<PAGE>   1
    As filed with the Securities and Exchange Commission on November 16, 1998

                                  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 quarterly period ended September 30, 1998

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
             OF THE SECURITIES EXCHANGE ACT OF 1934
         For the transition period from ___________ to _________________

                         Commission File Number: 0-21443

                        PLYMOUTH COMMERCIAL MORTGAGE FUND
             (Exact name of registrant as specified in its charter)

<TABLE>
  <S>                                                 <C>
                   Delaware                                         74-6439983
  (State or other jurisdiction of incorporation       (I.R.S. Employer Identification No.)
                 or organization)
</TABLE>

                          c/o  Greystone Advisers, Inc.,
                          13333 Blanco Road, Suite 314
                          San Antonio, Texas 78216-7756
          (Address of principal executive offices, including zip code)

                                  210-493-3971
              (Registrant's telephone number, including area code)

                                 Not Applicable
  (Former name, former address, and former fiscal year, if changed since last
                                    report)

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.

                                 [X] Yes [ ] No

As of November 10, 1998, 921,627 of the registrant's common shares of beneficial
interest, no par value, were outstanding.



<PAGE>   2


                        PLYMOUTH COMMERCIAL MORTGAGE FUND
                      Statements of Assets and Liabilities
                    September 30, 1998 and December 31, 1997
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                 September 30, 1998      December 31, 1997
                                                                 ------------------      -----------------
                          Assets
                          ------
<S>                                                              <C>                      <C>
Investments in securities at fair value, cost of
$10,349,427 and $14,538,157                                       $      9,971,656        $     15,295,698

Investment in affiliate                                                    972,346                 941,477

Cash                                                                       165,473                 568,899

Accounts Receivable                                                         (2,684)                  2,026

Organization Costs                                                          49,400                  72,800
                                                                  -----------------       -----------------
Total Assets                                                      $     11,156,191        $     16,880,900
                                                                  =================       =================

                        Liabilities
                        -----------

Accounts Payable                                                  $         64,530        $         48,547

Investment Advisory Fee Payable                                             60,000                  77,110

Dividend Payable                                                           460,814                 275,001

Note Payable                                                             2,956,315               7,981,158

Escrow Funds                                                                45,055                  80,924
                                                                  -----------------       -----------------
                     Total Liabilities                            $      3,586,714        $      8,462,740


                        Net Assets
                        ----------

Common shares of beneficial interest, no par value, 1,750,000
shares authorized, 921,627 shares issued and outstanding                 7,976,773               7,976,773

Accumulated undistributed net investment loss                           (1,435,435)               (789,921)

Accumulated undistributed net realized gains net of
distributions of $1,545,805 and $578,097                                 1,682,501                 611,696

Accumulated undistributed equity of subsidiary                            (276,590)               (137,929)

Accumulated undistributed unrealized gain (loss) on investments           (377,772)                757,541
                                                                  -----------------       -----------------
Total Net Assets ($8.21 and $9.13 per share)                             7,569,477               8,418,160


Total Liabilities & Net Assets                                    $     11,156,191        $     16,880,900
                                                                  =================       =================
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                    Page -2-
<PAGE>   3


                        PLYMOUTH COMMERCIAL MORTGAGE FUND
                            Statements of Operations
                                   (unaudited)

<TABLE>
<CAPTION>

                                              For the three      For the three      For the nine      For the nine
                                              months ended       months ended       months ended      months ended
                                              September 30,      September 30,      September 30,     September 30,
                                              1998               1997               1998              1997
                                             ---------------    ----------------   ---------------    --------------
<S>                                          <C>                 <C>               <C>                <C>
 INVESTMENT INCOME:

 Interest                                     $     160,333      $      175,189     $    580,617       $    286,404

 Other Investment Income                                  -               2,985              260            110,781
                                             ---------------    ----------------   --------------     --------------
 Total Investment Income                            160,333             178,174          580,877            397,185

 EXPENSES:

 Investment advisory fee                            151,041             160,779          582,397            320,536

 Legal and Professional                              38,893               5,317          108,161            102,445

 Interest expense                                    28,015              50,394          342,096             59,351

 Operating expense                                   66,217              68,740          193,737            177,360
                                             ---------------    ----------------   --------------     --------------
 Total Expenses                                     284,166             285,230        1,226,391            659,692


 Net Investment Loss                          $    (123,833)     $     (107,056)    $   (645,514)      $   (262,507)
                                             ---------------    ----------------   --------------         ----------
 Realized gain on sale of investment                359,577              29,092        1,426,668            297,720

 Realized gain on collection of notes               132,091             143,209          611,845            205,573

 Change in unrealized appreciation on assets       (337,120)            194,068       (1,135,312)           (11,496)

 Equity in earnings (loss) of affiliate             (90,855)             82,620         (138,660)            33,126
                                             ---------------    ----------------   --------------     --------------

 Net increase (decrease) in net assets
 resulting from operations                    $     (60,140)     $      341,933     $    119,027       $    262,416
                                             ===============    ================   ==============     ==============
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                    Page -3-
<PAGE>   4




                        PLYMOUTH COMMERCIAL MORTGAGE FUND
                       Statements of Changes in Net Assets
                                   (unaudited)

<TABLE>
<CAPTION>
                                                     For the three     For the three       For the nine       For the nine
                                                     months ended      months ended        months ended       months ended
                                                     September         September           September          September
                                                     30, 1998          30, 1997            30, 1998           30, 1997

<S>                                                  <C>               <C>                 <C>                <C>
Operations before distributions

Net investment loss                                  $     (123,833)   $       (107,056)   $      (645,514)   $      (262,507)

Net realized gain on sale of investments                    359,577              29,092          1,426,668            297,720

Net realized gain on collections                            132,091             143,209            611,845            205,573

Changes in unrealized appreciation on investments          (337,120)            194,068         (1,135,312)           (11,496)

Equity in earnings (loss) of affiliates                     (90,855)             82,620           (138,660)            33,126
                                                     ---------------   -----------------   ----------------   ----------------



Net increase (decrease) in net assets from
operations before distributions                             (60,140)            341,933            119,027            262,416

Distribution to shareholders from
Net realized gain on investments:                          (967,709)           (153,209)          (967,710)          (233,597)
                                                     ---------------   -----------------   ----------------   ----------------

Total increase in net assets                             (1,027,849)            188,724           (848,683)            28,819


Net assets, beginning of period                           8,597,326           8,432,341          8,418,160          8,592,246
                                                     ---------------   -----------------   ----------------   ----------------


Net assets, end of period                                 7,569,477           8,621,065          7,569,477          8,621,065
                                                     ===============   =================   ================   ================

Per Share Data

Investment income                                              0.17                0.19               0.63               0.43

Expenses                                                      (0.31)              (0.31)             (1.33)             (0.72)

Net realized gain on sale of investments                       0.39                0.03               1.55               0.32

Net realized gain on collection of notes                       0.14                0.16               0.66               0.22

Equity in earnings of affiliate                               (0.10)               0.09              (0.15)              0.04

Change in unrealized appreciation on assets                   (0.36)               0.21              (1.23)             (0.01)
                                                     ---------------   -----------------   ----------------   ----------------

Increase in net assets from operations before
distributions                                                 (0.07)               0.37               0.13               0.28


Increase in net assets from operations before
distributions                                                 (0.07)               0.37               0.13               0.28

Capital share transactions

Distributions from realized gain on securities                (1.05)              (0.17)             (1.05)             (0.25)
                                                     ---------------   -----------------   ----------------   ----------------


Net Increase (decrease) in net asset value                    (1.12)               0.20              (0.92)              0.03

Net asset value

Beginning of period                                            9.33                9.15               9.13               9.32
                                                     ---------------   -----------------   ----------------   ----------------
End of period                                                  8.21                9.35               8.21               9.35
                                                     ===============   =================   ================   ================
Ratio:

Expenses to Average Assets                                    3.52%               3.00%             15.34%              8.00%

Net Investment Income to Average Assets                      -1.53%              -1.00%             -8.08%             -3.00%
</TABLE>




    The accompanying notes are an integral part of these financial statements


                                    Page -4-
<PAGE>   5


                        PLYMOUTH COMMERCIAL MORTGAGE FUND
                            Statements of Cash Flows
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                   For the nine months             For the nine months
                                                                   ended September 30, 1998        ended September 30, 1997
                                                                   ----------------------------    ---------------------------
<S>                                                                  <C>                            <C>
Cash flows from operating activities

Increase (decreases) in net assets from operations before
distributions                                                        $                 119,027      $                 262,416

Adjustments to reconcile increases in net assets from
operations before distributions to net cash provided

            Amortization of organization costs                                          23,400                         23,400

            Change in unrealized appreciation on investments                         1,135,312                         11,496

            Changes in other assets                                                      4,707                         47,466

            Equity in loss of affiliates                                               138,660                        (33,126)

            Changes in receivables                                                           -                          4,224

            Changes in payables                                                         (1,127)                       442,209

            Change in dividend s payable                                                     -                        153,207

            Change in escrow funds                                                     (35,869)                        30,474
                                                                   ----------------------------    ---------------------------
Net cash provided/used by operating activities                                       1,384,110                        941,766

Cash flow from investing activities

            Purchase of securities and capital expenditures                         (3,633,746)                   (10,080,578)

            Sale of securities/principal collection on

            securities                                                               7,616,950                      2,033,825

            Investment in affiliate                                                     35,997                         81,483
                                                                   ----------------------------    ---------------------------
Net cash provided/used by investing activities                                       4,019,201                     (7,965,270)

Cash flow from financing activities

            Change in note net                                                      (5,024,842)                     1,739,826

            Dividends paid                                                            (781,896)                      (233,597)
                                                                   ----------------------------    ---------------------------
Net cash used by financing activities                                               (5,806,738)                     1,506,229


Net decrease in cash and cash equivalents                                             (403,426)                    (5,517,274)


Cash and cash equivalents at beginning of period                                       568,899                      5,584,460
                                                                   ----------------------------    ---------------------------

Cash and cash equivalents at end of period                                             165,473                         67,186
                                                                   ============================    ===========================

</TABLE>

    The accompanying notes are an integral part of these financial statements




                                    Page -5-
<PAGE>   6


1. ORGANIZATION AND BUSINESS PURPOSE

Plymouth Commercial Mortgage Fund, a Delaware business trust, (the "Fund") was
organized on August 23, 1996 and commenced operations on September 27, 1996.
Plymouth seeks to achieve a high level of current income by purchasing loans
where the obligor is having trouble meeting the loan's contractual requirements.
The loans that Plymouth purchases are typically secured by commercial real
estate.

Plymouth has elected to be regulated as a business development company under the
Investment Company Act of 1940, as amended ("1940 Act").


2.  SIGNIFICANT ACCOUNTING POLICIES

       A. Basis of Presentation: The financial statements included herein have
       been prepared in accordance with generally accepted accounting
       principles for interim financial information and the instructions to
       Form 10-Q and Articles 6 and 10 of Regulation S-X. Accordingly, certain
       information and notes that are required by generally accepted accounting
       principles for complete financial statements are not included herein.
       The interim statements should be read in conjunction with the financial
       statements and notes included in Plymouth's most recent annual report on
       Form 10-K. Interim statements are subject to possible adjustments in
       connection with the annual audit of Plymouth. Management believes all
       adjustments necessary for a fair presentation of these interim
       statements have been included.

       B. Security Valuation: There is no publicly quoted market for Plymouth's
       loan portfolio. As such, the fair value of the portfolio is established
       by Plymouth's Board of Trustees using their best judgment. The Board
       bases its values on what the Board believes Plymouth could reasonably
       expect to receive for each loan in an orderly disposition over a
       reasonable time period.

       In establishing the fair value of a loan, the Board considers aspects
       about the individual loan as well as the general economy. Such factors
       include but are not limited to the type of loan, whether the borrower is
       currently meeting the contractual terms of the obligation, the length of
       time that the borrower has or has not been meeting the contractual
       terms, the probability that the borrower will begin or stop making
       payments, the value of the collateral and the guarantees securing the
       loans, Plymouth's historical experience selling the type of loan being
       valued, various standard financial measurements, the remaining contract
       terms, and prevailing interest rates. Generally the Board does not
       change the value of the loan from the purchase price paid by Plymouth
       unless there are specific factors indicating the value should be
       revised.

       The valuation procedure involves subjective judgment. Because the
       majority of Plymouth's impaired loans are delinquent, Plymouth may not
       recover the fair value the Board has established. Plymouth's portfolio
       is not typically backed by any government guarantee or private credit
       enhancement. In many cases, Plymouth will also incur certain costs and
       delays in attempting to assert its right to payment or in foreclosing on
       the loan's collateral. The actual value realized on any particular loan
       will vary from the values determined by the Board and can be determined
       only in negotiations between Plymouth and third parties.

       When Plymouth cannot get the debt performing through restructure or
       otherwise, Plymouth generally attempts to foreclose and acquire the
       collateral. Pursuant to its credit agreement, Plymouth puts real estate
       acquired through foreclosure into Plymouth REO, Inc., a wholly owned
       subsidiary. Foreclosed real estate is recorded at its estimated fair
       value.

                                    Page -6-
<PAGE>   7

       C. Federal Income Taxes: Plymouth has elected the special income tax
       treatment available to "regulated investment companies" under Subchapter
       M of the Internal Revenue Code. If Plymouth qualifies as a regulated
       investment company and distributes to shareholders annually in a timely
       manner at least 90% of its investment company taxable income, as defined
       by the Internal Revenue Code (i.e., net investment income, including
       accrued discount, and net short-term capital gains), it will not be
       subject to federal income tax on the portion of its taxable investment
       income and net capital gain distributed to shareholders. In addition, if
       Plymouth distributes in a timely manner 98% of its net capital gain
       income for each fiscal year, and distributes 98% of its investment
       company taxable income for each calendar year (as well as any income not
       distributed in prior years), it will not be subject to the 4%
       nondeductible federal excise tax imposed with respect to certain
       undistributed income of regulated investment companies.

       D. Distributions to Shareholders: With respect to its third quarter
       operations, the Board declared a dividend to shareholders of record as
       of September 30, 1998 in the amount of $460,813, which is 50(cents) per
       share. The dividend was paid on November 9, 1998. In respect of its
       second quarter operations, the Board declared and Plymouth paid a
       dividend to shareholders of record as of July 18, 1998 in the amount of
       $506,894.85, which is 55(cents) per share. The dividend was paid on July
       18, 1998. There was no dividend in respect of first quarter operations.

       E. Other: Principal and interest payments due on Plymouth's portfolio
       notes are recognized on the date received. Interest income is typically
       not accrued because of the impaired nature of Plymouth's portfolio.

3.  INVESTMENT ADVISORY AGREEMENT

Plymouth has to entered into an Investment Advisory Agreement (Agreement) with
Greystone Advisers, Inc., a Delaware corporation, (Adviser). Initially, the
Adviser was a federally registered investment adviser under the Investment
Advisers Act of 1940. The Securities Markets Improvements Act of 1996, however,
altered the requirements for federal investment adviser registration. To
maintain its federal registration, the Adviser would have needed to have at
least $25,000,000.00 in assets under management. Accordingly, as of July 8,
1997, the Adviser was required by law to, and did, withdraw its federal
registration. Further, upon consultation with Texas securities counsel, the
Adviser determined that it was not required to have a Texas investment adviser
registration. Accordingly, until such time as the Adviser reaches $25,000,000.00
under management, it will have no investment adviser registration. When that
threshold is achieved, it intends to reregister under the Investment Advisers
Act.

Under the Agreement, the Adviser manages the investments of Plymouth, subject to
the supervision and control of Plymouth's Board of Trustees. Specifically, the
Adviser identifies, evaluates, structures, closes and monitors the investments
made by Plymouth. The Agreement remains in effect until January 26, 1999.
Thereafter, it will need to be renewed at least annually by the Board of
Trustees, including a majority of its members casting their votes in person who
are not interested persons of Plymouth (as defined by the 1940 Act) at a meeting
called for the purpose of voting on such approval, or by a vote of a majority of
the outstanding voting securities of Plymouth. The Agreement can be terminated
by Plymouth at any time, without payment of any penalty, on sixty day's written
notice to the Adviser if the decision to terminate has been made by the Board of
Trustees or by a vote of a majority of the outstanding voting securities of
Plymouth. The Agreement will terminate automatically in the event of its
assignment.

The Adviser is required to pay all expenses that are incurred in rendering its
services. Generally, these expenses include the cost of office space, telephone
service, equipment and personnel required to perform its obligations under the
Agreement. Plymouth will be required to pay its operating expenses and reimburse
the


                                    Page -7-
<PAGE>   8

Adviser promptly for expenses that the Adviser may pay on Plymouth's behalf,
except those specifically required to be borne by the Adviser under the
Agreement. Without limitation, the expenses to be borne by Plymouth will
include: all expenses of any offering and sale by Plymouth of its shares; the
fees and disbursements of Plymouth's counsel, accountants, and custodian; fees
and expenses incurred in producing and effecting filings with federal and state
securities administrators; costs of Plymouth's periodic reports to and other
communications with Plymouth's shareholders; fees and expenses of members of
Plymouth's Board of Trustees who are not directors, officers or employees of the
Adviser; premiums for the fidelity bond maintained by Plymouth; all costs
related to portfolio investments, including without limitation financing costs,
legal and accounting fees, expenses related to protecting or maintaining the
value of the loan portfolio or its underlying collateral, and other professional
or technical fees and expenses (e.g., credit reports, title searches and
delivery charges, property taxes, insurance premiums, long-distance telephone
charges, costs of specialized consultants such as accountants or
industry-specific technical experts, and travel expenses) incurred in acquiring,
monitoring, negotiating, working-out, and effecting disposition of such
investments, as well as responding to any litigation arising therefrom; and all
expenses related to any borrowings by Plymouth.

During the term of this Agreement, Plymouth pays to the Adviser, on the 15th day
of each month: (a) a fee calculated at an effective annual rate of 5.94% of
Plymouth's invested assets as of the end of the previous month; and (b) a fee
calculated at an effective annual rate of 0.48% of Plymouth's cash and
short-term investments as of the end of the previous month. For purposes of
calculating the fee to be paid on a monthly basis, "invested assets" means the
asset value as determined by the Board as of the end of the previous fiscal
quarter minus cash, short-term investments, intangible assets, and the amount of
collections applied to the carrying value of the loan portfolio since the end of
the previous quarter, plus the cost of loans purchased and capitalized advances
to protect portfolio investments or underlying collateral since the end of the
previous quarter.

4.  INVESTMENTS

Plymouth invests primarily in impaired loans of companies that qualify as
"eligible portfolio companies" as defined in Section 2(a)(46) of the 1940 Act or
in securities that otherwise qualify for investment as permitted in Section
55(a)(1) through (6). These loans are carried on the Statement of Assets and
Liabilities as of September 30, 1998, at fair value, as determined in good faith
by Plymouth's Board of Trustees.

These loans typically are offered at auction in packages of multiple loans.
Sellers include entities such as the Federal Deposit Insurance Corporation
(FDIC), banks, savings and loans, insurance companies and other financial
institutions. Plymouth's investments in loan packages will be directed by the
Adviser. Plymouth holds its real estate assets in a wholly-owned subsidiary as
required in the agreement establishing its senior credit facility.

Generally, a loan is considered impaired when, based on current information and
events, it is probable that a creditor will be unable to collect all amounts due
according to the contractual terms of the loan agreement unless the borrower
receives material assistance. While several types of impaired loans are
available for purchase, Plymouth's portfolio is concentrated in impaired loans
secured by commercial real estate. For both financial and regulatory reasons,
commercial banks, either directly or indirectly through the FDIC, make these
loans available for sale in packages with prices that are typically more than $1
million per package. Often the sale of impaired loans in this market offers
creditors the only alternative to foreclosure.

5.  INDEBTEDNESS

Plymouth has an $8,000,000 line of credit with a Texas bank that is secured by a
first lien on all of Plymouth's assets. As of September 30, 1998 the balance on
Plymouth's credit facility was $2,956,315. Plymouth's actual


                                    Page -8-
<PAGE>   9

borrowing capacity under the line of credit is substantially less than the
approximate $5,000,000 left on the line of credit because of borrowing base
restrictions discussed in previous filings. Plymouth is presently operating
under an extension of the credit line lasting until January 15, 1999. Although
Plymouth believes it can renew its present line on terms that are slightly more
favorable, it is presently exploring whether it can obtain significantly more
favorable terms elsewhere.

6.  STOCK OPTION PLAN

No action has been taken to put into effect the stock option plan adopted at the
annual shareholders meeting on April 28, 1998.

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF LIQUIDITY, CAPITAL RESOURCES,
AND RESULTS OF OPERATIONS.

Liquidity and Capital Resources

As of September 30, 1998, Plymouth had $7,569,477 in net assets and had borrowed
$2,956,315 against its credit line. Plymouth declared and, on November 9, 1998,
paid a 50(cents) per share dividend based on its third quarter results. The
dividend is reflected in the financial statements presented.

Plymouth's liquidity consists of its capital not invested in loans plus the
amount that is available on its line of credit. As Plymouth tries to remain
fully invested at all times, it generally has uninvested capital only when
assets are liquidated. Availability on its line of credit is tied to the credit
limit and a borrowing base.

Plymouth's line of credit was scheduled to mature on September 27, 1998.
Management requested an extension until January 15, 1999 so that it could
explore other financing options that provide Plymouth with more liquidity and
flexibility. Management has made and continues to make inquiries in that regard.
If such financing is not found, Plymouth's current lender has expressed a
willingness to renew the line on terms slightly more favorable to Plymouth than
the existing ones.

There are no material, unused sources of liquidity.

Plymouth is considering changing its structure to allow more flexibility in
purchasing assets and attracting new investors. There are no specific proposals
at present, and any such change must be approved by the shareholders.

Results of Operations

         Nine Months Ended 9/30/98

During the nine month period ending September 30,1998, Plymouth purchased 24
additional loans with a cost of $3,551,543 and a total outstanding principal
balance of $5,378,285. Plymouth's per share value decreased to $8.21 from $9.13
at December 31, 1997. The decrease was principally due to a $1.05 per share
dividend declared year to date for 1998. The aggregate dividends declared year
to date from realized income is $967,709. The per share value has also been
reduced by undistributed unrealized losses (see discussion below).

During the nine month period ending September 30,1998, Plymouth had gross
collections of $10,236,782, including seventy notes that settled or sold for an
average return on investment of approximately 33%. That

                                    Page -9-
<PAGE>   10

return on investment takes into the account the original cost, gross
collections, and direct expenses and is calculated on collections and expenses
over the holding period of the notes. The 33% return does not include the time
value of money or overhead such as the adviser fee and interest expense.
Plymouth's collections resulted in a net increase in net assets from operations,
before changes in unrealized appreciation on investments and equity in earnings
of affiliates, of $1,393,000 for the nine month period ending September 30,
1998. The GAAP net increase in assets for the nine month period was $119,027
after a change in unrealized appreciation of ($1,273,972). The number is
negative because gain was moved from unrealized to realized as a result of
settlements and sales of loans. The number is also affected by the value of
loans still in the portfolio (see discussion below).

Plymouth's asset value can be affected by adjustments to portfolio fair market
value by Plymouth's Board of Trustees. For the quarter ending September 30,
1998, the balance sheet shows an accumulated undistributed, unrealized loss on
investments and undistributed equity of subsidiaries of ($654,362). This loss is
principally attributable to reductions of expected cash flows to net present
value. The loss includes five loans with an expected cash loss of over $50,000.
The expected cash loss on the five loans is approximately $376,000.

When considering the amount of assets invested and the time period, expenses for
the nine month period were in line with expected expenses.

         Comparable Period for Previous Year

By way of comparison, for the period ending September 30,1997, Plymouth realized
a GAAP gain of $240,786. The difference is attributable to there being fewer
assets under management and to the timing of collections. Plymouth's $1,393,000
GAAP year to date gain through the third quarter of 1998 is significantly
affected by the loans moving in groups through Plymouth's resolution process.
For the second quarter in a row, Plymouth found the product to conduct a loan
auction. No auction is planned for the fourth quarter of 1998, and there will
likely be other quarters in the future when Plymouth does not have sufficient
product to conduct auctions. While management tries to keep Plymouth's portfolio
spread out, that is difficult to do. At such time as Plymouth may be able to
increase its capitalization significantly, the clusters of loans moving through
the resolution process should smoothen and performance should be more uniform.

Management believes the key to continued profitability is the ability to
purchase new loans regularly. This can be done only through additional equity or
a less restrictive borrowing base. There is no guarantee that Plymouth will be
able to achieve either requirement. If Plymouth is unable to achieve either,
then future liquidity and earnings are likely to suffer.

    Three Month Period Ending September 30, 1998 and Comparable Period Ending
    September 30, 1997

For the three month period ending September 30, 1998, Plymouth realized gross
collections of $1,921,659 and realized a net increase in net assets from
operations, before dividends and changes in unrealized appreciation on
investments and equity in earnings of affiliates, of $367,835. The magnitude of
both the collections and the gain arose from the settlement and sale of loans.
For the comparable period in 1997, Plymouth realized a net increase in net
assets from operations, before dividends and changes in unrealized appreciation
on investments and equity in earnings of affiliates, of $65,294. Most of
Plymouth's collections come upon final disposition of the loan and, at September
30, 1997, most of Plymouth's assets were still too young for final disposition.

Analysis of different financial results for comparable time periods will be a
useful tool only when Plymouth reaches a point at which it is consistently
purchasing and disposing of assets. As it is, clusters of assets passing through
the system distort the picture from one period to the next.


                                   Page -10-
<PAGE>   11

Year 2000 Compliance

Management is aware of the need to investigate whether its information systems
will function properly after December 31, 1999. All information systems belong
to Greystone Advisers, Inc., Plymouth's investment adviser.

The information systems all consist of personal computers linked by a Windows NT
network. The file server's operating system is Windows NT and the workstations'
operating system is Windows 95. Most of the software is off-the-shelf and could
be replaced at relatively minor expense if it proves to present a problem.
Examples are Excel and WordPerfect, and we use recent versions of both of those.
The two major, non-off-the-shelf programs used are Loan Base (loan servicing
software) and MAS 90 (accounting software). Both of the vendors of those
programs have represented to us that their products are Year 2000 compliant.

Management intends to test its computer system before the end of 1999 to
identify any problems that might arise internally. Management does not expect
the cost of compliance to be material and expects to expense it as incurred.
Neither Plymouth nor its adviser has any material online connections to vendors,
but management cannot be assured there will not be an adverse effect if
suppliers or service providers fail to bring their systems into compliance in a
timely manner.

PART II - OTHER INFORMATION

Item 1:  LEGAL PROCEEDINGS

On or about Wednesday, October 21, 1998, Whitney Holdings, LLC and Whitney
Financial Corp. filed a lawsuit entitled and numbered Whitney Financial
Corporation and Whitney Holdings Limited Liability Company on their own behalf
and as derivative plaintiffs on behalf of SouthWest Federated, Inc. and/or
SouthWest Federated Holding Company v. Robert R. Swendson, Goodhue W. Smith,
III, Duncan-Smith Co., Greystone Advisers, Inc., Plymouth Commercial Mortgage
Fund, SouthWest Federated, Inc., SouthWest Federated Holding Company, SouthWest
Federated Portfolio Limited Partnership, and SouthWest Federated Servicing
Limited Partnership, Cause Number 98-CI-15256, 131st Judicial District Court,
Bexar County, Texas.

Until on or about Monday, October 19, 1998, Whitney Holdings, LLC ("WHLLC") was
a shareholder of SouthWest Federated Holding Company, Inc. ("SWFHC"). At that
time, Whitney Holdings, LLC sold its shares in SWFHC back to SWFHC. Prior to the
creation of SWFHC, WHLLC was directly a shareholder of SouthWest Federated, Inc.
("SWF"). Prior to April 8, 1993, WHLLC's interest in SWF was held by Whitney
Financial Corp. In this discussion, the plaintiffs are collectively referred to
as "Whitney."

SWF is and, at all times material to the suit, has been a wholly owned
subsidiary of SWFHC. SWF's business has always been the purchase and resolution
of distressed debt. The business was usually conducted through limited
partnerships used as a vehicle to raise the capital necessary to purchase the
debt. SWF acted as general partner of the partnerships.

Whitney claims that the formation of Plymouth and Greystone was a corporate
opportunity of SWF that was usurped by Robert R. Swendson. Whitney also alleges
that Goodhue W. Smith, III, Duncan-Smith Co., and the limited partnerships
improperly benefitted from the conduct complained of. Whitney specifically
alleges that the conduct complained of amounts to breach of fiduciary duty,
usurpation of corporate opportunity, conversion, fraud, negligence, and breach
of contract. By way of remedy, Whitney seeks a (1) declaration of constructive
trust and an accounting of all assets, property, and profits gained or
transferred as a result of the conduct complained of, (2) a preliminary
injunction against SWF, SWFHC, and Greystone (but not Plymouth)

                                   Page -11-
<PAGE>   12

against distribution of profits, stock, or other assets or property, (3) a
receivership of Greystone, SWF, and SWFHC (but not Plymouth), (4) actual
damages, (5) punitive damages, and (6) attorneys fees. The suit is alleged both
derivatively on behalf of the corporation and individually on behalf of Whitney.

Greystone, Plymouth's investment adviser, is owned 100% by Robert R. Swendson.
Mr. Swendson is the majority shareholder, president, and a director of SWFHC.
All the holders of shares of Plymouth gave value for their interests. As such,
there was no "corporate opportunity" for SWFHC associated with the issuance of
Plymouth shares.

Although the law requires that derivative claims be submitted to the board of
directors before filing suit, Whitney failed to do that. Plymouth is informed
that SWFHC's board of directors will review the claims but it has asked Whitney
for additional information. Plymouth has been informed that there is a
significant legal impediment to Whitney's suit: (1) Whitney is no longer a
shareholder of any relevant entity, and one must be a shareholder to maintain a
derivative action and (2) Whitney's claims made cannot be maintained other than
derivatively. Plymouth's management believes these defenses will protect
whatever Plymouth has at stake in this litigation, but these defenses have not
yet been submitted to a judge for ruling. The outcome of litigation can never be
guaranteed.

Whitney has offered to mediate the dispute, and the defendants have agreed. If
the case is mediated, Plymouth is hopeful that the matter will be resolved in
that way, without the requirement of further court proceedings.

Item 2:  CHANGES IN SECURITIES

         None.

Item 3:  DEFAULTS UPON SENIOR SECURITIES

         None.

Item 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None

Item 5:  OTHER INFORMATION

         In its filing for the period ending June 30, 1998, Plymouth expressed
         an intent to attempt to raise at least some additional equity before
         the end of 1998. At this juncture, it now appears that schedule is
         unlikely. Plymouth remains hopeful that it can raise capital or
         obtain better debt financing in the first quarter of 1999.

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a) EXHIBITS-

                (2)Plan of acquisition, reorganization, arrangement, liquidation
                   or succession: (None)



                                   Page -12-
<PAGE>   13

             (3)(i)   (A)Certificate of Trust of the registrant, as filed August
                      23, 1996(1)
                      (B)Declaration of Trust of the registrant, dated
                      August 23, 1996(1)

             (3)(ii)Bylaws of the registrant, dated September 3, 1996(1)

             (4)      (A)Loan Agreement between Comerica Bank-Texas and the
                      registrant, dated September 27, 1996(2)

                      (B)Agreement to furnish to the Commission upon request a
                      copy of Subordinated Note Agreement between the registrant
                      and SouthWest Federated Holding Company, Inc., dated
                      September 27, 1996(2)

             (10)     (A)Investment Advisory Agreement by and between the
                      registrant and Greystone Advisers, Inc.(3)
                      (B)Custodial Agreement by and between Broadway National
                      Bank, Comerica Bank--Texas and the registrant, dated
                      September 27, 1996(4)

             (15)     Letter re unaudited interim financial information: (None)

             (18)     Letter re change in accounting principles: (None)

             (19)     Report furnished to security holders: (None)

             (22)     Published report regarding matters submitted to vote of
                      security holders: (None)

             (23)     Consents of experts and counsel: (None)

             (24)     Power of attorney: (None)

             (27)     Financial Data Schedule

    REPORTS ON FORM 8-K- None.


                                   SIGNATURES

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.

                                      PLYMOUTH COMMERCIAL MORTGAGE FUND

                                      /s/ Robert R. Swendson
November 13, 1998
                                      ------------------------------------------
                                      Robert R. Swendson, President  and  Chief
                                      Executive Officer

                                      /s/ Patrick J. Panzarella
November 13, 1998
                                      ------------------------------------------
                                      Patrick J. Panzarella,  Chief  Financial
                                      Officer (Principal Financial Officer)


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

           (1)Incorporated herein by reference from registrant's initial
           registration statement on Form 10 (File No. 0-21443), as filed with
           the Commission on September 27, 1996.

           (2)Incorporated herein by reference from amendment number 1 of the
           registrant's initial registration statement on Form 10 (File No.
           0-21443), as filed with the Commission on January 15, 1997.

           (3)Incorporated by reference from registrant's Form 10-Q for the
           period ending March 31, 1998 (File No. 0-21433), as filed with the
           Commission on May 14, 1998.

           (4)Incorporated by reference from registrant's Form 10-Q for the
           period ending June 30, 1997 (File No. 0-21433), as filed with the
           Commission on or about August 14, 1997.


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