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 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: 33-9921
                                                 -------


                            SENIOR INCOME FUND L. P.
              Exact name of Registrant as specified in its charter

              Delaware                                   13-3392077 
              --------                                   ----------
State or other jurisdiction of               I.R.S. Employer Identification No.
incorporation or organization 

3 World Financial Center, 29th Floor
New York, NY     Attn.:  Andre Anderson                     10285
---------------------------------------                     -----
Address of principal executive offices                     Zip code

Registrant's telephone number, including area code: (212) 526-3183

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

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

           4,827,500 DEPOSITORY UNITS OF LIMITED PARTNERSHIP INTEREST
           ----------------------------------------------------------
                                 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 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 is not contained herein, and will not be contained, to the
best of the 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
                            ---

State the aggregate market value of the voting stock held by non-affiliates of
the registrant: Not applicable.

DOCUMENTS INCORPORATED BY REFERENCE:Portions of Parts I, II, III and IV are
incorporated by reference to the Partnership's Annual Report to Unitholders for
the year ended December 31, 1998.
<PAGE>
2

                                     PART I

Item 1. Business

(a)  General Development of Business
     -------------------------------

Senior Income Fund L.P. (the "Partnership", formerly Shearson Lehman Senior
Income Fund Limited Partnership), a Delaware limited partnership, was formed on
October 14, 1986 pursuant to a Limited Partnership Agreement, as amended and
restated on March 17, 1987 pursuant to an Amended and Restated Limited
Partnership Agreement (the "Partnership Agreement"). The Partnership was formed
for the purpose of acquiring a general partnership interest in Shearson August
Property Partnership, a California general partnership (the "Property
Partnership"), with August Financial Partners II ("AFP-II") an affiliate of
August Financial Corporation ("August").

The general partner of the Partnership is Senior Income Fund Inc. (the "General
Partner", formerly Shearson Lehman Senior Income Fund, Inc.), a Delaware
corporation, and wholly owned subsidiary of Lehman Brothers Inc. (formerly
Shearson Lehman Brothers Inc.).

On November 21, 1996, the Partnership purchased the general partnership interest
of the successor to AFP-II for a purchase price of $850,000. As a result of such
purchase, all of the Property Partnership's assets were distributed to the
Partnership and the Property Partnership was dissolved. Accordingly, all sale
proceeds received upon a sale of any property belong to the Partnership and no
amount is owed to AFP-II. The Partnership will continue until December 31, 2036
unless terminated earlier pursuant to the provisions of the Partnership
Agreement.

The Property Partnership was formed to acquire, operate and ultimately sell four
specified residential properties for senior citizens (the "Properties") as
follows: (i) Pacific Inn, a 134-unit apartment complex located in Torrance,
California; (ii) Nohl Ranch Inn, a 133-unit apartment complex located in
Anaheim, California; (iii) Ocean House, a 121-unit apartment complex located in
Santa Monica, California, and; (iv) Prell Gardens, a 102-unit apartment complex
located in Van Nuys, California.

On August 1, 1997, the Partnership closed the sale of three of its four
Properties -- Prell Gardens, Nohl Ranch and Pacific Inn, for net proceeds of
$30,148,357. On October 13, 1998, the Partnership closed on the sale of the
remaining property, Ocean House, for a net selling price of $998,579. The
General Partner is in the process of winding up the Partnership's affairs and
expects to dissolve the Partnership during 1999. Reference is made to Item 7 for
a discussion of the sales.

(b)  Financial Information about Industry Segments
     ---------------------------------------------

Substantially all of the Partnership's revenues, operating profit or loss and
assets relate solely to its interest as general partner of the Property
Partnership whose operating profit or loss and assets relate to its ownership
and operation of the Properties, until November 21, 1996, at which time the
Partnership purchased AFP-II's general partner interest in the Property
Partnership, as noted in Item 1(a).

(c)  Narrative Description of Business
     ---------------------------------

The Partnership's principal objectives at inception were:

     (1)  to provide quarterly cash distributions a portion of which will be
          "tax sheltered;"
     (2)  to preserve and protect capital;
     (3)  to achieve long-term appreciation in the value of the Properties for
          distributions upon sale of the Properties.

Presently, the General Partner is in the process of winding up the Partnership's
affairs and expects to dissolve the Partnership in accordance with the
Partnership Agreement during 1999.

(d)  Employees
     ---------

The Partnership has no employees.
<PAGE>
3

Item 2.   Properties

As of December 31, 1998, all four of the Partnership's properties had been sold.


Item 3.   Legal Proceedings

The Registrant is not subject to any material pending legal proceedings.


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

No matters were submitted to a vote of the holders of Units ("Limited Partners")
during the fourth quarter of the year for which this report is filed.


                                     PART II

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

(a)  Market Price Information

There is no established trading market for the units nor is there anticipated to
be.

(b)  Holders

As of December 31, 1998, there were 3,298 Limited Partners of record.

(c)  Cash Distributions per Unit

<TABLE>
<CAPTION>
                                              1998         1997
                  ---------------------------------------------
                  <S>                      <C>          <C>    
                  1st Quarter              $ 0.000      $ 0.075
                  2nd Quarter                0.000        0.000
                  3rd Quarter                0.000        0.000
                  Special Distribution       1.1111       5.7502
                  4th Quarter                0.000        0.000
                                           --------------------
                  Total                    $ 1.111      $ 5.825
                  ---------------------------------------------

<FN>
     (1)  On November 17, 1998, the Partnership paid a cash distribution in the
          amount of $1.11 per Unit representing proceeds from the sale of Ocean
          House and a portion of the Partnership's cash reserves.

     (2)  On August 25, 1997, the Partnership paid a cash distribution in the
          amount of $5.75 per Unit representing proceeds from the sale of Prell
          Gardens, Nohl Ranch, and Pacific Inn and cash flow from operations for
          the second quarter of 1997.
</FN>
</TABLE>

As a result of the sale of Ocean House, the Partnership made a special
distribution of $1.11 per Unit on November 17, 1998, representing net sales
proceeds and a portion of the Partnership's cash reserves. The remaining
reserves will be used to pay the Partnership's liabilities and expenses through
liquidation. If any proceeds remain, the Partnership intends to make another
distribution upon liquidation.
<PAGE>
4

Item 6.   Selected Financial Data

<TABLE>
<CAPTION>

(Dollars in thousands, except per Unit data)   1998        1997        1996        1995        1994
---------------------------------------------------------------------------------------------------
<S>                                         <C>         <C>         <C>         <C>         <C>    
Rental Income                               $ 3,155     $ 8,233     $10,782     $10,838     $10,387
Interest and Other Income                       272         344         205         199          98
Total Income                                  3,427       8,577      13,305(2)   11,037      10,485
Income (Loss) From Operations                   277         931       3,154      (7,877)(3)     137
Gain On Sale Of Properties                    2,072      11,840          --          --          --
Net Income (Loss)                             2,349      12,771(4)    3,154      (7,877)(3)     137
Income (Loss) From Operations
  Per Unit(1)                                   .06         .19         .65       (1.63)        .03
Net Income (Loss) Per Unit(1)                   .49        2.58         .65       (1.63)        .03
Cash Distributions Per Unit(1)                 1.11        5.82         .90         .30         .30
                                            -------------------------------------------------------
Total Assets                                $ 1,111     $ 5,547     $22,574     $22,976     $32,459
---------------------------------------------------------------------------------------------------
<FN>
     (1) Total Units outstanding: 4,827,500.

     (2) Includes net insurance settlement income of $2,318,387, in connection
         with the Partnership's settlement of its litigation with its insurance
         carrier in November 1996.

     (3) Includes the recognition of a $8,712,292 loss on the write-down of
         real estate assets in compliance with Financial Accounting Standards
         No. 121 in 1995.

     (4) Includes the recognition of a $11,839,814 gain on sale of three
         properties.
</FN>
</TABLE>

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

(a) Liquidity and Capital Resources
    -------------------------------

On June 9, 1997, the Partnership executed an agreement with an unaffiliated
third party, MBK Senior Properties, Ltd. (the "Buyer") to sell the Partnership's
four Properties (the "Sale") for $36,300,000, subject to adjustments and
prorations for closing costs, and a credit for the cost to repair earthquake
damage at the Ocean House property. On August 1, 1997, the Partnership closed
the Sale for three of the four Properties - Prell Gardens, Nohl Ranch and
Pacific Inn, for net proceeds of $30,148,357. On October 13, 1998 the
Partnership closed on the sale of the fourth property, Ocean House. The gross
selling price of the property was $5,172,750, less a credit for cost of repairs
due to earthquake damages of $4,174,171, resulting in a net selling price of
$998,579.

As a result of the Sales, the Partnership suspended the payment of quarterly
cash distributions beginning with the second quarter 1997 distribution which
would have been paid on or about August 15, 1997. On August 25, 1997, the
Partnership paid a cash distribution in the amount of $5.75 per Unit,
representing proceeds from the sale of Prell Gardens, Nohl Ranch, and Pacific
Inn and cash flow from operations for the second quarter of 1997. On November
17, 1998, the Partnership made a special distribution of $1.11 per Unit,
representing net sales proceeds from the sale of Ocean House, and a portion of
the Partnership's cash reserves. The remaining reserves will be used to pay the
Partnership's liabilities and expenses through liquidation. If any proceeds
remain, the Partnership intends to make another distribution upon liquidation.
The General Partner is in the process of winding up the Partnership's affairs
and expects to dissolve the Partnership during 1999.

At December 31, 1998, the Partnership had cash and cash equivalents of
$1,060,585 compared to $5,320,317 at December 31, 1997. The decrease is
primarily due to the payment of a special cash distribution on November 17,
1998, representing net sales proceeds from the sale of Ocean House, and a
portion of the Partnership's cash reserves.

Primarily as a result of the sale of Ocean House, the following balance sheet
categories decreased from December 31, 1997 to December 31, 1998: prepaid
expenses, accounts payable and accrued expenses, deferred rent payable and
security deposits payable. Due to affiliates decreased from $61,973 at December
31, 1997 to $22,000 at December 31, 1998. The decrease reflects lower
Partnership management fees as a result of the sale of the Properties.
<PAGE>
5

Market Risk
-----------
The Partnership's principal market risk exposure is interest rate risk. As a
result of the sale of Ocean House, the Partnership no longer has any properties
or debt, and its assets consist primarily of cash and cash equivalents.
Accordingly, the Partnership's interest risk exposure is primarily limited to
interest earned on the Partnership's cash and cash equivalents, which are
invested at short-term rates. Such risk is not considered material to the
Partnership's operations.

Year 2000 Initiatives
---------------------
The Year 2000 compliance issue concerns the ability of computerized information
systems to accurately calculate, store or use a date after 1999. This could
result in computer system failures or miscalculations causing disruptions of
operations. The Year 2000 issue affects almost all companies and organizations.

As noted above, all of the Partnership's properties have been sold and it is
anticipated that the Partnership will dissolve prior to December 31, 1999. In
the event that the Partnership is not liquidated prior to December 31, 1999,
potential Year 2000 issues relate primarily to outside vendors which provide the
Partnership's administrative services including accounting, tax preparation and
transfer agent services. Such services are heavily reliant on computer systems,
software products and equipment which may or may not be Year 2000 compliant. It
is anticipated that the cost of vendor compliance with Year 2000 problems will
be borne primarily by vendors. Although it is not possible at present to give an
estimate of the cost of this work to the Partnership, the General Partner does
not expect such costs to have a material adverse impact on the Partnership's
long term results of operations.

(b)  Results of Operations
     ---------------------

1998 versus 1997
----------------

Partnership operations resulted in net income of $2,349,347 for the year ended
December 31, 1998, compared to $12,770,868 for the year ended December 31, 1997.
Net income in 1997 included a $11,839,814 gain on sale of Prell Gardens, Nohl
Ranch and Pacific Inn, while net income in 1998 included a $2,072,451 gain on
the sale of Ocean House. Excluding these gains, net income from operations
totaled $276,896 in 1998 compared with $931,054 in 1997. The decrease is
primarily due to a decrease in rental income, as a result of the sale of three
of the Properties in 1997, which exceeded the decrease in all expense
categories. The decrease also reflects the sale of Ocean House in October 1998.

Primarily as a result of the sale of three of the Partnership's Properties on
August 1, 1997, rental income and all expense categories decreased from 1997 to
1998. Loss on real estate held for disposition was $-0- in 1998 compared to
$48,000 in 1997. The 1997 amount represents costs associated with balcony
restoration at Ocean House which were expensed through the loss provision in
compliance with Statement of Financial Accounting Standards No. 121.

1997 versus 1996
----------------

Partnership operations for the year ended December 31, 1997 resulted in net
income of $12,770,868 compared to $3,154,499 for 1996. The increase is primarily
due to the gain on sale of properties in the amount of $11,839,814. Excluding
this gain, the Partnership incurred net income from operations of $931,054 for
the year ended December 31, 1997. The decrease in net income from operations was
primarily the result of lower rental income due to the sale of properties,
partially offset by the elimination of depreciation expense in 1997 as a result
of the reclassification of the Properties as "real estate assets held for
disposition". The 1996 amount also includes the receipt of insurance settlement
proceeds.

Rental income was $8,232,614 for the year ended December 31, 1997, compared to
$10,782,123 for 1996. The decrease is due to the sale of three of the Properties
on August 1, 1997, which was partially offset by an increase in rental income
from Ocean House.

As a result of the sale of three of the Partnership's Properties on August 1,
1997, the following expense categories decreased from 1996 to 1997: payroll,
rent and utilities, supplies, repairs and maintenance and real estate taxes.
<PAGE>
6

General and administrative expenses were $1,527,054 in 1997 as compared with
$1,774,183 in 1996. The decrease is the result of the sale of the three
properties partially offset by an increase in management fees at Ocean House and
an increase in Partnership servicing expense. During 1997, certain expenses
incurred by the General Partner, its affiliates, and an unaffiliated third party
service provider in servicing the Partnership, which were voluntarily absorbed
by affiliates of the General Partner in prior periods, were reimbursable to the
General Partner and its affiliates.

Loss on real estate held for disposition totaled $48,000 for the year ended
December 31, 1997. This represents costs associated with balcony restoration at
Ocean House which were expensed through the loss provision in compliance with
Statement of Financial Accounting Standards No. 121.

For the years ended December 31, 1997 and 1996, Ocean House reported average
occupancy of 95% and 91%, respectively.


Item 8.   Financial Statements and Supplementary Data

Incorporated by reference to the Partnership's Annual Report to Unitholders for
the year ended December 31, 1998, which is filed as an exhibit under Item 14.


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

None.


                                    PART III

Item 10.  Directors and Executive Officers of the Partnership

The Partnership has no directors or officers. The General Partner has general
responsibility for all aspects of the Partnership's operation. Certain of the
officers and directors of the General Partner are also officers and employees of
Lehman Brothers Inc.

Certain officers and directors of the General Partner are now serving (or in the
past have served) as officers or directors of entities which act as general
partners of a number of limited partnerships which have sought protection under
the provisions of the Federal Bankruptcy Code. The partnerships which have filed
bankruptcy petitions own assets which have been adversely affected by the
economic conditions in the markets in which that asset is located and,
consequently, the partnerships sought protection of the bankruptcy laws to
protect the partnerships' assets from loss through foreclosure.

The directors and principal officers of the General Partner are listed below.

      Name                       Office
      ----                       ------
      Rocco F. Andriola          Director
      Michael T. Marron          Director, President and Chief Financial Officer
      Lawrence M. Ostow          Vice President

Rocco F. Andriola, 40, is a Managing Director of Lehman Brothers Inc. in its
Diversified Asset Group and has held such position since October 1996.
Since joining Lehman in 1986, Mr. Andriola has been involved in a wide range
of restructuring and asset management activities involving real estate and
other direct investment transactions.  From June 1991 through September
1996, Mr. Andriola held the position of Senior Vice President in Lehman's
Diversified Asset Group.  From June 1989 through May 1991, Mr. Andriola held
the position of First Vice President in Lehman's Capital Preservation and
Restructuring Group.  From 1986-89, Mr. Andriola served as a Vice President
in the Corporate Transactions Group of Shearson Lehman Brothers' office of
the general counsel.  Prior to joining Lehman, Mr. Andriola practiced
corporate and securities law at Donovan Leisure Newton & Irvine in New
York.  Mr. Andriola received a B.A. from Fordham University, a J.D. from New
York University School of Law, and an LL.M in Corporate Law from New York
University's Graduate School of Law.
<PAGE>
7

Michael T. Marron, 35, is a Vice President of Lehman Brothers and has been a
member of the Diversified Asset Group since 1990 where he has actively
managed and restructured a diverse portfolio of syndicated limited
partnerships.  Prior to joining Lehman Brothers, Mr. Marron was associated
with Peat Marwick Mitchell & Co. serving in both its audit and tax divisions
from 1985 to 1989.  Mr. Marron received his B.S. degree from the State
University of New York at Albany and an M.B.A. from Columbia University.

Lawrence M. Ostow, 31, is a Vice President of Lehman Brothers and is
responsible for the management of commercial real estate in the Diversified
Asset Group.  Mr. Ostow joined Lehman Brothers in September 1992.  Prior to
that, Mr. Ostow was a Senior Consultant with Arthur Andersen & Co. in the
Real Estate Services Group, beginning in July 1990.  Mr. Ostow earned an
M.B.A. from the Stern School of Business in 1997 and a B.A. degree in
Economics from the University of Michigan in 1990.


Item 11.  Executive Compensation

The Directors and Officers of the General Partner do not receive any salaries or
other compensation from the Partnership. See Item 13, "Certain Relationships and
Related Transactions," for a description of certain transactions of the General
Partner and its affiliates with the Partnership.


Item 12.  Security Ownership of Certain Beneficial Owners and Management

(a)  Security ownership of certain beneficial owners.

As of December 31, 1998, one party was known by the Partnership to be the
beneficial owner of more than five percent of the Units of the Partnership. The
owner, LAVRA, Inc., owns a total of 585,482.75 Units or 12.1% of the Units in
one account. LAVRA's address is 245 Fischer Avenue, Suite D-1, Costa Mesa,
California, 92626.

(b)  Security ownership of management.

Officers and Directors of the General Partner owned no units of the Partnership
as of December 31, 1998.

(c)  Changes in control.

None.


Item 13.  Certain Relationships and Related Transactions

For fees paid and reimbursed to the General Partner or its affiliates during
1998, 1997 and 1996, see Note 5, "Transactions with Related Parties," to the
Consolidated Financial Statements which is incorporated by reference to the
Partnership's Annual Report to Unitholders for the year ended December 31, 1998,
which is filed as an exhibit under Item 14.
<PAGE>
8

                                     PART IV

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

(a)  (1)  Financial Statements:

          Consolidated Balance Sheets - At December 31, 1998 and 1997 .....(1)

          Consolidated Statements of Partners' Capital (Deficit) - For the
          years ended December 31, 1998, 1997 and 1996 ....................(1)

          Consolidated Statements of Operations - For the years ended
          December 31, 1998, 1997 and 1996 ................................(1)

          Consolidated Statements of Cash Flows - For the years ended
          December 31, 1998, 1997 and 1996 ................................(1)

          Notes to the Consolidated Financial Statements ..................(1)

          Report of Independent Accountants ...............................(1)

(a)  (2)  Financial Statement Schedules:

          No schedules are presented because the information is not applicable
          or is included in the Financial Statements or the notes thereto.

     (1)  Incorporated by reference to the Partnership's Annual Report to
          Unitholders for the year ended December 31, 1998, filed as an exhibit
          under Item 14.

(a)  (3)Exhibits

3.1       The Partnership's Amended and Restated Agreement of Limited
          Partnership, Dated March 17, 1987, is hereby incorporated by reference
          to Exhibit A to the Prospectus contained in Registration Statement No.
          33-9921, which registration Statement (the "Registration Statement")
          was declared effective by the Securities and Exchange Commission on
          January 30, 1987.

3.2       The Capital Contribution Agreement by and among the General Partner
          and Shearson Group is hereby incorporated by reference to Exhibit 3.2
          to the Registration Statement.

10.1      Form of the Management Agreement dated as of April 5, 1988 between the
          Partnership and the Operator is incorporated by reference to Exhibit
          10.2 to the Registration Statement.

10.2      The form of Property Partnership Agreement between the Partnership and
          the Property Partner is hereby incorporated by reference to Exhibit
          10.6 to the Registration Statement.

10.3      The form of Purchase Agreement concerning the acquisition of the
          Properties is hereby incorporated by reference to Exhibit No. 10.4 to
          the Registration Statement.

13.1      Annual Report to Unitholders for the year ended December 31, 1998.

27        Financial Data Schedule.

(b)       Reports on Form 8-K:

          On October 27, 1998 the Partnership filed a report on Form 8-K
          reporting the close of the sale of Ocean House.
<PAGE>
9

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Partnership has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.



                            SENIOR INCOME FUND L.P.

                            BY: SENIOR INCOME FUND INC.
                                General Partner



Date:  March 31, 1999           BY:    /s/Michael T. Marron
                                       --------------------
                                Name:  Michael T. Marron
                                Title: Director, President and Chief Financial
                                       Officer


Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Partnership has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



                            SENIOR INCOME FUND L.P.

                            BY: SENIOR INCOME FUND INC.
                                General Partner



Date:  March 31, 1999           BY: /s/Rocco F. Andriola
                                    --------------------
                                Name:  Rocco F. Andriola
                                Title: Director



Date:  March 31, 1999           BY:    /s/Michael T. Marron
                                       --------------------
                                Name:  Michael T. Marron
                                Title: Director, President and Chief Financial
                                       Officer



Date:  March 31, 1999           BY:    /s/Lawrence M. Ostow
                                       --------------------
                                Name:  Lawrence M. Ostow
                                Title: Vice President