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


     [X]     Annual  Report  Pursuant to Section 13 or 15(d) of the  Securities
             Exchange Act of 1934 For the fiscal year ended December 31, 1998.

     [ ]     Transition Report Pursuant to Section 13 or 15(d) of the Securities
             Exchange Act of 1934
             For the transition period from              to

                         Commission file number 33-27746
                             -----------------------


                          PLM EQUIPMENT GROWTH FUND IV
             (Exact name of registrant as specified in its charter)


        California                                        94-3090127
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                         Identification No.)

One Market, Steuart Street Tower
  Suite 800, San Francisco, CA                           94105-1301
    (Address of principal                                 (Zip code)
     executive offices)


        Registrant's telephone number, including area code (415) 974-1399
                             -----------------------

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 ______

Aggregate market value of voting stock:  N/A

An index of exhibits filed with this Form 10-K is located on page 27.

Total number of pages in this report:  51.



<PAGE>


                                                      PART I
ITEM 1.  BUSINESS
(A)  Background

In March 1989,  PLM Financial  Services,  Inc. (FSI or the General  Partner),  a
wholly-owned  subsidiary of PLM International,  Inc. (PLM International or PLM),
filed a  Registration  Statement  on Form S-1 with the  Securities  and Exchange
Commission with respect to a proposed offering of 8,750,000 limited  partnership
units  (including  1,250,000  option units) (the units) in PLM Equipment  Growth
Fund IV, a California limited partnership (the Partnership,  the Registrant,  or
EGF IV). The  Partnership's  offering became  effective on May 23, 1989. FSI, as
General Partner, owns a 5% interest in the Partnership.  The Partnership engages
in the business of investing in a  diversified  equipment  portfolio  consisting
primarily of used, long-lived, low-obsolescence capital equipment that is easily
transportable by and among prospective users.

The Partnership's primary objectives are:

     (1) to maintain a diversified  portfolio of  long-lived,  low-obsolescence,
high  residual-value  equipment with the net proceeds of the initial partnership
offering,  supplemented by debt financing and  reinvestment of cash generated by
operations.  All  transactions  of over $1.0  million  must be  approved  by PLM
International  Credit  Review  Committee  (the  Committee),  which is made up of
members  of PLM  International  Senior  Management.  In  determining  a lessee's
creditworthiness,   the  Committee  will  consider,  among  other  factors,  its
financial  statements,  internal and  external  credit  ratings,  and letters of
credit;

     (2) to generate sufficient net operating cash flow from lease operations to
meet liquidity  requirements  and to generate cash  distributions to the limited
partners  until  such  time  as  the  General  Partner   commences  the  orderly
liquidation of the  Partnership  assets or unless the  Partnership is terminated
earlier upon sale of all Partnership property or by certain other events;

     (3) to selectively  sell equipment when the General Partner  believes that,
due to market conditions,  market prices for equipment exceed inherent equipment
values or that expected future benefits from continued ownership of a particular
asset will have an adverse affect on the  Partnership.  As the Partnership is in
the  liquidation  phase,  proceeds  from these sales,  together  with excess net
operating cash flows from operations (net cash provided by operating  activities
plus distributions from unconsolidated  special-purpose  entities (USPEs)),  are
used to repay the Partnership's  outstanding  indebtedness and pay distributions
to the partners;

     (4) to  preserve  and protect the value of the  portfolio  through  quality
management,  maintaining the portfolio's  diversity,  and constantly  monitoring
equipment markets.

The offering of the units of the  Partnership  closed on March 28,  1990.  As of
December 31, 1998, there were 8,628,420 limited  partnership units  outstanding.
The General Partner  contributed $100 for its 5% general partner interest in the
Partnership.

On  January  1, 1999,  the  Partnership  entered  its  liquidation  phase and in
accordance with the limited partnership  agreement,  the General Partner intends
to commence an orderly liquidation of the Partnership's  assets. The liquidation
phase will end on  December  31,  2009,  unless the  Partnership  is  terminated
earlier upon sale of all of the equipment or by certain other events.



<PAGE>


Table  1,  below,  lists  the  equipment  and  the  cost  of  equipment  in  the
Partnership's   portfolio,   and  the  cost  of  investments  in  unconsolidated
special-purpose entities, as of December 31, 1998 (in thousands of dollars):

<TABLE>
<CAPTION>

                                     TABLE 1

 Units                              Type                                    Manufacturer                     Cost
---------------------------------------------------------------------------------------------------------------------

Owned equipment held for operating leases:

    <S>      <C>                                                     <C>                                 <C>       
      3      737-200 stage II commercial aircraft                    Boeing                              $   26,945
      1      DC-9-32 stage II commercial aircraft                    McDonnell-Douglas                       10,041
      1      Dash 8-300 commuter aircraft                            Dehavilland                              5,748
    334      Pressurized tank railcars                               Various                                  9,712
     98      Woodchip gondola railcars                               General Electric                         2,341
    110      Bulkhead flat railcars                                  Marine Industries Ltd.                   2,153
     26      Nonpressurized tank railcars                            Various                                    546
    395      Refrigerated marine containers                          Various                                  9,978
    305      Dry marine containers                                   Various                                  1,034
      1      Bulk carrier                                            Namura Shipping                          9,719
     98      Refrigerated trailers                                   Various                                  2,244
    133      Dry trailers                                            Various                                  1,817
                                                                                                         ------------

             Total owned equipment held for operating leases                                             $   82,278<F1>
                                                                                                         ===========


Investments in unconsolidated special-purpose entities:

   0.50      Bulk carrier                                            Nipponkai & Toyama                  $    9,705<F2>
   0.35      Equipment on direct finance lease:
               Two DC-9 stage III commercial aircraft                McDonnell-Douglas                        3,901<F3>
                                                                                                         ------------

             Total investments in unconsolidated special-purpose entities                                $   13,606<F1>
                                                                                                         ===========
<FN>

<F1> Includes equipment and investments  purchased with the proeeds from capital
     contributions,  undistributed  cashflow from  operations,  and  Partnership
     borrowings.   Includes  costs   capitalized   subsequent  to  the  date  of
     acquisition  and  equipment  acquisition  fees  paid to PLM  Transportation
     Equipment Corporation,  a wholly-owned subsidiary of FSI. All equipment was
     used equipment at the time of purchase.

<F2> Jointly owned:  EGF IV and an affiliated program.

<F3> Jointly owned:  EGF IV and two affiliated programs.

</FN>


</TABLE>
 

The equipment is generally  leased under  operating  leases with terms of one to
six years.  The  Partnership's  marine  containers  are leased to  operators  of
utilization-type  leasing pools,  which include  equipment owned by unaffiliated
parties.  In such instances,  revenues received by the Partnership  consist of a
specified  percentage of revenues  generated by leasing the pooled  equipment to
sublessees,  after  deducting  certain direct  operating  expenses of the pooled
equipment.  Rents for  railcars  are based on mileage  traveled or a fixed rate;
rents for all other equipment are based on fixed rates.

As of December 31, 1998, all of the of the  Partnership's  trailer equipment was
in rental facilities  operated by PLM Rental,  Inc., an affiliate of the General
Partner,  doing  business  as PLM  Trailer  Leasing.  Revenues  collected  under
short-term  rental  agreements with the rental yards'  customers are credited to
the owners of the related equipment as received. Direct expenses associated with
the equipment are charged  directly to the  Partnership.  An allocation of other
indirect  expenses of the rental yard  operations is charged to the  Partnership
monthly.

The lessees of the equipment  include,  but are not limited to: Aero California,
Continental Airlines, Inc., Transamerica Leasing, and Canadian Pacific Railways.

(B) Management of Partnership Equipment

The  Partnership  has entered into an equipment  management  agreement  with PLM
Investment  Management,  Inc.  (IMI), a wholly-owned  subsidiary of FSI, for the
management  of  the  Partnership's   equipment.   The  Partnership's  management
agreement with IMI is to co-terminate  with the dissolution of the  Partnership,
unless the limited  partners vote to terminate the agreement  prior to that date
or at the  discretion  of the  General  Partner.  IMI has agreed to perform  all
services  necessary to manage the equipment on behalf of the  Partnership and to
perform or contract for the  performance of all  obligations of the lessor under
the Partnership's  leases. In consideration for its services and pursuant to the
partnership agreement,  IMI is entitled to a monthly management fee (see Notes 1
and 2 to the financial statements).

(C)  Competition 

(1)  Operating Leases versus Full Payout Leases

Generally the equipment owned by or invested in the Partnership is leased out on
an  operating  lease  basis  wherein  the  rents  received  during  the  initial
noncancelable  term of the lease are  insufficient to recover the  Partnership's
purchase  price of the  equipment.  The short- to mid-term  nature of  operating
leases generally commands a higher rental rate than the longer-term, full payout
leases and offers lessees relative flexibility in their equipment commitment. In
addition, the rental obligation under an operating lease need not be capitalized
on the lessee's balance sheet.

The Partnership  encounters  considerable  competition from lessors that utilize
full payout leases on new  equipment,  i.e.  leases that have terms equal to the
expected  economic  life  of  the  equipment.  While  some  lessees  prefer  the
flexibility offered by a shorter-term  operating lease, other lessees prefer the
rate  advantages  possible with a full payout lease.  Competitors may write full
payout  leases  at  considerably  lower  rates  and for  longer  terms  than the
Partnership offers, or larger competitors with a lower cost of capital may offer
operating leases at lower rates,  which may put the Partnership at a competitive
disadvantage.

(2)  Manufacturers and Equipment Lessors

The Partnership competes with equipment manufacturers who offer operating leases
and full payout leases.  Manufacturers may provide  ancillary  services that the
Partnership cannot offer, such as specialized  maintenance  services  (including
possible substitution of equipment),  training,  warranty services, and trade-in
privileges.

The  Partnership  also  competes  with many  equipment  lessors,  including  ACF
Industries,  Inc.  (Shippers  Car  Line  Division),  GATX  Corporation,  General
Electric  Railcar  Services  Corporation,   General  Electric  Capital  Aviation
Services Corporation, Xtra Corporation and other investments programs that lease
the same types of equipment.

(D)  Demand

The Partnership  operates in five primary operating segments:  aircraft leasing,
marine container leasing,  marine vessel leasing,  trailer leasing,  and railcar
leasing.  Each  equipment  leasing  segment  engages in  short-term  to mid-term
operating leases to a variety of customers.  Except for those aircraft leased to
passenger air carriers, the Partnership's  equipment and investments are used to
transport materials and commodities, rather than people.

The following  section describes the international and national markets in which
the Partnership's capital equipment operates:



<PAGE>


(1)  Aircraft

(a)  Commercial Aircraft

The world's major  airlines  experienced a fourth  consecutive  year of profits,
showing a combined  marginal net income (net income  measured as a percentage of
revenue)  of 6%,  compared  to the  industry's  historical  annual  rate  of 1%.
Airlines recorded positive marginal net annual income of 2% in 1995, 4% in 1996,
6% in 1997,  and 6% in 1998.  The two factors that have led to this  increase in
profitability are improvements in yield management systems and reduced operating
costs,  particularly  lowered fuel costs.  These higher levels of  profitability
have allowed many airlines to re-equip their fleets with new aircraft, resulting
in a record number of orders for manufacturers.


Major  airlines  increased  their fleets from 7,181 aircraft in 1997 to 7,323 in
1998,  which has  resulted  in more used  aircraft  available  on the  secondary
market. Despite these increases, the number of Stage II aircraft in these fleets
(similar to those owned by the Partnership)  decreased by 26% from 1997 to 1998,
and  sharper  decreases  are  expected  in 1999.  This  trend is due to  Federal
Aviation  Regulation  section C36.5,  which requires airlines to convert 100% of
their fleets to Stage III aircraft,  which have lower noise levels than Stage II
aircraft,  by the year 2000 in the United States and the year 2002 in Canada and
Europe.  Stage II aircraft can be modified to Stage III with the installation of
a  hushkit  that  significantly  reduces  engine  noise.  The  cost  of  hushkit
installation ranges from $1.0 to $2.0 million for the types of aircraft owned by
the Partnership.


Orders for new aircraft  have risen rapidly  worldwide in recent  years:  691 in
1995,  1,182 in 1996, 1,328 in 1997, and an estimated 1,500 in 1998. As a result
of this increase in orders,  manufacturers  have expanded their production,  and
new aircraft deliveries have increased from 482 in 1995, 493 in 1996, and 674 in
1997, to an estimated 825 in 1998.


The industry now has in place two of the three  conditions that led to financial
problems in the early 1990s: potential excess orders and record deliveries.  The
missing element is a worldwide recession. Should a recession occur, the industry
will experience  another period of excess aircraft capacity and surplus aircraft
on the ground.


The Partnership's narrowbody (single-aisle) fleet is a mix of Stage II and Stage
III aircraft. The Stage II aircraft are either positioned with air carriers that
are  outside  Stage  III-legislated  areas or  anticipated  to be sold or leased
outside Stage III areas before the year 2000.


(b)  Commuter Aircraft


Major changes have occurred in the commuter market due to the 1993  introduction
of small regional jets. The original  concept for regional jets was to take over
the North American hub-and-spoke routes served by the large turboprops, but they
are also finding successful niches in point-to-point routes. The introduction of
this smaller  aircraft has allowed major  airlines to shift the regional jets to
those marginal routes previously operated by narrowbody (single-aisle) aircraft,
allowing  larger-capacity  aircraft  to  be  more  efficiently  employed  in  an
airline's route system.


The Partnership leases commuter turboprops containing from 36 to 50 seats. These
aircraft all fly in North  America,  which  continues to be the  fastest-growing
market for commuter  aircraft in the world. The  Partnership's  aircraft possess
unique performance capabilities,  compared to other turboprops, which allow them
to readily operate at maximum  payloads from unimproved  surfaces,  hot and high
runways,  and short  runways.  However,  the growing use of regional jets in the
commuter  market has resulted in an increase in demand for regional  jets at the
expense of turboprops. Several major turboprop programs have been terminated and
all  turboprop  manufacturers  are  cutting  back on  production  due to reduced
demand.

(2)  Railcars

(a)  Pressurized Tank Railcars

Pressurized tank cars transport primarily two chemicals: liquefied petroleum gas
(natural  gas) and  anhydrous  ammonia  (fertilizer).  Natural  gas is used in a
variety of ways in businesses,  electric plants, factories,  homes, and now even
cars.  The demand for  fertilizer  is driven by a number of  factors,  including
grain prices,  the status of  government  farm subsidy  programs,  the amount of
farming acreage and mix of crops planted,  weather patterns,  farming practices,
and the value of the U.S. dollar.

In North  America,  1998 carload  originations  of both  chemicals and petroleum
products  remained  relatively  constant,  compared to 1997. The 98% utilization
rate of the  Partnership's  pressurized  tank  cars  was  consistent  with  this
statistic.

(b)  Woodchip Gondolas Railcars

These  6,600-cubic-foot-capacity  railcars are used to transport  woodchips from
sawmills to pulp mills,  where the woodchips are converted into pulp. The demand
for  woodchip  gondolas  is  directly  related  to  demand  for  paper and paper
products,  particleboard,  and  plywood.  In  Canada,  where  the  Partnership's
woodchip gondolas operate, 1998 carload originations for primary forest products
remained relatively unchanged over 1997 levels.

All of the  Partnership's  woodchip  gondolas  continued to operate on long-term
leases during 1998.

(c)  Bulkhead Flat Railcars

Bulkhead  flatcars are used to transport  pulpwood  from sawmills to pulp mills.
High-grade  pulpwood is used to manufacture  paper,  while low-grade pulpwood is
used to make  particleboard  and  plywood.  In Canada,  where the  Partnership's
bulkhead  flatcars  operate,  carload  originations for pulp,  paper, and allied
products dropped slightly in 1998, declining by 2% over 1997 levels.

The Partnership's  bulkhead  flatcars  continued to operate on a long-term lease
during 1998.

(d)  Nonpressurized, General Purpose Tank Railcars

Tank cars that do not require  pressurization are used to transport a variety of
bulk liquid  commodities and chemicals,  including  certain  petroleum fuels and
products,  liquefied asphalt, lubricating and vegetable oils, molten sulfur, and
corn syrup. The largest  consumers of chemical  products are the  manufacturing,
automobile, and housing sectors. Because the bulk liquid industry is so diverse,
its overall  health is reflected by such  general  indicators  as changes in the
Gross  Domestic  Product,  personal  consumption  expenditures,   retail  sales,
currency exchange rates, and national and international economic forecasts.

In North  America,  railcar  loadings  for the  commodity  group  that  includes
chemicals and petroleum  products remained  essentially  unchanged,  compared to
1997. The Partnership's general purpose cars continue to be in high demand, with
utilization over 98% in 1998.

(3)  Marine Containers

The marine container market began 1998 with industrywide  utilization in the low
80% range.  This  percentage  eroded  somewhat  during the year,  while per diem
rental  rates  remained  steady.   One  factor  affecting  the  market  was  the
availability   of   historically   low-priced   marine   containers  from  Asian
manufacturers.  This trend is expected to remain in 1999,  and will  continue to
put pressure on economic results fleetwide.

The trend  toward  industrywide  consolidation  continued  in 1998,  as the U.S.
parent company of one of the industry's top ten container lessors announced that
it would be outsourcing  the management of its container  fleet to a competitor.
While  this  announcement  has yet to be  finalized,  over the long  term,  such
industrywide  consolidation  should bring more  rationalization to the container
leasing  market and result in both  higher  fleetwide  utilization  and per diem
rates.

(4)  Dry Bulk Vessels

The  Partnership  owns or has  investments  in  small to  medium-sized  dry bulk
vessels that trade in worldwide markets and carry commodity cargoes.  Demand for
commodity shipping closely follows worldwide economic growth patterns, which can
alter demand by causing  changes in volume on trade routes.  The General Partner
operates the Partnership's  vessels through time charters, an operating approach
that provides the flexibility to adapt to changing market situations.

Freight rates for dry bulk vessels  decreased  for all ship sizes in 1998,  with
the largest  vessels  experiencing  the  greatest  declines.  After a relatively
stable year in 1997,  rates  declined due to a decrease in cargo tonnage  moving
from the Pacific  Basin and Asia to western  ports.  The size of the overall dry
bulk carrier  fleet  decreased by 3%, as measured by the number of vessels,  but
increased by 1%, as measured by deadweight  (dwt)  tonnage.  While  scrapping of
ships was a significant  factor in 1998  (scrapping  increased by 50% over 1997)
overall  there was no material  change in the size of the dry bulk vessel fleet,
as deliveries and scrappings were nearly equal.

Total dry trade (as  measured  in  deadweight  tons) was flat,  compared to a 3%
growth in 1997. As a result, the market had no foundation for increasing freight
rates, and charter rates declined as trade not only failed to grow, but actually
declined due to economic  disruptions in Asia.  Overall  activity is expected to
remain flat in 1999, with trade in two of the three major commodities  static or
decreasing in volume.  Iron ore volume is expected to decrease,  and grain trade
is anticipated to be flat, while a bright spot remains in an estimated  increase
in steam coal trade.

Ship values experienced a significant decline in 1998, as expectations for trade
growth  were  dampened.  The  decline in ship  values was also driven by bargain
pricing for newbuilding in Asian yards.

The uncertainty in forecasts is the Asian economic situations;  if there is some
recovery  from the  economic  shake-up  that started in the second half of 1997,
then  1999 has  prospects  for  improvement.  The  delivery  of ships in 1999 is
expected to be less than in 1998, and high scrapping levels should continue. Dry
bulk  shipping  is a cyclical  business -- inducing  capital  investment  during
periods of high freight rates and discouraging  investment during periods of low
rates. The current environment thus discourages investment. However, the history
of the industry  implies that this period will be followed by one of  increasing
rates and investment in new ships, driven by growth in demand. Over time, demand
grows at an average of 3% a year,  so when  historic  levels of growth in demand
resume, the industry is expected to experience a significant increase in freight
rates and ship values.

(5)  Trailers

(a)  Over-the-Road Dry Trailers

The U.S.  over-the-road  dry trailer market continued to recover in 1998, with a
strong domestic economy resulting in heavy freight volumes.  The leasing outlook
continues  to be  positive,  as  equipment  surpluses  of recent years are being
absorbed by a buoyant  market.  In addition to high freight  volumes,  declining
fuel  prices  have led to a strong  trucking  industry  and  improved  equipment
demand.

The Partnership's dry van fleet experienced strong utilization  throughout 1998,
with utilization rates remaining well above 70% throughout the year.

(b)  Over-the-Road Refrigerated Trailers

The temperature-controlled  over-the-road trailer market remained strong in 1998
as  freight  levels  improved  and  equipment   oversupply  was  reduced.   Many
refrigerated  equipment  users retired  older  trailers and  consolidated  their
fleets, making way for new,  technologically  improved units.  Production of new
equipment is backlogged  into the third quarter of 1999. In light of the current
tight  supply of  trailers  available  on the  market,  it is  anticipated  that
trucking companies and other refrigerated  trailer users will look outside their
own fleets more  frequently  by leasing  trailers on a short-term  basis to meet
their equipment needs.

This  leasing  trend  should  benefit the  Partnership,  which makes most of its
trailers  available for short-term  leasing from rental yards owned and operated
by a PLM International subsidiary. The Partnership's utilization of refrigerated
trailers showed  improvement in 1998, with  utilization  rates  approaching 70%,
compared to 60% in 1997.



<PAGE>


(E)  Government Regulations

The use,  maintenance,  and  ownership  of equipment  are  regulated by federal,
state, local, or foreign governmental  authorities.  Such regulations may impose
restrictions and financial burdens on the Partnership's  ownership and operation
of  equipment.  Changes  in  government  regulations,   industry  standards,  or
deregulation  may also  affect  the  ownership,  operation,  and  resale  of the
equipment.  Substantial  portions of the Partnership's  equipment  portfolio are
either registered or operated internationally.  Such equipment may be subject to
adverse  political,   government,  or  legal  actions,  including  the  risk  of
expropriation  or loss arising from  hostilities.  Certain of the  Partnership's
equipment is subject to extensive  safety and operating  regulations,  which may
require its removal from service or extensive  modification of such equipment to
meet  these  regulations,   at  considerable  cost  to  the  Partnership.   Such
regulations include but are not limited to:

     (1) the U.S. Oil Pollution  Act of 1990,  which  established  liability for
     operators  and owners of vessels and mobile  offshore  drilling  units that
     create environmental pollution.  This regulation has resulted in higher oil
     pollution  liability  insurance.  The  lessee  of the  equipment  typically
     reimburses the Partnership for these additional costs;

     (2) the U.S. Department of Transportation's  Aircraft Capacity Act of 1990,
     which limits or  eliminates  the  operation of  commercial  aircraft in the
     United  States  that  do not  meet  certain  noise,  aging,  and  corrosion
     criteria.  In addition,  under U.S.  Federal  Aviation  Regulations,  after
     December  31,  1999,  no person  shall  operate an  aircraft to or from any
     airport in the contiguous United States unless that airplane has been shown
     to comply  with  Stage  III  noise  levels.  The  Partnership  has Stage II
     aircraft that do not meet Stage III  requirements.  These Stage II aircraft
     are  scheduled  to be  either  sold or  re-leased  by the  year  2000.  The
     Partnership  plans on re-leasing the Stage II aircraft in countries that do
     not require  this  regulation.  The cost to husk-kit a Stage II aircraft is
     approximately $1.5 million;

     (3) the Montreal  Protocol on  Substances  that Deplete the Ozone Layer and
     the United  States  Clean Air Act  Amendments  of 1990,  which call for the
     control and  eventual  replacement  of  substances  that have been found to
     cause or contribute  significantly to harmful effects on the  stratospheric
     ozone layer and that are used  extensively as  refrigerants in refrigerated
     marine cargo containers and over-the-road refrigerated trailers;

     (4)  the  U.S.   Department   of   Transportation's   Hazardous   Materials
     Regulations,  which regulate the classification and packaging  requirements
     of hazardous  materials and that apply  particularly  to the  Partnership's
     tank railcars,  issued a statement  which requires the owner to check for a
     protective coating to the outside of the tank, as well as the inside of the
     metal tank jacket  whenever a tank is  insulated.  If any of the  inspected
     tank railcars fail to meet the  requirements,  an additional  percentage of
     the tank railcars  will need to be  inspected.  If all the tank railcars in
     the initial inspection meet the issued requirements, the remaining railcars
     will be eliminated from the inspection  program.  The  Partnership  owns 21
     tank  railcars  that  need to be  inspected.  Tank  railcars  that fail the
     inspection will have to be repaired at a cost of approximately $25,000 each
     before it can go back into service by August 2000. The Partnership plans to
     complete the initial  inspection  of the tank  railcars by the end of March
     1999

As of December  31,  1998,  the  Partnership  was in  compliance  with the above
government  regulations.   Typically,   costs  related  to  extensive  equipment
modifications to meet government regulations are passed on to the lessee of that
equipment.

ITEM 2.  PROPERTIES

The Partnership  neither owns nor leases any properties other than the equipment
it has  purchased  and its  interests in entities that own equipment for leasing
purposes.  As of  December  31,  1998,  the  Partnership  owned a  portfolio  of
transportation  and related  equipment  and  investments  in equipment  owned by
unconsolidated special-purpose entities (USPEs) as described in Item I, Table 1.
The Partnership acquired equipment with the proceeds of the Partnership offering
of  $174.8  million  through  the  first  half of 1990,  proceeds  from the debt
financing of $33.0 million and by  reinvesting  a portion of its operating  cash
flow in additional equipment.

The  Partnership  maintains its principal  office at One Market,  Steuart Street
Tower, Suite 800, San Francisco,  California  94105-1301.  All office facilities
are provided by FSI without reimbursement by the Partnership.

ITEM 3.  LEGAL PROCEEDINGS

PLM  International,  (the  Company) and various of its  affiliates  are named as
defendants in a lawsuit filed as a purported class action on January 22, 1997 in
the Circuit Court of Mobile County,  Mobile,  Alabama,  Case No.  CV-97-251 (the
Koch action).  Plaintiffs, who filed the complaint on their own and on behalf of
all class  members  similarly  situated,  are six  individuals  who  invested in
certain  California  limited  partnerships  (the  Partnerships)  for  which  the
Company's wholly-owned  subsidiary,  PLM Financial Services, Inc. (FSI), acts as
the general partner,  including the  Partnership,  PLM Equipment Growth Funds V,
and VI, and PLM Equipment Growth & Income Fund VII (the Growth Funds). The state
court ex parte  certified  the  action  as a class  action  (i.e.,  solely  upon
plaintiffs'  request and without the Company being given the opportunity to file
an  opposition).  The  complaint  asserts  eight  causes of action  against  all
defendants,   as   follows:   fraud   and   deceit,    suppression,    negligent
misrepresentation  and  suppression,   intentional  breach  of  fiduciary  duty,
negligent  breach  of  fiduciary  duty,  unjust  enrichment,   conversion,   and
conspiracy.  Additionally,  plaintiffs  allege a cause  of  action  against  PLM
Securities Corp. for breach of third party beneficiary contracts in violation of
the  National   Association  of  Securities  Dealers  rules  of  fair  practice.
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
Growth Funds,  and concealing  such  mismanagement  from investors in the Growth
Funds.  Plaintiffs seek unspecified  compensatory and recissory damages, as well
as  punitive  damages,  and have  offered  to  tender  their  units  back to the
defendants.

In March 1997,  the  defendants  removed the Koch action from the state court to
the United States District Court for the Southern District of Alabama,  Southern
Division (Civil Action No. 97-0177-BH-C) based on the district court's diversity
jurisdiction,  following which plaintiffs filed a motion to remand the action to
the state court. Removal of the action to federal court automatically  nullified
the state court's ex parte  certification  of the class.  In September 1997, the
district court denied plaintiffs' motion to remand the action to state court and
dismissed without  prejudice the individual claims of the California  plaintiff,
reasoning that he had been fraudulently joined as a plaintiff.  In October 1997,
defendants filed a motion to compel arbitration of plaintiffs' claims,  based on
an agreement to arbitrate contained in the limited partnership agreement of each
Growth  Fund,  and to stay  further  proceedings  pending  the  outcome  of such
arbitration.  Notwithstanding plaintiffs' opposition, the district court granted
defendants' motion in December 1997.

Following  various  unsuccessful  requests that the district court  reverse,  or
otherwise certify for appeal, its order denying plaintiffs' motion to remand the
case to state court and dismissing the California plaintiff's claims, plaintiffs
filed with the U.S.  Court of Appeals for the Eleventh  Circuit a petition for a
writ of mandamus  seeking to reverse the district  court's  order.  The Eleventh
Circuit  denied  plaintiffs'  petition in November of 1997,  and further  denied
plaintiffs  subsequent  motion in the  Eleventh  Circuit for a rehearing on this
issue.  Plaintiffs also appealed the district court's order granting defendants'
motion to compel  arbitration,  but in June of 1998 voluntarily  dismissed their
appeal pending settlement of the Koch action, as discussed below.

On June 5, 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 PLM Equipment Growth Fund V,
and filed the  complaint  on her own behalf  and on behalf of all class  members
similarly situated who invested in certain  California limited  partnerships for
which FSI acts as the general partner, including the Growth Funds. The complaint
alleges the same facts and the same nine causes of action as in the Koch action,
plus five additional causes of action against all of the defendants, as follows:
violations of California  Business and Professions  Code Sections 17200, et seq.
for  alleged  unfair  and  deceptive   practices,   constructive  fraud,  unjust
enrichment, violations of California Corporations Code Section 1507, and a claim
for treble damages under California Civil Code Section 3345.

On July 31,  1997,  defendants  filed with the  district  court for the Northern
District of California  (Case No. C-97-2847 WHO) a petition (the petition) under
the Federal  Arbitration Act seeking to compel arbitration of plaintiff's claims
and for an order staying the state court proceedings  pending the outcome of the
arbitration.  In connection with this motion,  plaintiff agreed to a stay of the
state court  action  pending the  district  court's  decision on the petition to
compel  arbitration.  In October 1997,  the district  court denied the Company's
petition  to  compel  arbitration,  but in  November  1997,  agreed  to hear the
Company's motion for  reconsideration  of this order. The hearing on this motion
has been taken off calendar and the district  court has  dismissed  the petition
pending  settlement of the Romei  action,  as discussed  below.  The state court
action  continues to be stayed pending such  resolution.  In connection with her
opposition  to the petition to compel  arbitration,  plaintiff  filed an amended
complaint  with the state court in August 1997 alleging two new causes of action
for violations of the California Securities Law of 1968 (California Corporations
Code  Sections  25400 and  25500) and for  violation  of  California  Civil Code
Sections 1709 and 1710.  Plaintiff  also served  certain  discovery  requests on
defendants.  Because of the stay, no response to the amended complaint or to the
discovery is currently required.

In May 1998, all parties to the Koch and Romei actions entered into a memorandum
of understanding  (MOU) related to the settlement of those actions (the Monetary
Settlement).  The  Monetary  Settlement  contemplated  by the MOU  provides  for
stipulating to a class for settlement purposes,  and a settlement and release of
all claims  against  defendants  and third party brokers in exchange for payment
for the benefit of the Class of up to $6.0 million.  The final settlement amount
will  depend on the  number  of claims  filed by  authorized  claimants  who are
members  of the  Class,  the  amount of the  administrative  costs  incurred  in
connection with the settlement, and the amount of attorneys' fees awarded by the
Alabama  district court. The Company will pay up to $0.3 million of the Monetary
Settlement, with the remainder being funded by an insurance policy.

The  parties to the  Monetary  Settlement  have also agreed in  principal  to an
equitable  settlement (the Equitable  Settlement)  which  provides,  among other
things,  (a) for the  extension of the operating  lives of PLM Equipment  Growth
Fund V, PLM Equipment Growth Fund VI, and PLM Equipment Growth & Income Fund VII
(the Funds) by judicial amendment to each of their partnership agreements,  such
that FSI, the general  partner of each such Fund,  will be permitted to reinvest
cash  flow,  surplus  partnership  funds  or  retained  proceeds  in  additional
equipment into the year 2004, and will liquidate the partnerships'  equipment in
2006; (b) that FSI be entitled to earn front end fees (including acquisition and
lease negotiation  fees) in excess of the compensatory  limitations set forth in
the  NASAA  Statement  of  Policy  by  judicial  amendment  to  the  Partnership
Agreements  for each  Fund;  (c) for a one time  redemption  of up to 10% of the
outstanding units of each Fund at 80% of such partnership's net asset value; and
(d) for the  deferral  of a portion  of FSI's  management  fees.  The  Equitable
Settlement also provides for payment of the Equitable Class attorneys' fees from
Partnership funds in the event that distributions paid to investors in the Funds
during the extension period reach a certain internal rate of return.

Defendants will continue to deny each of the claims and contentions and admit no
liability in connection with the proposed  settlements.  The Monetary Settlement
remains  subject to  numerous  conditions,  including  but not  limited  to: (a)
agreement and execution by the parties of a settlement agreement (the Settlement
Agreement),  (b) notice to and  certification of the Monetary Class for purposes
of the  Monetary  Settlement,  and (c)  preliminary  and final  approval  of the
Monetary  Settlement by the Alabama  district  court.  The Equitable  Settlement
remains  subject to  numerous  conditions,  including  but not  limited  to: (a)
agreement and execution by the parties of the Settlement  Agreement,  (b) notice
to the current  unitholders (the Equitable Class) in the Funds and certification
of  the  Equitable  Class  for  purposes  of  the  Equitable   Settlement,   (c)
preparation,  review  by the  Securities  and  Exchange  Commission  (SEC),  and
dissemination  to the members of the Equitable Class of solicitation  statements
regarding  the  proposed  extensions,  (d)  disapproval  by less than 50% of the
limited partners in each of the Funds of the proposed  amendments to the limited
partnership agreements,  (e) judicial approval of the proposed amendments to the
limited  partnership  agreements,  and (f) preliminary and final approval of the
Equitable  Settlement by the Alabama district court.  The parties  submitted the
Settlement Agreement to the Alabama district court on February 12, 1999, and the
preliminary class certification  hearing is scheduled for March 24, 1999. If the
district court grants  preliminary  approval,  notices to the Monetary Class and
Equitable  Class will be sent  following  review by the SEC of the  solicitation
statements  to be prepared in  connection  with the  Equitable  Settlement.  The
Monetary  Settlement,  if approved,  will go forward  regardless  of whether the
Equitable  Settlement is approved or not. The Company  continues to believe that
the  allegations of the Koch and Romei actions are completely  without merit and
intends to continue to defend this matter vigorously if the Monetary  Settlement
is not consummated.

The Partnership,  together with affiliates,  has initiated litigation in various
official  forums in India against each of two defaulting  Indian airline lessees
to repossess Partnership property and to recover damages for failure to pay rent
and  failure to  maintain  such  property  in  accordance  with  relevant  lease
contracts. The Partnership has repossessed all of its property previously leased
to such airlines,  and the airlines have ceased  operations.  In response to the
Partnership's  collection  efforts,  the two airlines each filed  counter-claims
against  the  Partnership  in excess of the  Partnership's  claims  against  the
airlines.  The General  Partner  believes that the airlines'  counterclaims  are
completely without merit, and the General Partner will vigorously defend against
such counterclaims.

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

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Partnership's limited partners during
the fourth quarter of its fiscal year ended December 31, 1998.

                                     PART II

ITEM 5.  MARKET FOR THE PARTNERSHIP'S EQUITY AND RELATED UNITHOLDER MATTERS

Pursuant  to the terms of the  partnership  agreement,  the  General  Partner is
generally  entitled to a 5% interest in the profits and losses and distributions
of the  Partnership.  The General  Partner is the sole holder of such  interest.
Special  allocations  of income  are made to the  General  Partner  equal to the
deficit  balance,  if any, in the capital  account of the General  Partner.  The
General Partner's annual allocation of net income will generally be equal to the
General Partner's cash distributions paid during the current year. The remaining
interests in the profits and losses and  distributions  of the  Partnership  are
owned,  as of  December  31,  1998,  by  the  9,448  holders  of  units  in  the
Partnership.

There are several  secondary markets that will facilitate sales and purchases of
units.  Secondary  markets  are  characterized  as having few buyers for limited
partnership  interests  and,  therefore,  are  generally  viewed as  inefficient
vehicles  for the sale of units.  Presently,  there is no public  market for the
units and none is likely to develop.  To prevent the units from being considered
publicly  traded  and  thereby  to  avoid  taxation  of  the  Partnership  as an
association  treated as a corporation under the Internal Revenue Code, the units
will not be transferable  without the consent of the General Partner,  which may
be withheld at its absolute  discretion.  The General Partner intends to monitor
transfers of units in an effort to ensure that they do not exceed the percentage
or number permitted by certain safe harbors  promulgated by the Internal Revenue
Service. A transfer may be prohibited if the intended  transferee is not an U.S.
citizen or if the transfer  would cause any portion of the units of a "Qualified
Plan" and IRA to exceed  the  limit  allowable.  The  Partnership  may  redeem a
certain number of units each year. As of December 31, 1998, the  Partnership had
repurchased a cumulative  total of 121,580 units at a cost of $1.6 million.  The
General Partner does not intend to repurchase any additional  units on behalf of
the Partnership during 1999.






                     (this space intentionally left blank.)



<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA

Table 2, below, lists selected financial data for the Partnership:

                                     TABLE 2

                      For the Years Ended December 31, (In
               thousands of dollars, except weighted-average unit
                                    amounts)

<TABLE>
<CAPTION>

                                                  1998           1997           1996           1995           1994
                                               ------------------------------------------------------------------------

  <S>                                          <C>            <C>            <C>            <C>           <C>          
  Operating results:
    Total revenues                             $  10,768      $  16,378      $  22,120      $  21,410     $   24,367   
    Net gain (loss) on disposition of
      Equipment                                     (464 )        2,830          3,179            530          3,336
    Loss on revaluation of equipment                  --             --             --           (417 )         (820 )
    Equity in net income (loss) of uncon-
      solidated special-purpose entities             348          2,952           (331 )           --             --
    Net income (loss)                             (1,127 )        2,098         (4,119 )       (3,611 )       (5,112 )

  At year-end:
    Total assets                               $  31,250      $  46,089      $  59,009      $  71,924     $   82,773   
    Total liabilities                             14,683         24,862         34,100         35,449         35,997
    Notes payable                                 12,750         21,000         29,250         30,800         30,800

  Cash distribution                            $   3,533      $   5,780      $   7,271      $   6,443     $    7,523   

  Cash distribution representing a
      return of capital to the limited
      partners                                 $   3,351      $   3,682      $   6,908      $   6,124     $    7,135   

  Per weighted-average limited partnership unit:

  Net income (loss)                            $   (0.15 )    $    0.21      $   (0.52 )    $   (0.45 )   $    (0.63 ) 

  Cash distribution                            $    0.39      $    0.64      $    0.80      $    0.71     $     0.82   

  Cash distribution representing a
      return of capital                        $    0.39      $    0.43      $    0.80      $    0.71     $     0.82   

</TABLE>


<PAGE>


ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

(A)  Introduction

Management's  discussion  and  analysis of  financial  condition  and results of
operations  relates to the financial  statements of PLM Equipment Growth Fund IV
(the Partnership).  The following  discussion and analysis of operations focuses
on the  performance of the  Partnership's  equipment in the various  segments in
which  it  operates  and  its  effect  on the  Partnership's  overall  financial
condition.

(B)  Results of Operations - Factors Affecting Performance

(1)  Re-leasing Activity and Repricing Exposure to Current Economic Conditions

The exposure of the Partnership's  equipment  portfolio to repricing risk occurs
whenever the leases for the equipment expire or are otherwise terminated and the
equipment must be remarketed.  Major factors influencing the current market rate
for the  Partnership's  equipment  include,  but are not limited to,  supply and
demand for similar or comparable  types of transport  capacity,  desirability of
the  equipment  in the leasing  market,  market  conditions  for the  particular
industry  segment  in which the  equipment  is to be  leased,  overall  economic
conditions,  and  various  regulations  concerning  the  use of  the  equipment.
Equipment that is idle or out of service between the expiration of one lease and
the assumption of a subsequent  lease can result in a reduction of  contribution
to the Partnership. The Partnership experienced re-leasing or repricing activity
in 1998 primarily in its aircraft,  marine vessel, trailer, marine container and
railcars portfolios.

     (a) Aircraft:  The  Partnership  owns two Boeing  737-200 Stage II aircraft
that have been off-lease  throughout  1998.  These aircraft are currently  being
marketed for sale or re-lease.

     (b) Marine  vessels:  The  Partnership's  marine  vessel and interest in an
entity  which  owns a  marine  vessel  operated  in  the  time  charter  markets
throughout  1998.  Time  charters are generally of a short  duration  (such as a
single voyage of 10 - 45 days), or may be of extended duration (as much as three
years) in weaker cheaper markets. Short duration charters are the dominant forms
of  contract.  During 1998,  the  Partnership's  marine  vessels  experienced  a
decrease in contribution  due to lower re-lease rates as a result of a soft bulk
carrier vessel market.

     (c) Trailers:  The Partnership's  trailer portfolio  operates in short-term
rental facilities.  The relatively short duration of most of the leases in these
operations  exposes  the  trailers  to  considerable  re-leasing  and  repricing
activity.  The Partnership's trailer  contributions  declined from 1997 to 1998,
due to equipment sales and dispositions  during 1997 and 1998,  offset, in part,
by higher utilization and lease rates for the remaining fleet.

     (d) Marine containers:  All of the Partnership's marine container portfolio
operates in utilization-based leasing pools and was highly exposed to re-leasing
and  repricing  activity.  The  Partnership's  marine  container   contributions
declined from 1997 to 1998, due to equipment sales during 1997 and 1998 and soft
market conditions that caused a decline in re-leasing activity.

     (e) Railcars: The Partnership's railcar contributions declined from 1997 to
1998, due to equipment sales during 1997 and 1998 and soft market conditions for
several types of railcars that caused a decline in re-leasing activity.

(2)  Equipment Liquidations and Nonperforming Lessees

Liquidation  of  Partnership   equipment  and   investments  in   unconsolidated
special-purpose  entities  (USPEs)  represents  a  reduction  in the size of the
equipment  portfolio,  and may  result  in  reduction  of  contributions  to the
Partnership.  Lessees not performing under the terms of their leases,  either by
not paying rent, not  maintaining or operating the equipment in accordance  with
the conditions of the leases, or other possible departures from the lease terms,
can result not only in reductions in net contribution,  but also may require the
Partnership  to assume  additional  costs to  protect  its  interests  under the
leases,  such as  repossession  or legal fees. The  Partnership  experienced the
following in 1998:

     (a) Liquidations: During 1998, the Partnership disposed of aircraft, marine
containers, railcars, and trailers for proceeds of $1.5 million. The Partnership
used these  proceeds  to  partially  fund a required  principal  payment of $8.3
million.

     (b)  Nonperforming  lessees:  In  1997,  the  Partnership  repossessed  one
aircraft  from a  lessee  that  did not  comply  with  the  terms  of the  lease
agreement.  The Partnership incurred legal fees,  repossession costs, and repair
costs associated with this aircraft. In addition,  the Partnership wrote off all
outstanding  receivables  from this  lessee.  This  aircraft  remained off lease
throughout 1998 and is currently being marketed for sale.

(3)  Equipment Valuation and Write-downs

In accordance  with  Financial  Accounting  Standards  Board  statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be  Disposed  Of",  the  General  Partner  reviews  the  carrying  value  of the
Partnership's  equipment  portfolio  at least  quarterly in relation to expected
future market conditions for the purpose of assessing the  recoverability of the
recorded  amounts.  If projected  future lease revenues plus residual values are
less  than  the  carrying  value  of the  equipment,  a loss on  revaluation  is
recorded.  No reductions to the equipment  carrying values were required for the
years ended December 31, 1998, 1997, or 1996.

As of December 31, 1998, the General  Partner  estimated the current fair market
value of the  Partnership's  equipment  portfolio,  including the  Partnership's
interest in equipment  owned by USPEs,  to be $49.0  million.  This  estimate is
based on recent market  transactions for equipment  similar to the Partnership's
equipment portfolio and the Partnership's  interest in equipment owned by USPEs.
Ultimate  realization  of  fair  market  value  by the  Partnership  may  differ
substantially from the estimate due to specific market conditions, technological
obsolescence,  and government regulations,  among other factors that the General
Partner cannot accurately predict.

(C) Financial  Condition -- Capital  Resources,  Liquidity,  and Unit Redemption
Plan

The General Partner purchased the Partnership's initial equipment portfolio with
capital raised from its initial equity offering and permanent debt financing. No
further capital  contributions from the limited partners are permitted under the
terms of the  Partnership's  limited  partnership  agreement.  In addition,  the
Partnership,  under its current  loan  agreement,  does not have the capacity to
incur additional debt. The Partnership relies on operating cash flow to meet its
operating obligations and make cash distributions to limited partners.

For the year ended December 31, 1998, the Partnership  generated $4.0 million in
operating cash (net cash provided by operating  activities plus  non-liquidating
cash  distributions  from USPEs) to meet its operating  obligations  and to make
distributions (total of $3.5 million in 1998) to the partners.

As of December 31, 1998,  the  Partnership's  outstanding  debt had a balance of
$12.8 million.  The remaining balance of this loan is due in an annual principal
payment of $8.3 million on July 1, 1999,  and a final payment of $4.5 million in
2000.  The  Partnership  expects  that the  proceeds  from  equipment  sales and
operating cash flows will be sufficient to make these payments.  The interest on
the loan is fixed at 9.75%.  The loan  agreement  requires  the  Partnership  to
maintain certain debt coverage ratios.

Pursuant to the terms of the limited partnership agreement, beginning January 1,
1993, if the number of units made available for purchase by limited  partners in
any calendar  year exceeds the number that can be  purchased  with  reinvestment
plan proceeds during any calendar year, then the Partnership may redeem up to 2%
of the outstanding units each year, subject to certain terms and conditions. The
purchase  price  to be  offered  for  such  units  is to be equal to 110% of the
unrecovered principal attributed to the units.  Unrecovered principal is defined
as the  excess  of the  capital  contribution  attributable  to a unit  over the
distributions  from any source paid with respect to that unit.  The  Partnership
does not intend to repurchase any units in 1999.

The General  Partner has not  planned any  expenditures,  nor is it aware of any
contingencies  that would  cause it to require  any  additional  capital to that
mentioned above.

(D)  Results of Operations - Year-to-Year Detailed Comparison

(1) Comparison of Partnership's  Operating  Results for the Years Ended December
    31, 1998 and 1997

(a)   Owned Equipment Operations

Lease  revenues  less  direct  expenses  (defined  as  repair  and  maintenance,
equipment operating,  and asset-specific  insurance expenses) on owned equipment
decreased  during the year ended December 31, 1998,  compared to the same period
of 1997. Gains or losses from the sale of equipment and certain expenses such as
depreciation and amortization and general and  administrative  expenses relating
to the operating segments (see Note 5 to the audited financial statements),  are
not included in the owned equipment  operation  discussion because they are more
indirect in nature,  not a result of operations  but more 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 Years Ended
                                                                                December 31,
                                                                            1998             1997
                                                                         ----------------------------
  <S>                                                                    <C>             <C>                            
  Aircraft                                                               $  3,038        $   3,938                      
  Rail equipment                                                            2,607            2,526
  Trailers                                                                  1,132            1,244
  Marine containers                                                           712              935
  Marine vessel                                                               623              445

</TABLE>

Aircraft: Aircraft lease revenues and direct expenses were $3.5 million and $0.4
million,  respectively,  for the year ended December 31, 1998,  compared to $4.2
million and $0.2  million,  respectively,  during the same  period of 1997.  The
decrease  in  lease  revenues  in 1998  was due to the  off-lease  status  of an
aircraft, when compared to 1997 when the aircraft was on lease for eight months.
The decrease caused by the off-lease  status of this plane was offset,  in part,
by an  increase  in the  re-lease  rate for another  aircraft.  Direct  expenses
increased  due to  repairs  done in  1998,  on two  off-lease  aircraft  to meet
airworthiness conditions prior to being sold.

Rail equipment: Railcar lease revenues and direct expenses were $3.5 million and
$0.9 million,  respectively, in 1998, compared to $3.6 million and $1.1 million,
respectively,  during 1997.  The  decrease in lease  revenues in 1998 was due to
sales and dispositions of railcars in 1997 and 1998 and lower re-lease rates for
certain  railcars,  when  compared to 1997.  Direct  expenses  decreased  due to
running  repairs  required on certain  railcars in the fleet during 1997,  which
were not needed during 1998.

Trailers:  Trailer lease revenues and direct expenses were $1.6 million and $0.4
million,  respectively,  for the year ended December 31, 1998,  compared to $2.0
million and $0.7 million, respectively,  during the same period of 1997. Trailer
contribution decreased due to sales and dispositions during 1998 and 1997.

Marine containers: Marine container lease revenues and direct expenses were $0.7
million and $8,000, respectively, in 1998, compared to $0.9 million and $13,000,
respectively, during 1997. Marine container contributions decreased due to sales
and dispositions over the past two years.

Marine  vessel:  Marine  vessel  lease  revenues and direct  expenses  were $1.7
million and $1.0 million,  respectively,  in 1998,  compared to $2.0 million and
$1.5 million,  respectively,  in 1997. Marine vessel contributions increased due
to a $0.1  million  loss-of-hire  insurance  refund  received  during the second
quarter of 1998 from  Transportation  Equipment Indemnity Company Ltd. (TEI) due
to lower  claims  from the  insured  Partnership  and other  insured  affiliated
partnerships.  The increase in marine  contribution was offset,  in part, by the
sale of a marine  vessel in 1997 and  lower  re-lease  rates  for the  remaining
marine vessel as a result of a softer bulk carrier vessel market.


<PAGE>


(b)  Indirect Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $9.3 million for the year ended  December 31, 1998,
decreased  from  $13.6  million  for the same  period in 1997.  The  significant
variances are explained as follows:

     (i) A $1.5 million decrease in depreciation and amortization  expenses from
1997 levels reflects the sale of certain assets during 1998 and 1997 and the use
of the  double-declining  balance  depreciation method, which results in greater
depreciation in the first years an asset is owned.

     (ii)A  $1.0  million  decrease  in bad  debt  expenses  due to the  General
Partner's  evaluation  of the  collectibility  of  receivables  due from certain
lessees.

     (iii) A $0.9 million decrease in  administrative  expenses from 1997 levels
resulted  primarily from reduced legal fees to collect  outstanding  receivables
due from aircraft lessees.

     (iv)A $0.8 million  decrease in interest  expense was due to lower  average
borrowings  outstanding  during  1998,  compared  to  1997.  In July  1998,  the
Partnership  paid the second  annual  principal  payment of $8.3  million of the
outstanding debt.

(c)   Interest and Other Income

Interest and other income decreased $0.6 million in 1998,  compared to 1997, due
to the following:

     (i) The  recognition  in 1997 of $0.5  million in loss of hire and  general
claims insurance  recovery relating to generator repairs on one marine vessel. A
similar recovery did not occur in 1998.

     (ii)A decrease of $0.1 million in interest income due to lower average cash
balances in 1998 compared to 1997.

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

The net loss on  disposition  of equipment in 1998 totaled $0.5  million,  which
resulted from the sale of trailers  with a net book value of $1.4  million,  for
proceeds of $0.9  million.  In  addition,  the  Partnership  sold or disposed of
marine containers and railcars with an aggregate net book value of $0.6 million,
for aggregate  proceeds of $0.6 million.  In 1997,  the gain on  disposition  of
equipment  totaled $2.8  million,  which  resulted  from the sale or disposal of
marine containers,  trailers, railcars, an aircraft engine, and a marine vessel,
with an aggregate net book value of $6.7 million, and unused drydock reserves of
$1.0 million, for aggregate proceeds of $8.5 million.

(e)  Equity in Net Income (Loss) of Unconsolidated Special Purpose Entities 
     (USPEs)

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 Years Ended
                                                                                December 31,
                                                                            1998             1997
                                                                         ----------------------------
  <S>                                                                    <C>              <C>                          
  Aircraft                                                               $    654         $  3,924                        
  Marine vessels                                                             (306 )           (972 )
  ===================================================================================================
    Equity in Net Income (Loss) of USPEs                                 $    348         $  2,952                        
  ===================================================================================================

</TABLE>

Aircraft: As of December 31, 1998 and 1997, the Partnership had an interest in a
trust that owns two commercial aircraft on direct finance lease. During the year
ended December 31, 1998,  revenues of $0.6 million were offset by administrative
expenses of $0 million.  During the same period of 1997,  lease revenues of $1.5
million and the gain from the sale of the Partnership's interest in a trust that
owned six commercial  aircraft of $3.4 million sold during  December were offset
by  depreciation,  direct  and  administrative  expenses  of $1.0  million.  The
decrease in lease revenues and depreciation,  direct and administrative expenses
during the year ended December 31, 1998 was due to the sale of the Partnership's
interest  in the trust  that  owned six  commercial  aircraft  during the fourth
quarter of 1997.

Marine vessel: As of December 31, 1998 and 1997, the Partnership had an interest
in an entity owning a marine  vessel.  Marine vessel  revenues and expenses were
$1.2 million and $1.5  million,  respectively,  for the year ended  December 31,
1998, compared to $1.1 million and $2.1 million,  respectively,  during the same
period in 1997.  Lease  revenue  increased  in the year ended  December 31, 1998
primarily due to the marine vessel being  off-hire for 19 days in the year ended
December  31,  1997  compared  to 4 days in the same  period  of 1998.  Expenses
decreased  in the year ended  December  31, 1998 due to lower survey and repairs
and  maintenance   expenses  and  lower  depreciation   expense  caused  by  the
double-declining  balance  method of  depreciation,  which  results  in  greater
depreciation in the first years an asset is owned.

(f)  Net Income (Loss)

As a result of the foregoing,  the  Partnership's  net loss was $1.1 million for
the year ended December 31, 1998,  compared to net income of $2.1 million during
the same period of 1997.  The  Partnership's  ability to operate  and  liquidate
assets,  secure leases, and re-lease those assets whose leases expire is subject
to many factors,  and the  Partnership's  performance in the year ended December
31, 1998 is not  necessarily  indicative  of future  periods.  In the year ended
December  31,  1998,  the  Partnership  distributed  $3.4 million to the limited
partners, or $0.39 per weighted-average limited partnership unit.

(2) Comparison of Partnership's  Operating  Results for the Years Ended December
    31, 1997 and 1996

(a)   Owned Equipment Operations

Lease  revenues  less  direct  expenses  (defined  as repairs  and  maintenance,
equipment  operating expenses,  and asset-specific  insurance expenses) on owned
equipment  decreased  during the year ended  December 31, 1997,  compared to the
same  period of 1996.  Gains or losses  from the sale of  equipment  and certain
expenses such as depreciation and  amortization  and general and  administrative
expenses relating to the operating segments (see Note 5 to the audited financial
statements),  are not  included  in the  owned  equipment  operation  discussion
because they are more indirect in nature,  not a result of  operations  but more
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 Years Ended
                                                                                December 31,
                                                                            1997             1996
                                                                         ----------------------------
<S>                                                                      <C>              <C>                          
  Aircraft                                                               $  3,938         $  2,478                        
  Rail equipment                                                            2,526            2,266
  Trailers                                                                  1,244            1,621
  Marine containers                                                           935            1,191
  Marine vessels                                                              445            2,232
  Mobile offshore drilling unit                                                --              163

</TABLE>

Aircraft: Aircraft lease revenues and direct expenses were $4.2 million and $0.2
million,  respectively,  for the year ended December 31, 1997,  compared to $5.1
million and $2.6  million,  respectively,  during the same  period of 1996.  The
decrease in lease  revenues in the year ended  December  31, 1997 was due to the
off-lease  status of an aircraft,  when compared to the same period in 1996 when
the  aircraft  was on lease for the first eight  months.  The  decrease was also
attributable to another  aircraft coming off lease in August 1997,  which was on
lease  for the year  ended  December  31,  1996.  The  decrease  caused by these
off-lease  aircraft,  was  offset,  in part,  by the  purchase  of a Dash  8-300
aircraft  at the end of the second  quarter of 1996,  which was on lease for the
entire year of 1997. Direct expenses decreased due to costs incurred for repairs
on an aircraft and the overhaul of four engines on another  aircraft in the year
ended December 31, 1996, which were not required in 1997.

Rail equipment: Railcar lease revenues and direct expenses were $3.6 million and
$1.1 million,  respectively,  for the year ended December 31, 1997,  compared to
$3.6 million and $1.4 million, respectively, during the same period of 1996. The
increase in railcar  contribution  resulted  from  running  repairs  required on
certain of the railcars in the fleet during 1996,  which were not needed  during
1997.

Trailers:  Trailer lease revenues and direct expenses were $2.0 million and $0.7
million,  respectively,  for the year ended December 31, 1997,  compared to $2.0
million and $0.4 million, respectively,  during the same period of 1996. Trailer
contributions  decreased in the year ended  December  31, 1997,  compared to the
same period in 1996, due to a group of trailers that required  refurbishment  in
1997 prior to making the transition into short-term rental  facilities  operated
by an affiliate of the General Partner. There were no similar expenses in 1996.

Marine containers: Marine container lease revenues and direct expenses were $0.9
million  and  $13,000,  respectively,  for the year  ended  December  31,  1997,
compared to $1.2  million and $23,000,  respectively,  during the same period of
1996.  Marine  container  contributions  decreased due to sales and dispositions
over the past 12 months.

Marine  vessels:  Marine  vessel lease  revenues and direct  expenses  were $2.0
million and $1.5 million,  respectively,  for the year ended  December 31, 1997,
compared to $6.6 million and $4.4 million, respectively,  during the same period
of  1996.  Marine  vessel  contributions  decreased  due to the sale of a marine
vessel in January 1997. In addition, lease revenues declined during 1997 for the
remaining  marine  vessel,  due to lower  re-lease rates as a result of a softer
bulk-carrier vessel market.

Mobile offshore  drilling unit (rig):  The rig was sold in the second quarter of
1996,  resulting  in the  elimination  of any  contribution  in the  year  ended
December  31,  1997.  Revenues  and  expenses  were  $0.2  million  and  $1,000,
respectively, in the year ended December 31, 1996.

(b)  Indirect Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $13.6 million for the year ended  December 31, 1997
decreased  from  $17.0.  million for the same  period in 1996.  The  significant
variances are explained as follows:

     (i) A $2.5 million decrease in depreciation and amortization  expenses from
1996 levels reflects the sale of certain assets during 1997 and 1996 and the use
of the  double-declining  balance  depreciation method, which results in greater
depreciation in the first years an asset is owned.

     (ii)The $0.6 million  decrease in bad debt  expenses was due to the General
Partner's  evaluation  of the  collectibility  of  receivables  due from certain
lessees.

     (iii) A $0.7 million  decrease in interest expense was due to lower average
borrowings  outstanding during the year ended December 31, 1997, compared to the
same period in 1996. In November 1996, the  Partnership  prepaid $1.5 million of
its outstanding  debt. In addition,  in July 1997 the Partnership paid the first
annual principal payment of $8.3 million of the outstanding debt.

     (iv)A $0.2 million  decrease in management fees to affiliates  reflects the
lower levels of lease revenues in the year ended December 31, 1997.

     (v) A $0.5 million  increase in  administrative  expenses  from 1996 levels
resulted from additional legal fees to collect outstanding  receivables due from
aircraft lessees.

(c)   Interest and Other Income

Interest and other income  increased $0.6 million in the year ended December 31,
1997, compared to the same period in 1996, due to the following:

     (i) The  recognition  in 1997 of $0.5  million in loss of hire and  general
claims insurance recovery relating to generator repairs on one marine vessel.

     (ii)An  increase of $0.1 million in interest  income due to higher  average
cash balances compared to the same period in 1996.

(d)  Net Gain on Disposition of Owned Equipment

The net gain on  disposition  of equipment for the year ended  December 31, 1997
totaled  $2.8  million,  which  resulted  from the sale or  disposal  of  marine
containers, trailers, railcars, an aircraft engine, and a marine vessel, with an
aggregate net book value of $6.7 million,  and unused  drydock  reserves of $1.0
million, for aggregate proceeds of $8.5 million. For the year ended December 31,
1996, the $3.2 million net gain on  disposition  of equipment  resulted from the
sale or disposal of marine containers,  railcars, a trailer, an aircraft,  and a
mobile offshore drilling unit, with an aggregate net book value of $9.9 million,
for aggregate proceeds of $13.1 million.

(e)  Equity in Net Income (Loss) of USPEs

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 Years Ended
                                                                                December 31,
                                                                            1997             1996
                                                                         ----------------------------
  <S>                                                                    <C>              <C>                           
  Aircraft                                                               $  3,924         $   (315 )                    
  Marine vessels                                                             (972 )            (16 )
  ===================================================================================================
    Equity in Net Income (Loss) of USPEs                                 $  2,952         $   (331 )                    
  ===================================================================================================

</TABLE>

Aircraft:  As of December 31, 1997, the  Partnership  had an interest in a trust
that owns two commercial  aircraft on direct  finance lease.  As of December 31,
1996,  the  Partnership  owned an interest  in a trust that owns six  commercial
aircraft  and had an  interest in a trust that owns two  commercial  aircraft on
direct finance lease.  During the year ended December 31, 1997, revenues of $1.5
million  and the gain from the sale of the  Partnership's  interest in the trust
that owned six commercial  aircraft of $3.4 million during  December were offset
by depreciation,  direct and administrative expenses of $1.0 million. During the
same period of 1996,  revenues  of $1.1  million  were  offset by  depreciation,
direct and administrative  expenses of $1.4 million. Lease revenues increased in
the year ended  December 31, 1997 due to the  investment in the trust owning two
aircraft on a direct  finance  lease,  which was  acquired in the latter part of
1996, and thus it had no contribution  for the year ended December 31, 1996. The
contribution  for the  investment  in a trust owning  commercial  aircraft on an
operating lease was significantly  impacted by depreciation  charges,  which are
greatest  in the  early  years  due to the use of the  double-declining  balance
method of depreciation.  The trust  depreciated this aircraft  investment over a
period of six years.

Marine vessel: As of December 31, 1997 and 1996, the Partnership had an interest
in an entity owning a marine  vessel.  Marine vessel  revenues and expenses were
$1.1 million and $2.1  million,  respectively,  for the year ended  December 31,
1997, compared to $1.7 million and $1.7 million,  respectively,  during the same
period in 1996. Lease revenue  decreased in the year ended December 31, 1997 due
to lower  re-lease  rates as a result of a softer  bulk-carrier  vessel  market.
Direct  expenses  increased in the year ended December 31, 1997 due to increased
survey, repairs, and maintenance expenses.

(f)  Net Income (Loss)

As a result of the foregoing,  the Partnership's net income was $2.1 million for
the year ended December 31, 1997,  compared to a net loss of $4.1 million during
the same period of 1996.  The  Partnership's  ability to operate  and  liquidate
assets,  secure leases, and re-lease those assets whose leases expire is subject
to many factors,  and the  Partnership's  performance in the year ended December
31, 1997 is not  necessarily  indicative  of future  periods.  In the year ended
December  31,  1997,  the  Partnership  distributed  $5.5 million to the limited
partners, or $0.64 per weighted-average limited partnership unit.

(E)  Geographic Information

Certain  of the  Partnership's  equipment  operates  in  international  markets.
Although these operations expose the Partnership to certain currency, political,
credit, and economic risks, the General Partner believes these risks are minimal
or has  implemented  strategies  to control the risks.  Currency  risks are at a
minimum because all invoicing,  with the exception of a small number of railcars
operating in Canada, is conducted in U.S. dollars. Political risks are minimized
generally  through the avoidance of  operations in countries  that do not have a
stable judicial system and established  commercial business laws. Credit support
strategies  for lessees range from letters of credit  supported by U.S. banks to
cash  deposits.  Although these credit support  mechanisms  generally  allow the
Partnership  to  maintain  its lease  yield,  there are  risks  associated  with
slow-to-respond  judicial  systems  when legal  remedies  are required to secure
payment or repossess equipment. Economic risks are inherent in all international
markets,  and the  General  Partner  strives to  minimize  this risk with market
analysis prior to committing equipment to a particular geographic area. Refer to
Note 6 to the financial  statements for information on the revenues,  net income
(loss), and net book value of equipment in various geographic regions.

Revenues and net operating income by geographic  region are impacted by the time
period  the  asset is owned  and the  useful  life  ascribed  to the  asset  for
depreciation  purposes.  Net  income  (loss)  from  equipment  is  significantly
impacted  by  depreciation  charges,  which are  greatest  in the early years of
ownership due to the use of the double-declining balance method of depreciation.
The relationships of geographic revenues,  net income (loss), and net book value
of equipment are expected to  significantly  change in the future as assets come
off  lease and  decisions  are made to either  redeploy  the  assets in the most
advantageous  geographic  location,  or sell the assets.  An  explanation of the
current relationships is presented below.

The  Partnership's  owned  equipment on lease to United States  (U.S.)-domiciled
lessees  consists of  trailers,  railcars,  and  aircraft.  During  1998,  lease
revenues in the U.S.  accounted  for 37% of the lease  revenues  from wholly and
partially owned equipment,  while net income accounted for $0.8 million compared
to a loss for the  Partnership  of $1.1  million.  The  primary  reason for this
relationship is that the Partnership sold trailers and railcars during 1998 that
operated in the United States, which resulted in $0.6 million in net loss.

The  Partnership's  owned  equipment  on  lease  to  Canadian-domiciled  lessees
consists of railcars and aircraft. During 1998, lease revenues accounted for 22%
of total lease  revenues from wholly and partially  owned  equipment,  while net
income accounted for $0.7 million compared to a loss for the Partnership of $1.1
million.

The  Partnership's  owned  equipment  on lease to South  Asia-domiciled  lessees
accounted  for none of the  lease  revenues  from  wholly  and  partially  owned
equipment while a net loss accounted for $2.0 million of the total aggregate net
loss  for  the  Partnership  of  $1.1  million.  The  primary  reason  for  this
relationship  is that the aircraft in this region was off-lease  throughout 1998
and incurred repair costs of $0.4 million.

South  American  operations  consisted  of an  owned  aircraft.  Lease  revenues
accounted  for 11% of total  lease  revenues  from  wholly and  partially  owned
equipment,  while net income accounted for $0.8 million in net income,  compared
to total aggregate net loss of $1.1 million for the entire Partnership.

The Partnership's owned equipment and investments in equipment owned by USPEs on
lease to  lessees in the rest of the world  consists  of marine  containers  and
marine vessels and accounted for 30% of lease revenues from wholly and partially
owned  equipment,  while the net loss in this region accounted for $0.1 million,
compared to total aggregate net loss of $1.1 million for the entire Partnership.

(F) Effects of Year 2000

It is possible that the General Partner's  currently installed computer systems,
software  products and other business  systems,  or the  Partnership's  vendors,
service  providers,  and customers,  working either alone or in conjunction with
other  software or systems,  may not accept  input of,  store,  manipulate,  and
output  dates on or after  January  1, 2000  without  error or  interruption  (a
problem  commonly known as the "Year 2000" problem).  As the Partnership  relies
substantially  on the General  Partner's  software  systems,  applications,  and
control devices in operating and monitoring significant aspects of its business,
any Year 2000  problem  suffered  by the General  Partner  could have a material
adverse effect on the Partnership's business,  financial condition,  and results
of operations.

The General Partner has  established a special Year 2000 oversight  committee to
review  the  impact  of Year  2000  issues on its  software  products  and other
business  systems  in  order to  determine  whether  such  systems  will  retain
functionality  after  December  31, 1999.  The General  Partner (a) is currently
integrating Year  2000-compliant  programming code into its existing  internally
customized and internally developed transaction  processing software systems and
(b) the General Partner's  accounting and asset management software systems have
either already been made Year 2000-compliant or Year 2000-compliant  upgrades of
such systems are planned to be implemented by the General Partner before the end
of fiscal year 1999.  Although the General  Partner  believes that its Year 2000
compliance  program can be completed by the  beginning of 1999,  there can be no
assurance that the  compliance  program will be completed by that date. To date,
the  costs   incurred  and   allocated  to  the   Partnership   to  become  Year
2000-compliant have not been material. In addition, the General Partner believes
the future costs allocable to the Partnership to become Year 2000-compliant will
not be material.

It is possible that certain of the  Partnership's  equipment lease portfolio may
not be  Year  2000  compliant.  The  General  Partner  is  currently  contacting
equipment  manufacturers  of the  Partnership's  leased  equipment  portfolio to
assure Year 2000 compliance or to develop  remediation  strategies.  The General
Partner  does not expect that  non-Year  2000  compliance  of the  Partnership's
leased equipment portfolio will have an adverse material impact on its financial
statements.

Some risks  associated  with the Year 2000 problem are beyond the ability of the
Partnership or General  Partner to control,  including the extent to which third
parties can address the Year 2000 problem.  The General Partner is communicating
with vendors,  service providers, and customers in order to assess the Year 2000
compliance  readiness of such parties and the extent to which the Partnership is
vulnerable to any third-party  Year 2000 issues.  There can be no assurance that
the   software   systems  of  such  parties  will  be  converted  or  made  Year
2000-compliant  in a timely manner.  Any failure by the General  Partner or such
other parties to make their respective systems Year 2000-compliant  could have a
material  adverse  effect on the  business,  financial  position  and results of
operations of the  Partnership.  The General Partner will make an ongoing effort
to recognize and evaluate  potential  exposure relating to third-party Year 2000
non-compliance  and will  develop  a  contingency  plan if the  General  Partner
determines,  that third-party non-compliance will have a material adverse effect
on the Partnership's business, financial position, or results of operation.

The General  Partner is currently  developing a contingency  plan to address the
possible  failure of any  systems  due to the Year 2000  problems.  The  General
Partner anticipates these plans will be completed by September 30, 1999.

(G)  Accounting Pronouncements

In June 1998, the Financial  Accounting  Standards Board issued  "Accounting for
Derivative   Instruments   and  Hedging   Activities,"   (SFAS  No.  133)  which
standardizes  the  accounting  for  derivative  instruments,  including  certain
derivative instruments embedded in other contracts,  by requiring that an entity
recognize  those items as assets or  liabilities  in the  statement of financial
position and measure  them at fair value.  This  statement is effective  for all
quarters of fiscal years beginning after June 15, 1999. As of December 31, 1998,
the  General  Partner is  reviewing  the effect this  standard  will have on the
Partnership's consolidated financial statements.

(H)  Inflation

Inflation had no significant impact on the Partnership's operations during 1998,
1997, or 1996.

(I)  Forward-Looking Information

Except for historical  information contained herein, the discussion in this Form
10-K 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-K should be read as
being applicable to all related forward-looking  statements wherever they appear
in this Form 10-K. The Partnership's actual results could differ materially from
those discussed here.



<PAGE>


(J)  Outlook for the Future

Since the  Partnership  entered its  liquidation  phase in January of 1999,  the
General  Partner will be seeking to  selectively  re-lease or sell assets as the
existing leases expire.  Sale decisions will cause the operating  performance of
the Partnership to decline over the remainder of its life.

Several factors may affect the Partnership's  operating  performance in 1999 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.

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
those equipment  markets in which it determines that it cannot operate equipment
and achieve acceptable rates of return.

As of December 31, 1998,  the  Partnership's  outstanding  debt had a balance of
$12.8 million.  The remaining balance of this loan is due in an annual principal
payment  of $8.3  million  on July 1,  1999,  and  $4.5  million  in  2000.  The
Partnership  expects that the proceeds from  equipment  sales and operating cash
flows will be sufficient to make these payments.

The  Partnership  intends  to use cash  flow  from  operations  to  satisfy  its
operating  requirements,  pay  principal  and  interest  on  debt,  and pay cash
distributions to the partners.

(1)  Repricing Risk

Certain  of  the  Partnership's  aircraft,  marine  vessel,  marine  containers,
railcars and trailers  will be  remarketed  in 1999 as existing  leases  expire,
exposing the Partnership to some repricing risk/opportunity.  Additionally,  the
General Partner may elect to sell certain underperforming equipment or equipment
whose continued operation may become  prohibitively  expensive.  In either case,
the General Partner  intends to re-lease or sell equipment at prevailing  market
rates;  however,  the General Partner cannot predict these future rates with any
certainty at this time, and cannot accurately assess the effect of such activity
on future Partnership performance.

(2)  Impact of Government Regulations on Future Operations

The General  Partner  operates the  Partnership's  equipment in accordance  with
current applicable regulations (see Item 1, Section E, Government  Regulations).
However, the continuing implementation of new or modified regulations by some of
the  authorities  mentioned  previously,  or others,  may  adversely  affect the
Partnership's  ability to continue to own or operate equipment in its portfolio.
Additionally,  regulatory  systems  vary  from  country  to  country,  which may
increase the burden to the Partnership of meeting regulatory  compliance for the
same equipment  operated  between  countries.  Ongoing changes in the regulatory
environment, both in the United States and internationally,  cannot be predicted
with any accuracy and preclude the General  Partner from  determining the impact
of such changes on  Partnership  operations,  or sale of  equipment.  Under U.S.
Federal Aviation  Regulations,  after December 31, 1999, no person shall operate
an aircraft to or from any airport in the  contiguous  United States unless that
airplane has been shown to comply with Stage III noise levels.  The  Partnership
is scheduled to either sell or re-lease its  remaining  Stage II aircraft by the
year  2000.  The  Partnership  plans on  re-leasing  the  Stage II  aircraft  in
countries that do not require this regulation.  Furthermore, the U.S. Department
of  Transportation's   Hazardous  Materials  Regulations,   which  regulate  the
classification and packaging requirements of hazardous materials and which apply
particularly  to the  Partnership's  tank  railcars,  issued a  statement  which
requires the owner to inspect a certain  percentage  of the tank  railcars for a
protective  coating to the  outside of the tank and the inside of the metal tank
jacket  whenever a tank is insulated.  The  Partnership  owns tank railcars that
need to be inspected and, if needed, repaired before it can go back into service
by August 2000.

(3) Distributions

During the active  liquidation  phase,  the Partnership  will use operating cash
flow and proceeds from the sale of equipment to meet its operating  obligations,
make loan principal  payments on debt, and make  distributions  to the partners.
Although  the  General  Partner  intends  to  maintain  a  sustainable  level of
distributions prior to final liquidation of the Partnership,  actual Partnership
performance and other  considerations  may require  adjustments to then-existing
distribution  levels.  In the long term,  changing  market  conditions  and used
equipment  values preclude the General  Partner from accurately  determining the
impact  of  future  re-leasing  activity  and  equipment  sales  on  Partnership
performance and liquidity.

Since the Partnership has entered the active  liquidation phase, the size of the
Partnership's remaining equipment portfolio and, in turn, the amount of net cash
flows from  operations will continue to become  progressively  smaller as assets
are sold. Although  distribution levels may be reduced,  significant asset sales
may result in special distributions to unitholders.

The  Partnership's  permanent debt obligation  began to mature in July 1997. The
General Partner believes that sufficient cash flow from operations and equipment
sales will be available in the future for repayment of debt.

ITEM 7A.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Partnership's  primary market risk exposure is that of currency  devaluation
risk.  During 1998, 63% of the  Partnership's  total lease revenues from wholly-
and  partially-owned  equipment came from non-United  States domiciled  lessees.
Most of the 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 payment.

ITEM 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  financial  statements  for the  Partnership  are  listed  in the  Index  to
Financial Statements included in Item 14(a) of this Annual Report on Form 10-K.

ITEM 9.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
              FINANCIAL DISCLOSURE

None.









                     (This space intentionally left blank.)


<PAGE>


                                                     PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF PLM INTERNATIONAL AND PLM FINANCIAL
         SERVICES, INC.

As of the date of this annual  report,  the directors and executive  officers of
PLM  International  and of PLM  Financial  Services,  Inc.  (and  key  executive
officers of its subsidiaries) are as follows:

<TABLE>
<CAPTION>

Name                                     Age     Position
---------------------------------------- ------- ------------------------------------------------------------------

<S>                                      <C>     <C>                                                               
Robert N. Tidball                        60      Chairman of the Board, Director, President, and Chief Executive
                                                 Officer, PLM International, Inc.;
                                                 Director, PLM Financial Services, Inc.;
                                                 Vice President, PLM Railcar Management Services, Inc.;
                                                 President, PLM Worldwide Management Services Ltd.

Randall L.-W. Caudill                    51      Director, PLM International, Inc.

Douglas P. Goodrich                      52      Director and Senior Vice President, PLM International, Inc.;
                                                 Director and President, PLM Financial Services, Inc.; President,
                                                 PLM Transportation Equipment Corporation; President, PLM Railcar
                                                 Management Services, Inc.

Warren G. Lichtenstein                   33      Director, PLM International, Inc.

Howard M. Lorber                         50      Director, PLM International, Inc.

Harold R. Somerset                       63      Director, PLM International, Inc.

Robert L. Witt                           58      Director, PLM International, Inc.

J. Michael Allgood                       50      Vice President and Chief Financial Officer, PLM International,
                                                 Inc. and PLM Financial Services, Inc.

Robin L. Austin                          52      Vice President, Human Resources, PLM International, Inc. and PLM
                                                 Financial Services, Inc.

Stephen M. Bess                          52      President, PLM Investment Management, Inc.; Vice President and
                                                 Director, PLM Financial Services, Inc.

Richard K Brock                          36      Vice President and Corporate Controller, PLM International, Inc.
                                                 and PLM Financial Services, Inc.

James C. Chandler                        50      Vice President, Planning and Development, PLM International,
                                                 Inc. and PLM Financial Services, Inc.

Susan C. Santo                           36      Vice President, Secretary, and General Counsel, PLM
                                                 International, Inc. and PLM Financial Services, Inc.

Janet M. Turner                          42      Vice President, Investor Relations and Corporate Communications,
                                                 PLM International, Inc. and PLM Investment Management, Inc.

</TABLE>

Robert N.  Tidball  was  appointed  Chairman  of the  Board in  August  1997 and
President and Chief Executive Officer of PLM International in March 1989. At the
time of his  appointment  as  President  and  Chief  Executive  Officer,  he was
Executive Vice President of PLM International.  Mr. Tidball became a director of
PLM  International  in April 1989.  Mr.  Tidball was appointed a Director of PLM
Financial Services, Inc. in July 1997 and was elected President of PLM Worldwide
Management Services Limited in February 1998. He has served as an officer of PLM
Railcar  Management  Services,  Inc.  since June 1987. Mr. Tidball was Executive
Vice President of Hunter Keith,  Inc., a  Minneapolis-based  investment  banking
firm,  from March  1984 to  January  1986.  Prior to Hunter  Keith,  he was Vice
President, General Manager, and Director of North American Car Corporation and a
director of the American Railcar Institute and the Railway Supply Association.

Randall L.-W.  Caudill was elected to the Board of Directors in September  1997.
He is  President  of  Dunsford  Hill  Capital  Partners,  a San  Francisco-based
financial  consulting firm serving emerging growth companies.  Prior to founding
Dunsford  Hill Capital  Partners,  Mr.  Caudill held senior  investment  banking
positions at Prudential  Securities,  Morgan Grenfell Inc., and The First Boston
Corporation. Mr. Caudill also serves as a director of Northwest Biotherapeutics,
Inc., VaxGen, Inc., SBE, Inc., and RamGen, Inc.

Douglas  P.  Goodrich  was  elected  to the  Board of  Directors  in July  1996,
appointed  Senior  Vice  President  of PLM  International  in  March  1994,  and
appointed Director and President of PLM Financial  Services,  Inc. in June 1996.
Mr.  Goodrich  has also served as Senior Vice  President  of PLM  Transportation
Equipment Corporation since July 1989 and as President of PLM Railcar Management
Services,  Inc. since September 1992,  having been a Senior Vice President since
June 1987.  Mr.  Goodrich was an executive  vice  president of G.I.C.  Financial
Services  Corporation of Chicago,  Illinois, a subsidiary of Guardian Industries
Corporation, from December 1980 to September 1985.

Warren G.  Lichtenstein  was elected to the Board of Directors in December 1998.
Mr.  Lichtenstein  is the Chief  Executive  Officer of Steel  Partners II, L.P.,
which is PLM International's  largest  shareholder,  currently owning 16% of the
Company's common stock. Additionally,  Mr. Lichtenstein is Chairman of the Board
of Aydin Corporation,  a NYSE-listed defense  electronics  concern, as well as a
director of Gateway  Industries,  Rose's Holdings,  Inc., and Saratoga  Beverage
Group,  Inc. Mr.  Lichtenstein is a graduate of the University of  Pennsylvania,
where he received a Bachelor of Arts degree in economics.

Howard M.  Lorber was elected to the Board of  Directors  in January  1999.  Mr.
Lorber is President and Chief Operating  Officer of New Valley  Corporation,  an
investment banking and real estate concern. He is also Chairman of the Board and
Chief  Executive  Officer  of  Nathan's  Famous,  Inc.,  a  fast  food  company.
Additionally,  Mr. Lorber is a director of United Capital  Corporation and Prime
Hospitality  Corporation and serves on the boards of several  community  service
organizations.  He is a graduate of Long Island University,  where he received a
Bachelor  of Arts  degree and a Masters  degree in  taxation.  Mr.  Lorber  also
received charter life  underwriter and chartered  financial  consultant  degrees
from the American  College in Bryn Mawr,  Pennsylvania.  He is a trustee of Long
Island University and a member of the Corporation of Babson College.

Harold R. Somerset was elected to the Board of Directors of PLM International in
July 1994.  From February 1988 to December 1993, Mr.  Somerset was President and
Chief Executive  Officer of California & Hawaiian Sugar Corporation (C&H Sugar),
a subsidiary of Alexander & Baldwin,  Inc. Mr. Somerset joined C&H Sugar in 1984
as Executive Vice President and Chief  Operating  Officer,  having served on its
Board of Directors  since 1978.  Between 1972 and 1984, Mr.  Somerset  served in
various  capacities  with  Alexander & Baldwin,  Inc., a publicly  held land and
agriculture company headquartered in Honolulu,  Hawaii, including Executive Vice
President of Agriculture  and Vice President and General  Counsel.  Mr. Somerset
holds a law  degree  from  Harvard  Law  School  as well as a  degree  in  civil
engineering  from the  Rensselaer  Polytechnic  Institute and a degree in marine
engineering from the U.S. Naval Academy.  Mr. Somerset also serves on the boards
of directors for various other companies and organizations, including Longs Drug
Stores, Inc., a publicly held company.

Robert L. Witt was elected to the Board of Directors  in June 1997.  Since 1993,
Mr. Witt has been a principal with WWS  Associates,  a consulting and investment
group specializing in start-up situations and private  organizations about to go
public.  Prior to that, he was Chief Executive Officer and Chairman of the Board
of Hexcel  Corporation,  an international  advanced materials company with sales
primarily in the aerospace,  transportation, and general industrial markets. Mr.
Witt also serves on the boards of  directors  for various  other  companies  and
organizations.

J. Michael Allgood was appointed Vice President and Chief  Financial  Officer of
PLM International in October 1992 and Vice President and Chief Financial Officer
of PLM Financial Services,  Inc. in December 1992. Between July 1991 and October
1992,  Mr.  Allgood  was a  consultant  to  various  private  and  public-sector
companies  and  institutions   specializing  in  financial   operations  systems
development.  In October 1987, Mr. Allgood  co-founded  Electra Aviation Limited
and its holding  company,  Aviation  Holdings Plc of London,  where he served as
Chief Financial Officer until July 1991. Between June 1981 and October 1987, Mr.
Allgood  served as a first vice  president  with  American  Express Bank Ltd. In
February 1978,  Mr. Allgood  founded and until June 1981 served as a director of
Trade Projects  International/Philadelphia  Overseas  Finance  Company,  a joint
venture with  Philadelphia  National Bank. From March 1975 to February 1978, Mr.
Allgood served in various capacities with Citibank, N.A.

Robin  L.  Austin  became  Vice  President,  Human  Resources  of PLM  Financial
Services,  Inc. in 1984, having served in various capacities with PLM Investment
Management,  Inc., including Director of Operations, from February 1980 to March
1984.  From June 1970 to September 1978, Ms. Austin served on active duty in the
United  States Marine Corps and served in the United States Marine Corp Reserves
from 1978 to 1998.  She retired as a Colonel of the United  States  Marine Corps
Reserves  in 1998.  Ms.  Austin  has  served  on the Board of  Directors  of the
Marines'  Memorial  Club  and is  currently  on the  Board of  Directors  of the
International Diplomacy Council.

Stephen M. Bess was appointed a Director of PLM Financial Services, Inc. in July
1997.  Mr. Bess was appointed  President of PLM Investment  Management,  Inc. in
August  1989,   having  served  as  Senior  Vice  President  of  PLM  Investment
Management,  Inc. beginning in February 1984 and as Corporate  Controller of PLM
Financial Services, Inc. beginning in October 1983. Mr. Bess served as Corporate
Controller  of  PLM,  Inc.  beginning  in  December  1982.  Mr.  Bess  was  Vice
President-Controller  of Trans Ocean Leasing  Corporation,  a container  leasing
company, from November 1978 to November 1982, and Group Finance Manager with the
Field  Operations  Group of Memorex  Corporation,  a  manufacturer  of  computer
peripheral equipment, from October 1975 to November 1978.

Richard K Brock was appointed  Vice  President  and Corporate  Controller of PLM
International and PLM Financial Services, Inc. in June 1997, having served as an
accounting  manager  beginning in September 1991 and as Director of Planning and
General  Accounting  beginning  in  February  1994.  Mr.  Brock  was a  division
controller of Learning Tree International,  a technical education company,  from
February 1988 through July 1991.

James C.  Chandler  became  Vice  President,  Planning  and  Development  of PLM
International  in  April  1996.  From  1994 to 1996  Mr.  Chandler  worked  as a
consultant to public  companies,  including PLM, in the  formulation of business
growth  strategies.  Mr.  Chandler was Director of Business  Development at Itel
Corporation from 1987 to 1994, serving with both the Itel  Transportation  Group
and Itel Rail.

Susan C. Santo  became Vice  President,  Secretary,  and General  Counsel of PLM
International and PLM Financial Services,  Inc. in November 1997. She has worked
as an  attorney  for PLM  International  since  1990 and  served  as its  Senior
Attorney since 1994.  Previously,  Ms. Santo was engaged in the private practice
of law in San  Francisco.  Ms. Santo  received her J.D.  from the  University of
California, Hastings College of the Law.

Janet M. Turner became Vice President of Investor  Services of PLM International
in  1994,   having  previously  served  as  Vice  President  of  PLM  Investment
Management,  Inc.  since 1990.  Before 1990,  Ms.  Turner held the  positions of
manager of systems development and manager of investor relations at the Company.
Prior  to  joining  PLM  in  1984,   she  was  a  financial   analyst  with  The
Toronto-Dominion Bank in Toronto, Canada.

The directors of PLM  International,  Inc. are elected for a three-year term and
the directors of PLM Financial Services, Inc. are elected for a one-year term or
until their successors are elected and qualified.  No family relationships exist
between  any  director or  executive  officer of PLM  International  Inc. or PLM
Financial Services,  Inc., PLM Transportation Equipment Corp., or PLM Investment
Management, Inc.

ITEM 11. EXECUTIVE COMPENSATION 

The Partnership has no directors, officers, or employees. The Partnership has no
pension,  profit  sharing,  retirement,  or similar benefit plan in effect as of
December 31, 1998.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(A)      Security Ownership of Certain Beneficial Owners

         The  General  Partner is  generally  entitled  to a 5%  interest in the
         profits  and losses and  distributions  of the  Partnership  subject to
         certain  special  allocations  of income.  As  December  31,  1998,  no
         investor was known by the General Partner to beneficially own more than
         5% of the limited partnership units.

     (B) Security Ownership of Management

         Neither  the  General  Partner  and its  affiliates  nor any  executive
         officer or director of the General  Partner and its  affiliates own any
         limited partnership units of the Partnership as of December 31, 1998.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Transactions with Management and Others

         During 1998,  management fees to IMI were $0.6 million. The Partnership
         reimbursed FSI and its affiliates $0.6 million for  administrative  and
         data  processing  services  performed on behalf of the  Partnership  in
         1998. In 1998, the Partnership paid Transportation  Equipment Indemnity
         Company Ltd.  (TEI), a  wholly-owned,  Bermuda-based  subsidiary of PLM
         International,  $2,000  for  insurance  coverages  during  1998,  which
         amounts were paid substantially to third-party reinsurance underwriters
         or  placed  in  risk  pools  managed  by TEI on  behalf  of  affiliated
         partnerships and PLM International,  which provide threshold  coverages
         on  marine  vessel  loss of hire  and hull and  machinery  damage.  All
         pooling  arrangement  funds  are  either  paid out to cover  applicable
         losses  or  refunded  pro rata by TEI.  During  1998,  the  Partnership
         received a $0.1 million  loss-of-hire  insurance refund from TEI due to
         lower claims from the insured  Partnership and other insured affiliated
         programs.

         During 1998, the USPEs paid or accrued the following fees to FSI or its
         affiliates   (based  on  the   Partnership's   proportional   share  of
         ownership):  management fees, $0.1 million, and administrative and data
         processing  services,  $18,000.  The USPEs  also paid TEI  $17,000  for
         insurance coverages during 1998. The Partnership's  USPE's proportional
         share of a refund of  $14,000  was  received  during  1998  from  lower
         loss-of-hire claims.



<PAGE>


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (A) 1.   Financial Statements

              The  financial  statements  listed  in the  accompanying  Index to
              Financial  Statements  are filed as part of this Annual  Report on
              Form 10-K.

     (B) Reports on Form 8-K

              None.

     (C) Exhibits

        4.    Limited  Partnership  Agreement  of  Registrant,  incorporated  by
              reference to the Partnership's  Registration Statement on Form S-1
              (Reg. No.  33-27746),  which became  effective with the Securities
              and Exchange Commission on May 23, 1989.

       10.1   Management   Agreement  between  Partnership  and  PLM  Investment
              Management,  Inc.,  incorporated by reference to the Partnership's
              Registration  Statement  on Form S-1 (Reg.  No.  33-27746),  which
              became  effective with the  Securities and Exchange  Commission on
              May 23, 1989.

       10.2   Note Agreement,  dated as of July 1, 1990, regarding $33.0 million
              in 9.75% senior notes due July 1, 2000,  incorporated by reference
              to the  Partnership's  Annual  Report on Form 10-K  filed with the
              Securities and Exchange Commission on March 30, 1991.

       24.    Powers of Attorney.





                     (This space intentionally left blank.)


<PAGE>



                                                    SIGNATURES

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

The Partnership has no directors or officers.  The General Partner has signed on
behalf of the Partnership by duly authorized officers.



Date:  March 17, 1999              PLM EQUIPMENT GROWTH FUND IV
                                   PARTNERSHIP

                                   By:  PLM Financial Services, Inc.
                                        General Partner


                                   By:  /s/ Douglas P. Goodrich
                                        ---------------------------            
                                        Douglas P. Goodrich
                                        President and Director


                                   By:  /s/ Richard K Brock
                                        ---------------------------   
                                        Richard K Brock
                                        Vice President and
                                        Corporate Controller


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  directors of the  Partnership's  General
Partner on the dates indicated.


Name                               Capacity                Date


*_____________________                           
Robert N. Tidball                  Director, FSI        March 17, 1999


*______________________  
Douglas P. Goodrich                Director, FSI        March 17, 1999


*______________________
Stephen M. Bess                    Director, FSI        March 17, 1999

*Susan Santo,  by signing her name hereto,  does sign this document on behalf of
the persons indicated above pursuant to powers of attorney duly executed by such
persons and filed with the Securities and Exchange Commission.



/s/ Susan C. Santo
--------------------------        
Susan C. Santo
Attorney-in-Fact



<PAGE>


                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          INDEX TO FINANCIAL STATEMENTS


                                  (Item 14(a))


                                                                     Page

Independent auditors' report                                           30

Balance sheets as of December 31, 1998 and 1997                        31

Statements of operations for the years ended
     December 31, 1998, 1997, and 1996                                 32

Statements of changes in partners' capital for the years
     ended December 31, 1998, 1997, and 1996                           33

Statements of cash flows for the years ended
     December 31, 1998, 1997, and 1996                                 34

Notes to financial statements                                       35-47


All other  financial  statement  schedules  have been  omitted,  as the required
information  is not pertinent to the  registrant or is not material,  or because
the  information  required  is included in the  financial  statements  and notes
thereto.



<PAGE>


                          INDEPENDENT AUDITORS' REPORT


The Partners
PLM Equipment Growth Fund IV:

We have audited the  accompanying  financial  statements of PLM Equipment Growth
Fund IV (the  Partnership) as listed in the accompanying  index to the financial
statements.   These  financial   statements  are  the   responsibility   of  the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We have  conducted our audits in accordance  with  generally  accepted  auditing
standards.  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 financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As described in Note 1 to the financial  statements,  PLM Equipment  Growth Fund
IV, in accordance with the limited  partnership  agreement,  entered its passive
phase on January 1, 1997 and as a result,  the  Partnership  is not permitted to
reinvest  in  equipment.   On  January  1,  1999  the  Partnership  entered  its
liquidation  phase and has commenced an orderly  liquidation of the  Partnership
assets.  The Partnership will terminate on December 31, 2009,  unless terminated
earlier upon sale of all equipment or by certain other events.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of PLM Equipment Growth Fund IV as
of December  31, 1998 and 1997 and the  results of its  operations  and its cash
flows for each of the years in the three-year period ended December 31, 1998, in
conformity with generally accepted accounting principles.



/S/ KPMG LLP
----------------------------

SAN FRANCISCO, CALIFORNIA
March 12, 1999


<PAGE>



                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                                 BALANCE SHEETS
                                  December 31,
                 (in thousands of dollars, except unit amounts)

<TABLE>
<CAPTION>



                                                                             1998                1997
                                                                         ---------------------------------
  <S>                                                                    <C>                   <C>                          
  Assets

  Equipment held for operating leases, at cost                           $   82,278            $  87,520                    
  Less accumulated depreciation                                             (58,674 )            (56,215 )
                                                                         ---------------------------------
      Net equipment                                                          23,604               31,305

  Cash and cash equivalents                                                     778                3,650
  Restricted cash                                                               147                  247
  Accounts receivable, less allowance for doubtful
      accounts of $3,126 in 1998 and $3,332 in 1997                             874                  954
  Investments in unconsolidated special-purpose entities                      5,739                9,756
  Lease negotiation fees to affiliate, less accumulated
      amortization of $203 in 1997                                               --                   23
  Debt placement fees to affiliate, less accumulated
      amortization of $321 in 1998 and $283 in 1997                              58                   96
  Prepaid expenses and other assets                                              50                   58
                                                                         ---------------------------------

        Total assets                                                     $   31,250            $  46,089                    
                                                                         =================================

  Liabilities and partners' capital

  Liabilities
  Accounts payable and accrued expenses                                  $      563            $   1,097                    
  Due to affiliates                                                             244                  256
  Lessee deposits and reserve for repairs                                     1,126                2,509
  Notes payable                                                              12,750               21,000
                                                                         ---------------------------------
    Total liabilities                                                        14,683               24,862

  Partners' capital
  Limited partners (8,628,420 limited partnership units
      as of December 31, 1998 and 1997)                                      16,567               21,227
  General Partner                                                                --                   --
                                                                         ---------------------------------
    Total partners' capital                                                  16,567               21,227
                                                                         ---------------------------------

        Total liabilities and partners' capital                          $   31,250            $  46,089     
                                                                         =================================


</TABLE>










                       See accompanying notes to financial
                                  statements.


<PAGE>



                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                            STATEMENTS OF OPERATIONS
                        For the Years Ended December 31,
         (in thousands of dollars except weighted-average unit amounts)

<TABLE>
<CAPTION>


                                                                            1998            1997           1996
                                                                         -------------------------------------------
  Revenues

  <S>                                                                    <C>              <C>           <C>            
  Lease revenue                                                          $  10,981        $ 12,684      $  18,671      
  Interest and other income                                                    251             864            270
  Net gain (loss) on disposition of equipment                                 (464 )         2,830          3,179
                                                                         -------------------------------------------
    Total revenues                                                          10,768          16,378         22,120

  Expenses

  Depreciation and amortization                                              5,802           7,268          9,791
  Repairs and maintenance                                                    1,905           2,219          5,482
  Equipment operating expenses                                                 805             795          2,497
  Insurance expense to affiliate                                               (88 )            70            180
  Other insurance expenses                                                     285             566            622
  Management fees to affiliate                                                 622             649            895
  Interest expense                                                           1,652           2,450          3,109
  General and administrative expenses to affiliates                            584             519            606
  Other general and administrative expenses                                    667           1,669          1,098
  Provision for bad debts                                                        9           1,027          1,628
  ------------------------------------------------------------------------------------------------------------------
                                                                         -------------------------------------------
        Total expenses                                                      12,243          17,232         25,908

  Equity in net income (loss) of unconsolidated
      special-purpose entities                                                 348           2,952           (331 )
                                                                         -------------------------------------------

        Net income (loss)                                                $  (1,127 )      $  2,098      $  (4,119 ) 
                                                                         ===========================================

  Partners' share of net income (loss)

  Limited partners                                                       $  (1,309 )      $  1,803      $  (4,482 ) 
  General Partner                                                              182             295            363
                                                                         -------------------------------------------

        Total                                                            $  (1,127 )      $  2,098      $  (4,119 ) 
                                                                         ===========================================

  Net income (loss) per weighted-average limited partnership unit        $   (0.15 )      $   0.21      $   (0.52 ) 
                                                                         ===========================================

  Cash distribution                                                      $   3,533        $  5,780      $   7,271   
                                                                         ===========================================

  Cash distribution per weighted-average limited partnership unit        $    0.39        $   0.64      $    0.80   
                                                                         ===========================================



</TABLE>






                       See accompanying notes to financial
                                  statements.


<PAGE>



                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                   STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
              For the years ended December 31, 1998, 1997, and 1996
                            (in thousands of dollars)

<TABLE>
<CAPTION>


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

  <S>                                                  <C>                 <C>              <C>      
  Partners' capital as of December 31, 1995            $   36,475          $    --          $  36,475

  Net income (loss)                                        (4,482 )            363             (4,119 )

  Repurchase of limited partnership units                    (176 )             --               (176 )

  Cash distribution                                        (6,908 )           (363 )           (7,271 )
  ------------------------------------------------------------------------------------------------------

    Partners' capital as of December 31, 1996              24,909               --             24,909

  Net income                                                1,803              295              2,098

  Cash distribution                                        (5,485 )           (295 )           (5,780 )
  ------------------------------------------------------------------------------------------------------

    Partners' capital as of December 31, 1997              21,227               --             21,227

  Net income (loss)                                        (1,309 )            182             (1,127 )

  Cash distribution                                        (3,351 )           (182 )           (3,533 )
  ------------------------------------------------------------------------------------------------------

    Partners' capital as of December 31, 1998          $   16,567          $    --          $  16,567
                                                       =================================================


</TABLE>






















                       See accompanying notes to financial
                                  statements.


<PAGE>



                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                            STATEMENTS OF CASH FLOWS
                        For the Years Ended December 31,
                            (in thousands of dollars)

<TABLE>
<CAPTION>


                                                                             1998            1997           1996
                                                                         --------------------------------------------
  <S>                                                                    <C>             <C>             <C>        
  Operating activities
  Net income (loss)                                                      $   (1,127 )    $    2,098      $  (4,119 )
  Adjustments to reconcile net income (loss) to net cash
      provided by (used in) operating activities:
    Depreciation and amortization                                             5,802           7,268          9,791
    Net loss (gain) on disposition of equipment                                 464          (2,830 )       (3,179 )
    Equity in net (income) loss of unconsolidated special-
      purpose entities                                                         (348 )        (2,952 )          331
    Changes in operating assets and liabilities:
      Restricted cash                                                           100             305             23
      Accounts and notes receivable, net                                        127             523          2,204
      Prepaid expenses and other assets                                           8              82            (29 )
      Due from affiliates                                                        --             357            (25 )
      Accounts payable and accrued expenses                                    (534 )            70            624
      Due to affiliates                                                         (12 )           (48 )         (694 )
      Lessee deposits and reserve for repairs                                (1,383 )           (19 )          279
                                                                         ----------------
                                                                                         ----------------------------
        Net cash provided by operating activities                             3,097           4,854          5,206
                                                                         --------------------------------------------

  Investing activities
  Purchase of equipment and capital repairs                                      --            (621 )       (5,542 )
  Equipment purchased for unconsolidated special-
      purpose entity                                                             --              --         (4,247 )
  Payments of acquisition fees to affiliate                                      --              --           (247 )
  Payments of lease negotiation fees to affiliate                                --              --            (12 )
  Proceeds from disposition of equipment                                      1,449           8,493         13,065
  Distribution from liquidation of unconsolidated
      special-purpose entities                                                3,470           1,736             --
  Distribution from unconsolidated special-purpose entities                     895           1,076          1,680
                                                                         --------------------------------------------
        Net cash provided by investing activities                             5,814          10,684          4,697
                                                                         --------------------------------------------

  Financing activities
  Repayment of notes payable                                                 (8,250 )        (8,250 )       (1,550 )
  Cash distribution paid to limited partners                                 (3,351 )        (5,485 )       (6,908 )
  Cash distribution paid to General Partner                                    (182 )          (295 )         (363 )
  Repurchase of limited partnership units                                        --              --           (176 )
                                                                         --------------------------------------------
        Net cash used in financing activities                               (11,783 )       (14,030 )       (8,997 )
                                                                         --------------------------------------------

  Net (decrease) increase in cash and cash equivalents                       (2,872 )         1,508            906

  Cash and cash equivalents at beginning of year                              3,650           2,142          1,236
                                                                         --------------------------------------------

  Cash and cash equivalents at end of year                               $      778      $    3,650      $   2,142
                                                                         ============================================

  Supplemental information
  Interest paid                                                          $    1,652      $    2,450      $   3,159
                                                                         ============================================

</TABLE>


                       See accompanying notes to financial
                                  statements.


<PAGE>


                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

1.   Basis of Presentation

     Organization

     PLM  Equipment  Growth  Fund  IV, a  California  limited  partnership  (the
     Partnership),  was  formed  on March  25,  1989.  The  Partnership  engages
     primarily  in the  business of owning,  leasing or  otherwise  investing in
     predominately used  transportation  and related equipment.  The Partnership
     commenced significant operations in September 1989. PLM Financial Services,
     Inc. (FSI) is the General Partner of the Partnership. FSI is a wholly-owned
     subsidiary of PLM International, Inc. (PLM International).

     The  Partnership  will  terminate on December 31, 2009,  unless  terminated
     earlier  upon sale of all  equipment  or by certain  other  events.  At the
     conclusion of the Partnership's  sixth year of operations,  on December 31,
     1996,  the  General  Partner  stopped  reinvesting  excess cash and started
     distributing any funds remaining after payment of normal operating expenses
     and debt payments to the partners.  Beginning  January 1, 1999, the General
     Partner will begin the liquidation phase of the Partnership with the intent
     to commence an orderly  liquidation of the Partnership  assets.  During the
     liquidation phase, the Partnership's assets will continue to be recorded at
     the lower of carrying amount or fair value less cost to sell.

     FSI manages the affairs of the Partnership.  The net income (loss) and cash
     distributions of the Partnership are generally allocated 95% to the limited
     partners  and  5% to  the  General  Partner  (see  Net  Income  (Loss)  and
     Distribution per Limited  Partnership Unit,  below). The General Partner is
     also  entitled  to a  subordinated  incentive  fee equal to 7.5% of surplus
     distributions,  as defined in the limited partnership agreement,  remaining
     after the limited  partners have received a certain  minimum rate of return
     on, and a return of, their invested capital.

     The General  Partner has  determined  that it will not adopt a reinvestment
     plan for the  Partnership.  If the  number  of  units  made  available  for
     purchase by limited  partners in any calendar  year exceeds the number that
     can be purchased with reinvestment plan proceeds,  then the Partnership may
     redeem up to 2% of the  outstanding  units  each  year,  subject to certain
     terms and  conditions.  The purchase price to be offered by the Partnership
     for  these  units  will  be  equal  to 110%  of the  unrecovered  principal
     attributable to the units.  The unrecovered  principal for any unit will be
     equal to the excess of (a) the  capital  contribution  attributable  to the
     units over (b) the  distributions  from any source paid with respect to the
     units.  As  of  December  31,  1998,  the  Partnership  had  repurchased  a
     cumulative  total of 121,580 units at a cost of $1.6  million.  The General
     Partner does not intend to repurchase any additional units on behalf of the
     Partnership during 1999.

     The  accompanying  financial  statements  have been prepared on the accrual
     basis of  accounting  in  accordance  with  generally  accepted  accounting
     principles. This requires 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.

     Operations

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



<PAGE>


                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

1.   Basis of Presentation  (continued)

     Accounting for Leases

     The Partnership's leasing operations generally consist of 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.  Lease  origination
     costs  were   capitalized  and  amortized  over  the  term  of  the  lease.
     Periodically,  the  Partnership  leases  equipment  with  lease  terms that
     qualify for direct finance lease  classification,  as required by Statement
     of Financial Accounting Standards No. 13, "Accounting for Leases".

     Depreciation and Amortization

     Depreciation  of  transportation  equipment  held for  operating  leases is
     computed on the  double-declining  balance  method,  taking a full  month's
     depreciation in the month of acquisition, based upon estimated useful lives
     of 15 years for  railcars  and  typically  12 years for most other types of
     equipment.  The depreciation  method changes to  straight-line  when annual
     depreciation expense using the straight-line method exceeds that calculated
     by  the  double-declining  balance  method.   Acquisition  fees  have  been
     capitalized as part of the cost of the equipment.  Lease  negotiation  fees
     were amortized over the initial  equipment  lease term. Debt placement fees
     and  issuance  costs are  amortized  over the term of the related loan (see
     Note 7). Major expenditures that are expected to extend the useful lives or
     reduce future operating expenses of equipment are capitalized and amortized
     over the estimated remaining life of the equipment.

     Transportation Equipment

     In  accordance  with  the  Financial   Accounting  Standards  Board  issued
     Statement No. 121,  "Accounting for the Impairment of Long-Lived Assets and
     for Long-Lived  Assets to Be Disposed Of", the General  Partner reviews the
     carrying  value  of the  Partnership's  equipment  at  least  quarterly  in
     relation to expected future market  conditions for the purpose of assessing
     recoverability of the recorded amounts.  If projected  undiscounted  future
     lease revenue plus residual  values are less than the carrying value of the
     equipment,  a  loss  on  revaluation  is  recorded.  No  reductions  to the
     equipment  carrying  values were required for the years ended  December 31,
     1998, 1997, or 1996.

     Equipment held for operating leases is stated at cost.

     Investments in Unconsolidated Special-Purpose Entities

     The Partnership has interests in  unconsolidated  special-purpose  entities
     (USPEs) that own  transportation  equipment.  These interests are accounted
     for using the equity method.

     The  Partnership's  investment  in USPEs  includes  acquisition  and  lease
     negotiation  fees paid by the Partnership to PLM  Transportation  Equipment
     Corporation  (TEC),  a  wholly-owned  subsidiary  of FSI, and PLM Worldwide
     Management Services (WMS), a wholly-owned  subsidiary of PLM International.
     The Partnership's  interests in USPEs are managed by IMI. The Partnership's
     equity  interest in the net income of USPEs is reflected  net of management
     fees paid or payable to IMI and the  amortization  of acquisition and lease
     negotiation fees paid to TEC or WMS.



<PAGE>


                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

1.   Basis of Presentation  (continued)

     Repairs and Maintenance

     Repair and  maintenance  costs  related to marine  vessels,  railcars,  and
     trailers are usually the obligation of the Partnership.  Maintenance  costs
     of most of the other  equipment are the  obligation of the lessee.  If they
     are  not  covered  by  the  lessee,  they  are  generally  charged  against
     operations  as incurred.  Estimated  costs  associated  with marine  vessel
     drydockings are accrued and charged to income ratably over the period prior
     to such drydocking.  The reserve accounts are included in the balance sheet
     as lessee deposits and reserve for repairs.

     Net Income (Loss) and Distribution per Limited Partnership Unit

     The net income (loss) of the Partnership is generally  allocated 95% to the
     limited  partners and 5% to the General  Partner.  Special  allocations  of
     income are made to the General  Partner  equal to the deficit  balance,  if
     any, in the capital account of the General Partner.  Cash  distributions of
     the Partnership are generally  allocated 95% to the limited partners and 5%
     to the General Partner and may include amounts in excess of net income. The
     limited partners' net income (loss) is allocated among the limited partners
     based on the  number of limited  partnership  units  owned by each  limited
     partner  and on the number of days of the year each  limited  partner is in
     the Partnership.

     Cash  distributions are recorded when paid. Monthly  unitholders  receive a
     distribution check 15 days after the close of the previous month's business
     and quarterly  unitholders  receive a distribution  check 45 days after the
     close of the quarter.

     Cash  distributions  to investors in excess of net income are  considered a
     return of  capital.  Cash  distributions  to the  limited  partners of $3.4
     million,   $3.7  million,  and  $6.9  million  in  1998,  1997,  and  1996,
     respectively, were deemed to be a return of capital.

     Cash distributions of $0.9 million, $0.8 million and $1.7 million for 1998,
     1997, and 1996, respectively,  relating to the fourth quarter of that year,
     were paid during the first quarter of 1999, 1998, or 1997, respectively.

     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 year  ended  December  31,  1998 and  1997 was  8,628,420.  The
     weighted-average  number of Partnership units deemed outstanding during the
     year ended December 31, 1996 was 8,633,331.



<PAGE>


                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

1.   Basis of Presentation  (continued)

     Cash and Cash Equivalents

     The  Partnership  considers  highly  liquid  investments  that are  readily
     convertible  to known  amounts of cash with  original  maturities  of three
     months or less as cash  equivalents.  The carrying  amount of cash and cash
     equivalents  approximates fair market value due to the short-term nature of
     the investments.

     Comprehensive Income

     During 1998, the Partnership adopted Financial Accounting Standards Board's
     Statement  No.  130,  "Reporting   Comprehensive  Income,"  which  requires
     enterprises  to report,  by major  component  and in total,  all changes in
     equity from nonowner sources.  The Partnership's net income (loss) is equal
     to  comprehensive  income for the years ended December 31, 1998,  1997, and
     1996.

     Restricted Cash

     As of  December  31,  1998 and 1997,  restricted  cash  represented  lessee
     security deposits held by the Partnership.

     Reclassifications

     Certain amounts in the 1996 financial  statements have been reclassified to
conform to the 1998 presentations.

2.   General Partner and Transactions with Affiliates

     An officer of PLM Securities Corp., a wholly-owned subsidary of the General
     Partner,  contributed $100 of the Partnership's initial capital.  Under the
     equipment  management  agreement,   IMI,  subject  to  certain  reductions,
     receives a monthly management fee attributable to either owned equipment or
     interests  in  equipment  owned by the USPEs equal to the lesser of (a) the
     fees that  would be  charged  by an  independent  third  party for  similar
     services for similar  equipment or (b) the sum of (i) 5% of the gross lease
     revenues  attributable  to equipment  that is subject to operating  leases,
     (ii) 2% of the gross  lease  revenues  attributable  to  equipment  that is
     subject to full payout net leases, and (iii) 7% of the gross lease revenues
     attributable  to  equipment  for which IMI  provides  both  management  and
     additional  services  relating to the  continued  and active  operation  of
     program equipment,  such as on-going marketing and re-leasing of equipment,
     hiring or  arranging  for the  hiring of crew or  operating  personnel  for
     equipment,  and  similar  services.  Partnership  management  fees  of $0.1
     million and $0.1  million  were  payable as of December  31, 1998 and 1997,
     respectively.  The Partnership's  proportional share of the USPE management
     fees of $9,000 and $11,000  were  payable as of December 31, 1998 and 1997,
     respectively.  The Partnership's proportional share of USPE management fees
     was $0.1  million,  $0.1 million and $0.2 million  during 1998,  1997,  and
     1996, respectively.  The Partnership reimbursed FSI and its affiliates $0.6
     million,  $0.5  million,  and $0.6  million  during 1998,  1997,  and 1996,
     respectively,  for data  processing  expenses and  administrative  services
     performed  on behalf of the  Partnership.  The  Partnership's  proportional
     share of USPE  administrative  and data  processing  expenses  was $18,000,
     $35,000 and $38,000 during 1998, 1997 and 1996, respectively.

     Debt placement fees were paid to the General  Partner in an amount equal to
     1% of the  Partnership's  long-term  borrowings,  less  any  costs  paid to
     unaffiliated parties related to obtaining the borrowing. TEC received a fee
     for arranging the  acquisition  of equipment  and  negotiating  the initial
     lease of the  equipment.  The  Partnership  and USPEs paid or accrued lease
     negotiation and equipment  acquisition  fees of $0.5 million to TEC and WMS
     in 1996. The  Partnership  did not accrue lease  negotiation  and equipment
     acquisition fees during 1998 and 1997.


<PAGE>



                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

2.   General Partner and Transactions with Affiliates (continued)

     The Partnership paid $2,000, $0.1 million,  and $0.2 million in 1998, 1997,
     and 1996, respectively,  to Transportation Equipment Indemnity Company Ltd.
     (TEI), which provides marine insurance  coverage for Partnership  equipment
     and other insurance brokerage services.  TEI is an affiliate of the General
     Partner.  The  Partnership's  proportional  share of USPE marine  insurance
     coverage  paid to TEI was $17,000,  $0.1  million and $0.1  million  during
     1998, 1997 and 1996, respectively. A substantial portion of this amount was
     paid to  third-party  reinsurance  underwriters  or  placed  in risk  pools
     managed  by TEI on behalf of  affiliated  programs  and PLM  International,
     which  provide  threshold  coverages on marine vessel loss of hire and hull
     and machinery damage. All pooling  arrangement funds are either paid out to
     cover applicable losses or refunded pro rata by TEI. Also, during 1998, the
     Partnership  and the USPEs received a $0.1 million  loss-of-hire  insurance
     refund from TEI due to lower claims from the insured  Partnership and other
     insured affiliated  programs.  PLM International  plans to liquidate TEI in
     1999. During 1998, TEI did not provide the same level of insurance coverage
     as had been provided during 1997 and 1996.  These services were provided by
     an unaffiliated third party.

     As of December 31, 1998, all of the of the Partnership's  trailer equipment
     was in rental facilities operated by PLM Rental,  Inc., an affiliate of the
     General Partner, doing business as PLM Trailer Leasing.  Revenues collected
     under  short-term  rental  agreements with the rental yards'  customers are
     credited  to the  owners  of the  related  equipment  as  received.  Direct
     expenses  associated  with  the  equipment  are  charged  directly  to  the
     Partnership.  An  allocation  of  indirect  expenses  of  the  rental  yard
     operations is charged to the Partnership monthly.

     The  Partnership had an interest in certain  equipment in conjunction  with
     affiliated programs during 1998, 1997 and 1996 (see Note 4).

     The balance due to  affiliates  as of December  31, 1998 and 1997  includes
     $0.1 million due to FSI and its  affiliates  for  management  fees and $0.1
     million due to affiliated USPEs.

3.   Equipment

     The  components  of owned  equipment  as of December 31, are as follows (in
thousands of dollars):

<TABLE>
<CAPTION>

Equipment held for operating leases                         1998                1997
                                                        ----------------------------------

<S>                                                     <C>                  <C>       
Aircraft                                                $   42,734           $   42,734
Rail equipment                                              14,752               14,828
Marine containers                                           11,012               13,384
Marine vessels                                               9,719                9,719
Trailers                                                     4,061                6,855
                                                        ----------------------------------
                                                            82,278               87,520
Less accumulated depreciation                              (58,674 )            (56,215 )
                                                        --------------------------------
    Net equipment                                       $   23,604           $   31,305
                                                        ==================================
</TABLE>

     Revenues are earned by placing the  equipment  under  operating  leases.  A
     portion of the  Partnership's  marine containers are leased to operators of
     utilization-type leasing pools that include equipment owned by unaffiliated
     parties. In such instances, revenues received by the Partnership consist of
     a specified  percentage  of revenues  generated by leasing the equipment to
     sublessees, after deducting certain direct operating expenses of the pooled
     equipment.  Rents for  railcars  are based on mileage  traveled  or a fixed
     rate; rents for all other equipment are based on fixed rates.



<PAGE>


                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

3.   Equipment (continued)

     As of December 31, 1998, all owned equipment in the  Partnership  portfolio
     was  either on lease or  operating  in  PLM-affiliated  short-term  trailer
     rental facilities,  except for 2 commercial aircraft, 46 marine containers,
     and 5 railcars  with a net book value of $4.6  million.  As of December 31,
     1997, all owned equipment in the Partnership  portfolio was either on lease
     or operating in PLM-affiliated short-term trailer rental facilities, except
     for a commercial aircraft, 108 marine containers, and 2 railcars with a net
     book value of $3.2 million.

     During  1998,  the  Partnership  sold or  disposed  of  marine  containers,
     railcars,  and trailers,  with an aggregate net book value of $2.0 million,
     for proceeds of $1.5 million. During 1997, the Partnership sold or disposed
     of an aircraft engine, marine containers,  railcars, trailers, and a marine
     vessel,  with an  aggregate  net book  value of $6.6  million,  and  unused
     drydock reserves of $1.0, for proceeds of $8.5 million.

     Periodically,  PLM  International  will  purchase  groups of  assets  whose
     ownership may be allocated among affiliated programs and PLM International.
     Generally in these  cases,  only assets that are on lease will be purchased
     by the affiliated  programs.  PLM  International  will generally assume the
     ownership  and  remarketing  risks  associated  with  off-lease  equipment.
     Allocation of the purchase  price will be  determined  by a combination  of
     third-party  industry  sources and recent  transactions  or published  fair
     market value  references.  During 1996, PLM  International  realized a $0.7
     million  gain  on  the  sale  of 69  off-lease  railcars  purchased  by PLM
     International  as part of a group of assets in 1994 that had been allocated
     to the  Partnership,  PLM  Equipment  Growth Funds IV and VI,  Professional
     Lease Management Income Fund I, LLC (Fund I), and PLM International.

     All owned  equipment on lease is being  accounted for as operating  leases.
     Future minimum rentals receivable under noncancelable  operating leases, as
     of December  31,  1998,  for owned  equipment  during each of the next five
     years, are  approximately  $6.6 million in 1999, $4.3 million in 2000, $3.9
     million  in 2001,  $1.3  million  in 2002,  and  $0.9  million  in 2003 and
     thereafter.  Contingent  rentals based upon utilization were  approximately
     $0.7  million,  $0.9  million,  and $1.0 million in 1998,  1997,  and 1996,
     respectively.

4.   Investments in Unconsolidated Special-Purpose Entities

     The net investments in USPEs include the following  jointly-owned equipment
     (and related  assets and  liabilities)  as of December 31, (in thousands of
     dollars):

<TABLE>
<CAPTION>

                                                                                  1998           1997
                                                                               ---------------------------

       <S>                                                                     <C>            <C>      
       35% interest in two Stage II commercial aircraft on a direct
           finance lease                                                       $   3,880      $   4,008
       50% interest in an entity owning a bulk carrier                             1,859          2,264
       17% interest in a trust from a sold commercial aircraft                        --          3,484
       --------------------------------------------------------------------------------------------------
           Net investments                                                     $   5,739      $   9,756
                                                                               ==========================
</TABLE>

     The  Partnership  had an interest in one USPE that owned multiple  aircraft
     (the Trust). This Trust contained provisions,  under certain circumstances,
     for allocating specific aircraft to the beneficial owners.  During December
     1997,  the  Partnership  and an  affiliated  program each sold the aircraft
     designated  to it. The  Partnership's  17% interest in the Trust owning the
     commercial  aircraft  was sold for  proceeds  of $5.2  million  for its net
     investment of $1.8 million.  The Partnership  received liquidating proceeds
     of $1.7 million during 1997;the remaining liquidating proceeds of $3.5 were
     received during January 1998.



<PAGE>


                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

4.   Investments in Unconsolidated Special-Purpose Entities (continued)

     The following summarizes the financial  information for the special-purpose
     entities and the  Partnership's  interests  therein as of and for the years
     ended December 31, (in thousands of dollars):

<TABLE>
<CAPTION>

                                                               1998                    1997                       1996
                                                             ---------               ----------                 ----------
                                                                     Net                      Net                          Net
                                                      Total      Interest of     Total    Interest of      Total       Interest of
                                                      USPEs      Partnership     USPEs    Partnership      USPEs       Partnership
                                                     -----------------------------------------------------------------------------

                             <S>                   <C>                  <C>     <C>         <C>          <C>         <C>          
                             Net investments       $   14,339           5,739   $  32,310   $    9,756   $  33,250   $       9,616
                             Lease revenues             4,066           1,233       7,995        1,961      10,623           2,782
                             Net income (loss)          9,921             348       6,819        2,952      (2.350 )          (331 )

</TABLE>

5.   Operating Segments

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

     The General  Partner  evaluates  the  performance  of each segment based on
     profit  or  loss  from   operations   before   allocation  of  general  and
     administrative  expenses,  interest expense and certain other expenses. The
     segments are managed  separately due to different  business  strategies for
     each operation.

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

<TABLE>
<CAPTION>

                                                     Marine      Marine
                                          Aircraft  Container    Vessel   Trailer    Railcar   All
    For the Year Ended December 31, 1998  Leasing    Leasing    Leasing   Leasing    Leasing   Other<F1>    Total
    ------------------------------------  -------    -------    -------   -------    -------   ----         -----

    <S>                                    <C>       <C>        <C>       <C>        <C>       <C>        <C>     
    Revenues
      Lease revenue                        $ 3,484   $    720   $  1,666  $  1,578   $  3,533  $     --   $ 10,981
      Interest income and other                 15         --         --        --         21       215        251
      Gain (loss) on disposition of             (2 )       77         --      (530 )       (9 )      --       (464 )
    equipment
                                          -------------------------------------------------------------------------
        Total revenues                       3,497        797      1,666     1,048      3,545       215     10,768

    Costs and expenses
      Operations support                       446          8      1,043       446        926        38      2,907
      Depreciation and amortization          3,314        699        383       498        846        62      5,802
      Interest expense                           6         --         --        --         --     1,646      1,652
      General and administrative expenses      492         56        109       464        390       362      1,873
      Provision for bad debts                  (95 )       --         --       154        (50 )      --          9
                                          -------------------------------------------------------------------------
        Total costs and expenses             4,163        763      1,535     1,562      2,112     2,108     12,243
                                          -------------------------------------------------------------------------
    Equity in net income (loss) of USPEs       654         --       (306 )      --         --        --        348
                                          -------------------------------------------------------------------------
                                          =========================================================================
    Net income (loss)                      $   (12 ) $     34   $   (175 )$   (514 ) $  1,433  $ (1,893 ) $ (1,127 )
                                          =========================================================================

    As of December 31, 1998
    Total assets                           $ 15,434  $  2,169   $  3,727  $  2,035   $  5,978  $  1,907   $ 31,250
                                          =========================================================================
<FN>

<F1> Includes costs not  identifiable  to a particular  segment such as interest
expenses,  and  amortization  expense,  and certain  interest  income and other,
operations support expenses and general and administrative expenses.

</FN>



</TABLE>




<PAGE>


                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

5.   Operating Segments (continued)

<TABLE>
<CAPTION>

                                                     Marine      Marine
                                          Aircraft  Container    Vessel   Trailer    Railcar   All
    For the Year Ended December 31, 1997  Leasing    Leasing    Leasing   Leasing    Leasing   Other<F1>    Total
    ------------------------------------  -------    -------    -------   -------    -------   ----         -----

    <S>                                    <C>       <C>        <C>       <C>        <C>       <C>        <C>     
    Revenues
      Lease revenue                        $ 4,154   $    948   $  1,978  $  1,980   $  3,624  $     --   $ 12,684
      Interest income and other                 13          8        574        --          4       265        864
      Gain (loss) on disposition of            559        (86 )    2,337        17          3        --      2,830
    equipment
                                          -------------------------------------------------------------------------
        Total revenues                       4,726        870      4,889     1,997      3,631       265     16,378

    Costs and expenses
      Operations support                       216         13      1,533       736      1,097        55      3,650
      Depreciation and amortization          3,993        850        455       812      1,057       101      7,268
      Interest expense                          --         --         --        --         --     2,450      2,450
      General and administrative expenses    1,098         70        183       406        369       711      2,837
      Provision for bad debts                  855         55         --        94         23        --      1,027
                                          -------------------------------------------------------------------------
        Total costs and expenses             6,162        988      2,171     2,048      2,546     3,317     17,232
                                          -------------------------------------------------------------------------
    Equity in net income (loss) of USPEs     3,924         --       (972 )      --         --        --      2,952
                                          -------------------------------------------------------------------------
                                          =========================================================================
    Net income (loss)                      $ 2,488   $   (118 ) $  1,746  $    (51 ) $  1,085  $ (3,052 ) $  2,098
                                          =========================================================================

    As of December 31, 1997
    Total assets                           $ 22,360  $  3,362   $  4,515  $  3,968   $  6,857  $  5,027   $ 46,089
                                          =========================================================================
<FN>

<F1> Includes costs not  identifiable  to a particular  segment such as interest
expenses,  and  amortization  expense,  and certain  interest  income and other,
operations support expenses and general and administrative expenses.

</FN>

</TABLE>

<TABLE>
<CAPTION>
                                                     Marine      Marine
                                          Aircraft  Container    Vessel   Trailer    Railcar   All
    For the Year Ended December 31, 1996  Leasing    Leasing    Leasing   Leasing    Leasing   Other<F2>    Total
    ------------------------------------  -------    -------    -------   -------    -------   ----         -----

    <S>                                    <C>       <C>        <C>       <C>        <C>       <C>        <C>     
    Revenues
      Lease revenue                        $ 5,053   $  1,214   $  6,613  $  2,016   $  3,611  $    164   $ 18,671
      Interest income and other                 27         --         24        --         --       219        270
      Gain (loss) on disposition of            555         48         --        (3 )        9     2,570      3,179
    equipment
                                          -------------------------------------------------------------------------
        Total revenues                       5,635      1,262      6,637     2,013      3,620     2,953     22,120

    Costs and expenses
      Operations support                     2,575         23      4,381       395      1,345        62      8,781
      Depreciation and amortization          4,362      1,042      1,647       988      1,221       531      9,791
      Interest expense                          --         --        (50 )      --         --     3,159      3,109
      General and administrative expenses      575         72        436       368        425       723      2,599
      Provision for bad debts                1,520         85        (73 )      88          8        --      1,628
                                          -------------------------------------------------------------------------
        Total costs and expenses             9,032      1,222      6,341     1,839      2,999     4,475     25,908
                                          -------------------------------------------------------------------------
    Equity in net income (loss) of USPEs      (315 )       --        (16 )      --         --        --       (331 )
                                          -------------------------------------------------------------------------
                                          =========================================================================
    Net income (loss)                      $ (3,712) $     40   $    280  $    174   $    621  $ (1,522 ) $ (4,119 )
                                          =========================================================================

    As of December 31, 1996
    Total assets                           $ 25,171  $  4,816   $ 11,396  $  4,839   $  7,929  $  4,858   $ 59,009
                                          =========================================================================
<FN>

<F2> Includes costs not  identifiable  to a particular  segment such as interest
expenses,  and  amortization  expense,  and certain  interest  income and other,
operations  support  expenses  and general  and  administrative  expenses.  Also
includes income or gain on disposition from a mobile offshore drilling unit.

</FN>

</TABLE>



<PAGE>


                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

6.   Geographic Information

     The  Partnership  owns  certain  equipment  that  is  leased  and  operated
     internationally.  A limited number of the  Partnership's  transactions  are
     denominated in a foreign  currency.  Gains or losses resulting from foreign
     currency transactions are included in the results of operations and are not
     material.

     The Partnership  leases or leased its aircraft,  mobile  offshore  drilling
     unit,  railcars,  and  trailers to lessees  domiciled  in eight  geographic
     regions:  Canada, the United States, the Gulf of Mexico,  South Asia, South
     America,   Europe,   Australia,  and  Mexico.  Marine  vessels  and  marine
     containers are leased to multiple lessees in different regions that operate
     the marine vessels and marine containers worldwide.

     The following table sets forth lease revenue  information by region for the
     owned  equipment and  investments in USPEs for the years ended December 31,
     are as follows (in thousands of dollars):

<TABLE>
<CAPTION>

             Region                        Owned Equipment                         Investments in USPEs
   ---------------------------
                                ---------------------------------------    -------------------------------------
                                   1998          1997         1996            1998         1997        1996
                                ---------------------------------------    -------------------------------------

   <S>                          <C>          <C>           <C>              <C>         <C>         <C>       
   United States                $   4,516    $    5,369    $   5,307        $     --    $      --   $      -- 
   Canada                           2,698         2,339        2,042              --          846       1,083
   Gulf of Mexico                      --            --          164              --           --          --
   South Asia                          --           850        2,221              --           --          --
   South America                    1,380         1,200        1,110              --           --          --
   Rest of the world                2,387         2,926        7,827           1,233        1,115       1,699
                                =======================================    =====================================
       Lease revenues           $  10,981    $   12,684    $  18,671        $  1,233    $   1,961   $   2,782 
                                =======================================    =====================================
</TABLE>

     The following table sets forth net income (loss)  information by region for
     the owned  equipment and  investments in USPEs for the years ended December
     31, are as follows (in thousands of dollars):

<TABLE>
<CAPTION>

                                Region                            Owned Equipment                     Investments in USPEs
                   ----------------------------------  -------------------------------------- -------------------------------------
                                                          1998         1997         1996         1998          1997        1996
                                                       -------------------------------------- -------------------------------------

                   <S>                                 <C>          <C>          <C>          <C>           <C>           <C>   
                   United States                       $    847     $   1,131    $     832    $      --     $     --      $   --
                   Canada                                   622            14          309           84        3,305        (313 )
                   Gulf of Mexico                            --            --        2,327           --           --          --
                   South Asia                            (2,021 )      (2,034 )     (2,938 )         --           --          --
                   South America                            805           532          328           --           --          --
                   Europe                                    --            --       (1,676 )         --           --          --
                   Australia                                 --            --          555           --           --          --
                   Mexico                                    --            --           --          570          618          (2 )
                   Rest of the world                        164         2,594          356         (306 )       (971 )       (16 )
                                                       ------------------------------------   -------------------------------------
                     Regional net income (loss)             417         2,237           93          348        2,952        (331 )
                   Administrative and other              (1,892 )      (3,091 )     (3,881 )         --           --          --
                                                       ====================================== =====================================
                       Net income (loss)               $ (1,475 )   $    (854    $  (3,788    $     348     $  2,952      $ (331 )
                                                       ====================================== =====================================

</TABLE>


<PAGE>


                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

6.   Geographic Information (continued)

     The net book value of these  assets as of  December  31, are as follows (in
thousands of dollars):

<TABLE>
<CAPTION>

             Region                     Owned Equipment                      Investments in USPEs
   ---------------------------
                                ---------------------------------      ---------------------------------
                                   1998        1997       1996           1998        1997        1996
                                ---------------------------------      ---------------------------------

   <S>                           <C>       <C>          <C>            <C>        <C>         <C>       
   United States                 $  6,550  $   12,848   $ 12,168       $     --   $      --   $      -- 
   Canada                           5,728       6,580      8,145             --       3,484       2,575
   South Asia                       4,519       2,989      7,273             --          --          --
   South America                    2,770       3,275      3,873             --          --          --
   Mexico                              --           -         --          3,880       4,008       3,876
   Rest of the world                4,037       5,613      7,523          1,859       2,264       3,165
                                ---------------------------------      ---------------------------------
                                   23,604      31,305     38,982          5,739       9,756       9,616
   Equipment held for sale             --          --      5,524             --          --          --
                                ---------------------------------      =================================
       Net book value            $ 23,604  $   31,305   $ 44,506       $  5,739   $   9,756   $   9,616 
                                =================================      =================================
</TABLE>

7.   Notes Payable

     On July 1, 1990, the  Partnership  entered into an agreement to issue notes
     totaling  $33.0 million to two  institutional  investors.  The notes accrue
     interest  at a rate  equal to 9.75%  per  annum and  mature  July 1,  2000.
     Interest on the notes is payable monthly. The outstanding principal balance
     of  $12.8  million  as of  December  31,  1998  is  payable  in  an  annual
     installment  of $8.3 million on July 1, 1999,  with a final payment of $4.5
     million on July 1, 2000.

     The General Partner's  estimates,  based on recent  transactions,  that the
     fair market value of the $12.8 million in notes payable  outstanding  as of
     December 31, 1998 is $13.3 million.

     The  agreement  requires  the  Partnership  to maintain  certain  financial
     covenants   related  to   fixed-charge   coverage  and  limits   additional
     borrowings. The loan agreements require the Partnership to maintain certain
     minimum net worth ratios.

8.     Concentrations of Credit Risk

     No single lessee accounted for more than 10% of the  consolidated  revenues
     for the year ended  December 31,  1998,  1997 and 1996.  In 1997,  however,
     Noblesse  Maritime  Limited  purchased a marine vessel from the Partnership
     and the gain from the sale accounted for 10% of total consolidated revenues
     from  wholly  and  partially  owned  equipment,  and  Viking  Supply  Ships
     purchased a mobile offshore drilling unit from the Partnership and the gain
     from the sale accounted for 10% of total consolidated  revenues from wholly
     and partially owned equipment during 1996.

     As of  December  31,  1998 and  1997,  the  General  Partner  believes  the
     Partnership  had no other  significant  concentrations  of credit risk that
     could have a material adverse effect on the Partnership.


<PAGE>


                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

9.   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.  Accordingly,  no
     provision for income taxes has been made in the financial statements of the
     Partnership.

     As of December 31, 1998, there were temporary  differences of $26.1 million
     between  the  financial  statement  carrying  values of certain  assets and
     liabilities   and  the  federal   income  tax  basis  of  such  assets  and
     liabilities,  primarily  due to  differences  in  depreciation  methods and
     equipment  reserves and the tax treatment of  underwriting  commissions and
     syndication costs.

10.  Contingencies

     PLM International, (the Company) and various of its affiliates are named as
     defendants  in a lawsuit  filed as a purported  class action on January 22,
     1997 in the  Circuit  Court of Mobile  County,  Mobile,  Alabama,  Case No.
     CV-97-251 (the Koch action).  Plaintiffs,  who filed the complaint on their
     own  and on  behalf  of all  class  members  similarly  situated,  are  six
     individuals who invested in certain  California  limited  partnerships (the
     Partnerships)  for  which  the  Company's  wholly-owned   subsidiary,   PLM
     Financial Services, Inc. (FSI), acts as the general partner,  including the
     Partnership, PLM Equipment Growth Funds V, and VI, and PLM Equipment Growth
     & Income Fund VII (the Growth  Funds).  The state court ex parte  certified
     the action as a class action  (i.e.,  solely upon  plaintiffs'  request and
     without the Company being given the opportunity to file an opposition). The
     complaint  asserts  eight  causes  of action  against  all  defendants,  as
     follows:  fraud and deceit,  suppression,  negligent  misrepresentation and
     suppression,  intentional  breach of fiduciary  duty,  negligent  breach of
     fiduciary   duty,   unjust   enrichment,    conversion,   and   conspiracy.
     Additionally,  plaintiffs  allege a cause of action  against PLM Securities
     Corp. for breach of third party  beneficiary  contracts in violation of the
     National   Association  of  Securities  Dealers  rules  of  fair  practice.
     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
     Growth Funds,  and  concealing  such  mismanagement  from  investors in the
     Growth  Funds.  Plaintiffs  seek  unspecified  compensatory  and  recissory
     damages,  as well as punitive  damages,  and have  offered to tender  their
     units back to the defendants.

     In March 1997, the defendants  removed the Koch action from the state court
     to the United States  District Court for the Southern  District of Alabama,
     Southern  Division  (Civil Action No.  97-0177-BH-C)  based on the district
     court's diversity  jurisdiction,  following which plaintiffs filed a motion
     to remand the action to the state  court.  Removal of the action to federal
     court  automatically  nullified the state court's ex parte certification of
     the class. In September 1997, the district court denied  plaintiffs' motion
     to remand the action to state court and  dismissed  without  prejudice  the
     individual claims of the California  plaintiff,  reasoning that he had been
     fraudulently  joined as a plaintiff.  In October 1997,  defendants  filed a
     motion to compel arbitration of plaintiffs'  claims,  based on an agreement
     to arbitrate contained in the limited partnership  agreement of each Growth
     Fund,  and  to  stay  further  proceedings  pending  the  outcome  of  such
     arbitration.  Notwithstanding  plaintiffs'  opposition,  the district court
     granted defendants' motion in December 1997.

     Following various unsuccessful requests that the district court reverse, or
     otherwise  certify  for appeal,  its order  denying  plaintiffs'  motion to
     remand the case to state court and dismissing  the  California  plaintiff's
     claims,  plaintiffs  filed with the U.S.  Court of Appeals for the Eleventh
     Circuit a petition  for a writ of mandamus  seeking to reverse the district
     court's order. The Eleventh Circuit denied plaintiffs' petition in November
     of 1997, and further denied  plaintiffs  subsequent  motion in the Eleventh
     Circuit  for a  rehearing  on this  issue.  Plaintiffs  also  appealed  the
     district court's order granting defendants'

<PAGE>



                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

10.  Contingencies (continued)

     motion to compel  arbitration,  but in June of 1998  voluntarily  dismissed
     their appeal pending settlement of the Koch action, as discussed below.

     On June 5, 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 PLM
     Equipment  Growth Fund V, and filed the  complaint on her own behalf and on
     behalf of all class  members  similarly  situated  who  invested in certain
     California limited  partnerships for which FSI acts as the general partner,
     including  the Growth Funds.  The complaint  alleges the same facts and the
     same nine  causes of action  as in the Koch  action,  plus five  additional
     causes of action against all of the defendants,  as follows:  violations of
     California  Business  and  Professions  Code  Sections  17200,  et seq. for
     alleged  unfair  and  deceptive   practices,   constructive  fraud,  unjust
     enrichment,  violations of California Corporations Code Section 1507, and a
     claim for treble damages under California Civil Code Section 3345.

     On July 31, 1997, defendants filed with the district court for the Northern
     District of California  (Case No.  C-97-2847 WHO) a petition (the petition)
     under  the  Federal  Arbitration  Act  seeking  to  compel  arbitration  of
     plaintiff's  claims and for an order  staying the state  court  proceedings
     pending the outcome of the  arbitration.  In  connection  with this motion,
     plaintiff  agreed to a stay of the state court action  pending the district
     court's  decision on the petition to compel  arbitration.  In October 1997,
     the district court denied the Company's petition to compel arbitration, but
     in November 1997,  agreed to hear the Company's motion for  reconsideration
     of this order.  The hearing on this motion has been taken off  calendar and
     the district  court has  dismissed the petition  pending  settlement of the
     Romei action,  as discussed  below.  The state court action continues to be
     stayed pending such  resolution.  In connection  with her opposition to the
     petition to compel  arbitration,  plaintiff filed an amended complaint with
     the state  court in  August  1997  alleging  two new  causes of action  for
     violations  of  the   California   Securities   Law  of  1968   (California
     Corporations Code Sections 25400 and 25500) and for violation of California
     Civil Code Sections 1709 and 1710.  Plaintiff also served certain discovery
     requests  on  defendants.  Because of the stay,  no response to the amended
     complaint or to the discovery is currently required.

     In May 1998,  all  parties  to the Koch and Romei  actions  entered  into a
     memorandum  of  understanding  (MOU)  related  to the  settlement  of those
     actions (the Monetary Settlement).  The Monetary Settlement contemplated by
     the MOU provides for stipulating to a class for settlement purposes,  and a
     settlement  and release of all claims  against  defendants  and third party
     brokers in exchange  for payment for the benefit of the Class of up to $6.0
     million.  The final  settlement  amount will depend on the number of claims
     filed by authorized  claimants who are members of the Class,  the amount of
     the  administrative  costs incurred in connection with the settlement,  and
     the amount of attorneys' fees awarded by the Alabama  district  court.  The
     Company will pay up to $0.3 million of the  Monetary  Settlement,  with the
     remainder being funded by an insurance policy.

     The parties to the Monetary  Settlement have also agreed in principal to an
     equitable settlement (the Equitable Settlement) which provides, among other
     things,  (a) for the  extension  of the  operating  lives of PLM  Equipment
     Growth Fund V, PLM  Equipment  Growth Fund VI, and PLM  Equipment  Growth &
     Income  Fund  VII  (the  Funds)  by  judicial  amendment  to each of  their
     partnership  agreements,  such that FSI,  the general  partner of each such
     Fund, will be permitted to reinvest cash flow, surplus partnership funds or
     retained  proceeds in  additional  equipment  into the year 2004,  and will
     liquidate the partnerships'  equipment in 2006; (b) that FSI be entitled to
     earn front end fees (including  acquisition and lease  negotiation fees) in
     excess of the compensatory  limitations set forth in the NASAA Statement of
     Policy by judicial  amendment to the Partnership  Agreements for each Fund;
     (c) for a one time redemption of up to 10% of the outstanding units of each
     Fund at 80% of such

<PAGE>



                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

10.      Contingencies (continued)

     partnership's  net asset  value;  and (d) for the  deferral of a portion of
     FSI's management  fees. The Equitable  Settlement also provides for payment
     of the Equitable Class attorneys' fees from Partnership  funds in the event
     that  distributions  paid to investors  in the Funds  during the  extension
     period reach a certain internal rate of return.

     Defendants  will  continue to deny each of the claims and  contentions  and
     admit no  liability  in  connection  with  the  proposed  settlements.  The
     Monetary Settlement remains subject to numerous  conditions,  including but
     not limited to: (a)  agreement and execution by the parties of a settlement
     agreement (the Settlement  Agreement),  (b) notice to and  certification of
     the  Monetary  Class  for  purposes  of the  Monetary  Settlement,  and (c)
     preliminary  and final  approval of the Monetary  Settlement by the Alabama
     district  court.  The  Equitable  Settlement  remains  subject to  numerous
     conditions,  including  but not limited to: (a)  agreement and execution by
     the  parties  of the  Settlement  Agreement,  (b)  notice  to  the  current
     unitholders  (the Equitable  Class) in the Funds and  certification  of the
     Equitable Class for purposes of the Equitable Settlement,  (c) preparation,
     review by the Securities and Exchange  Commission  (SEC), and dissemination
     to the members of the Equitable Class of solicitation  statements regarding
     the proposed  extensions,  (d)  disapproval by less than 50% of the limited
     partners  in each of the Funds of the  proposed  amendments  to the limited
     partnership agreements, (e) judicial approval of the proposed amendments to
     the limited partnership agreements,  and (f) preliminary and final approval
     of the Equitable  Settlement  by the Alabama  district  court.  The parties
     submitted  the  Settlement  Agreement  to the  Alabama  district  court  on
     February 12,  1999,  and the  preliminary  class  certification  hearing is
     scheduled  for March 24,  1999.  If the district  court grants  preliminary
     approval,  notices to the Monetary  Class and Equitable  Class will be sent
     following review by the SEC of the  solicitation  statements to be prepared
     in connection with the Equitable  Settlement.  The Monetary Settlement,  if
     approved, will go forward regardless of whether the Equitable Settlement is
     approved or not. The Company  continues to believe that the  allegations of
     the Koch and Romei  actions  are  completely  without  merit and intends to
     continue to defend this matter vigorously if the Monetary Settlement is not
     consummated.

     The  Partnership,  together with  affiliates,  has initiated  litigation in
     various  official  forums in India  against each of two  defaulting  Indian
     airline  lessees to repossess  Partnership  property and to recover damages
     for failure to pay rent and failure to maintain such property in accordance
     with relevant lease  contracts.  The Partnership has repossessed all of its
     property  previously leased to such airlines,  and the airlines have ceased
     operations.  In response to the Partnership's  collection efforts,  the two
     airlines each filed counter-claims against the Partnership in excess of the
     Partnership's  claims against the airlines.  The General  Partner  believes
     that the airlines'  counterclaims  are completely  without  merit,  and the
     General Partner will vigorously defend against such counterclaims.

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









                      (This space intentionally left blank)
<PAGE>


                          PLM EQUIPMENT GROWTH FUND IV

                                INDEX OF EXHIBITS



  Exhibit                                                              Page

    4.     Limited Partnership Agreement of Registrant                 *       

   10.1    Management Agreement between Registrant and                 *
           PLM Investment Management, Inc.

   10.2    Note Agreement, dated as of July 1, 1990, regarding         *
           $33.0 million in 9.75% senior notes due July 1, 2000

   24.     Powers of Attorney                                    49 - 51


* Incorporated by reference.  See page 24 of this report.