SECURITIES AND EXCHANGE COMMISSION
                                Washington, DC 20549
                                    FORM 10-Q

                       QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                           OF THE SECURITIES EXCHANGE ACT OF 1934




For Quarter Ended September 30, 1995           Commission File Number 0-11639



             WINTHROP  RESIDENTIAL  ASSOCIATES III, A LIMITED  PARTNERSHIP
                (Exact name of registrant as specified in its charter)


            Maryland                                       04-2782016
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

One International Place, Boston, MA                              02110
(Address of principal executive offices)                        (Zip Code)




Registrant's telephone number, including area code           (617) 330-8600

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 _________









<PAGE>




PART 1 - FINANCIAL INFORMATION
STATEMENTS OF OPERATIONS
<TABLE>

                                                                                      Three Months Ended         Nine Months Ended
                                                                                         September 30,              September 30,
(Unaudited) (Note 1)                                                                  1995       1994            1995        1994   
--------------------                                                                  ------------------------   -------------------

<S>                                                                        <C>              <C>            <C>            <C>
Income
 Short-term taxable investments.....................................       $  25,859        $  36,756      $  87,562      $  77,394
   Income from Local Limited
    Partnership cash distributions..................................              50             -           186,623        263,298
                                                                           ----------          -------       --------       -------
                                                                              25,909           36,756        274,185        340,692
                                                                           ----------          -------       --------       -------
Expenses:
   Amortization.....................................................             945              945          2,835          2,835
   General and administrative.......................................           4,603            4,246         35,491         37,608
                                                                           ----------          -------        -------        ------
                                                                               5,548            5,191         38,326         40,443
                                                                           ----------          -------        -------        ------

Income from operations..............................................          20,361           31,565        235,859        300,249

Equity in income (loss) of Local Limited
 Partnerships ......................................................          35,969         (129,063)        54,085          7,093
                                                                           ----------       ----------       --------       -------

Net income (loss) ..................................................       $  56,330       $  (97,498)     $ 289,944       $307,342
                                                                           ----------      -----------     ----------      --------

Net income (loss) allocated to General
 Partners...........................................................       $   4,225       $   (7,312)     $  21,746      $  23,050
                                                                           ----------     ------------     ----------     ---------

Net income (loss) allocated to Limited
 Partners...........................................................       $  52,105       $  (90,186)     $ 268,198      $ 284,292
                                                                           ----------      -----------     ----------     ---------

Net income (loss) per Unit of Limited
 Partnership Interest...............................................       $    2.08       $    (3.61)     $   10.73      $   11.37
                                                                           ----------      -----------     ----------     ---------
</TABLE>





   The accompanying notes are an integral part of these financial statements.

<PAGE>



<TABLE>

BALANCE SHEETS
                                                                                               September 30,          December 31,
                                                                                                     1995                  1994
                                                                                                 (Unaudited)            (Audited)
ASSETS

<S>                                                                                             <C>                    <C>
Investments in Local Limited Partnerships............................................           $   456,055            $   404,805

Other Assets:
   Cash and cash equivalents.........................................................             1,769,009              2,338,714
   Interest receivable...............................................................                 8,044                 10,722
                                                                                                ------------            ----------
                                                                                                $ 2,233,108             $2,754,241
                                                                                                ------------            ----------
LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
   Distributions Payable to partners.................................................           $   189,123             $  270,324

Partners' Capital:
   Limited Partners
      Units of  Limited  Partnership  Interest,  $1,000  stated  value per Unit;
       authorized, issued and outstanding -
       25,005 Units..................................................................             3,287,765              3,694,702

General Partners.....................................................................            (1,243,780)            (1,210,785)
                                                                                                ------------           ----------- 
</TABLE>
 The accompanying notes are an integral part of these financial statements.

<PAGE>


<TABLE>


STATEMENTS OF CASH FLOWS

For The Nine Months Ended
September 30, 1995 and 1994 (Unaudited) (Note 1)                                                 1995                1994

<S>                                                                                         <C>                   <C>
Cash flows from operating activities:
   Net income..........................................................................     $  289,944            $  307,342
   Adjustments to reconcile net income to cash (used in)
      provided by operating activities:
   Amortization........................................................................          2,835                 2,835
   Equity in income of Local Limited Partnerships......................................        (54,085)               (7,093)
   Cash distributions from Local Limited Partnerships..................................       (186,623)             (263,298)
   Changes in assets and liabilities:
      Decrease (increase) in interest receivable.......................................          2,678                (1,540)
      (Decrease) in distributions payable..............................................        (81,201)                 -
                                                                                           ------------            ------

   Net cash (used in) provided by operating activities................................         (26,452)               38,246
                                                                                           ------------           ----------

Cash flows from investing activities:
   Cash distributions from Local Limited Partnership...................................        186,623               263,298
                                                                                           ------------              -------

Cash flows from financing activities:
      Cash distributions paid or accrued to Partners...................................       (729,876)             (810,972)
                                                                                           ------------           ---------- 

Net decrease in cash and cash equivalents..............................................       (569,705)             (509,428)

Cash and cash equivalents, beginning of period.........................................      2,338,714             3,095,286
                                                                                           ------------           ----------

Cash and cash equivalents, end of period...............................................    $ 1,769,009           $ 2,585,858
</TABLE>
 
 The accompanying notes are an integral part of these financial statements.

<PAGE>



<TABLE>

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

                                                             UNITS OF
For the Nine Months Ended                                     LIMITED            GENERAL              LIMITED
September 30, 1995 and 1994                                 PARTNERSHIP         PARTNERS'            PARTNERS'           TOTAL
(Unaudited (Note 1)                                           INTEREST           CAPITAL              CAPITAL           CAPITAL  
-------------------                                           ---------        ----------            ---------         ----------



<S>                                                          <C>               <C>                   <C   >            <C>
Balance December 31, 1994............................        25,005            $(1,210,785)          $3,694,702        $2,483,917
Net income...........................................                               21,746              268,198           289,944
Cash distributions paid or accrued...................                              (54,741)            (675,135)         (729,876)
                                                             -------           ------------          -----------       ---------- 
Balance September 30, 1995...........................        25,005             (1,243,780)           3,287,765         2,043,985
                                                           ---------            -----------           ----------        ---------


Balance December 31, 1993............................        25,005            $(1,152,506)          $4,413,480        $3,260,974
Net income...........................................                               23,050              284,292           307,342
Cash distributions paid or accrued...................                              (60,822)            (750,150)         (810,972)
Balance September 30, 1994...........................        25,005            $(1,190,278)          $3,947,622        $2,757,344
                                                          ----------           ------------          -----------       ----------
</TABLE>

 The accompanying notes are an integral part of these financial statements.

<PAGE>
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)


1.         ACCOUNTING AND FINANCIAL REPORTING POLICIES

           The condensed financial statements included herein have been prepared
           by  the  Registrant,   without  audit,  pursuant  to  the  rules  and
           regulations   of  the  Securities   and  Exchange   Commission.   The
           Registrant's  accounting  and  financial  reporting  policies  are in
           conformity with generally accepted accounting  principles and include
           adjustments  in  interim  periods  considered  necessary  for a  fair
           presentation  of the results of operations.  Certain  information and
           footnote   disclosures  normally  included  in  financial  statements
           prepared in accordance with generally accepted accounting  principles
           have  been   condensed   or  omitted   pursuant  to  such  rules  and
           regulations.   It  is  suggested  that  these   condensed   financial
           statements be read in conjunction  with the financial  statements and
           the notes thereto included in the  Registrant's  latest annual report
           on Form 10-K.

           The  accompanying  financial  statements  reflect  the  Partnership's
           results of operations for an interim  period and are not  necessarily
           indicative of the results of operations for the year ending  December
           31, 1995.

2.         CASH AVAILABLE FOR DISTRIBUTION

           Effective  January 1, 1991,  the  Managing  General  Partner  resumed
           quarterly  distributions  which are funded  from cash  available  for
           distribution and reserves.

3.         TAX INCOME/LOSS

           The Partnership's tax income/loss for 1995 is expected to differ from
           that for  financial  reporting  purposes  primarily due to accounting
           differences  in  the  recognition  of   construction   period  costs,
           depreciation   incurred  by  the  Local  Limited   Partnerships   and
           differences  in the  recognition  of equity in loss of Local  Limited
           Partnerships under the equity method of accounting described below.

4.         INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS

           The  Partnership  accounts for its  investment  in each Local Limited
           Partnership on the equity method of accounting.  The investment  cost
           (including  amounts paid or accrued) is subsequently  adjusted by the
           Partnership's  share of the Local  Limited  Partnership's  results of
           operations and by distributions  received or accrued.  Costs relating
           to the  acquisition  and  selection  of the  investment  in the Local
           Limited  Partnership  are  capitalized to the investment  account and
           amortized  over the life of the  investment  or until the  investment
           balance  has been  written  down to  zero.  Costs  in  excess  of the
           Partnership's  initial  basis in the net assets of the Local  Limited
           Partnerships  are amortized  over the  estimated  useful lives of the
           underlying assets.  Equity in the loss of Local Limited  Partnerships
           is not  recognized  to the extent that the  investment  balance would
           become negative.

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


The Partnership has an equity interest in seven Local Limited Partnerships,  all
of which own fully operating apartment complexes. The Partnership has recognized
its proportionate  share of losses from the Local Limited  Partnerships  through
September 30, 1995 to the extent that investment balances remain positive.

Net income for the first nine months of 1995 was  $289,944  compared to $307,342
for the first nine months of 1994. This decrease in net income was the result of
a decrease in income from Local Limited Partnership cash distributions which was
partially  offset  by an  increase  in  equity  in  income  of a  Local  Limited
Partnership,  Maple Manor. The Local Limited  Partnership  owning Village Square
distributed  $186,573  to the  Partnership  during the first nine months of 1995
versus  $263,298  during the first nine  months of 1994.  This  decrease  can be
attributed  to higher  operating  expenses  and capital  improvements  and lower
replacement reserve withdrawals.

The Partnership  requires cash to pay general and administrative  expenses.  All
cash requirements are satisfied by interest income on short-term investments and
cash distributions from Local Limited Partnerships. As of September 30, 1995 the
Partnership had available reserves of approximately $1,750,000.

Two properties owned by Local Limited  Partnerships in which the Partnership has
an interest,  Autumn Chase and Clear Creek,  had  previously  defaulted on their
mortgages.  Currently,  both properties are operating under provisional  workout
arrangement  with the U.S Department of Housing and Urban  Development  ("HUD").
The  workout  arrangements  are  effective  through  April  2000  and May  1998,
respectively.  The Local Limited Partnership owning Dunhaven Apartments, Section
2, Phase 2, defaulted on its mortgage  obligation in June 1994. The mortgage was
assigned  to HUD on March 23,  1995.  Winthrop  is  currently  working  with the
general  partner  of  Dunhaven  Apartments,  Section  2,  Phase 2, to bring  the
mortgage current.

The five properties  owned by the remaining Local Limited  Partnerships in which
the Partnership  retains an ownership  interest met their financial  obligations
during the third quarter of 1995.

Variations for future interim periods will occur as the operating results of the
Local Limited  Partnerships  change and the  Partnership  sells its interests in
Local Limited Partnerships and the gains are recognized.


SUPPLEMENTARY INFORMATION
REQUIRED PURSUANT TO SECTION 9.4 OF THE PARTNERSHIP AGREEMENT

September 30, 1995
(Unaudited)

 1.   Statement of Cash Available for Distribution for the three months ended
      September 30, 1995:
<TABLE>

<S>                                                                                                                      <C>
      Net income.......................................................                                                  $  56,330
        Add: Charges to income not affecting cash available for
                distributions:
                Amortization expense.......................................                                                    945
           Equity in income of Local Limited Partnership..............                                                     (35,969)
                Cash from Reserves.........................................                                                167,817
                                                                                                                         ---------

              Cash Available for Distribution.............................                                               $ 189,123
                                                                                                                         ---------

      Distributions allocated to General Partners.......................                                                 $  14,088
                                                                                                                         ---------

      Distributions allocated to Limited Partners.......................                                                 $ 175,035
                                                                                                                         ---------
</TABLE>


 2.    Fees or other  compensation  paid or  accrued by the  Partnership  to the
       General  Partners,  or their  affiliates,  during the three  months ended
       September 30, 1995.
<TABLE>

  Entity Receiving                      Form of
  Compensation                        Compensation                                                                    Amount       

<S>                                                                                                                   <C>
General Partners                 Interest in Cash
                                   Available for Distribution                                                         $14,088

WFC Realty Co., Inc.             Interest in Cash
                                   Available for Distribution                                                         $    35

</TABLE>


All other  information  required  pursuant  to  Section  9.4 of the  Partnership
Agreement  is set  forth in the  attached  Report  on Form  10-Q or  Partnership
Report.

PART II - OTHER INFORMATION


All items are inapplicable.

                                                              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.


                        WINTHROP RESIDENTIAL ASSOCIATES III,
                               A LIMITED PARTNERSHIP
                                  (Registrant)

                       By: Two Winthrop Properties, Inc.
                            Managing General Partner



                       By:  /s/ Anthony R. Page
                            Anthony R. Page
                            Chief Financial Officer


                       By:  /s/ Richard J. McCready
                            Richard J. McCready
                            Chief Operating Officer


DATED:  November 3, 1995