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

                Annual Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934



     For the fiscal year ended December 31, 1998 Commission File No. 2-95011


                Wellesley Lease Income Limited Partnership III-D
             (Exact Name of Registrant as Specified in its Charter)


Massachusetts                                                         04-2850823
(State or other jurisdiction                   (IRS Employer Identification No.)
 of incorporation or organization)


One Financial Center, 21st Floor, Boston, MA                               02111
(Address of principal executive offices)                              (Zip Code)


Registrant's telephone number, including area code                (617) 482-8000

                   -------------------------------------------

Securities registered pursuant to Section 12(b) of the Act                  None

                   -------------------------------------------

Securities registered pursuant                                  Units of Limited
 to Section 12(g) of the Act                               Partnership Interests

                   -------------------------------------------


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                          Yes  X           No
                              ---             ---

State the aggregate market value of the voting stock held by  non-affiliates  of
the  registrant  as of March 31, 1999:  Not  applicable,  since  securities  are
non-voting.

                   Documents incorporated by reference: None.

                            Exhibit Index on Page: 35

                                  Page 1 of 36


<PAGE>


Corporate organization as discussed in Part I, Item 1 Business is as follows:

TLP Holding LLC ("Holding")  controls TLP Leasing  Programs,  Inc. ("TLP"),  TLP
Management  Services, Inc. ("TLPMS"),  and  TLP Securities,  Inc.  TLP  controls
TLP Columbia  Management  Corp.  ("TCMC") which serves as General Partner to the
Columbia  Lease  Income  Funds.  Torchmark  Corporation  ("Torchmark")  controls
TMK/United,  Inc.  which  controls  Waddell and Reed  Financial  Services,  Inc.
("Waddell and Reed").
Through various  dealer-manager  arrangements,  TLP, TLPMS, and Waddell and Reed
serve  as  corporate  general  partners  to the  Wellesley  Leasing  Partnership
("Wellesley General Partner") and the Hanover Leasing Partnership. The Wellesley
General  Partner is the general  partner for the Wellesley  Lease Income Limited
Partnerships.  Hanover  Leasing  Partnership  serves as the General  Partner for
Hanover Lease Income Limited Partnership with BOT Financial  Corporation serving
as agent.




<PAGE>


                                     Part I
Item 1.  Business.

Wellesley  Lease  Income  Limited  Partnership  III-D (the  "Partnership")  is a
limited partnership  organized under the provisions of the Massachusetts Uniform
Limited  Partnership  Act on December  18, 1984.  As of December  31, 1998,  the
Partnership  consisted of a General  Partner and 1,967 Limited  Partners  owning
20,185 Units of Limited Partnership Interests of $500 each (the "Units"), except
that  employees of the  Corporate  General  Partners of the General  Partner and
employees and securities  representatives of its affiliates  purchased 334 Units
for a net price of $460 per Unit, and the Partnership  incurred no obligation to
pay any sales  commissions  with  respect  to such  sales.  The Units  were sold
commencing  March 19,  1985,  pursuant to a  Registration  Statement on Form S-1
under the Securities Act of 1933. As set forth more fully at Item 10.  Directors
and Executive  Officers of the Partnership.  of this report, the General Partner
is Wellesley  Leasing  Partnership,  and the General Partner has three Corporate
General Partners (the "Corporate General Partners"):  TLP Leasing Programs, Inc.
("TLP")  and  TLP  Management  Services  Corporation  ("TLPMS"),   formerly  CIS
Management Services Corporation ("CISMS"),  both Massachusetts  corporations and
Waddell  & Reed  Financial  Services,  Inc.  ("Waddell  &  Reed",  formerly  TUP
Services, Inc., "TUPS"), a Missouri corporation.

The   Partnership   was  organized  to  engage  in  the  business  of  acquiring
income-producing   computer  peripheral   equipment  for  investment   purposes,
principally International Business Machines, Incorporated ("IBM") equipment. The
Partnership's principal objectives are as follows:

1.       To  acquire  and  lease  equipment, primarily through operating leases,
         to generate income during its entire useful life;

2.       To provide  quarterly  distributions  of cash  to the Limited  Partners
         from  leasing   revenues  and  from  the  proceeds  of  sales or  other
         disposition of Partnership equipment; and

3.       To reinvest a portion of lease  revenues and a  substantial  portion of
         cash from sales and  refinancings  in additional  equipment  during the
         first nine years of the Partnership's operations.

The Partnership was formed  primarily for investment  purposes and not as a "tax
shelter".

The Partnership shall terminate on December 31, 2012, unless sooner dissolved or
terminated  as  provided  in  Section  11 of the  Amended  Agreement  of Limited
Partnership.

The closing date of the Partnership was April 25, 1986, and aggregate  equipment
purchased  through December 31, 1998, is $31,576,015.  At the end of 1998, there
are 37 leases in place with 16  lessees.  The  acquisition  of these  leases and
equipment  is  described  more fully in Item 2.  Properties.  of this report and
notes 3 and 4 to the financial statements included in Item 8.
Financial Statements and Supplementary Data.

On January 9, 1996,  TLP Holding LLC  purchased  all the common stock of TLP and
TLPMS from CMI  Holding  Co. and CMI  Corporation,  respectively.  Under the new
ownership, TLP and TLPMS will continue to operate in the same manner of business
as described below.

Under  the  Partnership  Agreement,  the  General  Partner,   Wellesley  Leasing
Partnership,  is solely responsible for the operation of the Partnership and its
equipment.  As discussed above, the General Partner has three Corporate  General
Partners:  TLP, TLPMS and Waddell & Reed. TLP was formed in December 1982 and is
a wholly-owned  subsidiary of TLP Holding LLC  ("Holding").  TLPMS was formed in
May 1985 as CISMS, and is a wholly-owned  subsidiary of Holding and an affiliate
of TLP.  Holding is  primarily  engaged in  management  services  and  equipment
leasing.  Waddell  & Reed  (formerly  TUPS)  was  formed  in May  1986 and is an
affiliate of Waddell & Reed, Inc.,  which was one of the Soliciting  Brokers for
this  offering.  Both Waddell & Reed and Waddell & Reed,  Inc. are  wholly-owned
subsidiaries  of  TMK/United  Inc.,  which  itself  is  an  indirect  85%  owned
subsidiary of Torchmark Corporation ("Torchmark").

The  General   Partnership   Agreement  between  TLP  and  TLPMS  (the  "General
Partnership  Agreement"),  provides  that TLPMS will propose to the  Partnership
equipment acquisitions,  leasing, financing and re-financing  transactions,  and
sale transactions, for approval by the Executive Committee, and will oversee the
operation,  management and use of the Partnership's equipment, and that TLP will
oversee  the  marketing  of the Units and all  administrative  functions  of the
Partnership and, together with Waddell & Reed, will supply  substantially all of
the General Partner's capital resources.  All of the Partnership's  equipment to
date has been acquired,  and all dispositions of Partnership equipment have been
made,  through  TLPMS,  using the personnel and resources of Holding and several
outside  equipment  lease  brokers the General  Partner  believes  would be most
advantageous for the Partnership.

The Partnership's  investment policy provides for the acquisition of diversified
types of computer  equipment  and the leasing of such  equipment  to others on a
short-term basis under operating  leases.  The Partnership  generally  purchases
equipment  for  which a lease  exists,  or is  entered  into at the  time of the
Partnership's  acquisition  of the  equipment.  This  equipment  is recorded and
depreciated at the Partnership  cost (purchase price plus the acquisition  fee).
If at any time the General Partner deems the equipment to be obsolete or related
maintenance  and  storage  costs to be in excess of its fair market  value,  the
equipment  is scrapped or sold at the current fair market  value,  which ever is
most advantageous for the Partnership.

Pursuant to its leasing policies, the General Partner performs a credit analysis
of potential  lessees to determine their  creditworthiness.  The General Partner
leases all of its equipment to third  parties by means of operating  leases with
fixed base lease rates. Rents are payable monthly or quarterly. Operating leases
generally  do not  have  terms  greater  than  five  years in  duration  and the
aggregate  noncancelable  rental payments during the term of the lease (on a net
present  value  basis),  are not  sufficient to permit the lessor to recover the
purchase price of the equipment.

At the termination of the lease,  the General Partner arranges for the equipment
to be  re-leased  (either to the same lessee or a new  lessee) if it  determines
that re-leasing is in the Partnership's best interests.  Generally, equipment is
re-leased at least once and  possibly  several  times  during the  Partnership's
life, unless it is determined that the equipment is not marketable and therefore
may be sold. The General  Partner  provides,  or arranges for the  installation,
removal,  maintenance and modification of the Partnership's equipment. Also, the
General  Partner  will  purchase  and  maintain,  or cause to be  purchased  and
maintained,  appropriate  insurance  coverage  to protect the  interests  of the
Partnership.



<PAGE>


Of the leases in place at December  31,  1998,  the  Partnership  owned  various
computer equipment with an original cost basis of $3,589,735.  Listed below is a
breakdown of the various types of computer equipment owned:

               Computer peripherals                         $       707,108
               Processors & upgrades                              1,361,264
               Other                                              1,521,363
                                                            ---------------

                                                            $     3,589,735
                                                            ===============

Of the leases in place at December 31, 1998, the average lease term is 33 months
and the average monthly lease rate as a percentage of original equipment cost is
3.31%.

The  Partnership's  investments  in computer  peripheral  equipment are and will
continue to be subject to various risk  factors.  The  principal  business  risk
associated  with  ownership of the  equipment is the  inability to keep it fully
leased at rentals which, after payment of operating expenses and debt service on
Partnership borrowings, provide, together with any anticipated sales proceeds or
salvage value, an acceptable rate of return. Other risk factors include:

1.       Technological   and   economic   equipment   obsolescence,     physical
         deterioration,  malfunction,  and  risks  attendant  upon  defaults  by
         lessees and credit losses.

2.       Residual  Values  of  Equipment.   The  Partnership's   return  on  its
         investment in equipment will depend in part upon the  continuing  value
         of such equipment which in turn,  depends upon, among other things: (1)
         the quality of the equipment;  (2) the condition of the equipment;  (3)
         the timing of the equipment's  acquisition;  (4) the cost of comparable
         new equipment; (5) the technological obsolescence of the equipment; (6)
         the General Partner's ability to forecast  technological  changes which
         may reduce the value of the equipment; and (7) market factors.

3.       Competition  from Full Payout  Lessors.  In connection  with  operating
         leases,  the Partnership will encounter  considerable  competition from
         those offering full payout leases,  which are written for a longer term
         and a lower rate than the Partnership's operating leases.

4.       Competition from Manufacturers.  Leases offered by the Partnership will
         compete  with  operating  leases  and full  payout  leases  offered  by
         equipment  manufacturers  in their own lease  programs.  In addition to
         attractive  financial  terms,  manufacturers  may also provide  certain
         ancillary services which the Partnership cannot offer directly, such as
         maintenance service (including possible equipment substitution rights),
         warranty services and trade-in privileges.

5.       Other  Competition.  There  are  numerous  other  potential  investors,
         including limited  partnerships  organized and managed similarly to the
         Partnership,  seeking to purchase equipment subject to either operating
         leases or full payout leases, many of which will have greater financial
         resources than the  Partnership  and more  experience  than the General
         Partner.   The  Partnership   will  compete  in  the  computer  leasing
         marketplace  with  many   non-manufacturing   firms,   including  other
         equipment  dealers,  brokers  and  leasing  companies,  as well as with
         financial institutions.

6.        Changes in  Marketing  Policies.  IBM's current  marketing  policy  of
          offering accrual discounts (i.e.,  applying lease payments as a credit
          toward the purchase of equipment) and volume discounts enables certain
          customers to obtain IBM equipment at a cost lower than its fair market
          value. In the case of accrual discounts,  lessees of IBM equipment who
          have earned a purchase  credit toward that  equipment can purchase the
          equipment  from IBM and arrange a  cost-effective  sale and  leaseback
          arrangement  with  TLP or  the  Partnership.  The  sale  price  to the
          Partnership  will  typically be less than the fair market value of the
          equipment.  The  Partnership  may be able  to  participate  in  volume
          discounts   through   purchases   arranged  by  lessees  of  TLP.  The
          Partnership's   lower  equipment  costs  in  turn  should  enable  the
          Partnership  to offer lower lease rates to  customers  and help offset
          the  risk  of  early  obsolescence.  If IBM  were to  eliminate  these
          policies,  raise its  prices,  lower its lease  rates,  or become more
          active as a lessor,  the  Partnership  might find it more difficult to
          compete successfully as a lessor of IBM equipment.

7.        Defaults by  Lessees.  Default by a lessee may  cause equipment to  be
          returned to the  Partnership at a time when the General Partner may be
          unable to  promptly  arrange  for its  re-leasing  (at the rental rate
          previously  received or  otherwise)  or sale (with or without a loss),
          thus resulting in the loss of  anticipated  revenues and the inability
          to recover the  Partnership's  investment  and repay related debt. Any
          related  debt may be secured by the  returned  equipment  and, in some
          cases, by the Partnership's  other equipment.  If the debt is not paid
          in a timely manner,  the lender may foreclose and assume  ownership of
          all  equipment  securing  the debt,  resulting  in  economic  loss and
          adverse tax consequences to the Partnership's  partners. Four lessees,
          American Hard Cider,  Incorporated,  J. Walter Thompson, Jumbo Sports,
          Incorporated  and The Internet  Access  Company,  Incorporated,  lease
          equipment in excess of 10% of total  rental  income for the year ended
          December  31,  1998.  The related  rental  payments  comprise  14.34%,
          14.75%, 19.02%, and 20.44%,  respectively,  of the total rental income
          for  the  year  ended   December  31,  1998.   American   Hard  Cider,
          Incorporated, J. Walter  Thompson,  Jumbo Sports,  Incorporated  and
          The Internet Access Company,  Incorporated  lease equipment comprising
          17.64%,  11.51%,  16.37%   and  17.28%,  respectively,  of  the  total
          equipment portfolio at December 31, 1998.

8.       Changes in Technology. The General Partner intends to offer lease rates
         to the  Partnership's  lessees  which  take  into  account  the risk of
         technological  advances  which may reduce  the value of such  equipment
         owned by the Partnership.  However, the introduction of an entirely new
         technology  could lead to a radical  reduction in the fair market value
         of certain equipment and make such equipment difficult to re-lease.

The Partnership considers itself to be engaged in only one industry segment, the
business of investing primarily in IBM computer peripheral equipment and leasing
the equipment to major national  corporations on an operating  lease basis,  and
therefore, industry segment information has not been provided.



<PAGE>


Item 2.  Properties.

At  December  31,  1998,  the  Partnership  owned  computer   equipment  with  a
depreciated  cost basis of $1,014,032.  All purchases of computer  equipment are
subject to a 3% acquisition fee paid to the General Partner.


<PAGE>


Item 3. Legal Proceedings:

There are no material pending legal  proceedings that the Partnership is a party
or of which any of its equipment or leases is the subject.

On January 9, 1996,  TLP Holding LLC  purchased all the common stock of TLP from
CMI Holding Co. and all the common stock of TLP Management Services  Corporation
("TLPMS",  formerly  CIS  Management  Services  Corporation  "CISMS")  from  CMI
Corporation.  Under the new  ownership,  it is expected  that TLP and TLPMS will
continue to operate in the same manner of business as each has in the past.

On January 13,  1989 (the  "Petition  Date"),  Continental  Information  Systems
Corporation  ("Continental"),  CIS  Corporation  ("CIS"),  CMI Holding Co. ("CMI
Holding"), CMI Corporation ("CMI") and certain of its affiliates  (collectively,
the "Debtors"), voluntarily petitioned for relief under Chapter 11 of the United
States  Bankruptcy  Code  ("Chapter  11"),  and  thereafter   continued  in  the
management  and  operation  of their  businesses  and  property  as  Debtors  In
Possession until October 25, 1989, when the United States  Bankruptcy Court (the
"Court")  confirmed  the  appointment  of James P. Hassett as Chapter 11 trustee
(the "Trustee") of the Debtors.  CMI Holding is the former parent of TLP and CMI
is the former  parent of TLPMS.  TLP and TLPMS,  neither  of which  filed  under
Chapter  11,  are  the two  Corporate  General  Partners  of  Wellesley  Leasing
Partnership,  the General Partner of the Partnership.  Both before and after the
Petition Date, CIS and CMI have acted as agents for the  Partnership in selling,
leasing and remarketing Partnership equipment. CMI Holding became a wholly-owned
subsidiary of CIS pursuant to a Court ordered settlement on July 20, 1993.

As of the Petition Date, there were a number of unsettled  transactions  between
CIS  and  CMI  and  the  Partnership  and  other  affiliated  partnerships  (the
Partnership and such other partnerships are herein  collectively  referred to as
the  "Partnerships"),  including  outstanding  accounts  receivable and accounts
payable between each of the Partnerships  and CIS and CMI and their  affiliates,
sales  of  equipment  and  related  leases  from  CIS  and  CMI to  each  of the
Partnerships  for  which  not all  documentation  had been  completed  as of the
Petition  Date,  and sales of  equipment  and related  leases from which CIS had
failed to remove prior third-party liens. In addition,  accounts  receivable and
accounts  payable   continued  to  accrue  and  be  paid  between  each  of  the
Partnerships  and CIS and CMI and their  affiliates  subsequent  to the Petition
Date.

On February 28, 1992,  the Court granted an order  implementing  a settlement of
the outstanding  issues between each of the  Partnerships  and the Debtors.  The
settlement occurred on March 13, 1992. In the order the Court approved a set-off
on a  partnership-by-partnership  basis  of  pre-petition  amounts  owed by each
affected Debtor to each  Partnership to the extent of pre-petition  amounts owed
by that  Partnership to that Debtor.  The  Partnership was a net creditor to the
Debtors and paid in full its amounts owing them.

On November 29, 1994, the Court  confirmed the Trustee's  proposed Joint Plan of
Reorganization  dated October 4, 1994,  and the Debtors  emerged from Chapter 11
bankruptcy protection on December 21, 1994.



<PAGE>


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

None.


<PAGE>


Item 5.  Market for the Partnership's Securities  and  Related  Security  Holder
         Matters.

(a)  Market Information

The  Partnership's   outstanding   securities  consist  of  Limited  Partnership
Interests in Units of $500 each. As of December 31, 1998,  20,185 Units had been
sold to the public at a price of $500 per Unit  (except for 334 Units which were
sold for a net  price of $460 per Unit to  employees  of the  Corporate  General
Partners of the General Partner and employees and securities  representatives of
its affiliates).

There is no public market for the Units,  and it is not anticipated  that such a
public market will develop.

(b)  Approximate Number of Security Holders

<TABLE>
<CAPTION>
                                      Number of Unit                            Number of Units
                                     holders on Record                              as of
 Title of Class                        as of 12/31/98                              12/31/98


<S>                                          <C>                                   <C>
    Units of
    Limited
    Partnership
    Interests                                1,962                                  20,185

</TABLE>


(c)  Dividend History and Restrictions

During the fiscal period ended December 31, 1986 the  Partnership  completed its
offering  of 20,185  Units.  Pursuant  to Section 8 of the  Limited  Partnership
Agreement, the Partnership's  "Distributable Cash From Operations" for each year
will be determined and then  distributed to the Partners.  Upon reaching the end
of its reinvestment  period (the ninth anniversary of the Partnership's  closing
date), the Partnership will also distribute to the Partners  "Distributable Cash
From Sales or  Refinancings",  if any.  The  Partnership  distributed  $605,558,
$504,626 and $857,863 to the Limited  Partners and $31,872,  $26,560 and $45,152
to the General  Partners in 1998,  1997 and 1996,  respectively.  The cumulative
cash  distributions  to the  Limited  Partners  through  December  31,  1998 are
$12,131,198 as compared with the Limited  Partners' net  contributed  capital of
$8,987,039.

"Cash From  Operations" and "Cash From Sales or Refinancing"  means the net cash
provided by the  Partnership's  normal  operations  or as a result of any sales,
refinancings or other dispositions of equipment, respectively, after the general
expenses and current  liabilities of the  Partnership  (other than the equipment
management  fee) are paid,  as reduced by any reserves  for working  capital and
contingent  liabilities to the extent deemed  reasonable by the General Partner,
and as  increased  by any  portion of such  reserves  then deemed by the General
Partner not to be required for Partnership operations.  "Distributable Cash From
Operations" and "Distributable  Cash From Sales or Refinancings" means Cash From
Operations or Cash From Sales or Refinancings,  respectively, reduced by amounts
which the General  Partner  determines  shall be  reinvested  (through the ninth
anniversary of the  Partnership's  closing date) in additional  Equipment and by
payments of all accrued but unpaid equipment management fees.

For  rendering  services  in  connection  with  the  normal  operations  of  the
Partnership,  the  Partnership  will pay to the  General  Partner a  Partnership
management fee equal to 7% of the monthly rental billings collected.

Each  distribution of Distributable  Cash From Operations and any  Distributable
Cash From Sales or Refinancings from gains of the Partnership shall be allocated
95% to the Limited Partners and 5% to the General Partner. Any losses from sales
or refinancings of equipment shall be allocated 99% to the Limited  Partners and
1% to the General  Partner until "Payout" has occurred.  "Payout" means the time
when the  aggregate  amount of all  distributions  to the  Limited  Partners  of
Distributable  Cash From  Operations  and of  Distributable  Cash From  Sales or
Refinancings  equals the  aggregate  amount of the  Limited  Partners'  original
invested capital plus a cumulative 10% annual return (compounded daily) on their
aggregate  unreturned  invested  capital  (calculated  from the beginning of the
first full fiscal quarter following the Partnership's  closing date).  Including
the  distribution  for the  fourth  quarter  of 1998  made  February  26,  1999,
cumulative  distributions to date are $608.50 per Unit. This constitutes 122% of
your initial investment.  After Payout has occurred, any Distributable Cash From
Sales or Refinancings will be distributed 15% (plus an additional 1% for each 1%
by which the  total of all  Limited  Partners'  original  Capital  Contributions
actually paid or allocated to the Partnership's  investment in equipment exceeds
the greater of (i) 80% of the gross  proceeds of the  Partnership's  offering of
Units,  reduced  by  0.0625%  for each 1% of  leverage  encumbering  Partnership
equipment,  or (ii) 75% of the gross  proceeds of such  offering) to the General
Partner,  and the remainder to the Limited Partners.  It is not anticipated that
Payout will occur as of the liquidation of this Partnership.

Distributable  Cash,  if any,  will be  distributed  within  60 days  after  the
completion of each of the first three fiscal quarters of each Partnership fiscal
year,  and within 120 days after the  completion of each fiscal year,  beginning
after the first full fiscal quarter  following the  Partnership's  closing date.
Each such  distribution  will be  described  in a statement  sent to the Limited
Partners.



<PAGE>


Item 6.  Selected Financial Data.

The following  table sets forth  selected  financial  information  regarding the
Partnership's  financial position and operating results. This information should
be read in conjunction  with the financial  statements  and notes  thereto,  and
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations, which are included in Items 7. and 8., respectively, of this report.

<TABLE>
<CAPTION>


                                                                  For the Years Ended December 31,
                                                  1998             1997              1996              1995              1994
                                          --------------------------------------------------------------------------------------


<S>                                       <C>               <C>               <C>               <C>             <C>             
Operating Data
   Rental Income                          $      1,532,778  $     1,773,096   $      1,557,912  $    2,483,009  $      2,315,814
   Interest Income                                  12,385           11,152             18,063          16,961            30,787
   Net Income                                      387,470          401,383            160,016         471,147           759,459
   Net Income Per Limited
     Partnership Unit                                17.62            18.57             5.35             21.01             35.30
   Distributions to Partners                       637,430          531,186            903,015         956,134         1,062,371
   Distributions Per Limited
     Partnership Unit                                30.00            25.00              42.50           45.00             50.00

Balance Sheet Data

   Cash and Cash Equivalents              $        403,150  $       253,590   $        265,199  $      245,755  $        592,377
   Computer Equipment at Cost                    3,589,735        6,164,470          5,844,357       7,636,323         7,469,559
   Total Assets                                  1,477,641        2,382,132          2,451,823       3,116,203         3,284,409
   Long-term Debt                                  229,717          858,642            795,925         732,726           366,745
   Partners' Equity                              1,140,261        1,390,221          1,520,024       2,263,023         2,748,010

</TABLE>


<PAGE>


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

General

On April 25, 1986, the Partnership  completed its offering and received from the
escrow  account  $10,079,140  representing  20,185 Units of Limited  Partnership
Interests.  Of this amount,  the Partnership  received proceeds from the sale of
334 Units at a price  net of sales  commissions  for  employees  of the  General
Partners of the General Partner and employees and securities  representatives of
its  affiliates,  who are allowed to purchase  Units for a net price of $460 per
Unit.

Results of Operations

The Partnership  realized net income of $387,470,  $401,383 and $160,016 for the
years ended  December  31,  1998,  1997 and 1996,  respectively.  Rental  income
decreased  $240,318  or 14% and  increased  $215,184  or 14% in 1998  and  1997,
respectively.  The current year  decrease in rental  income is primarily  due to
lower  rental rates  obtained on equipment  lease  extensions  and  remarketings
resulting  after the initial lease term expires.  The 1997 increase is primarily
due to to new leases  resulting  from  equipment  acquisitions  in the amount of
$1,168,532 as a result of the  extension of the  reinvestment  period.  Interest
income  increased in the current year as a result of higher  average  short-term
investment  balances held during 1997,  versus the prior year in which  interest
income decreased due to the lower average short-term balances held. The net gain
on sale of  equipment in the current year is less than 1997 as a result of fewer
equipment sales in 1998 than in 1997.

Total costs and expenses  decreased 17% and 13% in 1998 and 1997,  respectively,
compared to prior  periods.  The  decrease in costs and  expenses is primarily a
result of lower depreciation  expense. The current year decrease in depreciation
expense  is  attributable   to  a  portion  of  the  equipment   becoming  fully
depreciated. Interest expense decreased $22,707 between 1998 and 1997 due to the
continued  paydown of long-term  debt.  Management fees decreased in the current
year as a result of the decrease in rental  income.  General and  administrative
expenses  increased  $32,806 or 19% mainly due to an increase  in the  allocable
salaries of the  partnership  accounting and reporting  personnel of the General
Partner during the current year. The continued successful  collection efforts on
delinquent  accounts  has again  resulted  in a reversal  of the  provision  for
doubtful accounts.

The  Partnership  recorded  net income per Limited  Partnership  Unit of $17.62,
$18.57  and  $5.35  for the  years  ended  December  31,  1998,  1997 and  1996,
respectively.  The  allocation  for each of the years  includes a cost  recovery
allocation of profit and loss among the General and Limited Partners.  This cost
recovery allocation is required to maintain capital accounts consistent with the
distribution  provisions of the Partnership  Agreement.  In certain periods, the
cost  recovery of profit and loss may result in an allocation of net loss to the
Limited Partners in instances when the Partnership's  operations were profitable
for the period.

Year 2000 Compliance

The  year  2000   compliance   issue  concerns  the  inability  of  computerized
information  systems to  accurately  calculate,  store or use a date after 1999.
This  could  result in  computer  system  failures  or  miscalculations  causing
disruptions of operations.  The Year 2000 issue affects almost all companies and
organizations.

TLP has  planned  for the Year  2000  Compliance  since  late in  1996.  TLP has
inventoried,  classified, changed, upgraded, and/or modified its infrastructure,
hardware,  mission-critical  software and non-critical  software to be compliant
with the year 2000  requirements.  All  hardware  and  software  has either been
tested, if applicable,  or certification has been received from the vendor to be
Year 2000 compliant.  All the hardware tested positively for "Basic Input/Output
System" updates.  Any future hardware or software  purchased by TLP must be Year
2000 compliant prior to the actual purchase.


<PAGE>



Liquidity and Capital Resources

For the year ended December 31, 1998,  rental  revenue  generated from operating
leases and sales  proceeds  generated  from  equipment  sales  were the  primary
sources of funds for the Partnership. As equipment leases terminate, the General
Partner  determines  if the  equipment  will be  extended  to the  same  lessee,
remarketed to another  lessee,  or sold.  This  decision is made upon  analyzing
which option generates the most favorable result.

It is expected that rental income will decline in the future due to two factors.
First,  lower rates are obtained on the  remarketing of existing  equipment upon
expiration of the original leases.  Typically the remarketed rates are lower due
to the decrease in useful life of the equipment. Secondly, the increasing change
of technology in the computer  industry  usually  decreases the demand for older
equipment,  thus  increasing  the  possibility  of  obsolescence.  Both of these
factors together will cause remarketed rates to be lower than original rates and
will cause certain leases to terminate upon expiration.  This decrease  however,
should  not  affect  the   partnership's   ability  to  meet  its  future   cash
requirements,  including  long-term debt obligations.  To the extent that future
cash flows should be insufficient to meet the Partnership's  operating  expenses
and  liabilities,  additional  funds  could  be  obtained  through  the  sale of
equipment,  or a  reduction  in the rate of cash  distributions.  Future  rental
revenues  amount to $942,355  and are to be  received  over the next three years
(see note 4 to the financial statements).

The Partnership's  investing activities for the year resulted in equipment sales
with a net depreciated cost basis of $205,749,  generating $234,458 in proceeds.
The  Partnership  will not purchase  equipment in the future as the  Partnership
reached the end of its extended reinvestment period in June, 1997.

The  Partnership's  financing  activities  included a paydown on long-term  debt
during 1998 of $628,925.  The  Partnership  will payoff its remaining  long-term
debt of $229,717 by 2000.  Total long-term debt assumed by the Partnership  from
inception is $7,995,934, for a total leverage of 25%.

Cash  distributions paid in the first quarter of 1999 are currently at an annual
level of 6% per Limited Partnership Unit, or $7.50 per Limited Partnership Unit.
During  1998,  the  Partnership  distributed  a  total  of  $30.00  per  Limited
Partnership Unit, of which $17.62 per Unit represents income and $12.38 per Unit
represents a return of capital.  For the quarter  ended  December 31, 1998,  the
Partnership  declared  a cash  distribution  of  $159,356,  of which  $7,968 was
allocated  to the General  Partner and  $151,388  was  allocated  to the Limited
Partners.  The  distribution  subsequently  occurred on February 26,  1999.  The
Partnership  expects to continue paying at or near this level in the future. The
effects of inflation have not been  significant to the  Partnership  and are not
expected to have any material impact in future periods.



<PAGE>


Item 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA




                          Independent Auditors' Report




The Partners of Wellesley Lease Income Limited Partnership III-D:

We have  audited the  accompanying  balance  sheets of  Wellesley  Lease  Income
Limited Partnership III-D (a Massachusetts  Limited  Partnership) as of December
31, 1998 and 1997, and the related  statements of operations,  partners'  equity
(deficit)  and cash flows for each of the years in the  three-year  period ended
December 31, 1998. In connection with our audits of the financial statements, we
have also audited the accompanying  financial  statement schedule II for each of
the years in the  three-year  period ended  December 31, 1998.  These  financial
statements and this financial  statement  schedule are the responsibility of the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements and this financial statement schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits 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 Wellesley Lease Income Limited
Partnership  III-D as of  December  31,  1998 and 1997,  and the  results of its
operations  and its cash  flows for each of the years in the  three-year  period
ended  December 31, 1998,  in  conformity  with  generally  accepted  accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered  in  relation  to the basic  financial  statements  taken as a whole,
presents fairly, in all material respects, the information set forth therein.






                                                           KPMG Peat Marwick LLP



Boston, Massachusetts
February 26, 1999


<PAGE>

<TABLE>
<CAPTION>

                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
                      (A Massachusetts Limited Partnership)

                                 Balance Sheets
                           December 31, 1998 and 1997

                                     Assets
                                                                                       1998                     1997
                                                                                 ----------------        ----------------
<S>                                                                              <C>                     <C>             
Investment property, at cost:
   Computer equipment                                                            $      3,589,735        $      6,164,470
     Less accumulated depreciation                                                      2,575,703               4,119,544
                                                                                 ----------------        ----------------
       Investment property, net                                                         1,014,032               2,044,926

Cash and cash equivalents                                                                 403,150                 253,590
Rents receivable, net                                                                       5,483                  46,355
Sales receivable, net                                                                           -                   2,200
Accounts receivable - affiliates                                                           48,059                  17,768
Other assets                                                                                6,917                  17,293
                                                                                 ----------------        ----------------

     Total assets                                                                $      1,477,641        $      2,382,132
                                                                                 ================        ================

                        Liabilities and Partners' Equity
Liabilities:
   Current portion of long-term debt                                             $        225,770        $        628,925
   Accounts payable and accrued expenses - affiliates                                      23,637                  31,639
   Accounts payable and accrued expenses                                                   52,371                  61,989
   Unearned rental revenue                                                                 31,655                  39,641
   Long-term debt, less current portion                                                     3,947                 229,717
                                                                                 ----------------        ----------------

     Total liabilities                                                                    337,380                 991,911
                                                                                 ----------------        ----------------

Partners' equity:
   General Partner:
     Capital contribution                                                                   1,000                   1,000
     Cumulative net income                                                                637,502                 605,630
     Cumulative cash distributions                                                       (638,502)               (606,630)
                                                                                 ----------------        ----------------
                                                                                                -                       -
                                                                                 ----------------        ----------------
   Limited Partners (20,185 units):
     Capital contribution, net of offering costs                                        8,987,039               8,987,039
     Cumulative net income                                                              4,284,420               3,928,822
     Cumulative cash distributions                                                    (12,131,198)            (11,525,640)
                                                                                 ----------------        ----------------
                                                                                        1,140,261               1,390,221
                                                                                 ----------------        ----------------
     Total partners' equity                                                             1,140,261               1,390,221
                                                                                 ----------------        ----------------

     Total liabilities and partners' equity                                      $      1,477,641        $      2,382,132
                                                                                 ================        ================
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>

<TABLE>
<CAPTION>

                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
                      (A Massachusetts Limited Partnership)

                            Statements of Operations
                  Years Ended December 31, 1998, 1997 and 1996


                                                                   1998                    1997                  1996
                                                             --------------          --------------        --------------

<S>                                                          <C>                     <C>                   <C>           
Revenue:
   Rental income                                             $    1,532,778          $    1,773,096        $    1,557,912
   Interest income                                                   12,385                  11,152                18,063
   Net gain on sale of equipment                                     28,709                  50,663               238,012
                                                             --------------          --------------        --------------

       Total revenue                                              1,573,872               1,834,911             1,813,987
                                                             --------------          --------------        --------------

Costs and expenses:
   Depreciation                                                     825,145               1,103,845             1,293,741
   Interest                                                          51,388                  74,095                52,340
   General and administrative                                       318,537                 301,757               282,922
   (Reversal of) provision for
     doubtful accounts                                               (8,668)                (46,169)               24,968
                                                             --------------          --------------        --------------

       Total costs and expenses                                   1,186,402               1,433,528             1,653,971
                                                             --------------          --------------        --------------

Net income                                                   $      387,470          $      401,383        $      160,016
                                                             ==============          ==============        ==============
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>

<TABLE>
<CAPTION>

                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
                      (A Massachusetts Limited Partnership)

                    Statements of Partners' Equity (Deficit)
                  Years Ended December 31, 1998, 1997 and 1996


                                                             General              Limited
                                                             Partner              Partners                 Total



<S>                                                        <C>                  <C>                 <C>             
Equity (deficit) at
    December 31, 1995                                      $      (6,945)       $     2,269,968     $      2,263,023

Net income                                                        52,097                107,919              160,016

Cash distributions                                               (45,152)              (857,863)            (903,015)
                                                           -------------        ---------------     ----------------

Equity at
    December 31, 1996                                                  -              1,520,024            1,520,024

Net income                                                        26,560                374,823              401,383

Cash distributions                                               (26,560)              (504,626)            (531,186)
                                                           -------------        ---------------     ----------------

Equity at
    December 31, 1997                                                  -              1,390,221            1,390,221

Net income                                                        31,872                355,598              387,470

Cash distributions                                               (31,872)              (605,558)            (637,430)
                                                           -------------        ---------------     ----------------

Equity at
    December 31, 1998                                      $           -        $     1,140,261     $      1,140,261
                                                           =============        ===============     ================
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>

<TABLE>
<CAPTION>

                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
                      (A Massachusetts Limited Partnership)

                            Statements of Cash Flows
                  Years Ended December 31, 1998, 1997 and 1996

                                                                            1998               1997              1996
                                                                            ----               ----              ----

<S>                                                                  <C>                <C>                <C>           
Cash flows from operating activities:
   Net income                                                        $      387,470     $       401,383    $      160,016
                                                                     --------------     ---------------    --------------

   Adjustments  to  reconcile  net  income  to net cash
     provided  by  operating activities:
       Depreciation                                                         825,145           1,103,845         1,293,741
       (Reversal of) provision for doubtful accounts                         (8,668)            (46,169)           24,968
       Net gain on sale of equipment                                        (28,709)            (50,663)         (238,012)
       Net decrease in current assets                                        31,825             129,262            65,415
       Net (decrease) increase in current liabilities                       (25,606)             (2,605)           15,420
                                                                     --------------     ---------------    --------------

         Total adjustments                                                  793,987           1,133,670         1,161,532
                                                                     --------------     ---------------    --------------

         Net cash provided by operating activities                        1,181,457           1,535,053         1,321,548
                                                                     --------------     ---------------    --------------

Cash flows from investing activities:
   Purchase of investment property                                                -          (1,168,532)         (968,266)
   Proceeds from sales of investment property                               234,458              90,339           505,978
                                                                     --------------     ---------------    --------------

         Net cash provided by (used in) investing activities                234,458          (1,078,193)         (462,288)
                                                                     --------------     ---------------    --------------

Cash flows from financing activities:
   Proceeds from borrowings on long-term debt                                     -             708,661           488,322
   Principal payments on long-term debt                                    (628,925)           (645,944)         (425,123)
   Cash distributions to partners                                          (637,430)           (531,186)         (903,015)
                                                                     --------------     ---------------    --------------

         Net cash used in financing activities                           (1,266,355)           (468,469)         (839,816)
                                                                     --------------     ---------------    --------------

Net increase (decrease) in cash and cash equivalents                        149,560             (11,609)           19,444

Cash and cash equivalents at beginning of year                              253,590             265,199           245,755
                                                                     --------------     ---------------    --------------

Cash and cash equivalents at end of year                             $      403,150     $       253,590    $      265,199
                                                                     ==============     ===============    ==============

Supplemental cash flow information:
   Interest paid during the year                                     $       51,388     $        74,095    $       52,340
                                                                     ==============     ===============    ==============
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>


                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
                      (A Massachusetts Limited Partnership)

                          Notes to Financial Statements
                        December 31, 1998, 1997 and 1996

(1)   Organization and Partnership Matters

The  Partnership  was  organized   under  the   Massachusetts   Uniform  Limited
Partnership Act on March 19, 1985. The Amended Agreement of Limited  Partnership
authorized the issuance of up to 25,000 Limited  Partnership Units at a per unit
gross price of $500 and up to 20 additional units to affiliates. The Partnership
closed on April 25, 1986, with 20,185 units.

Pursuant  to  the  terms  of  the  Amended  Agreement  of  Limited  Partnership,
Distributable  Cash From  Operations  and  Profits  for  federal  income tax and
financial  reporting  purposes from normal operations and any Distributable Cash
From Sales or Refinancings  from gains of the Partnership shall be allocated 95%
to the Limited Partners and 5% to the General Partner.  Further,  gains on sales
of  equipment  occurring  after the  reinvestment  period end shall be allocated
first to  eliminate  negative  capital  accounts,  if any, and second 95% to the
Limited  Partners and 5% to the General Partner until  "Payout".  "Payout" means
the time when the aggregate amount of all  distributions to the Limited Partners
of Distributable  Cash From Operations and of  Distributable  Cash From Sales or
Refinancings  equals the  aggregate  amount of the  Limited  Partners'  original
invested capital plus a cumulative 10% annual return (compounded daily) on their
aggregate  unreturned  invested  capital  (calculated  from the beginning of the
first full fiscal quarter following the Partnership's  closing date). Losses for
federal income tax and financial  reporting  purposes from normal operations and
any Distributable Cash From Sales or Refinancings from losses of the Partnership
shall be allocated  99% to the Limited  Partners  and 1% to the General  Partner
until  Payout  has  occurred,  and 85% to the  Limited  Partners  and 15% to the
General Partner thereafter.  In addition,  special cost recovery allocations may
be  required to reflect  the  differing  initial  capital  contributions  of the
General Partner and the Limited Partners.  The  Partnership's  books and records
are  in  accordance  with  the  terms  of  the  Amended   Agreement  of  Limited
Partnership. Including the fourth quarter of 1998 distribution made February 26,
1999,  cumulative  distributions  to date are $608.50 per Unit. This constitutes
122% of the initial investment.  It is not anticipated that Payout will occur as
of the liquidation of this Partnership.

The General Partner has contributed $1,000 in respect of its General Partnership
interest.  In addition,  the General Partner and its affiliates have acquired an
additional  $10,000 of Limited  Partnership Units in accordance with the Amended
Agreement of Limited Partnership.



<PAGE>


                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
                      (A Massachusetts Limited Partnership)

                          Notes to Financial Statements

(2)   Summary of Significant Accounting Policies

General

The  Partnership's  records are maintained on the accrual basis of accounting so
that revenues are  recognized as earned and expenses are recognized as incurred.
Assets and  liabilities  are those of the  Partnership  and do not  include  any
assets and liabilities of the individual partners.  The preparation of financial
statements in conformity with generally accepted accounting  principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

Depreciation on investment property purchased in 1987 and thereafter is provided
using the  double-declining  balance method,  generally over a five-year period.
The  Partnership's  policy is to  periodically  review the estimated fair market
value of its equipment to assess the  recoverability of its undepreciated  cost.
In accordance with this policy, the Partnership records a charge to depreciation
expense  in  instances  when the net book  value of  equipment  exceeds  its net
realizable  value.  Included in depreciation  expense in 1996 is a provision for
$100,000 to properly  reflect the equipment  portfolio's  net realizable  value.
Routine maintenance and repairs are expensed as incurred.  Major betterments and
enhancements   are   capitalized   and   depreciated  in  accordance   with  the
Partnership's depreciation policy.

Cash and Cash Equivalents

The  Partnership  considers  cash  and  short-term   investments  with  original
maturities of three months or less to be cash and cash equivalents.

Allowance for Doubtful Accounts

The financial  statements  include allowances for estimated losses on receivable
balances.  The  allowances  for  doubtful  accounts  are based on past write off
experience  and an evaluation  of potential  uncollectible  accounts  within the
current  receivable  balances.  Receivable  balances  which are determined to be
uncollectible  are charged against the allowance and subsequent  recoveries,  if
any, are credited to the allowance. At December 31, 1998 and 1997, the allowance
for  doubtful  accounts  included  in rents  receivable  was  $938  and  $9,806,
respectively, and $0 and $0 included in sales receivable, respectively.



<PAGE>


                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
                      (A Massachusetts Limited Partnership)

                          Notes to Financial Statements

Income Taxes

No provision  for federal  income taxes has been made as the  liability for such
taxes is that of the Partners rather than the  Partnership.  Taxable income,  as
reported  on  Schedule  K-1,  Form 1065  "Partner's  Share of  Income,  Credits,
Deductions,  etc.", was $288,189,  $406,922 and $162,413 in 1998, 1997 and 1996,
respectively (see note 7).

(3)   Investment Property

At  December  31,  1998,  the  Partnership  owned  computer   equipment  with  a
depreciated  cost basis of $1,014,032.  All purchases of computer  equipment are
subject to a 3% acquisition fee paid to the General Partner.

(4)   Leases

Description of leasing arrangements:

Operations consist primarily of leasing computer equipment. All equipment leases
are classified as operating leases and expire over the next three years.

Minimum  lease  payments  scheduled to be received in the future under  existing
noncancelable operating leases are as follows:

                             1999                   $      842,389
                             2000                           97,446
                             2001                            2,520
                                                    --------------

                                                    $      942,355
                                                    ==============

Four  lessees,  American Hard Cider,  Incorporated,  J. Walter  Thompson,  Jumbo
Sports,  Incorporated  and The  Internet  Access  Company,  Incorporated,  lease
equipment  in excess of 10% of total rental  income for the year ended  December
31, 1998.  The related  rental  payments  comprise  14.34%,  14.75%,  19.02% and
20.44%, respectively, of the total rental income for the year ended December 31,
1998.  American  Hard Cider,  Incorporated,  J. Walter  Thompson,  Jumbo Sports,
Incorporated  and The Internet  Access  Company,  Incorporated  lease  equipment
comprising  17.64%,  11.51%,  16.37%  and  17.28%,  respectively,  of the  total
equipment portfolio at December 31, 1998.



<PAGE>


                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
                      (A Massachusetts Limited Partnership)

                          Notes to Financial Statements

 5)   Related Party Transactions

Fees,  commissions  and other expenses paid or accrued by the Partnership to the
General  Partner  or  affiliates  of the  General  Partner  for the years  ended
December 31 are as follows:

<TABLE>
<CAPTION>
                                                    1998                1997              1996
                                                    ----                ----              ----

<S>                                              <C>                 <C>               <C>         
Equipment acquisition fees                       $          -        $     34,035      $     28,202
Management fees                                       115,631             131,657           126,138
Reimbursable expenses paid                            188,015             165,800           147,986
                                                 ------------        ------------      ------------

                                                 $    303,646        $    331,492      $    302,326
                                                 ============        ============      ============
</TABLE>

Under the terms of the Partnership Agreement, the General Partner is entitled to
an equipment acquisition fee of 3% of the purchase price paid by the Partnership
for the  equipment.  The General  Partner is also  entitled to a management  fee
equal to 7% of the monthly rental  billings  collected.  Also,  the  Partnership
reimburses the General Partner and its affiliates for certain expenses  incurred
by them in connection with the operation of the Partnership.

(6)   Long-term Debt

Long-term  debt at December  31, 1998  consists  of two  installment  notes from
Pullman Capital Corporation  totaling $76,254 with an interest rate of 8.75% and
10.50%,  and twelve  loans  totaling  $153,463  from Liberty  Bank,  two bearing
interest at 8.50%,  one bearing  interest at 8.25%, and the nine remaining loans
bearing interest at 10.50%. All loans are non-recourse and are collateralized by
equipment on the  respective  leases with a total net book value of $360,434 and
assignment of the related leases.

Maturities on long-term debt are as follows:

                          1999                   $      225,770
                          2000                            3,947
                                                 --------------

                                                 $      229,717
                                                 ==============



<PAGE>


                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
                      (A Massachusetts Limited Partnership)

                          Notes to Financial Statements

(7)   Reconciliation of Financial Statement  Net Income to  Taxable  Income  to
      Partners

A reconciliation of financial statement net income to taxable income to partners
is as follows for the years ended December 31:

<TABLE>
<CAPTION>
                                                                                 1998            1997           1996
                                                                                 ----            ----           ----

<S>                                                                          <C>              <C>            <C>         
      Net income per financial statements                                    $    387,470     $    401,383   $    160,016

      Provision for doubtful accounts expense for financial
           statement purposes (less than) in excess of provision
           for doubtful accounts expense for tax purposes                          (8,868)         (43,610)        24,968

      Depreciation expense for financial statement purposes
           in excess of depreciation expense for tax purposes                      33,645           20,547         93,800

      Net  gain on sale of equipment for financial  statement purposes in excess
           of (less than) net gain on sale
           of equipment for tax purposes                                         (124,058)          28,602       (116,371)
                                                                             -------------    ------------   ------------

      Taxable income to partners                                             $    288,189     $    406,922   $    162,413
                                                                             ============     ============   ============
</TABLE>

Losses for federal tax purposes from normal  operations are allocated 99% to the
Limited Partners and 1% to the General Partner. Profits for federal tax purposes
from normal  operations are allocated 95% to the Limited  Partners and 5% to the
General Partner. In addition,  special cost recovery allocations may be required
to reflect the differing initial capital contribution of the General Partner and
the Limited Partners.



<PAGE>

<TABLE>
<CAPTION>

                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
                      (A Massachusetts Limited Partnership)




Schedule II - Valuation and Qualifying Accounts and Reserves


                                                          Additions charged
                                      Balance at           to (recoveries                                       Balance
                                      beginning            credited from)                                       at end
Classification                          of year           costs and expenses            Charge-offs             of year


<S>                                <C>                     <C>                      <C>                     <C>              
Year ended
December 31, 1996                  $         28,448        $         24,968         $              -        $          53,416
                                   ================        ================         ================        =================

Year ended
December 31, 1997                  $         53,416        $        (43,610)        $              -        $           9,806
                                   ================        ================         ================        =================

Year ended
December 31, 1998                  $          9,806        $         (8,668)        $           (200)       $             938
                                   ================        ================         ================        =================
</TABLE>





<PAGE>


                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
                      (A Massachusetts Limited Partnership)

                    Computer Equipment Portfolio (Unaudited)
                                December 31, 1998

Lessee

American Hard Cider, Incorporated
Cerulean Technology, Incorporated
Direct Cable TV, Incorporated
Elron Software, Incorporated
Evare, Limited Liability Corporation
Faxnet, Incorporated
George Melhado and Company
Hughes Aircraft Corporation
J. Walter Thompson, U.S.A., Incorporated
JumboSports, Incorporated
Mercury Marine, Division of Brunswick Corporation
NYNEX National, Incorporated
The Internet Access Company, Incorporated
USG Corporation
VenturCom, Incorporated
VIP Calling, Incorporated

Equipment Description                                 Acquisition Price

Computers                                              $        707,108
Peripherals                                                   1,361,264
Other                                                         1,521,363
                                                       ----------------

                                                       $      3,589,735
                                                       ================

<PAGE>

<TABLE>
<CAPTION>

Exhibit 11      WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
                      (A Massachusetts Limited Partnership)

             Computation of Net Income per Limited Partnership Unit
                  Years Ended December 31, 1998, 1997 and 1996

                                                                             1998               1997                 1996
                                                                             ----               ----                 ----

<S>                                                                   <C>                <C>                  <C>             
Net income                                                            $      387,470     $        401,383     $        160,016

Gain on sale                                                                 (28,709)             (50,663)            (245,351)
Loss on sale                                                                       -                    -                7,339
Special cost recovery allocation                                             (13,157)              (6,832)                   -
                                                                      --------------     ----------------     ----------------

Available income (loss) from operations                                      345,604              343,888              (77,996)
                                                                      --------------     ----------------     ----------------

Allocations to General Partner:
   Income (loss) from operations                                              17,280               17,194                 (780)
   Gain on sale                                                                1,435                2,534               52,950
   Loss on sale                                                                    -                    -                  (73)
   Special cost recovery allocation                                           13,157                6,832                    -
                                                                      --------------     ----------------     ----------------

Income allocated to General Partner                                           31,872               26,560               52,097
                                                                      --------------     ----------------     ----------------

Income allocated to Limited Partners                                  $      355,598     $        374,823     $        107,919
                                                                      ==============     ================     ================

Number of Limited Partnership Units                                           20,185               20,185               20,185

Net income per Limited Partnership Unit                               $        17.62     $          18.57     $           5.35
                                                                      ==============     ================     ================
</TABLE>




<PAGE>


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

None.


<PAGE>


                                    Part III

Item 10.  Directors and Executive Officers of the Partnership.

(a-b) Identification of Directors and Executive Officers

The  Partnership  has no Directors or Officers.  As indicated in Item 1. of this
report, the General Partner of the Partnership is Wellesley Leasing Partnership.
Under the Partnership  Agreement,  the General Partner is solely responsible for
the operation of the Partnership's properties,  and the Limited Partners have no
right to participate in the control of such operations.  The General Partner has
three Corporate General Partners: TLP and TLPMS, both Massachusetts corporations
and Waddell & Reed, a Missouri corporation.  The names and ages of the Directors
and Executive Officers of the Corporate General Partners are as follows:

<TABLE>
<CAPTION>

TLP and TLPMS

          Name                                                       Title                                            Age

<S>                                                <C>                                                                 <C>
Nicholas C. Bogard                                 Director                                                            53
Arthur P. Beecher                                  Director, President, and Clerk                                      61
Nancy E. Malone                                    Vice President, Lease Financing                                     40
Irene V. King                                      Vice President, Satellite Operations                                51
James P. Campbell                                  Vice President, Marketing                                           59

Waddell & Reed

          Name                                                       Title                                            Age

Keith A. Tucker                                    President, Chief Executive Officer                                  54
                                                      and Director
Robert L. Hechler                                  Vice President, Chief Operations Officer,                           62
                                                      Treasurer and Director
Henry J. Herrmann                                  Vice President, Chief Investment Officer                            56
                                                      and Director
Robert J. Williams, Jr.                            Vice President and National Sales Manager                           54
Sharon K. Pappas                                   Vice President, Secretary                                           40
                                                      and General Counsel
</TABLE>


(c) Identification of certain significant persons

See Item 10. (a-b)

(d) Family relationship

No  family  relationship  exists  between  any of  the  foregoing  Directors  or
Officers.

(e) Business experience



<PAGE>


Nicholas C. Bogard is Director of TLP and TLPMS.  Mr. Bogard served as President
and Director of TLP from 1982 - 1992,  and served as Director of CS First Boston
from 1992 - 1994. He has been working as an independent  consultant  since 1994.
Mr. Bogard holds a B.A. from  Princeton  University  and an M.B.A.  from Harvard
University.

Arthur P. Beecher is  President,  Director and Clerk of TLP and TLPMS.  Prior to
joining TLP, he was an officer of CSA Financial Corp. of Boston,  Massachusetts,
most recently as Vice  President,  Finance and  Administration  since 1975.  Mr.
Beecher  holds  a  B.S.  from  Boston  University  and  is  a  Certified  Public
Accountant.

Nancy E. Malone is Vice President,  Lease  Financing of TLP and TLPMS.  Prior to
joining TLP,  she was Manager,  Lease  Financing  for 11 years at CSA  Financial
Corp. of Boston, Massachusetts.  Ms. Malone holds a B.A. from The College of the
Holy Cross.

Irene V. King is Vice President,  Satellite  Operations for TLP and TLPMS. Prior
to joining TLP in April 1994,  she was  Director of Public  Income  Funds at CSA
Financial  Corp. of Boston,  Massachusetts  and was previously Vice President of
Finance at First  Alliance Corp. of Wellesley,  Massachusetts.  Ms. King holds a
B.A. from Barat College of the Sacred Heart, Lake Forest, Illinois.

James P. Campbell is Vice President,  Marketing of TLP. Prior to joining TLP, he
was  Senior  Vice  President,   Sales,  at  Chancellor  Corporation  of  Boston,
Massachusetts. He has held Sales Management positions at Hertz Corporation Truck
Leasing and Associates  Leasing.  Mr.  Campbell holds a B.S. in Psychology  from
Boston College.

Keith A. Tucker is President,  Chief Executive Officer and Director of Waddell &
Reed;  Chairman  of the Board of  Directors  of  WRIMCO,  Waddell & Reed,  Inc.,
Waddell & Reed Services  Company,  Waddell & Reed Asset  Management  Company and
Torchmark  Distributors,  Inc.,  an  affiliate  of  Waddell & Reed,  Inc.;  Vice
Chairman of the Board of  Directors,  Chief  Executive  Officer and President of
United Investors Management Company;  Vice Chairman of the Board of Directors of
Torchmark Corporation; and President of each of the funds in the United, Waddell
& Reed and TMK/United  mutual fund groups.  He is also Director of  Southwestern
Life Corporation. Prior to joining Torchmark Corporation in 1991, Mr. Tucker was
with Trivest,  Inc. and Trivest Securities  Corporation in Miami,  Florida since
1987,  most recently as the Senior Vice President and  President,  respectively.
Prior to Trivest,  Inc., he was Director of Atlantis Group,  Inc., a diversified
company.  Mr.  Tucker  holds a B.B.A.  and a J. D. both from the  University  of
Texas.

Robert L. Hechler is Vice  President,  Chief  Operations  Officer,  Director and
Treasurer  of Waddell & Reed;  Executive  Vice  President,  Principal  Financial
Officer, Director and Treasurer of WRIMCO;  President,  Chief Executive Officer,
Principal  Financial  Officer,  Director and Treasurer of Waddell & Reed,  Inc.;
Director  and  Treasurer of Waddell & Reed  Services  Company;  Vice  President,
Treasurer and Director of Torchmark  Distributors,  Inc.; and Vice President and
Principal  Financial Officer of each of the funds in the United,  Waddell & Reed
and  TMK/United  mutual fund groups.  He has been employed by Waddell & Reed and
its  affiliates  since 1977.  Mr.  Hechler holds a B.S.  from the  University of
Illinois and an M.B.A. from the University of Chicago.


<PAGE>


Henry J. Herrmann is Vice President,  Chief  Investment  Officer and Director of
Waddell & Reed;  Director of Waddell & Reed,  Inc.;  President,  Chief Executive
Officer,  Chief  Investment  Officer  and  Director of WRIMCO and Waddell & Reed
Asset Management Company;  Senior Vice President and Chief Investment Officer of
United Investors  Management Company; and Vice President of each of the funds in
the  United,  Waddell & Reed and  TMK/United  mutual  fund  groups.  He has been
employed by Waddell & Reed and its affiliates  since 1971. Mr.  Herrmann holds a
B.S. from New York University.

Robert J. Williams,  Jr. is Vice President and National Sales Manager of Waddell
& Reed and  Executive  Vice  President  and National  Sales Manager of Waddell &
Reed,  Inc. He has been employed by Waddell & Reed, Inc. since July 1996. He was
employed with Charles  Schwab & Company from  November  1991 to July 1995.  From
August 1984 to October  1991,  he was  employed by  American  Express  Financial
Advisors or its  affiliates.  Mr.  Williams  holds a B.S. from the University of
Utah and an M.B.A. from California State-Humbolt.

Sharon K. Pappas is Vice  President,  Secretary and General Counsel of Waddell &
Reed; Senior Vice President, Secretary and General Counsel of WRIMCO and Waddell
& Reed, Inc.; Director, Senior Vice President,  Secretary and General Counsel of
Waddell & Reed Services  Company;  Director,  Secretary  and General  Counsel of
Waddell & Reed Asset Management Company;  Vice President,  Secretary and General
Counsel of Torchmark Distributors,  Inc.; formerly, Assistant General Counsel of
WRIMCO, Waddell & Reed Financial Services, Inc., Waddell & Reed, Inc., Waddell &
Reed Asset Management  Company and Waddell & Reed Services Company.  She is Vice
President,  Secretary  and  General  Counsel of each of the funds in the United,
Waddell & Reed and  TMK/United  mutual fund groups.  Prior to joining  Waddell &
Reed and its  affiliates in 1989,  Ms.  Pappas was employed with Stinson,  Mag &
Fizzell in Kansas City,  Missouri.  Ms.  Pappas  holds a B.S.  from Kansas State
University and a J.D. from the University of Kansas.

(f) Involvement in certain legal proceedings

The  Partnership is not aware of any legal  proceedings  against any Director or
Executive  Officer of the Corporate  General Partners which may be important for
the evaluation of any such person's ability and integrity.


<PAGE>


Item 11.  Management Remuneration and Transactions.

(a), (b), (c), (d), and (e): The Officers and Directors of the Corporate General
Partners receive no current or proposed direct  remuneration in such capacities,
pursuant to any standard  arrangements or otherwise,  from the  Partnership.  In
addition,  the Partnership has not paid and does not propose to pay any options,
warrants  or rights to the  Officers  and  Directors  of the  Corporate  General
Partners.  There exists no remuneration  plan or arrangement with any Officer or
Director of the  Corporate  General  Partners  resulting  from the  resignation,
retirement  or any other  termination.  See note 5 to the  financial  statements
included in Item 8. of this report for a description of the remuneration paid by
the Partnership to the General Partner and its affiliates  during 1998, 1997 and
1996.


<PAGE>


Item 12.  Security Ownership of Certain Owners and Management.

By virtue of its  organization  as a limited  partnership,  the  Partnership has
outstanding no securities  possessing  traditional  voting rights.  However,  as
provided  for in Section 13.2 of the Amended  Agreement  of Limited  Partnership
(subject to Section  13.3),  a majority  interest of the Limited  Partners  have
voting rights with respect to:

1.  Amendment of the Limited Partnership Agreement;

2.  Termination of the Partnership;

3.  Removal of the General Partner; and

4.  Approval or  disapproval  of the sale of substantially all the assets of the
    Partnership.

No person or group is known by the General Partner to own beneficially more than
5% of  the  Partnership's  20,185  outstanding  Limited Partnership  Units as of
December 31, 1998.

By virtue of its  organization  as a limited  partnership,  the  Partnership has
no Officers  or Directors.  See also note 1 to the financial statements included
in Item 8. and Item 10. of this report.


<PAGE>


Item 13.  Certain Relationships and Related Transactions.

(a), (b), and (c): The General Partner of the  Partnership is Wellesley  Leasing
Partnership,  a  Massachusetts  general  partnership  which  in turn  has  three
Corporate General Partners:  TLP and TLPMS, both Massachusetts  corporations and
Waddell  &  Reed,  a  Missouri  corporation.  The  Corporate  General  Partners'
Directors and Executive  Officers are identified in Item 10. of this report. The
Partnership was not involved in any transaction involving any of these Directors
or Officers or any member of the immediate family of these individuals,  nor did
any of these persons provide services to the Partnership for which they received
direct  or  indirect   remuneration.   Similarly,   there   exists  no  business
relationship between the Partnership and any of the Directors or Officers of the
Corporate  General  Partners,  nor were any of the  individuals  indebted to the
Partnership.

The General Partner is responsible for acquiring, financing, leasing and selling
equipment for the  Partnership.  TLPMS  proposes for the  Partnership  equipment
acquisitions, leasing transactions,  financing and refinancing transactions, and
sale  transactions  for  approval by the  Executive  Committee  and oversees the
operation,  management and use of each Partnership's  equipment. TLP oversaw the
marketing  of  the  Units  and  oversees  all  administrative  functions  of the
Partnership and, together with Waddell & Reed, provides substantially all of the
General  Partner's  capital  resources.  In  consideration  of such services and
capital  commitments,  TLP receives  30%,  Waddell & Reed receives 10% and TLPMS
receives 60% of all  compensation  received by the General Partner in connection
with  the  formation  and  operation  of the  Partnership  (including  equipment
management fees, acquisition fees, subordinated remarketing fees and the General
Partner's share of Distributable  Cash From Sales or  Refinancings),  except for
Acquisition  Fees, as to which TLP receives 15%, Waddell & Reed receives 10% and
TLPMS  receives 75%. The General  Partner also was reimbursed in an amount equal
to 3% of the gross proceeds of the  Partnership's  offerings for  organizational
and offering expenses;  all such expenses in excess of that amount were borne by
TLP. See note 5 to the financial  statements  included in Item 8. of this report
for a description of payments made by the Partnership to the General Partner.

For  information  regarding  the  settlements  between the  Partnership  and the
Liquidating Estate of CIS Corporation,  et al, arising out of the emergence from
bankruptcy of CIS and CMI, see Item 3. Legal Proceedings.




<PAGE>

<TABLE>
<CAPTION>

                                     Part IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K: None.

   (a) 1. Financial Statements                                                                                    Page No.

          <S>                                                                                                       <C>
          Independent Auditors' Report                                                                              15
          Balance Sheets at December 31, 1998 and 1997                                                              16
          Statements of Operations
              Years Ended December 31, 1998, 1997 and 1996                                                          17
          Statements of Partners' Equity (Deficit)
             Years Ended December 31, 1998, 1997 and 1996                                                           18
          Statements of Cash Flows
             Years Ended December 31, 1998, 1997 and 1996                                                           19
          Notes to Financial Statements                                                                             20-24


       2. Financial Statement Schedules

          Schedule II - Valuation and Qualifying Accounts and Reserves                                              25

          All other financial  statement  schedules are omitted because they are
          not  applicable,  the  data  is  not  significant,   or  the  required
          information is shown elsewhere in this report.

          Computer Equipment Portfolio (Unaudited)                                                                  26


       3. Exhibit Index

          11  Statement regarding computation of net income per Limited Partnership Unit                            27

   (b)    Report on Form 8-K
          N/A

</TABLE>



<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.

WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
(Registrant)

By:    Wellesley Leasing Partnership,
       its General Partner

By:    TLP Leasing Programs, Inc.,
       one of its Corporate General Partners


Date:   March 27, 1999

By:     Arthur P. Beecher,
        President