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 The Quarter Ended September 30, 1996             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, 1996 and December 31, 1995                                         3

                    Statements of Operations For the Quarters Ended
                          September 30, 1996 and 1995 and For the Nine Months Ended
                          September 30, 1996 and 1995                                                                     4

                    Statements of Cash Flows For the Nine Months Ended
                          September 30, 1996 and 1995                                                                     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)
                                                                                       9/30/96                12/31/95
                                                                                 ----------------        ----------------
<S>                                                                              <C>                     <C>             
Investment property, at cost (note 3):
  Computer equipment                                                             $      5,976,472        $      7,636,323
     Less accumulated depreciation                                                      4,015,610               5,022,967
                                                                                 ----------------        ----------------
       Investment property, net                                                         1,960,862               2,613,356

Cash and cash equivalents                                                                 326,734                 245,755
Rents receivable, net (note 2)                                                             66,902                 173,959
Sales receivable, net (note 2)                                                                  -                   4,275
Accounts receivable - affiliates                                                           82,421                  66,971
Other assets                                                                                1,876                  11,887
                                                                                 ----------------        ----------------

     Total assets                                                                $      2,438,795        $      3,116,203
                                                                                 ================        ================

                        Liabilities and Partners' Equity
Liabilities:
   Current portion of long-term debt (note 5)                                    $        299,923        $        380,602
   Accounts payable and accrued expenses - affiliates (note 4)                             58,138                  32,533
   Accounts payable and accrued expenses                                                   99,919                  87,381
   Unearned rental revenue                                                                  9,006                     540
   Long-term debt, less current portion (note 5)                                          221,450                 352,124
                                                                                 ----------------        ----------------

     Total liabilities                                                                    688,436                 853,180
                                                                                 ----------------        ----------------

Partners' equity:
   General Partner:
     Capital contribution                                                                   1,000                   1,000
     Cumulative net income                                                                568,446                 526,973
     Cumulative cash distributions                                                       (569,446)               (534,918)
                                                                                 ----------------        ----------------
                                                                                                -                  (6,945)
                                                                                 ----------------        ----------------
   Limited Partners (20,185 units):
     Capital contribution, net of offering costs                                        8,987,039               8,987,039
     Cumulative net income                                                              3,582,483               3,446,080
     Cumulative cash distributions                                                    (10,819,163)            (10,163,151)
                                                                                 ----------------        ----------------
                                                                                        1,750,359               2,269,968
                                                                                 ----------------        ----------------
     Total partners' equity                                                             1,750,359               2,263,023
                                                                                 ----------------        ----------------

     Total liabilities and partners' equity                                      $      2,438,795        $      3,116,203
                                                                                 ================        ================
</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,
                                           ---------------------------------      ----------------------------------
                                                 1996              1995                1996                1995
                                           ---------------------------------      ----------------------------------
<S>                                        <C>                 <C>                <C>                <C>            
Revenue:
   Rental income                           $       321,786     $     685,802      $    1,158,972     $     1,914,439
   Interest income                                   4,679             4,134              12,021              12,577
   Net gain (loss) on sale
     of equipment                                    4,132           (10,144)            233,480               1,110
                                           ---------------     -------------      --------------     ---------------

       Total revenue                               330,597           679,792           1,404,473           1,928,126
                                           ---------------     -------------      --------------     ---------------

Costs and expenses:
   Depreciation                                    365,019           394,084             963,859           1,127,687
   Interest                                         10,314            17,249              38,135              30,418
   Related party expenses (note 4):
     Management fees                                28,323            47,454              96,530             125,859
     General and administrative                     42,825            28,324             113,462              88,540
   Provision for (reversal of)
     doubtful accounts                               3,367                 -              14,611             (20,348)
                                           ---------------     -------------      --------------     ---------------

       Total costs and expenses                    449,848           487,111           1,226,597           1,352,156
                                           ---------------     -------------      --------------     ---------------

Net (loss) income                          $      (119,251)    $     192,681      $      177,876     $       575,970
                                           ===============     =============      ==============     ===============

Net (loss) income per Limited
   Partnership Unit                        $         (6.57)    $        8.96      $         6.76     $         26.56
                                           ===============     =============      ==============     ===============
</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
              For the Nine Months Ended September 30, 1996 and 1995
                                   (Unaudited)

                                                                                           1996                     1995
                                                                                           ----                     ----

<S>                                                                                  <C>                      <C>            
Cash flows from operating activities:
   Net income                                                                        $      177,876           $       575,970
                                                                                     --------------           ---------------

   Adjustments  to  reconcile  net  income  to
   net cash  provided  by  operating activities:
       Depreciation                                                                         963,859                 1,127,687
       Provision for (reversal of) doubtful accounts                                         14,611                   (20,348)
       Net gain on sale of equipment                                                       (233,480)                   (1,110)
       Net decrease (increase) in current assets                                             91,282                   (77,891)
       Net increase in current liabilities                                                   46,609                    10,549
                                                                                     --------------           ---------------

         Total adjustments                                                                  882,881                 1,038,887
                                                                                     --------------           ---------------

         Net cash provided by operating activities                                        1,060,757                 1,614,857
                                                                                     --------------           ---------------

Cash flows from investing activities:
   Purchase of investment property                                                         (451,363)               (1,601,412)
   Proceeds from sales of investment property                                               373,478                   103,042
                                                                                     --------------           ---------------

         Net cash used in investing activities                                              (77,885)               (1,498,370)
                                                                                     --------------           ---------------

Cash flows from financing activities:
   Proceeds from borrowings on notes payable - affiliates                                         -                   339,047
   Principal payments on notes payable - affiliates                                               -                  (139,047)
   Proceeds from borrowings on long-term debt                                               109,263                   643,906
   Principal payments on long-term debt                                                    (320,616)                 (381,633)
   Cash distributions to partners                                                          (690,540)                 (719,756)
                                                                                     --------------           ---------------

         Net cash used in financing activities                                             (901,893)                 (257,483)
                                                                                     --------------           ---------------

Net increase (decrease) in cash and cash equivalents                                         80,979                  (140,996)

Cash and cash equivalents at beginning of period                                            245,755                   592,377
                                                                                     --------------           ---------------

Cash and cash equivalents at end of period                                           $      326,734           $       451,381
                                                                                     ==============           ===============

Supplemental cash flow information:
   Interest paid during the period                                                   $       38,135           $        31,496
                                                                                     ==============           ===============

</TABLE>
                 See accompanying notes to financial statements.


<PAGE>



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

                          Notes to Financial Statements
       For the Nine Months Ended September 30, 1996 and September 30, 1995
                                   (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, 1995.

(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, 1996 and December 31, 1995,
the allowance for doubtful accounts included in rents receivable was $34,534 and
$28,448,   respectively,  and  $8,525  and  $0  included  in  sales  receivable,
respectively.

(3)   Investment Property

At  September  30,  1996,  the  Partnership  owned  computer  equipment  with  a
depreciated  cost basis of $1,813,368,  subject to existing leases and equipment
with a  depreciated  cost basis of $147,494 in inventory,  awaiting  re-lease or
sale. 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
       For the Nine Months Ended September 30, 1996 and September 30, 1995
                                   (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, 1996 and 1995 are as follows:

<TABLE>
<CAPTION>

                                                    1996                  1995
                                                    ----                  ----

<S>                                             <C>                   <C>         
Equipment acquisition fees                      $     13,147          $     46,643
Management fees                                       96,530               125,859
Reimbursable expenses paid                           100,294                89,336
                                                ------------          ------------

                                                $    209,971          $    261,838
                                                ============          ============
</TABLE>

Under the terms of the Partnership Agreement, the General Partner is entitled to
an equipment acquisition fee of 3% of the purchase price paid by the Partnership
for the  equipment.  The General  Partner is also  entitled to a management  fee
equal to 7% of the monthly rental billings collected. 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, 1996 consists of two loans  totaling  $139,952
from Union Chelsea  National Bank, each bearing  interest at 9.00%, one loan for
$35,160 from CIT Group/Equipment  Financing,  Incorporated,  bearing interest at
14.17%,  four  installment  notes  from  Pullman  Capital  Corporation  totaling
$32,514,  each bearing interest at 8.00%, and three loans totaling $313,747 from
Liberty Bank, one bearing  interest at 7.75% and the two remaining loans bearing
interest  at  7.90%.  All  loans  are  non-recourse  and are  collateralized  by
equipment on the  respective  leases with a total net book value of $632,292 and
assignment of the related leases.

Maturities on long-term debt are as follows:

                    1996                   $       70,257
                    1997                          302,176
                    1998                          148,940
                                           --------------

                                           $      521,373
                                           ==============


<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, 1996 in comparison to the same periods ended
September 30, 1995.

The  Partnership  realized a net loss of $119,251 and net income of $192,681 for
the quarters  ended  September  30, 1996 and 1995,  respectively.  Rental income
decreased  $364,016  or 53% 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.  Interest  income
increased from 1995 as a result of higher average short-term investment 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 carrying low net book values.

Total  costs and  expenses  decreased  $37,263  or 8%  between  the three  month
periods.  Depreciation  expense  decreased $29,065 or 7% due to a portion of the
equipment  portfolio becoming fully  depreciated.  Also included in depreciation
expense for the quarter  ended  September 30, 1996 is a provision of $50,000 for
estimated  losses on the ultimate  disposition  of equipment.  Interest  expense
decreased  $6,935  in  the  current  quarter  due to the  continued  paydown  of
long-term  debt.  The long-term  debt balance at September 30, 1996 was $521,373
versus a balance of $629,018 at September 30, 1995. Management fees decreased as
a result of the decline in rental income.  General and  administrative  expenses
increased $14,501 or 51% mainly due to an increase in the allocable  salaries of
the partnership  accounting and reporting personnel of the General Partner.  The
Partnership  established a provision for doubtful  accounts of $3,367 to reserve
for potential uncollectible rents receivable.

The Partnership realized net income of $177,876 and $575,970 for the nine months
ended September 30, 1996 and 1995, respectively. The $755,467 or 39% decrease in
rental  income can be  attributed  to lower rental  rates  obtained on equipment
lease extensions and remarketings resulting after the initial lease term expires
and due to an overall  reduction in  equipment  portfolio,  as mentioned  above.
Interest  income  decreased  from 1995 as a result of lower  average  short-term
investment balances held during the nine month period. The significant  increase
in net gain on sale of equipment in 1996 is due to the large 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 $125,559 or 9% during the nine month periods.
As discussed  in the quarter  analysis  above,  depreciation  expense  decreased
$163,828 or 15% between  1996 and 1995 due to the  initial  equipment  portfolio
becoming fully depreciated and a reduction in the overall  equipment  portfolio.
Also included in  depreciation  expense for the nine months ended  September 30,
1996  is  a  provision  for  $100,000  for  estimated  losses  on  the  ultimate
disposition of equipment.  Interest  expense  increased  $7,717 between 1996 and
1995 due to new debt  leveraged  during the current  quarter  and the  continued
paydown of long-term  debt.  Management  fees  decreased  between the nine month
periods due to the decline in rental income. General and administrative expenses
increased $24,922 or 28% 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 provision for doubtful  accounts  increased in the current
year due to an increase in potential uncollectible rents receivable.

The Partnership recorded net loss and net income per Limited Partnership Unit of
$6.57  and  $8.96  for  the  quarters   ended   September  30,  1996  and  1995,
respectively,  and net  income of $6.76 and  $26.56  for the nine  months  ended
September 30, 1996 and 1995, respectively.

Liquidity and Capital Resources

For the  quarter  ended  September  30,  1996,  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 $1,655,671 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 $451,363 and  equipment  sales with a  depreciated  cost
basis of $68,826,  generating $373,478 in proceeds.  Included in equipment sales
is a $71,171 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  purchase  equipment  in  the  future  as the
Partnership has extended its reinvestment period.

The Partnership's financing activities resulted in the paydown on long-term debt
in the amount of $320,616 and  proceeds  from  borrowing  on  long-term  debt of
$109,263 for the nine months ended  September  30, 1996.  The  Partnership  will
payoff its remaining  long-term debt of $521,373 by 1998.  Total  long-term debt
assumed by the Partnership from inception is $6,908,214, for a total leverage of
23%.

Cash  distributions  are  currently  at  an  annual  level  of  8%  per  Limited
Partnership  Unit or $10.00 per Limited  Partnership  Unit on a quarterly basis.
For the quarter  ended  September  30,  1996,  the  Partnership  declared a cash
distribution of $212,474,  of which $10,624 was allocated to the General Partner
and $201,850 was allocated to the Limited  Partners.  The  distribution  will be
made on November 27, 1996. 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, 1996,  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, 1996

Lessee

Caterpillar Company, Incorporated
Coulter Leasing Corporation
George Melhado and Company
H.J. Meyers & Company, Incorporated
Invetech Company
J. Walter Thompson, U.S.A., Incorporated
Magnavox Electronic Systems Company, Incorporated
Maryland Casualty Insurance, 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
Simmons Market Research Bureau, Incorporated
Sports & Recreation Company, Incorporated
Xerox Corporation

<TABLE>
<CAPTION>

Equipment Description                                 Acquisition Price

<S>                                                   <C>    
Computer peripherals                                   $      2,330,824
Processors & upgrades                                         2,510,118
Other                                                         1,135,530
                                                       ----------------

                                                       $      5,976,472
                                                       ================
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                           PART II. OTHER INFORMATION

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


<S>            <C>
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
</TABLE>


<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 14, 1996

By:   Arthur P. Beecher,
      President