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, 1997.

     [  ]     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 41.

Total number of pages in this report:  44



<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  Class A 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 owning and leasing transportation-related
equipment  to be operated by or leased to various  shippers  and  transportation
companies.

The Partnership's primary objectives are:

     (1) to acquire 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 as deemed  appropriate by the General
Partner,  until the  conclusion  of the  reinvestment  phase of the  Partnership
operations on December 31, 1996;

     (2) to generate sufficient net operating cash flow from lease operations to
meet existing  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 or purchase (until the conclusion of the
reinvestment  phase, which ended on December 31, 1996) other equipment to add to
the  Partnership's  initial  portfolio.  The  General  Partner  intends  to sell
equipment  when it 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 not  equal or  exceed  other
equipment  investment  opportunities.  Proceeds from these sales,  together with
excess  net  operating  cash flow  from  operations  that  remained  after  cash
distributions  had been  made to the  limited  partners,  were  used to  acquire
additional  equipment   throughout  the  six-year   reinvestment  phase  of  the
Partnership, which concluded on December 31, 1996;

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

The offering of the  Partnership  units closed on March 28, 1990. As of December
31,  1997,  there  were  8,628,420  units   outstanding.   The  General  Partner
contributed $100 for its 5% general partner interest in the Partnership.

In the ninth year of operations of the  Partnership,  which commences on January
1,  1999,  the  General  Partner  will  begin to  liquidate  the  assets  of the
Partnership in an orderly fashion,  unless the Partnership is terminated earlier
upon sale of all of the  Partnership's  equipment or by certain other events. It
is anticipated  that the  liquidation  will be completed by the end of the tenth
year of operations of the Partnership.  Beginning in the  Partnership's  seventh
year of  operations,  all surplus cash flow will be distributed to the partners,
used to repay  Partnership  debt, or held as Partnership  working  capital.  The
sixth year of operations ended December 31, 1996.




<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, 1997 (in thousands of dollars):

<TABLE>
<CAPTION>

                                     TABLE 1

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


Equipment held for operating leases:


   <S>       <C>                                                     <C>                                  <C>
      1      Bulk carrier                                            Namura Shipping                      $     9,719
      1      DC-9-32 stage II commercial aircraft                    McDonnell-Douglas                         10,041
      3      737-200 stage II commercial aircraft                    Boeing                                    26,945
      1      Dash 8-300 commuter aircraft                            Dehavilland                                5,748
    463      Dry marine containers                                   Various                                    1,780
    493      Refrigerated marine containers                          Various                                   11,604
     98      Woodchip gondola railcars                               General Electric                           2,341
    364      Pressurized and nonpressurized tank cars                Various                                   10,334
    110      Bulkhead flatcars                                       Marine Industries Ltd.                     2,153
    103      Refrigerated trailers                                   Various                                    2,359
    145      Dry piggyback trailers                                  Stoughton                                  1,106
    273      Dry trailers                                            Various                                    3,390
                                                                                                         ---------------


             Total equipment held for operating leases                                                    $    87,520<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-9-47 stage III commercial aircraft             McDonnell-Douglas                          3,901<F3>
                                                                                                         ---------------

             Total investments                                                                            $    13,606<F1>

<FN>

<F1> Includes proceeds from capital contributions,  operations,  and Partnership
     borrowings invested in equipment. 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 for a term of one to
six years. Some of 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.

As of  December  31,  1997,  approximately  72%  of  the  Partnership's  trailer
equipment operated in rental yards owned and maintained by PLM Rental, Inc., the
short-term trailer rental subsidiary of PLM International  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,  Cargill
International  S.A.,  Continental  Airlines,  Inc.,  Transamerica  Leasing,  and
Canadian   Pacific   Railways.





<PAGE>



(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 equipment.  The Partnership's management agreement with IMI is
to  co-terminate  with the dissolution of the  Partnership,  unless the 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
transportation 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 the  Partnership is leased out on an operating
lease basis wherein the rents owed 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 the operating  lease need not be  capitalized  on the lessee's
balance sheet.

The Partnership encounters considerable  competition from lessors utilizing full
payout  leases on new  equipment,  i.e.,  leases  that have  terms  equal to the
expected  economic  life of the  equipment.  Full payout  leases are written for
longer terms and for lower monthly rates than the Partnership offers. 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  of the  Partnership  may write full payout  leases at  considerably
lower  rates,  or larger  competitors  with a lower  cost of  capital  may offer
operating  leases at lower rates,  and as a result,  the Partnership may be at a
competitive disadvantage.

(2)     Manufacturers and Equipment Lessors

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

(D)     Demand

The Partnership has investments in transportation-related  capital equipment and
relocatable  environments.  Types  of  transportation  equipment  owned  by  the
Partnership   include  aircraft,   marine  vessels,   railcars,   and  trailers.
Relocatable   environments   are   functionally   self-contained   transportable
equipment,  such as  marine  containers.  Except  for those  aircraft  leased to
passenger  air  carriers,  the  Partnership's  equipment  is 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:

(1)      Aircraft

(a)      Commercial Aircraft

The commercial  aircraft  market  experienced  another good year in 1997, with a
third consecutive year of profits by the world's airlines.  Airline  managements
have continued to emphasize cost reductions and a moderate increase in capacity.
However,  even the  limited  volume of new  aircraft  deliveries  has caused the
market to change from being in  equilibrium  at the end of 1996 to having excess
supply.  This  market  imbalance  is expected  to  continue,  with the number of
surplus aircraft  increasing from  approximately 350 aircraft at the end of 1996
to an estimated 600 aircraft by the end of the decade.

The changes  taking  place in the  commercial  aircraft  market also reflect the
impact of noise  legislation  enacted in the United  States and Europe.  Between
1997 and the end of  2002,  approximately  1,400  Stage II  aircraft  (Stage  II
aircraft are aircraft  that have been shown to comply with Stage II noise levels
prescribed  in Federal  Aviation  Regulation  section  C36.5) are forecast to be
retired,  primarily  due to  noncompliance  with Stage III  aircraft  (Stage III
aircraft are aircraft that have been shown to comply with Stage III noise levels
prescribed in Federal Aviation  Regulation  section C36.5) noise  requirements).
This  represents  about 41% of the Stage II aircraft now in  commercial  service
worldwide.  By 2002, about 2,000 (59%) of the current fleet of Stage II aircraft
will remain in operational service outside of Stage III-legislated regions or as
aircraft  that have had hushkits  installed so that engine noise levels meet the
quieter Stage III  requirements.  The cost to install a hushkit is approximately
$1.5 million,  depending on the type of aircraft.  All aircraft  currently being
manufactured will meet Stage III requirements.

The  Partnership's  narrowbody fleet is positioned to provide a balance of Stage
III and Stage II  aircraft  in the  portfolio.  This  strategy  is  intended  to
optimize  individual aircraft and the corresponding lease rentals with projected
demand.  The Stage II aircraft are positioned with air carriers that are outside
Stage III-legislated areas or are anticipated to be sold or leased outside Stage
III areas before the year 2000.

(b)      Commuter Aircraft

The commuter  aircraft  market is  experiencing a revolution with the successful
entry of small regional jets into this market. Major turboprop manufacturers are
re-evaluating  their programs,  and several successful but larger models are now
being  considered for phase-out.  The original concept for regional jets was for
them to take over hub-and-spoke  routes served by the larger turboprops in North
America,  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 marginal routes previously operated by narrowbody aircraft,
allowing the  larger-capacity  aircraft to be more  efficiently  employed in the
airline's route system.

The  Partnership  leases a commuter  aircraft  in the 36- to  50-seat  turboprop
category.  This  aircraft is positioned in North  America,  the  fastest-growing
market for commuter  aircraft in the world. The  Partnership's  aircraft possess
unique performance capabilities,  compared to other turboprops,  which allows it
to readily operate at a maximum payload from unimproved  surfaces and hot, high,
and short runways.  The market for turboprops is undergoing  rapid change due to
the  introduction  of  regional  jets.  The  manufacturer  of the  Partnership's
commuter  aircraft has already announced  production  cutbacks for some types of
turboprops,  which may adversely affect both demand and near-term values for the
Partnership's aircraft.

(2)      Marine Vessels

The Partnership owns or has investments with other affiliated  programs in small
to  medium-sized  dry bulk  vessels,  which are traded in worldwide  markets and
carry commodity cargos.  Demand for commodity  shipping closely tracks worldwide
economic growth patterns;  however,  economic  development alters trade patterns
from  time to time,  causing  changes  in volume on trade  routes.  The  General
Partner operates the Partnership's marine vessels under spot charters and period
charters.  It is believed that this operating  approach provides the flexibility
to adapt to changing demand patterns.

Freight rates for dry bulk vessels in 1997 maintained the levels  experienced in
the fourth  quarter of 1996.  Freight rates had declined  significantly  in 1996
until a moderate  recovery occurred late in the year due to an increase in grain
trade.  The size of the  overall  dry bulk  carrier  fleet  increased  by 3%, as
measured by the number of vessels, and by 5%, as measured by deadweight tonnage.
Scrapping of ships was not a significant factor in 1997: 126 dry bulk ships were
scrapped  while 247 were  delivered.  Total dry trade (as measured in deadweight
tons) grew by 3% in 1997,  versus 1% in 1996.  This balance of supply and demand
made market conditions soft,  providing little foundation for increasing freight
rates.

Growth in 1998 is expected to be approximately  2%, with most commodity  trading
flat.  The  majority  of growth is  forecast to come from grain (2%) and thermal
coal (6%). The primary  variable in forecasts is Asian growth;  if there is some
recovery from the economic  shake-up of the second half of 1997, then there will
be prospects for  improvement in 1998.  Delivery of ships in 1998 is expected to
be about the same as in 1997;  however,  an increase in scrapping is anticipated
to strengthen the market.

Current rates do not justify any new construction of dry bulk carriers and there
should be a  significant  drop in orders  over the next two years.  If growth in
demand  matches  historic  averages of around 3%, then the current excess supply
should be absorbed by the end of 1999, leading to the possible  strengthening of
freight rates.

(3)      Marine Containers

The marine  container  market began 1997 with a continuation  of the weakness in
industrywide  container utilization and rate pressures that had been experienced
in 1996. A reversal of this trend began in early spring and continued throughout
the remainder of 1997, as utilization  returned to the 80% range. Per diem rates
did not  strengthen,  however,  as  customers  resisted  attempts to raise daily
rental rates.

Industrywide  consolidation continued in 1997. Late in the year, Genstar, one of
the world's largest container leasing  companies,  announced that it had reached
an agreement  with  SeaContainers,  another  large  container  leasing  company,
whereby  SeaContainers  will take over the management of Genstar's  fleet.  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)      Railcars

(a)      Pressurized Tank Cars

Pressurized  tank cars are used  primarily in the  petrochemical  and fertilizer
industries  to transport  liquefied  petroleum gas and  anhydrous  ammonia.  The
utilization  rate on the  Partnership's  fleet of pressurized tank cars was over
98% during 1997. The demand for natural gas is anticipated to grow through 1999,
as the developing  world,  former Communist  countries,  and the  industrialized
world all increase  their energy  consumption.  World demand for  fertilizer  is
expected to  increase,  based on an awareness  of the  necessity of  fertilizing
crops and improving  diets, the shortage of farmland,  and population  growth in
developing nations.

Based on ongoing renewals with current lessees,  demand for these cars continues
to be strong and is projected to remain so during 1998.

(b)      General Purpose (Nonpressurized) Tank Cars

General purpose or nonpressurized tank cars are used to transport a wide variety
of bulk liquid commodities, such as petroleum fuels, lubricating oils, vegetable
oils, molten sulfur,  corn syrup,  asphalt,  and specialty  chemicals.  Chemical
carloadings  for the  first 45 weeks of 1997  were up 4%,  compared  to the same
period  in 1996.  The  demand  for  petroleum  is  anticipated  to grow,  as the
developing  world,  former Communist  countries,  and the  industrialized  world
increase energy consumption.

The demand for general purpose tank cars in the Partnership's fleet has remained
healthy over the last three years, with utilization remaining above 98%.

(c)      Bulkhead Flatcars

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 for  particleboard  and plywood.  The demand for bulkhead flat cars depends
upon  the  demand  for  paper,  paper  products,   particleboard,  and  plywood.
Nationally, the demand for cars carrying primary forest products decreased 5% in
1997.

(d)  Woodchip Gondola Railcars

Woodchip cars are  large-capacity  (6,600 cubic foot) gondolas used to transport
woodchips from the sawmills to the pulp mills.  High-grade woodchips are used to
manufacture  paper,  while low-grade  woodchips are used for  particleboard  and
plywood.  The demand for woodchip cars depends upon the demand for paper,  paper
products,  particleboard,  and plywood. Nationally, the demand for cars carrying
primary forest products decreased 5% in 1997.

(5)      Trailers

(a)      Intermodal (Piggyback) Trailers

In all intermodal  equipment areas,  1997 was a remarkably strong year. The U.S.
inventory of intermodal equipment totaled  approximately  163,900 units in 1997,
divided  between  about 55%  intermodal  trailers and 45%  domestic  containers.
Trailer loadings increased  approximately 4% in 1997 due to a robust economy and
a continuing  shortage of drivers in over-the-road  markets.  The expectation is
for flat to slightly  declining  utilization of intermodal trailer fleets in the
near future.

Overall  utilization in the  Partnership's  dry piggyback  fleet was over 75% in
1997,  an  increase  of 10% over 1996  levels.  The  expectation  is for flat to
slightly lower utilization of the fleet in the near future.

(b)      Over-the-Road Dry Trailers

The U.S.  over-the-road  dry trailer market began to recover in mid-1997,  as an
oversupply of equipment  from 1996  subsided.  The strong  domestic  economy,  a
continuing focus on integrated  logistics  planning by American  companies,  and
numerous  service  problems on class I railroads  contributed to the recovery in
the dry van market.  There  continues  to be much  consolidation  of the trailer
leasing  industry in North America,  as the two largest  lessors of dry vans now
control over 60% of the market.  The reduced level of competition,  coupled with
anticipated continued strong utilization, may lead to an increase in rates.

Utilization of the Partnership's dry van fleet was up 8% over last year.

(c)      Over-the-Road Refrigerated Trailers

The  temperature-controlled  over-the-road  trailer  market  recovered  in 1997;
freight levels improved and equipment oversupply was reduced as industry players
actively  retired older  trailers and  consolidated  fleets.  Most  refrigerated
carriers posted revenue growth of between 2% and 5% in 1997, and accordingly are
planning  fleet  upgrades.   In  addition,   with   refrigeration   and  trailer
technologies   changing  rapidly  and  industry  regulations  becoming  tighter,
trucking companies are managing their refrigerated fleets more effectively.

As a  result  of  these  changes  in  the  refrigerated  trailer  market,  it is
anticipated that trucking  companies will utilize short-term trailer leases more
frequently  to  supplement  their  fleets.  Such  a  trend  should  benefit  the
Partnership,  which  generally  leases its equipment on a short-term  basis from
rental  yards  owned  and  operated  by  PLM  subsidiaries.   The  Partnership's
utilization,  especially in the second half of 1997,  was  significantly  higher
than 1996 levels. ` (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  that may
require the 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  United  States  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 United States 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;

     (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 United States 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 cars.

As of  December  31,  1997,  the  Partnership  is 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 for leasing purposes.  As of December 31, 1997, the Partnership
owned a portfolio of transportation and related equipment,  as described in Part
I, Table 1(a).

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,  along  with  FSI,  TEC,  IMI and PLM  Securities  (the  PLM
Entities),  are  named as  defendants  in a lawsuit  filed as a class  action on
January 22, 1997 in the Circuit Court of Mobile County,  Mobile,  Alabama,  Case
No.  CV-97-251  (the Koch action).  The  plaintiffs,  who filed the complaint on
their  own and on  behalf  of all  class  members  similarly  situated,  are six
individuals who allegedly invested in certain  California  limited  partnerships
for  which FSI acts as the  general  partner,  including  the  Partnership,  PLM
Equipment  Growth Fund V, PLM Equipment Growth Fund VI, and PLM Equipment Growth
& Income Fund VII (the Growth  Funds).  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 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,  general partner, and
control persons. Based on these duties,  plaintiffs assert liability against the
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 limited partnership units
back to the defendants.

On March 6, 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.  On September 24, 1997, the district  court denied  plaintiffs'
motion and dismissed  without  prejudice the individual claims of the California
class  representative,  reasoning  that he had  been  fraudulently  joined  as a
plaintiff.  On October 3, 1997,  plaintiffs  filed a motion  requesting that the
district  court  reconsider  its ruling or, in the  alternative,  that the court
modify its order  dismissing the California  plaintiff's  claims so that it is a
final  appealable  order,  as well as  certify  for an  immediate  appeal to the
Eleventh  Circuit  Court of Appeals that part of its order  denying  plaintiffs'
motion to remand.  On October 7, 1997,  the district  court denied each of these
motions.  In responses to such denial,  plaintiffs  filed a petition for writ of
mandamus  with the Eleventh  Circuit,  which was denied on November 18, 1997. On
November 24,  1997,  plaintiffs  filed with the Eleventh  Circuit a petition for
rehearing and  consideration of the full court of the order denying the petition
for a writ of mandamus, which petition was supplemented by plaintiffs on January
27, 1998.

On  October  10,  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 the motion on December 8, 1997. On December 15, 1997,
plaintiffs  filed with the Eleventh Circuit a notice of appeal from the district
court's order granting  defendants' motion to compel arbitration and to stay the
proceedings,  and of the  district  court's  September  24,  1997 order  denying
plaintiffs'  motion to  remand  and  dismissing  the  claims  of the  California
plaintiff.  Plaintiffs  filed an amended  notice of appeal on December 31, 1997.
The PLM Entities  believe that the allegations of the Koch action are completely
without merit and intend to continue to defend this matter vigorously.

On June 5, 1997, the PLM Entities 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,  the PLM  Entities  filed  with the  district  court  for the
Northern  District of California  (Case No.  C-97-2847 WHO) a 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. By memorandum and order dated October 23, 1997, the district
court denied the PLM Entities'  petition to compel  arbitration.  On November 5,
1997, the PLM Entities filed an expedited  motion for leave to file a motion for
reconsideration  of this order,  which  motion was granted on November 14, 1997.
The parties have agreed to have oral argument on the reconsideration  motion set
for April 23, 1998.  The state court action has been stayed pending the district
court's decision on this motion.

In  connection  with  her  opposition  to  the  Company's   petition  to  compel
arbitration,  on August 22, 1997, the plaintiff filed an amended  complaint with
the  state  court  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 Section 1709 and 1710.
Plaintiff has also served certain discovery  requests on defendants.  Because of
the stay, no response to the amended  complaint or to the discovery is currently
required. The PLM Entities believe that the allegations of the amended complaint
in the Romei  action are  completely  without  merit and  intend to defend  this
matter vigorously.

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, 1997.










                      (This space intentionally left blank)




<PAGE>



                                     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
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.  Gross
income in each year of the  Partnership  is  specially  allocated to the General
Partner to the extent  necessary  to cause the  capital  account  balance of the
General Partner to be zero as of the close of such year. The remaining interests
in the profits and losses and  distributions of the Partnership are owned, as of
December 31, 1997, by the 9,667 holders of units in the Partnership.

There are several  secondary  exchanges that will facilitate sales and purchases
of limited partnership units.  Secondary markets are characterized as having few
buyers for limited partnership interests and, therefore, generally are viewed as
inefficient  vehicles for the sale of partnership  units.  There is presently 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 can not be  transferred  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 number  permitted by certain safe harbors  promulgated  by the
Internal  Revenue  Service.  A  transfer  may  be  prohibited  if  the  intended
transferee is not a U.S.  citizen or if the transfer  would cause any portion of
the units to be treated as plan  assets.  The  Partnership  may redeem a certain
number of units  each  year.  As of  December  31,  1997,  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 1998.



















                      (This space intentionally left blank)





<PAGE>



ITEM 6.  SELECTED FINANCIAL DATA

Table  2,  below,   lists  selected  financial  data  for  the  Partnership  (in
thousands):


                                     TABLE 2

                               For the years ended
                  December 31, 1997, 1996, 1995, 1994, and 1993
         (in thousands of dollars, except weighted-average unit amounts)
<TABLE>
<CAPTION>

                                                 1997            1996             1995            1994             1993
                                            --------------------------------------------------------------------------------

<S>                                           <C>             <C>             <C>              <C>             <C>
Operating results:
  Total revenues                              $  16,378       $   22,120      $   21,410       $  24,367       $   27,925
  Net gain on disposition
    of equipment                                  2,830            3,179             530           3,336              179
  Loss on revaluation of
    equipment                                        --               --            (417)           (820)              --
  Equity in net income (loss) of uncon-
    solidated special-purpose entities            2,952             (331)             --              --               --
  Net income (loss)                               2,098           (4,119)         (3,611)         (5,112)          (6,380)

At year end:
  Total assets                                $  46,089       $   59,009      $   71,924       $  82,773       $   98,453
  Total liabilities                              24,862           34,100          35,449          35,997           38,880
  Notes payable                                  21,000           29,250          30,800          30,800           33,000

Cash distribution                             $   5,780       $    7,271      $    6,443       $   7,523       $   14,628

Cash distribution representing a
    return of capital                         $   3,682       $    6,908      $    6,124       $   7,135       $   13,891

Per weighted-average limited partnership unit:

Net income (loss)                             $    0.21       $    (0.52)     $    (0.45)      $   (0.63)      $    (0.82)

Cash distribution                             $    0.64       $     0.80      $     0.71       $    0.82       $     1.60

Cash distribution representing a
    return of capital                         $    0.43       $     0.80      $     0.71       $    0.82       $     1.60

</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 various  sectors of the
transportation  industry and its effect on the  Partnership's  overall financial
condition.

(B)      Results of Operations -- Factors Affecting Performance

(1)      Re-leasing and Repricing Activity

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 transportation equipment include supply and demand for similar or comparable
types or kinds of transport capacity, desirability of the equipment in the lease
market,  market  conditions  for the  particular  industry  segment in which the
equipment is to be leased,  overall  economic  conditions,  various  regulations
concerning the use of the equipment,  and others.  Equipment that is idle or out
of  service  between  the  expiration  of one  lease  and  the  assumption  of a
subsequent one can result in a reduction of contribution to the Partnership. The
Partnership  experienced  re-pricing  exposure in 1997  primarily  in its marine
vessel, trailer, and marine container portfolios.

     (a)  Marine Vessels:  The Partnership's marine vessels operated in the time
          charter  market during 1997.  During 1996,  the  Partnership's  marine
          vessel was locked into a time  charter  for eleven  months and renewed
          its time charter during  December 1996 at a lower rate.  Although time
          charter  rates  remained  constant  from late 1996 through  1997,  the
          Partnership  saw a decline  in  revenues  due to the  decline  in time
          charter rates from 1996.

     (b)  Trailers:  The Partnership's  trailer portfolio operates in short-term
          rental facilities or with short-line railroad systems.  The relatively
          short duration of most leases in these operations exposes the trailers
          to considerable re-leasing and repricing activity.

     (c)  Marine Containers:  The majority of the Partnership's marine container
          portfolio operates in utilization-based  leasing pools and as such was
          highly exposed to re-leasing and repricing activity. The Partnership's
          marine  container  contributions  declined  from 1996 to 1997,  due to
          equipment  sales and soft market  conditions  that caused a decline in
          re-leasing activity.

(2)  Equipment Liquidations and Nonperforming Lessees

Liquidation of Partnership  equipment  represents a reduction in the size of the
equipment  portfolio,  and will result in reduction of net  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 leases, 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  and legal fees. The  Partnership  experienced the
following in 1997:

     (a)  Liquidations:  During 1997, the Partnership  sold a marine vessel,  an
          aircraft engine,  marine containers,  railcars,  and trailers for $8.5
          million. The sale proceeds of this equipment represented approximately
          42% of the original cost of these  assets.  The  Partnership  used the
          majority  of these  proceeds to make a required  principal  payment of
          $8.3 million.

     (b)  Nonperforming  Lessees:  During 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.
          Currently the Partnership expects to sell this asset in 1998.



(3)      Reinvestment Risk

During  the  first  six  years of  operations,  the  Partnership  increased  its
equipment  portfolio by investing  surplus cash in  additional  equipment  after
fulfilling  operating  requirements  and paying  distributions  to the partners.
Subsequent to the end of the reinvestment  period that concluded on December 31,
1996, the Partnership will continue to operate for an additional two years, then
begin an orderly liquidation over an anticipated two-year period.

(4)      Equipment Valuation and Write-downs

In March 1995, the Financial  Accounting Standards Board (FASB) issued statement
No. 121,  "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed  Of" (SFAS 121).  This  standard  is  effective  for years
beginning after December 15, 1995. The Partnership adopted SFAS 121 during 1995,
the effect of which was not material,  as the method previously  employed by the
Partnership  was  consistent  with SFAS 121. In  accordance  with SFAS 121,  the
Partnership  reviews the carrying  value of its  equipment at least  annually in
relation to expected  future market  conditions for the purpose of assessing the
recoverability of the recorded  amounts.  If projected future lease revenue plus
residual  values are less than the carrying  value of the  equipment,  a loss on
revaluation is recorded.  The carrying value of a commuter  aircraft was reduced
by $0.4 million in 1995 and sold in the second  quarter of 1995. No  write-downs
were required in 1997 or 1996.

As of December 31, 1997, the General  Partner  estimated the current fair market
value of the Partnership's  equipment  portfolio,  including  equipment owned by
unconsolidated special-purpose entities, to be approximately $63.5 million.

(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 original  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, 1997, the Partnership  generated $5.9 million in
operating   cash  (net  cash   provided  by  operating   activities   plus  cash
distributions  from  unconsolidated   special-purpose   entities)  to  meet  its
operating  obligations  and maintain the current level of  distributions  (total
1997 of $5.8 million) to the partners.

As of December 31, 1997, the Partnership had one loan outstanding totaling $21.0
million.  The  remaining  balance  of this loan is due in two  yearly  principal
payments of $8.2 million on July 1, 1998 and 1999, and $4.6 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 a net
worth ratio of at least 33.33% of the fair market value of equipment plus cash.

Pursuant to its  prospectus,  beginning  January 1, 1993, if the number of units
made available for purchase by limited  partners  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, where
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 1998.

During  December  1997,  the  General  Partner  amended and  restated  its joint
short-term credit facility (the Committed Bridge  Facility).  The Partnership is
no longer included as a borrower.






<PAGE>



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

(1) 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 repair and maintenance,  marine
equipment operating,  and asset-specific  insurance expenses) on owned equipment
decreased  during the year ended December 31, 1997,  compared to the same period
of 1996. The following  table  presents  lease revenues less direct  expenses by
owned equipment type (in thousands of dollars):

<TABLE>
<CAPTION>

                                                                              For the Years
                                                                            Ended December 31,
                                                                          1997              1996
                                                                      ------------------------------
<S>                                                                     <C>               <C>
Aircraft                                                                $ 3,971           $ 2,487
Rail equipment                                                            2,526             2,251
Trailers                                                                  1,244             1,595
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:

     (1) 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.

     (2) 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.

     (3) 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.

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

     (5) 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:

     (1) 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.

     (2) 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 Unconsolidated Special-Purpose Entities

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

<TABLE>
<CAPTION>

                                                                              For the Years
                                                                            Ended December 31,
                                                                          1997              1996
                                                                      ------------------------------
<S>                                                                     <C>               <C>
Aircraft                                                                $ 3,924           $  (315)
Marine vessels                                                             (972 )             (16)

</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  and  administrative  expenses of $1.0 million.  During the same
period  of 1996,  revenues  of $1.1  million  were  offset by  depreciation  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.

(2) Comparison of Partnership's  Operating  Results for the Years Ended December
31, 1996 and 1995


(a)      Owned Equipment Operations

Lease revenues less direct expenses (defined as repairs and maintenance,  marine
equipment operating,  and asset-specific  insurance expenses) on owned equipment
decreased  during the year ended  December  31,  1996 when  compared to the same
period of 1995. The following table presents lease revenues less direct expenses
by owned equipment type (in thousands of dollars):

<TABLE>
<CAPTION>

                                                                              For the Years
                                                                            Ended December 31,
                                                                          1996              1995
                                                                      ------------------------------
<S>                                                                     <C>               <C>
Aircraft                                                                $ 2,487           $ 5,540
Rail equipment                                                            2,251             2,837
Marine vessels                                                            2,232             2,496
Trailers                                                                  1,595               943
Marine containers                                                         1,191             1,218
Mobile offshore drilling unit                                               163               224

</TABLE>

Aircraft: Aircraft lease revenues and direct expenses were $5.1 million and $2.6
million,  respectively,  for the year ended December 31, 1996,  compared to $5.9
million and $0.4  million,  respectively,  during the same  period of 1995.  The
decrease in revenue was attributable to the sale of two aircraft in 1995 and the
off-lease status of another aircraft that was repossessed from the lessee in the
third quarter of 1996. The  repossessed  aircraft  earned revenue for the entire
year of 1995,  compared to eight months of 1996.  The  decrease  was offset,  in
part, by the purchase of a Dash 8-300  aircraft at the end of the second quarter
of 1996.  Direct  expenses  increased  due to the overhaul of four engines on an
aircraft  sold  at the end of  1996.  This  aircraft  had  been  off  lease  for
approximately two years. In addition,  repairs on the repossessed  aircraft were
required to meet airworthiness conditions before it could be re-leased.

Rail equipment: Railcar lease revenues and direct expenses were $3.6 million and
$1.4 million,  respectively,  for the year ended December 31, 1996,  compared to
$3.6  million and $0.8  million,  respectively,  during the same period of 1995.
Although the railcar fleet  remained  relatively the same size for both periods,
the decrease in railcar  contribution  resulted from running repairs required on
certain of the  railcars in the fleet  during  1996 that were not needed  during
1995.

Marine  vessels:  Marine  vessel lease  revenues and direct  expenses  were $6.6
million and $4.4 million,  respectively,  for the year ended  December 31, 1996,
compared to $6.3 million and $3.8 million, respectively,  during the same period
of 1995. Lease revenue increased due to higher charter rates earned for a marine
vessel  that  switched  from  a  utilization-based   pooling  arrangement  to  a
fixed-rate  time  charter  in the  beginning  of  1996.  In  addition,  revenues
increased  due to the higher  profit-sharing  revenue  earned on another  marine
vessel in the year ended December 31, 1996, compared to the same period in 1995.
Direct expenses  increased due to higher estimated future drydock costs for both
marine  vessels in the year ended  December 31, 1996,  when compared to the same
period in 1995.

Trailers:  Trailer lease revenues and direct expenses were $2.0 million and $0.4
million,  respectively,  for the year ended December 31, 1996,  compared to $1.3
million and $0.4  million,  respectively,  during the same  period of 1995.  The
increase in lease  revenues was primarily due to the addition of 333 trailers in
1995.

Marine containers: Marine container lease revenues and direct expenses were $1.2
million  and  $23,000,  respectively,  for the year  ended  December  31,  1996,
compared to $1.6 million and $0.4 million during the same period of 1995.  Lease
revenues have decreased due to sales and dispositions of marine  containers over
the last 12  months  and  lower  utilization.  Direct  expenses  have  decreased
primarily due to repairs performed on 327 marine containers in 1995.

Mobile  offshore  drilling  unit (rig):  The  Partnership's  rig was sold in the
second  quarter of 1996,  resulting in the  elimination of  contribution  in the
third  quarter.  Rig lease  revenues and direct  expenses  were $0.2 million and
$1,000,  respectively,  for the year ended  December 31, 1996,  compared to $0.2
million and $45,000, respectively, during the same period of 1995.

(b) Indirect Expenses Related to Owned Equipment Operations

Total indirect expenses decreased to $17.0 million in 1996 from $17.3 million in
1995. The variances are explained as follows:

     (1) A $1.5 million decrease in depreciation and amortization  expenses from
1995 levels reflects the sale of certain assets during 1996 and 1995.

     (2) A $0.1 million  decrease in management fees to affiliates  reflects the
lower levels of lease  revenues in the year ended December 31, 1996, as compared
to the same period in 1995.

     (3) A $1.0  million  increase  in bad debt  expense  reflects  the  General
Partner's  evaluation of the collectibility of receivables due from two aircraft
lessees that encountered financial difficulties.

     (4) A $0.3 million  increase in general and  administrative  expenses  from
1995 levels results from the increased  administrative costs associated with the
short-term  rental  facilities  due  to  additional  trailers  operating  in the
facilities in the first months of 1996, compared to the same period in 1995.

(c) Loss on Revaluation of Equipment

Loss on  revaluation  of  equipment of $0.4  million in 1995  resulted  from the
reduction  of the net book value of an  aircraft  to its  estimated  fair market
value less cost to sell.  This aircraft was sold in the second  quarter of 1995.
There was no loss on  revaluation  of equipment  in the year ended  December 31,
1996.

(d) Net Gain on Disposition of Owned Equipment

The net gain on  disposition  of equipment for the year ended  December 31, 1996
totaled  $3.2  million,  which  resulted  from the sale or  disposal  of  marine
containers,  railcars,  trailers,  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.  For the year ended  December 31, 1995,  the $0.5 million net
gain on  disposition  of equipment  resulted from the sale or disposal of marine
containers,  aircraft,  and  trailers,  with an aggregate net book value of $5.7
million, for aggregate proceeds of $6.2 million.

(e)      Interest and Other Income

Interest and other income  decreased $0.1 million during the year ended December
31,  1996,  which  was due  primarily  to lower  interest  rates  earned on cash
balances available for investments when compared to the same period of 1995.

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

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

<TABLE>
<CAPTION>

                                                                              For the Years
                                                                            Ended December 31,
                                                                          1996              1995
                                                                      ------------------------------
<S>                                                                     <C>               <C>
Aircraft                                                                $  (315 )         $  (263)
Marine vessels                                                              (16 )             203

</TABLE>

Aircraft:   Revenues   and  expenses   were  $1.1  million  and  $1.4   million,
respectively, for the year ended December 31, 1996, compared to $0.2 million and
$0.5 million,  respectively,  for the same period in 1995.  The  investment in a
trust owning 737-200A  commercial  aircraft was acquired at the end of the third
quarter  of  1995.  The  net  contribution  is  significantly  impacted  by  the
depreciation  charges that are greatest in the early years due to the use of the
double-declining  balance method of  depreciation.  The trust  depreciates  this
investment over a six-year period.

Marine vessel: As of December 31, 1996 and 1995, the Partnership had an interest
in an entity that owns a marine vessel.  Revenues and expenses were $1.7 million
and $1.7 million,  respectively,  for the year ended December 31, 1996, compared
to $1.2 million and $1.0 million,  respectively, for the same period in 1995. At
the end of 1995, this marine vessel was transferred from a bare-boat  charter to
a time charter.  Time charters have higher  revenues  associated with them since
the owner pays for costs, such as operating costs, normally borne by the lessees
under bare-boat  charters.  In addition,  lease revenue decreased  slightly as a
result  of this  marine  vessel  being  off lease for about 18 days in the first
quarter of 1996 due to scheduled drydocking repairs.

(g)      Net Loss

As a result of the foregoing,  the  Partnership's  net loss was $4.1 million for
the year ended December 31, 1996,  compared to a net loss of $3.6 million in the
same period in 1995. The Partnership's  ability to operate and liquidate assets,
secure leases,  and re-lease those assets whose leases expire during the life of
the Partnership is subject to many factors, and the Partnership's performance in
the year  ended  December  31,  1996 is not  necessarily  indicative  of  future
periods. For the year ended December 31, 1996, the Partnership  distributed $6.9
million  to  the  limited  partners,  or  $0.80  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 3 to the financial statements for information on the revenues,  income, and
net book value of equipment in various geographic regions.

Revenues and net 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 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 additional  equipment is sold
or disposed of in various equipment markets and geographic areas. An explanation
of the current relationships is presented below.

The Partnership's  owned equipment on lease to United  States-domiciled  lessees
consists of trailers, railcars, and aircraft. During 1997, lease revenues in the
United States  accounted  for 37% of the lease  revenues of wholly and partially
owned  equipment,  while net  income  accounted  for $1.1  million  of the total
aggregate net income for the Partnership of $2.1 million.

The Partnership's owned equipment and investments in equipment owned by USPEs on
lease to  Canadian-domiciled  lessees consists of railcars and aircraft.  During
1997,  lease  revenues  accounted for 22% of total lease  revenues of wholly and
partially owned  equipment,  while net income  accounted for $3.3 million of the
total  aggregate net income for the  Partnership  of $2.1  million.  The primary
reason  for this  revenue  is that a large  gain was  realized  from the sale of
assets in this geographic region.

The  Partnership's  owned  equipment  on lease to South  Asia-domiciled  lessees
accounted for 6% of the lease revenues of wholly and partially  owned  equipment
and generated a net loss of $2.0 million,  when compared to the total  aggregate
net income for the Partnership of $2.1 million. The primary reason for this loss
is that  during  1997,  the lessee of the  Partnership's  aircraft in South Asia
encountered  financial  difficulties,   forcing  the  Partnership  to  establish
reserves against  receivables,  due to the General Partner's  determination that
ultimate collection of these rents is uncertain.

South  American  operations  consisted  of an  owned  aircraft.  Lease  revenues
accounted  for  8% of  total  lease  revenues  of  wholly  and  partially  owned
equipment,  while net income  accounted for $0.5 million in profit,  compared to
total aggregate net income of $2.1 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 27% of lease  revenues of wholly and partially
owned equipment,  while the net income  accounted for $1.6 million.  The primary
reason for this revenue is that the Partnership  sold a marine vessel for a gain
of $2.3 million in this geographic region.

(F)      Year 2000 Compliance

The General  Partner is currently  addressing  the Year 2000  computer  software
issue.  The General Partner is creating a timetable for carrying out any program
modifications that may be required. The General Partner does not anticipate that
the cost of these modifications allocable to the Partnership will be material.

(G)      Accounting Pronouncements

In  June  1997,  the  Financial   Accounting  Standards  Board  issued  two  new
statements:  SFAS No. 130,  "Reporting  Comprehensive  Income,"  which  requires
enterprises to report,  by major  component and in total,  all changes in equity
from  nonowner  sources;  and SFAS No. 131,  "Disclosures  about  Segments of an
Enterprise  and  Related  Information,"  which  establishes  annual and  interim
reporting  standards  for a public  company's  operating  segments  and  related
disclosures about its products, services, geographic areas, and major customers.
Both statements are effective for the  Partnership's  fiscal year ended December
31, 1998, with earlier  application  permitted.  The effect of adoption of these
statements  will  be  limited  to the  form  and  content  of the  Partnership's
disclosures and will not impact the  Partnership's  results of operations,  cash
flow, or financial position.


(H)  Inflation

Inflation had no significant impact on the Partnership's operations during 1997,
1996, or 1995.

(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.


(J)  Outlook for the Future

In 1998, the Partnership  will be in its holding or passive  liquidation  phase.
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.  The  General
Partner anticipates that the liquidation of Partnership assets will be completed
by the scheduled termination of the Partnership at the end of the year 2000.

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

(1)      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, purchases, or sale of equipment.

(2) Distributions

Pursuant  to the  limited  partnership  agreement,  the  Partnership  ceased  to
reinvest in additional  equipment  beginning in its seventh year of  operations,
which  commenced  on January 1, 1997.  The General  Partner  intends to pursue a
strategy of selectively  re-leasing equipment to achieve competitive returns, or
of  selling  equipment  that  is  underperforming  or  whose  operation  becomes
prohibitively  expensive,  in the period prior to the final  liquidation  of the
Partnership.  During this time, the Partnership will use operating cash flow and
proceeds from the sale of equipment to meet its operating  obligations  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 may preclude the General  Partner
from  accurately  determining  the  impact of  future  re-leasing  activity  and
equipment  sales on Partnership  performance  and liquidity.  Consequently,  the
General Partner cannot establish future  distribution  levels with any certainty
at this time.

As of the fourth quarter of 1997, the cash distribution rate was reduced to more
closely reflect current and expected net cash flows from  operations.  Continued
weak market  conditions in certain  equipment  sectors and equipment  sales have
reduced overall lease revenues in the Partnership to the point where  reductions
in  distribution  levels  were  necessary.  In  addition,  with the  Partnership
expected to enter the active  liquidation phase in the near future,  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 will be reduced, significant asset
sales may result in potential special distributions to Unitholders.

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.








<PAGE>



                                    PART III

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

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

<TABLE>
<CAPTION>

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

<S>                                      <C>                   <C>
Robert N. Tidball                        59                    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                    50                    Director, PLM International, Inc.

Douglas P. Goodrich                      51                    Director and Senior Vice President, PLM International;
                                                               Director and President, PLM Financial Services, Inc.;
                                                               President, PLM Transportation Equipment Corporation;
                                                               President, PLM Railcar Management Services, Inc.

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

Robert L. Witt                           57                    Director, PLM International, Inc.

J. Michael Allgood                       49                    Vice President and Chief Financial Officer,
                                                               PLM International, Inc. and PLM Financial Services, Inc.

Stephen M. Bess                          51                    President, PLM Investment Management, Inc.
                                                               and PLM Securities Corp.; Vice President and Director,
                                                               PLM Financial Services, Inc.

Richard K Brock                          35                    Vice President and Corporate Controller,
                                                               PLM International, Inc. and PLM Financial Services, Inc.

Frank Diodati                            43                    President, PLM Railcar Management Services Canada Limited

Steven O. Layne                          43                    Vice President, PLM Transportation Equipment Corporation;
                                                               Vice President, PLM Worldwide Management Services Ltd.

Susan C. Santo                           35                    Vice President, Secretary, and General Counsel,
                                                               PLM International, Inc. and PLM Financial Services, Inc.

Thomas L. Wilmore                        55                    Vice President, PLM Transportation Equipment Corporation;
                                                               Vice President, PLM Railcar Management Services, 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  to  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  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 in the United States
and  abroad,  as well as a senior  advisor  to the  investment  banking  firm of
Prudential  Securities,  where he has been employed since 1987. Mr. Caudill also
serves as a director of VaxGen, Inc. and SBE, 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,  a  subsidiary  of  Guardian  Industries  Corporation  of
Chicago, Illinois, from December 1980 to September 1985.

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 recently acquired 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,  a position  in which he
continues  to serve.  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, General Counsel, and Secretary. In addition to a
law degree from Harvard Law School,  Mr.  Somerset  also holds  degrees in civil
engineering from the Rensselaer  Polytechnic Institute and in marine engineering
from the US 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.

Stephen M. Bess was appointed Director of PLM Financial  Services,  Inc. in July
1997.  Mr. Bess was appointed  President of PLM  Securities  Corporation in June
1996 and 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.

Frank Diodati was appointed  President of PLM Railcar Management Services Canada
Limited in 1986. Previously,  Mr. Diodati was Manager of Marketing and Sales for
G.E. Railcar Services Canada Limited.

Steven O. Layne was appointed  Vice  President of PLM  Transportation  Equipment
Corporation's  Air Group in November  1992, and was appointed Vice President and
Director of PLM Worldwide  Management  Services  Limited in September  1995. Mr.
Layne was its Vice President,  Commuter and Corporate Aircraft beginning in July
1990.  Prior to joining PLM, Mr. Layne was Director of Commercial  Marketing for
Bromon Aircraft Corporation, a joint venture of General Electric Corporation and
the  Government  Development  Bank of Puerto  Rico.  Mr. Layne is a major in the
United States Air Force Reserves and a senior pilot with 13 years of accumulated
service.

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.

Thomas L.  Wilmore was  appointed  Vice  President,  Rail of PLM  Transportation
Equipment  Corporation  in March  1994,  and has  served  as Vice  President  of
Marketing for PLM Railcar  Management  Services,  Inc. since May 1988.  Prior to
joining PLM, Mr. Wilmore was Assistant  Vice President and Regional  Manager for
MNC Leasing  Corporation  in Towson,  Maryland from February 1987 to April 1988.
From July 1985 to  February  1987,  he was  President  and  co-owner of Guardian
Industries  Corporation,  Chicago,  and between December 1980 and July 1985, Mr.
Wilmore was an executive vice  president for its  subsidiary,  G.I.C.  Financial
Services  Corporation.  Mr.  Wilmore also served as Vice  President of Sales for
Gould Financial Services,  located in Rolling Meadows,  Illinois, from June 1978
to December 1980.

The  directors of PLM  International  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 or PLM Financial
Services, Inc.


<PAGE>



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, 1997.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     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.  At December
         31, 1997, no investor was known by the General  Partner to beneficially
         own more than 5% of the Units of the Partnership.

     (b)      Security Ownership of Management

         Neither  the  General  Partner  and its  affiliates  nor any officer or
         director of the General Partner and its affiliates own any units of the
         Partnership as of December 31, 1997.

 ITEM 13.         CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     (a)      Transactions with Management and Others

         During 1997,  management fees to IMI were $0.6 million. The Partnership
         reimbursed FSI and its affiliates $0.5 million for  administrative  and
         data  processing  services  performed on behalf of the  Partnership  in
         1997. The Partnership paid  Transportation  Equipment Indemnity Company
         Ltd.   (TEI),   a   wholly-owned,   Bermuda-based   subsidiary  of  PLM
         International,  $0.1 million for insurance coverages during 1997, 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  1997,  the  unconsolidated  special-purpose  entities  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,  $35,000. The
         unconsolidated  special-purpose entities also paid TEI $0.1 million for
         insurance coverages during 1997.

     (b)      Certain Business Relationships

         None.

     (c)      Indebtedness of Management

         None.

     (d)      Transactions with Promoters

         None.




<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.)

                                      -10-


<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 24, 1998               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 24, 1998


*________________
Douglas P. Goodrich        Director, FSI                   March 24, 1998


*________________
Stephen M. Bess            Director, FSI                   March 24, 1998

*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 Santo
-----------------------
Susan Santo
Attorney-in-Fact





<PAGE>



                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)

                          INDEX TO FINANCIAL STATEMENTS


                                  (Item 14(a))


                                                                     Page

Report of independent auditors                                         27

Balance sheets as of December 31, 1997 and 1996                        28

Statements of operations for the years ended December 31, 1997,
     1996 and 1995                                                     29

Statements of changes in partners' capital for the years
     ended December 31, 1997, 1996 and 1995                            30

Statements of cash flows for the years ended December 31, 1997,
     1996 and 1995                                                     31

Notes to financial statements                                       32-40


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>



                         REPORT OF INDEPENDENT AUDITORS


The Partners
PLM Equipment Growth Fund IV

We have audited the  financial  statements  of PLM  Equipment  Growth Fund IV as
listed  in  the  accompanying   index.   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  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.

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, 1997 and 1996 and the  results of its  operations  and its cash
flows for each of the years in the three-year  period ended December 31, 1997 in
conformity with generally accepted accounting principles.

/S/ KPMG PEAT MARWICK LLP
------------------------------

SAN FRANCISCO, CALIFORNIA
March 12, 1998



<PAGE>




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



<TABLE>
<CAPTION>



                                                                            1997                 1996
                                                                      -------------------------------------
<S>                                                                     <C>                   <C>
Assets

Equipment held for operating leases, at cost                            $    87,520           $   89,766
Less accumulated depreciation                                               (56,215)             (50,784 )
                                                                      -------------------------------------
                                                                             31,305               38,982
Equipment held for sale                                                          --                5,524
                                                                      -------------------------------------
    Net equipment                                                            31,305               44,506

Cash and cash equivalents                                                     3,650                2,142
Restricted cash                                                                 247                  552
Accounts and note receivable, less allowance for doubtful
    accounts of $3,332 in 1997 and $2,329 in 1996                               954                1,477
Due from affiliate                                                               --                  357
Investments in unconsolidated special-purpose entities                        9,756                9,616
Lease negotiation fees to affiliate, less accumulated
    amortization of $203 in 1997 and $139 in 1996                                23                   86
Debt placement fees to affiliate, less accumulated
    amortization of $283 in 1997 and $275 in 1996                                96                  133
Prepaid expenses and other assets                                                58                  140
                                                                      -------------------------------------

      Total assets                                                      $    46,089           $   59,009
                                                                      =====================================

                                    Liabilities and partners' capital


Liabilities:
Accounts payable and accrued expenses                                   $     1,511           $    1,027
Due to affiliates                                                               256                  304
Lessee deposits and reserve for repairs                                       2,095                3,519
Notes payable                                                                21,000               29,250
                                                                      -------------------------------------
  Total liabilities                                                          24,862               34,100

Partners' capital:
Limited partners (8,628,420 limited partnership units
    as of December 31, 1997 and 1996)                                        21,227               24,909
General Partner                                                                  --                   --
                                                                      -------------------------------------
  Total partners' capital                                                    21,227               24,909
                                                                      -------------------------------------

      Total liabilities and partners' capital                           $    46,089           $   59,009
                                                                      =====================================
</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>


                                                                           1997            1996            1995
                                                                      -----------------------------------------------
<S>                                                                     <C>              <C>              <C>
Revenues

Lease revenue                                                           $   12,684       $   18,671       $  20,475
Interest and other income                                                      864              270             405
Net gain on disposition of equipment                                         2,830            3,179             530
                                                                      ------------------------------------------------
  Total revenues                                                            16,378           22,120          21,410

Expenses

Depreciation and amortization                                                7,268            9,791          12,561
Equipment operating expenses                                                   795            2,445           2,282
Repairs and maintenance                                                      2,219            5,639           2,822
Interest expense                                                             2,450            3,109           3,126
Insurance expense to affiliate                                                  70              180             256
Other insurance expense                                                        566              622             552
Management fees to affiliate                                                   649              895           1,064
General and administrative expenses
    to affiliates                                                              519              606             563
Other general and administrative expenses                                    1,669              993             717
Bad debt expense                                                             1,027            1,628             661
Loss on revaluation of equipment                                                --               --             417
                                                                      ------------------------------------------------
      Total expenses                                                        17,232           25,908          25,021

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

      Net income (loss)                                                 $    2,098       $   (4,119)      $  (3,611 )
                                                                      ================================================

Partners' share of net income (loss)

Limited partners                                                        $    1,803       $   (4,482)      $  (3,930 )
General Partner                                                                295              363             319
                                                                      ------------------------------------------------

      Total                                                             $    2,098       $   (4,119)      $  (3,611 )
                                                                      ================================================

Net income (loss) per  weighted-average  limited  partnership
    unit  (8,628,420, 8,633,331, and 8,647,516 limited partnership
    units in 1997, 1996, and 1995, respectively)                        $     0.21       $    (0.52)      $   (0.45 )
                                                                      ================================================

Cash distribution                                                       $    5,780       $    7,271       $   6,443
                                                                      ================================================

Cash distribution per weighted-average limited partnership unit         $     0.64       $     0.80       $    0.71
                                                                      ================================================

</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, 1997, 1996, and 1995 (in thousands of dollars)

<TABLE>
<CAPTION>



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

<S>                                                    <C>                 <C>               <C>
Partners' capital as of December 31, 1994              $  46,776           $     --          $   46,776

Net income (loss)                                         (3,930 )              319              (3,611)

Cash distribution                                         (6,124 )             (319)             (6,443)

Repurchase of limited partnership units                     (247 )               --                (247)
                                                     -----------------------------------------------------

Partners' capital as of December 31, 1995                 36,475                 --              36,475

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

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

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

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
                                                     =====================================================

</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>


                                                                           1997              1996             1995
                                                                      -------------------------------------------------
<S>                                                                     <C>              <C>              <C>
Operating activities
Net income (loss)                                                       $    2,098       $   (4,119 )     $   (3,611 )
Adjustments to reconcile net income (loss)
    to net cash provided by (used in) operating activities:
  Depreciation and amortization                                              7,268            9,791           12,561
  Net gain on disposition of equipment                                      (2,830 )         (3,179 )           (530 )
  Loss on revaluation of equipment                                              --               --              417
  Equity in net (income) loss of unconsolidated special-
    purpose entities                                                        (2,952 )            331               --
  Changes in operating assets and liabilities:
    Restricted cash                                                            305               23               --
    Accounts and notes receivable, net                                         523            2,204           (1,009 )
    Due from affiliates                                                        357              (25 )           (332 )
    Prepaid expenses and other assets                                           82              (29 )            (21 )
    Accounts payable and accrued expenses                                      484              624              203
    Due to affiliates                                                          (48 )           (694 )           (103 )
    Lessee deposits and reserve for repairs                                   (433 )            279             (114 )
                                                                      -------------------
                                                                                       --------------------------------
      Net cash provided by operating activities                              4,854            5,206            7,461
                                                                      -------------------------------------------------

Investing activities
Purchase of equipment and capital repairs                                     (621 )         (5,542 )        (10,670 )
Equipment purchased for unconsolidated special-
    purpose entity                                                              --           (4,247 )             --
Payments of acquisition fees to affiliate                                       --             (247 )            (47 )
Payments of lease negotiation fees to affiliate                                 --              (12 )            (11 )
Proceeds from disposition of equipment                                       8,493           13,065            6,239
Distribution from liquidation of unconsolidated
    special-purpose entities                                                 1,736               --               --
Distribution from unconsolidated special-purpose entities                    1,076            1,680               --
                                                                      -------------------------------------------------
      Net cash provided by (used in) investing activities                   10,684            4,697           (4,489 )
                                                                      -------------------------------------------------

Financing activities
Repayment of notes payable                                                  (8,250 )         (1,550 )             --
Cash distribution paid to limited partners                                  (5,485 )         (6,908 )         (6,124 )
Cash distribution paid to General Partner                                     (295 )           (363 )           (319 )
Repurchase of limited partnership units                                         --             (176 )           (247 )
                                                                      -------------------------------------------------
      Net cash used in financing activities                                (14,030 )         (8,997 )         (6,690 )
                                                                      -------------------------------------------------

Net increase (decrease) in cash and cash equivalents                         1,508              906           (3,718 )

Cash and cash equivalents at beginning of year (see Note 4)                  2,142            1,236            5,629
                                                                      -------------------------------------------------

Cash and cash equivalents at end of year                                $    3,650       $    2,142       $    1,911
                                                                      =================================================

Supplemental information
Interest paid                                                           $    2,450       $    3,159       $    3,003
                                                                      =================================================
</TABLE>

                       See accompanying notes to financial
                                  statements.




<PAGE>



                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1997

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 and leasing  used  transportation  and
     related equipment.  The Partnership offering became effective May 23, 1989.
     The  Partnership  commenced  significant  operations in September 1989. PLM
     Financial  Services,   Inc.  (FSI)  is  the  General  Partner.   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 in the  Partnership's  ninth
     year of  operations,  the  General  Partner  intends  to begin  an  orderly
     liquidation of the Partnership's  assets.  The General Partner  anticipates
     that the  liquidation  of the assets  will be  completed  by the end of the
     Partnership's tenth year of operations.

     FSI  manages  the  affairs of the  Partnership.  The net income  (loss) and
     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 Unit,  below).  The  General  Partner  is  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.

     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,  1997,  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 1998.

     These  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  and 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,  syndicates  investor  programs,  sells equipment to
     investor  programs  and  third  parties,  manages  pools of  transportation
     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, 1997

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  are   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 12 years  for  aircraft,  trailers,  marine
     containers,  and marine vessels. Certain aircraft are depreciated under the
     double-declining   balance  method   depreciation   over  the  lease  term.
     Regardless of the  depreciable  life,  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 are amortized over the initial equipment
     lease term.  Debt issuance costs and debt placement fees are amortized over
     the term of the related  loan.  Organization  costs were  amortized  over a
     60-month period. Major expenditures are capitalized if they are expected to
     extend the useful lives or reduce  future  operating  expenses of equipment
     and amortized over the remaining life of the equipment.

     Transportation Equipment

     In March 1995,  the  Financial  Accounting  Standards  Board (FASB)  issued
     statement No. 121,  "Accounting for the Impairment of Long-Lived Assets and
     for  Long-Lived  Assets to Be  Disposed  Of" (SFAS 121).  This  standard is
     effective for years  beginning  after  December 15, 1995.  The  Partnership
     adopted SFAS 121 during 1995, the effect of which was not material,  as the
     method previously employed by the Partnership was consistent with SFAS 121.
     In accordance with SFAS 121, the Partnership  reviews the carrying value of
     its  equipment  at least  annually in relation  to expected  future  market
     conditions for the purpose of assessing the  recoverability of the recorded
     amounts.  If projected  future lease revenue plus residual  values are less
     than  the  carrying  value  of the  equipment,  a loss  on  revaluation  is
     recorded. The Partnership recorded a loss on revaluation of $0.4 million on
     certain  aircraft  during 1995. No loss on revaluation was required in 1997
     or 1996.

     Equipment held for operating  leases is stated at cost.  Equipment held for
     sale  is  stated  at the  lower  of the  equipment's  depreciated  cost  or
     estimated  fair  market  value,  less  costs to sell,  and is  subject to a
     pending contract for sale.

     Investments in Unconsolidated Special-Purpose Entities (USPEs)

     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  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.





<PAGE>



                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1997

   1.         Basis of Presentation  (continued)

     Repairs and Maintenance

     Maintenance costs are usually the obligation of the lessee. If they are not
     covered by the  lessee,  they are usually  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) and  distributions  of the  Partnership are generally
     allocated 95% to the limited partners and 5% to the General Partner.  Gross
     income in each year is specially  allocated  to the General  Partner to the
     extent,  if any,  necessary  to cause the  capital  account  balance of the
     General  Partner  to be zero as of the  close  of such  year.  The  limited
     partners' net income (loss) and  distributions  are allocated  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 has participated in the
     Partnership.

     Cash  distributions are recorded when paid. Monthly  unitholders  receive a
     distribution  check 15 days  after  the  close of the  previous  month  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 to
     represent a return of capital.  Cash  distributions to the limited partners
     of $3.7 million,  $6.9 million,  and $6.1 million in 1997,  1996, and 1995,
     respectively, were deemed to be a return of capital.

     Cash distributions of $0.8 million, $1.7 million and $1.7 million for 1997,
     1996, and 1995, respectively,  relating to the fourth quarter of that year,
     were paid during January and February 1998, 1997, or 1996, respectively.

     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 equivalents
     approximates  fair  market  value  due  to  the  short-term  nature  of the
     investments.   Lessee  security   deposits  held  by  the  Partnership  are
     considered restricted cash.

     Reclassifications

     Certain amounts in the 1995 financial  statements have been reclassified to
     conform to the 1997 and 1996 presentations.

2.   General Partner and Transactions with Affiliates

     FSI  contributed  $100 of the  Partnership's  initial  capital.  Under  the
     equipment  management  agreement,  IMI  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





<PAGE>



                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1997

2.   General Partner and Transactions with Affiliates (continued)

     the gross lease revenues attributable to equipment, if any, that is subject
     to per diem leasing  arrangements  and thus is operated by the Partnership.
     Partnership  management  fees of $0.1 million and $0.3 million were payable
     at December 31, 1997 and 1996, respectively. The Partnership's proportional
     share of the USPE management fees of $11,000, and $8,000 were payable as of
     December 31, 1997 and 1996,  respectively.  The Partnership's  proportional
     share of USPE management fees was $0.1 million and $0.2 million during 1997
     and 1996,  respectively.  An affiliate of the General Partner is reimbursed
     for  administrative and data processing  services directly  attributable to
     the Partnership,  which were $0.5 million,  $0.6 million,  and $0.6 million
     during 1997, 1996, and 1995, respectively.  The Partnership's  proportional
     share of USPE  administrative and data processing  expenses was $35,000 and
     $38,000 during 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 and $0.2 million to TEC and WMS
     in 1996 and  1995,  respectively.  The  Partnership  did not  accrue  lease
     negotiation and equipment acquisition fees during 1997.

     The Partnership paid $0.1 million,  $0.2 million, and $0.3 million in 1997,
     1996, and 1995, respectively, to Transportation Equipment Indemnity Company
     Ltd. (TEI),  which provides marine  insurance  coverage and other insurance
     brokerage  services.  The Partnership's  proportional  share of USPE marine
     insurance  coverage paid to TEI was $0.1 million  during 1997 and 1996. TEI
     is an  affiliate  of the General  Partner.  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  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.

     As of December 31, 1997,  approximately  72% of the  Partnership's  trailer
     equipment was in rental facilities  operated by an affiliate of the General
     Partner.  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 1997 and 1996 (see Note 4).

     The  balance due from  affiliates  as of December  31, 1996  included  $0.4
     million due from TEI for  settlement  of an insurance  claim for one of the
     Partnership's  marine  vessel that was sold in 1995.  This  settlement  was
     received by TEI in December 1996 and paid to the Partnership in 1997.

     The balance due to affiliates as of December 31, 1997 includes $0.1 million
     due to FSI and its affiliates  for management  fees and $0.1 million due to
     affiliated  USPEs.  The balance due to  affiliates  as of December 31, 1996
     includes $0.3 million due to FSI and its affiliates for management fees.





<PAGE>



                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1997

3.   Equipment

     The components of equipment as of December 31, 1997 and 1996 are as follows
(in thousands of dollars):

<TABLE>
<CAPTION>

Equipment Held for Operating Leases                         1997                 1996
                                                       -------------------------------------

<S>                                                     <C>                   <C>
Aircraft                                                $    42,734           $   42,734
Rail equipment                                               14,828               14,867
Marine containers                                            13,384               15,498
Marine vessels                                                9,719                9,719
Trailers                                                      6,855                6,948
                                                       -------------------------------------
                                                             87,520               89,766
Less accumulated depreciation                               (56,215)             (50,784 )
                                                       ----------------------------------
                                                             31,305               38,982
Equipment held for sale                                          --                5,524
                                                       -------------------------------------
    Net equipment                                       $    31,305           $   44,506
                                                       =====================================
</TABLE>

     Revenues are earned by placing the equipment  under  operating  leases that
     are billed  monthly or  quarterly.  As of  December  31,  1997,  all of the
     Partnership's  marine  containers that are on lease 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 other equipment are
     based on fixed rates.

     As of December 31, 1997,  all equipment was either on lease or operating in
     PLM-affiliated   short-term  trailer  rental   facilities,   except  for  a
     commercial aircraft, containers, and railcars with a net book value of $3.2
     million.  As of December 31,  1996,  all  equipment  was either on lease or
     operating in PLM-affiliated  short-term trailer rental  facilities,  except
     for a commuter aircraft,  containers, and railcars with a net book value of
     $3.9 million.

     During 1997, the Partnership sold or disposed of an aircraft engine, marine
     containers,  railcars,  and  trailers,  with an aggregate net book value of
     $1.1 million,  for proceeds of $1.6 million.  The  Partnership  also sold a
     marine vessel that was held for sale on December 31, 1996,  with a net book
     value of $5.5 million,  for proceeds of $6.9 million.  Included in the gain
     of $2.3 million from the sale of the marine  vessels was the unused portion
     of accrued drydocking of $1.0 million.

     During  1996,  the  Partnership  sold or  disposed of an  aircraft,  marine
     containers,  railcars,  trailers, and a mobile offshore drilling unit, with
     an aggregate net book value of $9.9 million, for proceeds of $13.1 million.

     Periodically,  PLM International Inc., (PLM) will purchase groups of assets
     whose  ownership  may  be  allocated  among  affiliated  programs  and  the
     Partnership.  Generally in these cases,  only assets that are on lease will
     be purchased by the affiliated  programs.  The  Partnership  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,  the  Partnership
     realized  $0.7  million  of  gains  on the  sale of 69  off-lease  railcars
     purchased by the  Partnership as part of a group of assets in 1994 that had
     been allocated to PLM Equipment Growth Fund VI (EGF VI), Equipment Growth &
     Income Fund VII (EGF VII),  Professional  Lease  Management  Income Fund I,
     L.L.C (Fund I), and the  Partnership.  These assets were included in assets
     held for  sale as of  December  31,  1995.  During  1995,  the  Partnership
     realized $1.3 million in gains on sales of railcars and aircraft  purchased
     by the  Partnership  in 1994 and 1995 as part of a group of assets that had
     been allocated to EGFs IV, V, VI, VII, Fund I, and the Partnership.




<PAGE>



                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1997

3.   Equipment (continued)

     All owned  equipment on lease is being  accounted for as operating  leases.
     Future minimum rentals receivable under noncancelable  operating leases, as
     of December 31, 1997, for owned and partially owned  equipment  during each
     of the next five  years,  are  approximately  $7.1  million  in 1998,  $5.8
     million in 1999,  $3.7  million  in 2000,  $2.4  million in 2001,  and $2.2
     million in 2002 and thereafter.  Contingent  rentals based upon utilization
     were  approximately $0.9 million,  $1.0 million,  and $3.9 million in 1997,
     1996, and 1995, respectively.

     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 who operate
     the marine  vessels  and marine  containers  worldwide.  For the year ended
     December  31, 1997 and 1996,  the  Partnership  accounts  for  proportional
     interest in equipment using the equity method.  The geographic  information
     is grouped by domicile of the lessee as of and for the years ended December
     31, 1997, 1996, and 1995 (in thousands of dollars):

<TABLE>
<CAPTION>

          Region                 Investments in USPEs                     Owned Equipment
---------------------------- ----------------------------  ---------------------------------------------
      Lease Revenues           1997              1996             1997             1996            1995
-----------------------------------------------------------  -----------------------------------------------


<S>                         <C>              <C>              <C>             <C>            <C>
United States               $      --        $       --       $   5,369       $   5,307      $    4,819
Canada                            846             1,083           2,339           2,042           1,820
Gulf of Mexico                     --                --              --             164             259
South Asia                         --                --             850           2,221           2,769
South America                      --                --           1,200           1,110           1,110
Europe                             --                --              --              --             621
Rest of the world               1,115             1,699           2,926           7,827           9,077
                          --------------------------------  ---------------------------------------------
    Total lease revenues    $   1,961        $    2,782       $  12,684       $  18,671      $   20,475
                          ================================  =============================================
</TABLE>

     The following table sets forth  identifiable net income (loss)  information
by region for the owned  equipment and  investments in USPEs for the years ended
December 31, 1997, 1996, and 1995 (in thousands):

<TABLE>
<CAPTION>

              Region                    Investments in USPEs                      Owned Equipment
-----------------------------------------------------------------  ---------------------------------------------
         Net Income (Loss)             1997              1996             1997             1996            1995
------------------------------------------------------------------   -----------------------------------------------

<S>                                 <C>               <C>              <C>             <C>             <C>
United States                       $      --         $      --        $   1,131       $      832      $    1,617
Canada                                  3,305              (313 )             14              309             721
Gulf of Mexico                             --                --               --            2,327            (967 )
South Asia                                 --                --           (2,034)          (2,938)            782
South America                              --                --              532              328             218
Europe                                     --                --               --           (1,676)         (1,152 )
Australia                                  --                --               --              555              --
Mexico                                    618                (2 )             --               --              --
Rest of the world                        (971)              (16 )          2,594              356             (65 )
                                  --------------------------------   -----------------------------------------------
  Total identifiable net income         2,952              (331 )          2,237               93           1,154
Administrative and other                   --                --           (3,091)          (3,881)         (4,765 )
                                  --------------------------------   -----------------------------------------------
    Total net income (loss)         $   2,952         $    (331 )      $    (854 )     $   (3,788 )    $   (3,611 )
                                  ================================   ===============================================

</TABLE>




<PAGE>



                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1997

Equipment (continued)

     The net book value of these assets as of December 31, 1997,  1996, and 1995
are as follows (in thousands of dollars):

<TABLE>
<CAPTION>

          Region                   Investments in USPEs                  Owned Equipment
-------------------------------------------------------------- ------------------------------------

Net Book Value                 1997         1996        1995          1997         1996        1995
                            -----------------------------------  -------------------------------------

<S>                         <C>         <C>          <C>           <C>          <C>        <C>
United States               $      --   $       --   $      --     $  12,848    $  12,168  $   14,613
Canada                          3,484        2,575       3,922         6,580        8,145       3,593
Gulf of Mexico                     --           --          --            --           --       5,835
South Asia                         --           --          --         2,989        7,273       8,826
South America                      --           --          --         3,275        3,873       4,581
Europe                             --           --          --            --           --       4,463
Mexico                          4,008        3,876          --            --           --          --
Rest of the world               2,264        3,165       3,458         5,613        7,523      16,364
                          -------------------------------------  -------------------------------------
                                9,756        9,616       7,380        31,305       38,982      58,275
Equipment held for sale            --           --          --            --        5,524          --
                          -------------------------------------  -------------------------------------
    Total net book value    $   9,756   $    9,616   $   7,380     $  31,305    $  44,506   $  58,275
                          =====================================  =====================================
</TABLE>

     There were no lessees that  accounted for 10% or more of total revenues for
     1997, 1996, and 1995.

4.   Investments in Unconsolidated Special-Purpose Entities

     Prior  to  1996,  the  Partnership   accounted  for  operating   activities
     associated  with joint ownership of  transportation  equipment as undivided
     interests,  including  its  proportionate  share of each asset with similar
     wholly-owned assets in its financial  statements.  Under generally accepted
     accounting principles,  the effects of such activities, if material, should
     be reported  using the equity method of  accounting.  Therefore,  effective
     January 1, 1996, the  Partnership  adopted the equity method to account for
     its investment in such jointly-held assets.

     The principal  differences  between the previous  accounting method and the
     equity method  concern the  presentation  of  activities  relating to these
     assets in the  statement  of  operations.  Under the previous  method,  the
     Partnership's  income statement  reflected its proportionate  share of each
     individual  item of  revenue  and  expense.  Under  the  equity  method  of
     accounting, the Partnership's  proportionate share is presented as a single
     net amount,  equity in net income (loss) of unconsolidated  special-purpose
     entities.  Accordingly,  the  effect  of  adopting  the  equity  method  of
     accounting  has no  cumulative  effect  on  previously  reported  partners'
     capital  or on the  Partnership's  net  income  (loss)  for the  period  of
     adoption.  Because the effects on previously issued financial statements of
     applying the equity method of accounting to  investments  in  jointly-owned
     assets are not considered to be material to such financial statements taken
     as a whole,  previously issued financial statements have not been restated.
     However, during 1996, certain items had been reclassified in the previously
     issued 1995 balance  sheet to conform to the  current-period  presentation.
     The  beginning  cash and cash  equivalents  for 1996 is different  from the
     ending cash and cash  equivalents  for 1995 on statements of cash flows due
     to the reclassification.











<PAGE>



                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1997

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

     The net investments in USPEs include the following  jointly-owned equipment
     (and related assets and  liabilities)  as of December 31, 1997 and 1996 (in
     thousands of dollars):

<TABLE>
<CAPTION>

                                                                            1997           1996
                                                                       -------------  --------------


<S>                                                                      <C>             <C>
35% interest in two commercial aircraft on a direct finance
    lease                                                                $   4,008       $   3,876
17% interest in a trust from a sold commercial aircraft                      3,484              --
50% interest in an entity owning a bulk carrier                              2,264           3,165
17% interest in a trust owning six commercial aircraft (see note
           below)                                                               --           2,575
    Net investments                                                      $   9,756       $   9,616
                                                                       ==============  ==============
</TABLE>

     The  Partnership  had an interest in one USPE that owns  multiple  aircraft
     (the Trust). This Trust contains 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 after  deducting
     the 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.

     During September 1996, PLM Equipment  Growth Fund V, an affiliated  program
     that also has a beneficial  interest in the Trust,  renegotiated its senior
     loan agreement and was required,  for loan collateral purposes, to withdraw
     the aircraft designated to it from the Trust. The result was to restate the
     percentage  ownership  of the  remaining  beneficial  owners  of the  Trust
     beginning September 30, 1996, from 14% to 17%. This change had no effect on
     the income or loss  recognized  in the period  ended  December  31, 1997 or
     1996.

     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, 1997 and 1996 (in thousands of dollars):

<TABLE>
<CAPTION>

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

<S>                              <C>              <C>             <C>               <C>
Net Investments                  $       32,310   $        9,756  $        33,250   $        9,616
Lease revenues                            7,995            1,961           10,623            2,782
Net income (loss)                         6,819            2,952           (2,350)            (331 )

</TABLE>

5.   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 $21.0 million is payable in annual  installments of $8.2 million on July
     1 of 1998 and 1999, with a final payment of $4.6 million on July 1, 2000.

     The General Partner's  estimates,  based on recent  transactions,  that the
     fair market value of the $21.0 million in notes is $20.9 million.




<PAGE>



                          PLM EQUIPMENT GROWTH FUND IV
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1997

5.   Notes Payable (continued)

     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  based on 33 1/3% of the fair  market  value of
     equipment plus cash and cash equivalents. Economic conditions, coupled with
     the increasing age of the  Partnership's  equipment,  resulted in decreased
     market values for the  Partnership's  equipment  which required an optional
     prepayment  to be made in 1996 in order to  remain in  compliance  with the
     loan covenants. As a result, the Partnership paid $1.6 million in principal
     and $0.2 million in prepayment  fees to remain in  compliance  with the net
     worth ratio contained in the note agreement.

     During  December 1997, the General  Partner  amended and restated its joint
     short-term credit facility (the Committed Bridge Facility). The Partnership
     is no longer included as a borrower.

6.   Income Taxes

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

     As of December 31, 1997, there were temporary  differences of $22.6 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.






<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                                        42 - 44



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

                                                      -27-


<PAGE>