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

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


For Quarter Ended June 30, 1998                      Commission File No. 2-95011


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


         Massachusetts                                                04-2850823
(State or other jurisdiction 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.

Part I.    FINANCIAL INFORMATION

<S>           <C>                                                                                   <C>
              Financial Statements

                    Balance Sheets as of June 30, 1998 and December 31, 1997                        3

                    Statements of Operations
                          Quarters Ended June 30, 1998 and 1997 and
                          Six Months Ended June 30, 1998 and 1997                                   4

                    Statements of Cash Flows
                          Six Months Ended June 30, 1998 and 1997                                   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)
                                                                                     6/30/98                 12/31/97
                                                                                 ----------------        ----------------
<S>                                                                              <C>                     <C>             
Investment property, at cost (note 3):
   Computer equipment                                                            $      5,314,654        $      6,164,470
     Less accumulated depreciation                                                      3,797,338               4,119,544
                                                                                 ----------------        ----------------
       Investment property, net                                                         1,517,316               2,044,926

Cash and cash equivalents                                                                 286,328                 253,590
Rents receivable, net (note 2)                                                             61,564                  46,355
Sales receivable, net (note 2)                                                             42,532                   2,200
Accounts receivable - affiliates                                                           70,390                  17,768
Other assets                                                                               18,015                  17,293
                                                                                 ----------------        ----------------

     Total assets                                                                $      1,996,145        $      2,382,132
                                                                                 ================        ================

                        Liabilities and Partners' Equity
Liabilities:
   Current portion of long-term debt (note 5)                                    $        450,139        $        628,925
   Accounts payable and accrued expenses - affiliates (note 4)                             42,682                  31,639
   Accounts payable and accrued expenses                                                   74,761                  61,989
   Unearned rental revenue                                                                 26,833                  39,641
   Long-term debt, less current portion (note 5)                                           35,888                 229,717
                                                                                 ----------------        ----------------

     Total liabilities                                                                    630,303                 991,911
                                                                                 ----------------        ----------------

Partners' equity:
   General Partner:
     Capital contribution                                                                   1,000                   1,000
     Cumulative net income                                                                621,566                 605,630
     Cumulative cash distributions                                                       (622,566)               (606,630)
                                                                                 ----------------        ----------------
                                                                                                -                       -
                                                                                 ----------------        ----------------
   Limited Partners (20,185 units):
     Capital contribution, net of offering costs                                        8,987,039               8,987,039
     Cumulative net income                                                              4,207,226               3,928,822
     Cumulative cash distributions                                                    (11,828,423)            (11,525,640)
                                                                                 ----------------        ----------------
                                                                                        1,365,842               1,390,221
                                                                                 ----------------        ----------------
     Total partners' equity                                                             1,365,842               1,390,221
                                                                                 ----------------        ----------------

     Total liabilities and partners' equity                                      $      1,996,145        $      2,382,132
                                                                                 ================        ================

                 See accompanying notes to financial statements.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

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

                            Statements of Operations
                                   (Unaudited)

                                                   Quarters Ended                                  Six Months Ended
                                                        June 30,                                        June 30,
                                           ---------------------------------              -----------------------------------
                                                 1998              1997                          1998              1997
                                           ---------------------------------              -----------------------------------

<S>                                        <C>                 <C>                        <C>                 <C>            
Revenue:
   Rental income                           $       464,846     $     423,709              $       931,696     $       808,856
   Interest income                                   2,998             1,365                        5,904               3,134
   Net gain on sale
     of equipment                                   12,202             8,412                       27,383              40,556
                                           ---------------     -------------              ---------------     ---------------

       Total revenue                               480,046           433,486                      964,983             852,546
                                           ---------------     -------------              ---------------     ---------------

Costs and expenses:
   Depreciation                                    222,733           272,802                      460,743             514,509
   (Reversal of) provision for
     doubtful accounts                             (10,854)          (17,960)                      (2,999)            (43,499)
   Interest                                         14,392            15,218                       33,127              31,194
   Related party expenses (note 4):
     Management fees                                33,751            30,248                       68,373              61,746
     General and administrative                     57,181            41,469                      111,407              85,471
                                           ---------------     -------------              ---------------     ---------------

       Total costs and expenses                    317,203           341,777                      670,651             649,421
                                           ---------------     -------------              ---------------     ---------------

Net income                                 $       162,843     $      91,709              $       294,332     $       203,125
                                           ===============     =============              ===============     ===============

Net income per Limited
   Partnership Unit                        $          7.67     $        4.35              $         13.79     $          9.54
                                           ===============     =============              ===============     ===============

                 See accompanying notes to financial statements.
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

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

                            Statements of Cash Flows
                     Six Months Ended June 30, 1998 and 1997
                                   (Unaudited)

                                                                                        1998                       1997
                                                                                     --------------           ---------------

<S>                                                                                  <C>                      <C>            
Cash flows from operating activities:
   Net income                                                                        $      294,332           $       203,125
                                                                                     --------------           ---------------

   Adjustments  to  reconcile  net  income  to net cash
     provided  by  operating activities:
       Depreciation                                                                         460,743                   514,509
       (Reversal of) provision for doubtful accounts                                         (2,999)                  (43,499)
       Net gain on sale of equipment                                                        (27,383)                  (40,556)
       Net decrease (increase) in current assets                                           (105,886)                  107,751
       Net increase (decrease) in current liabilities                                        11,007                   (46,748)
                                                                                     --------------           ---------------

         Total adjustments                                                                  335,482                   491,457
                                                                                     --------------           ---------------

         Net cash provided by operating activities                                          629,814                   694,582
                                                                                     --------------           ---------------

Cash flows from investing activities:
   Purchase of investment property                                                                -                  (703,107)
   Proceeds from sales of investment property                                                94,250                    63,397
                                                                                     --------------           ---------------

         Net cash (used in) provided by investing activities                                 94,250                  (639,710)
                                                                                     --------------           ---------------

Cash flows from financing activities:
   Proceeds from borrowings on long-term debt                                                     -                   412,946
   Principal payments on long-term debt                                                    (372,615)                 (263,291)
   Cash distributions to partners                                                          (318,711)                 (212,474)
                                                                                     --------------           ---------------

         Net cash used in financing activities                                             (691,326)                  (62,819)

Net (decrease) increase in cash and cash equivalents                                         32,738                    (7,947)

Cash and cash equivalents at beginning of period                                            253,590                   265,199
                                                                                     --------------           ---------------

Cash and cash equivalents at end of period                                           $      286,328           $       257,252
                                                                                     ==============           ===============

Supplemental cash flow information:
   Interest paid during the period                                                   $       33,127           $        31,194
                                                                                     ==============           ===============

                 See accompanying notes to financial statements.
</TABLE>


<PAGE>


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

                          Notes to Financial Statements
                Six Months Ended June 30, 1998 and June 30, 1997
                                   (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, 1997.

(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 June 30, 1998 and December 31, 1997, the
allowance  for doubtful  accounts  included in rents  receivable  was $6,607 and
$9,806, respectively, and $0 and $0 included in sales receivable, respectively.

(3)   Investment Property

At June 30, 1998, the  Partnership  owned computer  equipment with a depreciated
cost basis of $1,517,316.  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 six months ended
June 30 are as follows:

                                           1998                 1997
                                           ----                 ----

Equipment acquisition fees             $          -          $     20,479
Management fees                              68,373                61,746
Reimbursable expenses paid                   99,158                84,182
                                       ------------          ------------

                                       $    167,531          $    166,407
                                       ============          ============



<PAGE>


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

                          Notes to Financial Statements
                Six Months Ended June 30, 1998 and June 30, 1997
                                   (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 June 30, 1998 consists of two  installment  notes from Pullman
Capital  Corporation  in the amount of $114,654 with interest rates of 8.75% and
10.50%,  and eighteen  loans  totaling  $371,372 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 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 $528,441 and assignment of the
related leases.

Maturities on long-term debt are as follows:

             1998                   $      256,310
             1999                          225,770
             2000                            3,947
                                    --------------

                                    $      486,027
                                    ==============


<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 six months ended June 30, 1998 in  comparison to the same periods ended June
30, 1997.

The  Partnership  realized  net income of $162,843  and $91,709 for the quarters
ended June 30, 1998 and 1997,  respectively.  Rental income increased $41,137 or
10% in 1998. The increase in rental income between the two periods is due to new
equipment  acquisitions as a result of the extension of the reinvestment period.
Interest  income  increased as a result of higher cash  balances held during the
current  quarter.  The  increase  in net  gain on the sale of  equipment  in the
current quarter is primarily due to a larger number of equipment sales.

Total costs and expenses  decreased $24,574 or 7% in 1998. The decrease in costs
and  expenses is mainly due to the $50,069  reduction  in  depreciation  expense
during the current quarter in comparison to the same period in 1997. The decline
in depreciation expense is primarily due to a portion of the equipment portfolio
becoming fully  depreciated.  For the quarters ended June 30, 1998 and 1997, the
reversal  of  provision   for   doubtful   accounts  was  $10,854  and  $17,960,
respectively.  The reversal is a result of the successful  collection efforts of
delinquent  rents  receivable.  Management  fees increased in correlation to the
rise in rental income. General and administrative  expenses increased $15,712. A
major factor contributing to this increase is that the reimbursable salaries and
expenses of the  partnership  accounting and reporting  personnel of the General
Partner are being  allocated  over a diminishing  number of  partnerships  under
management.

The Partnership  realized net income of $294,332 and $203,125 for the six months
ended June 30, 1998 and 1997,  respectively.  The  $122,840  or 15%  increase in
rental income is attributed  to new  equipment  acquisitions  as a result of the
extension of the reinvestment  period.  Interest income increased from 1997 as a
result of higher cash  balances  held during the current six month  period.  The
decrease in net gain on sale of equipment in 1998 is due to a smaller  number of
equipment sales 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  increased  $21,230 or 3% during the six month periods.
The  increase in costs and expenses is mainly due to the $25,936 or 30% increase
in general and  administrative  expenses.  As discussed in the quarter  analysis
above,  the increase is mainly due to an increase in the  allocable  salaries of
the partnership accounting and reporting personnel of the General Partner during
the current year.  Another  element  impacting the rise in costs and expenses is
the $43,499 reversal of provision for doubtful accounts in 1997. The reversal is
a result of  successful  collection  efforts of delinquent  rents  receivable in
1997. Management fees increased between the six month periods in relation to the
rise in rental income.  The $53,766 decline in depreciation  expense is due to a
portion of the initial equipment portfolio becoming fully depreciated.

The Partnership  recorded net income per Limited  Partnership  Unit of $7.67 and
$4.35 for the quarters  ended June 30, 1998 and 1997,  respectively,  and $13.79
and $9.54 for the six month periods ended June 30, 1998 and 1997,  respectively.
The  allocation  for the six months ended June 30, 1998 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 June 30, 1998,  rental  revenue  generated  from operating
leases and sales  proceeds  generated  from  equipment  sales  were the  primary
sources of funds for the Partnership. As equipment leases terminate, the General
Partner  determines  if the  equipment  will be  extended  to the  same  lessee,
remarketed to another  lessee,  or sold.  This  decision is made upon  analyzing
which option generates the most favorable result.

Rental income will begin to decrease due to two factors.  First, lower rates are
obtained on the  remarketing  of existing  equipment  upon the expiration of the
original lease.  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
$1,395,866 and are to be received over the next three 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  six  months  ended  June 30
consisted  of  equipment  sales  with  a  depreciated  cost  basis  of  $79,951,
generating  $94,250 in proceeds.  Included in equipment  sales is a $13,094 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's  financing  activities  included a paydown on long-term  debt
during 1998 of $372,615.  The  Partnership  will payoff its remaining  long-term
debt of $486,027 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  June  30,  1998,  the  Partnership   declared  a  cash
distribution of $159,356, of which $7,968 was distributed to the General Partner
and $151,388 was distributed to the Limited  Partners.  The distribution will be
made on August 29, 1998. 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)
                                  June 30, 1998

Lessee

American Hard Cider, Incorporated
Cerulean Technology, Incorporated
Coulter Leasing Corporation
Direct Cable TV, Incorporated
Evare, Limited Liability Corporation
Faxnet, Incorporated
George Melhado and Company
Hughes Aircraft Corporation
J. Walter Thompson, U.S.A., Incorporated
JumboSports Incorporated
Magnavox Electronic Systems Company, Incorporated
Mercury Marine, Division of Brunswick Corporation
NYNEX National, Incorporated
ON Technology Corporation
Owens - Corning Fiberglass Corporation
The Internet Access Company, Incorporated
USG Corporation

Equipment Description                                 Acquisition Price

Computer peripherals                                   $      2,096,149
Processors & upgrades                                         2,058,978
Other                                                         1,159,527
                                                       ----------------

                                                       $      5,314,654
                                                       ================

<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:   August 13, 1998

By:     Arthur P. Beecher,
        President