MONTGOMERY PARTNERSHIP
                             (A LIMITED PARTNERSHIP)

                              FINANCIAL STATEMENTS






<PAGE>






                          INDEPENDENT AUDITORS' REPORT






The Partners
Montgomery Partnership:

We have  audited the  accompanying  statements  of income,  changes in partners'
capital, and cash flows of the Montgomery  Partnership (the Partnership) for the
year ended December 31, 1999. These financial  statements are the responsibility
of the Partnership's management.  Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
statement  presentation.  We believe that our audit provides a reasonable  basis
for our opinion.

As described in Note 1 to the financial statements,  the Partnership is expected
to be terminated in 2002, as the marine vessel in the Partnership has been sold.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  results  of  operations  and  cash  flows  of the
Montgomery  Partnership  for the year ended December 31, 1999 in conformity with
accounting  principles  generally accepted in the United States of America.  The
accompanying  2001 and 2000  financial  statements  were not  audited by us, and
accordingly, we express no opinion or any other form of assurance on them.




/s/ KPMG LLP

SAN FRANCISCO, CALIFORNIA
June 9, 2000





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                             MONTGOMERY PARTNERSHIP
                             (A LIMITED PARTNERSHIP)
                                  BALANCE SHEET
                                DECEMBER 31, 2000
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>


                                                                              2001                2000
ASSETS                                                                     (unaudited)          (unaudited)
                                                                        ---------------------------------------

<S>                                                                     <C>                  <C>
Accounts receivable                                                     $             --     $             --
                                                                        ---------------------------------------
      Total assets                                                      $             --     $             --
                                                                        =======================================


LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
Accounts payable and accrued expenses                                   $             --    $              --
Due to affiliates                                                                     --                   --
                                                                        ---------------------------------------
  Total liabilities                                                                   --                   --

Partners' capital (deficit):
Limited partners                                                                     194                  194
General partner                                                                     (194 )               (194 )
                                                                        ---------------------------------------
  Total partners' capital                                                             --                   --
                                                                        ---------------------------------------

      Total liabilities and partners' capital                           $             --    $              --
                                                                        =======================================


</TABLE>





















      See accompanying auditors' report and notes to financial statements.






                             MONTGOMERY PARTNERSHIP
                             (A LIMITED PARTNERSHIP)
                            STATEMENTS OF OPERATIONS
                        FOR THE YEARS ENDED DECEMBER 31,
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>

                                                                           2001          2000            1999
                                                                         (unaudited)    (unaudited)
                                                                        ------------------------------------------------
REVENUES

<S>                                                                     <C>           <C>            <C>
Lease revenue                                                           $      --     $        (3)   $    2,106
Interest and other income                                                      --             240            11
Gain on disposition of the marine vessel                                       --              --         3,812
                                                                        ---------------------------------------------
    Total revenues                                                             --             237         5,929
                                                                        ---------------------------------------------

EXPENSES

Depreciation expense                                                           --              --           702
Marine operating expense                                                       68              12         1,135
Repairs and maintenance                                                        --             (53)          251
Insurance expense                                                              --             (19)          173
Management fees to affiliate                                                   --              --           105
Administrative expenses to affiliate                                           --              10            21
Administrative expenses and other                                              --              16            32
                                                                        ---------------------------------------------
    Total expenses                                                             68             (34)        2,419
                                                                        ---------------------------------------------

Net income (loss)                                                       $     (68 )   $       271    $    3,510
                                                                        =============================================


</TABLE>





















      See accompanying auditors' reports and notes to financial statements.



                             MONTGOMERY PARTNERSHIP
                             (A LIMITED PARTNERSHIP)
              STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>

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

<S>                                                                       <C>              <C>          <C>
  Partners' capital (deficit) as of December 31, 1998 (unaudited)         $    3,875       $  (157)     $     3,718

Net income                                                                     3,475            35            3,510

Cash distribution                                                             (7,419)          (75)          (7,494)
                                                                          -------------------------------------------

  Partners' deficit as of December 31, 1999                                      (69)         (197)            (266)

Net income (unaudited)                                                           268             3              271

Cash distribution  (unaudited)                                                    (5)           --               (5)
                                                                          -------------------------------------------

  Partners' capital (deficit) as of December 31, 2000 (unaudited)                194          (194)              --

Net loss (unaudited)                                                             (67)           (1)             (68)

Cash contribution (unaudited)                                                     67             1               68
                                                                          -------------------------------------------

  Partners' capital (deficit) as of December 31, 2001 (unaudited)         $      194       $  (194)     $        --
                                                                          ===========================================


</TABLE>






















      See accompanying auditors' reports and notes to financial statements.


<PAGE>



                             MONTGOMERY PARTNERSHIP
                             (A LIMITED PARTNERSHIP)
                            STATEMENTS OF CASH FLOWS
                        FOR THE YEARS ENDED DECEMBER 31,
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>

                                                                   2000          1999            1999
                                                               (unaudited)
                                                               ---------------------------------------------

OPERATING ACTIVITIEs

<S>                                                            <C>           <C>           <C>
Net income (loss)                                              $     (68)    $      271    $        3,510
Adjustments to reconcile net income (loss) to net cash
    provided by (used in) operating activities:
  Depreciation                                                        --             --               702
  Gain on disposition of the marine vessel                            --             --            (3,812)
  Changes in operating assets and liabilities:
    Accounts receivable                                               --             30                70
    Prepaid expenses                                                  --             --                27
    Accounts payable and accrued expenses                             --           (290)             (114)
    Due to affiliates                                                 --             (6)               (2)
    Reserve for repairs                                               --             --              (500)
                                                               --------------------------------------------
      Net cash provided by (used in) operating activities            (68)             5              (119)
                                                               --------------------------------------------


INVESTING ACTIVITIES
Proceeds from disposition of vessel                                   --             --             7,613
                                                               --------------------------------------------
      Net cash provided by investing activities                       --             --             7,613
                                                               --------------------------------------------

FINANCING ACTIVITIES

Cash (distributions) contributions - limited partners                 67             (5)           (7,419)
Cash (distributions) contributions - General Partner                   1             (5)              (75)
                                                               --------------------------------------------
      Net cash provided by (used in) financing activities             68             (5)           (7,494)
                                                               --------------------------------------------

Net change in cash and cash equivalents                               --             --                --
Cash and cash equivalents at beginning of year                        --             --                --
                                                               --------------------------------------------
Cash and cash equivalents at end of year                       $      --     $       --    $           --
                                                               ============================================

</TABLE>














      See accompanying auditors' reports and notes to financial statements.


<PAGE>


                             MONTGOMERY PARTNERSHIP
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     ORGANIZATION

Montgomery Partnership, a California limited partnership (the Partnership),  was
formed  during  December  1990.  The  Partnership  was formed for the purpose of
purchasing a bulk-carrier marine vessel and commenced significant  operations in
January 1991. The  Partnership had neither  employees nor operations  other than
the operation of the marine vessel.  The Partnership is owned 99% by the limited
partners  and 1% by  the  General  Partner.  The  Partnership  has  two  limited
partners;  PLM Equipment Growth Fund IV (EGF IV) and PLM Equipment Growth Fund V
(EGF V), (the Limited Partners).  The Limited Partnership is owned 50% by EGF IV
and 50% by EGF V. The General Partner is the Montgomery  Corporation  (MC) which
is owned by EGF IV and EGF V.

PLM Financial  Services Inc.  (FSI) is the General  Partner of EGF IV and EGF V.
FSI is a wholly owned subsidiary of PLM International, Inc.

The Partnership is expected to be terminated during 2002 as the marine vessel in
the Partnership was sold in December 1999.

These accompanying  financial  statements had been prepared on the accrual basis
of accounting in accordance with generally accepted accounting principles.  This
required  management to make estimates and assumptions  that affect the reported
amounts  of  assets  and  liabilities,  disclosures  of  contingent  assets  and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those  estimates.  All amounts as of and for the years ended  December  31,
2001 and 2000 are unaudited.

     OPERATIONS

The marine vessel in the Partnership  was managed under a continuing  management
agreement by PLM Investment Management, Inc. (IMI), a wholly owned subsidiary of
PLM Financial  Services Inc. (FSI).  IMI received a monthly  management fee from
the  Partnership  for managing the marine  vessel (Note 2). FSI, in  conjunction
with its  subsidiaries,  sells equipment to investor programs and third parties,
manages  pools  of  transportation  equipment  under  agreements  with  investor
programs, and is the general partner of other limited partnerships.

     CASH AND CASH EQUIVALENTS

All cash generated from operations was distributed to the partners, accordingly,
the Partnership had no cash balance at December 31, 2001 and 2000.

     ACCOUNTING FOR LEASES

The marine vessel in the Partnership was leased under  operating  leases.  Under
the operating  lease method of accounting,  the leased asset is recorded at cost
and depreciated over its estimated useful life.  Rental payments are recorded as
revenue over the lease term as earned in accordance  with Statement of Financial
Accounting  Standards No. 13,  "Accounting for Leases".  Lease origination costs
were capitalized and amortized equally over 36 months.








                             MONTGOMERY PARTNERSHIP
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


      DEPRECIATION

Depreciation  on the  marine  vessel  was  computed  using the  double-declining
balance method,  taking a full month's depreciation in the month of acquisition,
based upon an estimated useful life of 12 years. The depreciation method changed
to straight-line when annual depreciation expense using the straight-line method
exceeded that calculated by the  double-declining  balance  method.  Acquisition
fees of $0.8  million,  that were paid to FSI, were  capitalized  as part of the
cost of the  equipment.  Major  expenditures  that were  expected  to extend the
marine vessel's useful life or reduce future equipment  operating  expenses were
capitalized  and  amortized  over the  estimated  remaining  life of the  marine
vessel.

     MARINE VESSEL

In accordance with the Financial Accounting Standards Board's Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed  Of", FSI reviewed the carrying  value of the  Partnership's  marine
vessel  at  least  quarterly,  and  whenever  circumstances  indicated  that the
carrying  value of this asset may not be  recoverable  in  relation  to expected
future market  conditions,  for the purpose of assessing  recoverability  of the
recorded  amounts.  If  projected  undiscounted  future  cash flows and the fair
market value of the marine vessel was less than the carrying value of the marine
vessel,  a loss on  revaluation  would have been  recorded.  No reduction to the
carrying value of the marine vessel was required during 2001, 2000, or 1999.

     REPAIRS AND MAINTENANCE

Repair  and  maintenance  for the  marine  vessel  were  the  obligation  of the
Partnership.  Costs associated with marine vessel  drydocking were estimated and
accrued ratably over the period prior to such drydocking.

     NET INCOME (LOSS) AND CASH DISTRIBUTIONS TO LIMITED PARTNERS

The net income (loss) and cash  distributions  of the  Partnership are generally
allocated  99% to the limited  partners and 1% to the General  Partner.  The net
income (loss) and cash distributions are allocated to the limited partners based
on their  percentage of ownership in the  Partnership.  The limited partners 99%
share of net income  (loss) and cash  distributions  are allocated 50% to EGF IV
and 50% to EGF V.

Cash Distributions Were Recorded When Paid.

     Comprehensive Income (Loss)

The Partnership's net income (loss) was equal to comprehensive income (loss) for
the years ended December 31, 2001, 2000, and 1999.

2.   General Partner


MC contributed $100 of the  Partnership's  initial capital.  MC was owned by two
shareholders,  EGF IV owned 50% and EGF V owned 50%.  Dividends were paid to the
shareholders annually, when declared,  based on the percentage of ownership each
shareholder owns.






                             Montgomery Partnership
                             (A Limited Partnership)
                          Notes to Financial Statements
                                December 31, 2001

3.   Transactions With Affiliates

Under the equipment management agreement,  IMI receives a monthly management fee
attributable  to owned  equipment equal to the lesser of (i) the fees that would
be charged by an  independent  third  party for  similar  services  for  similar
equipment or (ii) 5% of the gross lease revenues  attributable to equipment that
is subject to operating  leases.  The  Partnership's  management  fee expense to
affiliate was $0, $0 and $0.1 million during 2001, 2000, and 1999, respectively.
The  Partnership  reimbursed FSI $0, $10,000 and $21,000,  during 2001, 2000 and
1999,  respectively,  for data processing and  administrative  expenses directly
attributable to the Partnership.

4.   Marine Vessel On Lease

During 1999, the Partnership  sold the marine vessel with net book value of $3.8
million for proceeds of $7.6 million.

The  Partnership's  marine  vessel was leased to operators  of  utilization-type
leasing pools that included  equipment  owned by unaffiliated  parties.  In such
instances,  revenues earned by the Partnership consist of a specified percentage
of the total  revenues  generated by leasing the pooled  equipment to sublessees
after deducting certain direct operating expenses of the pooled equipment.

The marine vessel lease was being accounted for as an operating lease. There are
no future minimum rentals under non-cancelable  leases at December 31, 2001. Per
diem and  short-term  rentals  consisting  of  utilization  rate lease  payments
included in lease revenues amounted to $0, $0 and $2.1 million in 2001, 2000 and
1999, respectively.

5.   Geographic Information

The  Partnership's  marine  vessel was leased to multiple  lessees in  different
regions that operated worldwide.

6.   Income Taxes

The  Partnership  is not  subject  to  income  taxes,  as any  income or loss is
included  in the tax  returns of the  individual  partners  owning  the  Limited
Partners.  Accordingly,  no  provision  for  income  taxes  has been made in the
financial statements of the Partnership.

As of  December  31,  2001,  there were no  temporary  differences  between  the
financial statements carrying value of assets and the income tax basis.

7.   Concentrations of Credit Risk

Financial   instruments,   which   potentially   subject  the   Partnership   to
concentrations of credit risk, consist principally of lease receivables.

No single lessee  accounted for more than 10% of the  consolidated  revenues for
the years ended December 31, 2001, 2000 or 1999. CO. TBN by Messrs. Apex Marine,
New York purchased the marine vessel from the  Partnership and the gain from the
sale accounted for 64% of total consolidated revenues during 1999.

As of December 31, 2001, the General  Partner  believes the  Partnership  had no
other  significant  concentrations  of credit  risk that  could  have a material
adverse effect on the Partnership.