INDEPENDENT AUDITORS' REPORT






The Owners
Aero California Trust

We have audited the  accompanying  balance sheet of the Aero California Trust as
of December 31, 1998, and the related  statements of income,  changes in owners'
equity, and cash flows for the year then ended.  These financial  statements are
the responsibility of the owner's  management.  Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of the Aero California Trust as of
December 31, 1998,  and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles. The
accompanying  1999 and 1997  financial  statements  were not  audited by us, and
accordingly, we express no opinion or any other form of assurance on them.



/s/ KPMG
SAN FRANCISCO, CALIFORNIA
June 9, 2000



<PAGE>
<TABLE>
<CAPTION>



                                            AERO CALIFORNIA TRUST
                                                  (A Trust)
                                                Balance Sheets
                                                 December 31,
                                          (in thousands of dollars)





                                                                               1999               1998
                                                                           (unaudited)
                                                                         --------------------------------------
  ASSETS

  <S>                                                                     <C>               <C>
  Accounts receivable, net of allowance for doubtful
        accounts of $5 in 1999 and $0 in 1998                             $            826  $            624
  Receivable from affiliates                                                           420               420
  Finance lease receivable                                                           9,176            10,011
  Deferred charges, less accumulated
        amortization of $250 in 1999 and $167 in 1998                                  384               467
                                                                          -------------------------------------
        Total assets                                                      $         10,806  $         11,522
                                                                          =====================================


  LIABILITIES AND OWNERS' EQUITY

  Liabilities:
  Due to affiliates                                                       $             62  $              16
  Lessee deposits                                                                      420                420
                                                                          ------------------------------------
    Total liabilities                                                                  482                436

  Owners' equity                                                                    10,324             11,086
                                                                          ------------------------------------

        Total liabilities and owners' equity                              $         10,806  $          11,522
                                                                          ====================================



</TABLE>



















      See accompanying auditors' report and notes to financial statements.


<PAGE>




<TABLE>
<CAPTION>



                                            AERO CALIFORNIA TRUST
                                                  (A Trust)
                                             STATEMENTS OF INCOME
                                       For the Years Ended December 31,
                                          (in thousands of dollars)


                                                                       1999                 1998              1997
                                                                                                         ----------------
                                                                    (unaudited)                            (unaudited)
                                                                 --------------------------------------------------------
  <S>                                                             <C>                 <C>                 <C>
  REVENUES

  Finance lease income                                            $        1,685      $         1,818     $      1,942
  Interest income                                                             19                    1               --
                                                                  -------------------------------------------------------
    Total revenues                                                         1,704                1,819            1,942
                                                                  -------------------------------------------------------

  Expenses

  Amortization expense                                                        83                   83               83
  Management fees to affiliate                                                50                   50               50
  Insurance expense                                                           12                   19                5
  Repairs and maintenance                                                     --                    4               --
  Administrative expenses to affiliates                                        1                    8               12
  Administrative expenses                                                     25                   27               25
  Provision for bad debt                                                       5                   --               --
                                                                  -------------------------------------------------------
    Total expenses                                                           176                  191              175
                                                                  -------------------------------------------------------

        Net income                                                $        1,528      $         1,628     $      1,767
                                                                  =======================================================

</TABLE>




      See accompanying auditors' report and notes to financial statements.


<PAGE>



                              AERO CALIFORNIA TRUST
                                    (A Trust)
                     STATEMENTS OF CHANGES IN OWNERS' EQUITY
             For the Years Ended December 31, 1999 , 1998, and 1997
                            (in thousands of dollars)







   Owners' equity at December 31, 1996 (unaudited)          $       11,073

  Net income                                                         1,767

  Distributions paid                                                (1,387)
                                                            ----------------

   Owners' equity at December 31, 1997 (unaudited)                  11,453

  Net income                                                         1,628

  Distributions paid                                                (1,995)
                                                            ----------------

   Owners' equity at December 31, 1998                              11,086

  Net income                                                         1,528

  Distributions paid                                                (2,290)
                                                            ----------------

    Owners' equity at December 31, 1999 (unaudited)         $       10,324
                                                            ================








      See accompanying auditors' report and notes to financial statements.


<PAGE>

<TABLE>
<CAPTION>


                                            AERO CALIFORNIA TRUST
                                                  (A Trust)
                                           STATEMENTS OF CASH FLOWS
                                       For the Years Ended December 31,
                                          (in thousands of dollars)


                                                                        1999               1998             1997
                                                                  (unaudited)                           (unaudited)
                                                               ---------------------------------------------------------

  OPERATING ACTIVITIES

  <S>                                                           <C>                <C>               <C>
  Net income                                                    $         1,528    $         1,628   $          1,767
  Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:
    Amortization expense                                                     83                 83                 83
    Changes in operating assets and liabilities:
      Due from affiliates                                                    --                 --               (420)
      Accounts payable                                                       --                 (1)                (6)
      Due to affiliates                                                      46                 (1)              (616)
                                                                --------------------------------------------------------
        Net cash provided by operating activities                         1,657              1,709                808
                                                                --------------------------------------------------------

  INVESTING ACTIVITIES

  Principal payments received on direct finance lease                       633                286                579
                                                                -------------------------------------------------------
        Net cash provided by investing activities                           633                286                579
                                                                --------------------------------------------------------

  Financing activities

  Distributions paid                                                     (2,290)            (1,995)            (1,387)
                                                                --------------------------------------------------------
        Net cash used in financing activities                            (2,290)            (1,995)            (1,387)
                                                                --------------------------------------------------------

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


</TABLE>















      See accompanying auditors' report and notes to financial statements.


<PAGE>


                              AERO CALIFORNIA TRUST
                                    (A TRUST)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     ORGANIZATION

In December  1996, PLM Equipment  Growth Fund IV (EGF IV), a California  limited
partnership,  PLM  Equipment  Growth  Fund  V  (EGF  V),  a  California  limited
partnership,  and PLM  Equipment  Growth Fund VI (EGF VI), a California  limited
partnership,  (the Owners or  Partnerships)  entered into a Trust Agreement (the
Trust) with PLM Transportation  Equipment Corp. (TEC), a wholly-owned subsidiary
of PLM  International,  Inc., by the terms of which TEC is owner trustee for the
benefit of the Owners as equal  co-beneficiaries.  The Trust was established for
the purpose of purchasing two DC-9 Stage III commercial aircraft.  The Trust has
no employees  nor  operations  other than the  operation of the two DC-9's.  The
Trust is owned 35% by EGF IV, 25% by EGF V, and 40% by EGF VI.

PLM  Financial   Services  Inc.,   (FSI),  a  wholly-owned   subsidiary  of  PLM
International, Inc., is the General Partner of the Owners.

The two aircraft were purchased in December 1996 for $11.5  million.  The Owners
paid  acquisition  and lease  negotiation  fees of $0.6 million to PLM Worldwide
Management Services (WMS), a wholly-owned subsidiary of PLM International, Inc.,
based on the prorata  share of the cost of the  aircraft  purchased.  A 91 month
lease was signed upon the  acquisition of the aircraft which is being  accounted
for as a finance lease expiring July 2004 with Inter Global Inc.

These 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 aircraft in the Trust are 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 Trust for managing the aircraft (Note
2). FSI, in conjunction with its subsidiaries, sells transportation equipment to
investor programs and third parties,  manages pools of transportation  equipment
under agreements with the investor programs, and is a general partner in limited
partnerships.

     ACCOUNTING FOR LEASES

In December 1996, PLM Worldwide  Leasing (WLC) entered into a sale and leaseback
transaction for two DC-9 aircraft with TEC as trustee for the Owners.  The lease
qualifies as a finance lease in accordance with Financial  Accounting  Standards
Board  (FASB)  Statement  of  Financial  Accounting  Standards  (SFAS)  No.  13,
"Accounting for Leases".

Under the  direct  finance  lease  method of  accounting,  the  leased  asset is
recorded as an investment in a direct  finance lease and  represents the minimum
net lease payments receivable,  including the unguaranteed residual value of the
equipment,  less  unearned  income.  Rental  payments  consist of principal  and
interest on the lease,  principal  payments reduce the investment in the finance
lease, and the interest is recorded as revenue over the lease term.

     CASH AND CASH EQUIVALENTS

All cash  generated from  operations is distributed to the owners,  accordingly,
the Trust has no cash balance at December 31, 1999 and 1998.


<PAGE>



                              AERO CALIFORNIA TRUST
                                    (A TRUST)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

     AIRCRAFT

In accordance with the Financial  Accounting  Standards Board Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of", FSI reviews the carrying value of the equipment under the Trust
at least quarterly, and whenever circumstances indicated that the carrying value
of an asset  may not be  recoverable  in  relation  to  expected  future  market
conditions for the purpose of assessing  recoverability of the recorded amounts.
If  projected  undiscounted  future  cash flows and fair value are less than the
carrying value of the asset, a loss on revaluation is recorded. No reductions to
the carrying value of the assets were required during 1999, 1998, or 1997.

The aircraft in the Trust is used as collateral against the senior loan of EGF V
and EGF VI.

     REPAIRS AND MAINTENANCE

Repair and  maintenance  for the  aircraft  are  usually the  obligation  of the
lessee.

     NET INCOME AND CASH DISTRIBUTIONS TO OWNERS

The net income and cash  distributions  of the Trust are allocated to the Owners
based on their percentage of ownership in the Trust.

     COMPREHENSIVE INCOME

The  Trust's  net income is equal to  comprehensive  income for the years  ended
December 31, 1999, 1998, and 1997.

2.   GENERAL PARTNER AND TRANSACTIONS WITH AFFILIATES

Under the equipment management agreement,  IMI receives a monthly management fee
equal to 2% of the  lease  payments.  The  Trust's  management  fee  expense  to
affiliate was $0.1 million during 1999, 1998, and 1997.

The Trust  reimbursed FSI $1,000,  $8,000,  and $12,000  during 1999,  1998, and
1997,  respectively,  for data processing and  administrative  expenses directly
attributable to the Trust.

The  balance in due to  affiliates  as of  December  31, 1999 and 1998 were $0.1
million and $16,000, respectively, due to IMI for management fees.

3.   NET INVESTMENT IN A DIRECT FINANCE LEASE

During 1996,  the Trust entered into a direct finance lease for the two aircraft
owned by the Trust.  Gross lease  payments  are to be  received  over 91 months,
which commenced in December 31, 1996.

The  components of the net investment in the direct finance lease as of December
31, are as follows (in thousands in dollars):

                                                  1999               1998
                                              (unaudited)
                                            --------------     --------------
  Total minimum lease payments              $      11,340      $      13,860
  Estimated unguaranteed residual values            3,000              3,000
  Less unearned income                             (5,164)            (6,849)
                                            ==============     ==============
                                            $       9,176      $      10,011
                                            ==============     ==============


<PAGE>







                              AERO CALIFORNIA TRUST
                                    (A TRUST)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

3.   NET INVESTMENT IN A DIRECT FINANCE LEASE (CONTINUED)

Future minimum rentals  receivable under the direct finance lease as of December
31, 1999 are  approximately  $2.5 million in 2000,  2001,  2002,  2003, and $4.3
million in 2004.

4.   GEOGRAPHIC INFORMATION

The aircraft are leased and operating in Mexico.

5.   INCOME TAXES

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

As of December 31, 1999, the financial  statement  carrying amount of assets and
liabilities was approximately  $5,000 lower than the federal income tax basis of
such assets and  liabilities,  primarily due to differences in provision for bad
debt.

6.   CONCENTRATIONS OF CREDIT RISK

Financial instruments,  which potentially subject the Trust to concentrations of
credit risk consist principally of lease receivables.  The aircraft in the Trust
was on finance lease to only one customer during 1999, 1998, and 1997.

As of December 31, 1999, the manager believes the Trust had no other significant
concentrations  of credit risk that could have a material  adverse effect on the
Trust.