<PAGE>   1

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

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

                  For the fiscal year ended December 31, 1998

[ ]    Transition Report Pursuant to Section 13 or 15(d) of the

                        Securities Exchange Act of 1934

                  For the transition period from _____ to _____

                       Commission file number - 000-25593

                     TELECOMMUNICATIONS INCOME FUND XI, L.P.
             (Exact name of registrant as specified in its charter)

            Iowa                                               39-1904041
            ----                                               ----------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                              Identification No.)

     100 Second Street S.E., Cedar Rapids, Iowa                    52401
     -----------------------------------------------------------------------
     (Address of principal executive offices)                    (Zip Code)

         Registrant's telephone number, including area code 319-365-2506

        Securities registered pursuant to Section 12(b) of the Act: NONE

                Securities pursuant to section 12 (g) of the Act:

                   Limited Partnership Interests (the "Units")
                   -------------------------------------------
                                (Title of class)



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 
                                       ---    ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K [X].

As of March 19, 1999, 7,273 units were issued and outstanding. Based on the book
value of $846.31 per unit at December 31, 1998, the aggregate market value at
March 19, 1999 was $6,155,213.

DOCUMENTS INCORPORATED BY REFERENCE. Portions of the Registration Statement on
Form S-1, dated November 26, 1997, are incorporated by reference into Part IV.

<PAGE>   2


                     TELECOMMUNICATIONS INCOME FUND XI, L.P.

                          1998 FORM 10-K ANNUAL REPORT

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           Page

                                     PART I
<S>         <C>                                                              <C>
Item 1.     Business..........................................................3
Item 2.     Properties........................................................5
Item 3.     Legal Proceedings.................................................5
Item 4.     Submission of Matters to a Vote of
               Unit Holders...................................................5


                                    PART II

Item 5.     Market for the Registrant's Common Equity
               and Related Stockholders Matters...............................6
Item 6.     Selected Financial Data...........................................6
Item 7.     Management's Discussion and Analysis
               of Financial Condition and
               Results of Operations..........................................7
Item 8.     Financial Statements and
               Supplementary Data............................................12
Item 9.     Changes in and Disagreements with Accountants
               on Accounting and Financial Disclosure........................23


                                    PART III

Item 10.    Directors and Executive
               Officers of the Registrant....................................23
Item 11.    Executive Compensation...........................................25
Item 12.    Security Ownership of Certain
               Beneficial Owners and Management..............................26
Item 13.    Certain Relationships and
               Related Transactions..........................................26


                                    PART IV

Item 14.    Exhibits, Financial Statement Schedules and Reports on
               Form 8.K......................................................27

SIGNATURES        ...........................................................28
EXHIBIT INDEX     ...........................................................29
</TABLE>


<PAGE>   3



                                     PART I


ITEM 1.  BUSINESS

Telecommunications Income Fund XI, L.P., an Iowa limited partnership (the
"Partnership"), was organized on August 26, 1997. The general partner is Berthel
Fisher & Company Leasing, Inc. (the "General Partner"), an Iowa corporation that
has been in operation since 1988. The Partnership's business and the executive
offices of the General Partner are located at 100 Second Street S.E., Cedar
Rapids, Iowa 52401. Substantially all of the voting stock of the General Partner
is owned by Berthel Fisher & Company ("Berthel Fisher").

The Partnership began offering Units to the public on December 23, 1997. The
General Partner has elected to extend the offering period and the closing date
to December 23, 1999. The business of the Partnership is the acquisition and
leasing of equipment, primarily telecommunications equipment such as pay
telephones and call processing equipment. The Partnership began its primary
business activities in February of 1998.

The Partnership will operate until December 31, 2012 unless dissolved sooner due
to the occurrence of any of the following events: (i) the vote by limited
partners owning a majority of the Partnership in accordance with the Partnership
Agreement; (ii) the withdrawal, bankruptcy, or dissolution and liquidation or
other cessation to exist as a legal entity of the general partner (unless any
successor general partner elected in accordance with the provisions of the
Partnership Agreement elects to continue the business of the Partnership); (iii)
the final distribution of all liquidating distributions among the limited
partners pursuant to the Partnership Agreement; or (iv) the sale or disposition
of all or substantially all of the assets of the Partnership without the
subsequent reinvestment in equipment.

A significant portion of the Partnership's business is and is intended to be
with customers who are in the telecommunications and ATM industries. The
telecommunications industry, particularly the pay telephone and long distance
facets of the industry, is heavily regulated by the Federal Communications
Commission ("FCC") and by various state public utility commissions. Regulation
is not directed at the ownership or leasing of telecommunications equipment, but
is focused primarily on the business of the Partnership's customers that operate
in the telecommunications industry. Generally, regulation affects rates that can
be charged and the relationship of the regional Bell operating companies to the
rest of the pay telephone industry. Management does not expect regulation to
have any significant negative impact upon the business of the Partnership.

The Partnership also has a significant portion of its business in the ATM
industry, where major growth has been in installing ATM machines "off premises",
such as supermarkets, hotels, airports, and convenience stores. Since the major
ATM networks have allowed ATM owners to assess surcharges on transactions, the
operation of ATM's has become more lucrative. Now, in addition to receiving a
portion of the interchange fee from the cardholders' financial institutions, the
ATM owner can now receive surcharges on each transaction.



<PAGE>   4


ITEM 1.  BUSINESS (CONTINUED)

The principle investment objective of the Partnership is to obtain the maximum
available economic return from its investment in equipment leases to
unaffiliated third parties with a view toward: (i) generating cash flow from
operations, with the intent to make distributions during the Operating Phase
(the period which ends when the General Partner elects to begin the liquidation
of the Partnership assets); (ii) reinvesting (during the Operating Phase) any
undistributed cash flow from operations in additional equipment to be leased to
increase the Partnership's assets; (iii) obtaining the residual values of
equipment upon sale; (iv) obtaining value from sales of the Partnership's lease
portfolio upon entering the Liquidating Phase (the period during which the
General Partner will liquidate the Partnership assets); and (v) providing cash
distributions to the partners during the liquidating phase.

The Partnership intends to acquire primarily telecommunications and ATM
equipment (specifically pay telephones, call processing equipment, and ATM
machines), that is leased to third parties. The Partnership has also acquired
and will acquire other types of equipment that is generally subject to leases.
During 1998 the Partnership acquired equipment with a cost of $4,477,922. All of
this equipment has been leased.

Equipment acquired by the Partnership is installed in various locations by the
lessees. When the lessee installs the equipment in a location, a site location
agreement gives the lessee the right to have the equipment at this site for a
specified period of time. These site location agreements generally have a three
to five year term. The Partnership, in addition to its ownership of the
equipment, takes an assignment of and a first security interest in these site
location agreements. Therefore, if a lessee defaulted, the Partnership could
have the ability to re-sell or re-lease the equipment in place. This "in place"
value is generally much higher than the residual value of the equipment. The
telecommunications equipment generates revenue primarily through long distance
phone calls. The Partnership's lessee generally receives long distance revenue
from a contracted third party billing company. The Partnership also takes an
assignment of this revenue.

The General Partner acquires and approves leases on behalf of the Partnership.
The General Partner established guidelines to use in approving lessees.
Generally, before any lease is approved, there is a review of the potential
lessees' financial statements, credit references are checked, and outside
business and/or individual credit reports are obtained.

The equipment purchased by the Partnership consists of advanced technology pay
telephones, call processing systems, and ATM machines to be used in hotels,
hospitals, colleges, universities, correctional institutions, and other
locations. Although the Partnership will concentrate its equipment acquisitions
in telecommunications equipment and ATM machines, it will also acquire other
types of equipment that meet the investment objectives of the Partnership.

The Partnership's equipment leases are concentrated in the pay telephone and ATM
machine industries representing approximately 25% and 68% of the Partnership's
direct finance lease portfolio at December 31, 1998, respectively.

The leasing industry is highly competitive and the Partnership has fewer assets
than some of its major competitors. The principal methods of competition include
service and price (interest rate).

The Partnership has no employees and utilizes the administrative services of the
General Partner for which it pay an administrative service fee.




<PAGE>   5




ITEM 2.  PROPERTIES

The Partnership does not own or lease any real estate. The Partnership's
materially important properties consist entirely of equipment under lease. The
carrying value of such equipment is represented by the Partnership's investment
in direct financing leases, which was $3,832,762 at December 31, 1998. This was
comprised primarily of ATM machines and telecommunications equipment, as
described in Item 1.

ITEM 3.  LEGAL PROCEEDINGS

None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF UNIT HOLDERS

No matters were submitted to a vote of limited partners, through the
solicitation of proxies or otherwise during the year covered by this report.




<PAGE>   6



                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER 
         MATTERS:

The Registrants' units are not publicly traded. There is no market for the
Registrant's units and it is unlikely that any will develop. The General Partner
will resist the development of a public market for the units.

<TABLE>
<CAPTION>
                                                                        Number of Partners
                                                                                at
          Title of Class                                                   March 19, 1999
          --------------                                                ------------------
          <S>                                                                   <C>
          Limited Partner                                                       464
          General Partner                                                         1
</TABLE>

Distributions are paid to Partners on a monthly basis. Through December 31, 1998
distributions totalling $279,521 have been paid to Partners. As of December 31,
1998 the Partnership had accrued distributions to Partners of $45,038.


ITEM 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                                             Period from
                                                                                           August 26, 1997
                                                                    Year Ended         (Date of Inception) to
                                                                 December 31, 1998        December 31, 1997
                                                                 -----------------        -----------------
     <S>                                                            <C>                          <C>    
     Total Revenue                                                  $  377,483                   $    77
     Net Income (Loss)                                                 157,464                      (407)
     Total Assets                                                    5,053,409                    10,593
     Provision for Possible Losses                                      87,818                        -0-
     Distributions to Partners                                         324,559                        -0-
     Earnings (Loss) per Unit                                            46.18                    (40.70)
     Distributions per Unit                                              95.18                        -0-
</TABLE>

The above selected financial data should be read in connection with the
financial statements and related notes appearing elsewhere in this report.



<PAGE>   7

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                       Aug. 26, 1997 (Date
      Results of Operations                                       Year Ended            of Inception) to
                                                                  Dec. 31, 1998           Dec. 31, 1997
                                                                  -------------           -------------
      <S>                                                              <C>                        <C>    
      Description:

         Lease Income                                                  $286,551                   $  0
         Gain on Lease Termination                                       38,471                      0
         Interest and Other Income                                       52,461                     77
         Management Fees                                                 12,599                      0
         Administrative Services                                         77,000                      0
         Other General & Admin. Expenses                                 33,596                    484
         Interest Expense                                                 9,006                      0
         Provision for Possible Losses                                   87,818                      0
</TABLE>


1998 was the first year of actual leasing operations. Lease income in 1998 of
$286,551 is the result of the Partnership acquiring equipment for direct
financing leases of $4,477,922, the equipment being acquired throughout the
year. Interest and other income of $52,461 consists of various accounts but is
primarily interest income on a money market account and other investments and
late charges on lease payments.

Certain lessees have requested early termination of their lease contracts with
the Partnership. As the payphone industry matures, the capital structure of
these lessees has reached a level whereby they are able to secure financing from
other sources. When this occurs, the Partnership will always quote an amount at
least equal to the Partnership's net investment and typically will exceed the
net investment. The Partnership will generally recognize a gain on the early
termination. In addition to some lessees improving capital structure, some
lessees have been acquired by other entities whose capital structure is such
that they also desire to refinance the equipment which was under lease to the
Partnership. As such, the Partnership's gain on lease terminations can and will
vary from year to year based on the number of requests received to terminate
leases as well as the size of the contract being terminated. The Partnership
uses the cash generated from these early terminations to purchase equipment for
investments in direct financing leases with other lessees. For 1998, the
proceeds from lease terminations were $434,001, including a gain of $38,471.

Management fees are paid to the General Partner and represent 2% of the rental
and note payments received. Payments received in the years ended December 31 are
as follows:
                                                      1998                 1997
                                                      ----                 ----

      Rental Payments Received                      $629,950                 $0

<PAGE>   8


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS (CONTINUED)

The General Partner receives a monthly reimbursement of $7,000 for
administrative services provided to the Partnership. This administrative fee
started in February 1998 and resulted in expense to the Partnership of $77,000
for 1998.

Interest expense in 1998 was $9,006 and is the result of the Partnership
borrowing from the General Partner on a short-term basis. The Partnership
borrowed and paid back $810,000 from the General Partner in the third quarter of
1998.

The allowance for possible lease losses is based upon a continuing review of
past lease loss experience, current economic conditions and the underlying lease
asset value of the portfolio. At the end of each quarter a review of the
allowance account is conducted. At a minimum it is the Partnership's desire to
maintain a loss reserve equal to 1.5 percent of the Partnership's investment in
leases and notes, exclusive of any specific reserves. The Partnership currently
has a loss reserve of $87,818 or 1.9% of the lease and note portfolio.

As of December 31, 1998 there was one customer with payments owed to the
Partnership which were over 90 days past due. When payments are past due more
than 90 days, the Partnership discontinues recognizing income on those customer
contracts. At December 31, 1998, the net investment in this contract was $2,376,
while the contract receivable balance was $2,645. Management continues to
monitor the contracts in the Partnership's portfolio and will take the necessary
steps to protect the Partnership's investment.

Other general and administrative expenses totalled $33,596 and consist of legal
expenses, data processing expense, amortization, office supplies, and other
miscellaneous expenses. The Partnership outsources its lease servicing and data
processing to unrelated third parties.

The General Partner is engaged directly for its own account in the business of
acquiring and leasing equipment. The General Partner also serves as the general
partner of Telecommunications Income Fund IX, L.P. ("TIF IX") and
Telecommunications Income Fund X, L.P. ("TIF X"), publicly owned limited
partnerships that are engaged in the equipment leasing business. Also, an
affiliate of the General Partner is the general partner of a privately offered
active limited partnership. As of December 31, 1998, the net proceeds of the
private program, TIF IX, and TIF X have been invested in specific equipment. TIF
IX is in its liquidation phase and is expected to be dissolved by December 31,
1999. The activities of the General Partner, in regards to its other leasing
activities, has had no impact on the Partnership to date in management's
opinion.

The equipment that the Partnership leases is maintained by the lessee, and the
lessee is responsible for keeping the equipment upgraded with any improvements
that may be developed. The Partnership generally establishes the equipment's
residual value at 10% of the equipment's original cost. The Partnership
generally expects to realize the residual value by the sale of the equipment at
the expiration of the original lease term. The General Partner monitors the
maintenance and upgrades to the equipment and expects the Partnership to realize
residual values of at least 10%.



<PAGE>   9



ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS (CONTINUED)

The General Partner is not aware of any regulatory issues that may have a
substantial negative impact on the telecommunications businesses to whom the
Partnership leases equipment. There are and will continue to be regulatory
issues in the telecommunications industry that the General Partner will monitor.

The equipment leases acquired by the Partnership have been financed to yield
rates of return between 10% and 14%. The lease terms vary from 36 months to 60
months. The rate charged on a particular lease depends on the size of the
transaction and the financial strength of the lessee. Generally, before any
lease is approved, there is a review of the potential lessees' financial
statements, credit references are checked, and outside business and/or
individual credit reports are obtained.

Inflation affects the cost of equipment purchased and the residual values
realized when leases terminate and equipment is sold. The impact of inflation is
mitigated as any increases in lease related expenses are passed on to the
lessees through corresponding increases in rental rates as new leases are
entered into.

YEAR 2000 ISSUE: The Partnership recognizes that the arrival of the Year 2000
poses a unique challenge to the ability of all systems to recognize the date
change from December 31, 1999 to January 1, 2000. The cost of ensuring systems
are compatible with the Year 2000 are not believed to be material. There are no
non-information technology processes that the Partnership has identified which
would affect its operations. An assessment of the readiness of external entities
which it interfaces with, such as vendors, counterparties, customers, and
others, is ongoing. At the present the Partnership does not contemplate that any
specific charges will be incurred for this assessment, and if there are any
related expenditures, does not expect them to be significant. The Partnership
does not expect the Year 2000 impact on external parties to have any material
adverse impact on the Partnership.

The Partnership is assessing the impact of the Year 2000 issue on information
technology and non-information technology systems used by lessees. No lessee is
contractually obligated to become Year 2000 compliant or to disclose their
capabilities to the Partnership. The Partnership has not yet determined whether
the Year 2000 issue has been addressed by all of its customers. The Partnership
has contacted some of its customers and will continue to contact its customers
in 1999. If the Partnership's customers have not addressed this issue, it could
lead to non-payments of amounts owed to the Partnership.

The Partnership has determined that the software it utilizes in its operations
is compatible with the Year 2000. The Partnership utilizes an unrelated third
party for lease servicing. This third party vendor has been contacted and it has
been determined that their lease servicing application is year 2000 compliant. A
written confirmation regarding compliance of this application has been received
from the software developer.



<PAGE>   10

<TABLE>
<CAPTION>
                                                                                     Aug. 26, 1997 (Date
                                                                      Year Ended      of Inception) to
LIQUIDITY AND CAPITAL RESOURCES                                     Dec. 31, 1998       Dec. 31, 1997
-------------------------------                                     -------------       -------------
<S>                                                                   <C>                   <C>
Major Cash Sources (Uses):
        Operations                                                    $  222,122            $  (407)
        Acquisitions of Equip for Direct Finance Leases               (4,477,922)                 0
        Acquisitions of Notes Receivable                              (1,119,912)                 0
        Repayments/Terminations of Leases & Notes                        994,543                  0
        Distributions & Withdrawals Paid to Partners                    (280,521)                 0
        Payment of Syndication Costs                                    (723,000)                 0
        Sale of Partnership Units                                      5,784,000             11,000
</TABLE>


The Partnership is required to establish working capital reserves of no less
than 1% of the proceeds to satisfy general liquidity requirements, operating
costs of equipment, and the maintenance and refurbishment of equipment. At
December 31, 1998, that working capital reserve, as defined, would be $57,940.
Actual cash on hand at December 31, 1998 was $500,713.

The Partnership obtained a line of credit agreement with a bank in January 1999
that allows the Partnership to borrow the lesser of $2.0 million, or 32% of the
Partnership's qualified accounts as defined in the agreement. The line of credit
agreement bears interest at 1% above the prime rate and is collateralized by
substantially all the assets of the Partnership. The Partnership's line of
credit will be used to acquire additional leases as they become available. The
line of credit matures on June 30, 2000 and is cancelable by the lender after
giving a 90-day notice. The General Partner believes amounts available under the
line of credit are adequate for the foreseeable future.

Cash flow from operating activities was $222,122 for 1998 and is derived from
the leasing operations of the Partnership. This results from the income from
direct financing leases and notes received less operating expenses as discussed
above. During 1998, the Partnership acquired equipment for direct financing
leases of $4,477,922 and notes receivable of $1,119,912. The proceeds relating
to repayments of these leases and notes, including early terminations totalled
$994,543 in 1998.

Distributions and withdrawals paid to partners include the monthly distributions
paid to partners totalling $279,521 in 1998, and $1,000 for the withdrawal of a
limited partner. At December 31, 1998, the Partnership accrued $45,038 of
distributions payable.

Syndication fees are reductions of the proceeds of units sold that are paid to
the General Partner and the Parent of the General Partner ("Berthel Fisher").
Nine percent (9%) of the gross proceeds is paid to Berthel Fisher during the
organization and offering phase. Three and one-half percent (3.5%) is paid to
the General Partner for offering and promotional expenses incurred on their
behalf. For 1998, syndication fees were $723,000 ($5,784,000 proceeds from the
sales of units to limited partners multiplied by 12.5%), and are a reduction of
capital.



<PAGE>   11



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE SENSITIVITY
The table below provides information about the Partnership's notes receivable
that are sensitive to changes in interest rates. For notes receivable, the table
presents principal cash flows and related weighted average interest by expected
maturity dates as of December 31, 1998.

<TABLE>
<CAPTION>
                                  (Principal Amount)
         Expected                 Fixed Rate                 Average
         Maturity Date            Notes Receivable           Interest Rate
         -------------            ----------------           -------------
         <S>                      <C>                         <C>   
         1999                     $170,349                    14.60%
         2000                      190,231                    14.72%
         2001                      219,500                    15.03%
         2002                      183,039                    15.97%
         2003                       44,633                    14.48%
                                  --------
         Total                    $807,752
                                  ========
         Fair Value               $807,752
                                  ========
</TABLE>

The Partnership manages interest rate risk, its primary market risk exposure, by
limiting the terms of notes receivable to no more than five years and generally
requiring full repayment ratably over the term of the note.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following financial statements and related information as of and for the
periods ended December 31, 1998, and 1997 are included in Item 8:

     Independent Auditors' Report
     Balance Sheets
     Statements of Operations
     Statements of Changes in Partners' Equity
     Statements of Cash Flows
     Notes to Financial Statements

<PAGE>   12

INDEPENDENT AUDITORS' REPORT


To the Partners
Telecommunications Income Fund XI, L.P.

We have audited the accompanying balance sheets of Telecommunications Income
Fund XI, L.P. as of December 31, 1998 and 1997, and the related statements of
operations, changes in partners' equity and cash flows for the year ended
December 31, 1998 and the period from August 26, 1997 (date of formation)
through December 31, 1997. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements 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, such financial statements present fairly, in all material
respects, the financial position of Telecommunications Income Fund XI, L.P. at
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the periods then ended, in conformity with generally accepted accounting
principles.



DELOITTE & TOUCHE LLP

Cedar Rapids, Iowa
February 19, 1999



<PAGE>   13



TELECOMMUNICATIONS INCOME FUND XI, L.P.

<TABLE>
<CAPTION>

BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
----------------------------------------------------------------------------------------
ASSETS                                                            1998            1997
<S>                                                          <C>            <C>     
  Cash and cash equivalents                                  $   500,713    $    10,593
  Net investment in direct financing leases
    and notes receivable (Note 2)                              4,640,514           --
  Allowance for possible loan and lease losses (Note 3)          (87,818)          --
                                                             -----------    -----------
  Direct financing leases and notes receivable, net            4,552,696           --
                                                             -----------    -----------
TOTAL                                                        $ 5,053,409    $    10,593
                                                             ===========    ===========

LIABILITIES AND PARTNERS' EQUITY

LIABILITIES:
  Due to affiliates                                          $     3,472    $      --
  Distributions payable to partners                               45,038           --
  Accrued expenses and other liabilities                          10,591           --
  Lease security deposits                                         90,810           --
                                                             -----------    -----------
           Total liabilities                                     149,911           --
                                                             -----------    -----------

PARTNERS' EQUITY, 25,000 units authorized (Notes 1 and 4):
  General partner, 10 units issued and outstanding                 9,254          9,593
  Limited partners, 5,784 units in 1998 and 1 unit
      in 1997 issued and outstanding                           4,894,244          1,000
                                                             -----------    -----------
           Total partners' equity                              4,903,498         10,593
                                                             -----------    -----------
TOTAL                                                        $ 5,053,409    $    10,593
                                                             ===========    ===========
</TABLE>


See notes to financial statements.



                                       -2-



<PAGE>   14


TELECOMMUNICATIONS INCOME FUND XI, L.P.

<TABLE>
<CAPTION>

STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998 AND PERIOD FROM
AUGUST 26, 1997 (DATE OF FORMATION) THROUGH DECEMBER 31, 1997
----------------------------------------------------------------------------------------
ASSETS                                                        1998        1997
<S>                                                       <C>          <C>     
REVENUES:
  Income from direct financing leases                     $ 286,551    $    --
  Gain on lease terminations                                 38,471         --
  Interest and other income                                  52,461           77
                                                          ---------    ---------
           Total revenues                                   377,483           77
                                                          ---------    ---------
EXPENSES:
  Management and administrative fees (Note 5)                89,599         --
  Other general and administrative expenses                  33,596          484
  Interest expense                                            9,006         --
  Provision for possible loan and lease losses (Note 3)      87,818         --
                                                          ---------    ---------
           Total expenses                                   220,019          484
                                                          ---------    ---------
NET INCOME (LOSS)                                         $ 157,464    $    (407)
                                                          =========    =========

NET INCOME (LOSS) ALLOCATED TO:
  General partner                                         $     578    $    (407)
  Limited partners                                          156,886         --
                                                          ---------    ---------
                                                          $ 157,464    $    (407)
                                                          =========    =========
NET INCOME (LOSS) PER PARTNERSHIP UNIT                    $   46.18    $  (40.70)
                                                          =========    =========
WEIGHTED AVERAGE PARTNERSHIP UNITS
  OUTSTANDING                                                 3,410           10
                                                          =========    =========
</TABLE>


See notes to financial statements.




                                       -3-



<PAGE>   15


TELECOMMUNICATIONS INCOME FUND XI, L.P.

<TABLE>
<CAPTION>

STATEMENTS OF CHANGES IN PARTNERS' EQUITY
YEAR ENDED DECEMBER 31, 1998 AND PERIOD FROM
AUGUST 26, 1997 (DATE OF FORMATION) THROUGH DECEMBER 31, 1997
-----------------------------------------------------------------------------------------------------------------


                                                          GENERAL           LIMITED PARTNERS          TOTAL
                                                          PARTNER      ---------------------------   PARTNERS'
                                                         (10 UNITS)       UNITS        AMOUNT         EQUITY
<S>                                                      <C>              <C>      <C>            <C>        
BALANCE AT FORMATION - General partner contribution      $10,000           --      $     --       $   10,000

  Proceeds from sale of limited partnership interests       --                1         1,000          1,000

  Net loss                                                  (407)          --            --             (407)
                                                         -------          -----    ----------     ----------

BALANCE AT DECEMBER 31, 1997                               9,593              1         1,000         10,593

  Proceeds from sale of limited partnership interests       --            5,784     5,784,000      5,784,000

  Syndication costs incurred (Note 5)                       --             --        (723,000)      (723,000)

  Distributions to partners ($95.18 per unit) (Note 4)      (917)          --        (323,642)      (324,559)

  Withdrawal of limited partner                             --               (1)       (1,000)        (1,000)

  Net income                                                 578           --         156,886        157,464
                                                         -------          -----    ----------     ----------
BALANCE AT DECEMBER 31, 1998                             $ 9,254          5,784    $4,894,244     $4,903,498
                                                         =======          =====    ==========     ==========
</TABLE>


See notes to financial statements.



                                       -4-


<PAGE>   16

TELECOMMUNICATIONS INCOME FUND XI, L.P.

<TABLE>
<CAPTION>

STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1998 AND PERIOD FROM
AUGUST 26, 1997 (DATE OF FORMATION) THROUGH DECEMBER 31, 1997
--------------------------------------------------------------------------------------------------------------------
                                                                                            1998           1997
OPERATING ACTIVITIES:
<S>                                                                                   <C>            <C>         
  Net income (loss)                                                                   $   157,464    $      (407)
  Adjustments to reconcile net income (loss) to net cash from operating activities:
    Gain on lease terminations                                                            (38,471)          --
    Amortization of intangibles                                                             1,248           --
    Provision for possible loan and lease losses                                           87,818           --
    Changes in operating assets and liabilities:
      Due to affiliates                                                                     3,472           --
      Accrued expenses and other liabilities                                               10,591           --
                                                                                      -----------    -----------
           Net cash from operating activities                                             222,122           (407)
                                                                                      -----------    -----------

INVESTING ACTIVITIES:
  Acquisitions of, and purchases of equipment for, direct financing leases             (4,477,922)          --
  Repayments of direct financing leases                                                   248,382           --
  Proceeds from termination of direct financing leases                                    434,001           --
  Repayments of notes receivable                                                          312,160           --
  Issuance of notes receivable                                                         (1,119,912)          --
  Net lease security deposits collected                                                    90,810           --
                                                                                      -----------    -----------
           Net cash from investing activities                                          (4,512,481)          --
                                                                                      -----------    -----------

FINANCING ACTIVITIES:
  Contribution and sale of partnership units                                            5,784,000         11,000
  Proceeds from borrowings                                                                810,000           --
  Repayment of borrowings                                                                (810,000)          --
  Distributions and withdrawals paid to partners                                         (280,521)          --
  Payment of syndication costs                                                           (723,000)          --
                                                                                      -----------    -----------
           Net cash from financing activities                                           4,780,479         11,000
                                                                                      -----------    -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                                 490,120         10,593

CASH AND CASH EQUIVALENTS AT
  BEGINNING OF PERIOD                                                                      10,593           --
                                                                                      -----------    -----------
CASH AND CASH EQUIVALENTS AT
  END OF PERIOD                                                                       $   500,713    $    10,593
                                                                                      ===========    ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION - Interest paid                     $     9,006    $      --
</TABLE>


See notes to financial statements.



                                       -5-


<PAGE>   17


TELECOMMUNICATIONS INCOME FUND XI, L.P.

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1998 AND PERIOD FROM
AUGUST 26, 1997 (DATE OF FORMATION) THROUGH DECEMBER 31,1997
-------------------------------------------------------------------------------


1.    SIGNIFICANT ACCOUNTING POLICIES

      ORGANIZATION AND NATURE OF OPERATIONS- Telecommunications Income Fund XI,
      L.P. (the "Partnership") was formed on August 26, 1997 under the Iowa
      Limited Partnership Act. The general partner of the Partnership is Berthel
      Fisher & Company Leasing, Inc. (the "General Partner"), an Iowa
      corporation. The Partnership intends to offer for sale a maximum of 25,000
      units of limited partnership interest ("Units") at a price per unit of
      $1,000. The General Partner has elected to extend the offering period and
      the closing date to December 23, 1999. As of December 31, 1998, the
      Partnership had 5,784 limited partnership units outstanding.

      The Partnership's operations are conducted throughout the United States.
      The Partnership primarily acquires equipment for lease to third parties
      under a direct finance arrangement. The Partnership will also provide
      financing to customers under a note agreement. On December 23, 2004 (or
      earlier if the General Partner determines it to be in the Partnership's
      best interest), the Partnership will cease reinvestment in equipment and
      leases and will begin the orderly liquidation of Partnership assets. The
      Partnership must dissolve on December 31, 2012, or earlier, upon the
      occurrence of certain events (see Note 4).

      The Partnership commenced leasing operations in February of 1998.

      USE OF ESTIMATES - 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
      significantly from those estimated. Material estimates that are
      particularly susceptible to significant change in the near-term relate to
      the determination of the allowance for possible loan and lease losses and
      the estimated unguaranteed residual values of the Partnership's leased
      equipment.

      Most of the Partnership's leases and notes receivable are with customers
      that are in the entrepreneurial stage and, therefore, are highly leveraged
      and require financing in place of or to supplement financing from banks.
      Although the Partnership attempts to mitigate its credit risk through the
      use of a variety of commercial credit reporting agencies when processing
      the applications of its customers, failure of the Partnership's customers
      to make scheduled payments under their equipment leases and notes
      receivable could have a material near-term impact on the allowance for
      possible loan and lease losses.

      Realization of residual values depends on many factors, several of which
      are not within the Partnership's control, including general market
      conditions at the time of the original contract's expiration, whether
      there has been unusual wear and tear on, or use of, the equipment, the
      cost of comparable new equipment, the extent, if any, to which the
      equipment has become technologically or economically obsolete during the
      contract term and the effects of any additional or amended government
      regulations. These factors, among others, could have a material near-term
      impact on the estimated unguaranteed residual values.

      CERTAIN RISK CONCENTRATIONS - The Partnership's equipment leases and
      collateral under its notes receivable are concentrated in pay telephones
      and automated teller machines, representing approximately 25% and 68% of
      the Partnership's direct finance lease and note receivable portfolio at
      December 31, 1998, respectively.





                                      -6-



<PAGE>   18


      RELATED PARTY TRANSACTIONS - In fulfilling its role as general partner,
      Berthel Fisher & Company Leasing, Inc. enters into transactions with the
      Partnership in the normal course of business. Further, the Partnership
      also enters into transactions with affiliates of Berthel Fisher & Company
      Leasing, Inc. These transactions are set forth in the notes that follow.
      Management is of the opinion that these transactions are in accordance
      with the terms of the Agreement of Limited Partnership.

      CASH AND CASH EQUIVALENTS - The Partnership considers all highly liquid
      investments with a maturity of three months or less when purchased to be
      cash equivalents.

      NET INVESTMENT IN DIRECT FINANCING LEASES - The Partnership's primary
      activity consists of leasing equipment under direct financing leases
      generally over a period of three to five years. At the time of closing a
      direct financing lease, the Partnership records the gross lease contract
      receivable, the estimated unguaranteed residual value and unearned lease
      income. The unearned lease income represents the excess of the gross lease
      receivable plus the estimated unguaranteed residual value over the cost of
      the equipment leased. In addition, the Partnership capitalizes all initial
      direct costs associated with originating the direct financing lease. The
      unearned income and initial direct costs are amortized to income over the
      lease term so as to produce a constant periodic rate-of-return on the net
      investment in the lease. Lessees are responsible for all taxes, insurance
      and maintenance costs.

      The realization of the estimated unguaranteed residual value of leased
      equipment depends on the value of the leased equipment at the end of the
      lease term and is not a part of the contractual agreement with the lessee.
      Estimated residual values are based on estimates of amounts historically
      realized by the Partnership for similar equipment and are periodically
      reviewed by management for possible impairment.

      Direct financing leases are accounted for as operating leases for income
      tax purposes.

      NOTES RECEIVABLE - Notes receivable are carried at the principle balance
      outstanding. Interest income on notes receivable is accrued based on the
      principle amount outstanding.

      ALLOWANCE FOR POSSIBLE LOAN AND LEASE LOSSES - The Partnership performs
      credit evaluations prior to approval of a loan and lease. Subsequently,
      the creditworthiness of the customer and the value of the underlying
      assets are monitored on an ongoing basis. Under its lease agreements, the
      Partnership retains legal ownership of the leased asset. The Partnership
      maintains an allowance for possible loan and lease losses which could
      arise should customers become unable to discharge their obligations under
      the loan and lease agreements. The allowance for possible loan and lease
      losses is maintained at a level deemed appropriate by management to
      provide for known and inherent risks in the loan and lease portfolio. The
      allowance is based upon a continuing review of past loss experience,
      current economic conditions, delinquent loans and leases, an estimate of
      potential loss exposure on significant customers in adverse situations,
      and the underlying asset value. The consideration of such future potential
      losses also includes an evaluation for other than temporary declines in
      value of the underlying assets. Loans and leases which are deemed
      uncollectible are charged off and deducted from the allowance. The
      provision for possible loan and lease losses and recoveries are added to
      the allowance.

      TAX STATUS - Under present income tax laws, the Partnership is not liable
      for income taxes, as each partner recognizes a proportionate share of the
      Partnership income or loss in their income tax return. Accordingly, no
      provision for income taxes is made in the financial statements of the
      Partnership.

      NET INCOME (LOSS) PER PARTNERSHIP UNIT - Net income (loss) per partnership
      unit is based on the weighted average number of units outstanding
      (including both general and limited partners' units).





                                      -7-


<PAGE>   19


      IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS - In June 1997, the Financial
      Accounting Standards Board ("FASB") issued Statement of Financial
      Accounting Standards ("SFAS") No. 131, "Disclosures about Segments of an
      Enterprise and Related Information". SFAS No. 131 establishes standards
      for the way that public business enterprises report information about
      operating segments in annual financial statements. It also establishes
      standards for related disclosures about products and services, geographic
      areas, and major customers. SFAS No. 131 is effective for the
      Partnership's year ended December 31, 1998. The Partnership operates in
      one segment.

      In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
      Instruments and Hedging Activities". SFAS No. 133 establishes standards
      for derivative instruments, including certain derivative instruments
      embedded in other contracts, (collectively referred to as derivatives) and
      for hedging activities. It requires that an entity recognize all
      derivatives as either assets or liabilities in the statement of financial
      position and measure those instruments at fair value. The recognition of
      gains or losses resulting from changes in the values of derivatives is
      based on the use of each derivative instrument and whether it qualifies
      for hedge accounting. SFAS No. 133 is effective for all fiscal quarters of
      fiscal years beginning after June 15, 1999. The Partnership has not yet
      determined the effect of SFAS No. 133 on the financial statements.

2.    NET INVESTMENT IN DIRECT FINANCING LEASES AND NOTES RECEIVABLE

      The Partnership's net investment in direct financing leases and notes
      receivable consists of the following at December 31, 1998:

<TABLE>
<CAPTION>
<S>                                                                <C>        
Minimum lease payments receivable                                  $ 4,560,446
Estimated unguaranteed residual values                                 348,889
Unamortized initial direct costs                                         1,891
Unearned income                                                     (1,078,464)
Notes receivable, collateralized primarily by pay telephone
  equipment and related site agreements, 12% to 14%,
  maturing through 2003                                                807,752
                                                                   -----------
Net investment in direct financing leases and notes receivable     $ 4,640,514
                                                                   ===========
</TABLE>

      At December 31, 1998, future minimum payments to be received under the
      direct financing leases and the estimated unguaranteed residuals to be
      realized at the expiration of the direct financing leases are as follows:

<TABLE>
<CAPTION>
                                               MINIMUM         ESTIMATED
                                               LEASE        UNGUARANTEED
                                              PAYMENTS         RESIDUAL
                                             RECEIVABLE         VALUES
<S>                                            <C>               <C>    
Years ending December 31:
                1999                           $1,086,654        $  4,664
                2000                            1,104,456           5,124
                2001                              959,807          39,164
                2002                              805,594             369
                2003                              579,595         223,568
                Thereafter                         24,340          76,000
                                               ----------        --------
                Total                          $4,560,446        $348,889
                                               ==========        ========
</TABLE>

      The Partnership leases equipment to certain companies for which the
      General Partner or its affiliates have an ownership interest in, provide
      financing to, or provide investment advisory services for such companies.
      The Partnership's net investment in direct financing leases with these
      companies approximated $32,887 at December 31, 1998.


                                      
                                     -8-



<PAGE>   20


3.    ALLOWANCE FOR POSSIBLE LOAN AND LEASE LOSSES

      The changes in the allowance for possible loan and lease losses for the
      year ended December 31, 1998 is as follows:

<TABLE>
<CAPTION>
      <S>                                                               <C>    
      Balance at beginning of year                                      $   -  
        Provision                                                        87,818
        Charge-offs                                                         -  
                                                                        -------
      Balance at end of year                                            $87,818
                                                                        =======
</TABLE>

      The allowance for possible loan and lease losses consisted entirely of a
      general unallocated reserve at December 31, 1998.

4.    LIMITED PARTNERSHIP AGREEMENT

      The Partnership was formed pursuant to an Agreement of Limited Partnership
      dated as of August 26, 1997 (the "Agreement"). The Agreement outlines
      capital contributions to be made by the partners and the allocation of
      cash distributions, net income and net loss to the partners. Capital
      contributions by the partners to the partnership will consist of the
      $10,000 contributed by the General Partner and the amounts contributed by
      limited partners for the purchase of their Units ($1,000 per unit).

      Net income or net loss allocated to the limited partners (and to the
      General Partner to the extent of its contribution) will be apportioned
      among them based on the number of Units held and on the number of days
      within the fiscal year that they were limited partners. Any Partnership
      net loss will first be allocated to the partners to the extent of their
      positive capital accounts. Any additional Partnership net loss will be
      allocated to the General Partner. Any Partnership net income will first be
      allocated to partners with negative capital accounts in proportion to, and
      to the extent of, such negative capital accounts. Except as provided
      below, any Partnership net income will then be allocated to the partners.
      During the liquidating phase of the Partnership, net income earned that
      results in Partnership assets to be distributed 80.0% to the limited
      partners and 20.0% to the General Partner will be allocated 80% to the
      limited partners and 20% to the General Partner.

      A partner's share of profits, losses and operating distributions to
      partners (distributions of up to 9.6% annually made during the operating
      phase) will be based upon the amount of each partner's adjusted capital
      contribution (a partner's capital contribution, reduced by all payments to
      the partner that qualify as a liquidating distribution or return of
      capital) and each limited partner's admission date (the date a limited
      partner is admitted to the Partnership).

      During the Partnership's operating phase, to the extent there is cash
      available for distribution, cash distributions will be made on a monthly
      basis in the following order of priority: first, to reimburse the General
      Partner for administrative services it provides to the Partnership, as
      further described in the Agreement (see Note 5); second, to the limited
      partners up to amounts representing a 9.6% cumulative annual return on
      their adjusted capital contribution (as defined); and, third, to the
      General Partner, representing a monthly equipment management fee of 2% of
      the gross rental payments received by the Partnership (see Note 5). To the
      extent that cash is not available to pay all or a portion of the equipment
      management fee pursuant to the above priority distributions, such fee will
      accrue and accumulate. Any remaining cash distributions after payment of
      the above (including arrearages) will be paid, at the discretion of the
      General Partner, to the limited partners.





                                      -9-



<PAGE>   21


      The Partnership will cease reinvesting in assets and will not enter into
      additional leases during the liquidating phase. The liquidating phase
      shall begin at any time after June 23, 2003 (or earlier if the General
      Partner determines it to be in the Partnership's best interest), but no
      later than December 23, 2004. During the liquidating phase, the
      Partnership will proceed with all due and deliberate speed and care to
      wind up the Partnership's affairs and to convert all of the Partnership's
      assets into cash. Operating distributions will not be paid during the 
      liquidating phase.

      During the liquidating phase, amounts available to be distributed among
      the partners after satisfaction of all Partnership liabilities and
      obligations and/or the provision of reserves for future or contingent
      Partnership liabilities will be distributed in order of priority as
      follows:

      -  First, payment of the General Partner's expense reimbursement;

      -  Second, payment to the partners, to the extent necessary to pay to the
         partners during the term of their investment in the Partnership,
         operating distributions of 8.0% annually (on a cumulative, compounded
         daily basis) on their adjusted capital contributions;

      -  Third, payment to the partners of 100.0% of their adjusted capital
         contributions to the Partnership;

      -  Fourth, payment to the partners to the extent they have not received,
         during the term of their investment in the Partnership, distributions
         totaling 9.6% annually (calculated only through the end of the
         operating phase), noncompounded, on their adjusted capital
         contributions;

      -  Fifth, payment to the General Partner of any unpaid arrearages in its
         management fee; and

      -  Sixth, payment of any remaining amounts will be made 80.0% to the
         limited partners and 20.0% to the General Partner; provided, however,
         the General Partner will not receive its share of these remaining
         amounts until such time as the limited partners have received operating
         distributions and liquidating distributions equal to their capital
         contributions plus 9.6% annually (calculated only through the end of
         the operating phase) noncompounded, on their adjusted capital
         contributions.

5.    MANAGEMENT AND SERVICE AGREEMENTS

      The Partnership paid the General Partner acquisition fees of 5% of the
      cost of equipment financing provided by the Partnership, which was
      $265,760 for the year ended December 31, 1998.

      The Partnership also pays an equipment management fee equal to 2% of the
      amount of gross rental payments received, to the General Partner. During
      the year ended December 31, 1998, those management fees aggregated
      $12,599.

      In addition, the General Partner is reimbursed for certain other costs
      under an administrative services agreement. Amounts incurred by the
      Partnership pursuant to this agreement amounted to $77,000 for the year
      ended December 31, 1998.

      As a part of the issuance of partnership units, the Partnership paid
      commissions of 9% to Berthel Fisher & Company Financial Services, Inc., a
      broker-dealer affiliated with the General Partner, and reimbursed other
      offering expenses of up to 3.5% of the gross proceeds to the General
      Partner. These fees, which amounted to $723,000 for the year ended
      December 31, 1998, have been treated as syndication costs and charged
      directly to partners' equity.





                                      -10-


<PAGE>   22



6.    RECONCILIATION OF FINANCIAL AND INCOME TAX REPORTING BASIS

      A reconciliation of net income (loss) for financial reporting purposes
      with the related amount reported for income tax purposes for the periods
      ended December 31, 1998 and 1997 is as follows:

<TABLE>
<CAPTION>
                                            1998                    1997
                                   ----------------------     -----------------
                                                  PER                    PER
                                     AMOUNT       UNIT        AMOUNT     UNIT
<S>                                <C>          <C>          <C>      <C>     
Net income (loss) for financial
  reporting purposes               $ 157,464    $  46.18     $(407)   $(40.70)
Adjustment to convert direct
  financing leases to operating
  leases for income tax purposes    (427,982)    (125.51)       --        --
Net change in allowance for
  possible loan and lease losses      87,818       25.75        --        --
Gain on lease terminations             3,809        1.12        --        --
                                   ---------    --------     -----    -------
Net income (loss) for income tax
  reporting purposes               $(178,891)   $ (52.46)    $(407)   $(40.70)
                                   =========    ========     =====    =======
</TABLE>

7.    DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

      The fair value amounts disclosed below are based on estimates prepared by
      management of the Partnership based on valuation methods appropriate in
      the circumstances. Generally accepted accounting principles do not require
      disclosure for lease contracts. The carrying amount for financial
      instruments included among cash and cash equivalents and other short-term
      payables approximates their fair value because of the short maturity of
      those instruments. The estimated fair value of other significant financial
      instruments are based principally on discounted future cash flows at rates
      commensurate with the credit and interest rate risk involved.

      The estimated fair values of the Partnership's other significant financial
      instruments are as follows at December 31, 1998:

                                                   CARRYING             FAIR
                                                    AMOUNT             VALUE

      Notes receivable                             $ 807,752          $ 807,752

8.    SUBSEQUENT EVENT

      In January 1999, the Partnership obtained financing under a line-of-credit
      agreement with a bank. The amount available to borrow under the
      line-of-credit is limited to $2.0 million or 32% of its qualified accounts
      (primarily leases and notes receivable). The line-of-credit agreement
      bears interest at 1% over prime ($4,000 minimum interest charge beginning
      in July 1999) and is collateralized by substantially all the assets of the
      Partnership. The line-of-credit is guaranteed by the General Partner and
      certain affiliates of the General Partner. This agreement is cancelable by
      the lender after giving a 90-day notice. The agreement expires on June 30,
      2000. The General Partner believes amounts available under the
      line-of-credit are adequate for the foreseeable future.

                                    * * * * *


                                      -11-

<PAGE>   23

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE
          None
                                    PART III

ITEM 10.  DIRECTORS & EXECUTIVE OFFICERS OF THE REGISTRANT

          A:   The General Partner of the registrant:

               Berthel Fisher & Company Leasing, Inc., an Iowa corporation.

          B.   Executive officers of the General Partner of the Registrant:

ITEM 10.  DIRECTORS & EXECUTIVE OFFICERS OF THE REGISTRANT (CONTINUED)

          Thomas J. Berthel (age 47) - Mr. Berthel is the Chief Executive
Officer and Director of the General Partner, a position he has held since the
General Partner's inception in 1988. Mr. Berthel is also President and a
Director of the General Partner's parent, Berthel Fisher & Company, Inc.
("Berthel Fisher"), which he founded in 1985, and Berthel Fisher's other
subsidiaries, Berthel Fisher & Company Financial Services, Inc.; Berthel Fisher
& Company Management Corp.; Berthel Fisher & Company Planning, Inc.; and one
other corporation which acts as general partner of a separate private program.
He also serves as the Chairman of the Board and Director of Amana Colonies Golf
Course, Inc. Mr. Berthel holds a bachelor's degree from St. Ambrose College in
Davenport, Iowa (1974). From 1974 to 1982, Mr. Berthel was President and
majority shareholder of Insurance Planning Services Corporation in Maquoketa,
Iowa, which was engaged in the operation of a securities and insurance business.
Mr. Berthel holds a Financial and Operation Principal license issued by the
National Association of Securities Dealers, Inc. Mr. Berthel is also a Certified
Life Underwriter. Mr. Berthel also serves as an individual general partner of
the limited partnership referred to above. Mr. Berthel received a MBA degree
from the University of Iowa in 1993.

          Ronald O. Brendengen (age 43) - Mr. Brendengen is the Treasurer, Chief
Financial Officer, and a Director (1988 to present) of the General Partner. He
was elected to his current offices in October 1996. He served as Treasurer and
Chief Financial Officer since October 1996. He has also served as Secretary
(1994 - March, 1995), Treasurer (1988 - August 1995) and Chief Financial Officer
(1994 - August 1995) of the General Partner. He served as Controller
(1985-1993), Treasurer (1987-present), Chief Financial Officer, Secretary and a
Director (1987-present), and was also elected Chief Operating Officer in January
1998, of Berthel Fisher & Company, the parent company of the General Partner.
Mr. Brendengen serves as the Treasurer, Chief Financial Officer and a Director
of Berthel Fisher & Company Planning, Inc., the trust advisor of Berthel Growth
& Income Trust I, a company required to file reports pursuant to the Securities
Exchange Act of 1934. He also serves in various offices and as a Director of
each subsidiary of Berthel Fisher & Company. Mr. Brendengen holds a certified
public accounting certificate and worked in public accounting



<PAGE>   24


during 1984 and 1985. From 1979 to 1984, Mr. Brendengen worked in various
capacities for Morris Plan and MorAmerica Financial Corp., Cedar Rapids, Iowa.
Mr. Brendengen attended the University of Iowa before receiving a bachelor's
degree in Accounting and Business Administration with a minor in Economics from
Mt. Mercy College, Cedar Rapids, Iowa, in 1978.

          Nancy L. Lowenberg (age 40) - Ms. Lowenberg has been elected Vice
President and Chief Operating Officer of the General Partner beginning January
2, 1997. From September 1986 to December 1996, Ms. Lowenberg was employed by
Firstar Bank Iowa, N.A., in Cedar Rapids. Since 1989, Ms. Lowenberg was Vice
President Commercial Loans. As Vice President Commercial Loans, she was
relationship manager for 62 accounts with approximately $70,000,000 of committed
credit. She had responsibility for credit quality, annual review and maintenance
of existing accounts and business development. From 1981-1986, Ms. Lowenberg was
employed by Firstar Bank Systems. Ms. Lowenberg received her Bachelor of Science
Agricultural Business with a minor in Finance in 1981 from Iowa State
University, Ames, Iowa.

<PAGE>   25

ITEM 11.  EXECUTIVE COMPENSATION

          Set forth is the information relating to all direct remuneration paid
          or accrued by the Registrant during the last three years to the
          General Partner:

<TABLE>
<CAPTION>

(A)                              (B)       (C)                    (C1)          (C2)                 (D)
                                                                                Securities of
                                                                                property
                                                                                insurance            Aggregate
                                                                                benefits or          of
                                           Cash and Cash                        reimbursement        contingent
Name of individual              Year       equivalent forms                     personal             or forms of
and capacities served           Ended      of remuneration        Fees          benefits             remuneration
-----------------------------------------------------------------------------------------------------------------
<S>                             <C>              <C>             <C>               <C>                  <C>
Berthel Fisher & Co.            1998             $0              $89,599           $0                   $0

Leasing, Inc.                   1997             $0              $0                $0                   $0

General Partner
</TABLE>
<PAGE>   26

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     (a) No person owns of record, or is known by the Registrant to own
         beneficially, more than five percent of the Partnership Units.

     (b) The General Partner of the Registrant owns Units of the Registrant set
         forth in the following table.

<TABLE>
<CAPTION>
    (1)                            (2)                  (3)                     (4)

                         Name and Address of     Amount and Nature of
Title of Class           Beneficial Ownership    Beneficial Ownership      Percent of Class
--------------           --------------------    --------------------      ----------------
         <S>             <C>                     <C>                       <C>
         Units           Berthel Fisher & Co.    Ten (10) Units;                       .17%
                         Leasing, Inc.           sole owner.
                         100 2nd Street S.E.
                         Cedar Rapids, IA 52401
</TABLE>


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          Related party transactions are described in Notes 2 and 5 of Notes to
          Financial Statements.

<PAGE>   27

                                     PART IV

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K


      (a)  1. Financial Statements.

                                                                       Page No.

           Balance Sheets at December 31, 1998 and
           December 31, 1997                                              13

           Statements of Operations for the periods ended December
           31, 1998, and December 31, 1997                                14

           Statements of Changes in Partners' Equity for the periods
           ended December 31, 1998, and December 31, 1997                 15

           Statements of Cash Flows for the periods ended December
           31, 1998, and December 31, 1997                                16

           Notes to Financial Statements                                  17


           2. Financial Statements Schedules

           Information pursuant to Rule 12-09 (Schedule II) is included in the
           financial statements and notes thereto.

           3. Exhibits

                3,4 Amended and Restated Agreement of Telecommunications Income
                    Fund XI, L.P. currently in effect dated as of November 26,
                    1997 (1)


           6. Reports on Form 8-K
              No reports on Form 8-K were filed in the fourth quarter of 1998.

___________________________
   (1) Incorporated herein by reference to Exhibit A in the Partnership's
registration statement on Form S-1, effective November 26, 1997

<PAGE>   28

                                   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.

                    TELECOMMUNICATIONS INCOME FUND XL, L.P.
                    ---------------------------------------
                                  (REGISTRANT)

By Berthel Fisher & Company Leasing, Inc.

By: /s/ Thomas J. Berthel                                  Date: March 24, 1999
   --------------------------------------
Thomas J. Berthel
President, Chief Executive Officer

By Berthel Fisher & Company Leasing, Inc.

By: /s/ Ronald O. Brendengen                               Date: March 24, 1999
   --------------------------------------
Ronald O. Brendengen
Chief Operating Officer, Chief Financial Officer, Treasurer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

/s/ Thomas J. Berthel                                      Date: March 24, 1999
-----------------------------------------
Thomas J. Berthel
Chief Executive Officer
President, Director
Berthel Fisher & Company Leasing, Inc.
Corporate General Partner

/s/ Nancy L. Lowenberg                                     Date: March 24, 1999
-----------------------------------------
Nancy L. Lowenberg
Executive Vice President, General Mgr., Director
Berthel Fisher & Company Leasing, Inc.
Corporate General Partner

/s/ Ronald O. Brendengen                                   Date: March 24, 1999
-----------------------------------------
Ronald O. Brendengen
Chief Operating Officer, Chief Financial Officer,
Treasurer, Director
Berthel Fisher & Company Leasing, Inc.
Corporate General Partner

/s/ Daniel P. Wegmann                                      Date: March 24, 1999
-----------------------------------------
Daniel P. Wegmann
Controller
Berthel Fisher & Company Leasing, Inc.
Corporate General Partner

<PAGE>   29


                                  EXHIBIT INDEX




          3,4   Amended and Restated Agreement of
                Telecommunications Income Fund XI, L.P. currently in effect
                dated as of November 26, 1997 (1)


______________________________


          (1)   Incorporated herein by reference to Partnership Exhibit A to the
                prospectus included in the Partnership's post effective
                amendment No. 1 to Form S-1 registration statement filed on
                November 26, 1997.