INDEPENDENT AUDITORS' REPORT





The Partners
Spear Vessel

We have audited the  accompanying  balance sheet of the Spear  Partnership  (the
Partnership) as of December 31, 1998, and the related  statements of operations,
changes in  partners'  capital,  and cash flows for the year then  ended.  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 audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

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



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


<PAGE>

<TABLE>
<CAPTION>


                                              SPEAR PARTNERSHIP
                                           (A LIMITED PARTNERSHIP)
                                                BALANCE SHEETS
                                                 DECEMBER 31,
                                          (IN THOUSANDS OF DOLLARS)





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

  <S>                                                                     <C>               <C>
  Marine vessel held for lease, at cost                                   $          7,840  $          7,840
  Less accumulated depreciation                                                     (5,536)           (5,074)
                                                                          -------------------------------------
      Net equipment                                                                  2,304             2,766

  Accounts receivable                                                                  224               139
  Prepaid expenses and other                                                            --                 7
                                                                          -------------------------------------
        Total assets                                                      $          2,528  $          2,912
                                                                          =====================================


  LIABILITIES AND PARTNERS' CAPITAL

  Liabilities:
  Accounts payable and accrued expenses                                   $            125  $             135
  Due to affiliates                                                                     27                  9
  Lessee deposits                                                                      174                 82
                                                                          -------------------------------------
    Total liabilities                                                                  326                226

  Partners' capital (deficit):
  Limited partners                                                                   2,258              2,737
  General partner                                                                      (56)               (51)
                                                                          -------------------------------------
    Total partners' capital                                                          2,202              2,686
                                                                          -------------------------------------

        Total liabilities and partners' capital                           $          2,528  $           2,912
                                                                          =====================================




</TABLE>












      See accompanying auditors' report and notes to financial statements.


<PAGE>
<TABLE>
<CAPTION>



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



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

  <S>                                                  <C>                  <C>                   <C>
  Lease revenue                                        $         1,498      $        1,824        $      2,380
  Interest and other income                                         51                  --                  97
                                                       ----------------------------------------------------------
    Total revenues                                               1,549               1,824               2,477
                                                       ----------------------------------------------------------

  EXPENSES

  Depreciation and amortization                                    464                 949               1,153
  Marine operating expenses                                      1,148               1,137                 949
  Repairs and maintenance                                          273                 443                 658
  Management fees to affiliate                                      75                  91                 119
  Insurance expense to affiliates                                   --                 (10)                 20
  Other insurance expense                                          112                 161                 225
  Administrative expenses to affiliates                             17                  26                  29
  Administrative and other                                          24                  22                  20
  Loss on revaluation                                               --               1,910                  --
                                                       ----------------------------------------------------------
    Total expenses                                               2,113               4,729               3,173
                                                       ----------------------------------------------------------

        Net loss                                       $          (564)     $       (2,905)       $       (696)
                                                       ==========================================================



</TABLE>





      See accompanying auditors' report and notes to financial statements.


<PAGE>
<TABLE>
<CAPTION>



                                              SPEAR PARTNERSHIP
                                           (A LIMITED PARTNERSHIP)
                                  STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
                            FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
                                          (IN THOUSANDS OF DOLLARS)





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

  <S>                                                                 <C>            <C>             <C>
    Partners' capital (deficit) at December 31, 1996 (unaudited)      $       6,222  $          (15) $        6,207

  Net loss                                                                     (689)             (7)           (696)

  Cash distribution                                                             (61)             (1)            (62)
                                                                      ------------------------------------------------

    Partners' capital (deficit) at December 31, 1997 (unaudited)              5,472             (23)          5,449

  Net loss                                                                   (2,876)            (29)         (2,905)

  Capital contribution                                                          141               1             142
                                                                      ------------------------------------------------

    Partners' capital (deficit) at December 31, 1998                          2,737             (51)          2,686

  Net loss                                                                     (558)             (6)           (564)

  Capital contribution                                                           79               1              80
                                                                      ------------------------------------------------

    Partners' capital (deficit) at December 31, 1999 (unaudited)      $       2,258  $          (56) $        2,202
                                                                      ================================================
</TABLE>










      See accompanying auditors' report and notes to financial statements.


<PAGE>

<TABLE>
<CAPTION>


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

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

  OPERATING ACTIVITIES

  <S>                                                           <C>                <C>               <C>
  Net loss                                                      $          (564)   $        (2,905)  $            (696)
  Adjustments to reconcile net loss to net cash
      provided by (used in) operating activities:
    Depreciation and amortization                                           464                949               1,153
    Loss on revaluation                                                      --              1,910                  --
    Changes in operating assets and liabilities:
      Accounts receivable                                                   (84)                34                (173)
      Prepaid expenses                                                        5                 11                   3
      Accounts payable and accrued expenses                                 (11)                90                (322)
      Due to affiliates                                                      18                 (6)                  6
      Lessee deposits                                                        92               (225)                 91
                                                                ---------------------------------------------------------
        Net cash (used in) provided by operating activities                 (80)              (142)                 62
                                                                ---------------------------------------------------------

  Financing activities

  Cash contributions (distributions)-General Partner                          1                  1                  (1)
  Cash contributions (distributions)-limited partners                        79                141                 (61)
                                                                ----------------------------------------------------------
        Net cash provided by (used in) financing activities                  80                142                 (62)

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

</TABLE>










      See accompanying auditors' report and notes to financial statements.


<PAGE>



                                SPEAR PARTNERSHIP
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     ORGANIZATION

Spear  Partnership,  a California  limited  partnership (the  Partnership),  was
formed  during  December  1995.  The  Partnership  was formed for the purpose of
purchasing a container  cargo feeder  marine  vessel and  commenced  significant
operations in March 1996. The Partnership has no employees nor operations  other
than the operation of the marine  vessel.  The  Partnership  is owned 99% by the
limited partners and 1% by the General Partner.  The Partnership has two limited
partners:   PLM  Equipment  Growth  Fund  VI  (EGF  VI),  a  California  limited
partnership,  and  Professional  Lease  Management  Income  Fund I (Fund  I),  a
Delaware Limited Liability Company, (the Limited Partners).  The General Partner
is the Spear Corporation (SC) which is owned 50% by EGF VI and 50% by Fund I.
The Limited Partnership is owned 50% by EGF VI and 50% by Fund I.

The marine  vessel was  purchased  in March 1996 for $7.5  million.  EGF VI paid
acquisition and lease negotiation fees of $0.2 million to FSI. No fees were paid
by Fund I.

     The  Partnership is expected to terminate  during 2002 as EGF VI will be in
its liquidation phase and all equipment must be sold.

These accompanying  financial statements have been prepared on the accrual basis
of accounting in accordance with generally accepted accounting principles.  This
requires  management to make estimates and assumptions  that affect the reported
amounts  of  assets  and  liabilities,  disclosures  of  contingent  assets  and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.

     OPERATIONS

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

     CASH AND CASH EQUIVALENTS

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

     ACCOUNTING FOR LEASES

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

     DEPRECIATION

Depreciation is computed using the  double-declining  balance  method,  taking a
full month's  depreciation in the month of acquisition,  based upon an estimated
useful life of 12 years. The depreciation method


<PAGE>


                                SPEAR PARTNERSHIP
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     DEPRECIATION (CONTINUED)

changes  to  straight-line  when  the  annual  depreciation  expense  using  the
straight-line  method exceeds that  calculated by the  double-declining  balance
method.  Acquisition  fees of $0.2  million,  that  were  paid to FSI,  had been
capitalized as part of the cost of the equipment.  Major  expenditures  that are
expected to extend the marine  vessel's  useful life or reduce future  equipment
operating  expenses,  have been  capitalized  and  amortized  over the estimated
remaining life of the marine vessel.

     MARINE VESSEL

In accordance with the Financial Accounting Standards Board's Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed  Of", FSI reviews the  carrying  value of the  Partnership's  marine
vessel  at  least  quarterly,  and  whenever  circumstances  indicated  that the
carrying  value of this asset may not be  recoverable  in  relation  to expected
future market  conditions,  for the purpose of assessing  recoverability  of the
recorded  amounts.  If  projected  undiscounted  future  cash flows and the fair
market value of the marine vessel was less than the carrying value of the marine
vessel,  a loss on revaluation  is recorded.  A reduction of $1.9 million to the
carrying  value of the marine  vessel was required  during 1998. No reduction to
the carrying value of the marine vessel was required during 1999 or 1997.

     REPAIRS AND MAINTENANCE

Repair  and  maintenance  for  the  marine  vessel  are  the  obligation  of the
Partnership.

     NET INCOME (LOSS) AND CASH DISTRIBUTION TO LIMITED PARTNERS

The net income (loss) and cash  distributions  of the  Partnership are generally
allocated  99% to the limited  partners and 1% to the General  Partner.  The net
income  (loss) and cash  distributions  are  generally  allocated to the limited
partners  based on their  percentage  of ownership in the  Partnership.  Certain
depreciable  and  amortizable  amounts  are not  allocated  to  Fund I,  such as
depreciation on acquisition  fees and  amortization on lease  negotiation  fees.
Otherwise,  the  limited  partners  99%  share  of net  income  (loss)  and cash
distributions are allocated 50% to EGF VI and 50% to Fund I.

Cash distributions are recorded when paid.

     COMPREHENSIVE INCOME

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

2.   GENERAL PARTNER

SC contributed $100 of the  Partnership's  initial  capital.  SC is owned by two
shareholders,  EGF VI owns 50% and Fund I owns 50%. Dividends,  if declared, are
paid to the  shareholders  annually  based on the  percentage of ownership  each
shareholder owns.

3.   TRANSACTIONS WITH AFFILIATES

Under the equipment  management  agreement,  IMI, subject to certain reductions,
receives a monthly  management fee  attributable to owned equipment equal to the
lesser of (i) the fees that would be charged by an  independent  third party for
similar services for similar equipment or (ii) 5% of the gross


<PAGE>


                                SPEAR PARTNERSHIP
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

3.   TRANSACTIONS WITH AFFILIATES (CONTINUED)

lease revenues  attributable  to equipment that is subject to operating  leases.
The  Partnership's  management  fee expense to affiliate was $0.1 million during
1999,  1998, and 1997. The  Partnership  reimbursed  FSI $17,000,  $26,000,  and
$29,000  during 1999,  1998,  and 1997,  respectively,  for data  processing and
administrative expenses directly attributable to the Partnership.

The Partnership paid $20,000 during 1997 to Transportation  Equipment  Indemnity
Company Ltd.  (TEI),  an  affiliate  of FSI,  which  provided  marine  insurance
coverage and other insurance brokerage services. The Partnership did not pay TEI
for insurance coverage during 1999 and 1998. A substantial portion of the amount
that was paid to TEI was then paid to third-party  reinsurance  underwriters  or
placed in risk pools  managed by TEI on behalf of  affiliated  programs  and PLM
International,  which provide threshold  coverages on marine vessel loss of hire
and hull and machinery damage. All pooling arrangement funds are either paid out
to cover  applicable  losses  or  refunded  pro rata by TEI.  During  1998,  the
Partnership  received a $10,000  loss-of-hire  insurance  refund from TEI due to
lower claims from the insured Partnership and other insured affiliated programs.
During 1999 and 1998,  TEI did not provide the same level of insurance  coverage
as  had  been  provided  during  1997.   These  services  were  provided  by  an
unaffiliated third party. PLM International liquidated TEI in 2000.

Partnership management fees payable to IMI was $27,000 and $9,000 as of December
31, 1999 and 1998, respectively.

4.   MARINE VESSEL ON LEASE

The  Partnership's  marine  vessel  is leased to  multiple  operators  on a time
charter  basis.  In such  instances,  revenues  are earned from each lessee that
hires the marine vessel for a specific voyage.

The marine vessel in the  Partnership  is used as collateral  against the senior
loans of the Limited Partners.

The marine vessel lease is being accounted for as an operating lease.  There are
no future minimum rentals under non-cancelable  leases at December 31, 1999. Per
diem and  short-term  rentals  consisting  of  utilization  rate lease  payments
included in lease  revenues  amounted to $1.5  million in 1999,  $1.8 million in
1998, and $2.4 million in 1997.

5.   GEOGRAPHIC INFORMATION

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

6.   INCOME TAXES

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

As of December 31, 1999, the financial  statement  carrying amount of assets and
liabilities  was  approximately  $4.3 million lower than the federal  income tax
basis of such assets and  liabilities,  primarily due to  differences  in lessee
prepaid deposits, depreciation method, and the tax estimated useful life.



<PAGE>


                                SPEAR PARTNERSHIP
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

7.   CONCENTRATIONS OF CREDIT RISK

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

The  Partnership's  lessees that accounted for 10% or more of the total revenues
for the marine  vessel  during the past three  years were Kaud I. Larsen (85% in
1998 and 100% in 1997),  Crowley  American  Transport (60% in 1999),  Panamarian
Courice Corp. (18% in 1999), and Industrial Maritime Couriers (15% in 1999).

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