UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                    FORM 10-Q
                   Quarterly Report Under Section 13 or 15(d)
              of the United States Securities Exchange Act of 1934

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


Quarter Ended September 30, 1997                     Commission File No. 2-95011


                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
             (Exact name of registrant as specified in its charter)


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


    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

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


                                 Not Applicable
              (Former name, former address and former fiscal year,
                          if changed since last report)

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 ___

                             There are no Exhibits.

                                  Page 1 of 13

<PAGE>

<TABLE>
<CAPTION>

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

                                      INDEX                                                                        Page No.

<S>            <C>                                                                                                 <C>

Part I.       FINANCIAL INFORMATION


              Financial Statements

                    Balance Sheets as of September 30, 1997 and December 31, 1996                                  3

                    Statements of Operations
                          Quarters Ended September 30, 1997 and 1996 and
                          Nine Months Ended September 30, 1997 and 1996                                            4

                    Statements of Cash Flows
                          Nine Months Ended September 30, 1997 and 1996                                            5

                    Notes to Financial Statements                                                                  6 - 7

              Management's Discussion and Analysis of Financial Condition
                    and Results of Operations                                                                      8 - 10

              Computer Equipment Portfolio                                                                         11

Part II.      OTHER INFORMATION

              Items 1 - 6                                                                                          12

              Signature                                                                                            13
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                          PART I. FINANCIAL INFORMATION

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

                                 Balance Sheets

                                     Assets                                         (Unaudited)            (Audited)
                                                                                      9/30/97               12/31/96
                                                                                 ----------------        ----------------
<S>                                                                              <C>                     <C>             
Investment property, at cost (note 3):
   Computer equipment                                                            $      6,033,932        $      5,844,357
     Less accumulated depreciation                                                      3,961,094               3,824,442
                                                                                 ----------------        ----------------
       Investment property, net                                                         2,072,838               2,019,915

Cash and cash equivalents                                                                 344,441                 265,199
Rents receivable, net (note 2)                                                             31,961                  69,908
Sales receivable, net (note 2)                                                              5,200                       -
Accounts receivable - affiliates                                                            5,910                  84,022
Other assets                                                                               19,887                  12,779
                                                                                 ----------------        ----------------

     Total assets                                                                $      2,480,237        $      2,451,823
                                                                                 ================        ================

                        Liabilities and Partners' Equity
Liabilities:
   Current portion of long-term debt (note 5)                                    $        620,891        $        550,139
   Accounts payable and accrued expenses - affiliates (note 4)                             32,210                  27,168
   Accounts payable and accrued expenses                                                   51,405                  93,581
   Unearned rental revenue                                                                 32,070                  15,125
   Long-term debt, less current portion (note 5)                                          277,775                 245,786
                                                                                 ----------------        ----------------

     Total liabilities                                                                  1,014,351                 931,799
                                                                                 ----------------        ----------------

Partners' equity:
   General Partner:
     Capital contribution                                                                   1,000                   1,000
     Cumulative net income                                                                597,662                 579,070
     Cumulative cash distributions                                                       (598,662)               (580,070)
                                                                                 ----------------        ----------------
                                                                                                -                       -
                                                                                 ----------------        ----------------
   Limited Partners (20,185 units):
     Capital contribution, net of offering costs                                        8,987,039               8,987,039
     Cumulative net income                                                              3,853,099               3,553,999
     Cumulative cash distributions                                                    (11,374,252)            (11,021,014)
                                                                                 ----------------        ----------------
                                                                                        1,465,886               1,520,024
                                                                                 ----------------        ----------------
     Total partners' equity                                                             1,465,886               1,520,024
                                                                                 ----------------        ----------------

     Total liabilities and partners' equity                                      $      2,480,237        $      2,451,823
                                                                                 ================        ================
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>

<TABLE>
<CAPTION>

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

                            Statements of Operations
                                   (Unaudited)

                                                     Quarters Ended                         Nine Months Ended
                                                      September 30,                           September 30,
                                           ---------------------------------      ----------------------------------
                                                 1997              1996                1997                1996
                                           ---------------------------------      ----------------------------------

<S>                                        <C>                 <C>                <C>                <C>            
Revenue:
   Rental income                           $       472,496     $     321,786      $    1,281,352     $     1,158,972
   Interest income                                   3,145             4,679               6,279              12,021
   Net gain on sale
     of equipment                                    2,776             4,132              43,332             233,480
                                           ---------------     -------------      --------------     ---------------

       Total revenue                               478,417           330,597           1,330,963           1,404,473
                                           ---------------     -------------      --------------     ---------------

Costs and expenses:
   Depreciation                                    275,439           365,019             789,948             963,859
   Interest                                         20,441            10,314              51,635              38,135
   Related party expenses (note 4):
     Management fees                                35,054            28,323              96,800              96,530
     General and administrative                     40,295            42,825             125,766             113,462
   (Reversal of) provision for
     doubtful accounts                              (7,379)            3,367             (50,878)             14,611
                                           ---------------     -------------      --------------     ---------------

       Total costs and expenses                    363,850           449,848           1,013,271           1,226,597
                                           ---------------     -------------      --------------     ---------------

Net income (loss)                          $       114,567     $    (119,251)     $      317,692     $       177,876
                                           ===============     =============      ==============     ===============

Net income (loss) per Limited
   Partnership Unit                        $          5.28     $      (6.57)      $        14.82     $          6.76
                                           ===============     ============       ==============     ===============
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>

<TABLE>
<CAPTION>

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

                            Statements of Cash Flows
                  Nine Months Ended September 30, 1997 and 1996
                                   (Unaudited)

                                                                                           1997                     1996
                                                                                           ----                     ----

<S>                                                                                  <C>                      <C>            
Cash flows from operating activities:
   Net income                                                                        $      317,692           $       177,876
                                                                                     --------------           ---------------

   Adjustments  to  reconcile  net  income  to net cash  provided
     by  operating  activities:
       Depreciation                                                                         789,948                   963,859
       (Reversal of) provision for doubtful accounts                                        (50,878)                   14,611
       Net gain on sale of equipment                                                        (43,332)                 (233,480)
       Net decrease in current assets                                                       154,629                    91,282
       Net (decrease) increase in current liabilities                                       (20,189)                   46,609
                                                                                     --------------           ---------------

         Total adjustments                                                                  830,178                   882,881
                                                                                     --------------           ---------------

         Net cash provided by operating activities                                        1,147,870                 1,060,757
                                                                                     --------------           ---------------

Cash flows from investing activities:
   Purchase of investment property                                                         (866,431)                 (451,363)
   Proceeds from sales of investment property                                                66,892                   373,478
                                                                                     --------------           ---------------

         Net cash used in investing activities                                             (799,539)                  (77,885)
                                                                                     --------------           ---------------

Cash flows from financing activities:
   Proceeds from borrowings on long-term debt                                               533,704                   109,263
   Principal payments on long-term debt                                                    (430,963)                 (320,616)
   Cash distributions to partners                                                          (371,830)                 (690,540)
                                                                                     --------------           ---------------

         Net cash used in financing activities                                             (269,089)                 (901,893)
                                                                                     --------------           ---------------

Net increase in cash and cash equivalents                                                    79,242                    80,979

Cash and cash equivalents at beginning of period                                            265,199                   245,755
                                                                                     --------------           ---------------

Cash and cash equivalents at end of period                                           $      344,441           $       326,734
                                                                                     ==============           ===============

Supplemental cash flow information:
   Interest paid during the period                                                   $       51,635           $        38,135
                                                                                     ==============           ===============
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>


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

                          Notes to Financial Statements
           Nine Months Ended September 30, 1997 and September 30, 1996
                                   (Unaudited)

(1)   Organization and Partnership Matters

The foregoing financial statements of Wellesley Lease Income Limited Partnership
III-D (the  "Partnership")  have been prepared in accordance  with the rules and
regulations of the Securities and Exchange  Commission for Form 10-Q and reflect
all  adjustments  which are, in the opinion of management,  necessary for a fair
presentation of the results for the interim periods presented.  Pursuant to such
rules and  regulations,  certain note  disclosures  which are normally  required
under  generally  accepted  accounting  principles  have  been  omitted.  It  is
recommended  that these  financial  statements be read in  conjunction  with the
Partnership's Annual Report on Form 10-K for the year ended December 31, 1996.

(2)   Summary of Significant Accounting Policies

Allowance for Doubtful Accounts

The financial  statements  include allowances for estimated losses on receivable
balances.  The  allowances  for  doubtful  accounts  are based on past write off
experience  and an evaluation  of potential  uncollectible  accounts  within the
current  receivable  balances.  Receivable  balances  which are determined to be
uncollectible  are charged against the allowance and subsequent  recoveries,  if
any, are credited to the allowance. At September 30, 1997 and December 31, 1996,
the allowance for doubtful  accounts included in rents receivable was $5,097 and
$51,713,   respectively,  and  $0  and  $1,703  included  in  sales  receivable,
respectively.

(3)   Investment Property

At  September  30,  1997,  the  Partnership  owned  computer  equipment  with  a
depreciated  cost basis of $2,031,494,  subject to existing leases and equipment
with a  depreciated  cost basis of $41,344 in  inventory,  awaiting  re-lease or
sale. All purchases of computer  equipment are subject to a 3%  acquisition  fee
paid to the General Partner.

(4)   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 nine months ended
September 30 are as follows:

                                                 1997                  1996
                                                 ----                  ----

Equipment acquisition fees                  $     25,236          $     13,147
Management fees                                   96,800                96,530
Reimbursable expenses paid                       119,529               100,294
                                            ------------          ------------

                                            $    241,565          $    209,971
                                            ============          ============



<PAGE>


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

                          Notes to Financial Statements
           Nine Months Ended September 30, 1997 and September 30, 1996
                                   (Unaudited)

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.

(5)   Long-term Debt

Long-term debt at September 30, 1997 consists of two loans totaling $47,041 from
Union  Chelsea  National  Bank,  each  bearing  interest at 9.00%,  one loan for
$11,079 from CIT Group/Equipment Financing,  Incorporated, with an interest rate
of 14.17%, two installment notes from Pullman Capital  Corporation in the amount
of  $168,781,  with an interest  rate of 8.75% and 10.50%,  and  eighteen  loans
totaling  $671,765 from Liberty Bank, one bearing interest at 8.50%, one bearing
interest at 11.00%,  two bearing  interest at 7.90%,  five  bearing  interest at
8.25%,  and the nine remaining loans bearing  interest at 10.50%.  All loans are
non-recourse and are collateralized by equipment on the respective leases with a
total net book value of $899,731 and assignment of the related leases.

Maturities on long-term debt are as follows:

                              1997                   $      195,471
                              1998                          505,898
                              1999                          193,350
                              2000                            3,947
                                                     --------------

                                                     $      898,666
                                                     ==============


<PAGE>


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

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                                   (Unaudited)

Results of Operations

The following discussion relates to the Partnership's operations for the quarter
and nine months ended September 30, 1997 in comparison to the same periods ended
September 30, 1996.

The  Partnership  realized net income of $114,567 and a net loss of $119,251 for
the quarters  ended  September  30, 1997 and 1996,  respectively.  Rental income
increased  $150,710  or 47% between the three  month  periods.  The  increase in
rental  income  between  the two  periods  is due to new leases  resulting  from
equipment  acquisitions as a result of the extension of the reinvestment period.
Interest  income  decreased as a result of lower cash  balances  held during the
current  quarter.  The  decrease  in net  gain on the sale of  equipment  in the
current quarter is primarily due to a smaller number of equipment sales.

Total  costs and  expenses  decreased  $85,998 or 19%  between  the three  month
periods.  The  decrease  in cost  and  expenses  is  mainly  due to the  $89,580
reduction in  depreciation  expense during the current  quarter in comparison to
the same period in 1996. The decline in depreciation expense is primarily due to
a portion  of the  equipment  portfolio  becoming  fully  depreciated.  Interest
expense  increased  $10,127 as a result of the  continued  paydown of  long-term
debt. Management fees increased in correlation to the increase in rental income.
General and administrative  expenses remained  relatively flat between the three
month periods. The $7,379 reversal of the provision for doubtful accounts in the
current quarter is due to successful collection efforts on delinquent accounts.

The Partnership realized net income of $317,692 and $177,876 for the nine months
ended  September  30,  1997 and  1996,  respectively.  Rental  income  increased
$122,380  or 11% in 1997.  As  discussed  in the  quarter  analysis  above,  the
increase  in  rental  income  is  primarily  due to new  leases  resulting  from
equipment  acquisitions as a result of the extension of the reinvestment period.
Interest  income  decreased  from 1996 as a result of lower cash  balances  held
during the nine month period.  The  significant  decrease in net gain on sale of
equipment  in 1997 is due to a smaller  number of  equipment  sales and sales of
equipment carrying high net book values.



<PAGE>


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

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                                   (Unaudited)

Total  costs and  expenses  decreased  $213,326  or 17%  during  the nine  month
periods. The decrease in costs and expenses is mainly due to the $173,911 or 18%
decline in depreciation expense. As discussed in the quarter analysis above, the
reduction in depreciation  expense is due to a portion of the initial  equipment
portfolio becoming fully  depreciated.  Another element impacting the decline in
costs and expenses is the $50,878  reversal of provision for doubtful  accounts.
The reversal is a result of successful collection efforts on delinquent accounts
in 1997.  Interest  expense  increased  $13,500 due to the continued  paydown of
long-term debt during the nine month period ended September 30, 1997. Management
fees  increased  between the nine month  periods in relation to the  increase in
rental income.  General and  administrative  expenses  increased  $12,304 or 11%
mainly  due  to an  increase  in  the  allocable  salaries  of  the  partnership
accounting  and reporting  personnel of the General  Partner  during the current
year.

The Partnership recorded net income and net loss per Limited Partnership Unit of
$5.28  and  $6.57  for  the  quarters   ended   September  30,  1997  and  1996,
respectively,  and net  income of $14.82  and $6.76 for the nine  month  periods
ended  September 30, 1997 and 1996,  respectively.  The  allocation for the nine
months ended  September 30, 1997  includes a cost recovery  allocation of profit
and loss among the General and Limited Partners.  This cost recovery  allocation
is  required to  maintain  capital  accounts  consistent  with the  distribution
provisions of the Partnership  Agreement.  In certain periods, the cost recovery
of  profit  and loss may  result  in an  allocation  of net loss to the  Limited
Partners in instances when the Partnership's  operations were profitable for the
period.

Liquidity and Capital Resources

For the  quarter  ended  September  30,  1997,  rental  revenue  generated  from
operating  leases and sales proceeds  generated  from  equipment  sales were the
primary sources of funds for the Partnership. As equipment leases terminate, the
General Partner determines if the equipment will be extended to the same lessee,
remarketed to another  lessee,  or sold.  This  decision is made upon  analyzing
which option generates the most favorable result.

Operating  activities  have resulted in a 11% increase in rental  revenue due to
equipment  lease  acquisitions  in  1997 as a  result  of the  extension  of the
reinvestment  period.  It is  expected  that rental  income will  decline in the
future due to two factors. First, lower rates are obtained on the remarketing of
existing  equipment  upon  expiration  of the  original  leases.  Typically  the
remarketed  rates are lower due to the decrease in useful life of the equipment.
Second,  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 its 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 through a reduction in the rate of
cash  distributions.  Future rental  revenues amount to $2,527,227 and are to be
received over the next four years.



<PAGE>


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

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                                   (Unaudited)

The  Partnership's  investing  activities for the nine month periods resulted in
equipment  purchases of $866,431 and  equipment  sales with a  depreciated  cost
basis of $21,862, generating $66,892 in proceeds. Included in equipment sales is
a $1,698 loss which was charged against the reserve, initially set up in a prior
period to account for estimated losses on the ultimate disposition of equipment.
The  Partnership  will not purchase  equipment in the future as the  Partnership
reached the end of its extended reinvestment period in June, 1997.

The Partnership's  financing  activities resulted in proceeds from borrowings on
long-term debt of $533,704. The Partnership's activities also included a paydown
on  long-term  debt during 1997 of  $430,963.  The  Partnership  will payoff its
remaining  long-term debt of $898,666 by 2000.  Total  long-term debt assumed by
the Partnership from inception is $7,820,977, for a total leverage of 25%.

Cash  distributions  are  currently  at  an  annual  level  of  6%  per  Limited
Partnership Unit or $7.50 per Limited Partnership Unit on a quarterly basis. For
the  quarter  ended  September  30,  1997,  the  Partnership   declared  a  cash
distribution  of $159,356,  of which $7,968 was allocated to the General Partner
and $151,388 was allocated to the Limited  Partners.  The  distribution  will be
made on November 26, 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 future
periods.



<PAGE>


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

                    Computer Equipment Portfolio (Unaudited)
                               September 30, 1997

Lessee

American Hard Cider, Incorporated
Baylor Heath Network, Incorporated
Caterpillar, Incorporated
Cerulean Technology, Incorporated
Coulter Leasing Corporation
Direct Cable TV, Incorporated
Evare, Limited Liability Corporation
Faxnet, Incorporated
George Melhado and Company
Halliburton Company
H.J. Meyers & Company, Incorporated
Hughes Aircraft Corporation
J. Walter Thompson, U.S.A., Incorporated
JumboSports, Incorporated
Magnavox  Electronic  Systems  Company,  Incorporated
Merchants  Association of Florida,  Incorporated
Mercury Marine,  Division of Brunswick  Corporation
NYNEX National,  Incorporated
ON Technology  Corporation
Owens  Corning  Fiberglass, Incorporated
Packard  Hughes  Interconnect,  Incorporated
The Internet  Access Company,  Incorporated
USG  Corporation
VenturCom,  Incorporated
VIP Calling, Incorporated

Equipment Description                                 Acquisition Price

Computer peripherals                                   $      2,353,234
Processors & upgrades                                         2,534,251
Other                                                         1,146,447
                                                       ----------------

                                                       $      6,033,932
                                                       ================

<PAGE>


                           PART II. OTHER INFORMATION

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


Item 1.        Legal Proceedings
               Response:  None

Item 2.        Changes in the Rights of the Partnership's Security Holders
               Response:  None

Item 3.        Defaults by the Partnership on its Senior Securities
               Response:  None

Item 4.        Results of Votes of Security Holders
               Response:  None

Item 5.        Other Information
               Response:  None

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

               A.  None

               B.  None


<PAGE>


                                    SIGNATURE

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

WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
(Registrant)

By:     Wellesley Leasing Partnership,
        its General Partner

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


Date:   November 7, 1997

By:     Arthur P. Beecher,
        President