UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K

                Annual Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934



 For the fiscal year ended December 31, 1996        Commission File No. 33-18859


                  Wellesley Lease Income Limited Partnership IV
             (Exact Name of Registrant as Specified in its Charter)


Massachusetts                                                         04-2985041
(State or other jurisdiction                   (IRS Employer Identification No.)
 of incorporation or organization)


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

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

           Securities registered pursuant to Section 12(b) of the Act

                                      None

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

           Securities registered pursuant to Section 12(g) of the Act

                     Units of Limited Partnership Interests

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


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

State the aggregate market value of the voting stock held by  non-affiliates  of
the  registrant  as of March 26, 1997:  Not  applicable,  since  securities  are
non-voting.

                   Documents incorporated by reference: None.

                            Exhibit Index on Page: 39

                                  Page 1 of 40


<PAGE>


Corporate organization as discussed in Part I, Item 1 Business is as follows:

TLP Holding LLC ("Holding")  controls TLP Leasing Programs,  Inc.  ("TLP"),  TLP
Management Services, Inc. ("TLPMS"),  and TLP Securities,  Inc. TLP controls TLP
Columbia  Management  Corp.  ("TCMC")  which  serves as  General  Partner to the
Columbia  Lease  Income  Funds.  Torchmark  Corporation  ("Torchmark")  controls
TMK/United,  Inc.  which  controls  Waddell and Reed  Financial  Services,  Inc.
("Waddell and Reed").

Through various  dealer-manager  arrangements,  TLP, TLPMS, and Waddell and Reed
serve  as  corporate  general  partners  to the  Wellesley  Leasing  Partnership
("Wellesley General Partner") and the Hanover Leasing Partnership. The Wellesley
General  Partner is the general  partner for the Wellesley  Lease Income Limited
Partnerships.  Hanover  Leasing  Partnership  serves as the General  Partner for
Hanover Lease Income Limited Partnership with BOT Financial  Corporation serving
as agent.




<PAGE>


                                     Part I
Item 1.  Business.

Wellesley Lease Income Limited  Partnership IV (the  "Partnership") is a limited
partnership  organized under the provisions of the Massachusetts Uniform Limited
Partnership  Act on November 9, 1987. As of December 31, 1996,  the  Partnership
consisted of a General Partner and 1,685 Limited Partners owning 27,226 Units of
Limited Partnership Interests of $500 each (the "Units"),  except that employees
of the  Corporate  General  Partners of the General  Partner and  employees  and
securities representatives of its affiliates purchased 148 Units for a net price
of $460 per Unit,  and the  Partnership  incurred no obligation to pay any sales
commissions  with respect to such sales. The Units were sold commencing March 3,
1988, pursuant to a Registration  Statement on Form S-1 under the Securities Act
of 1933. As set forth more fully at Item 10. Directors and Executive Officers of
the  Partnership.  of this  Report,  the General  Partner is  Wellesley  Leasing
Partnership,  and the General Partner has three Corporate  General Partners (the
"Corporate  General  Partners"):  TLP  Leasing  Programs,  Inc.  ("TLP") and TLP
Management  Services  Corporation  ("TLPMS"),  formerly CIS Management  Services
Corporation  ("CISMS"),  both  Massachusetts  corporations  and  Waddell  & Reed
Financial  Services,  Inc.  ("Waddell  & Reed",  formerly  TUP  Services,  Inc.,
"TUPS"), a Missouri corporation.

The   Partnership   was  organized  to  engage  in  the  business  of  acquiring
income-producing   computer  peripheral   equipment  for  investment   purposes,
principally International Business Machines, Incorporated ("IBM") equipment. The
Partnership's principal objectives are as follows:

1.       To acquire and lease equipment,  primarily through operating leases, to
         generate income during its entire useful life;

2.       To provide quarterly distributions of cash to the Limited Partners from
         leasing revenues and from the proceeds of sales or other disposition of
         Partnership equipment; and

3.       To reinvest a portion of lease  revenues and a  substantial  portion of
         cash from sales and  refinancings  in additional  equipment  during the
         first seven years of the Partnership's operations.

The Partnership was formed  primarily for investment  purposes and not as a "tax
shelter".

The Partnership shall terminate on December 31, 2012, unless sooner dissolved or
terminated  as  provided  in  Section  11 of the  Amended  Agreement  of Limited
Partnership.

The Partnership has had a total of five closings.  The closings  occurred on May
18, 1988, July 11, 1988,  September 16, 1988,  October 31, 1988, and December 1,
1988 with 9,104,  5,545, 5,657, 3,640 and 3,280 units,  respectively.  Equipment
purchased  through  December 31, 1996 is $33,688,384.  At the end of 1996, there
are 157 leases in place with 140 lessees.  The  acquisition  of these leases and
equipment  is  described  more fully in Item 2.  Properties.  of this report and
notes  3 and 4 to  the  financial  statements  included  in  Item  8.  Financial
Statements and Supplementary Data.

On January 9, 1996,  TLP Holding LLC  purchased  all the common stock of TLP and
TLPMS from CMI  Holding  Co. and CMI  Corporation,  respectively.  Under the new
ownership, TLP and TLPMS will continue to operate in the same manner of business
as described below.



<PAGE>


Under  the  Partnership  Agreement,  the  General  Partner,   Wellesley  Leasing
Partnership,  is solely responsible for the operation of the Partnership and its
equipment.  As discussed above, the General Partner has three Corporate  General
Partners:  TLP, TLPMS and Waddell & Reed. TLP was formed in December 1982 and is
a wholly-owned  subsidiary of TLP Holding LLC  ("Holding").  TLPMS was formed in
May 1985 as CISMS, and is a wholly-owned  subsidiary of Holding and an affiliate
of TLP.  Holding is  primarily  engaged in  management  services  and  equipment
leasing.  Waddell  & Reed  (formerly  TUPS)  was  formed  in May  1986 and is an
affiliate of Waddell & Reed, Inc.,  which was one of the Soliciting  Brokers for
this  offering.  Both Waddell & Reed and Waddell & Reed,  Inc. are  wholly-owned
subsidiaries  of  TMK/United  Inc.,  which  itself  is  an  indirect  85%  owned
subsidiary of Torchmark Corporation ("Torchmark").

The  General   Partnership   Agreement  between  TLP  and  TLPMS  (the  "General
Partnership  Agreement"),  provides  that TLPMS will propose to the  Partnership
equipment  acquisitions,  leasing,  financing and re-financing  transactions and
sale transactions, for approval by the Executive Committee, and will oversee the
operation,  management and use of the Partnership's equipment, and that TLP will
oversee  the  marketing  of the Units and all  administrative  functions  of the
Partnership and, together with Waddell & Reed, will supply  substantially all of
the General Partner's capital resources.  All of the Partnership's  equipment to
date has been acquired,  and all dispositions of Partnership equipment have been
made,  through  TLPMS,  using the personnel and resources of Holding and several
outside  equipment  lease  brokers the General  Partner  believes  would be most
advantageous for the Partnership.

The Partnership's  investment policy provides for the acquisition of diversified
types of computer  equipment  and the leasing of such  equipment  to others on a
short-term basis under operating  leases.  The Partnership  generally  purchases
equipment  for  which a lease  exists,  or is  entered  into at the  time of the
Partnership's  acquisition  of the  equipment.  This  equipment  is recorded and
depreciated at the Partnership  cost (purchase price plus the acquisition  fee).
If at any time the General Partner deems the equipment to be obsolete or related
maintenance  and  storage  costs to be in excess of its fair market  value,  the
equipment  is scrapped or sold at the current fair market  value,  which ever is
most advantageous for the Partnership.

Pursuant to its leasing policies, the General Partner performs a credit analysis
of potential  lessees to determine their  creditworthiness.  The General Partner
leases all of its equipment to third  parties by means of operating  leases with
fixed base lease rates. Rents are payable monthly or quarterly. Operating leases
generally  do not  have  terms  greater  than  five  years in  duration  and the
aggregate  noncancelable  rental payments during the term of the lease (on a net
present  value  basis),  are not  sufficient to permit the lessor to recover the
purchase price of the equipment.

At the termination of the lease,  the General Partner arranges for the equipment
to be  re-leased  (either to the same lessee or a new  lessee) if it  determines
that re-leasing is in the Partnership's best interests.  Generally, equipment is
re-leased at least once and  possibly  several  times  during the  Partnership's
life, unless it is determined that the equipment is not marketable and therefore
may be sold. The General  Partner  provides,  or arranges for the  installation,
removal,  maintenance and modification of the Partnership's equipment. Also, the
General  Partner  will  purchase  and  maintain,  or cause to be  purchased  and
maintained,  appropriate  insurance  coverage  to protect the  interests  of the
Partnership.



<PAGE>


At December 31, 1996, the Partnership  owned various computer  equipment with an
original  cost basis of  $5,084,339.  Listed below is a breakdown of the various
types of computer equipment owned:

      Computer peripherals                         $     2,237,109
      Processors & upgrades                              1,372,772
      Telecommunications                                   152,530
      Other                                              1,321,928
                                                   ---------------

                                                   $     5,084,339
                                                   ===============

Of the leases in place at December 31, 1996, the average lease term is 35 months
and the average monthly lease rate as a percentage of original equipment cost is
3.04%.

The  Partnership's  investments  in computer  peripheral  equipment are and will
continue to be subject to various risk  factors.  The  principal  business  risk
associated  with  ownership of the  equipment is the  inability to keep it fully
leased at rentals which, after payment of operating expenses and debt service on
Partnership borrowings, provide, together with any anticipated sales proceeds or
salvage value, an acceptable rate of return. Other risk factors include:

1.       Technological   and   economic   equipment    obsolescence,    physical
         deterioration,  malfunction,  and  risks  attendant  upon  defaults  by
         lessees and credit losses.

2.       Residual  Values  of  Equipment.   The  Partnership's   return  on  its
         investment in equipment will depend in part upon the  continuing  value
         of such equipment which in turn,  depends upon, among other things: (1)
         the quality of the equipment;  (2) the condition of the equipment;  (3)
         the timing of the equipment's  acquisition;  (4) the cost of comparable
         new equipment; (5) the technological obsolescence of the equipment; (6)
         the General Partner's ability to forecast  technological  changes which
         may reduce the value of the equipment; and (7) market factors.

3.       Competition  from Full Payout  Lessors.  In connection  with  operating
         leases,  the Partnership will encounter  considerable  competition from
         those offering full payout leases,  which are written for a longer term
         and a lower rate than the Partnership's operating leases.

4.       Competition from Manufacturers.  Leases offered by the Partnership will
         compete  with  operating  leases  and full  payout  leases  offered  by
         equipment  manufacturers  in their own lease  programs.  In addition to
         attractive  financial  terms,  manufacturers  may also provide  certain
         ancillary services which the Partnership cannot offer directly, such as
         maintenance service (including possible equipment substitution rights),
         warranty services and trade-in privileges.

5.       Other  Competition.  There  are  numerous  other  potential  investors,
         including limited  partnerships  organized and managed similarly to the
         Partnership,  seeking to purchase equipment subject to either operating
         leases or full payout leases, many of which will have greater financial
         resources than the  Partnership  and more  experience  than the General
         Partner.   The  Partnership   will  compete  in  the  computer  leasing
         marketplace  with  many   non-manufacturing   firms,   including  other
         equipment  dealers,  brokers  and  leasing  companies,  as well as with
         financial institutions.



<PAGE>


6.       Changes  in  Marketing  Policies.  IBM's  current  marketing  policy of
         offering accrual  discounts (i.e.,  applying lease payments as a credit
         toward the purchase of equipment) and volume discounts  enables certain
         customers to obtain IBM  equipment at a cost lower than its fair market
         value. In the case of accrual  discounts,  lessees of IBM equipment who
         have earned a purchase  credit  toward that  equipment can purchase the
         equipment  from IBM and  arrange a  cost-effective  sale and  leaseback
         arrangement  with  TLP  or  the  Partnership.  The  sale  price  to the
         Partnership  will  typically  be less than the fair market value of the
         equipment.  The  Partnership  may be  able  to  participate  in  volume
         discounts   through   purchases   arranged  by  lessees  of  TLP.   The
         Partnership's   lower   equipment  costs  in  turn  should  enable  the
         Partnership to offer lower lease rates to customers and help offset the
         risk of early  obsolescence.  If IBM were to eliminate  these policies,
         raise its  prices,  lower its lease  rates,  or become more active as a
         lessor,  the  Partnership  might  find it  more  difficult  to  compete
         successfully as a lessor of IBM equipment.

7.       Defaults  by  Lessees.  Default by a lessee may cause  equipment  to be
         returned to the  Partnership at a time when the General  Partner may be
         unable to  promptly  arrange  for its  re-leasing  (at the rental  rate
         previously  received  or  otherwise)  or sale (with or without a loss),
         thus resulting in the loss of anticipated revenues and the inability to
         recover  the  Partnership's  investment  and repay  related  debt.  Any
         related  debt may be secured by the  returned  equipment  and,  in some
         cases, by the Partnership's other equipment. If the debt is not paid in
         a timely manner,  the lender may foreclose and assume  ownership of all
         equipment securing the debt, resulting in economic loss and adverse tax
         consequences  to the  Partnership's  partners.  Two  lessees,  American
         Freightways,  Incorporated and Halliburton Company,  lease equipment in
         excess of 10% of total  rental  income for the year ended  December 31,
         1996.  The  related  rental   payments   comprise  13.92%  and  12.21%,
         respectively,  of total rental  income for the year ended  December 31,
         1996. American Freightways,  Incorporated and Halliburton Company lease
         equipment  comprising  14.87% and  10.53%,  respectively,  of the total
         equipment portfolio at December 31, 1996.

8.       Changes in Technology. The General Partner intends to offer lease rates
         to the  Partnership's  lessees  which  take  into  account  the risk of
         technological  advances  which may reduce  the value of such  equipment
         owned by the Partnership.  However, the introduction of an entirely new
         technology  could lead to a radical  reduction in the fair market value
         of certain equipment and make such equipment difficult to re-lease.

The Partnership considers itself to be engaged in only one industry segment, the
business of investing primarily in IBM computer peripheral equipment and leasing
the equipment to major national  corporations on an operating  lease basis,  and
therefore, industry segment information has not been provided.



<PAGE>


Item 2.  Properties.

At  December  31,  1996,  the  Partnership  owned  computer   equipment  with  a
depreciated  cost basis of $1,250,203,  subject to 157 existing  leases with 140
different lessees,  and equipment held in inventory,  awaiting re-lease or sale,
with a depreciated  cost basis of $26,469.  All purchases of computer  equipment
are subject to a 3% acquisition fee paid to the General Partner.


<PAGE>


Item 3. Legal Proceedings:

There are no material pending legal  proceedings that the Partnership is a party
or of which any of its equipment or leases is the subject.

On January 9, 1996,  TLP Holding LLC  purchased all the common stock of TLP from
CMI Holding Co. and all the common stock of TLP Management Services  Corporation
("TLPMS",  formerly  CIS  Management  Services  Corporation  "CISMS")  from  CMI
Corporation.  Under the new  ownership,  it is expected  that TLP and TLPMS will
continue to operate in the same manner of business as each has in the past.

On January 13,  1989 (the  "Petition  Date"),  Continental  Information  Systems
Corporation  ("Continental"),  CIS  Corporation  ("CIS"),  CMI Holding Co. ("CMI
Holding"), CMI Corporation ("CMI") and certain of its affiliates  (collectively,
the "Debtors"), voluntarily petitioned for relief under Chapter 11 of the United
States  Bankruptcy  Code  ("Chapter  11"),  and  thereafter   continued  in  the
management  and  operation  of their  businesses  and  property  as  Debtors  In
Possession until October 25, 1989, when the United States  Bankruptcy Court (the
"Court")  confirmed  the  appointment  of James P. Hassett as Chapter 11 trustee
(the "Trustee") of the Debtors.  CMI Holding is the former parent of TLP and CMI
is the former  parent of TLPMS.  TLP and TLPMS,  neither  of which  filed  under
Chapter  11,  are  the two  Corporate  General  Partners  of  Wellesley  Leasing
Partnership,  the General Partner of the Partnership.  Both before and after the
Petition Date, CIS and CMI have acted as agents for the  Partnership in selling,
leasing and remarketing Partnership equipment. CMI Holding became a wholly-owned
subsidiary of CIS pursuant to a Court ordered settlement on July 20, 1993.

As of the Petition Date, there were a number of unsettled  transactions  between
CIS  and  CMI  and  the  Partnership  and  other  affiliated  partnerships  (the
Partnership and such other partnerships are herein  collectively  referred to as
the  "Partnerships"),  including  outstanding  accounts  receivable and accounts
payable between each of the Partnerships  and CIS and CMI and their  affiliates,
sales  of  equipment  and  related  leases  from  CIS  and  CMI to  each  of the
Partnerships  for  which  not all  documentation  had been  completed  as of the
Petition  Date,  and sales of  equipment  and related  leases from which CIS had
failed to remove prior third-party liens. In addition,  accounts  receivable and
accounts  payable   continued  to  accrue  and  be  paid  between  each  of  the
Partnerships  and CIS and CMI and their  affiliates  subsequent  to the Petition
Date.

On February 28, 1992,  the Court granted an order  implementing  a settlement of
the outstanding  issues between each of the  Partnerships  and the Debtors.  The
settlement occurred on March 13, 1992. In the order the Court approved a set-off
on a  partnership-by-partnership  basis  of  pre-petition  amounts  owed by each
affected Debtor to each  Partnership to the extent of pre-petition  amounts owed
by that Partnership to that Debtor. As a result of the set-off,  the Partnership
had a net unsecured pre-petition claim of $37,470 against CMI as of December 31,
1993 which had been fully reserved.

On November 29, 1994, the Court  confirmed the Trustee's  proposed Joint Plan of
Reorganization  ("the Plan") dated October 4, 1994, and the Debtors emerged from
Chapter 11 bankruptcy  protection  on December 21, 1994. In accordance  with the
Plan  projections,  100% of each CMI claim  would be paid in full,  of which 75%
would  be cash and 25%  would be  common  stock of the  reorganized  Continental
Information Systems Corporation ("CISC"), based on a per share price of $4.29.



<PAGE>


On December 27, 1994, the Partnership  received the first  distribution from the
Trustee (now Trustee of the Liquidating  Estate of CIS Corporation,  et al) with
respect  to  the  net  unsecured   pre-petition   claim  described   above.  The
distribution  consisted  of cash  proceeds of $22,808 and 1,844 shares of common
stock in CISC.  During  the  second  quarter  of 1995,  the stock of CISC  began
trading,  thereby  providing an objective  valuation method for establishing the
cost basis of $2.50 per share, which approximated fair value at June 30, 1995. A
charge off was made in 1995 in relation to the difference  between the Trustee's
original  prescribed  value of the CISC  stock at $4.29  per  share and the cost
basis established by the Partnership. On July 20, 1995, the Partnership received
the second and final distribution from the Trustee,  consisting of cash proceeds
of $5,294 and 341 shares of CISC.  Following the Trustee's  second  distribution
and the  charge  off made  during  the year,  the  Partnership's  net  unsecured
pre-petition  claim was  settled and there are no other  outstanding  receivable
balances.



<PAGE>


Item 4.  Submission of Matters to a Vote of Security Holders.

None.


<PAGE>


                                     Part II

Item 5.  Market  for  the  Partnership's  Securities and Related Security Holder
         Matters.

(a)  Market Information

The  Partnership's   outstanding   securities  consist  of  Limited  Partnership
Interests in Units of $500 each. As of December 31, 1996,  27,226 Units had been
sold to the public at a price of $500 per Unit  (except for 148 Units which were
sold for a net  price of $460 per Unit to  employees  of the  Corporate  General
Partners of the General Partner and employees and securities  representatives of
its affiliates).

There is no public market for the Units,  and it is not anticipated  that such a
public market will develop.

(b)  Approximate Number of Security Holders

<TABLE>
<CAPTION>

                                      Number of Unit                          Number of Units
                                     holders on Record                             as of
 Title of Class                        as of 12/31/96                             12/31/96
                                       --------------                             --------


    <S>                                    <C>                                      <C>
    Units of
    Limited
    Partnership
    Interests                              1,685                                    27,226

</TABLE>

(c)  Dividend History and Restrictions

During the fiscal  period  ended  December 31, 1988,  the  Partnership  had five
closings  with 27,226  Units.  Pursuant to Section 8 of the Limited  Partnership
Agreement, the Partnership's  "Distributable Cash From Operations" for each year
will be determined and then  distributed to the Partners.  Upon reaching the end
of its reinvestment  period (the seventh  anniversary of the Partnership's final
closing  date),   the   Partnership   will  also   distribute  to  the  Partners
"Distributable  Cash  From  Sales  or  Refinancings",  if any.  The  Partnership
distributed  $442,423,  $1,157,104  and  $1,633,561 to the Limited  Partners and
$23,285,  $60,899 and $85,976 to the  General  Partners in 1996,  1995 and 1994,
respectively.  The cumulative cash distributions to the Limited Partners through
December  31, 1996 are  $11,640,935  as compared  with the  contributed  Limited
Partners' net capital of $12,148,459.

"Cash From  Operations" and "Cash From Sales or Refinancing"  means the net cash
provided by the  Partnership's  normal  operations  or as a result of any sales,
refinancings or other dispositions of equipment, respectively, after the general
expenses and current  liabilities of the  Partnership  (other than the equipment
management  fee) are paid,  as reduced by any reserves  for working  capital and
contingent  liabilities to the extent deemed  reasonable by the General Partner,
and as  increased  by any  portion of such  reserves  then deemed by the General
Partner not to be required for Partnership operations.  "Distributable Cash From
Operations" and "Distributable  Cash From Sales or Refinancings" means Cash From
Operations or Cash From Sales or Refinancings,  respectively, reduced by amounts
which the General Partner  determines  shall be reinvested  (through the seventh
anniversary of the Partnership's final closing date) in additional Equipment and
by payments of all accrued but unpaid equipment management fees.

For  rendering  services  in  connection  with  the  normal  operations  of  the
Partnership,  the  Partnership  will pay to the  General  Partner a  Partnership
management fee equal to 7% of the monthly rental billings collected.

Each distribution of Distributable Cash From Operations of the Partnership shall
be  allocated  95% to the Limited  Partners and 5% to the General  Partner.  Any
Distributable  Cash From Sales or  Refinancings  from gains and losses  shall be
allocated  99% to the  Limited  Partners  and 1% to the  General  Partner  until
"Payout" has occurred.  "Payout" means the time when the aggregate amount of all
distributions to the Limited Partners of Distributable  Cash From Operations and
of Distributable Cash From Sales or Refinancings  equals the aggregate amount of
the Limited  Partners'  original  invested  capital plus a cumulative 10% annual
return  (compounded  daily)  on  their  aggregate  unreturned  invested  capital
(calculated  from the beginning of the first full fiscal  quarter  following the
Partnership's  closing date).  Including the distribution for the fourth quarter
of 1996 made February 28, 1997, cumulative distributions to date are $425.88 per
unit.  This  cumulative  distribution  per  unit  amount  represents  15.74%  of
"Payout".  After  Payout  has  occurred,  any  Distributable  Cash From Sales or
Refinancings will be distributed 15% (plus an additional 1% for each 1% by which
the total of all Limited Partners' original Capital Contributions  actually paid
or allocated to the Partnership's investment in equipment exceeds the greater of
(i) 80% of the gross proceeds of the Partnership's offering of Units, reduced by
0.0625% for each 1% of leverage encumbering  Partnership equipment,  or (ii) 75%
of the  gross  proceeds  of  such  offering)  to the  General  Partner,  and the
remainder to the Limited Partners.  It is not anticipated that Payout will occur
as of the liquidation of this Partnership.

Distributable  Cash,  if any,  will be  distributed  within  60 days  after  the
completion of each of the first three fiscal quarters of each Partnership fiscal
year,  and within 120 days after the  completion of each fiscal year,  beginning
after the first full fiscal quarter  following the  Partnership's  closing date.
Each such  distribution  will be  described  in a statement  sent to the Limited
Partners.



<PAGE>


Item 6.  Selected Financial Data.

The following  table sets forth  selected  financial  information  regarding the
Partnership's  financial position and operating results. This information should
be read in conjunction  with the financial  statements  and notes  thereto,  and
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations, which are included in Items 8. and 7., respectively of this report.

<TABLE>
<CAPTION>
                                                          For the Years Ended December 31,
                                                1996             1995               1994             1993                   1992
                                          ------------------------------------------------------------------------------------------
Operating Data

<S>                                       <C>               <C>                 <C>              <C>                <C>             
   Rental Income                          $      1,617,165  $     1,697,214     $     2,759,929  $     3,997,157    $      4,692,969
   Interest Income                                   6,844           23,035              30,708           34,787              54,809
   Net Income (Loss)                               463,920         (347,598)           (614,313)         203,727             774,516
   Net Income (Loss) Per Limited
       Partnership Unit                              12.12          (12.64)              (24.02)            4.33               18.16

Balance Sheet Data

   Cash and Cash Equivalents              $         36,022  $       336,360     $       843,110  $       959,487    $      1,363,767
   Computer Equipment at Cost                    5,084,339        7,388,216           8,169,287       13,518,961          17,078,290
   Total Assets                                  1,385,036        2,239,549           3,064,038        5,366,699           7,672,897
   Long-term Debt                                  591,174          960,503             668,195          648,751           1,172,460
   Distributions to Partners                       465,708        1,218,003           1,719,537        1,719,536           1,719,533
   Distributions Per Limited
     Partnership Unit                                16.25            42.50               60.00            60.00               60.00
   Partners' Equity                                591,832          592,951           2,159,371        4,493,221           6,009,030

</TABLE>



<PAGE>


Item 7.  Management's   Discussion  and  Analysis  of  Financial  Condition  and
         Results of Operations.

General

The  Partnership  had five  closings as of December  31,  1988.  These  closings
occurred on May 18, 1988,  July 11, 1988,  September 16, 1988,  October 31, 1988
and December 1, 1988.  Total  subscriptions  received  from these  closings were
$4,548,920,  $2,771,260,  $2,828,500,  $1,818,600 and $1,639,800,  respectively,
representing  27,226 Units of Limited  Partnership  Interest.  Included in these
amounts  were  proceeds  from  the  sale of 148  Units  at a price  net of sales
commissions  for  employees  of an affiliate  of the General  Partner,  who were
allowed to purchase units at a net price of $460 per unit.

Results of Operations

The following discussion relates to Partnership's  operations for the year ended
December 31, 1996, in comparison to the years ended December 31, 1995 and 1994.

The  Partnership  realized net income of $463,920 and a net loss of $347,598 and
$614,313 for the years ended  December 31,  1996,  1995 and 1994,  respectively.
Rental income  decreased  $80,049 or 5% and  $1,062,715 or 39% in 1996 and 1995,
respectively.  The decrease in rental income each year is primarily due to lower
rental rates obtained on equipment lease extensions and  remarketings  after the
initial  lease term  expires  and a net  reduction  in the  overall  size of the
equipment  portfolio.  Other  income  of  $31,147  in  1995  represents  the net
settlement  proceeds  relating to a dispute  between the  Partnership and Gemini
Equities,  Incorporated ("Gemini") with regard to ownership rights of equipment.
The  Partnership  had the rights to  purchase  equipment  at a bargain  purchase
option at the expiration of a lease with a French  corporation that commenced in
1989.  However,  during the lease term the  equipment  owner was sold to Gemini.
Upon  lease  expiration  in 1992,  Gemini  denied the  Partnership's  request to
purchase the equipment. In response, the Partnership pursued the title rights to
the equipment, resolving the dispute in a settlement of cash proceeds during the
current year.  Interest  income  decreased  $16,191 and $7,673 in 1996 and 1995,
respectively,  as result of lower average  short-term  investment  balances held
during each year.  The recovery of net unsecured  pre-petition  claim of $10,757
and $22,808 for the years ended  December 31, 1995 and 1994,  respectively,  was
the result of the receipt of the Trustee's  distributions  on the fully reserved
net unsecured  pre-petition  receivable,  in the original amount of $37,470 (for
further  discussion  refer  to note 9 to the  financial  statements).  The  1995
recovery  relates to the receipt of the second and final Trustee's  distribution
comprised of cash and stock, along with the second quarter of 1995 establishment
of  the  carrying  value  of  the  stock  received  in  the  December  27,  1994
distribution.  Accordingly, the 1994 recovery amount represents the cash portion
of the Trustee's first distribution.  The $26,370 and $6,188 net gain on sale of
equipment  in 1996 and 1995,  respectively,  can be  attributed  to the  overall
increase in the sales of equipment  carrying low net book values. In comparison,
1994 reflected a $582,152 net loss on sale of equipment due to a number of large
equipment sales carrying high net book values.

Total costs and expenses  decreased  $929,120 or 44% and $729,667 or 26% in 1996
and 1995,  respectively,  compared to prior  periods.  The decrease in costs and
expenses each year is primarily the result of lower depreciation expense,  which
accounted for a decrease of $1,012,253 and $652,660 for the years ended December
31, 1996 and 1995, respectively.  The decrease in depreciation expense each year
is due to a large portion of the equipment  portfolio becoming fully depreciated
and a reduction in the overall  equipment  portfolio.  Included in  depreciation
expense in 1996, 1995 and 1994 is a reversal of a provision for $275,000,  and a
provision  for  $700,541 and  $500,000,  respectively,  to properly  reflect the
equipment  portfolio's  net  realizable  value for each year.  Interest  expense
increased $31,091 and $8,908 in 1996 and 1995,  respectively,  due to the payoff
and  continued  paydown  on the  installment  notes  payable  -  affiliates  and
long-term  debt.  Such debt was used to finance  equipment  lease  transactions.
Management  fees  increased  $12,257 or 11% due to the  increased  collection of
delinquent  rents  receivable  in  1996.  General  and  administrative  expenses
increased  17%  and  6%  for  the  years  ended  December  31,  1996  and  1995,
respectively.  A major factor  contributing  to the  increase  each year is that
salaries and expenses of the partnership accounting and reporting personnel,  of
the General Partner,  which are reimbursable by the various  partnerships  under
management are being allocated over a diminishing  number of  partnerships.  The
provision for doubtful accounts  increased $16,523 in the current year due to an
increase in potential  uncollectible rents receivable,  versus the prior year in
which the provision for doubtful  accounts  decreased  $26,706 due to successful
collection  efforts on delinquent  accounts.  The net loss on sale of marketable
securities  in 1996  reflects the sale of stock that had been  received from the
Trustee.

The  Partnership  recorded a net income (loss) per Limited  Partnership  Unit of
$12.12,  $(12.64) and $(24.02) for the years ended  December 31, 1996,  1995 and
1994, respectively. The allocation for the year ended December 31, 1994 includes
a cost  recovery  allocation  of profit and loss among the  General  and Limited
Partners  which results in an  allocation  of net loss to the 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 year ended December 31, 1996,  rental  revenue  generated from operating
leases was the primary source 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  remarketable,
sold.  This decision is made upon  analyzing  which option would derive the most
favorable results.

Rental income will continue to decrease due to two factors.  The first factor is
the rate obtained when the original  leases expire and are remarketed at a lower
rate.  Typically  the  remarketed  rates are lower due to the decrease in useful
life of the  equipment.  Secondly,  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
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 $1,750,992
and are to be received over the next five years (for further  discussion,  refer
to note 4 to the financial statements).

The  Partnership's  investing  activities  for the year  resulted  in  equipment
purchases  of $506,622  and  equipment  sales with a  depreciated  cost basis of
$52,789,  generating  $165,568 in  proceeds.  Included in  equipment  sales is a
$86,049 loss which was charged against the reserve,  initially set up in a prior
period to account for estimated losses on the ultimate disposition of equipment.
The Partnership will not purchase equipment in the future as the Partnership has
reached the end of its reinvestment period.

The Partnership's  financing  activities  resulted in proceeds from borrowing on
long-term debt of $189,942.  The Partnership  activities also included a paydown
on  long-term  debt during 1996 of  $559,271.  The  Partnership  will payoff its
remaining  long-term  debt of  $591,174  by  1998.  Total  debt  assumed  by the
Partnership  from  inception is  $14,270,105,  for a total  leverage of 42%. The
Partnership's  financing  activities  in 1996 also  resulted  in the  short-term
borrowing  of notes  payable-affiliate  in the  amount of  $223,600  to  finance
equipment purchases. These notes were paid off during the year.

Cash  distributions paid in the first quarter of 1997 are currently at an annual
level of 2% per Limited  Partnership  Unit,  or $10.00 per  Limited  Partnership
Unit.  During 1996,  the  Partnership  distributed a total of $16.25 per Limited
Partnership  Unit, of which $12.12 per Unit represents income and $4.13 per Unit
represents a return of capital.  For the quarter  ended  December 31, 1996,  the
Partnership  declared  a cash  distribution  of  $71,647,  of which  $3,582  was
distributed  to the General  Partner and $68,065 was  distributed to the Limited
Partners.  The  distribution  subsequently  occurred on February 28,  1997.  The
Partnership  expects to continue paying  distributions  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>


Item 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





                          Independent Auditors' Report




The Partners of Wellesley Lease Income Limited Partnership IV:

We have  audited the  accompanying  balance  sheets of  Wellesley  Lease  Income
Limited Partnership IV (a Massachusetts  Limited Partnership) as of December 31,
1996 and 1995,  and the  related  statements  of  operations,  partners'  equity
(deficit)  and cash flows for each of the years in the  three-year  period ended
December 31, 1996. In connection with our audits of the financial statements, we
have also audited the accompanying  financial  statement schedule II for each of
the years in the  three-year  period ended  December 31, 1996.  These  financial
statements and this financial  statement  schedule are the responsibility of the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements and this financial statement schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Wellesley Lease Income Limited
Partnership  IV as of  December  31,  1996  and  1995,  and the  results  of its
operations  and its cash  flows for each of the years in the  three-year  period
ended  December 31, 1996,  in  conformity  with  generally  accepted  accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered  in  relation  to the basic  financial  statements  taken as a whole,
presents fairly, in all material respects, the information set forth therein.







KPMG Peat Marwick LLP



Boston, Massachusetts
March 21, 1997


<PAGE>


                  WELLESLEY LEASE INCOME LIMITED PARTNERSHIP IV
                      (A Massachusetts Limited Partnership)

                                 Balance Sheets
                           December 31, 1996 and 1995
<TABLE>
<CAPTION>

                                     Assets
                                                                                       1996                   1995
                                                                                 ----------------        ----------------
<S>                                                                              <C>                     <C>             
Investment property, at cost (notes 3 and 4):
   Computer equipment                                                            $      5,084,339        $      7,388,216
     Less accumulated depreciation                                                      3,807,667               5,674,559
                                                                                 ----------------        ----------------
       Investment property, net                                                         1,276,672               1,713,657

Cash and cash equivalents                                                                  36,022                 336,360
Rents receivable, net (note 2)                                                             64,103                 125,765
Account receivable - affiliates                                                             1,214                  43,054
Sales receivable, net (note 2)                                                              6,425                  16,069
Marketable securities (notes 2 and 8)                                                         600                   4,644
                                                                                 ----------------        ----------------

     Total assets                                                                $      1,385,036        $      2,239,549
                                                                                 ================        ================

                        Liabilities and Partners' Equity
Liabilities:
   Current portion of long-term debt (note 7)                                    $        437,438        $        491,254
   Accounts payable and accrued expenses - affiliates (note 5)                             28,097                 420,457
   Accounts payable and accrued expenses                                                  144,138                 237,953
   Unearned rental revenue                                                                 29,795                  27,685
   Long-term debt, less current portion (note 7)                                          153,736                 469,249
                                                                                 ----------------        ----------------

     Total liabilities                                                                    793,204               1,646,598
                                                                                 ----------------        ----------------

Partners' equity:
   General Partner:
     Capital contribution                                                                   1,000                   1,000
     Cumulative net income                                                                610,700                 476,748
     Cumulative cash distributions                                                       (611,699)               (588,414)
     Unrealized losses on marketable securities (note 8)                                       (1)                     (8)
                                                                                 ----------------        ----------------
                                                                                                -                (110,674)
                                                                                 ----------------        ----------------
   Limited Partners (27,226 units):
     Capital contribution, net of offering costs                                       12,148,459              12,148,459
     Cumulative net income (loss)                                                          84,457                (245,511)
     Cumulative cash distributions                                                    (11,640,935)            (11,198,512)
     Unrealized losses on marketable securities (note 8)                                     (149)                   (811)
                                                                                 ----------------        ----------------
                                                                                          591,832                 703,625
                                                                                 ----------------        ----------------
     Total partners' equity                                                               591,832                 592,951
                                                                                 ----------------        ----------------

     Total liabilities and partners' equity                                      $      1,385,036        $      2,239,549
                                                                                 ================        ================
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>


                  WELLESLEY LEASE INCOME LIMITED PARTNERSHIP IV
                      (A Massachusetts Limited Partnership)

                            Statements of Operations
              For the Years Ended December 31, 1996, 1995 and 1994

<TABLE>
<CAPTION>

                                                                 1996                     1995                    1994
                                                            ---------------          --------------         ---------------

<S>                                                         <C>                      <C>                    <C>            
Revenue:
   Rental income                                            $     1,617,165          $    1,697,214         $     2,759,929
   Other income                                                           -                  31,147                       -
   Interest income                                                    6,844                  23,035                  30,708
   Recovery of net unsecured pre-petition
     claim (note 9)                                                       -                  10,757                  22,808
   Net gain (loss) on sale of equipment                              26,730                   6,188                (582,152)
                                                            ---------------          --------------         ---------------

       Total revenue                                              1,650,739               1,768,341               2,231,293
                                                            ---------------          --------------         ---------------

Costs and expenses:
   Depreciation                                                     804,769               1,817,022               2,469,682
   Interest                                                          82,349                  51,258                  42,350
   Related party expenses (note 5):
     Management fees                                                123,488                 111,231                 178,265
     General and administrative                                     152,198                 129,883                 122,058
   Provision for doubtful accounts                                   23,068                   6,545                  33,251
   Net loss on sale of marketable securities                            947                       -                       -
                                                            ---------------          --------------         ---------------

       Total costs and expenses                                   1,186,819               2,115,939               2,845,606
                                                            ---------------          --------------         ---------------

Net income (loss)                                           $       463,920          $     (347,598)        $      (614,313)
                                                            ===============          ==============         ===============

Net income (loss) per
   Limited Partnership Unit                                 $         12.12          $       (12.64)        $        (24.02)
                                                            ===============          ==============         ===============
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>


                  WELLESLEY LEASE INCOME LIMITED PARTNERSHIP IV
                      (A Massachusetts Limited Partnership)

                    Statements of Partners' Equity (Deficit)
              For the Years Ended December 31, 1996, 1995 and 1994

<TABLE>
<CAPTION>

                                                             General              Limited
                                                             Partner              Partners              Total
                                                       -----------------     ----------------    ------------------

<S>                                                    <C>                   <C>                 <C>               
Equity at
    December 31, 1993                                  $               -     $      4,493,221    $        4,493,221

Net income (loss)                                                 39,685             (653,998)             (614,313)

Cash distributions                                               (85,976)          (1,633,561)           (1,719,537)
                                                       -----------------     ----------------    ------------------

Equity (deficit) at
    December 31, 1994                                            (46,291)           2,205,662             2,159,371

Net loss                                                          (3,476)            (344,122)             (347,598)

Cash distributions                                               (60,899)          (1,157,104)           (1,218,003)

Unrealized loss on marketable
    securities (note 8)                                               (8)                (811)                 (819)
                                                       -----------------     ----------------    ------------------

Equity (deficit) at
    December 31, 1995                                           (110,674)             703,625               592,951

Net income                                                       133,952              329,968               463,920

Cash distributions                                               (23,285)            (442,423)             (465,708)

Reduction of unrealized loss on
    marketable securities (note 8)                                     7                  662                   669
                                                       -----------------     ----------------    ------------------

Equity at
    December 31, 1996                                  $               -     $        591,832    $          591,832
                                                       =================     ================    ==================
</TABLE>

                 See accompanying notes to financial statements.



<PAGE>


                  WELLESLEY LEASE INCOME LIMITED PARTNERSHIP IV
                      (A Massachusetts Limited Partnership)

                            Statements of Cash Flows
              For the Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>

                                                                            1996                1995                 1994
                                                                            ----                ----                 ----

<S>                                                                  <C>                 <C>                  <C>              
Cash flows from operating activities:
   Net income (loss)                                                 $       463,920     $       (347,598)    $       (614,313)
                                                                     ---------------     ----------------     ----------------

   Adjustments to reconcile  net income (loss) to net cash
     provided by operating activities:
       Depreciation                                                          804,769            1,817,022            2,469,682
       Provision for doubtful accounts                                        23,068                6,545               33,251
       Net (gain) loss on sale of equipment                                  (26,730)              (6,188)             582,152
       Net loss on sale of marketable securities                                 947                    -                    -
       Net decrease (increase) in current assets                              90,078              (30,042)             (87,070)
       Net (decrease) increase in current liabilities                       (484,065)             449,623               11,745
                                                                     ---------------     ----------------     ----------------

         Total adjustments                                                   408,067            2,236,960            3,009,760
                                                                     ---------------     ----------------     ----------------

         Net cash provided by operating activities                           871,987            1,889,362            2,395,447
                                                                     ---------------     ----------------     ----------------

Cash flows from investing activities:
   Purchase of investment property                                          (506,622)          (1,747,497)          (1,571,470)
   Proceeds from sale of investment property                                 165,568              277,080              759,739
   Proceeds from sale of marketable securities                                 3,766                    -                    -
                                                                     ---------------     ----------------     ----------------

         Net cash used in investing activities                              (337,288)          (1,470,417)            (811,731)
                                                                     ---------------     ----------------     ----------------

Cash flows from financing activities:
   Proceeds from borrowings under notes payable                              223,600                    -                    -
   Principal payments on notes payable                                      (223,600)                   -                    -
   Proceeds from borrowings under long-term debt                             189,942              645,188              685,709
   Principal payments on long-term debt                                     (559,271)            (352,880)            (666,265)
   Cash distributions to partners                                           (465,708)          (1,218,003)          (1,719,537)
                                                                     ---------------     ----------------     ----------------

         Net cash used in financing activities                              (835,037)            (925,695)          (1,700,093)
                                                                     ---------------     ----------------     ----------------

Net decrease in cash and cash equivalents                                   (300,338)            (506,750)            (116,377)

Cash and cash equivalents at beginning of year                               336,360              843,110              959,487
                                                                     ---------------     ----------------     ----------------

Cash and cash equivalents at end of year                             $        36,022     $        336,360     $        843,110
                                                                     ===============     ================     ================

Supplemental cash flow information:
   Interest paid during the year                                     $        73,371     $         51,258     $         45,231
                                                                     ===============     ================     ================
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>


                  WELLESLEY LEASE INCOME LIMITED PARTNERSHIP IV
                      (A Massachusetts Limited Partnership)

                          Notes to Financial Statements
                        December 31, 1996, 1995 and 1994

(1)   Organization and Partnership Matters

The  Partnership  was  organized   under  the   Massachusetts   Uniform  Limited
Partnership  Act on November 9, 1987. In exchange for a capital  contribution of
$1,000,  the  Partnership  has issued all of its General  Partner  interests  to
Wellesley Leasing Partnership, a Massachusetts General Partnership.

The Amended  Agreement of Limited  Partnership  authorizes the issuance of up to
150,000 Limited  Partnership  units at a gross price per unit of $500, and up to
50 additional units to affiliates.

The  Partnership  has entered into a Sales Agent  Agreement  with TLP Securities
Corporation ("TLP Securities"), an affiliate of the General Partner, which acted
as a Dealer/Manager for the offering of Limited Partnership Interests.  On March
3, 1988,  pursuant to the  Dealer/Manager  agreement,  the Partnership began the
marketing  and  sale of the  units.  The  Partnership  has  had a total  of five
closings.  The  closings  occurred on May 18, 1988,  with 9,104 units,  July 11,
1988, with 5,545 units,  September 16, 1988, with 5,657 units, October 31, 1988,
with 3,640 units and December 31, 1988, with 3,280 units.

Pursuant  to  the  terms  of  the  Amended  Agreement  of  Limited  Partnership,
Distributable  Cash From  Operations  and  Profits  for  federal  income tax and
financial  reporting purposes from normal operations of the Partnership shall be
allocated 95% to the Limited  Partners and 5% to the General  Partner.  Further,
gains on sales of equipment occurring after the reinvestment period end shall be
allocated first to eliminate  negative capital accounts,  if any, and second 99%
to the Limited  Partners and 1% to the General Partner until "Payout".  "Payout"
means the time when the  aggregate  amount of all  distributions  to the Limited
Partners of Distributable  Cash From Operations and of  Distributable  Cash From
Sales or  Refinancings  equals the  aggregate  amount of the  Limited  Partners'
original invested capital plus a cumulative 10% annual return (compounded daily)
on their aggregate unreturned invested capital (calculated from the beginning of
the first full fiscal quarter following the Partnership's  closing date). Losses
for federal income tax and financial  reporting  purposes from normal operations
and any  Distributable  Cash From  Sales or  Refinancings  from gains and losses
shall be allocated  99% to the Limited  Partners  and 1% to the General  Partner
until  Payout  has  occurred,  and 85% to the  Limited  Partners  and 15% to the
General Partner thereafter.  In addition,  special cost recovery allocations may
be  required to reflect  the  differing  initial  capital  contributions  of the
General Partner and the Limited Partners.  The  Partnership's  books and records
are  in  accordance  with  the  terms  of  the  Amended   Agreement  of  Limited
Partnership.  Including  the  distribution  for the fourth  quarter of 1996 made
February 28, 1997,  cumulative  distributions  to date is $425.88 per unit. This
cumulative  distribution per Unit amount  represents 15.74% of Payout. It is not
anticipated that Payout will occur as of the liquidation of this Partnership.



<PAGE>


                  WELLESLEY LEASE INCOME LIMITED PARTNERSHIP IV
                      (A Massachusetts Limited Partnership)

                          Notes to Financial Statements

(2)   Summary of Significant Accounting Policies

General

The  Partnership's  records are maintained on the accrual basis of accounting so
that revenues are  recognized as earned and expenses are recognized as incurred.
Assets and  liabilities  are those of the  Partnership  and do not  include  any
assets and liabilities of the individual partners.  The preparation of financial
statements in conformity with generally accepted accounting  principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

Depreciation  on  investment  property  purchased  prior to  January  1, 1993 is
provided using a  straight-line  basis,  generally over a five year period.  For
equipment purchased on or after January 1, 1993,  depreciation is provided using
a straight-line  basis, over a four year period. The Partnership's  policy is to
periodically  review the estimated  fair market value of its equipment to assess
the  recoverability of its  undepreciated  cost. In accordance with this policy,
the Partnership  records a charge to depreciation  expense in instances when the
net book value of  equipment  exceeds  its net  realizable  value.  Included  in
depreciation  expense in 1996,  1995 and 1994 is a reversal of a  provision  for
$275,000 and a provision  for $700,541 and $500,000,  respectively,  to properly
reflect the equipment  portfolio's net realizable value. Routine maintenance and
repairs  are  expensed as  incurred.  Major  betterments  and  enhancements  are
capitalized and depreciated in accordance  with the  Partnership's  depreciation
policy.

Cash and Cash Equivalents

The  Partnership  considers  cash  and  short-term   investments  with  original
maturities of three months or less to be cash and cash equivalents.

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 December 31, 1996 and 1995, the allowance
for  doubtful  accounts  included in rents  receivable  was $51,763 and $34,889,
respectively, and $11,100 and $4,906 in sales receivable, respectively.



<PAGE>


                  WELLESLEY LEASE INCOME LIMITED PARTNERSHIP IV
                      (A Massachusetts Limited Partnership)

                          Notes to Financial Statements

Marketable Securities

The marketable securities are stated at fair value at the balance sheet date and
consist  of 300  shares  of  common  stock in  Continental  Information  Systems
Corporation  ("CISC")  received by the  Partnership  in the  distributions  made
December 27, 1994 and July 20, 1995 by the Trustee of the Liquidating  Estate of
CIS  Corporation,  et al, ("the  Trustee"),  with respect to the outstanding net
unsecured pre-petition claim. During the second quarter of 1995, the stock began
trading,  thereby providing an objective  valuation measure for establishing the
cost basis.  Unrealized  gains and losses are  recorded  directly  in  partners'
equity  except  those losses that are deemed to be other than  temporary,  which
would be reflected in income (see note 8).

Income Taxes

No provision  for federal  income taxes has been made as the  liability for such
taxes is that of the  Partners  rather  than  that of the  Partnership.  Taxable
income  (loss),  as reported  on Schedule  K-1,  Form 1065  "Partner's  Share of
Income, Credits, Deductions,  etc.", was $136,436,  $(381,970) and $(480,112) in
1996, 1995 and 1994, respectively (see note 6).

(3)   Investment Property

At  December  31,  1996,  the  Partnership  owned  computer   equipment  with  a
depreciated  cost basis of $1,250,203,  subject to existing leases and equipment
with a  depreciated  cost basis of $26,469 in  inventory,  awaiting  re-lease or
sale. All purchases of computer  equipment are subject to a 3%  acquisition  fee
paid to the General Partner.

(4)   Leases

Description of leasing arrangements:

Operations consist primarily of leasing computer equipment. All equipment leases
are classified as operating leases and expire over the next five years.

Minimum lease  payments  scheduled to be received in  the future under  existing
noncancelable operating leases are as follows:

                           1997                    $     1,074,612
                           1998                            478,040
                           1999                            114,137
                           2000                             58,718
                           2001                             25,485
                                                   ---------------

                                                   $     1,750,992
                                                   ===============


<PAGE>


                  WELLESLEY LEASE INCOME LIMITED PARTNERSHIP IV
                      (A Massachusetts Limited Partnership)

                          Notes to Financial Statements

The following  schedule provides an analysis of the cost of capital equipment by
major classes as of December 31, 1996:

            Computer peripherals                         $     2,237,109
            Processors & upgrades                              1,372,772
            Telecommunications                                   152,530
            Other                                              1,321,928
                                                         ---------------

                                                         $     5,084,339
                                                         ===============

Two lessees,  American Freightways,  Incorporated and Halliburton Company, lease
equipment  in excess of 10% of total rental  income for the year ended  December
31, 1996. The related rental payments comprise 13.92% and 12.21%,  respectively,
of  total  rental  income  for  the  year  ended  December  31,  1996.  American
Freightways,  Incorporated  and Halliburton  Company lease equipment  comprising
14.87% and 10.53%,  respectively,  of the total equipment  portfolio at December
31, 1996.

(5)   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 years  ended
December 31, 1996, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
                                                     1996               1995                1994
                                                     ----               ----                ----

<S>                                              <C>                 <C>                 <C>         
Equipment acquisition fees                       $     14,756        $     50,898        $     45,732
Management fees                                       123,488             111,231             178,265
Reimbursable expenses paid                            149,711             119,878             105,601
                                                 ------------        ------------        ------------

                                                 $    287,955        $    282,007        $    329,598
                                                 ============        ============        ============
</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.  Also,  the  Partnership
reimburses the General Partner and its affiliates for certain expenses  incurred
by them in connection with the operation of the Partnership.



<PAGE>


                  WELLESLEY LEASE INCOME LIMITED PARTNERSHIP IV
                      (A Massachusetts Limited Partnership)

                          Notes to Financial Statements

(6)   Reconciliation of Financial Statement Net  Income (Loss) to Taxable Income
     (Loss) to Partners

A  reconciliation  of financial  statement net income  (loss) to taxable  income
(loss) to partners is as follows for the years ended December 31, 1996, 1995 and
1994:

<TABLE>
<CAPTION>
                                                                                   1996               1995                1994
                                                                                   ----               ----                ----

      <S>                                                                     <C>                 <C>                <C>           
      Net income (loss) per financial statements                              $      463,920      $    (347,598)     $    (614,313)

      Provision for doubtful accounts expense for financial
           statement purposes in excess of (less than) provision
           for doubtful accounts expense for tax purposes                             23,068             (8,118)            10,444

      Depreciation expense for financial statement purposes
           (less than) in excess of depreciation expense for
           tax purposes                                                             (249,510)           500,855            500,000

      Net gain on sale of equipment for financial statement
           purposes in excess of net gain on sale of equipment
           for tax purposes                                                         (101,042)          (527,109)          (376,243)
                                                                              --------------      -------------      -------------

      Taxable income (loss) to partners                                       $      136,436      $    (381,970)     $    (480,112)
                                                                              ==============      =============      =============
</TABLE>

Losses for federal tax purposes from normal  operations are allocated 99% to the
Limited Partners and 1% to the General Partner. Profits for federal tax purposes
from normal  operations are allocated 95% to the Limited  Partners and 5% to the
General Partner. In addition,  special cost recovery allocations may be required
to reflect the differing initial capital contribution of the General Partner and
the Limited Partners.

(7)   Long-term Debt

Long-term debt at December 31, 1996 consists of two loans  totaling  $3,830 from
Randolph  Computer  Company  each with an interest  rate of 6.00%,  one loan for
$101,792 from Pioneer Bank and Trust Company with an interest rate of 8.15%, two
loans totaling  $292,588 from Pullman Capital  Corporation with an interest rate
of 8.00% and three loans  totaling  $192,964  from  Liberty  Bank,  each bearing
interest  at  a  rate  of  8.25%.   The  total   outstanding   debt  balance  is
collateralized  by equipment with a net book value of $892,376 and assignment of
the related leases.

Maturities of long-term debt are as follows:

                     1997                   $      437,438
                     1998                          153,736
                                            --------------

                                            $      591,174
                                            ==============


<PAGE>


                  WELLESLEY LEASE INCOME LIMITED PARTNERSHIP IV
                      (A Massachusetts Limited Partnership)

                          Notes to Financial Statements

(8)   Fair Values of Financial Instruments

Pursuant to Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity  Securities," which requires  investments
in debt and equity  securities  other than those  accounted for under the equity
method  to be  carried  at fair  value or  amortized  cost  for debt  securities
expected to be held to maturity,  the Partnership has classified its investments
in equity  securities as available  for sale.  Accordingly,  the net  unrealized
gains and losses computed in marking these  securities to market are reported as
a component of partners' equity. At December 31, 1996 the difference between the
fair value and the cost basis of these securities is an unrealized loss of $150.

The fair value is based on currently  quoted market  prices.  The cost basis and
estimated fair value of the Partnership's  marketable securities at December 31,
1996 and 1995, respectively, are as follows:

<TABLE>
<CAPTION>
                                                                                1996                             1995
                                                                       ------------------------         ---------------------
                                                                       Cost           Fair              Cost          Fair
                                                                       Basis          Value             Basis         Value

<S>                                                                    <C>            <C>               <C>           <C>    
Investment in Continental Information
     Systems Corporation Stock                                         $  750         $  600            $ 5,463       $ 4,644
                                                                       ======         ======            =======       =======
</TABLE>

As was discussed in note 2,  Marketable  Securities,  the  Partnership  received
stock in CISC as part of the December  27, 1994 and July 20, 1995  distributions
from the Trustee,  with respect to the  outstanding  net unsecured  pre-petition
claim. The receivables  comprising the net unsecured pre-petition claim had been
fully reserved during prior years;  thus, during the second quarter of 1995 when
the  stock  began  actively  trading,  the  carrying  amount  for the  stock was
established  to be $2.50 per share  which  approximated  fair  value at June 30,
1995.

(9)  Bankruptcy of Continental Information Systems Corporation (former parent of
     General Partner)

On January 9, 1996,  TLP Holding LLC  purchased all the common stock of TLP from
CMI Holding Co. and all the common stock of TLP Management Services  Corporation
("TLPMS",  formerly  CIS  Management  Services  Corporation  "CISMS")  from  CMI
Corporation.  Under the new  ownership,  it is expected  that TLP and TLPMS will
continue to operate in the same manner of business as each has in the past.

On January 13,  1989 (the  "Petition  Date"),  Continental  Information  Systems
Corporation  ("Continental"),  CIS  Corporation  ("CIS"),  CMI Holding Co. ("CMI
Holding"), CMI Corporation ("CMI") and certain of its affiliates  (collectively,
the "Debtors"), voluntarily petitioned for relief under Chapter 11 of the United
States  Bankruptcy  Code  ("Chapter  11"),  and  thereafter   continued  in  the
management  and  operation  of their  businesses  and  property  as  Debtors  In
Possession until October 25, 1989, when the United States  Bankruptcy Court (the
"Court")  confirmed  the  appointment  of James P. Hassett as Chapter 11 trustee
(the "Trustee") of the Debtors.  CMI Holding is the former parent of TLP and CMI
is the former  parent of TLPMS.  TLP and TLPMS,  neither  of which  filed  under
Chapter  11,  are  the two  Corporate  General  Partners  of  Wellesley  Leasing
Partnership,  the General Partner of the Partnership.  Both before and after the
Petition Date, CIS and CMI have acted as agents for the  Partnership in selling,
leasing and remarketing Partnership equipment. CMI Holding became a wholly-owned
subsidiary of CIS pursuant to a Court ordered settlement on July 20, 1993.


<PAGE>


                  WELLESLEY LEASE INCOME LIMITED PARTNERSHIP IV
                      (A Massachusetts Limited Partnership)

                          Notes to Financial Statements

As of the Petition Date, there were a number of unsettled  transactions  between
CIS  and  CMI  and  the  Partnership  and  other  affiliated  partnerships  (the
Partnership and such other partnerships are herein  collectively  referred to as
the  "Partnerships"),  including  outstanding  accounts  receivable and accounts
payable between each of the Partnerships  and CIS and CMI and their  affiliates,
sales  of  equipment  and  related  leases  from  CIS  and  CMI to  each  of the
Partnerships  for  which  not all  documentation  had been  completed  as of the
Petition  Date,  and sales of  equipment  and related  leases from which CIS had
failed to remove prior third-party liens. In addition,  accounts  receivable and
accounts  payable   continued  to  accrue  and  be  paid  between  each  of  the
Partnerships  and CIS and CMI and their  affiliates  subsequent  to the Petition
Date.

On February 28, 1992,  the Court granted an order  implementing  a settlement of
the outstanding  issues between each of the  Partnerships  and the Debtors.  The
settlement occurred on March 13, 1992. In the order the Court approved a set-off
on a  partnership-by-partnership  basis  of  pre-petition  amounts  owed by each
affected Debtor to each  Partnership to the extent of pre-petition  amounts owed
by that Partnership to that Debtor. As a result of the set-off,  the Partnership
had a net unsecured pre-petition claim of $37,470 against CMI as of December 31,
1993 which had been fully reserved.

On November 29, 1994, the Court  confirmed the Trustee's  proposed Joint Plan of
Reorganization  ("the Plan") dated October 4, 1994, and the Debtors emerged from
Chapter 11 bankruptcy  protection  on December 21, 1994. In accordance  with the
Plan  projections,  100% of each CMI claim  would be paid in full,  of which 75%
would  be cash and 25%  would be  common  stock of the  reorganized  Continental
Information Systems Corporation ("CISC"), based on a per share price of $4.29.

On December 27, 1994, the Partnership  received the first  distribution from the
Trustee (now Trustee of the Liquidating  Estate of CIS Corporation,  et al) with
respect  to  the  net  unsecured   pre-petition   claim  described   above.  The
distribution  consisted  of cash  proceeds of $22,808 and 1,844 shares of common
stock in CISC.  During  the  second  quarter  of 1995,  the stock of CISC  began
trading,  thereby  providing an objective  valuation method for establishing the
cost basis of $2.50 per share, which approximated fair value at June 30, 1995. A
charge off was made in 1995 in relation to the difference  between the Trustee's
original  prescribed  value of the CISC  stock at $4.29  per  share and the cost
basis established by the Partnership. On July 20, 1995, the Partnership received
the second and final distribution from the Trustee,  consisting of cash proceeds
of $5,294 and 341 shares of CISC.  Following the Trustee's  second  distribution
and the  charge  off made  during  the year,  the  Partnership's  net  unsecured
pre-petition  claim was  settled and there are no other  outstanding  receivable
balances.


<PAGE>


                  WELLESLEY LEASE INCOME LIMITED PARTNERSHIP IV
                      (A Massachusetts Limited Partnership)




Schedule II - Valuation and Qualifying Accounts and Reserves

<TABLE>
<CAPTION>

                                                          Additions charged
                                      Balance at           to (recoveries                                       Balance
                                      beginning            credited from)                                       at end
Classification                          of year           costs and expenses        Charge-offs                 of year
                                   ----------------        ----------------         ----------------        -----------------

<S>                                <C>                     <C>                      <C>                     <C>              
Year ended
December 31, 1994                  $         37,470        $         10,443         $              -        $          47,913
                                   ================        ================         ================        =================

Year ended
December 31, 1995                  $         47,913        $         (4,212)        $          3,906        $          39,795
                                   ================        ================         ================        =================

Year ended
December 31, 1996                  $         39,795        $         23,068         $              -        $          62,863
                                   ================        ================         ================        =================
</TABLE>





<PAGE>


                  WELLESLEY LEASE INCOME LIMITED PARTNERSHIP IV
                      (A Massachusetts Limited Partnership)

                    Computer Equipment Portfolio (Unaudited)
                                December 31, 1996

Lessee

American  Freightways,  Incorporated
Bassin  Distributors,   Incorporated
Carr Separation,  Incorporated
Chrysler Corporation
Cincinnati Gas & Electric Company
Coulter Corporation
Cybersmith, Incorporated
Dave's Custom Caps
Delphi Internet, Incorporated
FAX  International,  Incorporated
Halliburton  Company
H.J. Meyers Company,  Incorporated
Hughes Aircraft  Company,  Incorporated
Internet Access Company,  Incorporated
J. Walter Thompson Company
ON Technology Corporation
Sero Company, Incorporated
Sports & Recreation, Incorporated

Equipment Description                       Acquisition Price

Computer peripherals                         $      2,237,109
Processors & upgrades                               1,372,772
Telecommunications                                    152,530
Other                                               1,321,928
                                             ----------------

                                             $      5,084,339
                                             ================

<PAGE>


Exhibit 11         WELLESLEY LEASE INCOME LIMITED PARTNERSHIP IV
                      (A Massachusetts Limited Partnership)

          Computation of Net Income (Loss) per Limited Partnership Unit
              For the Years Ended December 31, 1996, 1995 and 1994

<TABLE>
<CAPTION>
                                                                             1996               1995                 1994
                                                                             ----               ----                 ----

<S>                                                                   <C>                <C>                  <C>              
Net income (loss)                                                     $      463,920     $       (347,598)    $       (614,313)

Gain on sale                                                                 (26,730)              (8,470)            (237,777)
Loss on sale                                                                       -                2,282              819,929
Special cost recovery allocation                                                (819)                   -              (46,291)
                                                                      --------------     ----------------     ----------------

Available income (loss) from operations                                      436,371             (353,786)             (78,452)
                                                                      --------------     ----------------     ----------------

Allocations to General Partner:
   Income (loss) from operations                                              21,859               (3,538)                (785)
   Gain on sale                                                              112,101                   85                2,378
   Loss on sale                                                                    -                  (23)              (8,199)
   Special cost recovery allocation                                               (8)                   -               46,291
                                                                      --------------     ----------------     ----------------

Income (loss) allocated to General Partner                                   133,952               (3,476)              39,685
                                                                      --------------     ----------------     ----------------

Income (loss) allocated to Limited Partners                           $      329,968     $       (344,122)    $       (653,998)
                                                                      ==============     ================     ================

Number of Limited Partnership Units                                           27,226               27,226               27,226

Net income (loss) per Limited Partnership Unit                        $        12.12     $         (12.64)    $         (24.02)
                                                                      ==============     ================     ================
</TABLE>



<PAGE>


Item 9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Statement Disclosures.

None.


<PAGE>


                                    Part III

Item 10.  Directors and Executive Officers of the Partnership.

(a-b) Identification of Directors and Executive Officers

The  Partnership  has no Directors or Officers.  As indicated in Item 1. of this
report, the General Partner of the Partnership is Wellesley Leasing Partnership.
Under the Partnership  Agreement,  the General Partner is solely responsible for
the operation of the Partnership's properties,  and the Limited Partners have no
right to participate in the control of such operations.  The General Partner has
three Corporate General Partners: TLP and TLPMS, both Massachusetts corporations
and Waddell & Reed, a Missouri corporation.  The names and ages of the Directors
and Executive Officers of the Corporate General Partners are as follows:

<TABLE>
<CAPTION>

TLP and TLPMS

          Name                                                       Title                                             Age

<S>                                                <C>                                                                 <C>
Nicholas C. Bogard                                 Director                                                            51
Arthur P. Beecher                                  Director and President                                              59
Nancy E. Malone                                    Vice President, Lease Financing                                     38
Irene V. King                                      Vice President, Satellite Operations                                50
Joseph P. Colonna                                  Vice President, Marketing                                           37
James S. Felman                                    Clerk                                                               32

Waddell & Reed

          Name                                                       Title                                             Age

Keith A. Tucker                                    President, Chief Executive Officer                                  52
                                                      and Director
Robert L. Hechler                                  Vice President, Chief Operations Officer,                           60
                                                      Treasurer and Director
Henry J. Herrmann                                  Vice President, Chief Investment Officer                            55
                                                      and Director
Robert J. Williams, Jr.                            Vice President and National Sales Manager                           53
Sharon K. Pappas                                   Vice President, Secretary                                           38
                                                      and General Counsel
</TABLE>


(c) Identification of certain significant persons

See Item 10. (a-b)

(d) Family relationship

No  family  relationship  exists  between  any of  the  foregoing  Directors  or
Officers.

(e) Business experience



<PAGE>


Nicholas C. Bogard is Director of TLP and TLPMS.  Mr. Bogard served as President
and Director of TLP from 1982 - 1992,  and served as Director of CS First Boston
from 1992 - 1994. He has been working as an independent  consultant  since 1994.
Mr. Bogard holds a B.A. from  Princeton  University  and an M.B.A.  from Harvard
University.

Arthur P. Beecher is President  and Director of TLP and TLPMS.  Prior to joining
TLP, he was an officer of CSA  Financial  Corp. of Boston,  Massachusetts,  most
recently as Vice President,  Finance and Administration  since 1975. Mr. Beecher
holds a B.S. from Boston University and is a Certified Public Accountant.

Nancy E. Malone is Vice President,  Lease  Financing of TLP and TLPMS.  Prior to
joining TLP,  she was Manager,  Lease  Financing  for 11 years at CSA  Financial
Corp. of Boston, Massachusetts.  Ms. Malone holds a B.A. from The College of the
Holy Cross.

Irene V. King is Vice President,  Satellite  Operations for TLP and TLPMS. Prior
to joining TLP in April 1994,  she was  Director of Public  Income  Funds at CSA
Financial  Corp. of Boston,  Massachusetts  and was previously Vice President of
Finance at First  Alliance Corp. of Wellesley,  Massachusetts.  Ms. King holds a
B.A. from Barat College of the Sacred Heart, Lake Forest, Illinois.

James S.  Felman is Clerk of TLP and  TLPMS.  Prior to  joining  TLP,  he was in
private  practice and was  previously  employed as a Tax  Consultant  with Price
Waterhouse in Miami,  Florida and New York,  New York.  Mr. Felman  received his
J.D. from S.U.N.Y. at Buffalo Law School, holds a B.S. in Economics and Business
Management from Cornell  University,  and is a licensed attorney in New York and
Florida.

Joseph P.  Colonna  is Vice  President,  Marketing  of TLP and  TLPMS.  Prior to
joining  TLP,  he was  Associate  Counsel  at CSA  Financial  Corp.  of  Boston,
Massachusetts in charge of Domestic and International Leasing  Transactions.  He
received his B.A.  from Rutgers  University,  J.D. from Suffolk  University  Law
School and M.S.L. from Vermont Law School.

Keith A. Tucker is President,  Chief Executive Officer and Director of Waddell &
Reed;  Chairman  of the Board of  Directors  of  WRIMCO,  Waddell & Reed,  Inc.,
Waddell & Reed Services  Company,  Waddell & Reed Asset  Management  Company and
Torchmark  Distributors,  Inc.,  an  affiliate  of  Waddell & Reed,  Inc.;  Vice
Chairman of the Board of  Directors,  Chief  Executive  Officer and President of
United Investors Management Company;  Vice Chairman of the Board of Directors of
Torchmark Corporation; and President of each of the funds in the United, Waddell
& Reed and TMK/United  mutual fund groups.  He is also Director of  Southwestern
Life Corporation. Prior to joining Torchmark Corporation in 1991, Mr. Tucker was
with Trivest,  Inc. and Trivest Securities  Corporation in Miami,  Florida since
1987,  most recently as the Senior Vice President and  President,  respectively.
Prior to Trivest,  Inc., he was Director of Atlantis Group,  Inc., a diversified
company.  Mr.  Tucker  holds a B.B.A.  and a J. D. both from the  University  of
Texas.

Robert L. Hechler is Vice  President,  Chief  Operations  Officer,  Director and
Treasurer  of Waddell & Reed;  Executive  Vice  President,  Principal  Financial
Officer, Director and Treasurer of WRIMCO;  President,  Chief Executive Officer,
Principal  Financial  Officer,  Director and Treasurer of Waddell & Reed,  Inc.;
Director  and  Treasurer of Waddell & Reed  Services  Company;  Vice  President,
Treasurer and Director of Torchmark  Distributors,  Inc.; and Vice President and
Principal  Financial Officer of each of the funds in the United,  Waddell & Reed
and  TMK/United  mutual fund groups.  He has been employed by Waddell & Reed and
its  affiliates  since 1977.  Mr.  Hechler holds a B.S.  from the  University of
Illinois and an M.B.A. from the University of Chicago.


<PAGE>


Henry J. Herrmann is Vice President,  Chief  Investment  Officer and Director of
Waddell & Reed;  Director of Waddell & Reed,  Inc.;  President,  Chief Executive
Officer,  Chief  Investment  Officer  and  Director of WRIMCO and Waddell & Reed
Asset Management Company;  Senior Vice President and Chief Investment Officer of
United Investors  Management Company; and Vice President of each of the funds in
the  United,  Waddell & Reed and  TMK/United  mutual  fund  groups.  He has been
employed by Waddell & Reed and its affiliates  since 1971. Mr.  Herrmann holds a
B.S. from New York University.

Robert J. Williams,  Jr. is Vice President and National Sales Manager of Waddell
& Reed and  Executive  Vice  President  and National  Sales Manager of Waddell &
Reed,  Inc. He has been employed by Waddell & Reed, Inc. since July 1996. He was
employed with Charles  Schwab & Company from  November  1991 to July 1995.  From
August 1984 to October  1991,  he was  employed by  American  Express  Financial
Advisors or its  affiliates.  Mr.  Williams  holds a B.S. from the University of
Utah and an M.B.A. from California State-Humbolt.

Sharon K. Pappas is Vice  President,  Secretary and General Counsel of Waddell &
Reed; Senior Vice President, Secretary and General Counsel of WRIMCO and Waddell
& Reed, Inc.; Director, Senior Vice President,  Secretary and General Counsel of
Waddell & Reed Services  Company;  Director,  Secretary  and General  Counsel of
Waddell & Reed Asset Management Company;  Vice President,  Secretary and General
Counsel of Torchmark Distributors,  Inc.; formerly, Assistant General Counsel of
WRIMCO, Waddell & Reed Financial Services, Inc., Waddell & Reed, Inc., Waddell &
Reed Asset Management  Company and Waddell & Reed Services Company.  She is Vice
President,  Secretary  and  General  Counsel of each of the funds in the United,
Waddell & Reed and  TMK/United  mutual fund groups.  Prior to joining  Waddell &
Reed and its  affiliates in 1989,  Ms.  Pappas was employed with Stinson,  Mag &
Fizzell in Kansas City,  Missouri.  Ms.  Pappas  holds a B.S.  from Kansas State
University and a J.D. from the University of Kansas.

(f) Involvement in certain legal proceedings

The  Partnership is not aware of any legal  proceedings  against any Director or
Executive  Officer of the Corporate  General Partners which may be important for
the evaluation of any such person's ability and integrity.


<PAGE>


Item 11.  Management Remuneration and Transactions.

(a), (b), (c), (d), and (e): The Officers and Directors of the Corporate General
Partners receive no current or proposed direct  remuneration in such capacities,
pursuant to any standard  arrangements or otherwise,  from the  Partnership.  In
addition,  the Partnership has not paid and does not propose to pay any options,
warrants  or rights to the  Officers  and  Directors  of the  Corporate  General
Partners.  There exists no remuneration  plan or arrangement with any Officer or
Director of the  Corporate  General  Partners  resulting  from the  resignation,
retirement  or any other  termination.  See note 5 to the  financial  statements
included in Item 8. of this report for a description of the remuneration paid by
the Partnership to the General Partner and its affiliates  during 1996, 1995 and
1994.


<PAGE>


Item 12.  Security Ownership of Certain Owners and Management.

By virtue of its  organization  as a limited  partnership,  the  Partnership has
outstanding no securities  possessing  traditional  voting rights.  However,  as
provided  for in Section 13.2 of the Amended  Agreement  of Limited  Partnership
(subject to Section  13.3),  a majority  interest of the Limited  Partners  have
voting rights with respect to:

1.  Amendment of the Limited Partnership Agreement;

2.  Termination of the Partnership;

3.  Removal of the General Partner; and

4.  Approval or disapproval of the sale of  substantially  all the assets of the
    Partnership.

No person or group is known by the General Partner to own beneficially more than
5% of the  Partnership's  27,226  outstanding  Limited  Partnership  Units as of
December 31, 1996.

By virtue of its organization as a limited  partnership,  the Partnership has no
Officers or Directors.  See also note 1 to the financial  statements included in
Item 8. and Item 10. of this report.


<PAGE>


Item 13.  Certain Relationships and Related Transactions.

(a), (b), and (c): The General Partner of the  Partnership is Wellesley  Leasing
Partnership,  a  Massachusetts  general  partnership  which  in turn  has  three
Corporate General Partners:  TLP and TLPMS, both Massachusetts  corporations and
Waddell  &  Reed,  a  Missouri  corporation.  The  Corporate  General  Partners'
Directors and Executive  Officers are identified in Item 10. of this report. The
Partnership was not involved in any transaction involving any of these Directors
or Officers or any member of the immediate family of these individuals,  nor did
any of these persons provide services to the Partnership for which they received
direct  or  indirect   remuneration.   Similarly,   there   exists  no  business
relationship between the Partnership and any of the Directors or Officers of the
Corporate  General  Partners,  nor were any of the  individuals  indebted to the
Partnership.

The General Partner is responsible for acquiring, financing, leasing and selling
equipment for the  Partnership.  TLPMS  proposes for the  Partnership  equipment
acquisitions, leasing transactions,  financing and refinancing transactions, and
sale  transactions,  for approval by the  Executive  Committee  and oversees the
operation,  management and use of each Partnership's  equipment. TLP oversaw the
marketing  of  the  Units  and  oversees  all  administrative  functions  of the
Partnership and, together with Waddell & Reed, provides substantially all of the
General  Partner's  capital  resources.  In  consideration  of such services and
capital  commitments,  TLP receives  30%,  Waddell & Reed receives 10% and TLPMS
receives 60% of all  compensation  received by the General Partner in connection
with  the  formation  and  operation  of the  Partnership  (including  equipment
management fees, acquisition fees, subordinated remarketing fees and the General
Partner's share of Distributable  Cash From Sales or  Refinancings),  except for
Acquisition  Fees, as to which TLP receives 15%, Waddell & Reed receives 10% and
TLPMS  receives 75%. The General  Partner also was reimbursed in an amount equal
to 3% of the gross proceeds of the  Partnership's  offerings for  organizational
and offering expenses;  all such expenses in excess of that amount were borne by
TLP. See note 5 to the  financial  statements  included in Item 8 of this report
for a description of payments made by the Partnership to the General Partner.

For  information  regarding  the  settlements  between the  Partnership  and the
Liquidating Estate of CIS Corporation,  et al, arising out of the emergence from
bankruptcy of CIS and CMI, see Item 3. Legal Proceedings.



<PAGE>


<TABLE>
<CAPTION>

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K: None.

   <S>                                                                                                            <C>
   (a) 1. Financial Statements                                                                                    Page No.

          Independent Auditors' Report                                                                            17
          Balance Sheets at December 31, 1996 and 1995                                                            18
          Statements of Operations for the Years Ended
             December 31, 1996, 1995 and 1994                                                                     19
          Statements of Partners' Equity (Deficit) for
             the Years Ended December 31, 1996, 1995 and 1994                                                     20
          Statements of Cash Flows for the Years
             Ended December 31, 1996, 1995 and 1994                                                               21
          Notes to Financial Statements                                                                           22 - 28


       2. Financial Statement Schedules

          Schedule II - Valuation and Qualifying Accounts and Reserves                                            29

          All other financial  statement  schedules are omitted because they are
          not  applicable,  the  data  is  not  significant,   or  the  required
          information is shown elsewhere in this report.

          Computer Equipment Portfolio (Unaudited)                                                                30


       3. Exhibit Index

          11  Statement regarding computation  of net income (loss) per  Limited
          Partnership Unit                                                                                        31

   (b)    Report on Form 8-K
          N/A

</TABLE>


<PAGE>


                                   SIGNATURES



Pursuant to the  requirements of Section 13 or 15(d) 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 IV
(Registrant)

By:    Wellesley Leasing Partnership,
       its General Partner

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


Date:  March 27, 1997




By:    Arthur P. Beecher,
       President