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, 1996          Commission File No. 2-95011




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


Massachusetts                                                         04-2846629
(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 to Section 12(g) of the Act

                     Units of Limited 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 26, 1996:  Not  applicable,  since  securities  are
non-voting.

                   Documents incorporated by reference: None.

                            Exhibit Index on Page: 38

                                  Page 1 of 39


<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-C (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, 1996,  the
Partnership  consisted of a General  Partner and 1,665 Limited  Partners  owning
25,020 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 371 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, 2011, unless sooner dissolved or
terminated  as  provided  in  Section  11 of the  Amended  Agreement  of Limited
Partnership.

The  closing  date of the  Partnership  was  December  6,  1985,  and  aggregate
equipment  purchased  through  December 31, 1996, is $24,959,019.  At the end of
1996,  there are 8 leases in place  with 7  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;  see note 8 Item 8. Financial  Statements and
Supplementary Data. of this report.

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>


At December 31, 1996, the Partnership  owned various computer  equipment with an
original  cost basis of  $443,464.  Listed  below is a breakdown  of the various
types of computer equipment owned:

            Computer peripherals                   $       84,258
            Processors & upgrades                         235,036
            Telecommunications                            110,866
            Other                                          13,304
                                                   --------------

                                                   $      443,464
                                                   ==============

As of  December  31,  1996,  the average lease term is 36 months and the average
monthly  lease rate as a  percentage  of original equipment cost is 2.94%.

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.

<PAGE>

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.  Three  lessees,  Baylor
         Health Network, Incorporated, J. Walter Thompson & Company and Sports &
         Recreation,  Incorporated,  lease equipment in which the related rental
         payments exceed 10% of total rental income. The related rental payments
         comprise 16.78%, 34.67% and 16.32%,  respectively,  of the total rental
         income for the year ended  December 31, 1996.  Baylor  Health  Network,
         Incorporated,  J. Walter  Thompson & Company  and Sports &  Recreation,
         Incorporated  lease  equipment  comprising  19.05%,  37.02% and 16.30%,
         respectively, of the total equipment portfolio at December 31, 1996.

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.

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  Corporation  and  CMI   Corporation,   see  Item  3.  Legal
Proceedings.



<PAGE>


Item 2.  Properties.

At  December  31,  1996,  the  Partnership  owned  computer   equipment  with  a
depreciated cost basis of $109,050 subject to 8 existing leases with 7 different
lessees. 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. As a result of the set-off,  the Partnership
had a net unsecured  pre-petition  claim of $359,830  ($155,624  against CIS and
$204,206 against CMI), as of December 31, 1993 which had been fully reserved.

On November 29, 1994, the Court  confirmed the Trustee's  proposed Joint Plan of
Reorganization  ("the Plan") dated October 4, 1994, and the Debtors emerged from
Chapter 11 bankruptcy  protection  on December 21, 1994. In accordance  with the
Plan,  59% of the CIS claims would be paid in total,  of which 44% would be cash
and 15% would be common stock of the reorganized Continental Information Systems
Corporation ("CISC"),  based on a per share price of $4.29. The CMI claims would
be paid in full,  of which 75% would be cash and 25% would be CISC common stock,
as  described  above.  Based  on the  Plan,  the  Partnership`s  fully  reserved
unsecured pre-petition claim balance was reduced to $296,024.



<PAGE>


On December 27, 1994, the Partnership  received the first  distribution from the
Trustee (now trustee of the Liquidating  Estate of CIS Corporation,  et al) with
respect to the net unsecured  pre-petition claim described above,  consisting of
cash and common stock proceeds.  On July 20, 1995, the Partnership  received the
second and final  distribution,  consisting  of cash and common stock  proceeds.
During the  second  quarter of 1995,  the stock of CISC began  trading,  thereby
providing an objective valuation method for establishing the cost basis of $2.50
per share, which approximated fair value at June 30, 1995. A charge off was made
in 1995 in relation to the difference between the Trustee's original  prescribed
value of the CISC stock at $4.29 per share and the cost basis established by the
Partnership. Following the Trustee's second distribution and the charge off made
during the year, the  Partnership's  net unsecured  pre-petition  claim has been
settled  as of July 20,  1995 and  there  are no  other  outstanding  receivable
balances.


<PAGE>


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

None.


<PAGE>


                                     Part II

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, 1996,  25,020 Units had been
sold to the public at a price of $500 per Unit  (except for 371 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 12/31/96                              12/31/96
                                       --------------                           ---------------

<S>                                         <C>                                     <C>   
Units of
Limited
Partnership
Interests                                   1,665                                   25,020

</TABLE>

c)  Dividend History and Restrictions

During the fiscal period ended December 31, 1985, the Partnership  completed its
offering  of 25,020  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  final
closing  date),   the   Partnership   will  also   distribute  to  the  Partners
"Distributable  Cash  From  Sales  or  Refinancings",  if any.  The  Partnership
distributed  $250,200 to the Limited  Partners  in 1996,  $469,125 in 1995,  and
$500,400 in 1994,  respectively,  and distributed $13,168 to the General Partner
in 1996, $24,690 in 1995, and $26,336 in 1994, respectively. The cumulative cash
distributions  to the Limited Partners through December 31, 1996 are $12,109,430
as compared with the contributed Limited Partner net capital of $11,139,685.

"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 1996  made  February  28,  1997,
cumulative   distributions  to  date  are  $485.24  per  Unit.  This  cumulative
distribution  per Unit amount  represents  27.60% of "Payout".  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 8. and 7., respectively, of this report.

<TABLE>
<CAPTION>

                                                                      For the Years Ended December 31,
                                                 1996              1995              1994               1993                  1992
                                          ------------------------------------------------------------------------------------------

<S>                                       <C>               <C>               <C>                <C>               <C>              
Operating Data

   Rental Income                          $        184,100  $       469,123   $        584,404   $     1,102,743   $       1,663,907
   Interest Income                                   4,825            8,743              7,559             2,971              20,110
   Net Income                                      123,166          161,792            262,849           456,514             816,043
   Net Income Per Limited
     Partnership Unit                                 1.07             2.77               4.24             16.82               25.31

Balance Sheet Data

   Cash and Cash Equivalents              $         18,943  $        58,929   $        325,125   $       269,150   $          95,879
   Computer Equipment at Cost                      443,464        1,495,761          3,574,018         4,392,631           5,348,420
   Total Assets                                    170,381          407,481            815,628         1,015,548           1,250,402
   Long-Term Debt                                        -           38,051             91,422             3,363             205,221
   Distributions to Partners                       263,368          493,815            526,736           526,736             526,736
   Distributions Per Limited
     Partnership Unit                                10.00            18.75              20.00             20.00               20.00
   Partners' Equity                                 42,831          182,156            522,050           785,937             856,159

</TABLE>


<PAGE>


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

General

On December 6, 1985,  the  Partnership  completed its offering and received from
the escrow account $12,495,160  representing 25,020 Units of Limited Partnership
Interests.  Of this amount,  the Partnership  received proceeds from the sale of
371 Units at a price net of sales  commissions  for  employees of the  Corporate
General   Partners  of  the  General   Partner  and   employees  or   securities
representatives  of its affiliates,  who are allowed to purchase Units for a net
price of $460 per Unit.

Results of Operations

The following discussion relates to Partnership's  operations for the year ended
December 31, 1996, in comparison to the years ended December 31, 1995 and 1994.

The Partnership realized net income of $123,166,  $161,792, and $262,849 for the
years ended  December  31,  1996,  1995 and 1994,  respectively.  Rental  income
decreased  $285,023 or 61% and  $115,281 or 20% in 1996 and 1995,  respectively.
The  decrease  each year is  primarily  due to lower  rental  rates  obtained on
equipment lease  extensions and  remarketings  resulting after the initial lease
term  expires and due to a net  decrease in the  overall  size of the  equipment
portfolio.  Interest income decreased $3,918 in 1996 compared to the prior years
as a result of lower average  short-term  investment  balances.  Other income in
1995 is the result of the  reversal  of certain  liabilities  recorded  in prior
periods.  The Partnership  recognized a net gain on sale of equipment in 1996 of
$152,656  versus a net loss of  $47,239  in 1995 due to  current  year  sales of
equipment with low net book values.  The recovery of net unsecured  pre-petition
claim of $52,470 and  $219,033  for the years ended  December 31, 1995 and 1994,
respectively,  was the result of the receipt of the Trustee's  distributions  on
the fully reserved net unsecured pre-petition receivable (for further discussion
refer to note 8 to the financial statements).

Total cost and expenses  decreased  48% and 32% in 1996 and 1995,  respectively,
compared  to prior  periods.  The  decrease in costs and  expenses  each year is
primarily a result of lower depreciation expense. Depreciation expense decreased
each year due to a large  portion  of the  equipment  portfolio  becoming  fully
depreciated and an overall  reduction in the equipment  portfolio.  During 1996,
the  Partnership  established  a provision  for  doubtful  accounts of $7,563 to
reserve for uncollectible  rents  receivable.  Interest expense decreased during
1996 due to the complete  payoff on long-term debt that was originally  obtained
in the fourth  quarter of 1994.  Management  fees decreased each year due to the
decline in rental income. General and administrative  expenses increased 10% and
19% in 1996 and 1995, respectively. A major factor contributing to this increase
is that  salaries  and  expenses of the  partnership  accounting  and  reporting
personnel  of the  General  Partner,  which  are  reimbursable  by  the  various
partnerships  under management are being allocated over a diminishing  number of
partnerships. The net loss on sale of marketable securities in 1996 reflects the
fourth quarter sale of stock in CISC that had been received from the Trustee.



<PAGE>


The  Partnership  recorded  net income per  Limited  Partnership  Unit of $1.07,
$2.77,  and  $4.24  for the  years  ended  December  31,  1996,  1995 and  1994,
respectively.  The allocation  for the years ended  December 31, 1996,  1995 and
1994  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  the  Limited  Partners  in  instances  when the
Partnership's operations were profitable for the period.

Liquidity and Capital Resources

For the year ended December 31, 1996,  rental  revenue  generated from operating
leases and gain on the sales of equipment  were the primary  source 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 if it is less marketable,  sold. This decision is made upon analyzing
which options would generate the most favorable results.

Rental income will continue to decrease due to two factors.  The first factor is
the rate obtained when the original  leases expire and are remarketed at a lower
rate.  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 $107,227 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 depreciated cost basis of $53,513,  generating $206,078 in proceeds.  The
Partnership  has no  material  capital  expenditure  commitments  and  will  not
purchase  equipment in the future as the  Partnership has reached the end of its
reinvestment period.

Cash  distributions paid in the first quarter of 1997 are currently at an annual
level of 1% per Limited Partnership Unit, or $1.25 per Limited Partnership Unit.
During  1996,  the  Partnership  distributed  a  total  of  $10.00  per  Limited
Partnership  Unit, of which $1.07 per Unit represents  income and $8.93 per Unit
represents a return of capital.  For the quarter  ended  December 31, 1996,  the
Partnership  declared  a cash  distribution  of  $32,921,  of which  $1,646  was
allocated  to the  General  Partner and  $31,275  was  allocated  to the Limited
Partners.  The  distribution  will be made on February 28, 1997. 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 the future periods.



<PAGE>


Item 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA




                          Independent Auditors' Report




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

We have  audited the  accompanying  balance  sheets of  Wellesley  Lease  Income
Limited Partnership III-C (a Massachusetts  Limited  Partnership) as of December
31, 1996 and 1995, 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, 1996. 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, 1996.  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-C as of  December  31,  1996 and 1995,  and the  results of its
operations  and its cash  flows for each of the years in the  three-year  period
ended  December 31, 1996,  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
March 21, 1997


<PAGE>


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

                                 Balance Sheets
                           December 31, 1996 and 1995

<TABLE>
<CAPTION>
                                     Assets
                                                                                       1996                     1995
                                                                                 ----------------        ----------------

<S>                                                                              <C>                     <C>             
Investment property, at cost (notes 3 and 4):
   Computer equipment                                                            $        443,464        $      1,495,761
     Less accumulated depreciation                                                        334,414               1,217,633
                                                                                 ----------------        ----------------
       Investment property, net                                                           109,050                 278,128

Cash and cash equivalents                                                                  18,943                  58,929
Marketable securities (notes 2 and 7)                                                      27,976                  44,599
Rents receivable, net (note 2)                                                              5,611                  25,775
Sales receivable                                                                            8,801                      50
                                                                                 ----------------        ----------------

     Total assets                                                                $        170,381        $        407,481
                                                                                 ================        ================

                        Liabilities and Partners' Equity
Liabilities:
   Current portion of long-term debt                                             $              -        $         38,051
   Accounts payable and accrued expenses - affiliates (note 5)                              4,826                   8,210
   Accounts payable and accrued expenses                                                  118,436                 176,888
   Unearned rental revenue                                                                  4,288                   2,176
                                                                                 ----------------        ----------------

     Total liabilities                                                                    127,550                 225,325
                                                                                 ----------------        ----------------

Partners' equity:
   General Partner:
     Capital contribution                                                                   1,000                   1,000
     Cumulative net income                                                                636,408                 540,111
     Cumulative cash distributions                                                       (637,338)               (624,170)
     Unrealized losses on marketable securities (note 7)                                      (70)                    (79)
                                                                                 ----------------        ----------------
                                                                                                -                 (83,138)
                                                                                 ----------------        ----------------
   Limited Partners (25,020 units):
     Capital contribution, net of offering costs                                       11,139,685              11,139,685
     Cumulative net income                                                              1,019,500                 992,631
     Cumulative cash distributions                                                    (12,109,430)            (11,859,230)
     Unrealized losses on marketable securities (note 7)                                   (6,924)                 (7,792)
                                                                                 ----------------        ----------------
                                                                                           42,831                 265,294
                                                                                 ----------------        ----------------
     Total partners' equity                                                                42,831                 182,156
                                                                                 ----------------        ----------------

     Total liabilities and partners' equity                                      $        170,381        $        407,481
                                                                                 ================        ================
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>


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

                            Statements of Operations
              For the Years Ended December 31, 1996, 1995 and 1994

<TABLE>
<CAPTION>

                                                                 1996                     1995                    1994
                                                            ---------------          --------------         ---------------

<S>                                                         <C>                      <C>                    <C>            
Revenue:
   Rental income                                            $       184,100          $      469,123         $       584,404
   Other income                                                           -                 100,752                       -
   Interest income                                                    4,825                   8,743                   7,559
   Net gain (loss) on sale of equipment                             152,565                 (47,329)                 74,975
   Recovery of net unsecured pre-petition
     claim (note 8)                                                       -                  52,470                 219,033
                                                            ---------------          --------------         ---------------

       Total revenue                                                341,490                 583,759                 885,971
                                                            ---------------          --------------         ---------------

Costs and expenses:
   Depreciation                                                     115,565                 307,194                 516,765
   Provision for doubtful accounts                                    7,563                   5,720                   6,830
   Interest                                                           1,165                   5,496                   1,077
   Related party expenses (note 5):
     Management fees                                                 11,539                  32,581                  39,056
     General and administrative                                      78,112                  70,976                  59,394
   Net loss on sale of marketable securities                          4,380                       -                       -
                                                            ---------------          --------------         ---------------

       Total costs and expenses                                     218,324                 421,967                 623,122
                                                            ---------------          --------------         ---------------

Net income                                                  $       123,166          $      161,792         $       262,849
                                                            ===============          ==============         ===============

Net income per Limited
   Partnership Unit                                         $          1.07          $         2.77         $          4.24
                                                            ===============          ==============         ===============
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>


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

                    Statements of Partners' Equity (Deficit)
              For the Years Ended December 31, 1996, 1995 and 1994


<TABLE>
<CAPTION>

                                                             General                Limited
                                                             Partner                Partners                 Total
                                                       -----------------         --------------        ---------------

<S>                                                    <C>                       <C>                   <C>            
Equity (deficit) at
    December 31, 1993                                  $        (281,375)        $    1,067,312        $       785,937

Net income                                                       156,797                106,052                262,849

Cash distributions                                               (26,336)              (500,400)              (526,736)
                                                       -----------------         --------------        ---------------

Equity (deficit) at
    December 31, 1994                                           (150,914)               672,964                522,050

Net income                                                        92,545                 69,247                161,792

Cash distributions                                               (24,690)              (469,125)              (493,815)

Unrealized losses on
    marketable securities (note 7)                                   (79)                (7,792)                (7,871)
                                                       -----------------         --------------        ---------------

Equity (deficit) at
    December 31, 1995                                            (83,138)               265,294                182,156

Net income                                                        96,297                 26,869                123,166

Cash distributions                                               (13,168)              (250,200)              (263,368)

Reduction of unrealized losses on
    marketable securities (note 7)                                     9                    868                    877
                                                       -----------------         --------------        ---------------

Equity at
    December 31, 1996                                  $               -         $       42,831        $        42,831
                                                       =================         ==============        ===============
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>


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

                            Statements of Cash Flows
              For the Years Ended December 31, 1996, 1995 and 1994

<TABLE>
<CAPTION>
                                                                            1996                1995                1994
                                                                            ----                ----                ----

<S>                                                                  <C>                 <C>                  <C>             
Cash flows from operating activities:
   Net income                                                        $       123,166     $        161,792     $        262,849
                                                                     ---------------     ----------------     ----------------

   Adjustments  to  reconcile  net  income  to net cash
     provided  by  operating   activities:
       Depreciation                                                          115,565              307,194              516,765
       Provision for doubtful accounts                                         7,563                5,720                6,830
       Net (gain) loss on sale of equipment                                 (152,565)              47,329              (74,975)
       Net loss on sale of marketable securities                               4,380                    -                    -
       Net decrease (increase) in current assets                               3,850              (73,173)              (7,375)
       Net decrease in current liabilities                                   (59,724)             (14,882)             (24,092)
                                                                     ---------------     ----------------     ----------------

         Total adjustments                                                   (80,931)             272,188              417,153
                                                                     ---------------     ----------------     ----------------

         Net cash provided by operating activities                            42,235              433,980              680,002
                                                                     ---------------     ----------------     ----------------

Cash flows from investing activities:
   Purchase of investment property                                                 -             (167,898)            (368,853)
   Proceeds from sales of investment property                                206,078               14,908              183,503
   Proceeds from sales of marketable securities                               13,120                    -                    -
                                                                     ---------------     ----------------     ----------------

         Net cash provided by (used in)
           investing activities                                              219,198             (152,990)            (185,350)
                                                                     ---------------     ----------------     ----------------

Cash flows from financing activities:
   Proceeds from borrowings under long-term debt                                   -                    -               91,422
   Principal payments on long-term debt                                      (38,051)             (53,371)              (3,363)
   Cash distributions to partners                                           (263,368)            (493,815)            (526,736)
                                                                     ---------------     ----------------     ----------------

         Net cash used in financing activities                              (301,419)            (547,186)            (438,677)
                                                                     ---------------     ----------------     ----------------

Net (decrease) increase in cash and cash equivalents                         (39,986)            (266,196)              55,975

Cash and cash equivalents at beginning of year                                58,929              325,125              269,150
                                                                     ---------------     ----------------     ----------------

Cash and cash equivalents at end of year                             $        18,943     $         58,929     $        325,125
                                                                     ===============     ================     ================

Supplemental cash flow information:
   Interest paid during the year                                     $         1,165     $          6,572     $              -
                                                                     ===============     ================     ================
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>


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

                          Notes to Financial Statements
                        December 31, 1996, 1995 and 1994

(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 December 6, 1985, with 25,020 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" 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). 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 1996 distribution made February 28,
1997,  cumulative  distributions  to date are $485.24 per Unit.  This cumulative
distribution per Unit amount represents 27.60% of Payout. 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-C
                      (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. No
salvage value is assumed. 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.  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 an allowance for estimated losses on receivable
balances.  The  allowance  for  doubtful  accounts  is 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  allowances.  At  December  31,  1996 and 1995,  the
allowance  for doubtful  accounts  included in rents  receivable  was $8,377 and
$814, respectively.



<PAGE>


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

                          Notes to Financial Statements

Marketable Securities

The marketable securities are stated at fair value at the balance sheet date and
consist of 13,988  shares of common  stock in  Continental  Information  Systems
Corporation  ("CISC")  received by the  Partnership  in the  distributions  made
December 27, 1994 and July 20, 1995 by the Trustee of the Liquidating  Estate of
CIS  Corporation,  et al, ("the  Trustee"),  with respect to the outstanding net
unsecured pre-petition claim. During the second quarter of 1995, the stock began
trading,  thereby providing an objective  valuation measure for establishing the
cost basis.  Unrealized  gains and losses are  recorded  directly  in  partners'
equity  except  those losses that are deemed to be other than  temporary,  which
would be reflected in income or loss (see note 7).

Income Taxes

No provision  for federal  income taxes has been made as the  liability for such
taxes is that of the  Partners  rather  than  that of the  Partnership.  Taxable
income (loss) as reported on Schedule K-1, Form 1065 "Partner's Share of Income,
Credits,  Deductions,  etc.", was $119,588, $90,684, and $(46,335) in 1996, 1995
and 1994, respectively (see note 6).

(3)   Investment Property

At  December  31,  1996,  the  Partnership  owned  computer   equipment  with  a
depreciated cost basis of $109,050, subject to existing leases. 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:

                1997                               $       92,176
                1998                                       10,827
                1999                                        4,224
                                                   --------------

                                                   $      107,227
                                                   ==============


<PAGE>


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

                          Notes to Financial Statements

The following schedule provides an  analysis of the cost of capital equipment by
major classes as of December 31, 1996:

                  Computer peripherals                      $       84,258
                  Processors & upgrades                            235,036
                  Telecommunications                               110,866
                  Other                                             13,304
                                                            --------------

                                                            $      443,464
                                                            ==============


Three lessees, Baylor Health Network, Incorporated, J. Walter Thompson & Company
and Sports &  Recreation,  Incorporated,  lease  equipment  in which the related
rental payments  exceed 10% of total rental income.  The related rental payments
comprise 16.78%, 34.67% and 16.32%, respectively, of the total rental income for
the year ended December 31, 1996. Baylor Health Network, Incorporated, J. Walter
Thompson  &  Company  and  Sports &  Recreation,  Incorporated  lease  equipment
comprising  19.05%,  37.02% and  16.30%,  respectively,  of the total  equipment
portfolio at December 31, 1996.

(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, 1996, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
                                                      1996               1995               1994
                                                      ----               ----               ----

<S>                                               <C>                <C>               <C>         
Equipment acquisition fees                        $          -       $      4,890      $      9,518
Management fees                                         11,539             32,581            39,056
Reimbursable expenses paid                              78,040             63,128            66,303
                                                  ------------       ------------      ------------

                                                  $     89,579       $    100,599      $    114,877
                                                  ============       ============      ============
</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.



<PAGE>


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

                          Notes to Financial Statements

(6) Reconciliation of Financial Statement Net Income to Taxable Income (Loss) to
    Partners

A reconciliation  of financial  statement net income to taxable income (loss) to
partners is as follows for the years ended December 31, 1996, 1995 and 1994:

<TABLE>
<CAPTION>
                                                                                   1996                1995              1994
                                                                              --------------      -------------      -------------

      <S>                                                                     <C>                 <C>                <C>          
      Net income per financial statements                                     $      123,166      $     161,792      $     262,849

      Depreciation expense for financial statement purposes
           (less than) in excess of depreciation expense for
           tax purposes                                                                 (434)            24,750                  -

      Provision for doubtful accounts expense for financial
           statement purposes in excess of (less than) provision
           for doubtful accounts expense for tax purposes                              7,563            (84,318)          (282,698)

      Net gain on sale of equipment for financial statement
           purposes in excess of net gain on sale of equipment for
           tax purposes                                                              (10,707)           (11,540)           (26,486)
                                                                              --------------      -------------      -------------

      Taxable income (loss) to partners                                       $      119,588      $      90,684      $     (46,335)
                                                                              ==============      =============      =============
</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.

(7)   Fair Values of Financial Instruments

Pursuant to Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity  Securities," which requires  investments
in debt and equity  securities  other than those  accounted for under the equity
method  to be  carried  at fair  value or  amortized  cost  for debt  securities
expected to be held to maturity,  the Partnership has classified its investments
in equity  securities as available  for sale.  Accordingly,  the net  unrealized
gains and losses computed in marking these  securities to market are reported as
a component of partners' equity. At December 31, 1996 the difference between the
fair  value and the cost  basis of these  securities  is an  unrealized  loss of
$6,994.



<PAGE>


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

                          Notes to Financial Statements

The fair value is based on currently  quoted market  prices.  The cost basis and
estimated fair value of the Partnership's  marketable securities at December 31,
1996 are as follows:

<TABLE>
<CAPTION>
                                                                                1996
                                                                       Cost           Fair
                                                                       Basis          Value
                                                                       --------       --------

<S>                                                                    <C>            <C>     
Investment in Continental Information
     Systems Corporation Stock                                         $ 34,970       $ 27,976
                                                                       ========       ========
</TABLE>

As was discussed in note 2,  Marketable  Securities,  the  Partnership  received
stock in CISC as part of the December  27, 1994 and July 20, 1995  distributions
from the Trustee,  with respect to the  outstanding  net unsecured  pre-petition
claim. The receivables  comprising the net unsecured pre-petition claim had been
fully reserved during prior years;  thus, during the second quarter of 1995 when
the  stock  began  actively  trading,  the  carrying  amount  for the  stock was
established  to be $2.50 per share  which  approximated  fair  value at June 30,
1995.

(8) Bankruptcy of Continental  Information Systems Corporation (former parent of
    General Partner)

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.


<PAGE>


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

                          Notes to Financial Statements

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. As a result of the set-off,  the Partnership
had a net unsecured  pre-petition  claim of $359,830  ($155,624  against CIS and
$204,206 against CMI), as of December 31, 1993 which had been fully reserved.

On November 29, 1994, the Court  confirmed the Trustee's  proposed Joint Plan of
Reorganization  ("the Plan") dated October 4, 1994, and the Debtors emerged from
Chapter 11 bankruptcy  protection  on December 21, 1994. In accordance  with the
Plan,  59% of the CIS claims would be paid in total,  of which 44% would be cash
and 15% would be common stock of the reorganized Continental Information Systems
Corporation ("CISC"),  based on a per share price of $4.29. The CMI claims would
be paid in full,  of which 75% would be cash and 25% would be CISC common stock,
as  described  above.  Based  on the  Plan,  the  Partnership`s  fully  reserved
unsecured pre-petition claim balance was reduced to $296,024.

On December 27, 1994, the Partnership  received the first  distribution from the
Trustee (now trustee of the Liquidating  Estate of CIS Corporation,  et al) with
respect to the net unsecured  pre-petition claim described above,  consisting of
cash and common stock proceeds.  On July 20, 1995, the Partnership  received the
second and final  distribution,  consisting  of cash and common stock  proceeds.
During the  second  quarter of 1995,  the stock of CISC began  trading,  thereby
providing an objective valuation method for establishing the cost basis of $2.50
per share, which approximated fair value at June 30, 1995. A charge off was made
in 1995 in relation to the difference between the Trustee's original  prescribed
value of the CISC stock at $4.29 per share and the cost basis established by the
Partnership. Following the Trustee's second distribution and the charge off made
during the year, the  Partnership's  net unsecured  pre-petition  claim has been
settled  as of July 20,  1995 and  there  are no  other  outstanding  receivable
balances.



<PAGE>


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




Schedule II - Valuation and Qualifying Accounts and Reserves

<TABLE>
<CAPTION>

                                   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, 1994                  $        367,830        $       (212,203)        $         70,494        $          85,133
                                   ================        ================         ================        =================

Year ended
December 31, 1995                  $         85,133        $        (46,750)        $         37,569        $             814
                                   ================        ================         ================        =================

Year ended
December 31, 1996                  $            814        $          7,563         $              -        $           8,377
                                   ================        ================         ================        =================
</TABLE>





<PAGE>


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

                    Computer Equipment Portfolio (Unaudited)
                                December 31, 1996

Lessee

Baylor Health Network, Incorporated
Centura Bank, Incorporated
Hughes Aircraft Company, Incorporated
J. Walter Thompson & Company
New York Life Insurance Company, Incorporated
Sports & Recreation, Incorporated
USG Corporation

Equipment Description                         Acquisition Price

Computer peripherals                             $       84,258
Processors & upgrades                                   235,036
Telecommunications                                      110,866
Other                                                    13,304
                                                 --------------

                                                 $      443,464
                                                 ==============

<PAGE>


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

             Computation of Net Income per Limited Partnership Unit
              For the Years Ended December 31, 1996, 1995 and 1994

<TABLE>
<CAPTION>
                                                                             1996               1995                 1994
                                                                     ---------------     ----------------     ----------------

<S>                                                                   <C>                <C>                  <C>             
Net income                                                            $      123,166     $        161,792     $        262,849

Gain on sale                                                                (153,682)              (3,617)             (77,385)
Loss on sale                                                                   5,497               50,946                2,410
Special cost recovery allocation                                              (7,871)             (83,138)            (150,914)
                                                                      --------------     ----------------     ----------------

Available income from operations                                             (32,890)             125,983               36,960
                                                                      --------------     ----------------     ----------------

Allocations to General Partner:
   (Loss) income from operations                                                (250)               6,299                1,848
   Gain on sale                                                               96,681                3,617                4,059
   Loss on sale                                                                  (55)                (509)                 (24)
   Special cost recovery allocation                                              (79)              83,138              150,914
                                                                      --------------     ----------------     ----------------

Income allocated to General Partner                                           96,297               92,545              156,797
                                                                      --------------     ----------------     ----------------

Income allocated to Limited Partners                                  $       26,869     $         69,247     $        106,052
                                                                      ==============     ================     ================

Number of Limited Partnership Units                                           25,020               25,020               25,020

Net income per Limited Partnership Unit                               $         1.07     $           2.77     $           4.24
                                                                      ==============     ================     ================
</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                                                            51
Arthur P. Beecher                                  Director and President                                              59
Nancy E. Malone                                    Vice President, Lease Financing                                     38
Irene V. King                                      Vice President, Satellite Operations                                50
Joseph P. Colonna                                  Vice President, Marketing                                           37
James S. Felman                                    Clerk                                                               32

Waddell & Reed
          Name                                                       Title                                             Age

Keith A. Tucker                                    President, Chief Executive Officer                                  52
                                                      and Director
Robert L. Hechler                                  Vice President, Chief Operations Officer,                           60
                                                      Treasurer and Director
Henry J. Herrmann                                  Vice President, Chief Investment Officer                            55
                                                      and Director
Robert J. Williams, Jr.                            Vice President and National Sales Manager                           53
Sharon K. Pappas                                   Vice President, Secretary                                           38
                                                      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  and Director 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 S.  Felman is Clerk of TLP and  TLPMS.  Prior to  joining  TLP,  he was in
private  practice and was  previously  employed as a Tax  Consultant  with Price
Waterhouse in Miami,  Florida and New York,  New York.  Mr. Felman  received his
J.D. from S.U.N.Y. at Buffalo Law School, holds a B.S. in Economics and Business
Management from Cornell  University,  and is a licensed attorney in New York and
Florida.

Joseph P.  Colonna  is Vice  President,  Marketing  of TLP and  TLPMS.  Prior to
joining  TLP,  he was  Associate  Counsel  at CSA  Financial  Corp.  of  Boston,
Massachusetts in charge of Domestic and International Leasing  Transactions.  He
received his B.A.  from Rutgers  University,  J.D. from Suffolk  University  Law
School and M.S.L. from Vermont Law School.

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 1996, 1995 and
1994.


<PAGE>


Item 12.  Security Ownership of Certain Owners and Management.

By virtue of its organization as a limited  partnership,  the Partnership has no
outstanding  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  25,020  outstanding  Limited  Partnership  Units as of
December 31, 1996.

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

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

   (a) 1. Financial Statements                                                                                    Page No.

          Independent Auditors' Report                                                                            16
          Balance Sheets at December 31, 1996 and 1995                                                            17
          Statements of Operations for the Years Ended
             December 31, 1996, 1995 and 1994                                                                     18
          Statements of Partners' Equity (Deficit) for
             the Years Ended December 31, 1996, 1995 and 1994                                                     19
          Statements of Cash Flows for the Years
             Ended December 31, 1996, 1995 and 1994                                                               20
          Notes to Financial Statements                                                                           21 - 27


       2. Financial Statement Schedules

          Schedule II - Valuation and Qualifying Accounts and Reserves                                            28

          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)                                                                29


       3. Exhibit Index

          11  Statement   regarding  computation  of   net  income  per  Limited
          Partnership Unit                                                                                        30

   (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-C
(Registrant)

By:    Wellesley Leasing Partnership,
       its General Partner

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


Date:  March 27, 1997




By:    Arthur P. Beecher,
       President