Exhibit 13.1

                             Senior Income Fund L.P.

                               1999 Annual Report
<PAGE>


--------------------------------------------------------------------------------
                              MESSAGE TO INVESTORS
--------------------------------------------------------------------------------



Presented for your review is the 1999 Annual Report for Senior Income Fund L.P.
(the "Partnership") which includes the Partnership's audited financial
statements for the year ended December 31, 1999.

As previously reported, the Partnership sold its interest in Prell Gardens, Nohl
Ranch and Pacific Inn during 1997, and Ocean House in 1998, to MBK Senior Living
Communities, Ltd. for a net sales price of approximately $31.1 million. The
Partnership subsequently distributed the net sales proceeds and a portion of the
Partnership's cash reserves to the Limited Partners.

The land on which the Ocean House property is located was leased to the
Partnership under a ground lease. Although the Partnership's leasehold interest
in Ocean House was sold, the ground lessor has not released the Partnership from
its continuing contingent liability associated with the ground lease. The
General Partner has explored various means by which to release or protect the
Partnership from this contingent liability, and will continue to do so. Until
this is accomplished, the General Partner expects that the Partnership will not
be terminated, and the remaining cash balances will continue to be held in
reserve. Accordingly, while we are attempting to terminate the Partnership in
2000, there can be no assurance it will be terminated within this timeframe.

Questions regarding the Partnership should be directed to your Financial
Consultant or Partnership Investor Services. All requests for a change of
address or transfer should be submitted in writing to the Partnership's
administrative agent at P.O. Box 7090, Troy, MI 48007-7090. Partnership Investor
Services can be reached at (617) 342-4225, and the Partnership's administrative
agent can be reached at (248) 637-7900.


Very truly yours,

Senior Income Fund Inc.
General Partner



Michael T. Marron
President

March 28, 2000

                                                                               1
<PAGE>


SENIOR INCOME FUND L.P.


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
BALANCE SHEETS
                                                      At December 31,   At December 31,
                                                                1999              1998
--------------------------------------------------------------------------------------
<S>                                                      <C>               <C>
Assets
Cash and cash equivalents                                $   839,125       $ 1,060,585
Accounts receivable - other                                       96                --
Prepaid expenses                                                  --            50,754
--------------------------------------------------------------------------------------
      Total Assets                                       $   839,221       $ 1,111,339
======================================================================================
Liabilities and Partners' Capital
Liabilities:
  Accounts payable and accrued expenses                  $    46,440       $    92,716
  Due to affiliates                                            4,600            22,000
  Security deposits payable                                       --                --
                                                         -----------------------------
      Total Liabilities                                       51,040          114,716
                                                         -----------------------------
Partners' Capital:
  General Partner                                                 --                --
  Limited Partners (4,827,500 units outstanding)             788,181           996,623
                                                         -----------------------------
      Total Partners' Capital                                788,181           996,623
--------------------------------------------------------------------------------------
      Total Liabilities and Partners' Capital            $   839,221       $ 1,111,339
======================================================================================
</TABLE>


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
STATEMENT OF PARTNERS' CAPITAL
For the years ended December 31, 1999, 1998 and 1997
                                               General         Limited
                                               Partner        Partners           Total
--------------------------------------------------------------------------------------
<S>                                          <C>          <C>             <C>
Balance at December 31, 1996                 $ (54,910)   $ 19,699,435    $ 19,644,525
Net Income                                     338,949      12,431,919      12,770,868
Distributions                                 (284,039)    (28,120,188)    (28,404,227)
--------------------------------------------------------------------------------------
Balance at December 31, 1997                        --       4,011,166       4,011,166
Net income                                          --       2,349,347       2,349,347
Distributions                                       --      (5,363,890)     (5,363,890)
--------------------------------------------------------------------------------------
Balance at December 31, 1998                        --         996,623         996,623
Net income (loss)                                   --        (208,442)       (208,442)
--------------------------------------------------------------------------------------
Balance at December 31, 1999                 $      --    $    788,181    $    788,181
======================================================================================
</TABLE>

See accompanying notes to the consolidated financial statements.               2
<PAGE>
SENIOR INCOME FUND L.P.


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the years ended December 31,
                                                  1999            1998            1997
--------------------------------------------------------------------------------------
<S>                                         <C>           <C>             <C>
Income
Rental                                      $       --    $  3,155,478    $  8,232,614
Interest and other                              49,460         271,562         344,439
                                            ------------------------------------------
      Total Income                              49,460       3,427,040       8,577,053
--------------------------------------------------------------------------------------
Expenses
Payroll                                             --         916,592       2,574,322
General and administrative                     257,902         602,131       1,527,054
Rent and utilities                                  --         925,702       1,444,213
Supplies                                            --         293,301         890,148
Repairs and maintenance                             --         271,770         841,709
Real estate taxes                                   --         123,081         290,595
Travel and entertainment                            --          17,567          29,958
Loss on real estate held for disposition            --              --          48,000
                                            ------------------------------------------
      Total Expenses                           257,902       3,150,144       7,645,999
--------------------------------------------------------------------------------------
      Income (Loss) from Operations           (208,442)        276,896         931,054
--------------------------------------------------------------------------------------
Other Income:
Gain on sale of properties                          --       2,072,451      11,839,814
--------------------------------------------------------------------------------------
      Net Income (Loss)                     $ (208,442)   $  2,349,347    $ 12,770,868
======================================================================================
Net Income (Loss) Allocated:
To the General Partner                      $       --    $         --    $    338,949
To the Limited Partners                       (208,442)      2,349,347      12,431,919
--------------------------------------------------------------------------------------
                                            $ (208,442)   $  2,349,347    $ 12,770,868
======================================================================================
Per limited partnership unit
(4,827,500 outstanding)                         $ (.04)          $ .49          $ 2.58
--------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to the consolidated financial statements.               3
<PAGE>


SENIOR INCOME FUND L.P.


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
For the years ended December 31,
                                                  1999            1998            1997
--------------------------------------------------------------------------------------
<S>                                        <C>            <C>             <C>
Cash Flows From Operating Activities:
Net Income (Loss)                          $  (208,442)   $  2,349,347    $ 12,770,868
Adjustments to reconcile net income
(loss) to net cash provided by (used
for) operating activities:
  Gain on sale of properties                        --      (2,072,451)    (11,839,814)
  Loss on real estate assets held for
  disposition                                       --              --          48,000
  Increase (decrease) in cash arising
  from changes in operating assets and
  liabilities:
    Prepaid expenses                            50,754          97,282         (36,608)
    Other current assets                           (96)             --              --
    Accounts payable and accrued expenses      (46,276)        145,029        (853,124)
    Deferred rent payable                           --          35,514          45,395
    Due to affiliates                          (17,400)        (39,973)       (128,636)
    Security deposits                               --              --         (91,869)
                                           -------------------------------------------
Net cash provided by (used for)
operating activities                          (221,460)        514,748         (85,788)
--------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
  Proceeds from disposal of asset                   --         589,410      30,148,357
  Additions to real estate                          --              --         (77,000)
                                           -------------------------------------------
Net cash provided by investing activities           --         589,410      30,071,357
--------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
  Distributions paid to partners                    --      (5,363,890)    (28,769,947)
                                           -------------------------------------------
Net cash used for financing activities              --      (5,363,890)    (28,769,947)
--------------------------------------------------------------------------------------
Net increase (decrease) in cash
and cash equivalents                          (221,460)     (4,259,732)      1,215,622
Cash and cash equivalents,
beginning of year                            1,060,585       5,320,317       4,104,695
                                           -------------------------------------------
Cash and cash equivalents, end of year     $   839,125    $  1,060,585    $  5,320,317
======================================================================================
Supplemental Disclosure of Non-Cash
Investing Activities:
  Settlement costs funded through
  accounts payable                         $        --    $    232,505    $         --
======================================================================================
Supplemental Disclosure of Non-Cash
Operating Activities:
  In connection with the sale of the properties, 1998 prepaid expenses, deferred
  rent payable, and security deposits in the amounts of $56,831, $1,272,078, and
  $56,831 were netted against gain on sale of properties.
</TABLE>

See accompanying notes to the consolidated financial statements.               4
<PAGE>


SENIOR INCOME FUND L.P.


NOTES TO THE FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

1.  Organization
Senior Income Fund L.P. (the "Partnership"), a Delaware limited partnership (see
below), was formed on October 14, 1986 for the purpose of acquiring a general
partnership interest in Shearson August Property Partnership (the "Property
Partnership"), a California general partnership. As discussed below, through
November 21, 1996, the other general partner of the Property Partnership was
August Financial Partners II ("AFP-II"), an affiliate of August Financial
Corporation ("August"). The Property Partnership was formed to acquire and
operate four specified senior residential properties (the "Properties", see Note
7). The General Partner of the Partnership is Senior Income Fund Inc., (the
"General Partner"), a Delaware corporation, and an affiliate of Lehman Brothers
Inc. (see below). The Partnership will continue until December 31, 2036, unless
terminated sooner in accordance with the terms of the Partnership Agreement.

The initial capital contributions to the Partnership totaled $110,
representing capital contributions of $100 by the General Partner and $10 by
Senior Income Depositary Inc., formerly known as Shearson Lehman Senior
Depositary, Inc. (the Assignor Limited Partner).

The agreement of limited partnership authorized the issuance of 4,827,500
depositary units at $10 per unit, which represent assignments of economic and
certain other rights attributable to the partnership interests. The offering
period ended on March 17, 1987, at which time 4,827,500 depositary units had
been issued.

On November 21, 1996, the Partnership purchased the general partnership interest
of the successor to AFP-II for a purchase price of $850,000. The Partnership's
purchase of the general partnership interest was funded from cash reserves. As a
result of such purchase, the Property Partnership was dissolved in 1997 and all
of its assets were distributed to the Partnership. Accordingly, all sale
proceeds received upon a sale of any property belong to the Partnership and no
amount will be owed to AFP-II.

On August 1, 1997, the Partnership closed the sale of three of its four
Properties, Prell Gardens, Nohl Ranch and Pacific Inn to MBK Senior Properties,
Ltd. (the "Buyer"), for net proceeds of $30,148,357 and a gain on the Sale of
$11,839,814. On October 13, 1998, the Partnership closed on the sale of its
remaining Property, Ocean House, to MBK Senior Living Communities, Ltd.,
formerly known as MBK Senior Properties, Ltd., for a net selling price of
$998,579 and a gain on the sale of $2,072,451, including the assignment of the
land lease obligation. The Partnership remains contingently liable under the
terms of the Ocean House ground lease. The General Partner is in the process of
winding up the Partnership's affairs and expects to terminate the Partnership
subsequent to its removal as obligor of this contingent liability.

2.  Significant Accounting Policies

Basis of Accounting  The financial statements of the Partnership have been
prepared on the accrual basis of accounting.

Cash and Cash Equivalents  Cash and cash equivalents consist of short-term
highly liquid investments, including commercial paper, which have maturities of
three months or less from the date of purchase. The carrying value approximates
fair value because of the short maturity of these instruments.

Concentration of Credit Risk  Financial instruments which potentially subject
the Partnership to a concentration of credit risk principally consist of cash
and cash equivalents in excess of the financial institutions' insurance limits.
The Partnership invests available cash with high credit quality financial
institutions.

                                                                               5
<PAGE>


SENIOR INCOME FUND L.P.


Leases  Leases are accounted for under the operating method. Under this method,
revenue is recognized as rentals are earned and expenses (including
depreciation) are charged to operations when incurred. Leases are generally for
terms of one year or less.

Fair Value of Financial Instruments  Statement of Financial Accounting Standards
No. 107, "Disclosures about Fair Value of Financial Instruments" ("FAS 107"),
requires that the Partnership disclose the estimated fair values of its
financial instruments. Fair values generally represent estimates of amounts at
which a financial instrument could be exchanged between willing parties in a
current transaction other than in forced liquidation.

Fair value estimates are subjective and are dependent on a number of significant
assumptions based on management's judgment regarding future expected loss
experience, current economic conditions, risk characteristics of various
financial instruments, and other factors. In addition, FAS 107 allows a wide
range of valuation techniques, therefore, comparisons between entities, however
similar, may be difficult.

Income Taxes  No provision for income taxes has been made in the financial
statements since income, losses and tax credits are passed through to the
individual partners.

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 amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

3.  Partnership Agreement

Partnership Agreement
The Partnership Agreement provides for the allocation of Income, Losses, Net
Cash Flow from Operations, Net Proceeds from Interim Capital Transactions and
Net Proceeds upon Dissolution, as follows:

Income is generally allocated 99% to the Limited Partners and 1% to the General
Partner until the Limited Partners have received their Preferred Return, as
defined. The balance is allocated 95% to the Limited Partners and 5% to the
General Partner.

Losses are allocated to the General Partner and Limited Partners in proportion
to, and to the extent of their positive capital account balances, as defined. At
such time as the partners' capital account balances are zero, losses will be
allocated in the same proportion as distributions.

Net Cash Flow from Operations with respect to each fiscal year will generally be
distributed 99% to the Limited Partners and 1% to the General Partner, until
such time as each Limited Partner has received an amount equal to his Preferred
Return, as defined. The Partnership's share of any remaining Net Cash Flow from
Operations will be distributed 95% to the Limited Partners and 5% to the General
Partner.

Net Proceeds from Interim Capital Transactions, as defined, generally will be
distributed 99% to the Limited Partners and 1% to the General Partner until each
Limited Partner has received an amount equal to his unpaid Cumulative Preferred
Return and Unrecovered Capital, as defined. The Partnership's share of any
excess Net Proceeds will be distributed 95% to the Limited Partners and 5% to
the General Partner.

Net Proceeds upon Dissolution will be made in proportion to partners' capital
accounts. It is anticipated that Net Proceeds from any final liquidation of the
Partnership's assets generally will be distributed 99% to the Limited Partners
and 1% to the General Partner until each Limited Partner has received an amount
equal to any unpaid Preferred Return and his Unrecovered Capital as defined. The
Partnership's share of any excess Net Proceeds generally will be distributed 95%
to the Limited Partners and 5% to the General Partner.

                                                                               6
<PAGE>


SENIOR INCOME FUND L.P.


4.  Property Management
From April 6, 1988 through July 31, 1997, the Partnership's properties were
managed by Leisure Care, Inc. ("Leisure Care"), an unaffiliated third party. On
August 1, 1997, simultaneous with the sale of three of the Partnership's four
properties, MBK Senior Living Communities, Ltd., an affiliate of the Buyer, was
retained to manage Ocean House, the remaining property, which was sold in
October 1998.

Management fees for the years ended December 31, 1999, 1998 and 1997 amounted to
$0, $172,354 and $291,660, respectively.

For the years ended December 31, 1998 and 1997, Leisure Care earned $0 and
$197,796, respectively, in performance incentive fees.

5.  Transactions with Related Parties
The Partnership reimburses the General Partner or its affiliates for certain
administrative expenses. For the years ended December 31, 1999, 1998 and 1997,
the General Partner or its affiliates were reimbursed approximately $7,200,
$21,000 and $179,000, respectively. The General Partner or its affiliates were
owed approximately $4,600, $22,000 and $62,000 at December 31, 1999, 1998 and
1997, respectively.

Relating to the sale of the three properties in 1997, a brokerage commission was
received by an affiliate of the General Partner in the amount of $233,454. In
1998, the affiliate received a commission on the sale of Ocean House in the
amount of $7,489.

6.  Real Estate
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 and a gain on the sale of the properties of $11,839,814. On October
13, 1998, the Partnership closed on the sale of its remaining property, Ocean
House, for a gross selling price of $5,172,750, less a credit for cost of
repairs due to earthquake damage of $4,174,171, resulting in a net selling price
of $998,579. The sale resulted in a gain of $2,072,451, including the assignment
of the land lease obligation. The Partnership remains contingently liable under
the terms of the ground lease. The General Partner is in the process of winding
up the Partnership's affairs and expects to terminate the Partnership subsequent
to its removal as obligor of this contingent liability.

On November 21, 1996, the Partnership purchased the general partnership interest
of the successor to AFP-II for a purchase price of $850,000. Accordingly, the
purchase resulted in an additional investment of $850,000 in the Properties.

7.  Distributions Paid
Cash distributions, per the statements of partners' capital, are recorded on the
accrual basis, which recognize specific record dates for payments within each
calendar year. The statements of cash flows recognize actual cash distributions
paid during the calendar year. The following table discloses the annual amounts
as presented on the financial statements:

<TABLE>
<CAPTION>
             Distributions                                         Distributions
                   Payable     Distributions     Distributions           Payable
         Beginning of Year          Declared              Paid       December 31
--------------------------------------------------------------------------------
<S>               <C>            <C>               <C>                  <C>
1999              $     --       $        --       $        --          $     --
1998                    --         5,363,890         5,363,890                --
1997               365,720        28,404,227        28,769,947                --
--------------------------------------------------------------------------------
</TABLE>

                                                                               7
<PAGE>


SENIOR INCOME FUND L.P.


8.  Reconciliation of Net Income to Taxable Income (Loss)

The following is a reconciliation of the net income (loss) for financial
statement purposes to net income for federal income tax purposes for the years
ended December 31, 1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                                  1999            1998            1997
--------------------------------------------------------------------------------------
<S>                                         <C>            <C>            <C>
Net income (loss) per financial statements  $ (208,442)    $ 2,349,347    $ 12,770,868

Depreciation deducted for tax purposes
in excess of depreciation expense per
financial statements                                --         (91,954)       (590,360)

Tax basis Property Partnership net
income (loss) in excess of GAAP basis
Property Partnership net income                     --              --              --

Gain on sale per financial statements
in excess of tax basis gain (loss) on sale          --      (4,127,111)       (898,326)

Financial statement loss on write-down
of real estate over tax basis loss on
write-down of real estate                           --              --          48,000

Other                                               --          53,424         (49,017)
--------------------------------------------------------------------------------------
Taxable net income (loss)                   $ (208,442)    $(1,816,294)    $11,281,165
======================================================================================
</TABLE>

The following is a reconciliation of partners' capital for financial statement
purposes to partners' capital for federal income tax purposes as of December 31,
1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                                  1999            1998            1997
--------------------------------------------------------------------------------------
<S>                                         <C>            <C>            <C>
Partners' capital per
financial statements                        $  788,181     $   996,623    $  4,011,166
Adjustment for cumulative
difference between tax basis
net income and net income (loss)
per financial statements                        58,979          58,979       4,224,620
--------------------------------------------------------------------------------------
Partners' capital per tax return            $  847,160     $ 1,055,602    $  8,235,786
======================================================================================
</TABLE>

                                                                               8
<PAGE>


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                        REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------




To the Partners of
Senior Income Fund Limited Partnership:


In our opinion, the accompanying balance sheets and the related statements of
operations, partners' capital and of cash flows present fairly, in all material
respects, the financial position of Senior Income Fund Limited Partnership, a
Delaware Limited Partnership, at December 31, 1999 and 1998, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States. 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 of these
statements in accordance with auditing standards generally accepted in the
United States, which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

As discussed in Notes 1 and 6 to the financial statements, the Partnership
entered into a Purchase and Sale Agreement for its four real estate properties.
The Partnership sold three of the four properties on August 1, 1997. The sale of
the fourth property occurred on October 13, 1998. The Partnership expects to
terminate subsequent to its removal as obligor under a contingent liability
described in Note 6 of the financial statements.

                                          /s/PricewaterhouseCoopers LLP

February 22, 2000

                                                                               9