property in Greensburg,  Indiana, in connection with the new lease
entered into in July 1997,  as  described  above.  In addition,  the increase in
other  liabilities  for 1997 was due to an increase in accrued and escrowed real
estate taxes payable due to the Partnership  accruing  current real estate taxes
relating to its Property in Melbourne,  Florida, due to the fact that the tenant
vacated the Property in October 1997. Other liabilities also increased due to an
increase  in  rents  paid in  advance.  The  increase  in other  liabilities  is
partially  offset by a  decrease  in  distributions  payable  as a result of the
Partnership  accruing a special  distribution payable to the Limited Partners of
$70,000  at  December  31,  1996,  which was paid in  January  1997 from  excess
operating  reserves.  The General  Partners  believe  that the  Partnership  has
sufficient cash on hand to meet its current working capital needs.

         Based on cash from operations, and cumulative excess operating reserves
for the year ended December 31, 1996, the Partnership declared  distributions to
the Limited Partners of $3,150,000, $3,220,000 and $3,150,000 for

                                       10

<PAGE>



the years ended December 31, 1997, 1996 and 1995, respectively.  This represents
distributions  of $45,  $46 and $45 per Unit for the years  ended  December  31,
1997,  1996 and  1995,  respectively.  No  amounts  distributed  to the  Limited
Partners for the years ended  December 31, 1997,  1996 and 1995, are required to
be or have been treated by the  Partnership  as a return of capital for purposes
of  calculating  the  Limited   Partners'   return  on  their  adjusted  capital
contributions. The Partnership intends to continue to make distributions of cash
available for distribution to the Limited Partners on a quarterly basis.

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

         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.

         Due to low  operating  expenses  and  ongoing  cash flow,  the  General
Partners do not believe that  working  capital  reserves  are  necessary at this
time. In addition,  because the leases of the Partnership's  Properties are on a
triple-net basis, it is not anticipated that a permanent reserve for maintenance
and repairs will be established at this time. To the extent,  however,  that the
Partnership has insufficient funds for such purposes,  the General Partners will
contribute to the  Partnership  an aggregate  amount of up to one percent of the
offering proceeds for maintenance and repairs.

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

Results of Operations

         During  1995,  the  Partnership   owned  and  leased  38  wholly  owned
Properties (including one Property in Little Canada,  Minnesota,  which was sold
in June 1995),  during 1996,  the  Partnership  owned and leased 37 wholly owned
Properties  (including one Property in Dallas, Texas, which was sold in December
1996),  and  during  1997,  the  Partnership  owned and  leased 39 wholly  owned
Properties  (including  three  Properties,  one  in  each  of  Naples,  Florida;
Plattsmouth,  Nebraska and Whitehall, Michigan, which were sold in July 1997 and
one Property in Venice, Florida, which was sold in September 1997). In addition,
during 1995 and 1996, the  Partnership  was a co-venturer in four separate joint
ventures  that each  owned  and  leased  one  Property,  and  during  1997,  the
Partnership  was a co-venturer  in four separate  joint  ventures that owned and
leased a total of five Properties  (including one Property in Show Low, Arizona,
which was sold in January,  1997). During 1995, the Partnership owned and leased
one  Property  with  an  affiliate  as   tenants-in-common,   during  1996,  the
Partnership owned and leased two properties with affiliates as tenants-in-common
and  during  1997,  the  Partnership  owned  and  leased  four  Properties  with
affiliates as tenants-in-common  (including one Property in Yuma, Arizona, which
was sold in October,  1997).  As of December 31, 1997,  the  Partnership  owned,
either directly, as tenants-in-common with affiliates,  or through joint venture
arrangements,  41 Properties which are subject to long-term,  triple-net leases.
The leases of the  Properties  provide for minimum  base annual  rental  amounts
(payable  in  monthly   installments)  ranging  from  approximately  $38,100  to
$185,700.  Generally,  the leases provide for percentage  rent based on sales in
excess of a specified  amount.  In addition,  some of the leases  provide  that,
commencing  in the fourth to sixth lease year,  the  percentage  rent will be an
amount equal to the greater of the percentage  rent  calculated  under the lease
formula or a  specified  percentage  (ranging  from one to five  percent) of the
purchase  price or gross sales.  For further  description  of the  Partnership's
leases and  Properties,  see Item 1.  Business - Leases and Item 2.  Properties,
respectively.

         During  the  years  ended  December  31,  1997,   1996  and  1995,  the
Partnership  and its  consolidated  joint venture,  Caro Joint  Venture,  earned
$2,897,402,  $3,333,665  and  $3,207,860,  respectively,  in rental  income from
operating leases and earned income from direct financing leases. The decrease in
rental and earned income during the year ended December 31, 1997, as compared to
1996, was partially  attributable to a decrease of approximately $159,400 during
1997,  as a result of the sales  during  1997 of the  Properties  in  Whitehall,
Michigan;  Naples,  Florida;  Plattsmouth,  Nebraska  and Venice,  Florida.  The
decrease in rental and earned  income  during  1997,  as  compared to 1996,  was
partially  attributable  to, and the increase in rental and earned income during
1996, as compared to 1995,

                                       11

<PAGE>



was  partially  offset by, a decrease of $103,100 and $6,800,  respectively,  of
rental and  earned  income  from the sale of the  Property  in Dallas,  Texas in
December 1996. The decrease in rental income during 1997 was partially offset by
an increase of  approximately  $109,400 due to the reinvestment of the net sales
proceeds from the 1996 sale of the Property in Dallas,  Texas,  in a Property in
Marietta,  Georgia,  in February  1997. The decrease in rental and earned income
during  1997 was  partially  offset by an increase  of  approximately  $1,600 in
rental and earned income due to the fact that the Partnership reinvested the net
sales proceeds from the sales of the Properties in Naples and Venice, Florida in
two IHOP Properties in Elgin, Illinois and Manassas, Virginia in December 1997.

         The decrease in rental income during 1997, as compared to 1996, is also
attributable to the fact that during 1997 the Partnership's  consolidated  joint
venture established an allowance for doubtful accounts for rental amounts unpaid
by the tenant of the Property in Caro, Michigan totalling  approximately $84,500
due to financial difficulties the tenant is experiencing.  No such allowance was
established  during 1996.  The  Partnership's  consolidated  joint  venture will
continue  to pursue  collection  of past due  rental  amounts  relating  to this
Property and will recognize such amounts as income if collected.

         In addition,  the decrease in rental and earned  income during 1997, as
compared to 1996, is partially  attributable to the  Partnership  increasing its
allowance for doubtful accounts during 1997 by approximately  $40,500 for rental
amounts relating to the Hardee's Property located in Greensburg, Indiana, due to
financial  difficulties  the tenant was  experiencing.  Rental and earned income
also  decreased by  approximately  $43,700  during 1997 due to the fact that the
Partnership  terminated  the lease with the  former  tenant of the  Property  in
Greensburg,  Indiana, in June 1997, as described above in "Liquidity and Capital
Resources."  The General  Partners  have agreed that they will cease  collection
efforts on past due rental  amounts once the former tenant of this Property pays
all  amounts  due  under  the  promissory  note for past due real  estate  taxes
described above in "Liquidity and Capital Resources." The decrease in rental and
earned  income was  slightly  offset by an increase of $14,200 in rental  income
from the new tenant of this Property who began  operating the Property  after it
was renovated into an Arby's Property.

         In addition,  rental and earned  income  decreased  during  1997,  as a
result of the Partnership establishing an allowance for doubtful accounts during
1997  totalling  approximately  $107,100  for  rental  amounts  relating  to the
Property located in Melbourne,  Florida, due to the fact that the tenant vacated
the Property in October 1997. The Partnership will continue to pursue collection
of past due rental  amounts  relating to this Property and will  recognize  such
amounts as income if collected.  The Partnership  sold this Property in February
1998, as described above in "Liquidity and Capital Resources."

         In  addition,  rental  and earned  income  decreased  by  approximately
$35,300  during 1997, as a result of the fact that in December  1996, the tenant
ceased  operations  and  vacated  the  Property  in  Liverpool,  New  York.  The
Partnership  sold  this  Property  in  February  1998,  as  described  above  in
"Liquidity and Capital Resources."

         The decrease in rental and earned  income  during 1997,  as compared to
1996,  was offset by, and the increase in rental and earned income for 1996, was
partially  attributable to, the fact that the Partnership collected and recorded
as income  approximately  $18,600 and $5,300,  respectively,  in rental  payment
deferrals  for  the  two  Properties  leased  by the  same  tenant  in  Chester,
Pennsylvania,  and Orlando, Florida. Previously, the Partnership had established
an  allowance  for  doubtful  accounts  for these  amounts.  These  amounts were
collected in accordance with the agreement  entered into in March 1996, with the
tenant to collect the remaining  balance of the rental payment  deferral amounts
as discussed above in "Liquidity and Capital  Resources." The increase in rental
and earned income during 1996, as compared to 1995,  was partially  attributable
to the fact that  during the year  ended  December  31,  1995,  the  Partnership
established an allowance for doubtful  accounts of  approximately  $52,900,  for
rental  payment   deferral   amounts   relating  to  these   Properties   deemed
uncollectible.  No such allowance was established during the year ended December
31, 1996 or 1997.

          Rental and earned income  increased  during 1996, as compared to 1995,
by approximately  $43,700 due to the acquisition of a Property located in Broken
Arrow, Oklahoma, in August 1995 with the net sales proceeds from the sale of the
Property  in Little  Canada,  Minnesota,  in June 1995.  The  increase in rental
income was  partially  offset by a decrease of  approximately  $6,800 during the
year ended  December 31, 1996, due to the sale of the Property in Little Canada,
Minnesota, in June 1995.


                                       12

<PAGE>



         In addition,  the increase in rental income during 1996, as compared to
1995, was partially  attributable to an increase of approximately $35,300 during
1996,  due to the fact that in April 1995,  the  Partnership  entered into a new
lease for the Property in Hermitage, Tennessee, for which rent commenced in June
1995.

         For the years ended December 31, 1997,  1996 and 1995, the  Partnership
also earned $147,434, $110,073 and $115,946,  respectively, in contingent rental
income.  The  increase in  contingent  rental  income  during 1997 is  primarily
attributable  to increases in gross sales  relating to certain  Properties.  The
decrease in contingent rental income for 1996, as compared to 1995, is primarily
attributable to the decreases in gross sales relating to certain Properties.

         In addition,  for the years ended December 31, 1997, 1996 and 1995, the
Partnership earned $280,331, $97,381 and $83,483, respectively,  attributable to
net income earned by joint  ventures in which the  Partnership is a co-venturer.
The  increase in net income  earned by joint  ventures  in 1997,  as compared to
1996, is primarily attributable to the fact that in January 1997, Show Low Joint
Venture, in which the Partnership owns a 36 percent interest,  recognized a gain
of approximately  $360,000 for financial reporting purposes,  as a result of the
sale of its Property in January  1997,  as  described  above in  "Liquidity  and
Capital  Resources."  Show Low Joint Venture  reinvested the majority of the net
sales proceeds in a replacement  Property in June 1997. In addition,  in October
1997, the Partnership and an affiliate, as tenants-in-common,  sold the Property
in Yuma, Arizona, and recognized a gain of approximately  $128,400 for financial
reporting purposes, as described above in "Liquidity and Capital Resources." The
Partnership  owned a 51.67% interest in the Property in Yuma,  Arizona,  held as
tenants-in-common  with an affiliate.  The Partnership reinvested its portion of
the net sales proceeds in a Property in Vancouver, Washington, in December 1997,
as described  above in "Liquidity  and Capital  Resources."  The increase in net
income  earned by these joint  ventures  during  1996,  as compared to 1995,  is
primarily  attributable  to the  fact  that in  January  1996,  the  Partnership
acquired an interest in a Golden  Corral  Property in Clinton,  North  Carolina,
with  affiliates as  tenants-in-common,  as described  above in  "Liquidity  and
Capital Resources."

         During the years ended December 31, 1997,  1996 and 1995,  three of the
Partnership's   lessees,   Golden  Corral  Corporation,   Restaurant  Management
Services,  Inc. and  Mid-America  Corporation,  each  contributed  more than ten
percent of the  Partnership's  total rental income (including rental income from
the Partnership's  consolidated joint venture and the Partnership's share of the
rental income from the three Properties owned by  unconsolidated  joint ventures
in  which  the  Partnership  is a  co-venturer  and two  Properties  owned  with
affiliates  as  tenants-in-common).  As of  December  31,  1997,  Golden  Corral
Corporation was the lessee under leases relating to five restaurants, Restaurant
Management  Services,  Inc.  was the  lessee  under  leases  relating  to  seven
restaurants and Mid-America  Corporation was the lessee under leases relating to
four  restaurants.  It is anticipated  that,  based on the minimum annual rental
payments  required by the  leases,  these three  lessees  each will  continue to
contribute more than ten percent of the Partnership's total rental income during
1998 and subsequent years. In addition,  three Restaurant Chains, Golden Corral,
Hardee's and Burger King, and in 1997, an additional  Restaurant Chain, Denny's,
each  accounted  for more than ten  percent of the  Partnership's  total  rental
income in 1997, 1996 and 1995 (including the  Partnership's  consolidated  joint
venture  and the  Partnership's  share  of the  rental  income  from  the  three
Properties owned by unconsolidated  joint ventures in which the Partnership is a
co-venturer and two Properties owned with affiliates as  tenants-in-common).  In
subsequent  years, it is anticipated that these four Restaurant Chains each will
continue to account for more than ten percent of the Partnership's  total rental
income to which the  Partnership is entitled under the terms of the leases.  Any
failure of these  lessees  or  Restaurant  Chains  could  materially  affect the
Partnership's income.

         For the years ended 1997,  1996 and 1995, the  Partnership  also earned
$119,961, $49,056 and $51,130,  respectively,  in interest and other income. The
increase in interest and other income  during the year ended  December 31, 1997,
was primarily attributable to interest earned on the net sales proceeds received
and held in escrow  relating to the sales of the  Properties  in Dallas,  Texas;
Naples, Florida; Plattsmouth, Nebraska and Venice, Florida.

         Operating expenses,  including  depreciation and amortization  expense,
were $840,365, $683,163 and $672,818 for the years ended December 31, 1997, 1996
and 1995,  respectively.  The increase in  operating  expenses  during 1997,  as
compared to 1996,  is partially  due to the fact that the  Partnership  recorded
approximately  $122,400 in bad debt  expense and  approximately  $19,400 in real
estate tax expense for the Property  located in Melbourne,  Florida,  due to the
fact that the tenant vacated the Property in October 1997. The Partnership  sold
this  Property in February  1998, as described  above in "Liquidity  and Capital
Resources." In addition, the Partnership's consolidated

                                       13

<PAGE>



joint venture, Caro Joint Venture, recorded bad debt expense and real estate tax
expense of  approximately  $26,200  relating  to the  Property  located in Caro,
Michigan,  representing  past due rental and other  amounts.  The joint  venture
partners intend to continue to pursue the collection of such amounts relating to
the Property in Caro, Michigan.  The increase in operating expenses during 1996,
as compared to 1995,  was  partially a result of an increase in  accounting  and
administrative  expenses  associated  with  operating  the  Partnership  and its
Properties  and an  increase  in  insurance  expense as a result of the  General
Partners'  obtaining   contingent   liability  and  Property  coverage  for  the
Partnership beginning in May 1995.

         The increase in operating  expenses during 1997 was partially offset by
the  decrease  in  depreciation  expense  which  resulted  from  the sale of the
Property  in  Dallas,  Texas  in  December  1996,  the sale of the  Property  in
Whitehall,  Michigan,  in July  1997,  and the sale of the  Property  in Venice,
Florida,  in September 1997. The decrease in depreciation  expense was partially
offset by an increase in  depreciation  expense  attributable to the purchase of
the Property in Marietta, Georgia, in February 1997.

         As a  result  of  the  sales  of the  Properties  in  Naples,  Florida;
Plattsmouth,  Nebraska and Venice, Florida, as described above in "Liquidity and
Capital  Resources," the  Partnership  recognized a gain of $626,804 during 1997
for financial  reporting  purposes.  The gain for 1997 was partially offset by a
loss of $79,777 for financial reporting  purposes,  resulting from the July 1997
sale of the Property in Whitehall,  Michigan,  as described  above in "Liquidity
and Capital Resources."

         As a result of the sale of the Property in Dallas,  Texas,  in December
1996,  the  Partnership  recognized a loss for financial  reporting  purposes of
$1,706 for the year ended  December 31, 1996,  as discussed  above in "Liquidity
and Capital Resources." In addition,  as a result of the sale of the Property in
Little  Canada,  Minnesota,  during 1995 the  Partnership  recognized  a gain of
$103,283,  and as a result of the sale  during  1995 of a portion of the land of
the Property in Orlando,  Florida,  the Partnership  recognized a loss of $7,370
for the year ended  December 31,  1995,  as described  above in  "Liquidity  and
Capital Resources."

         During the years  ended  December  31, 1996 and 1997,  the  Partnership
recorded  provisions  for losses on land and  building in the amounts of $77,023
and $104,947, respectively, for financial reporting purposes for the Property in
Liverpool,  New York.  The  allowance  at December  31,  1996,  represented  the
difference  between the  Property's  carrying value at December 31, 1996 and the
estimated net realizable  value for this Property based on an anticipated  sales
price to an  interested  third  party.  The  allowance  at  December  31,  1997,
represents the difference between the Property's  carrying value at December 31,
1997  and the net  realizable  value  of the  Property  based  on the net  sales
proceeds received in February 1998 from the sale of the Property.

         During the year ended December 31, 1997, the Partnership established an
allowance for loss on land and on allowance for  impairment in carrying value of
net investment in direct financing lease for its Property in Melbourne, Florida,
in the amount of $158,239.  The allowance  represents the difference between the
Property's  carrying  value at  December  31,  1997 and the net  sales  proceeds
received in February 1998 from the sale of the Property,  as described  above in
"Liquidity and Capital Resources."

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

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

Item 8.   Financial Statements and Supplementary Data

                                       14

<PAGE>



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

                                    CONTENTS







                                                                  Page

Report of Independent Accountants                                  16

Financial Statements:

  Balance Sheets                                                   17

  Statements of Income                                             18

  Statements of Partners' Capital                                  19

  Statements of Cash Flows                                         20

  Notes to Financial Statements                                    23

                                       15

<PAGE>







                        Report of Independent Accountants



To the Partners
CNL Income Fund VI, Ltd.


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

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

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






Orlando, Florida
January 24, 1998,  except as to Notes 3 and 12 for which the date is February 9,
1998.

                                       16

<PAGE>



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

                                 BALANCE SHEETS


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

Land and buildings on operating
  leases, less accumulated
  depreciation and allowance for
  loss on land and building                      $20,785,684       $21,105,355
Net investment in direct financing
  leases, less allowance for
  impairment in carrying value                     4,708,841         4,659,024
Investment in joint ventures                       1,130,139           997,016
Cash and cash equivalents                          1,614,759         1,127,930
Restricted cash                                      709,227           977,756
Receivables, less allowance for
  doubtful accounts of $363,410
  and $115,892                                       157,989           174,983
Prepaid expenses                                       4,235             1,163
Lease costs, less accumulated
  amortization of $5,581 and
  $3,691                                              12,119            14,009
Accrued rental income, less
  allowance for doubtful accounts
  of $9,697 in 1997 and 1996                         843,345         1,045,319
Other assets                                          26,731            26,731
                                                 -----------       -----------

                                                 $29,993,069       $30,129,286
                                                 ===========       ===========


LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                                 $    14,138       $    18,161
Accrued construction costs payable                   125,000                -
Accrued and escrowed real
  estate taxes payable                                38,025            11,338
Due to related parties                                32,019             2,633
Distributions payable                                787,500           857,500
Rents paid in advance                                 57,663            30,705
                                                 -----------       -----------
    Total liabilities                              1,054,345           920,337

Minority interest                                    144,475           164,582

Partners' capital                                 28,794,249        29,044,367
                                                 -----------       -----------

                                                 $29,993,069       $30,129,286
                                                 ===========       ===========





                 See accompanying notes to financial statements.

                                       17

<PAGE>



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

                              STATEMENTS OF INCOME

<TABLE>
<CAPTION>

                                                                               Year Ended December 31,
                                                                   1997                1996               1995
                                                                ----------          ----------         -------
<S> <C>
Revenues:
  Rental income from operating
    leases                                                      $2,448,269          $2,776,239         $2,738,218
  Earned income from direct
    financing leases                                               449,133             557,426            469,642
  Contingent rental income                                         147,437             110,073            115,946
  Interest and other income                                        119,961              49,056             51,130
                                                                ----------          ----------         ----------
                                                                 3,164,800           3,492,794          3,374,936
                                                                ----------          ----------         ----------

Expenses:
  General operating and
    administrative                                                 156,847             159,388            147,902
  Professional services                                             25,861              32,272             27,741
  Bad debt expense                                                 131,184                  -                  -
  Real estate taxes                                                 43,676                  -                  -
  State and other taxes                                              8,969               7,930              6,789
  Depreciation and amortization                                    473,828             483,573            490,386
                                                                ----------          ----------         ----------
                                                                   840,365             683,163            672,818
                                                                ----------          ----------         ----------

Income Before Minority Interest
  in Income of Consolidated
  Joint Venture, Equity in
  Earnings of Unconsolidated
  Joint Ventures, Gain (Loss) on
  Sale of Land and Buildings and
  Net Investment in Direct Financing
  Leases and Provision for Loss on
  Land and Buildings                                             2,324,435           2,809,631          2,702,118

Minority Interest in Income of
  Consolidated Joint Venture                                        11,275             (24,682)           (20,133)

Equity in Earnings of Uncon-
  solidated Joint Ventures                                         280,331              97,381             83,483

Gain (Loss) on Sale of Land and
  Buildings and Net Investment in
  Direct Financing Leases                                          547,027              (1,706)            95,913

Provision for Loss on Land and
  Buildings and Impairment in
  Carrying Value of Net Investment
  in Direct Financing Lease                                       (263,186)            (77,023)                -
                                                                ----------          ----------         ---------

Net Income                                                      $2,899,882          $2,803,601         $2,861,381
                                                                ==========          ==========         ==========

Allocation of Net Income:
  General partners                                              $   25,353          $   28,337         $   28,411
  Limited partners                                               2,874,529           2,775,264          2,832,970
                                                                ----------          ----------         ----------

                                                                $2,899,882          $2,803,601         $2,861,381
                                                                ==========          ==========         ==========

Net Income Per Limited Partner
  Unit                                                          $    41.06          $    39.65         $    40.47
                                                                ==========          ==========         ==========

Weighted Average Number of
  Limited Partner Units
  Outstanding                                                       70,000              70,000             70,000
                                                                ==========          ==========         ==========

</TABLE>




                 See accompanying notes to financial statements.

                                       18

<PAGE>



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

                         STATEMENTS OF PARTNERS' CAPITAL

                  Years Ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>


                                      General Partners                       Limited Partners
                                              Accumu-                                   Accumu-
                                  Contri-     lated       Contri-        Distri-        lated       Syndication
                                  butions    Earnings     butions        butions       Earnings        Costs          Total
                                  -------    --------   -----------   ------------   -----------    -----------    --------
<S> <C>
Balance, December 31, 1994        $ 1,000    $146,262   $35,000,000   $(16,064,226)  $14,681,349    $(4,015,000)   $29,749,385

  Distributions to limited
    partners ($45.00 per
    limited partner unit)              -           -             -      (3,150,000)           -              -      (3,150,000)
  Net income                           -       28,411            -              -      2,832,970             -       2,861,381
                                  -------    --------   -----------   ------------   -----------    -----------    -----------

Balance, December 31, 1995          1,000     174,673    35,000,000    (19,214,226)   17,514,319     (4,015,000)    29,460,766

  Distributions to limited
    partners ($46.00 per
    limited partner unit)              -           -             -      (3,220,000)           -              -      (3,220,000)
  Net income                           -       28,337            -              -      2,775,264             -       2,803,601
                                  -------    --------   -----------   ------------   -----------    -----------    -----------

Balance, December 31, 1996          1,000     203,010    35,000,000    (22,434,226)   20,289,583     (4,015,000)    29,044,367

  Distributions to limited
    partners ($45.00 per
    limited partner unit)              -           -             -      (3,150,000)           -              -      (3,150,000)
  Net income                           -       25,353            -              -      2,874,529             -       2,899,882
                                  -------    --------   -----------   ------------   -----------    -----------    -----------

Balance, December 31, 1997        $ 1,000    $228,363   $35,000,000   $(25,584,226)  $23,164,112    $(4,015,000)   $28,794,249
                                  =======    ========   ===========   ============   ===========    ===========    ===========

</TABLE>

                 See accompanying notes to financial statements.

                                       19

<PAGE>



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

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                Year Ended December 31,
                                                                  1997                1996               1995
                                                               -----------         -----------        -------
<S> <C>
Increase (Decrease) in Cash and
  Cash Equivalents:

    Cash Flows from Operating
      Activities:
        Cash received from tenants                             $ 3,097,751         $ 3,363,188        $ 3,264,527
        Distributions from
          unconsolidated joint
          ventures                                                 144,016             114,163             95,931
        Cash paid for expenses                                    (180,530)           (203,432)          (181,153)
        Interest received                                           94,804              36,843             43,125
                                                               -----------         -----------        -----------
            Net cash provided by
              operating activities                               3,156,041           3,310,762          3,222,430
                                                               -----------         -----------        -----------

    Cash Flows from Investing
      Activities:
        Proceeds from sale of
          land and buildings                                     4,003,985             982,980            899,503
        Additions to land and
          buildings on operating
          leases                                                (2,666,258)                 -             (25,646)
        Investment in direct
          financing leases                                      (1,057,282)                 -            (723,237)
        Investment in joint
          ventures                                                (521,867)           (146,090)                -
        Return of capital from
          joint ventures                                           524,975                  -                  -
        Collections on mortgage
          note receivable                                               -                3,033              2,967
        Decrease (increase) in
          restricted cash                                          279,367            (977,017)                -
        Payment of lease costs                                      (3,300)             (3,300)            (3,300)
                                                               -----------         -----------        -----------
            Net cash provided
              by (used in)
              investing activities                                 559,620            (140,394)           150,287
                                                               -----------         -----------        -----------

    Cash Flows from Financing
      Activities:
        Reimbursement of acquisi-
          tion costs paid by
          related parties on
          behalf of the Part-
          nership                                                       -                   -              (1,375)
        Distributions to limited
          partners                                              (3,220,000)         (3,150,000)        (3,150,000)
        Distributions to holder
          of minority interest                                      (8,832)            (13,437)           (26,824)
                                                               -----------         -----------        -----------
            Net cash used in
              financing activities                              (3,228,832)         (3,163,437)        (3,178,199)
                                                               -----------         -----------        -----------

Net Increase in Cash and Cash
  Equivalents                                                      486,829               6,931            194,518

Cash and Cash Equivalents at
  Beginning of Year                                              1,127,930           1,120,999            926,481
                                                               -----------         -----------        -----------

Cash and Cash Equivalents at
  End of Year                                                  $ 1,614,759         $ 1,127,930        $ 1,120,999
                                                               ===========         ===========        ===========
</TABLE>




                 See accompanying notes to financial statements.

                                       20

<PAGE>



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

                      STATEMENTS OF CASH FLOWS - CONTINUED

<TABLE>
<CAPTION>

                                                                             Year Ended December 31,
                                                                  1997                1996               1995
                                                               -----------         -----------        -------
<S> <C>
Reconciliation of Net Income to
  Net Cash Provided by Operating
  Activities:

    Net income                                                 $ 2,899,882         $ 2,803,601        $ 2,861,381
                                                               -----------         -----------        -----------
    Adjustments to reconcile net
      income to net cash provided
      by operating activities:
        Depreciation                                               471,938             481,683            489,480
        Amortization                                                 1,890               1,890                906
        Minority interest in income
          of consolidated joint
          venture                                                  (11,275)             24,682             20,133
        Equity in earnings of
          unconsolidated joint
          ventures, net of
          distributions                                           (136,315)             16,782             12,448
        Loss (gain) on sale of land
          and building                                            (547,027)              1,706            (95,913)
        Provision for loss on land
          and building and impair-
          ment in carrying value
          of net investment in
          direct financing lease                                   263,186              77,023                 -
        Decrease (increase) in
          receivables                                               25,880             (90,360)            44,096
        Decrease (increase) in
          prepaid expenses                                          (3,072)              4,087             (2,042)
        Decrease in net investment
          in direct financing leases                                67,389              68,177             53,944
        Decrease (increase) in
          accrued rental income                                     41,173            (103,935)          (131,428)
        Increase in accounts payable
          and accrued expenses                                      25,964               2,529                215
        Increase (decrease) in
          due to related parties                                    29,470              (3,391)             5,909
        Increase (decrease) in
          rents paid in advance
          and deposits                                              26,958              26,288            (36,699)
                                                               -----------         -----------        -----------
            Total adjustments                                      256,159             507,161            361,049
                                                               -----------         -----------        -----------

Net Cash Provided by Operating
  Activities                                                   $ 3,156,041         $ 3,310,762        $ 3,222,430
                                                               ===========         ===========        ===========

</TABLE>


                 See accompanying notes to financial statements.

                                       21

<PAGE>



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

                      STATEMENTS OF CASH FLOWS - CONTINUED

<TABLE>
<CAPTION>

                                                                               Year Ended December 31,
                                                                  1997                1996               1995
                                                               -----------         -----------        -------
<S> <C>
Supplemental Schedule of Non-Cash
  Investing and Financing
  Activities:

    Acquisition costs paid by
      affiliates on behalf of
      the Partnership                                          $        -          $        -         $     1,375
                                                               ===========         ===========        ===========

    Mortgage note accepted in
      connection with sale of
      land                                                     $        -          $        -         $     6,000
                                                               ===========         ===========        ===========

    Distributions declared and
      unpaid at December 31                                    $   787,500         $   857,500        $   787,500
                                                               ===========         ===========        ===========

</TABLE>


                 See accompanying notes to financial statements.

                                       22

<PAGE>



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

                          NOTES TO FINANCIAL STATEMENTS

                  Years Ended December 31, 1997, 1996 and 1995


1.       Significant Accounting Policies:

         Organization  and Nature of Business - CNL Income  Fund VI,  Ltd.  (the
         "Partnership") is a Florida limited  partnership that was organized for
         the purpose of acquiring both newly constructed and existing restaurant
         properties,  as well as properties  upon which  restaurants  were to be
         constructed,  which are leased  primarily  to operators of national and
         regional fast-food and family-style restaurant chains.

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

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

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

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

                                       23

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


1.       Significant Accounting Policies - Continued:

                  Accrued  rental  income  represents  the  aggregate  amount of
                  income  recognized  on a  straight-line  basis  in  excess  of
                  scheduled rental payments to date.

         When  the  properties  are  sold,  the  related  cost  and  accumulated
         depreciation  for operating  leases and the net  investment  for direct
         financing leases,  plus any accrued rental income, are removed from the
         accounts and gains or losses from sales are  reflected  in income.  The
         general   partners  of  the  Partnership   review  the  properties  for
         impairment  whenever events or changes in  circumstances  indicate that
         the  carrying  amount  of the  assets  may not be  recoverable  through
         operations.  The general  partners  determine  whether an impairment in
         value has occurred by comparing the estimated future  undiscounted cash
         flows, including the residual value of the property,  with the carrying
         cost of the  individual  property.  Although the general  partners have
         made their best estimate of these factors based on current  conditions,
         it is  reasonably  possible  that changes  could occur in the near term
         which could adversely affect the general partners' best estimate of net
         cash flows  expected to be generated  from its  properties and the need
         for asset impairment  write-downs.  If an impairment is indicated,  the
         assets are adjusted to their fair value.

         When the  collection  of amounts  recorded as rental or other income is
         considered  to be  doubtful,  an  adjustment  is made to  increase  the
         allowance for doubtful  accounts,  which is netted against  receivables
         and accrued  rental income,  and to decrease  rental or other income or
         increase  bad  debt  expense  for  the  current  period,  although  the
         Partnership  continues to pursue collection of such amounts. If amounts
         are  subsequently  determined to be  uncollectible,  the  corresponding
         receivable   and   allowance   for  doubtful   accounts  are  decreased
         accordingly.

         Investment  in Joint  Ventures - The  Partnership  accounts  for its 66
         percent interest in Caro Joint Venture, a Florida general  partnership,
         using  the  consolidation  method.  Minority  interest  represents  the
         minority joint venture partner's  proportionate  share of equity in the
         Partnership's  consolidated joint venture. All significant intercompany
         accounts and transactions have been eliminated.

                                       24

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


1.       Significant Accounting Policies - Continued:

         The Partnership's  investments in Auburn Joint Venture,  Show Low Joint
         Venture and Asheville Joint Venture, and a property in Yuma, Arizona, a
         property  in Clinton,  North  Carolina,  and a property  in  Vancouver,
         Washington,  for which each property is held as tenants-in-common  with
         affiliates,  are  accounted  for  using  the  equity  method  since the
         Partnership  shares control with affiliates which have the same general
         partners.

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

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

         Lease  Costs - Brokerage  fees and lease  incentive  costs  incurred in
         finding new tenants and  negotiating  new leases for the  Partnership's
         properties  are  amortized  over the terms of the new leases  using the
         straight-line method.

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

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

                                       25

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995

1.       Significant Accounting Policies - Continued:

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

2.       Leases:

         The Partnership leases its land and buildings primarily to operators of
         national and  regional  fast-food  and  family-style  restaurants.  The
         leases are accounted for under the provisions of Statement of Financial
         Accounting  Standards  No.  13,  "Accounting  for  Leases."  The leases
         generally are classified as operating leases; however, some leases have
         been classified as direct financing  leases.  For the leases classified
         as direct  financing  leases,  the  building  portions of the  property
         leases are  accounted  for as direct  financing  leases  while the land
         portions of some of these leases are  operating  leases.  Substantially
         all  leases  are  for  10 to 20  years  and  provide  for  minimum  and
         contingent rentals. In addition, the tenant pays all property taxes and
         assessments,  fully maintains the interior and exterior of the building
         and carries insurance  coverage for public liability,  property damage,
         fire and extended  coverage.  The lease options generally allow tenants
         to  renew  the  leases  for two to four  successive  five-year  periods
         subject to the same terms and  conditions  as the initial  lease.  Most
         leases  also allow the tenant to purchase  the  property at fair market
         value after a specified portion of the lease has elapsed.

                                       26

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


3.       Land and Buildings on Operating Leases:

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

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

                  Land                           $10,046,309     $10,364,275
                  Buildings                       14,344,114      13,983,253
                                                 -----------     -----------
                                                  24,390,423      24,347,528
                  Less accumulated
                    depreciation                  (3,327,334)     (3,165,150)
                                                 -----------     -----------
                                                  21,063,089      21,182,378
                  Less allowance for loss
                    on land and building            (277,405)        (77,023)
                                                ------------     -----------

                                                 $20,785,684     $21,105,355
                                                 ===========     ===========

         In December 1996, the Partnership  sold its property in Dallas,  Texas,
         to a third party for  $1,016,000  and  received  net sales  proceeds of
         $982,980.  This property was originally  acquired by the Partnership in
         June  1994  and  had  a  cost  of  approximately  $980,900,   excluding
         acquisition fees and miscellaneous acquisition expenses; therefore, the
         Partnership sold the property for approximately $2,100 in excess of its
         original  purchase  price.  Due to the fact  that the  Partnership  had
         recognized  accrued  rental  income  since the  inception  of the lease
         relating to the  straight-lining  of future scheduled rent increases in
         accordance  with  generally   accepted   accounting   principles,   the
         Partnership  wrote-off the  cumulative  balance of such accrued  rental
         income at the time of the sale of this property, resulting in a loss on
         land and building of $1,706 for financial  reporting  purposes.  Due to
         the fact that the  straight-lining  of future rent  increases  over the
         term of the lease is a non-cash accounting adjustment, the write off of
         these  amounts is a loss for  financial  statement  purposes  only.  In
         February 1997, the  Partnership  reinvested the net sales proceeds from
         the sale of the property in Dallas, Texas, along with additional funds,
         in a  Bertucci's  property in  Marietta,  Georgia,  for a total cost of
         approximately $1,112,600.

         In July 1997, the Partnership sold the property in Whitehall, Michigan,
         to a third party,  for $665,000 and received net sales proceeds (net of
         $2,981 which  represents  amounts due to the former tenant for prorated
         rent)  of  $626,907,  resulting  in a loss  of  $79,777  for  financial
         reporting purposes.

                                       27

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995

3.       Land and Buildings on Operating Leases - Continued:

         In addition, in July 1997, the Partnership sold its property in Naples,
         Florida,  to a third  party,  for  $1,530,000  and  received  net sales
         proceeds  (net of $9,945  which  represents  amounts  due to the former
         tenant  for  prorated  rent)  of  $1,477,780,  resulting  in a gain  of
         $186,550 for financial reporting purposes. This property was originally
         acquired  by the  Partnership  in  December  1989  and  had a  cost  of
         approximately $1,083,900,  excluding acquisition fees and miscellaneous
         acquisition expenses;  therefore, the partnership sold the property for
         approximately  $403,800 in excess of its original  purchase  price.  In
         December 1997, the Partnership  reinvested the net sales proceeds in an
         IHOP  property in Elgin,  Illinois,  for a total cost of  approximately
         $1,484,100.

         In July 1997, the Partnership entered into a new lease for the property
         in Greensburg, Indiana, with a new tenant to operate the property as an
         Arby's restaurant.  In connection  therewith,  the Partnership incurred
         $125,000 in renovation costs.

         In  September  1997,  the  Partnership  sold its  property  in  Venice,
         Florida,  to a third  party,  for  $1,245,000  and  received  net sales
         proceeds  (net of $5,048  which  represents  amounts  due to the former
         tenant  for  prorated  rent)  of  $1,201,648,  resulting  in a gain  of
         $283,853 for financial reporting purposes. This property was originally
         acquired  by  the  Partnership  in  August  1989  and  had  a  cost  of
         approximately $1,032,400,  excluding acquisition fees and miscellaneous
         acquisition expenses;  therefore, the Partnership sold the property for
         approximately  $174,300 in excess of its original  purchase  price.  In
         December 1997, the Partnership  reinvested the net sales proceeds in an
         IHOP property in Manassas,  Virginia, for a total cost of approximately
         $1,126,800.

         In 1996 and 1997,  the  Partnership  recorded  provisions for losses on
         land and building in the amounts of $77,023 and $104,947, respectively,
         for financial  reporting  purposes for the property in  Liverpool,  New
         York.  The allowance at December 31, 1996,  represented  the difference
         between the  property's  carrying  value at  December  31, 1996 and the
         estimated  net   realizable   value  for  this  property  based  on  an
         anticipated  sales price to an interested third party. The allowance at
         December 31, 1997, represents the difference between (i) the property's
         carrying value at December 31, 1997, and (ii) the net realizable  value
         of the property  based on the net sales  proceeds  received in February
         1998 from the sale of the property (see Note 12).

                                       28

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


3.       Land and Buildings on Operating Leases - Continued:

         At December 31, 1997, the Partnership established an allowance for loss
         on  land in the  amount  of  $95,435  for its  property  in  Melbourne,
         Florida. The allowance represents the difference between the property's
         carrying  value  for  the  land  at  December  31,  1997,  and  the net
         realizable  value of the land based on the net sales proceeds  received
         in February 1998 from the sale of the property (see Note 12).

         Some leases provide for escalating  guaranteed minimum rents throughout
         the  lease  terms.  Income  from  these  scheduled  rent  increases  is
         recognized on a straight-line  basis over the terms of the leases.  For
         the years ended  December  31,  1997,  1996 and 1995,  the  Partnership
         recognized $87,094, $103,935 and $131,428, respectively, of such rental
         income.

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

                  1998                           $ 2,393,528
                  1999                             2,396,060
                  2000                             2,487,704
                  2001                             2,538,767
                  2002                             2,541,122
                  Thereafter                      14,362,769
                                                 -----------

                                                 $26,719,950

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

                                       29

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


4.       Net Investment in Direct Financing Leases:

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

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

                  Minimum lease payments
                    receivable                 $ 9,313,752       $ 8,955,426
                  Estimated residual
                    values                       1,655,911         1,704,299
                  Less unearned income          (6,198,018)       (6,000,701)
                                               -----------       -----------
                                                 4,771,645         4,659,024
                  Less allowance for
                    impairment in
                    carrying value                 (62,804)               -
                                               -----------       ----------
                  Net investment in direct
                    financing leases           $ 4,708,841       $ 4,659,024
                                               ===========       ===========

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

                  1998                             $  622,540
                  1999                                622,540
                  2000                                624,680
                  2001                                637,400
                  2002                                637,400
                  Thereafter                        6,169,192
                                                   ----------

                                                   $9,313,752

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

         In July 1997, the Partnership sold its property in Naples, Florida, for
         which the building  portion had been  classified as a direct  financing
         lease. In connection  therewith,  the gross  investment  (minimum lease
         payments  receivable and estimated residual values) and unearned income
         relating to this  property  were removed from the accounts and the gain
         from the sale  relating to this  property was reflected in income (Note
         3).



                                       30

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


4.       Net Investment in Direct Financing Leases - Continued:

         In  addition,  in July  1997,  the  Partnership  sold its  property  in
         Plattsmouth,  Nebraska,  to the tenant,  for  $700,000 and received net
         sales  proceeds  (net of  escrow  fees  paid of  $1,750)  of  $697,650,
         resulting in a gain of $156,401 for financial reporting purposes.  This
         property was originally acquired by the Partnership in January 1990 and
         had a cost of approximately  $561,000,  excluding  acquisition fees and
         miscellaneous acquisition expenses; therefore, the Partnership sold the
         property for approximately  $138,400 in excess of its original purchase
         price.

         At December 31, 1997, the  Partnership had established an allowance for
         impairment in carrying  value in the amount of $62,804 for its property
         in Melbourne,  Florida. The allowance represents the difference between
         the (i) carrying  value of the net  investment in the direct  financing
         lease at December 31, 1997,  and (ii) the net  realizable  value of the
         net  investment  in the direct  financing  lease based on the net sales
         proceeds  received in February  1998 from the sale of the property (see
         Note 12).

5.       Investment in Joint Ventures:

         The Partnership  has a 3.9%, a 36 percent and a 14 percent  interest in
         the profits and losses of Auburn Joint Venture,  Show Low Joint Venture
         and Asheville Joint Venture,  respectively.  The remaining interests in
         these joint  ventures are held by affiliates of the  Partnership  which
         have the same general partners.

         In January 1996, the Partnership acquired a property in Clinton,  North
         Carolina, as tenants-in-common with affiliates of the general partners.
         In connection  therewith,  the Partnership  contributed  $146,090 for a
         17.93%  interest in such  property.  The  Partnership  accounts for its
         investment  in  this  property   using  the  equity  method  since  the
         Partnership shares control with affiliates, and amounts relating to its
         investment are included in investment in joint ventures.

         In January 1997, Show Low Joint Venture,  in which the Partnership owns
         a 36 percent  interest,  sold its property to the tenant for  $970,000,
         resulting in a gain to the joint venture of approximately  $360,000 for
         financial reporting purposes.  The property was originally  contributed
         to Show Low


                                       31

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


5.       Investment in Joint Venture - Continued:

         Joint  Venture  in July  1990  and had a  total  cost of  approximately
         $663,500,  excluding  acquisition  fees and  miscellaneous  acquisition
         expenses;   therefore,   the  joint   venture  sold  the  property  for
         approximately  $306,500 in excess of its original  purchase  price.  In
         June 1997,  Show Low Joint  Venture  reinvested  $782,413  of net sales
         proceeds in a property in Greensboro,  North Carolina. During 1997, the
         Partnership  received  approximately  $70,000  representing a return of
         capital,  for its pro-rata share of the uninvested net sales  proceeds.
         As of December 31, 1997, the Partnership owned a 36 percent interest in
         the profits and losses of the joint venture.

         As of December 31, 1996,  the  Partnership  had a 51.67%  interest in a
         property in Yuma,  Arizona,  with an affiliate of the Partnership  that
         has the same general partners, as  tenants-in-common.  In October 1997,
         the  Partnership  and the  affiliate,  as  tenants-in-common,  sold the
         property in Yuma,  Arizona,  for a total sales price of $1,010,000  and
         received net sales  proceeds of $982,025,  resulting in a gain,  to the
         tenancy-in-common,  of approximately  $128,400 for financial  reporting
         purposes.  The property was originally  acquired in July 1994 and had a
         total cost of approximately  $861,700,  excluding  acquisition fees and
         miscellaneous  acquisition expenses;  therefore,  the property was sold
         for  approximately  $120,300 in excess of its original  purchase price.
         The Partnership received  approximately  $455,000 representing a return
         of  capital  for its  pro-rata  share  of the net  sales  proceeds.  In
         December 1997,  the  Partnership  reinvested the amounts  received as a
         return of capital  from the sale of the Yuma,  Arizona  property,  in a
         property in Vancouver, Washington, as tenants-in-common with affiliates
         of the general partners. The Partnership accounts for its investment in
         the property in  Vancouver,  Washington,  using the equity method since
         the Partnership shares control with affiliates, and amounts relating to
         its  investment  are included in  investment in joint  ventures.  As of
         December  31,  1997,  the  Partnership  owned a 23.04%  interest in the
         Vancouver,    Washington,    property   owned   with    affiliates   as
         tenants-in-common.

         Auburn Joint Venture, Show Low Joint Venture,  Asheville Joint Venture,
         and the Partnership and affiliates as tenants-in-common in two separate
         tenancy-in-common  arrangements,  each own and lease one property to an
         operator  of  national  fast-food  and  family-style  restaurants.  The
         following presents the


                                       32

<PAGE>




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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


5.       Investment in Joint Venture - Continued:

         combined,  condensed  financial  information for the joint ventures and
         the  two  properties  held  as  tenants-in-common  with  affiliates  at
         December 31:

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

                  Land and buildings on
                    operating leases,
                    less accumulated
                    depreciation                $4,568,842      $3,463,093
                  Net investment in direct
                    financing leases               911,559         401,650
                  Cash                               7,991          11,177
                  Receivables                       22,230          21,826
                  Accrued rental income            160,197         191,594
                  Other assets                         414          44,380
                  Liabilities                        7,557          10,221
                  Partners' capital              5,663,676       4,123,499
                  Revenues                         471,627         528,092
                  Gain on sale of land
                    and building                   488,372              -
                  Net income                       889,883         436,981

         The Partnership  recognized  income totalling  $280,331,  $97,381,  and
         $83,483  for  the  years  ended  December  31,  1997,  1996  and  1995,
         respectively, from these joint ventures.

6.       Restricted Cash:

         As of December 31, 1996,  net sales  proceeds of $977,017 from the sale
         of the property in Dallas,  Texas,  plus accrued interest of $739, were
         being held in an interest-bearing escrow account pending the release of
         funds by the  escrow  agent  to  acquire  an  additional  property.  In
         February  1997,  the escrow agent  released  these funds to acquire the
         property in Marietta, Georgia (see Note 3).

         As of December 31, 1997,  net sales  proceeds of $697,650 from the sale
         of the property in  Plattsmouth,  Nebraska,  plus  accrued  interest of
         $11,577, were being held in an interest-bearing  escrow account pending
         the  release  of funds by the escrow  agent to  acquire  an  additional
         property.



                                       33

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995

7.       Receivables:

         In June 1997, the  Partnership  terminated the lease with the tenant of
         the property in  Greensburg,  Indiana.  In  connection  therewith,  the
         Partnership  accepted a  promissory  note from this  former  tenant for
         $13,077  for  amounts  relating  to past  due  real  estate  taxes  the
         Partnership had incurred as a result of the former  tenant's  financial
         difficulties.  The promissory  note, which is  uncollateralized,  bears
         interest at a rate of ten percent per annum,  and is being collected in
         36 monthly  installments.  Receivables  at December 31, 1997,  included
         $13,631 of such amounts, including accrued interest of $554.

8.       Allocations and Distributions:

         Generally, all net income and net losses of the Partnership,  excluding
         gains and losses from the sale of properties,  are allocated 99 percent
         to the  limited  partners  and one  percent  to the  general  partners.
         Distributions  of net  cash  flow are made 99  percent  to the  limited
         partners and one percent to the general  partners;  provided,  however,
         that the one percent of net cash flow to be  distributed to the general
         partners  is  subordinated  to receipt by the  limited  partners  of an
         aggregate,  ten percent,  cumulative,  noncompounded  annual  return on
         their adjusted capital contributions (the "10% Preferred Return").

         Generally,  net  sales  proceeds  from the sale of  properties,  to the
         extent  distributed,  will be distributed first to the limited partners
         in an  amount  sufficient  to  provide  them with  their 10%  Preferred
         Return,  plus the return of their adjusted capital  contributions.  The
         general   partners  will  then  receive,   to  the  extent   previously
         subordinated   and  unpaid,   a  one  percent  interest  in  all  prior
         distributions   of  net  cash  flow  and  a  return  of  their  capital
         contributions.  Any remaining  sales  proceeds will be  distributed  95
         percent  to the  limited  partners  and  five  percent  to the  general
         partners.  Any  gain  from  the  sale of a  property  is,  in  general,
         allocated in the same manner as net sales  proceeds are  distributable.
         Any loss from the sale of a property is, in general,  allocated  first,
         on a pro rata  basis,  to  partners  with  positive  balances  in their
         capital  accounts;  and thereafter,  95 percent to the limited partners
         and five percent to the general partners.

         During the years ended December 31, 1997, 1996 and 1995 the Partnership
         declared   distributions   to  the  limited   partners  of  $3,150,000,
         $3,220,000 and $3,150,000,  respectively.  No  distributions  have been
         made to the general partners to date.

                                       34

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995

9.       Income Taxes:

         The following is a reconciliation of net income for financial reporting
         purposes to net income for federal  income tax  purposes  for the years
         ended December 31:
<TABLE>
<CAPTION>

                                                                1997             1996              1995
                                                             ----------       ----------        -------
<S> <C>
                  Net income for financial
                    reporting purposes                       $2,899,882       $2,803,601        $2,861,381

                  Depreciation for tax
                    reporting purposes
                    in excess of depreci-
                    ation for financial
                    reporting purposes                          (92,303)        (104,412)          (94,987)

                  Allowance for loss on
                    land and building                           263,186           77,023                -

                  Direct financing leases
                    recorded as operating
                    leases for tax
                    reporting purposes                           67,392           68,177            53,944

                  Gain and  loss on sale of
                    land and buildings for
                    financial reporting
                    purposes in excess of
                    gain and loss on sale
                    for tax reporting
                    purposes                                   (335,658)           1,706            (2,914)

                  Equity in earnings of
                    unconsolidated joint
                    ventures for financial
                    reporting purposes in
                    excess of equity in
                    earnings of unconsolidated
                    joint ventures for tax
                    reporting purposes                         (147,256)             (49)           (5,299)

                  Allowance for doubtful
                    accounts                                    369,935          (78,517)           16,154

                  Accrued rental income                         (81,244)        (103,935)         (131,428)

                  Rents paid in advance                          26,458           26,288           (36,699)

                  Minority interest in
                    timing differences
                    of consolidated
                    joint venture                               (30,778)           1,781              (200)
                                                             ----------       ----------        ----------

                  Net income for federal
                    income tax purposes                      $2,939,614       $2,691,663        $2,659,952
                                                             ==========       ==========        ==========
</TABLE>

                                       35

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


10.      Related Party Transactions:

         One of the individual general partners, James M. Seneff, Jr., is one of
         the principal  shareholders  of CNL Group,  Inc., the parent company of
         CNL Fund Advisors, Inc. The other individual general partner, Robert A.
         Bourne, served as president of CNL Fund Advisors,  Inc. through October
         1997. CNL Income Fund Advisors,  Inc. was a wholly owned  subsidiary of
         CNL Group,  Inc. until its merger,  effective January 1, 1996, with CNL
         Fund Advisors,  Inc. During the years ended December 31, 1997, 1996 and
         1995,  CNL Income  Fund  Advisors,  Inc.  and CNL Fund  Advisors,  Inc.
         (hereinafter   referred  to  collectively  as  the  "Affiliates")  each
         performed certain services for the Partnership, as described below.

         During  the years  ended  December  31,  1997,  1996 and 1995,  certain
         Affiliates acted as manager of the Partnership's properties pursuant to
         a management agreement with the Partnership.  In connection  therewith,
         the  Partnership  agreed  to pay  Affiliates  a  management  fee of one
         percent of the sum of gross  revenues from  properties  wholly owned by
         the Partnership and the Partnership's allocable share of gross revenues
         from joint ventures and the property held as tenants-in-common  with an
         affiliate,  but  not in  excess  of  competitive  fees  for  comparable
         services.  These  fees are  payable  only  after the  limited  partners
         receive their 10% Preferred Return. Due to the fact that these fees are
         noncumulative,  if the  limited  partners  do  not  receive  their  10%
         Preferred Return in any particular year, no management fees will be due
         or payable for such year. As a result of such threshold,  no management
         fees were incurred  during the years ended December 31, 1997,  1996 and
         1995.

         Certain   Affiliates   are  also   entitled   to  receive  a  deferred,
         subordinated real estate  disposition fee, payable upon the sale of one
         or more  properties  based on the lesser of one-half  of a  competitive
         real  estate  commission  or three  percent  of the sales  price if the
         Affiliates  provide a substantial amount of services in connection with
         the  sale.   However,  if  the  sales  proceeds  are  reinvested  in  a
         replacement  property,  no such real  estate  disposition  fees will be
         incurred  until  such  replacement  property  is sold and the net sales
         proceeds are  distributed.  The payment of the real estate  disposition
         fee is  subordinated  to  receipt  by the  limited  partners  of  their
         aggregate   10%  Preferred   Return,   plus  their   adjusted   capital
         contributions.  No deferred,  subordinated real estate disposition fees
         have been incurred since inception.

                                       36

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


10.      Related Party Transactions - Continued:

         During the years ended  December  31, 1997,  1996 and 1995,  Affiliates
         provided accounting and administrative services to the Partnership on a
         day-to-day basis. The Partnership incurred $85,714, $95,420 and $81,847
         for the years ended December 31, 1997, 1996 and 1995, respectively, for
         such services.

         The due to related  parties at  December  31,  1997 and 1996,  totalled
         $32,019 and $2,633, respectively.

11.      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  two  properties  held  as  tenants-in-common   with
         affiliates), for at least one of the years ended December 31:

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

                  Golden Corral
                    Corporation             $751,866    $758,348   $725,908
                  Restaurant Manage-
                    ment Services, Inc.      478,750     511,040    440,987
                  Mid-America
                    Corporation              439,519     439,519    439,519

         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 two properties  held as  tenants-in-common
         with affiliates), for at least one of the years ended December 31:

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

                  Golden Corral
                    Family Steakhouse
                    Restaurants           $751,866    $758,348   $725,908
                  Burger King              496,487     455,764    455,820
                  Denny's                  317,041     336,269    276,547
                  Hardee's                 270,129     410,951    431,465

                                       37

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


11.      Concentration of Credit Risk - Continued:

         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 one of these lessees or
         restaurant chains could significantly  impact the results of operations
         of the Partnership. However, the general partners believe that the risk
         of such a default is reduced due to the  essential or important  nature
         of these properties for the on-going operations of the lessees.

12.      Subsequent Events:

         In January 1998, the  Partnership  used the net sales proceeds from the
         sale of the property in Whitehall,  Michigan,  to acquire a property in
         Overland Park,  Kansas,  as  tenants-in-common  with  affiliates of the
         general partners. In connection therewith,  the Partnership contributed
         approximately  $558,900  for a 34.74%  interest in such  property.  The
         Partnership  will account for its investment in this property using the
         equity method since the Partnership will share control with affiliates.

         In January 1998, the  Partnership  used the net sales proceeds from the
         sale of the property in Plattsmouth, Nebraska, to acquire a property in
         Memphis, Tennessee, as tenants-in-common with affiliates of the general
         partners.   In  connection  therewith,   the  Partnership   contributed
         approximately  $694,800  for a 46.2%  interest  in such  property.  The
         Partnership  will account for its investment in this property using the
         equity method since the Partnership will share control with affiliates.

         In addition,  in January  1998,  the  Partnership  sold its property in
         Deland,  Florida,  to the tenant, for $1,250,000 and received net sales
         proceeds of $1,234,617,  resulting in a gain of approximately  $345,100
         for financial reporting purposes.



                                       38

<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1997, 1996 and 1995


12.      Subsequent Events - Continued:

         In February  1998,  the  Partnership  sold its  property in  Melbourne,
         Florida,  for $590,000  and  received  net sales  proceeds of $542,477,
         resulting in a loss of $158,239 for financial  reporting purposes which
         the Partnership recorded in 1997 (See Notes 3 and 4).

         In February 1998, the Partnership  sold its property in Liverpool,  New
         York,  for $157,500 and  received net sales  proceeds of  approximately
         $150,700,  resulting  in a loss of  $181,970  for  financial  reporting
         purposes which the  Partnership  recorded in 1996 and in 1997 (See Note
         3).

                                       39

<PAGE>



Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

         None.



                                    PART III


Item 10.  Directors and Executive Officers of the Registrant

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

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


                                       40

<PAGE>



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

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

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

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

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



                                       41

<PAGE>



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

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

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



                                       42

<PAGE>



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

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

Item 11.  Executive Compensation

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


Item 12.  Security Ownership of Certain Beneficial Owners and Management

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

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

<TABLE>
<CAPTION>

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

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


                                       43

<PAGE>



Item 13.  Certain Relationships and Related Transactions

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

==========================================================================================================================
                                                                                              Amount Incurred
         Type of Compensation                                                                  For the Year
               and Recipient                      Method of Computation                   Ended December 31, 1997
       -------------------------                  ---------------------                   -----------------------
<S> <C>
Reimbursement to affiliates for          Operating expenses are reimbursed        Operating expenses incurred on
operating expenses                       at the lower of cost or 90 percent       behalf of the Partnership: $82,503
                                         of the prevailing rate at which
                                         comparable services could have
                                         been obtained in the same                Accounting and administrative
                                         geographic area.  Affiliates of the      services:  $85,714
                                         General Partners from time to
                                         time incur certain operating
                                         expenses on behalf of the
                                         Partnership for which the
                                         Partnership reimburses the
                                         affiliates without interest.

Annual, subordinated  manage-            One percent of the sum of gross             $ - 0 -
ment fee to affiliates                   operating revenues from
                                         Properties    wholly   owned   by   the
                                         Partnership   plus  the   Partnership's
                                         allocable  share of gross  revenues  of
                                         joint ventures in which the Partnership
                                         is a co-venturer and the Property owned
                                         with an affiliate as tenants-in-common,
                                         subordinated to certain minimum returns
                                         to the Limited Partners. The management
                                         fee will not  exceed  competitive  fees
                                         for  comparable  services.  Due  to the
                                         fact     that     these     fees    are
                                         non-cumulative, if the Limited Partners
                                         do  not  receive  their  10%  Preferred
                                         Return  in  any  particular   year,  no
                                         management  fees will be due or payable
                                         for such year.
==========================================================================================================================
</TABLE>


                                       44

<PAGE>


<TABLE>
<CAPTION>


==========================================================================================================================
                                                                                              Amount Incurred
         Type of Compensation                                                                  For the Year
             and Recipient                        Method of Computation                   Ended December 31, 1997
       ------------------------                   ---------------------                   -----------------------
<S> <C>
Deferred, subordinated real estate       A deferred, subordinated real               $ - 0 -
disposition fee payable to               estate disposition fee, payable
affiliates                               upon sale of one or more
                                         Properties,  in an amount  equal to the
                                         lesser of (i) one-half of a competitive
                                         real estate  commission,  or (ii) three
                                         percent  of the  sales  price  of  such
                                         Property or Properties. Payment of such
                                         fee shall be made only if affiliates of
                                         the   General    Partners   provide   a
                                         substantial   amount  of   services  in
                                         connection  with the sale of a Property
                                         or Properties and shall be subordinated
                                         to  certain   minimum  returns  to  the
                                         Limited Partners.  However,  if the net
                                         sales  proceeds  are  reinvested  in  a
                                         replacement   Property,  no  such  real
                                         estate disposition fee will be incurred
                                         until such replacement Property is sold
                                         and  the   net   sales   proceeds   are
                                         distributed.

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

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

</TABLE>


                                       45

<PAGE>



                                     PART IV

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

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

          1.  Financial Statements

                  Report of Independent Accountants

                  Balance Sheets at December 31, 1997 and 1996

                  Statements  of Income for the years ended  December  31, 1997,
                  1996 and 1995

                  Statements of Partners'  Capital for the years ended  December
                  31, 1997, 1996 and 1995

                  Statements  of Cash  Flows for the years  ended  December  31,
                  1997, 1996 and 1995

                  Notes to Financial Statements

          2.  Financial Statement Schedules

                  Schedule II - Valuation and Qualifying  Accounts for the years
                  ended December 31, 1997, 1996 and 1995

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

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

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

          3.  Exhibits

         3.1      Certificate of Limited Partnership of CNL Income Fund VI, Ltd.
                  (Included  as  Exhibit  3.3  to  Registration   Statement  No.
                  33-23892 on Form S-11 and incorporated herein by reference.)

         4.1      Certificate of Limited Partnership of CNL Income Fund VI, Ltd.
                  (Included  as  Exhibit  4.2  to  Registration   Statement  No.
                  33-23892 on Form S-11 and incorporated herein by reference.)

         4.2      Agreement and Certificate of Limited Partnership of CNL Income
                  Fund VI, Ltd. (Included as Exhibit 4.2 to Form 10-K filed with
                  the Securities  and Exchange  Commission on April 1, 1996, and
                  incorporated herein by reference.)

         10.1     Management  Agreement  (Included  as Exhibit 10.1 to Form 10-K
                  filed with the Securities and Exchange Commission on March 31,
                  1994, and incorporated herein by reference.)

         10.2     Assignment of 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.)

                                       46

<PAGE>



         10.3     Assignment  of  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.)

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

                                       47

<PAGE>



                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly  authorized,  on the 23rd day of
March, 1998.

                          CNL INCOME FUND VI, LTD.

                          By:      CNL REALTY CORPORATION
                                   General Partner

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


                          By:      ROBERT A. BOURNE
                                   General Partner

                                   /s/ Robert A. Bourne
                                   ---------------------------
                                   ROBERT A. BOURNE


                          By:      JAMES M. SENEFF, JR.
                                   General Partner

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


<PAGE>



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

==========================================================================================================================
               Signature                                  Title                                    Date
<S> <C>
/s/ Robert A. Bourne                     President, Treasurer and Director                    March 23, 1998
-----------------------------------      (Principal Financial and
Robert A. Bourne                         Accounting Officer)


/s/ James M. Seneff, Jr.                 Chief Executive Officer and                          March 23, 1998
-----------------------------------      Director (Principal Executive
James M. Seneff, Jr.                     Officer)

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

</TABLE>




<PAGE>



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

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                  Years Ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>


                                                               Additions                                     Deductions
                           Balance at       Charged to        Charged to        Deemed                         Balance
                            Beginning        Costs and          Other          Uncollec-                       at End
Year     Description         of Year         Expenses          Accounts          tible         Collected       of Year
----     -----------       ----------       ----------        ----------       ---------       ---------      --------
<S> <C>

1995     Allowance for
           doubtful
           accounts (a)      $186,342         $    -          $ 75,202 (b)      $ 49,672       $  8,303        $203,569
                             ========         =======         ========          ========       ========        ========


1996     Allowance for
           doubtful
           accounts (a)      $203,569         $    -          $ 11,762 (b)      $ 78,084       $ 11,658        $125,589
                             ========         =======         ========          ========       ========        ========


1997     Allowance for
           doubtful
           accounts (a)      $125,589         $    -          $268,022 (b)      $  1,914       $ 18,590        $373,107
                             ========         =======         ========          ========       ========        ========

</TABLE>


         (a) Deducted from  receivables and accrued rental income on the balance
sheet.

         (b) Reduction of rental and other income.

                                       F-1

<PAGE>



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

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 1997


<TABLE>
<CAPTION>

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

    Bertucci's:
      Marietta, Georgia                      -        $   399,885         $  712,762       $       -      $     -

    Burger King Restaurants:
      Sevierville, Tennessee                 -            352,845            609,006               -            -
      Walker Springs, Tennessee              -            370,839            563,193               -            -
      Knoxville, Tennessee                   -            421,258            539,964               -            -
      Greeneville, Tennessee                 -            318,817            642,538               -            -

    Church's Fried Chicken
      Restaurant:
        Orlando, Florida                     -            177,440            270,985               -            -

    Denny's Restaurant:
      Deland, Florida                        -            448,435                 -           600,394           -

    Golden Corral Family
      Steakhouse Restaurants:
        Albuquerque, New Mexico              -            717,708          1,018,823               -            -
        Amarillo, Texas                      -            773,627            908,171               -            -
        Lawton, Oklahoma                     -            559,095            838,642               -            -
        El Paso, Texas                       -            670,916                 -           837,317           -

    Hardee's Restaurants:
      Greensburg, Indiana                    -            222,559                 -           640,529           -
      Bellevue, Nebraska                     -            397,402                 -                -            -
      Springfield, Tennessee                 -            203,159            413,221               -            -

    IHOP:
      Elgin, Illinois                        -            426,831                 -                -            -
      Manassas, Virginia                     -            366,992            759,788               -            -

    Jack in the Box Restaurant:
      San Antonio, Texas                     -            272,300                 -                -            -

    KFC Restaurants:
      Caro, Michigan                         -            150,804                 -           373,558           -
      Gainesville, Florida                   -            321,789            287,429               -            -

    Perkins Restaurants:
      Melbourne, Florida (i)                 -            428,901                 -                -            -

</TABLE>



<PAGE>









<TABLE>
<CAPTION>


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





       $   399,885          $   712,762        $ 1,112,647          $   20,152          1993           02/97            (b)


           352,845              609,006            961,851             162,179          1986           01/90            (b)
           370,839              563,193            934,032             149,722          1986           01/90            (b)
           421,258              539,964            961,222             143,793          1985           01/90            (b)
           318,817              642,538            961,355             171,109          1988           01/90            (b)



           177,440              270,985            448,425              69,342          1985           04/90            (b)


           448,435              600,394          1,048,829             155,719          1990           10/89            (b)



           717,708            1,018,823          1,736,531             272,251          1989           12/89            (b)
           773,627              908,171          1,681,798             242,677          1989           12/89            (b)
           559,095              838,642          1,397,737             224,097          1989           12/89            (b)
           670,916              837,317          1,508,233             207,073          1990           04/90            (b)


           222,559              640,529            863,088             140,968          1989           07/89            (b)
           397,402                (f)              397,402                  -           1990           12/89            (d)
           203,159              413,221            616,380              98,003          1990           11/90            (b)


           426,831                (f)              426,831                  -           1997           12/97            (d)
           366,992              759,788          1,126,780                 136          1986           12/97            (b)


           272,300                (f)              272,300                  -           1990           08/90            (d)


           150,804              373,558            524,362              96,503          1990           03/90            (b)
           321,789              287,429            609,218              68,668          1985           11/90            (b)


           428,901                (f)              428,901                  -           1990           11/89            (d)


</TABLE>


                                       F-2

<PAGE>



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

       SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

                                December 31, 1997


<TABLE>
<CAPTION>

                                                                                                               Costs Capitalized
                                                                                                                    Subsequent
                                                                  Initial Cost                       To Acquisition
                                                                              Buildings
                                              Encum-                             and             Improve-      Carrying
                                             brances          Land           Improvements         ments         Costs
<S> <C>
    Popeyes Famous Fried
      Chicken Restaurants:
        Jacksonville, Florida                     -            121,901            190,505          123,663           -
        Jacksonville, Florida                     -            141,356            185,933          132,144           -
        Gainesville, Florida                      -             83,542            208,564          192,227           -
        Jacksonville, Florida                     -             93,914            158,543          163,399           -
        Tallahassee, Florida                      -            116,019            233,858          177,915           -

    Shoney's Restaurants:
      Nashville, Tennessee                        -            320,540            531,507               -            -

    Taco Bell Restaurant:
      Detroit, Michigan                           -            171,240                 -           385,709           -

    Waffle House Restaurants:
      Clearwater, Florida                         -            130,499            268,580               -            -
      Roanoke, Virginia                           -            119,533            236,219               -            -
      Atlantic Beach, Florida                     -            141,627            263,021               -            -

    Wendy's Old Fashioned
      Hamburger Restaurant:
        Liverpool, New York (h)                   -            213,380            155,981               -            -

    Other:
      Hermitage, Tennessee                        -            391,156                 -           720,026           -
                                                           -----------         ----------       ----------     -------

                                                           $10,046,309         $9,997,233       $4,346,881     $     -
                                                           ===========         ==========       ==========     =======

Property of Joint Venture
  in Which the Partnership
  has a 36% Interest and has
  Invested in Under an
  Operating Lease:
    Darryl's Restaurant:
      Greensboro, North Carolina                  -        $   261,013         $       -        $       -      $     -
                                                           ===========         ==========       ==========     =======

Property of Joint Venture
  in Which the Partnership
  has a 3.9% Interest and has
  Invested in Under an
  Operating Lease:
    KFC Restaurant:
      Auburn, Massachusetts                       -        $   484,362         $       -        $       -      $     -
                                                           ===========         ==========       ==========     =======

Property of Joint Venture in Which
  the Partnership has a 14% Interest
  and has Invested in Under an
  Operating Lease:
    Burger King Restaurant:
      Asheville, North Carolina                   -        $   438,695         $  450,432       $       -      $     -
                                                           ===========         ==========       ==========     =======
</TABLE>


<PAGE>










<TABLE>
<CAPTION>

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


           121,901              314,168            436,069              78,707          1985           04/90            (b)
           141,356              318,077            459,433              79,848          1985           04/90            (b)
            83,542              400,791            484,333              97,685          1990           04/90            (b)
            93,914              321,942            415,856              78,742          1985           04/90            (b)
           116,019              411,773            527,792             101,119          1985           04/90            (b)


           320,540              531,507            852,047             146,906          1988           09/89            (b)


           171,240              385,709            556,949             101,975          1990           11/89            (b)


           130,499              268,580            399,079              71,352          1988           01/90            (b)
           119,533              236,219            355,752              62,754          1987           01/90            (b)
           141,627              263,021            404,648              69,586          1986           01/90            (b)



           213,380              155,981            369,361              40,891          1977           12/89            (b)


           391,156              720,026          1,111,182             175,377          1990           02/90            (b)
       -----------          -----------        -----------          ----------

       $10,046,309          $14,344,114        $24,390,423          $3,327,334
       ===========          ===========        ===========          ==========







       $   261,013              (f)            $   261,013         $       -            1974           06/97           (d)
       ===========                             ===========         ==========







       $   484,362              (f)            $   484,362         $       -            1989           01/90           (d)
       ===========                             ===========         ==========







       $   438,695          $   450,432        $   889,127          $  101,933          1986           03/91            (b)
       ===========          ===========        ===========          ==========
</TABLE>

                                       F-3

<PAGE>



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

       SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

                                December 31, 1997

<TABLE>
<CAPTION>


                                                                                               Costs Capitalized
                                                                                                   Subsequent
                                                            Initial Cost                        To Acquisition
                                                                          Buildings
                                          Encum-                             and             Improve-      Carrying
                                         brances          Land           Improvements         ments         Costs
<S> <C>
Property in Which the Partner-
  has a 17.93% Interest as
  Tenants-in-Common and has
  Invested in Under an
  Operating Lease:
    Golden Corral Family
      Steakhouse Restaurant:
        Clinton, North Carolina                -       $   138,382        $   676,588       $       -       $    -
                                                       ===========        ===========       ==========      ======

Property in Which the Partner-
  ship has a 23.04% Interest
  as Tenants-in-Common and
  has Invested in Under an
  Operating Lease:
    Chevy's Fresh Mex Restaurant:
      Vancouver, Washington                   -        $   875,659        $ 1,389,366       $       -      $     -
                                                       ===========        ===========       ==========     =======

Properties the Partnership
  has Invested in Under
  Direct Financing Leases:
    Denny's Restaurant:
      Cheyenne, Wyoming                       -        $   162,209        $   648,839       $       -      $     -
      Broken Arrow, Oklahoma                  -            164,640            559,972               -            -

    IHOP:
      Elgin, Illinois                         -                 -           1,057,282               -            -

    Hardee's Restaurants:
      Bellevue, Nebraska                      -                 -             556,737               -            -
      Waynesburg, Ohio                        -            136,242            441,299               -            -

    Jack in the Box Restaurant:
      San Antonio, Texas                      -                 -             420,568               -            -

    Perkins Restaurants:
      Melbourne, Florida (i)                  -                 -                  -           305,120           -

    Other:
      Chester, Pennsylvania (g)               -             98,009                 -           495,472           -
                                                       -----------         ----------       ----------     -------

                                              -        $   561,100         $3,684,697       $  800,592     $     -
                                                       ===========         ==========       ==========     =======

Property of Joint Venture in Which
  the Partnership has a 3.9% Interest
  and has Invested in Under a Direct
  Financing Lease:
    KFC Restaurant:
      Auburn, Massachusetts                   -        $        -          $       -        $  434,947     $     -
                                                       ===========         ==========       ==========     =======
</TABLE>


<PAGE>







<TABLE>
<CAPTION>




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







       $   138,382          $   676,588        $   814,970        $   43,595            1996           01/96            (b)
       ===========          ===========        ===========        ==========







       $   875,659          $ 1,389,366        $ 2,265,025        $      127            1994           12/97            (b)
       ===========          ===========        ===========        ==========





           (f)                    (f)                (f)               (e)              1980           12/89            (e)
           (f)                    (f)                (f)               (e)              1982           08/95            (e)


            -                     (f)                (f)               (e)              1997           12/97            (e)


            -                     (f)                (f)               (d)              1990           12/89            (d)
           (f)                    (f)                (f)               (e)              1990           11/90            (e)


            -                     (f)                (f)               (d)              1990           08/90            (d)


            -                     (f)                (f)               (d)              1990           11/89            (d)


           (f)                    (f)                (f)               (e)              1991           12/89            (e)









            -                     (f)                (f)               (d)             1989            01/90            (d)
</TABLE>

                                       F-4

<PAGE>



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

       SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

                                December 31, 1997

<TABLE>
<CAPTION>


                                                                                               Costs Capitalized
                                                                                                    Subsequent
                                                                 Initial Cost                     To Acquisition
                                                                              Buildings
                                              Encum-                             and             Improve-      Carrying
                                             brances          Land           Improvements         ments         Costs
<S> <C>
Property of Joint  Venture in
  Which the Partnership has a
  36% Interest and has Invested
  in Under a Direct Financing Lease:

    Darryl's Restaurant:
      Greensboro, North Carolina                  -        $        -          $       -        $  521,400     $     -
                                                           ===========         ==========       ==========     =======
</TABLE>


<PAGE>










<TABLE>
<CAPTION>

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







                -               (f)                (f)                 (d)             1974           06/97               (d)
</TABLE>


                                       F-5

<PAGE>



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

        NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 1997



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

                                                                                                          Accumulated
                                                                                       Cost(h)(i)       Depreciation
<S> <C>
                    Properties the Partnership
                      has Invested In Under
                      Operating Leases:

                        Balance, December 31, 1994                                   $26,191,835          $2,307,725
                        Dispositions                                                    (889,049)            (79,459)
                        Additional costs capitalized                                      25,646                  -
                        Depreciation expense                                                  -              489,480
                                                                                     -----------          ----------

                        Balance, December 31, 1995                                    25,328,432           2,717,746
                        Disposition                                                     (980,904)            (34,279)
                        Depreciation expense                                                  -              481,683
                                                                                     -----------          ----------

                        Balance, December 31, 1996                                    24,347,528           3,165,150
                        Acquisition                                                    2,791,258                  -
                        Disposition                                                   (2,748,363)           (309,754)
                        Depreciation expense                                                  -              471,938
                                                                                     -----------         -----------

                        Balance, December 31, 1997                                   $24,390,423         $ 3,327,334
                                                                                     ===========         ===========


                    Property of Joint Venture in Which
                      the Partnership has a 36% Interest
                      and has Invested in Under an
                      Operating Lease:

                        Balance, December 31, 1994                                   $   721,893          $  127,072
                        Depreciation expense                                                  -               20,847
                                                                                     -----------          ----------

                        Balance, December 31, 1995                                       721,893             147,919
                        Depreciation expense                                                  -               20,846
                                                                                     -----------          ----------

                        Balance, December 31, 1996                                       721,893             168,765
                        Acquisition                                                      261,013                  -
                        Disposition                                                     (721,893)           (170,478)
                        Depreciation expense                                                  -                1,713
                                                                                     -----------          ----------

                        Balance, December 31, 1997                                   $   261,013          $       -
                                                                                     ===========          =========
</TABLE>


                                       F-6

<PAGE>



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

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

                                December 31, 1997


<TABLE>
<CAPTION>

                                                                                                         Accumulated
                                                                                       Cost(h)(i)       Depreciation
<S> <C>
                    Property of Joint Venture in Which
                      the Partnership has a 3.9%
                      Interest and has Invested in
                      Under an Operating Lease:

                        Balance, December 31, 1994                                   $   484,362          $       -
                        Depreciation expense (d)                                              -                   -
                                                                                     -----------          ---------

                        Balance, December 31, 1995                                       484,362                  -
                        Depreciation expense (d)                                              -
                                                                                     ----------

                        Balance, December 31, 1996                                       484,362                  -
                        Depreciation expense (d)                                              -
                                                                                     ----------

                        Balance, December 31, 1997                                   $   484,362          $       -
                                                                                     ===========          =========


                    Property of Joint Venture in Which
                      the Partnership has a 14% Interest
                      and has Invested in Under an
                      Operating Lease:

                        Balance, December 31, 1994                                   $   889,127          $   56,891
                        Depreciation expense                                                  -               15,014
                                                                                     -----------          ----------

                        Balance, December 31, 1995                                       889,127              71,905
                        Depreciation expense                                                  -               15,014
                                                                                     -----------          ----------

                        Balance, December 31, 1996                                       889,127              86,919
                        Depreciation expense                                                  -               15,014
                                                                                     -----------          ----------

                        Balance, December 31, 1997                                   $   889,127          $  101,933
                                                                                     ===========          ==========


                    Property in Which the Partnership
                      has a 51.67% Interest as
                      Tenants-in-Common and has
                      Invested in Under an Operating
                      Lease:

                        Balance, December 31, 1994                                   $   881,033          $    9,720
                        Depreciation expense                                                  -               20,860
                                                                                     -----------          ----------

                        Balance, December 31, 1995                                       881,033              30,580
                        Depreciation expense                                                  -               20,860
                                                                                     -----------          ----------

                        Balance, December 31, 1996                                       881,033              51,440
                        Depreciation expense                                                  -               17,383
                        Dispositions                                                    (881,033)            (68,823)
                                                                                     -----------          ----------

                        Balance, December 31, 1997                                   $        -           $       -
                                                                                     ===========          =========
</TABLE>

                                       F-7

<PAGE>



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

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

                                December 31, 1997
<TABLE>
<CAPTION>

                                                                                                        Accumulated
                                                                                       Cost(h)(i)       Depreciation
<S> <C>
                    Property in Which the Partnership
                      has a 17.93% Interest as
                      Tenants-in-Common and has Invested
                      in Under an Operating Lease:

                        Balance, December 31, 1995                                   $        -           $       -
                        Acquisitions                                                     814,970                  -
                        Depreciation expense                                                  -               21,168
                                                                                     -----------          ----------

                        Balance, December 31, 1996                                       814,970              21,168
                        Depreciation expense                                                  -               22,427
                                                                                     -----------          ----------

                        Balance, December 31, 1997                                   $   814,970          $   43,595
                                                                                     ===========          ==========


                    Property in Which the Partnership
                      has a 23.04% Interest as Tenants-
                      in-Common and has Invested in
                      Under an Operating Lease:

                        Balance, December 31, 1996                                   $        -           $       -
                        Acquisitions                                                   2,265,025                  -
                        Depreciation expense                                                  -                  127
                                                                                     -----------          ----------

                        Balance, December 31, 1997                                   $ 2,265,025          $      127
                                                                                     ===========          ==========
</TABLE>


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

(c)        As of December 31, 1996, the aggregate  cost of the Properties  owned
           by the  Partnership  and  its  consolidated  joint  venture,  and the
           unconsolidated  joint ventures  (including the two Properties held as
           tenants-in-common)  for federal  income tax purposes was  $28,598,561
           and  $3,023,805,  respectively.  All of the  leases  are  treated  as
           operating leases for federal income tax purposes.

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

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

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

(g)        The tenant of this Property,  Restaurant  Management  Services,  Inc.
           subleased  this  Property to a  franchisee  of a regional  restaurant
           chain.  The  franchisee  vacated the  Property;  however,  Restaurant
           Management  Services,  Inc. continues to be responsible for complying
           with all of the terms of the lease agreement and is continuing to pay
           rent on this Property,  subject to certain rent  concessions,  to the
           Partnership.

                                       F-8

<PAGE>



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

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

                                December 31, 1997


(h)        For  financial  reporting  purposes,  the  undepreciated  cost of the
           Property  in  Liverpool,  New  York,  was  written  down  to its  net
           realizable  value due to an  anticipated  impairment  in  value.  The
           Partnership  recognized  the impairment by recording an allowance for
           loss on land and  building in the amount of $77,023  and  $104,947 at
           December 31, 1996 and 1997, respectively.  The impairment at December
           31, 1996  represents the difference  between the Property's  carrying
           value and the property manager's estimate of the net realizable value
           of the Property based on an anticipated  sales price to an interested
           third party.  The  impairment  at December 31, 1997,  represents  the
           difference  between the  Property's  carrying  value and the property
           manager's  estimate of the net realizable value of the Property based
           on the net sales proceeds  received in February 1998 from the sale of
           the Property.  The cost of the Property presented on this schedule is
           the gross  amount at which the  Property  was carried at December 31,
           1997, excluding the allowance for loss on land and building.

(i)        For  financial  reporting  purposes,  the  undepreciated  cost of the
           Property  in  Melbourne,   Florida,  was  written  down  to  its  net
           realizable  value due to an  anticipated  impairment  in  value.  The
           Partnership  recognized  the impairment by recording an allowance for
           loss on land and net  investment  in  direct  financing  lease in the
           amount of $158,239 at December 31, 1997.  The  impairment at December
           31, 1997,  represents the difference between the Property's  carrying
           value and the net sales  proceeds  received in February 1998 from the
           sale of the  Property.  The cost of the  Property  presented  on this
           schedule  is the gross  amount at which the  Property  was carried at
           December 31, 1997,  excluding  the allowance for loss on land and net
           investment in direct financing lease.

                                       F-9

<PAGE>



                                    EXHIBITS


<PAGE>


                                  EXHIBIT INDEX


Exhibit Number                                                            Page

      3.1         Certificate of Limited Partnership of CNL Income Fund VI, Ltd.
                  (Included  as  Exhibit  3.3  to  Registration   Statement  No.
                  33-23892 on Form S-11 and incorporated herein by reference.)

      4.1         Certificate of Limited Partnership of CNL Income Fund VI, Ltd.
                  (Included  as  Exhibit  4.2  to  Registration   Statement  No.
                  33-23892 on Form S-11 and incorporated herein by reference.)

      4.2         Agreement and Certificate of Limited Partnership of CNL Income
                  Fund VI, Ltd. (Included as Exhibit 4.2 to Form 10-K filed with
                  the Securities  and Exchange  Commission on April 1, 1996, and
                  incorporated herein by reference.)

     10.1         Management  Agreement  (Included  as Exhibit 10.1 to Form 10-K
                  filed with the Securities and Exchange Commission on March 31,
                  1994, and incorporated herein by reference.)

     10.2         Assignment of 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  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.)

                                        i