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




     [X]  Quarterly  Report  Pursuant  to Section 13 or 15(d) of the  Securities
          Exchange Act of 1934 For the fiscal quarter ended June 30, 2001


     [ ]  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 0-26594
                             -----------------------




                     PLM EQUIPMENT GROWTH & INCOME FUND VII
             (Exact name of registrant as specified in its charter)


              California                                      94-3168838
    (State or other jurisdiction of                        (I.R.S. Employer
    incorporation or organization)                        Identification No.)

   120 Montgomery Street, Suite 1350
           San Francisco, CA                                     94104
         (Address of principal                                (Zip code)
          executive offices)


       Registrant's telephone number, including area code: (415) 445-3201
                             -----------------------


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days. Yes X No ____


<PAGE>



                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A Limited Partnership)
                                 BALANCE SHEETS
                 (in thousands of dollars, except unit amounts)

<TABLE>
<CAPTION>


                                                                              June 30,          December 31,
                                                                               2001                2000
                                                                         -----------------------------------
<S>                                                                      <C>                   <C>
ASSETS
Equipment held for operating leases, at cost                             $       79,758        $       71,632
Less accumulated depreciation                                                   (39,101)              (35,114)
                                                                         ---------------------------------------
  Net equipment                                                                  40,657                36,518

Cash and cash equivalents                                                         3,850                 2,941
Restricted cash                                                                     211                   194
Accounts receivable, less allowance for doubtful accounts
    of $52 in 2001 and $27 in 2000                                                1,691                 1,502
Investments in unconsolidated special-purpose entities                           10,063                14,689
Deferred charges, net of accumulated amortization
    of $256 in 2001 and $209 in 2000                                                267                   264
Prepaid expenses and other assets                                                    68                   100
                                                                         ---------------------------------------

      Total assets                                                       $       56,807        $       56,208
                                                                         =======================================

LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
Accounts payable and accrued expenses                                    $          218        $          411
Due to affiliates                                                                   501                 1,182
Lessee deposits and reserve for repairs                                           1,137                   900
Notes payable                                                                    17,000                17,000
                                                                         ---------------------------------------
  Total liabilities                                                              18,856                19,493

Partners' capital:
Limited partners (5,323,569 limited partnership units as of
    June 30, 2001 and December 31, 2000)                                         37,951                36,715
General Partner                                                                      --                    --
                                                                         ---------------------------------------
  Total partners' capital                                                        37,951                36,715
                                                                         ---------------------------------------

      Total liabilities and partners' capital                            $       56,807        $       56,208
                                                                         =======================================
</TABLE>

















                 See accompanying notes to financial statements.


<PAGE>



                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A Limited Partnership)
                            STATEMENTS OF OPERATIONS
         (in thousands of dollars, except weighted-average unit amounts)
<TABLE>
<CAPTION>
                                                     For the Three Months                For the Six Months
                                                        Ended June 30,                     Ended June 30,
                                                     2001            2000              2001            2000
                                                   --------------------------------------------------------------
<S>                                                   <C>         <C>               <C>             <C>
REVENUES

Lease revenue                                      $  4,128       $  4,047          $   8,119       $   7,704
Interest and other income                                59             58                136              99
Net gain (loss) on disposition of equipment              12            (10)                14           1,086
                                                   --------------------------------------------------------------
    Total revenues                                    4,199          4,095              8,269           8,889
                                                   --------------------------------------------------------------

EXPENSES

Depreciation and amortization                         2,015          1,535              4,040           2,972
Repairs and maintenance                                 395            667                763           1,146
Equipment operating expense                             414            410                786             860
Insurance expense                                        54            124                218             192
Management fees to affiliate                            222            209                430             410
Interest expense                                        366            359                690             727
General and administrative expenses
      to affiliates                                     111            218                295             456
Other general and administrative expenses               169            205                401             355
Provision for bad debts                                   1             19                 24              69
                                                   --------------------------------------------------------------
    Total expenses                                    3,747          3,746              7,647           7,187
                                                   --------------------------------------------------------------

Equity in net income (loss) of unconsolidated
      special-purpose entities                        2,408           (396 )            2,036            (845 )
                                                   --------------------------------------------------------------

Net income (loss)                                  $  2,860       $    (47 )        $   2,658       $     857
                                                   ==============================================================

PARTNERS' SHARE OF NET INCOME (LOSS)

Limited partners                                   $  2,860       $   (173 )        $   2,532       $     605
General Partner                                          --            126                126             252
                                                   --------------------------------------------------------------

Total                                              $  2,860       $    (47 )        $   2,658       $     857
                                                   ==============================================================

Limited partners' net income (loss) per
    weighted-average limited partnership unit      $   0.54       $  (0.03 )        $    0.48       $    0.11
                                                   ==============================================================

Cash distributions                                 $     --       $  2,637          $   1,422       $   5,043
                                                   ==============================================================

Cash distributions per weighted-average
    limited partnership unit                       $     --       $   0.47          $    0.24       $    0.90
                                                   ==============================================================

</TABLE>









                 See accompanying notes to financial statements.

                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                            ( A Limited Partnership)
                 STATEMENTS OF CHANGES IN PARTNERS' CAPITAL For
               the period from December 31, 1999 to June 30, 2001
                            (in thousands of dollars)

<TABLE>
<CAPTION>


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

<S>                                                       <C>                   <C>                 <C>
  Partners' capital as of December 31, 1999               $   42,747            $    --             $   42,747

Net income                                                     3,555                504                  4,059

Purchase of limited partnership units                             (3)                --                     (3)

Cash distribution                                             (9,584)              (504)               (10,088)
                                                          -------------------------------------------------------

  Partners' capital as of December 31, 2000                   36,715                 --                 36,715

Net income                                                     2,532                126                  2,658

Cash distribution                                             (1,296)              (126)                (1,422)
                                                          -------------------------------------------------------

  Partners' capital as of June 30, 2001                   $   37,951            $    --             $   37,951
                                                          =======================================================
</TABLE>

































                 See accompanying notes to financial statements.



<PAGE>




                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A Limited Partnership)
                            STATEMENTS OF CASH FLOWS
                            (in thousands of dollars)
<TABLE>
<CAPTION>
                                                                                       For the Six Months
                                                                                         Ended June 30,
                                                                                        2001            2000
                                                                                    -----------------------------



<S>                                                                                  <C>             <C>
OPERATING ACTIVITIES

 Net income                                                                          $    2,658      $     857
 Adjustments to reconcile net income to net cash
       provided by (used in) operating activities:
   Depreciation and amortization                                                          4,040          2,972
   Net gain on disposition of equipment                                                     (14)        (1,086)
   Equity in net (income) loss from unconsolidated special-purpose entities              (2,036)           845
   Changes in operating assets and liabilities:
     Restricted cash                                                                        (17)            83
     Accounts receivable, net                                                              (204)          (183)
     Prepaid expenses and other assets                                                       32             34
     Accounts payable and accrued expenses                                                 (193)          (113)
     Due to affiliates                                                                     (681)           180
     Lessee deposits and reserve for repairs                                                237           (348)
                                                                                     ----------------------------
       Net cash provided by operating activities                                          3,822          3,241
                                                                                     ----------------------------

 INVESTING ACTIVITIES

 Payments for purchase of equipment and capitalized improvements                         (8,011)        (3,823)
 Investment in and equipment purchased and placed in
     unconsolidated special-purpose entities                                                (86)            --
 Distribution from unconsolidated special-purpose entities                                1,455          2,500
 Distribution from liquidation of unconsolidated special-purpose entities                 5,293             --
 Payments of acquisition fees to affiliate                                                 (134)          (125)
 Payments of lease negotiation fees to affiliate                                            (50)           (28)
 Proceeds from disposition of equipment                                                      42          2,577
                                                                                     ----------------------------
       Net cash (used in) provided by investing activities                               (1,491)         1,101
                                                                                     ----------------------------

 FINANCING ACTIVITIES

 Proceeds from short-term notes payable to affiliate                                      5,500             --
 Payments of short-term notes payable to affiliate                                       (5,500)            --
 Cash distribution paid to limited partners                                              (1,296)        (4,791)
 Cash distribution paid to General Partner                                                 (126)          (252)
 Purchase of limited partnership units                                                       --             (3)
                                                                                     ----------------------------
       Net cash used in financing activities                                             (1,422)        (5,046)
                                                                                     ----------------------------

 Net increase (decrease) in cash and cash equivalents                                       909           (704)
 Cash and cash equivalents at beginning of period                                         2,941          2,495
                                                                                     ----------------------------
 Cash and cash equivalents at end of period                                          $    3,850      $   1,791
                                                                                     ============================

 SUPPLEMENTAL INFORMATION

 Interest paid                                                                       $      690      $     727
                                                                                     ============================
</TABLE>






                 See accompanying notes to financial statements.


<PAGE>


                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                  June 30, 2001

1. OPINION OF MANAGEMENT

In the opinion of the  management  of PLM Financial  Services,  Inc. (FSI or the
General Partner),  the accompanying  unaudited financial  statements contain all
adjustments  necessary,  consisting  primarily of normal recurring accruals,  to
present fairly the financial  position of PLM Equipment Growth & Income Fund VII
(the  Partnership)  as of June 30, 2001 and December 31, 2000, the statements of
operations  for the three  and six  months  ended  June 30,  2001 and 2000,  the
statements of changes in partners' capital for the period from December 31, 1999
to June 30, 2001, and the statements of cash flows for the six months ended June
30, 2001 and 2000. Certain information and note disclosures normally included in
financial  statements  prepared in accordance with generally accepted accounting
principles  have been  condensed  or  omitted  from the  accompanying  financial
statements.  For further information,  reference should be made to the financial
statements and notes thereto included in the Partnership's Annual Report on Form
10-K for the  year  ended  December  31,  2000,  on file at the  Securities  and
Exchange Commission.

2. SCHEDULE OF PARTNERSHIP PHASES

Beginning in the  Partnership's  seventh year of operations,  which commences on
January 1, 2002, the General Partner will stop purchasing  additional equipment.
Surplus cash, if any,  less  reasonable  reserves,  will be  distributed  to the
partners.  Beginning  in the  Partnership's  ninth  year  of  operations,  which
commences on January 1, 2004,  the General  Partner  intends to begin an orderly
liquidation of the Partnership's  assets.  The General Partner  anticipates that
the liquidation of the assets will be completed by the end of the  Partnership's
twelfth year of operations. The Partnership will terminate on December 31, 2013,
unless  terminated  earlier  upon sale of all  equipment  and by  certain  other
events.

3. CASH DISTRIBUTIONS

Cash  distributions  are recorded when paid and may include amounts in excess of
net income that are  considered to represent a return of capital.  For the three
months ended June 30, 2001 and 2000,  cash  distributions  totaled $-0- and $2.6
million,  respectively.  For the six months  ended June 30, 2001 and 2000,  cash
distributions totaled $1.4 million and $5.0 million,  respectively.  None of the
cash  distributions to the limited partners during the six months ended June 30,
2001, were deemed to be a return of capital.  Cash distributions of $4.2 million
to the limited  partners  during the six months ended June 30, 2000, were deemed
to be a return of capital.

4. TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES

The balance due to  affiliates  as of June 30, 2001 included $0.2 million due to
FSI and its affiliates  for  management  fees and $0.3 million due to affiliated
unconsolidated  special-purpose  entities (USPEs). The balance due to affiliates
as of December 31, 2000 included $0.1 million due to FSI and its  affiliates for
management fees and $1.0 million due to an affiliated USPE.

During the six months ended June 30, 2001,  the  Partnership  had  borrowings of
$5.5 million from the General Partner to fund the purchase of marine containers.
The  General  Partner  charged  the  Partnership  market  interest  rates on the
outstanding  balance of the  short-term  notes totaling $0.1 million for the six
months ended June 30, 2001.  All loans from the General  Partner had been repaid
by June 30, 2001.

The  Partnership's  proportional  share of  USPE-affiliated  management  fees of
$18,000 and $0.1 million were payable as of June 30, 2001 and December 31, 2000,
respectively.


<PAGE>



                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                  June 30, 2001

4. TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES (continued)

The Partnership's  proportional share of the affiliated expenses incurred by the
USPEs  during 2001 and 2000 is listed in the  following  table (in  thousands of
dollars):
<TABLE>
<CAPTION>

                                                     For the Three Months               For the Six Months
                                                        Ended June 30,                    Ended June 30,
                                                     2001            2000              2001            2000
                                                   -------------------------------------------------------------
<S>                                                <C>            <C>               <C>             <C>
Management fees                                    $     37       $     87          $      96       $     168
Data processing and administrative
   expenses                                              21             18                 62              41
</TABLE>

The  Partnership and USPE's paid FSI $0.3 million and $0.2 million for equipment
acquisition and lease negotiation fees during the six months ended June 30, 2001
and 2000, respectively.

5. EQUIPMENT

The components of owned equipment were as follows (in thousands of dollars):
<TABLE>
<CAPTION>

                                                 June 30,           December 31,
                                                 2001                 2000
                                             -----------------------------------

<S>                                          <C>                  <C>
Marine containers                            $    38,709          $   30,599
Marine vessels                                    22,212              22,212
Rail equipment                                     9,596               9,580
Aircraft                                           5,483               5,483
Trailers                                           3,758               3,758
                                             ------------         -----------
                                                  79,758              71,632
Less accumulated depreciation                    (39,101)            (35,114)
                                             ------------         -----------
    Net equipment                            $    40,657          $   36,518
                                             ============         ===========
</TABLE>

As of June 30, 2001, all owned equipment in the  Partnership's  portfolio was on
lease except for 12 railcars.  As of December 31, 2000,  all owned  equipment in
the  Partnership's  portfolio was on lease except for 23 railcars.  The net book
value of the  equipment  off lease was $0.1  million and $0.2 million as of June
30, 2001 and December 31, 2000, respectively.

During the six months  ended June 30, 2001,  the  Partnership  purchased  marine
containers for $8.0 million and paid acquisition fees of $0.1 million to FSI.

During the six months ended June 30, 2001,  the  Partnership  disposed of marine
containers with a net book value of $13,000 for proceeds of $27,000.  During the
six months ended June 30, 2000, the Partnership disposed of a commuter aircraft,
a railcar,  marine containers,  and trailers with an aggregate net book value of
$1.4 million for $2.5 million.



<PAGE>


                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                  June 30, 2001

6. INVESTMENTS IN UNCONSOLIDATED SPECIAL-PURPOSE ENTITIES

The net investments in USPEs includes the following jointly-owned equipment (and
related assets and liabilities) (in thousands of dollars):
<TABLE>
<CAPTION>

                                                                                      June 30,       December 31,
                                                                                         2001             2000
                                                                                   ------------------------------
<S>                                                                                <C>              <C>
      38% interest in a trust owning a Boeing 737-300 Stage III commercial
                aircraft                                                           $    6,250       $    6,497
      50% interest in a trust owning a MD-82 Stage III commercial aircraft              3,380            3,751
      50% interest in a trust owning a MD-82 Stage III commercial aircraft                415              900
      80% interest in an entity that owned a dry bulk-carrier marine vessel                18            3,482
      44% interest in an entity that owned a dry bulk-carrier marine vessel                --               59
                                                                                   -----------      -----------
          Net investments                                                          $   10,063       $   14,689
                                                                                   ===========      ===========
</TABLE>

As of June 30, 2001 and December 31, 2000,  all  jointly-owned  equipment in the
Partnership's USPE portfolio was on lease.

During  the six  months  ended  June 30,  2001,  the  General  Partner  sold the
Partnership's 80% interest in an entity owning a dry bulk-carrier marine vessel.
The Partnership's  interest in this entity was sold for proceeds of $5.3 million
for its net investment of $3.4 million. Included in the net gain on sale of this
entity was the unused portion of marine vessel drydocking of $0.2 million.

7. OPERATING SEGMENTS

The  Partnership  operates in five primary  operating  segments:  marine  vessel
leasing,  trailer  leasing,   aircraft  leasing,  railcar  leasing,  and  marine
container  leasing.  Each  equipment  leasing  segment  engages in short-term to
mid-term operating leases to a variety of customers.

The following  tables present a summary of the operating  segments (in thousands
of dollars):
<TABLE>
<CAPTION>

                                            Marine                                    Marine
     For the three months ended             Vessel   Trailer    Aircraft  Railcar    Container
         June 30, 2001                     Leasing   Leasing    Leasing   Leasing    Leasing    Other(1)    Total
     ----------------------------------    --------- ---------  --------- ---------  --------- ---------  -----------

<S>                                        <C>       <C>        <C>       <C>        <C>       <C>        <C>
     REVENUES
       Lease revenue                       $  1,433  $    138   $    272  $    601   $  1,684  $     --   $  4,128
       Interest income and other                 --        --         33        --         --        26         59
       Gain on disposition of equipment          --         1         --        --         11        --         12
                                           ------------------------------------------------------------------------
         Total revenues                       1,433       139        305       601      1,695        26      4,199

     COSTS AND EXPENSES
       Operations support                       615        83         (2)      131         19        17        863
       Depreciation and amortization            309        53        154       135      1,358         6      2,015
       Interest expense                          --        --         --        --         --       366        366
       Management fees to affiliate              72         7         13        45         85        --        222
       General and administrative expenses       21        34          7        12         --       206        280
       Provision for bad debts                   --        --         --         1         --        --          1
                                           ------------------------------------------------------------------------
         Total costs and expenses             1,017       177        172       324      1,462       595      3,747
                                           ------------------------------------------------------------------------
     Equity in net income of USPEs            1,929        --        479        --         --        --      2,408
                                           ------------------------------------------------------------------------
     Net income (loss)                     $  2,345       (38)       612       277        233      (569)     2,860
                                           ========================================================================

     Total assets as of June 30, 2001      $  6,460  $  1,125   $ 10,408  $  3,804   $ 30,825  $  4,185   $ 56,807
                                           ========================================================================




(1)  Includes  interest  income  and  costs  not  identifiable  to a  particular
     segment, such as, interest expense, and certain  amortization,  general and
     administrative, and operations support expenses.
</TABLE>


<PAGE>


                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                  June 30, 2001

7. OPERATING SEGMENTS (continued)
<TABLE>
<CAPTION>

                                            Marine                                    Marine
     For the three months ended             Vessel   Trailer    Aircraft  Railcar    Container
         June 30, 2000                     Leasing   Leasing    Leasing   Leasing    Leasing    Other1      Total
     ----------------------------------    --------- ---------  --------- ---------  --------- ---------  -----------

<S>                                        <C>       <C>        <C>       <C>        <C>       <C>        <C>
     REVENUES
       Lease revenue                       $  1,424  $    918   $    271  $    603   $    831  $     --   $  4,047
       Interest income and other                 --        --         --        --         --        58         58
       Gain (loss) on disposition of             --       (38)         1        --         27        --        (10)
     equipment
                                           ------------------------------------------------------------------------
         Total revenues                       1,424       880        272       603        858        58      4,095

     COSTS AND EXPENSES
       Operations support                       727       269         17       176          2        10      1,201
       Depreciation and amortization            341       314        154       157        562         7      1,535
       Interest expense                          --        --         --        --         --       359        359
       Management fees to affiliate              71        49         14        34         41        --        209
       General and administrative expenses       22       178          3        27         --       193        423
       Provision for (recovery of) bad           --        40         --        (9)        --       (12)        19
     debts
                                           ------------------------------------------------------------------------
         Total costs and expenses             1,161       850        188       385        605       557      3,746
                                           ------------------------------------------------------------------------
     Equity in net income (loss) of USPEs       (33)       --       (418)       --         55        --       (396)
                                           ------------------------------------------------------------------------
                                           ------------------------------------------------------------------------
     Net income (loss)                     $    230  $     30   $   (334) $    218   $    308  $   (499)  $    (47)
                                           ========================================================================

     Total assets as of June 30, 2000      $ 13,170  $  7,407   $ 13,900  $  4,409   $ 19,608  $  2,075   $ 60,569
                                           ========================================================================
</TABLE>
<TABLE>
<CAPTION>



                                            Marine                                    Marine
     For the six months ended               Vessel   Trailer    Aircraft  Railcar    Container
         June 30, 2001                     Leasing   Leasing    Leasing   Leasing    Leasing    Other(1)    Total
     ----------------------------------    --------- ---------  --------- ---------  --------- ---------  -----------

<S>                                        <C>       <C>        <C>       <C>        <C>       <C>        <C>
     REVENUES
       Lease revenue                       $  2,896  $    308   $    543  $  1,212   $  3,160  $     --   $  8,119
       Interest income and other                 --        --         33        --         --       103        136
       Gain on disposition of equipment          --         1         --        --         13        --         14
                                           ------------------------------------------------------------------------
         Total revenues                       2,896       309        576     1,212      3,173       103      8,269

     COSTS AND EXPENSES
       Operations support                     1,211       146          2       294         37        77      1,767
       Depreciation and amortization            619       105        308       270      2,725        13      4,040
       Interest expense                          --        --         --        --         --       690        690
       Management fees to affiliate             145        16         27        84        158        --        430
       General and administrative expenses       35        56         11        28         --       566        696
       Provision for (recovery of) bad           --        (3)        --        19          8        --         24
     debts
                                           ------------------------------------------------------------------------
         Total costs and expenses             2,010       320        348       695      2,928     1,346      7,647
                                           ------------------------------------------------------------------------
     Equity in net income of USPEs            2,036        --         --        --         --        --      2,036
                                           ------------------------------------------------------------------------
     Net income (loss)                     $  2,922  $    (11)  $    228  $    517   $    245  $ (1,243)  $  2,658
                                           ========================================================================

     Total assets as of June 30, 2001      $  6,460  $  1,125   $ 10,408  $  3,804   $ 30,825  $  4,185   $ 56,807
                                           ========================================================================





(1)  Includes  interest  income  and  costs  not  identifiable  to a  particular
     segment, such as, interest expense, and certain  amortization,  general and
     administrative, and operations support expenses.
</TABLE>



<PAGE>


                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                  June 30, 2001

7.   OPERATING SEGMENTS (continued)
<TABLE>
<CAPTION>

                                             Marine                                    Marine
     For the six months ended                Vessel    Trailer    Aircraft  Railcar    Container
         June 30, 2000                       Leasing   Leasing    Leasing   Leasing    Leasing    Other(2)    Total
     ------------------------------------    --------  ---------  --------  ---------  --------  ---------  ----------

<S>                                          <C>       <C>        <C>       <C>        <C>       <C>        <C>
     REVENUES
       Lease revenue                         $ 2,683   $  1,796   $   542   $  1,251   $ 1,432   $     --   $  7,704
       Interest income and other                  --         --        --         --        --         99         99
       Gain (loss) on disposition of              --        (58)    1,118         (1)       27         --      1,086
     equipment
                                             ------------------------------------------------------------------------
         Total revenues                        2,683      1,738     1,660      1,250     1,459         99      8,889

     COSTS AND EXPENSES
       Operations support                      1,376        491        26        281         4         20      2,198
       Depreciation and amortization             682        631       353        314       979         13      2,972
       Interest expense                           --         --        --         --        --        727        727
       Management fees to affiliate              134         97        28         80        71         --        410
       General and administrative expenses        32        374         6         46        --        353        811
       Provision for (recovery of) bad debts      --         84        --         (2)       --        (13)        69
                                             ------------------------------------------------------------------------
         Total costs and expenses              2,224      1,677       413        719     1,054      1,100      7,187
                                             ------------------------------------------------------------------------
     Equity in net income (loss) of USPEs       (142)        --      (811)        --       109         (1)      (845)
                                             ------------------------------------------------------------------------
     Net income (loss)                       $   317   $     61   $   436   $    531   $   514   $ (1,002)  $    857
                                             ========================================================================

     Total assets as of June 30, 2000        $13,170   $  7,407   $13,900   $  4,409   $19,608   $  2,075   $ 60,569
                                             ========================================================================

(2)  Includes  interest  income  and  costs  not  identifiable  to a  particular
     segment,  such as interest expense, and certain  amortization,  general and
     administrative,  and operations  support  expenses.  Also includes net loss
     from an investment in an entity that owned a mobile offshore drilling unit.

</TABLE>

8. NET INCOME (LOSS) PER WEIGHTED-AVERAGE PARTNERSHIP UNIT

Net income (loss) per weighted-average Partnership unit was computed by dividing
net income  (loss)  attributable  to limited  partners  by the  weighted-average
number  of  Partnership  units  deemed   outstanding   during  the  period.  The
weighted-average number of Partnership units deemed outstanding during the three
and six months ended June 30, 2001 was 5,323,569. The weighted-average number of
Partnership units deemed  outstanding during the three and six months ended June
30, 2000 was 5,323,569 and 5,323,651, respectively.

9. DEBT

During  2001,  the General  Partner  entered into a joint $15.0  million  credit
facility on behalf of the  Partnership,  PLM Equipment  Growth Fund VI (EGF VI),
Professional  Lease Management Income Fund I (Fund I), and Acquisub LLC (ACQ), a
wholly owned subsidiary of PLM International which is the parent company of FSI.
The facility  provides  interim  financing of up to 100% of the  aggregate  book
value of eligible  equipment owned by the Partnership,  as defined in the credit
facility. The Partnership, EGF VI, Fund I, and ACQ collectively may borrow up to
$15.0 million of this facility.  Outstanding  borrowings by one borrower  reduce
the  amount  available  to each  of the  other  borrowers  under  the  facility.
Individual  borrowings  may be outstanding  for no more than 270 days,  with all
advances due no later than April 12, 2002.  Interest accrues at either the prime
rate or adjusted LIBOR plus 2.0% at the borrower's option and is set at the time
of an advance of funds.  Borrowings  by the  Partnership  are  guaranteed by PLM
International.

As of June 30, 2001, no eligible  borrower had any outstanding  borrowings under
the warehouse facility.









                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                  June 30, 2001

10. CONTINGENCIES

PLM  International,  (the Company) and various of its wholly owned  subsidiaries
are  defendants  in a class  action  lawsuit  filed in January 1997 and which is
pending  in the  United  States  District  Court for the  Southern  District  of
Alabama,  Southern  Division (Civil Action No.  97-0177-BH-C)  (the court).  The
named  plaintiffs are six individuals who invested in PLM Equipment  Growth Fund
IV (Fund IV), PLM Equipment Growth Fund V (Fund V), PLM Equipment Growth Fund VI
(Fund VI), and PLM Equipment  Growth & Income Fund VII (Fund VII),  collectively
(the  Funds),  each a California  limited  partnership  for which the  Company's
wholly owned subsidiary, PLM Financial Services, Inc. (FSI), acts as the General
Partner.

The complaint  asserts  causes of action  against all  defendants  for fraud and
deceit,  suppression,  negligent  misrepresentation,  negligent and  intentional
breaches of fiduciary  duty,  unjust  enrichment,  conversion,  and  conspiracy.
Plaintiffs  allege that each  defendant  owed  plaintiffs  and the class certain
duties due to their  status as  fiduciaries,  financial  advisors,  agents,  and
control persons.  Based on these duties,  plaintiffs  assert  liability  against
defendants  for improper  sales and marketing  practices,  mismanagement  of the
Funds, and concealing such mismanagement from investors in the Funds. Plaintiffs
seek unspecified compensatory damages, as well as punitive damages.

In June 1997, the Company and the affiliates who are also defendants in the Koch
action were named as defendants in another  purported  class action filed in the
San Francisco  Superior Court,  San Francisco,  California,  Case No.987062 (the
Romei  action).  The plaintiff is an investor in Fund V, and filed the complaint
on her own  behalf and on behalf of all class  members  similarly  situated  who
invested in the Funds. The complaint  alleges the same facts and the same causes
of action as in the Koch action, plus additional causes of action against all of
the defendants,  including alleged unfair and deceptive practices and violations
of  state  securities  law.  In July  1997,  defendants  filed a  petition  (the
petition) in federal district court under the Federal Arbitration Act seeking to
compel  arbitration of plaintiff's  claims.  In October 1997, the district court
denied  the  Company'  s  petition,  but in  November  1997,  agreed to hear the
Company's  motion for  reconsideration.  Prior to  reconsidering  its order, the
district court dismissed the petition pending settlement of the Romei action, as
discussed  below.  The state court action  continues  to be stayed  pending such
resolution.

In February 1999 the parties to the Koch and Romei actions  agreed to settle the
lawsuits,  with  no  admission  of  liability  by any  defendant,  and  filed  a
Stipulation  of Settlement  with the court.  The  settlement is divided into two
parts,  a  monetary  settlement  and  an  equitable  settlement.   The  monetary
settlement  provides  for  a  settlement  and  release  of  all  claims  against
defendants  in  exchange  for payment for the benefit of the class of up to $6.6
million.  The final settlement  amount will depend on the number of claims filed
by class members,  the amount of the administrative costs incurred in connection
with the  settlement,  and the amount of attorneys' fees awarded by the court to
plaintiffs'  attorneys.  The Company will pay up to $0.3 million of the monetary
settlement,  with  the  remainder  being  funded  by an  insurance  policy.  For
settlement  purposes,  the monetary  settlement class consists of all investors,
limited partners, assignees, or unit holders who purchased or received by way of
transfer or  assignment  any units in the Funds  between May 23, 1989 and August
30, 2000. The monetary  settlement,  if approved,  will go forward regardless of
whether the equitable settlement is approved or not.

The equitable  settlement  provides,  among other things, for: (a) the extension
(until  January 1, 2007) of the date by which FSI must complete  liquidation  of
the Funds' equipment,  (b) the extension (until December 31, 2004) of the period
during which FSI can reinvest the Funds' funds in additional  equipment,  (c) an
increase of up to 20% in the amount of front-end fees (including acquisition and
lease  negotiation  fees)  that  FSI  is  entitled  to  earn  in  excess  of the
compensatory   limitations   set   forth  in  the  North   American   Securities
Administrator's  Association's Statement of Policy; (d) a one-time repurchase by
each  of  Fund  V,  Fund  VI and  Fund  VII of up to 10% of  that  partnership's
outstanding units for 80% of net asset value per unit; and (e) the deferral of a
portion of the  management  fees paid to an  affiliate  of FSI  until,  if ever,
certain  performance  thresholds  have been met by the  Funds.  Subject to final
court  approval,  these  proposed  changes  would be made as  amendments to each
Fund's limited partnership agreement if less


<PAGE>


                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                  June 30, 2001

10. CONTINGENCIES (continued)

than 50% of the limited partners of each Fund vote against such amendments.  The
equitable settlement also provides for payment of additional  attorneys' fees to
the  plaintiffs'  attorneys from Fund funds in the event,  if ever, that certain
performance  thresholds  have been met by the Funds.  The  equitable  settlement
class consists of all investors, limited partners, assignees or unit holders who
on August 30,  2000 held any units in Fund V, Fund VI,  and Fund VII,  and their
assigns and successors in interest.

The court  preliminarily  approved  the monetary and  equitable  settlements  in
August 2000, and information regarding each of the settlements was sent to class
members in  September  2000. A final  fairness  hearing was held on November 29,
2000,  and on April 25, 2001 the federal  magistrate  judge assigned to the case
entered a Report and Recommendation  recommending final approval of the monetary
and equitable settlements to the federal district court judge. On July 24, 2001,
the federal  district  court judge  adopted the Report and  Recommendation,  and
entered a final judgment approving both settlements.  Monetary class members who
submitted timely claims will be paid their settlement amount out of the monetary
fund by the third-party claims administrator, calculated pursuant to the formula
set  forth in the  settlement  agreement  and court  order.  These  payments  to
qualifying class members will occur following the expiration of the time for the
filing of an appeal,  assuming that no appeal is filed.  Similarly the equitable
settlement will be implemented  promptly at the same time and assuming no appeal
is filed.  For those equitable  class members who submitted  timely requests for
the repurchase of their limited  partnership units, the respective  partnerships
will repurchase such units by December 31, 2001.

The  Partnership  is involved as plaintiff  or defendant in various  other legal
actions  incidental  to its  business.  Management  does not believe that any of
these actions will be material to the financial condition of the Partnership.














                      (This space intentionally left blank)



<PAGE>


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

(I)  RESULTS OF OPERATIONS

COMPARISON OF THE PLM EQUIPMENT  GROWTH & INCOME FUND VII'S (THE  PARTNERSHIP'S)
OPERATING RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2001 and 2000

(A) Owned Equipment Operations

Lease  revenues  less  direct  expenses  (defined  as repairs  and  maintenance,
equipment operating,  and asset-specific  insurance expenses) on owned equipment
increased  during the three  months  ended June 30,  2001,  compared to the same
period of 2000.  Gains or losses from the sale of equipment,  interest and other
income,  and certain  expenses such as depreciation and amortization and general
and  administrative  expenses relating to the operating  segments (see Note 7 to
the unaudited  financial  statements),  are not included in the owned  equipment
operation  discussion  because  they are  indirect in nature and not a result of
operations,  but the result of owning a portfolio of  equipment.  The  following
table presents  lease revenues less direct  expenses by segment (in thousands of
dollars):
<TABLE>
<CAPTION>

                                                       For the Three Months
                                                          Ended June 30,
                                                      2001             2000
                                                    ---------------------------
<S>                                                 <C>              <C>
Marine containers                                   $ 1,665          $   829
Marine vessels                                          818              697
Railcars                                                470              427
Aircraft                                                274              254
Trailers                                                 55              649
</TABLE>

Marine containers: Lease revenues and direct expenses for marine containers were
$1.7 million and $19,000 respectively, for the three months ended June 30, 2001,
compared to $0.8  million and  $2,000,  respectively,  during the same period of
2000.  An increase in lease  revenues of $0.3 million was due to the transfer of
the  Partnership's  interest in an entity that owned marine  containers  from an
unconsolidated  special-purpose  entity (USPE) to owned  equipment  during 2000.
Additionally,  an increase of $0.6 million was due to the purchase of additional
equipment during 2001 and 2000.

Marine  vessels:  Marine  vessel lease  revenues and direct  expenses  were $1.4
million and $0.6  million,  respectively,  for the three  months  ended June 30,
2001, compared to $1.4 million and $0.7 million,  respectively,  during the same
period of 2000. Marine vessel direct expenses  decreased $0.1 million during the
three months ended June 30, 2001 due to lower insurance expense.

Railcars:  Railcar lease revenues and direct expenses were $0.6 million and $0.1
million,  respectively,  for the three months  ended June 30, 2001,  compared to
$0.6  million and $0.2  million,  respectively,  during the same period of 2000.
Direct expenses  decreased  $45,000 during the three months ending June 30, 2001
due to fewer required repairs compared to the same period of 2000.

Aircraft:  Aircraft  lease  revenues and direct  expenses  were $0.3 million and
($2,000),  respectively,  for the three months ended June 30, 2001,  compared to
$0.3 million and $17,000, respectively, during the same period of 2000.

Trailers:  Trailer lease revenues and direct expenses were $0.1 million and $0.1
million,  respectively,  for the three months  ended June 30, 2001,  compared to
$0.9 million and $0.3 million, respectively, during the same period of 2000. The
decrease in trailer  contribution  of $0.6 million was due to the sale of 78% of
the Partnership's trailers during 2000.


<PAGE>


(B)  Indirect Expenses Related to Owned Equipment Operations

Total indirect expenses of $2.9 million for the three months ended June 30, 2001
increased from $2.5 million for the same period in 2000.  Significant  variances
are explained as follows:

     (i) A $0.5 million increase in depreciation and amortization  expenses from
2000  levels  reflects  an  increase  of  $0.6  million  in   depreciation   and
amortization expenses resulting from the purchase of additional equipment during
2001 and 2000 and an increase of $0.2 million resulting from the transfer of the
Partnership's  interest in an entity that owned marine containers from a USPE to
owned  equipment  during 2000.  These  increases  were offset,  in part,  by the
decrease  of $0.1  million  caused  by the  double-declining  balance  method of
depreciation  which results in greater  depreciation in the first years an asset
is owned and a decrease of $0.2 million due to the sale of equipment during 2001
and 2000.

     (ii) A $0.1 million decrease in general and administrative  expenses during
the three months ended June 30, 2001 was due to lower costs  resulting  from the
sale of 78% of the  Partnership's  trailers  during  2000  compared  to the same
period of 2000.

(C) Net Gain (Loss) on Disposition of Owned Equipment

The net gain on  disposition of equipment for the second quarter of 2001 totaled
$12,000,  and resulted from the sale of a marine container with an aggregate net
book value of $11,000 for proceeds of $22,000.  The net loss on  disposition  of
equipment for the second quarter of 2000 totaled $10,000,  and resulted from the
sale of marine  containers and trailers with an aggregate net book value of $0.1
million for proceeds of $0.1 million.

(D) Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities

Net income (loss) generated from the operation of jointly-owned assets accounted
for under the equity  method is shown in the following  table by equipment  type
(in thousands of dollars):
<TABLE>
<CAPTION>

                                                                            For the Three Months
                                                                               Ended June 30,
                                                                           2001              2000
                                                                        -----------------------------
<S>                                                                     <C>              <C>
Marine vessels                                                          $   1,929        $     (33)
Aircraft                                                                      479             (418)
Marine containers                                                              --               55
                                                                        ------------     ------------
    Equity in net income (loss) of USPEs                                $   2,408        $    (396)
                                                                        ============     ============
</TABLE>

Marine vessels:  During the three months ended June 30, 2001,  lease revenues of
$0.2  million and the gain of $2.1  million  from the sale of the  Partnership's
interest  in an entity that owned a marine  vessel  were offset by  depreciation
expense,  direct expenses, and administrative  expenses of $0.4 million.  During
the same  period  of  2000,  lease  revenues  of $0.9  million  were  offset  by
depreciation  expense,  direct  expenses,  and  administrative  expenses of $0.9
million.

The decreases in marine vessel lease  revenues of $0.7 million and  depreciation
expense, direct expenses, and administrative expenses of $0.5 million during the
three months ended June 30, 2001,  were caused by the sale of the  Partnership's
interest in an entity that owned a marine vessel during 2001 and the sale of one
of the  Partnership's  interest in an entity that owned a marine  vessel  during
2000.

Aircraft:  During the three months ended June 30, 2001,  lease  revenues of $0.5
million and other income of $0.8 million  were offset by  depreciation  expense,
direct expenses,  and administrative  expenses of $0.8 million.  During the same
period of 2000,  lease  revenues of $0.6  million  were  offset by  depreciation
expense, direct expenses, and administrative expenses of $1.0 million.

Lease revenues  decreased $0.2 million due to the reduction of the lease rate on
an MD-82 as part of a new  lease  agreement  of this  commercial  aircraft.  The
decrease in lease  revenues was offset,  in part, by an increase of $0.1 million
due to a Boeing  737-300 being on-lease the full second quarter of 2001 that was
off-lease most of the same period of 2000.  Other income  increased $0.8 million
during the three months ended June 30, 2001 due to the  recognition of an engine
reserve liability as income upon termination of the previous lease agreement.  A
similar event did not occur during the same period of 2000.

The  decrease in  depreciation  expense,  direct  expenses,  and  administrative
expenses of $0.2 million was due to $0.1 million in lower  depreciation  expense
as the  result of the  double  declining-balance  method of  depreciation  which
results in greater  depreciation  in the first years an asset is owned and lower
required  repairs and  maintenance  of $0.1 million to the Boeing 737-300 during
the second quarter of 2001 compared to the same period of 2000.

Marine  containers:  During 2000, the  Partnership's  interest in an entity that
owned marine containers was transferred to owned equipment.

(E) Net Income (Loss)

As a result of the foregoing,  the  Partnership had a net income of $2.9 million
for the three months ended June 30, 2001, compared to net loss of $47,000 during
the same period of 2000.  The  Partnership's  ability to acquire,  operate,  and
liquidate assets,  secure leases,  and re-lease those assets whose leases expire
is subject to many factors.  Therefore,  the  Partnership's  performance  in the
second quarter of 2001 is not necessarily indicative of future periods.

COMPARISON OF THE PARTNERSHIP'S  OPERATING RESULTS FOR THE SIX MONTHS ENDED JUNE
30, 2001 AND 2000

(A) Owned Equipment Operations

Lease  revenues  less  direct  expenses  (defined  as repairs  and  maintenance,
equipment operating,  and asset-specific  insurance expenses) on owned equipment
increased during the six months ended June 30, 2001, compared to the same period
of 2000. The following  table  presents  lease revenues less direct  expenses by
segment (in thousands of dollars):
<TABLE>
<CAPTION>

                                                      For the Six Months
                                                        Ended June 30,
                                                    2001             2000
                                                  ---------------------------

<S>                                               <C>              <C>
Marine containers                                 $ 3,123          $ 1,428
Marine vessels                                      1,685            1,307
Railcars                                              918              970
Aircraft                                              541              516
Trailers                                              162            1,305
</TABLE>

Marine containers: Lease revenues and direct expenses for marine containers were
$3.2 million and $37,000  respectively,  for the six months ended June 30, 2001,
compared to $1.4  million and  $4,000,  respectively,  during the same period of
2000.  An increase in lease  revenues of $0.7 million was due to the transfer of
the  Partnership's  interest in an entity that owned marine  containers  from an
unconsolidated  special-purpose  entity (USPE) to owned  equipment  during 2000.
Additionally,  an increase of $1.0 million was due to the purchase of additional
equipment during 2001 and 2000.

Marine  vessels:  Marine  vessel lease  revenues and direct  expenses  were $2.9
million and $1.2 million,  respectively, for the six months ended June 30, 2001,
compared to $2.7 million and $1.4 million, respectively,  during the same period
of 2000.

Marine vessel lease revenues  increased $0.2 million during the six months ended
June 30,  2001.  The  increase in lease  revenues was caused by the required dry
docking of one of the  Partnership's  two wholly owned marine vessels during the
six months ended June 30, 2000 which was not required  during the same period of
2001.  During 2000, the marine vessel was off-lease while undergoing dry docking
and was not earning any lease revenues.

Marine vessel direct expenses decreased $0.2 million during the six months ended
June 30,  2001.  The decrease in direct  expenses was caused by lower  insurance
expense of $0.1 million and lower marine operating expenses of $0.1 million.

Railcars:  Railcar lease revenues and direct expenses were $1.2 million and $0.3
million,  respectively, for the six months ended June 30, 2001, compared to $1.3
million  and $0.3  million,  respectively,  during  the same  period of 2000.  A
decrease in railcar lease  revenues of $39,000 was due to lower  re-lease  rates
earned on existing railcars whose leases expired during 2001.

Aircraft:  Aircraft  lease  revenues and direct  expenses  were $0.5 million and
$2,000,  respectively,  for the six months ended June 30, 2001, compared to $0.5
million and $26,000, respectively, during the same period of 2000.

Trailers:  Trailer lease revenues and direct expenses were $0.3 million and $0.1
million,  respectively, for the six months ended June 30, 2001, compared to $1.8
million  and $0.5  million,  respectively,  during  the same  period of 2000.  A
decrease in trailer  contribution  of $1.1 million was due to the sale of 78% of
the Partnership's trailers during 2000.

(B) Indirect Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $5.9 million for the six months ended June 30, 2001
increased from $5.0 million for the same period in 2000.  Significant  variances
are explained as follows:

     (i) A $1.1 million increase in depreciation and amortization  expenses from
2000  levels  reflects  an  increase  of  $1.3  million  in   depreciation   and
amortization expenses resulting from the purchase of additional equipment during
2001 and 2000 and an increase of $0.4 million resulting from the transfer of the
Partnership's  interest in an entity that owned marine containers from a USPE to
owned  equipment  during 2000.  These  increases  were offset,  in part,  by the
decrease  of $0.2  million  caused  by the  double-declining  balance  method of
depreciation  which results in greater  depreciation in the first years an asset
is owned and a decrease of $0.5 million due to the sale of equipment during 2001
and 2000.

     (ii) A $0.1 million decrease in general and administrative  expenses during
the six  months  ended  June 30,  2001 was due to  lower  costs of $0.3  million
resulting from the sale of 78% of the Partnership's  trailers during 2000 offset
in part, by an increase of $0.1 million when compared to the same period of 2000
resulting from allocations by the General Partner due to severance costs related
to staff reductions.

     (iii) A $45,000  decrease in the  provision  for bad debts was based on the
General Partner's  evaluation of the  collectability of receivables  compared to
the same period of 2000.

(C)  Net Gain on Disposition of Owned Equipment

The net gain on  disposition of equipment for the six months ended June 30, 2001
totaled  $14,000,  and  resulted  from the  sale of  marine  containers  with an
aggregate  net book value of $13,000 for  proceeds  of $26,000.  The net gain on
disposition  of  equipment  for the six months  ended June 30, 2000 totaled $1.1
million,  and resulted from the sale of a commuter aircraft,  a railcar,  marine
containers,  and trailers  with an aggregate  net book value of $1.4 million for
proceeds of $2.5 million.

(D) Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities

Net income (loss) generated from the operation of jointly-owned assets accounted
for under the equity  method is shown in the following  table by equipment  type
(in thousands of dollars):
<TABLE>
<CAPTION>

                                                                             For the Six Months
                                                                               Ended June 30,
                                                                            2001             2000
                                                                         ----------------------------

<S>                                                                      <C>                  <C>
Marine vessels                                                           $  2,036          $  (141)
Aircraft                                                                       --             (812)
Marine containers                                                              --              109
Mobile offshore drilling unit                                                  --               (1)
                                                                         -----------       ----------
  Equity in net income (loss) of USPEs                                   $  2,036          $  (845)
                                                                         ===========       ==========
</TABLE>

Marine  vessels:  During the six months ended June 30, 2001,  lease  revenues of
$0.7  million and the gain of $2.1  million  from the sale of the  Partnership's
interest  in an entity that owned a marine  vessel  were offset by  depreciation
expense,  direct expenses, and administrative  expenses of $0.8 million.  During
the same  period  of  2000,  lease  revenues  of $1.6  million  were  offset  by
depreciation  expense,  direct  expenses,  and  administrative  expenses of $1.8
million.

The decrease in marine  vessel lease  revenues of $0.8 million and  depreciation
expense, direct expenses, and administrative expenses of $1.0 million during the
six months  ended  June 30,  2001,  was caused by the sale of the  Partnership's
interest in an entity that owned a marine vessel during 2001 and the sale of one
of the  Partnership's  interest in an entity that owned a marine  vessel  during
2000.

Aircraft:  During the six months  ended June 30,  2001,  lease  revenues of $1.2
million and other income of $0.8 million  were offset by  depreciation  expense,
direct expenses,  and administrative  expenses of $2.0 million.  During the same
period of 2000,  lease  revenues of $1.2  million  were  offset by  depreciation
expense, direct expenses, and administrative expenses of $2.0 million.

Lease revenues remained the same for both periods. Lease revenues increased $0.2
million due to a Boeing 737-300 being on-lease  during the six months ended June
30, 2001 that was off-lease for four months during the same period of 2000. This
increase in lease  revenues  was offset by a decrease of $0.2 million due to the
reduction of the lease rate on a MD-82 as part of a new lease  agreement of this
commercial  aircraft.  Other income increased $0.8 million during the six months
ended June 30, 2001 due to the  recognition  of $0.8  million in engine  reserve
liability as income upon termination of the previous lease agreement.  A similar
event did not occur during the same period of 2000.

Direct expenses also remained  approximately  the same for both periods.  During
the six months  ended June 30,  2001,  repairs and  maintenance  increased  $0.2
million to the Boeing  737-300  when  compared to the same period of 2000.  This
increase  was  offset by a decrease  of $0.2  million  in  depreciation  expense
resulting from the double declining-balance method of depreciation which results
in greater depreciation in the first years an asset is owned.

Marine  containers:  During 2000, the  Partnership's  interest in an entity that
owned marine containers was transferred to owned equipment.

(E) Net Income

As a result of the foregoing,  the  Partnership had a net income of $2.7 million
for the six months ended June 30,  2001,  compared to net income of $0.9 million
during the same period of 2000. The Partnership's  ability to acquire,  operate,
and liquidate  assets,  secure  leases,  and re-lease  those assets whose leases
expire is subject to many factors.  Therefore, the Partnership's  performance in
the six  months  ended June 30,  2001 is not  necessarily  indicative  of future
periods. In the six months ended June 30, 2001, the Partnership distributed $1.3
million  to  the  limited  partners,  or  $0.24  per  weighted-average   limited
partnership unit.

(II) FINANCIAL CONDITION -- CAPITAL RESOURCES, LIQUIDITY, AND DISTRIBUTIONS

For the six months ended June 30, 2001, the Partnership generated operating cash
of $5.3 million (net cash provided by operating activities, plus non-liquidating
distributions   from  USPEs)  to  meet  its  operating   obligations   and  make
distributions  (total for six months ended June 30, 2001 of  approximately  $1.4
million) to the partners.

During the six months ended June 30, 2001,  the  Partnership  disposed of marine
containers  for  proceeds  of $26,000 and  collected  unpaid  sales  proceeds in
accounts receivable at December 31, 2000 of $15,000.

During the six months  ended June 30, 2001,  the  Partnership  purchased  marine
containers for $8.0 million and paid  acquisition and lease  negotiation fees of
$0.2 million to PLM Financial  Services,  Inc. (FSI or the General  Partner) for
this equipment.

Investments in USPEs decreased $4.6 million during the six months ended June 30,
2001.  Decreases  to the  Partnership's  investments  in  USPEs  were due to the
receipt of $1.5 million of cash  distributions from the USPEs and the receipt of
$5.3  million  of   liquidating   proceeds   resulting  from  the  sale  of  the
Partnership's  interest in an entity that owned a marine vessel. These decreases
were  partially  offset  by $2.0  million  of  income  that  was  recorded  from
operations  from the  Partnership's  equity  interests in USPEs and $0.1 million
additional investment by the Partnership in a USPE.

Accounts  payable  decreased  $0.2 million  during the six months ended June 30,
2001 due to the timing of payments to vendors.

During the six months ended June 30, 2001,  the  Partnership  had  borrowings of
$5.5 million from the General Partner to fund the purchase of marine containers.
These borrowings were repaid to the General Partner as of June 30, 2001.

During the six months  ended June 30,  2001,  lessee  deposits  and  reserve for
repairs  increased  $0.2  million due to an increase in the reserve for a marine
vessel dry docking of $0.2  million and an increase in the reserve for  aircraft
engine repairs of $0.1 million.

The  Partnership  is scheduled to make an annual debt payment of $3.0 million to
the lenders of the notes payable on December 31, 2001. The cash for this payment
will come from operations and proceeds from equipment sales.

During April 2001, the General Partner entered into a joint $15.0 million credit
facility on behalf of the  Partnership,  PLM Equipment  Growth Fund VI (EGF VI),
Professional  Lease Management Income Fund I (Fund I), and Acquisub LLC (ACQ), a
wholly owned subsidiary of PLM International which is the parent company of FSI.
The facility  provides  interim  financing of up to 100% of the  aggregate  book
value of eligible  equipment owned by the Partnership,  as defined in the credit
facility. The Partnership, EGF VI, Fund I, and ACQ collectively may borrow up to
$15.0 million of this facility.  Outstanding  borrowings by one borrower  reduce
the  amount  available  to each  of the  other  borrowers  under  the  facility.
Individual  borrowings  may be outstanding  for no more than 270 days,  with all
advances due no later than April 12, 2002.  Interest accrues at either the prime
rate or adjusted LIBOR plus 2.0% at the borrower's option and is set at the time
of an advance of funds.  Borrowings  by the  Partnership  are  guaranteed by PLM
International.

As of August 10, 2001, no eligible borrower has any outstanding borrowings.

(III) OUTLOOK FOR THE FUTURE

Several factors may affect the Partnership's  operating  performance in 2001 and
beyond,  including  changes in the markets for the  Partnership's  equipment and
changes in the regulatory environment in which that equipment operates.

The Partnership's operation of a diversified equipment portfolio in a broad base
of markets is  intended  to reduce its  exposure  to  volatility  in  individual
equipment sectors.

Factors  affecting the Partnership's  contribution  during the remainder of 2001
and beyond include:

1. Marine  vessel  bulk-carrier  freight  rates are  dependent  upon the overall
condition of the international economy. The Partnership's two marine vessels had
fixed-rate  leases that expired in 2001. The General  Partner  expects to sign a
new lease with the existing lessee that will result in a lease rate reduction of
approximately 10%.

2. Railcar  loadings in North America for the six months ended June 30, 2001 are
below  those of 2000.  This  decrease  has led to lower  utilization  and  lower
contribution to the Partnership as existing leases expire and renewal leases are
negotiated.

3. The cost of new marine  containers  have been at  historic  lows for the past
several  years  which has caused  downward  pressure on per diem lease rates for
this type of equipment.

4. Recent changes in economic  condition of the airline  industry have adversely
affected the demand for and market  values for  aircraft.  These  changes  could
adversely lower the contribution of aircraft to the Partnership and the residual
value of the aircraft.  Currently,  all of the owned and jointly owned  aircraft
are subject to contracted lease agreements.

Until  resolution  of the Koch and Romei  matters  related  to the  purchase  of
Partnership  units  (see note 10 to the  unaudited  financial  statements),  the
Partnership will not make cash distributions to the partners.

The  ability  of the  Partnership  to  realize  acceptable  lease  rates  on its
equipment in the different equipment markets is contingent on many factors, such
as specific market conditions and economic activity, technological obsolescence,
and  government  or other  regulations.  The  unpredictability  of some of these
factors,  or of their occurrence,  makes it difficult for the General Partner to
clearly  define  trends or  influences  that may impact the  performance  of the
Partnership's  equipment.  The General  Partner  continually  monitors  both the
equipment  markets and the performance of the  Partnership's  equipment in these
markets. The General Partner may decide to reduce the Partnership's  exposure to
equipment  markets in which it determines it cannot operate equipment to achieve
acceptable  rates of  return.  Alternatively,  the  General  Partner  may make a
determination to enter equipment markets in which it perceives  opportunities to
profit from supply/demand instabilities or other market imperfections.

The unpredictability of some of these factors, or of their occurrence,  makes it
difficult for the General  Partner to clearly  define trends or influences  that
may impact the performance of the Partnership's equipment.

The  Partnership  intends to use  excess  cash flow,  if any,  after  payment of
operating  expenses,  principal and interest on debt, and cash  distributions to
the partners,  to acquire  additional  equipment during the first seven years of
Partnership  operations,  which concludes December 31, 2001. The General Partner
believes  that  these   acquisitions  may  cause  the  Partnership  to  generate
additional earnings and cash flow for the Partnership.

Beginning in the  Partnership's  seventh year of operations,  which commences on
January 1, 2002,  the General  Partner  will stop  reinvesting  excess cash into
additional  equipment.  Surplus cash, if any, less reasonable reserves,  will be
distributed  to the  partners.  Beginning  in the  Partnership's  ninth  year of
operations,  which  commences on January 1, 2004, the General Partner intends to
begin an orderly  liquidation of the Partnership's  assets. The Partnership will
terminate  on December  31,  2013,  unless  terminated  earlier upon sale of all
equipment and by certain other events.

(IV) FORWARD-LOOKING INFORMATION

Except for the historical  information contained herein, this Form 10-Q contains
forward-looking  statements  that  involve  risks  and  uncertainties,  such  as
statements of the Partnership's plans, objectives, expectations, and intentions.
The  cautionary  statements  made in this  Form  10-Q  should  be read as  being
applicable  to all related  forward-looking  statements  wherever they appear in
this Form 10-Q. The  Partnership's  actual results could differ  materially from
those discussed here.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Partnership's  primary market risk exposure is that of currency  devaluation
risk. During the six months ended June 30, 2001, 84% of the Partnership's  total
lease revenues from wholly- and  partially-owned  equipment came from non-United
States domiciled lessee's.  Most of the Partnership's  leases require payment in
United States (U.S.) currency.  If these lessees'  currency devalues against the
U.S. dollar,  the lessees could potentially  encounter  difficulty in making the
U.S. dollar denominated lease payments.












                      (This space intentionally left blank)


<PAGE>




                          PART II -- OTHER INFORMATION


ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K
           --------------------------------

           (a)    Exhibits

                  None.

           (b)    Reports on Form 8-K

                  None.





<PAGE>


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



                                       PLM EQUIPMENT GROWTH & INCOME FUND VII

                                       By:      PLM Financial Services, Inc.
                                                General Partner


Date:  August 10, 2001                 By:      /s/ Stephen M. Bess
                                                -------------------
                                                Stephen M. Bess
                                                President and
                                                Chief Accounting Officer