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 September 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

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<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 September 30, 1998 and December 31, 1997               3

                    Statements of Operations
                          Quarters Ended September 30, 1998 and 1997 and
                          Nine Months Ended September 30, 1998 and 1997                         4

                    Statements of Cash Flows
                          Nine Months Ended September 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

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<CAPTION>

                          PART I. FINANCIAL INFORMATION

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

                                 Balance Sheets

                                     Assets                                         (Unaudited)             (Audited)
                                                                                      9/30/98                12/31/97
                                                                                 ----------------        ----------------
<S>                                                                              <C>                     <C>             
Investment property, at cost (note 3):
   Computer equipment                                                            $      4,012,068        $      6,164,470
     Less accumulated depreciation                                                      2,750,350               4,119,544
                                                                                 ----------------        ----------------
       Investment property, net                                                         1,261,718               2,044,926

Cash and cash equivalents                                                                 306,118                 253,590
Rents receivable, net (note 2)                                                             55,677                  46,355
Sales receivable, net (note 2)                                                                  -                   2,200
Accounts receivable - affiliates                                                          111,970                  17,768
Other assets                                                                               15,421                  17,293
                                                                                 ----------------        ----------------

     Total assets                                                                $      1,750,904        $      2,382,132
                                                                                 ================        ================

                        Liabilities and Partners' Equity
Liabilities:
   Current portion of long-term debt (note 5)                                    $        342,745        $        628,925
   Accounts payable and accrued expenses - affiliates (note 4)                             33,458                  31,639
   Accounts payable and accrued expenses                                                   53,313                  61,989
   Unearned rental revenue                                                                 23,906                  39,641
   Long-term debt, less current portion (note 5)                                           14,937                 229,717
                                                                                 ----------------        ----------------

     Total liabilities                                                                    468,359                 991,911
                                                                                 ----------------        ----------------

Partners' equity:
   General Partner:
     Capital contribution                                                                   1,000                   1,000
     Cumulative net income                                                                629,534                 605,630
     Cumulative cash distributions                                                       (630,534)               (606,630)
                                                                                 ----------------        ----------------
                                                                                                -                       -
                                                                                 ----------------        ----------------
   Limited Partners (20,185 units):
     Capital contribution, net of offering costs                                        8,987,039               8,987,039
     Cumulative net income                                                              4,275,316               3,928,822
     Cumulative cash distributions                                                    (11,979,810)            (11,525,640)
                                                                                 ----------------        ----------------
                                                                                        1,282,545               1,390,221
                                                                                 ----------------        ----------------
     Total partners' equity                                                             1,282,545               1,390,221
                                                                                 ----------------        ----------------

     Total liabilities and partners' equity                                      $      1,750,904        $      2,382,132
                                                                                 ================        ================
</TABLE>

                 See accompanying notes to financial statements.


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<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,
                                           ---------------------------------      ----------------------------------
                                                 1998              1997                1998                1997
                                           ---------------------------------      ----------------------------------

<S>                                        <C>                <C>                 <C>                <C>            
Revenue:
   Rental income                           $        346,265   $      472,496      $    1,277,961     $     1,281,352
   Interest income                                    3,066            3,145               8,970               6,279
   Net gain on sale
     of equipment                                       850            2,776              28,233              43,332
                                           ----------------   --------------      --------------     ---------------

       Total revenue                                350,181          478,417           1,315,164           1,330,963
                                           ----------------   --------------      --------------     ---------------

Costs and expenses:
   Depreciation                                     182,200          275,439             642,943             789,948
   (Reversal of) provision for
     doubtful accounts                                1,727           (7,379)             (1,272)            (50,878)
   Interest                                          10,636           20,441              43,763              51,635
   Related party expenses (note 4):
     Management fees                                 23,889           36,498              92,262              96,530
     General and
       administrative                                55,671           38,851             167,078             126,036
                                           ----------------   --------------      --------------     ---------------

       Total costs
         and expenses                               274,123          363,850             944,774           1,013,271
                                           ----------------   --------------      --------------     ---------------

Net income                                 $         76,058   $      114,567      $      370,390     $       317,692
                                           ================   ==============      ==============     ===============

Net income per Limited
   Partnership Unit                        $           3.37  $          5.28      $        17.17     $         14.82
                                           ================  ===============      ==============     ===============

                 See accompanying notes to financial statements.
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<CAPTION>

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

                            Statements of Cash Flows
                  Nine Months Ended September 30, 1998 and 1997
                                   (Unaudited)

                                                                                       1998                    1997
                                                                                       ----                    ----

<S>                                                                              <C>                     <C>             
Cash flows from operating activities:
   Net income                                                                    $        370,390        $        317,692
                                                                                 ----------------        ----------------

   Adjustments  to  reconcile  net  income  to net cash  provided
     by  operating activities:
       Depreciation                                                                       642,943                 789,948
       (Reversal of) provision for
         doubtful accounts                                                                 (1,272)                (50,878)
       Net gain on sale of equipment                                                      (28,233)                (43,332)
       Net (increase) decrease in current assets                                          (98,172)                154,629
       Net (decrease) increase in
         current liabilities                                                              (22,592)                (20,189)
                                                                                 ----------------        ----------------

         Total adjustments                                                                492,674                 830,178
                                                                                 ----------------        ----------------

         Net cash provided by
           operating activities                                                           863,064               1,147,870
                                                                                 ----------------        ----------------

Cash flows from investing activities:
   Purchase of investment property                                                              -                (866,431)
   Proceeds from sales of investment property                                             168,498                  66,892
                                                                                 ----------------        ----------------

         Net cash used in investing activities                                            168,498                (799,539)
                                                                                 ----------------        ----------------

Cash flows from financing activities:
   Proceeds from borrowings on long-term debt                                                   -                 533,704
   Principal payments on long-term debt                                                  (500,960)               (430,963)
   Cash distributions to partners                                                        (478,074)               (371,830)
                                                                                 ----------------        ----------------

         Net cash used in financing activities                                           (979,034)               (269,089)
                                                                                 ----------------        ----------------

Net increase in cash and cash equivalents                                                  52,528                  79,242

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

Cash and cash equivalents at end of period                                       $        306,118        $        344,441
                                                                                 ================        ================

Supplemental cash flow information:
   Interest paid during the period                                               $         43,763        $         51,635
                                                                                 ================        ================
</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, 1998 and September 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, 1998.

(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, 1998 and December 31, 1997,
the allowance for doubtful  accounts included in rents receivable was $8,334 and
$9,806, respectively, and $0 and $0 included in sales receivable, respectively.

(3)   Investment Property

At  September  30,  1998,  the  Partnership  owned  computer  equipment  with  a
depreciated  cost basis of $1,261,718.  All purchases of computer  equipment are
subject to a 3% acquisition fee paid to the General Partner.


<PAGE>


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

                          Notes to Financial Statements
           Nine Months Ended September 30, 1998 and September 30, 1997
                                   (Unaudited)

(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:

                                                1998                  1997
                                                ----                  ----

Equipment acquisition fees                 $          -          $     13,147
Management fees                                  92,262                96,530
Reimbursable expenses paid                      147,686               100,294
                                           ------------          ------------

                                           $    239,948          $    209,971
                                           ============          ============

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. 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, 1998  consists of two  installment  notes from
Pullman Capital  Corporation  totaling  $95,693 with interest rates of 8.75% and
10.50%,  and twelve  loans  totaling  $261,989  from Liberty  Bank,  one bearing
interest at 8.25%,  two loans bearing  interest at 8.50%, and the remaining nine
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 $425,974 and assignment of the related leases.

Maturities on long-term debt are as follows:

                        1998                   $      127,965
                        1999                          225,770
                        2000                            3,947
                                               --------------

                                               $      357,682
                                               ==============



<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, 1998 in comparison to the same periods ended
September 30, 1997.

The  Partnership  realized  net income of $76,058 and  $114,567 for the quarters
ended  September  30,  1998 and  1997,  respectively.  Rental  income  decreased
$126,231 or 27% between the three month  periods.  The decrease 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 decrease in the
overall size of the equipment portfolio.

Total  costs and  expenses  decreased  $89,727 or 25%  between  the three  month
periods.  Depreciation  expense decreased $93,239 or 34% due to a portion of the
equipment  portfolio becoming fully  depreciated.  Also included in depreciation
expense for the quarter  ended  September 30, 1998 is a provision of $10,446 for
estimated  losses on the ultimate  disposition  of equipment.  Interest  expense
decreased  $9,805  in  the  current  quarter  due to the  continued  paydown  of
long-term  debt.  The  long-term  debt balance at September 30, 1998 was $14,937
versus a balance of $277,775 at September 30, 1997. Management fees decreased as
a result of the decline in rental income.  General and  administrative  expenses
increased $16,820 or 43% mainly due to an increase in the allocable  salaries of
the partnership accounting and reporting personnel of the General Partner.

The Partnership realized net income of $370,390 and $317,692 for the nine months
ended September 30, 1998 and 1997, respectively. The decrease in net gain on the
sale of equipment is primarily due to a fewer number of equipment sales carrying
low 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 $68,497 or 7% during the nine month periods.
As discussed  in the quarter  analysis  above,  depreciation  expense  decreased
$147,005 or 19% between  1998 and 1997 due to the  initial  equipment  portfolio
becoming fully depreciated and a reduction in the overall  equipment  portfolio.
Management  fees decreased  between the nine month periods due to the decline in
rental income.  General and  administrative  expenses  increased  $41,042 or 33%
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 per Limited  Partnership  Unit of $3.37 and
$5.28 for the quarters ended September 30, 1998 and 1997, respectively,  and net
income of $17.17 and $14.82 for the nine  months  ended  September  30, 1998 and
1997, respectively.

Liquidity and Capital Resources

For the  quarter  ended  September  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 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.  First, lower rental
rates are obtained on the remarketing of existing equipment after 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 a  reduction  in the rate of cash  distributions.  Future  rental
revenues amount to $1,101,738 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 sales with a depreciated cost basis of $232,232,  generating  $168,498
in  proceeds.  Included in  equipment  sales is a $91,966 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 resulted in the paydown on long-term debt
in the amount of $500,960 for the nine months  ended  September  30,  1998.  The
Partnership will payoff its remaining  long-term debt of $357,682 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,  1998,  the  Partnership   declared  a  cash
distribution  of $159,356,  of which $7,968 was allocated to the General Partner
and $151,388 was allocated to the Limited  Partners.  The  distribution  will be
made on November 27, 1998. The Partnership  expects to continue paying 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.

On  January 9, 1997,  TLP  Holding  LLC  purchased  all the common  stock of TLP
Leasing  Programs,  Inc.  from CMI Holding Co.  Under the new  ownership,  it is
expected  that TLP Leasing  Programs,  Inc. will continue to operate in the same
manner of business as it has in the past.



<PAGE>


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

                    Computer Equipment Portfolio (Unaudited)
                               September 30, 1998

Lessee

American Hard Cider
Caterpillar Company, Incorporated
Cerulean, Incorporated
Direct Cable TV, Incorporated
Evare, Incorporated
Faxnet, Incorporated
George Melhado and Company
H.J. Meyers & Company, Incorporated
Hughes Aircraft
Internet Access Company
J. Walter Thompson, U.S.A., Incorporated
Jumbo Sports, Incorporated
Mercury Marine, Division of Brunswick Corporation
NYNEX National, Incorporated
ON Technology Corporation
Owens Corning Fiberglass, Incorporated
Packard Hughes Interconnect, Incorporated
USG Corporation
Venturcom, Incorporated
VIP Calling, Incorporated

Equipment Description                                 Acquisition Price

Computer peripherals                                   $      1,546,149
Processors & upgrades                                         1,508,935
Other                                                           956,984
                                                       ----------------

                                                       $      4,012,068
                                                       ================

<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 12, 1998

By:    Arthur P. Beecher,
       President