UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                           ---------------------------

                                    FORM 10-Q

                           ---------------------------



           _X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1997

                                       OR

           ___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                        For the transition period from ___ to ___

                           ---------------------------

                          Commission File No. 33-15551

                           ---------------------------



                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

                        State of Organization: California
                   IRS Employer Identification No. 94-3039169
         201 Mission Street, 27th Floor, San Francisco, California 94105
                           Telephone - (415) 284-7400



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,  and (2) has been  subject to such filing
requirements for the past 90 days.



                            Yes _X_      No ___








                       This document consists of 18 pages.


<PAGE>



                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

            FORM 10-Q - For the Quarterly Period Ended June 30, 1997




                                      INDEX


Part I.       Financial Information                                        Page


         Item 1.      Financial Statements

              a)  Balance Sheets - June 30, 1997 and
                  December 31, 1996..........................................3

              b)  Statements of Income - Three and Six Months
                  Ended June 30, 1997 and 1996...............................4

              c)  Statements of Changes in Partners' Capital
                  (Deficit) - Year Ended December 31, 1996
                  and Six Months Ended June 30, 1997.........................5

              d)  Statements of Cash Flows - Six Months
                  Ended June 30, 1997 and 1996...............................6

              e)  Notes to Financial Statements..............................7

         Item 2.      Management's Discussion and Analysis of
                      Financial Condition and Results of Operations.........11



Part II.      Other Information

         Item 1.      Legal Proceedings.....................................16

         Item 6.      Exhibits and Reports on Form 8-K......................17

         Signature    ......................................................18

                                        2

<PAGE>



                          Part I. Financial Information
Item 1.       Financial Statements

                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

                                 BALANCE SHEETS
                                   (Unaudited)

                                                 June 30,       December 31,
                                                   1997            1996
                                                   ----            ----
ASSETS:

CASH AND CASH EQUIVALENTS                      $ 21,826,465    $ 23,989,285

RENT AND OTHER RECEIVABLES                             --           943,708

AIRCRAFT, net of accumulated
   depreciation of $88,490,049 in 1996                 --        30,187,395

AIRCRAFT AND OTHER ASSETS HELD FOR SALE          28,425,913            --

OTHER ASSETS                                        250,724          22,099
                                               ------------    ------------

                                               $ 50,503,102    $ 55,142,487
                                               ============    ============

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT):

PAYABLE TO AFFILIATES                          $     76,965    $    216,319

ACCOUNTS PAYABLE AND ACCRUED
   LIABILITIES                                      321,300         322,513

LESSEE SECURITY DEPOSITS                          1,150,734       1,124,529

MAINTENANCE RESERVES                              5,169,816       5,409,620
                                               ------------    ------------

        Total Liabilities                         6,718,815       7,072,981
                                               ------------    ------------

PARTNERS' CAPITAL (DEFICIT):
   General Partner                               (4,018,268)     (3,975,366)
   Limited Partners, 499,964 units
      issued and outstanding                     47,802,555      52,044,872
                                               ------------    ------------

        Total Partners' Capital                  43,784,287      48,069,506
                                               ------------    ------------

                                               $ 50,503,102    $ 55,142,487
                                               ============    ============

        The accompanying notes are an integral part of these statements.

                                        3

<PAGE>


<TABLE>
                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

                              STATEMENTS OF INCOME
                                   (Unaudited)


<CAPTION>
                                             Three Months Ended          Six Months Ended
                                                   June 30,                  June 30,
                                                   --------                  --------

                                              1997         1996         1997        1996
                                              ----         ----         ----        ----
<S>                                       <C>          <C>          <C>          <C>
REVENUES:
     Rent from operating leases           $1,586,190   $3,161,395   $3,718,832   $6,303,158
     Interest                                271,725      341,884      562,848      752,923
     Other                                    11,162         --         27,495         --
                                          ----------   ----------   ----------   ----------

             Total Revenues                1,869,077    3,503,279    4,309,175    7,056,081
                                          ----------   ----------   ----------   ----------

EXPENSES:
     Depreciation and amortization         1,331,496    2,022,332    2,682,462    4,044,664
     Management fees to general partner         --        158,070      106,632      300,158
     Provision for credit losses                --           --           --        307,127
     Operating                                51,534       82,873       56,852      180,548
     Administration and other                113,907       84,870      193,293      147,831
                                          ----------   ----------   ----------   ----------

             Total Expenses                1,496,937    2,348,145    3,039,239    4,980,328
                                          ----------   ----------   ----------   ----------

NET INCOME                                $  372,140   $1,155,134   $1,269,936   $2,075,753
                                          ==========   ==========   ==========   ==========

NET INCOME ALLOCATED
     TO THE GENERAL PARTNER               $  253,678   $  323,998   $  512,613   $  645,650
                                          ==========   ==========   ==========   ==========

NET INCOME ALLOCATED
     TO LIMITED PARTNERS                  $  118,462   $  831,136   $  757,323   $1,430,103
                                          ==========   ==========   ==========   ==========

NET INCOME PER LIMITED
     PARTNERSHIP UNIT                     $     0.24   $     1.66   $     1.52   $     2.86
                                          ==========   ==========   ==========   ==========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                        4

<PAGE>



                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

              STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
                                   (Unaudited)


                                           Year Ended December 31, 1996 and
                                            Six Months Ended June 30, 1997
                                            ------------------------------

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

Balance, December 31, 1995           $ (3,651,904)  $ 84,055,091   $ 80,403,187

     Net income (loss)                  1,065,327    (19,511,119)   (18,445,792)

     Cash distributions to partners    (1,388,789)   (12,499,100)   (13,887,889)
                                      ------------   ------------   ------------

Balance, December 31, 1996             (3,975,366)    52,044,872     48,069,506

     Net income                           512,613        757,323      1,269,936

     Cash distributions to partners      (555,515)    (4,999,640)    (5,555,155)
                                      ------------   ------------   ------------

Balance, June 30, 1997               $ (4,018,268)  $ 47,802,555   $ 43,784,287
                                      ============   ============   ============

        The accompanying notes are an integral part of these statements.

                                        5

<PAGE>


<TABLE>
                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<CAPTION>
                                                              Six Months Ended June 30,
                                                              -------------------------

                                                                1997            1996
                                                                ----            ----
<S>                                                       <C>             <C>
OPERATING ACTIVITIES:
   Net income                                             $  1,269,936    $  2,075,753
   Adjustments to reconcile net income to
        net cash provided by operating activities:
        Depreciation and amortization                        2,682,462       4,044,664
        Provision for credit losses                               --           307,127
        Changes in operating assets and liabilities:
           Increase in rent and other receivables               (6,893)       (216,044)
           Increase in other assets                           (250,724)           --
           Increase (decrease) in payable to affiliates        (87,634)         26,902
           Increase (decrease) in accounts payable
              and accrued liabilities                           (1,213)        123,530
           Increase in lessee security deposits                 26,205          24,641
           Decrease in maintenance reserves                   (239,804)       (236,823)
           Decrease in deferred income                            --          (382,500)
                                                          ------------    ------------

             Net cash provided by operating activities       3,392,335       5,767,250
                                                          ------------    ------------

INVESTING ACTIVITIES:
   Principal payments on notes receivable                         --         2,171,777
                                                          ------------    ------------

             Net cash provided by investing activities            --         2,171,777
                                                          ------------    ------------

FINANCING ACTIVITIES:
   Cash distributions to partners                           (5,555,155)     (6,943,944)
                                                          ------------    ------------

             Net cash used in financing activities          (5,555,155)     (6,943,944)
                                                          ------------    ------------

CHANGES IN CASH AND CASH
   EQUIVALENTS                                              (2,162,820)        995,083

CASH AND CASH EQUIVALENTS AT
   BEGINNING OF PERIOD                                      23,989,285      23,456,031
                                                          ------------    ------------

CASH AND CASH EQUIVALENTS AT
   END OF PERIOD                                          $ 21,826,465    $ 24,451,114
                                                          ============    ============
</TABLE>
        The accompanying notes are an integral part of these statements.

                                        6

<PAGE>



                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)


1. Accounting Principles and Policies

In the opinion of management,  the financial statements presented herein include
all  adjustments,  consisting  only of  normal  recurring  items,  necessary  to
summarize fairly Polaris Aircraft Income Fund IV's (the Partnership's) financial
position and results of operations.  The financial statements have been prepared
in accordance with the  instructions  of the Quarterly  Report to the Securities
and  Exchange  Commission  (SEC)  Form  10-Q  and  do  not  include  all  of the
information  and note  disclosures  required by  generally  accepted  accounting
principles.  These  statements  should be read in conjunction with the financial
statements  and notes thereto for the years ended  December 31, 1996,  1995, and
1994  included in the  Partnership's  1996 Annual Report to the SEC on Form 10-K
(Form 10-K).


2. Sale of Aircraft to Triton

On May  28,  1997,  Polaris  Investment  Management  Corporation  (the  "General
Partner"  or  "PIMC"),  on  behalf  of  the  Partnership,   executed  definitive
documentation for the purchase of the  Partnership's 13 remaining  aircraft (the
"Aircraft") and certain of its notes  receivables by Triton Aviation Services IV
LLC, a special purpose company (the  "Purchaser" or "Triton").  The closings for
the  purchase  of 11 of the 13 Aircraft  occurred  from May 28, 1997 to June 30,
1997.  The  closings  for 2 of the  Aircraft  occurred  on July  21,  1997.  The
Purchaser is managed by Triton Aviation Services, Ltd. ("Triton Aviation" or the
"Manager"),  a privately held aircraft  leasing company which was formed in 1996
by Triton  Investments,  Ltd.,  a company  which  has been in the  marine  cargo
container  leasing  business for 17 years and is  diversifying  its portfolio by
leasing  commercial  aircraft.  Each  Aircraft  was sold subject to the existing
leases,  if any.  Although the  aforementioned  transaction  was structured as a
sale, under Generally Accepted Accounting Principles (GAAP), the transaction has
been  recorded  using the deposit  method of  accounting  as discussed in Note 2
under The Accounting Treatment of the Transaction.

The Terms of the Transaction - The total contract  purchase price (the "Purchase
Price") to the Purchaser is  $29,748,000  which is allocable to the Aircraft and
to certain notes  receivable  by the  Partnership.  The  Purchaser  paid into an
escrow account  $3,351,410 of the Purchase Price in cash upon the closing of the
first aircraft and delivered a promissory note (the  "Promissory  Note") for the
balance of  $26,396,590.  The  Partnership  received  $2,633,833 from the escrow
account on July 10,  1997 for the pro rata cash  portion of the  Purchase  Price
allocated to the 11 aircraft that closed from May 28, 1997 to June 30, 1997. The
Partnership  received the balance of the escrow funds of $717,577 from Triton on
July 31, 1997 for the pro rata cash portion of the Purchase  Price  allocated to
the 2 aircraft  that closed on July 21,  1997.  The  Partnership  is entitled to
interest on the cash portion of the purchase  price at 5.3% per annum from April
1, 1997 to the date the Partnership received the funds.

The  Promissory  Note  is due in 28  quarterly  installments  of  principal  and
interest  commencing  June 30, 1997 in the amount of $1,294,663 over a period of
seven years bearing interest at a rate of 12% per annum with a balloon principal
payment in the amount of $4,812,392 due on March 31, 2004. The Purchaser has the
right to voluntarily  prepay the Promissory Note in whole or in part at any time
without  penalty.  In  addition,  the  Promissory  Note is subject to  mandatory
partial prepayment in certain specified  instances.  Due to the fact that it was
possible that 4 of the Aircraft (United Kingdom  registered  aircraft) would not
close by June 30, 1997,  the  Partnership  agreed with the Purchaser to accept a
pro rata note payment on June 30, 1997 of $714,786. The unpaid principal balance
continued to accrue  interest at 12% per annum until paid.  In fact,  two of the

                                        7

<PAGE>



four Aircraft closed on June 30, 1997 and the Partnership  received  $298,906 on
July 10,  1997.  The  remaining  two  aircraft  closed on July 21,  1997 and the
Partnership  received  the  balance of the note  payment on July 29,  1997.  The
Promissory  Note is not  reflected in the balance  sheet due to the  Partnership
using the deposit method of accounting as discussed in The Accounting  Treatment
of the Transaction.

Under the terms of the transaction, the Purchaser's assets, which are limited to
the  Aircraft,  including any income or proceeds  therefrom,  and any funds made
available to Purchaser under the working capital line described below constitute
the sole  source of payments  under the  Promissory  Note.  Although no security
interest over the Aircraft or the leases is granted in favor of the Partnership,
the equity interests in the Purchaser have been pledged to the  Partnership.  In
connection  with  that  pledge,  the  Purchaser  is  prohibited  from  incurring
indebtedness other than (i) the Promissory Note; (ii) deferred taxes not yet due
and  payable;  (iii)  indebtedness  incurred  to hushkit  Aircraft  owned by the
Purchaser;  (iv) demand loans to another SPC (defined below) at a market rate of
interest;  and (v) debt to trade  creditors  incurred in the ordinary  course of
business. In addition,  the Purchaser undertakes to keep the Aircraft and leases
free of any lien, security interest or other encumbrance other than (i) inchoate
taxes and materialmen's liens and the like, (ii) in the event that the Purchaser
elects to install  hushkits on any  Aircraft,  secured debt to the extent of the
full cost of such hushkit and other  hushkits  acquired  with  proceeds from the
same loan facility;  (iii) liens lessees are customarily permitted to incur that
are  required  to be  removed.  The  Purchaser  has the right to sell any of the
Aircraft without the consent of the Partnership,  except that the  Partnership's
consent  would be  required  in the event  that the sale  price is less than the
portion of the outstanding  balance of the Promissory Note which is allocable to
the Aircraft in question and the  Purchaser  does not have  sufficient  funds to
make up the  difference.  In the event that any of the  Aircraft are sold by the
Purchaser,  the  Promissory  Note is subject to a  mandatory  prepayment  of the
portion of the Promissory Note which is allocable to the Aircraft sold.

Under the terms of the  transaction,  the Purchaser's  Manager has undertaken to
make  available a working  capital line to the Purchaser of up to  approximately
$2,598,000 to fund operating obligations of the Purchaser.  This working capital
line is guaranteed by Triton  Investments,  Ltd., the parent of the  Purchaser's
Manager and such  guarantor  provided  the  Partnership  with a copy of its most
recent  balance  sheet  showing  a  consolidated  net  worth  (net  of  minority
interests)  of at least  $150-million  at December 31, 1996.  Provided  that the
Purchaser is not in default in making  payments due under the Promissory Note to
the Partnership,  the Purchaser is permitted to dividend to its equity owners an
amount  not to  exceed  approximately  $70,000  per  month.  The  Purchaser  may
distribute  additional  dividends  to the  equity  owners  to the  extent of the
working  capital  advances  made by the  Purchaser's  Manager  provided that the
working capital line available to the Purchaser will be deemed  increased to the
extent of such dividends.

Under the purchase agreement,  the Purchaser purchased the Aircraft effective as
of April 1, 1997 notwithstanding the actual closing dates. The utilization of an
effective  date  facilitated  the  determination  of rent and other  allocations
between  the  parties.  The  Purchaser  has the right to receive  all income and
proceeds,  including rents and receivables,  from the Aircraft accruing from and
after April 1, 1997, and the Promissory  Note commenced  bearing  interest as of
April 1, 1997  subject to the closing of the  Aircraft.  Each  Aircraft was sold
subject to the  existing  leases,  if any,  and as part of the  transaction  the
Purchaser assumes all obligations  relating to maintenance reserves and security
deposits relating to such leases. Cash balances related to maintenance  reserves
and security  deposits are to be  transferred  to the  Purchaser on or after the
Aircraft  closing dates.  As of June 30, 1997, the  Partnership  had transferred
$150,000 in security deposits and maintenance reserves to the Purchaser. In July
1997, security deposits and maintenance  reserves of $5,010,507 were transferred
to the Purchaser and any remaining  cash balances  should be  transferred to the
Purchaser by the end of the third quarter.

Neither PIMC nor GECAS will receive a sales  commission in  connection  with the
transaction. In addition, PIMC will not be paid a management fee with respect to
the  collection of the  Promissory  Note or on any rents  accruing from or after
April 1,  1997.  Neither  PIMC  nor  GECAS or any of its  affiliates  holds  any
interest in Triton Aviation or any of Triton Aviation's affiliates.  John Flynn,


                                        8

<PAGE>



the current President of Triton Aviation, was a Polaris executive until May 1996
and has over 15 years  experience in the commercial  aviation  industry.  At the
time Mr. Flynn was employed at PIMC, he had no affiliation  with Triton Aviation
or its affiliates.

Polaris  Aircraft  Income Fund II,  Polaris  Aircraft  Income Fund III,  Polaris
Aircraft  Income  Fund V and  Polaris  Aircraft  Income  Fund VI have  also sold
certain  aircraft  assets to separate  special  purpose  companies  under common
management with the Purchaser  (collectively,  together with the Purchaser,  the
"SPC's") on terms  similar to those set forth above,  with the  exception of the
Polaris Aircraft Income Fund VI aircraft, which were sold on an all cash basis.

The Accounting  Treatment of the  Transaction - As noted above and in accordance
with GAAP, this  transaction has not been accounted for as a sale as of June 30,
1997. This  transaction is being recorded using the deposit method of accounting
which requires the Partnership to continue to report on its financial statements
the Aircraft,  other assets,  liabilities and any related debt even if they have
been  assumed by Triton.  Cash  received  from  Triton,  including  initial down
payment and  subsequent  collection of principal and interest,  is reported as a
deposit on the contract. As of June 30, 1997, the balance of the deposit account
included in other assets on the balance sheet was $249,909, representing the net
excess of the amounts transferred to Triton with the Aircraft including;  rents,
receivables  and other amounts  accruing from April 1, 1997 to the closing dates
for each of the  Aircraft,  and security  deposits  over the cash  received from
Triton  for the pro rata  down  payment  and pro  rata  principal  and  interest
payments on the Promissory  Note. A sale will be recognized with respect to this
transaction if the net cash received from Triton demonstrates that its financial
investment is sufficient to indicate that, for accounting purposes, the risks of
ownership of the Aircraft have  transferred to Triton.  This amount is estimated
to be approximately $3.2 million.

In accordance with GAAP, the Partnership  recognized  rental income up until the
closing date for 11 of the 13 aircraft  which occurred from May 28, 1997 to June
30, 1997, and recognized  rental income through June 30, 1997 for the 2 aircraft
which closed on July 21,  1997.  The  Partnership  recorded  rental  income from
operating leases, interest and other income totaling $1,603,571 during the three
months ended June 30, 1997 related to the Aircraft.  However, under the terms of
the  transaction,   Triton  was  entitled  to  receive  payment  of  the  rents,
receivables  and other income  accruing  from April 1, 1997 to the closing dates
for each of the  Aircraft,  which  have been  reflected  as  adjustments  to the
deposit account of the Partnership.  Interest collected prior to sale accounting
treatment  is  recorded  as  part  of  Triton's  initial   investment  when  the
transaction is deemed a sale in accordance with GAAP.

The Aircraft  transferred pursuant to the definitive  documentation  executed on
May 28,  1997 have been  classified  as  aircraft  held for sale from that date.
Under GAAP,  aircraft  held for sale are carried at their fair market value less
estimated  costs to sell. The adjustment to the sales proceeds  described  above
and revisions to estimated  costs to sell the Aircraft  required the Partnership
to record an adjustment to the net carrying  value of the aircraft held for sale
of $1,328,482  during the three months ended June 30, 1997.  This  adjustment to
the net carrying value of the aircraft held for sale is included in depreciation
and  amortization  expense on the statement of operations  for the three and six
months ended June 30, 1997.




                                        9

<PAGE>



3. Related Parties

Under the Limited Partnership  Agreement,  the Partnership paid or agreed to pay
the following  amounts for the current quarter to the general  partner,  Polaris
Investment  Management  Corporation,  in connection  with  services  rendered or
payments made on behalf of the Partnership:

                                               Payments for
                                             Three Months Ended    Payable at
                                               June 30, 1997      June 30, 1997
                                               -------------      -------------

Aircraft Management Fees                       $      5,250        $      -

Out-of-Pocket Administrative and Selling
     Expense Reimbursement                           76,109             73,690

Out-of-Pocket Operating and
     Remarketing Expense Reimbursement               66,588              3,275
                                                -----------        -----------

                                               $    147,947        $    76,965
                                               ============        ===========


4. Subsequent Event

On August 6, 1997, the Partnership  received a mandatory prepayment of principal
on the Promissory Note of $1,891,402 due to the sale of two Aircraft by Triton.

                                       10

<PAGE>



Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS

During the quarter  ended June 30, 1997,  Polaris  Aircraft  Income Fund IV (the
Partnership)  executed  definitive  documentation  for the  purchase  by  Triton
Aviation Services IV LLC of the  Partnership's  remaining 13 used commercial jet
aircraft  out of its original  portfolio of 33 aircraft.  The closings for 11 of
the 13 used  commercial  jet aircraft  were  completed  during May 1997 and June
1997. In July 1997,  the closings for the  remaining 2 aircraft were  completed.
The 13 aircraft sold consisted of: five DC-9-30  aircraft  leased to Continental
Airlines,  Inc.  (Continental);  two Boeing 727-200 Advanced  aircraft leased to
American Trans Air, Inc. (ATA); two Boeing 737-200  Advanced  aircraft leased to
Independent  Aviation Group Limited (IAG); two Boeing 737-200 Advanced  aircraft
leased to TBG Airways  Limited (TBG Airways);  and two Boeing  737-200  aircraft
formerly  leased to  Viscount  Air  Services,  Inc.  (Viscount)  which filed for
Chapter 11 bankruptcy  protection in January 1996 as discussed  below. Out of an
original  portfolio of 33 aircraft,  one Boeing  727-100 was declared a casualty
loss due to an accident in 1991, fourteen Boeing 727-100 Freighters were sold in
1993,  and five Boeing  727-200  aircraft  were sold in May 1994.  In 1993,  ATA
transferred to the  Partnership  two Boeing 727-100  aircraft as part of the ATA
lease  transaction.  One of these Boeing  727-100  aircraft was sold in February
1994 and the second Boeing 727-100 aircraft was sold in August 1994.


REMARKETING UPDATE

Sale of Aircraft to Triton

On May  28,  1997,  Polaris  Investment  Management  Corporation  (the  "General
Partner"  or  "PIMC"),  on  behalf  of  the  Partnership,   executed  definitive
documentation for the purchase of the  Partnership's 13 remaining  aircraft (the
"Aircraft") and certain of its notes  receivables by Triton Aviation Services IV
LLC, a special purpose company (the  "Purchaser" or "Triton").  The closings for
the  purchase  of 11 of the 13 Aircraft  occurred  from May 28, 1997 to June 30,
1997.  The  closings  for 2 of the  Aircraft  occurred  on July  21,  1997.  The
Purchaser is managed by Triton Aviation Services, Ltd. ("Triton Aviation" or the
"Manager"),  a privately held aircraft  leasing company which was formed in 1996
by Triton  Investments,  Ltd.,  a company  which  has been in the  marine  cargo
container  leasing  business for 17 years and is  diversifying  its portfolio by
leasing  commercial  aircraft.  Each  Aircraft  was sold subject to the existing
leases if any. Although the aforementioned transaction was structured as a sale,
under Generally Accepted Accounting  Principles (GAAP), the transaction has been
recorded using the deposit method of accounting as discussed in Note 2 under The
Accounting Treatment of the Transaction.

The  General  Partner's  Decision to Approve the  Transaction  - In  determining
whether the  transaction  was in the best interests of the  Partnership  and its
unit holders,  the General Partner evaluated,  among other things, the risks and
significant expenses associated with continuing to own and remarket the Aircraft
(many of which were subject to leases that were nearing expiration). The General
Partner  determined that such a strategy could require the Partnership to expend
a significant  portion of its cash reserves for remarketing and that there was a
substantial  risk that this strategy could result in the  Partnership  having to
reduce or even  suspend  future  cash  distributions  to limited  partners.  The
General  Partner  concluded  that the  opportunity  to sell the  Aircraft  at an
attractive  price would be  beneficial  in the present  market  where demand for
Stage II aircraft  is  relatively  strong  rather  than  attempting  to sell the
aircraft  "one-by-one"  over the coming years when the demand for such  Aircraft
might be weaker. During the months of intense negotiations,  GE Capital Aviation
Services,  Inc.  ("GECAS"),  which  provides  aircraft  marketing and management
services  to the  General  Partner,  sought to obtain  the best  price and terms
available  for  these  Stage II  aircraft  given  the  aircraft  market  and the
conditions  and  types of  planes  owned by the  Partnership.  Both the  General
Partner and GECAS  approved the sale terms of the Aircraft (as described  below)
as being in the best interest of the  Partnership  and its unit holders  because
both  believe  that  this   transaction   will  optimize  the   potential   cash
distributions  to be paid to limited  partners.  To ensure that no better  offer

                                       11

<PAGE>



could be obtained,  the terms of the transaction  negotiated by GECAS included a
"market-out"  provision  that  permitted the  Partnership  to elect to accept an
offer  for all (but not less  than  all) of the  assets  to be sold by it to the
Purchaser  on terms  which it deemed  more  favorable,  with the  ability of the
Purchaser to match the offer or decline to match the offer and be entitled to be
compensated in an amount equal to 1 1/2% of the  Purchaser's  proposed  purchase
price.  The Partnership did not receive any other offers and,  accordingly,  the
General Partner believes that a valid market check has occurred  confirming that
the terms of this  transaction  were the most  beneficial  that  could have been
obtained.

The Terms of the Transaction - The total contract  purchase price (the "Purchase
Price") to the Purchaser is  $29,748,000  which is allocable to the Aircraft and
to certain notes  receivable  by the  Partnership.  The  Purchaser  paid into an
escrow account  $3,351,410 of the Purchase Price in cash upon the closing of the
first aircraft and delivered a promissory note (the  "Promissory  Note") for the
balance of  $26,396,590.  The  Partnership  received  $2,633,833 from the escrow
account on July 10,  1997 for the pro rata cash  portion of the  Purchase  Price
allocated to the 11 aircraft that closed from May 28, 1997 to June 30, 1997. The
Partnership  received the balance of the escrow funds of $717,577 from Triton on
July 31, 1997 for the pro rata cash portion of the Purchase  Price  allocated to
the 2 aircraft  that closed on July 21,  1997.  The  Partnership  is entitled to
interest on the cash portion of the purchase  price at 5.3% per annum from April
1, 1997 to the date the Partnership received the funds.

The  Promissory  Note  is due in 28  quarterly  installments  of  principal  and
interest  commencing  June 30, 1997 in the amount of $1,294,663 over a period of
seven years bearing interest at a rate of 12% per annum with a balloon principal
payment in the amount of $4,812,392 due on March 31, 2004. The Purchaser has the
right to voluntarily  prepay the Promissory Note in whole or in part at any time
without  penalty.  In  addition,  the  Promissory  Note is subject to  mandatory
partial prepayment in certain specified  instances.  Due to the fact that it was
possible that 4 of the Aircraft (United Kingdom  registered  aircraft) would not
close by June 30, 1997,  the  Partnership  agreed with the Purchaser to accept a
pro rata note payment on June 30, 1997 of $714,786. The unpaid principal balance
continued to accrue  interest at 12% per annum until paid.  In fact,  two of the
four Aircraft closed on June 30, 1997 and the Partnership  received  $298,906 on
July 10,  1997.  The  remaining  two  aircraft  closed on July 21,  1997 and the
Partnership  received  the  balance of the note  payment on July 29,  1997.  The
Promissory  Note is not  reflected in the balance  sheet due to the  Partnership
using the deposit method of accounting as discussed in The Accounting  Treatment
of the Transaction.

Under the terms of the transaction, the Purchaser's assets, which are limited to
the  Aircraft,  including any income or proceeds  therefrom,  and any funds made
available to Purchaser under the working capital line described below constitute
the sole  source of payments  under the  Promissory  Note.  Although no security
interest over the Aircraft or the leases is granted in favor of the Partnership,
the equity interests in the Purchaser have been pledged to the  Partnership.  In
connection  with  that  pledge,  the  Purchaser  is  prohibited  from  incurring
indebtedness other than (i) the Promissory Note; (ii) deferred taxes not yet due
and  payable;  (iii)  indebtedness  incurred  to hushkit  Aircraft  owned by the
Purchaser;  (iv) demand loans to another SPC (defined below) at a market rate of
interest;  and (v) debt to trade  creditors  incurred in the ordinary  course of
business. In addition,  the Purchaser undertakes to keep the Aircraft and leases
free of any lien, security interest or other encumbrance other than (i) inchoate
taxes and materialmen's liens and the like, (ii) in the event that the Purchaser
elects to install  hushkits on any  Aircraft,  secured debt to the extent of the
full cost of such hushkit and other  hushkits  acquired  with  proceeds from the
same loan facility;  (iii) liens lessees are customarily permitted to incur that
are  required  to be  removed.  The  Purchaser  has the right to sell any of the
Aircraft without the consent of the Partnership,  except that the  Partnership's
consent  would be  required  in the event  that the sale  price is less than the
portion of the outstanding  balance of the Promissory Note which is allocable to
the Aircraft in question and the  Purchaser  does not have  sufficient  funds to
make up the  difference.  In the event that any of the  Aircraft are sold by the
Purchaser,  the  Promissory  Note is subject to a  mandatory  prepayment  of the
portion of the Promissory Note which is allocable to the Aircraft sold.


                                       12

<PAGE>



Under the terms of the  transaction,  the Purchaser's  Manager has undertaken to
make  available a working  capital line to the Purchaser of up to  approximately
$2,598,000 to fund operating obligations of the Purchaser.  This working capital
line is guaranteed by Triton  Investments,  Ltd., the parent of the  Purchaser's
Manager and such  guarantor  provided  the  Partnership  with a copy of its most
recent  balance  sheet  showing  a  consolidated  net  worth  (net  of  minority
interests)  of at least  $150-million  at December 31, 1996.  Provided  that the
Purchaser is not in default in making  payments due under the Promissory Note to
the Partnership,  the Purchaser is permitted to dividend to its equity owners an
amount  not to  exceed  approximately  $70,000  per  month.  The  Purchaser  may
distribute  additional  dividends  to the  equity  owners  to the  extent of the
working  capital  advances  made by the  Purchaser's  Manager  provided that the
working capital line available to the Purchaser will be deemed  increased to the
extent of such dividends.

Under the purchase agreement,  the Purchaser purchased the Aircraft effective as
of April 1, 1997 notwithstanding the actual closing dates. The utilization of an
effective  date  facilitated  the  determination  of rent and other  allocations
between  the  parties.  The  Purchaser  has the right to receive  all income and
proceeds,  including rents and receivables,  from the Aircraft accruing from and
after April 1, 1997, and the Promissory  Note commenced  bearing  interest as of
April 1, 1997  subject to the closing of the  Aircraft.  Each  Aircraft was sold
subject to the  existing  leases,  if any,  and as part of the  transaction  the
Purchaser assumes all obligations  relating to maintenance reserves and security
deposits  with  respect to such leases.  Cash  balances  related to  maintenance
reserves and  security  deposits are to be  transferred  to the  Purchaser on or
after the Aircraft  closing  dates.  As of June 30, 1997,  the  Partnership  had
transferred  $150,000  in  security  deposits  and  maintenance  reserves to the
Purchaser.   In  July  1997,  security  deposits  and  maintenance  reserves  of
$5,010,507  were  transferred  to the Purchaser and any remaining  cash balances
should be transferred to the Purchaser by the end of the third quarter.

Neither PIMC nor GECAS will receive a sales  commission in  connection  with the
transaction. In addition, PIMC will not be paid a management fee with respect to
the  collection of the  Promissory  Note or on any rents  accruing from or after
April 1,  1997.  Neither  PIMC  nor  GECAS or any of its  affiliates  holds  any
interest in Triton Aviation or any of Triton Aviation's affiliates.  John Flynn,
the current President of Triton Aviation, was a Polaris executive until May 1996
and has over 15 years  experience in the commercial  aviation  industry.  At the
time Mr. Flynn was employed at PIMC, he had no affiliation  with Triton Aviation
or its affiliates.

Polaris  Aircraft  Income Fund II,  Polaris  Aircraft  Income Fund III,  Polaris
Aircraft  Income  Fund V and  Polaris  Aircraft  Income  Fund VI have  also sold
certain  aircraft  assets to separate  special  purpose  companies  under common
management with the Purchaser  (collectively,  together with the Purchaser,  the
"SPC's") on terms  similar to those set forth above,  with the  exception of the
Polaris Aircraft Income Fund VI aircraft, which were sold on an all cash basis.

The Accounting  Treatment of the  Transaction - As noted above and in accordance
with GAAP, this  transaction has not been accounted for as a sale as of June 30,
1997. This  transaction is being recorded using the deposit method of accounting
which requires the Partnership to continue to report on its financial statements
the Aircraft,  other assets,  liabilities and any related debt even if they have
been  assumed by Triton.  Cash  received  from  Triton,  including  initial down
payment and  subsequent  collection of principal and interest,  is reported as a
deposit on the contract. As of June 30, 1997, the balance of the deposit account
included in other assets on the balance sheet was $249,909, representing the net
excess of the amounts transferred to Triton with the Aircraft including;  rents,
receivables  and other amounts  accruing from April 1, 1997 to the closing dates
for each of the  Aircraft,  and security  deposits  over the cash  received from
Triton  for the pro rata  down  payment  and pro  rata  principal  and  interest
payments on the Promissory  Note. A sale will be recognized with respect to this
transaction if the net cash received from Triton demonstrates that its financial
investment is sufficient to indicate that, for accounting purposes, the risks of
ownership of the Aircraft have  transferred to Triton.  This amount is estimated
to be approximately $3.2 million.


                                       13

<PAGE>



In accordance with GAAP, the Partnership  recognized  rental income up until the
closing date for 11 of the 13 aircraft  which occurred from May 28, 1997 to June
30, 1997, and recognized  rental income through June 30, 1997 for the 2 aircraft
which closed on July 21,  1997.  The  Partnership  recorded  rental  income from
operating leases, interest and other income totaling $1,603,571 during the three
months ended June 30, 1997 related to the Aircraft.  However, under the terms of
the  transaction,   Triton  was  entitled  to  receive  payment  of  the  rents,
receivables  and other income  accruing  from April 1, 1997 to the closing dates
for each of the  Aircraft,  which  have been  reflected  as  adjustments  to the
deposit account of the Partnership.  Interest collected prior to sale accounting
treatment  is  recorded  as  part  of  Triton's  initial   investment  when  the
transaction is deemed a sale in accordance with GAAP.

The Aircraft  transferred pursuant to the definitive  documentation  executed on
May 28,  1997 have been  classified  as  aircraft  held for sale from that date.
Under GAAP,  aircraft  held for sale are carried at their fair market value less
estimated  costs to sell. The adjustment to the sales proceeds  described  above
and revisions to estimated  costs to sell the Aircraft  required the Partnership
to record an adjustment to the net carrying  value of the aircraft held for sale
of $1,328,482  during the three months ended June 30, 1997.  This  adjustment to
the net carrying value of the aircraft held for sale is included in depreciation
and  amortization  expense on the statement of operations  for the three and six
months ended June 30, 1997.


PARTNERSHIP OPERATIONS

The  Partnership  recorded  net  income  of  $372,140,   or  $0.24  per  limited
partnership  unit,  for the three months  ended June 30,  1997,  compared to net
income of  $1,155,134,  or $1.66 per  limited  partnership  unit,  for the three
months ended June 30, 1996. The  Partnership  recorded net income of $1,269,936,
or $1.52 per limited  partnership  unit for the six months  ended June 30, 1997,
compared to net income of $2,075,753, or $2.86 per limited partnership unit, for
the six months ended June 30, 1996.

Rental revenues,  net of related management fees, decreased during the three and
six months  ended June 30,  1997 as compared  to the same  periods in 1996.  One
factor  contributing  to the decrease during both the three and six months ended
June  30,  1997  was the  sale  of the  Partnership's  aircraft  to  Triton,  as
previously discussed under the Remarketing Update section.

Another  factor  contributing  to the  decrease in rental  revenues  for the six
months  ended June 30,  1997,  was the absence of rental  revenues  from the two
aircraft formerly leased to Viscount,  which were returned to the Partnership in
September and October  1996. In addition,  rental  revenues  decreased  from the
Continental  leases that were  renewed in June 1996 for a one-year  term through
June 1997 at the current  market  lease rate which is  approximately  51% of the
prior lease rate. Rental revenues from Continental  further decreased during the
three months ended March 31, 1997 as compared to the same period in 1996, due to
Continental  having  completed its payment of the deferred rental amounts in the
first quarter of 1997, which have been recognized as income when received.

The leases of five McDonnell  Douglas  DC-9-30  aircraft with  Continental  were
originally scheduled to expire in June 1996.  Continental  exercised their right
to extend the leases for the five  aircraft for a one-year  term  commencing  in
July 1996 at the current fair market monthly lease rate,  which is approximately
65% of the prior lease rate.

The   Partnership   recorded   depreciation   adjustments   to  certain  of  the
Partnership's  aircraft in 1996. The increased  depreciation expense reduces the
aircraft's carrying value and reduces the amount of future depreciation  expense
that the Partnership will recognize over the projected  remaining  economic life
of the aircraft.  As discussed previously in the Remarketing Update section, the
Partnership's  13 aircraft have been classified as aircraft held for sale in May
1997. During the second quarter of 1997, the Partnership recorded adjustments to
the  estimated  fair value of  aircraft  held for sale of  $1,328,482,  which is
included in  depreciation  expense  for the three and six months  ended June 30,
1997.

                                       14

<PAGE>



The Partnership recorded an allowance for credit losses during the first quarter
of 1996 for certain unpaid rent and accrued  interest  receivables from Viscount
during the first  quarter of 1996 as a result of  Viscount's  default on certain
obligations due the Partnership and Viscount's subsequent bankruptcy filing. The
aggregate  allowance  for credit  losses of $307,127 for these  obligations  was
reflected in the provision for credit losses in the  Partnership's  statement of
income for the six months ended June 30,  1996.  In  addition,  the  Partnership
recognized legal costs of approximately $179,000 related to the Viscount default
and its Chapter 11 bankruptcy  filing and are reflected as operating  expense in
the Partnership's statement of income for the six months ended June 30, 1996.

Interest income decreased during the three and six months ended June 30, 1997 as
compared to the same  periods in 1996 due to the payoff of the ATA note in March
1996 and the  Continental  note in  September  1996,  and a decrease in interest
income on the  deferred  rent  payments due from  Continental  that ended in the
first quarter of 1997.

Administration  and other  expenses  increased  during  the three and six months
ended June 30, 1997 as compared to the same periods in 1996, due to increases in
printing and postage costs combined with an increase in outside services.


LIQUIDITY AND CASH DISTRIBUTIONS

Liquidity - The Partnership received payments on the Promissory Note due on June
30, 1997 from Triton in June and July of 1997, which was agreed upon by both the
Partnership  and the  Purchaser as discussed  under Sale of Aircraft to Triton .
PIMC has  determined  that the  Partnership  maintain cash reserves as a prudent
measure to insure  that the  Partnership  has  available  funds in the event the
Purchaser  defaults  under  the  Promissory  Note  and for  other  contingencies
including  expenses of the Partnership.  The Partnership's cash reserves will be
monitored  and may be revised from time to time as further  information  becomes
available in the future.

Cash  Distributions - Cash  distributions  to limited  partners during the three
months  ended  June 30,  1997 and 1996 were  $2,499,820,  or $5.00  per  limited
partnership  unit,  and  $3,124,775,  or $6.25  per  limited  partnership  unit,
respectively. Cash distributions to limited partners during the six months ended
June 30, 1997 and 1996 were $4,999,640,  or $10.00 per limited partnership unit,
and $6,249,550, or $12.50 per limited partnership unit, respectively.

In accordance with the Limited Partnership Agreement,  cash distributions are to
be allocated 90% to the limited partners and 10% to the general partner. In July
1997, the Partnership made a cash distribution to limited partners of $8,664,376
($17.33 per limited  partnership unit) and $962,708 to the general partner.  The
timing and amount of future cash distributions are not yet known and will depend
on  the  Partnership's  future  cash  requirements  including  expenses  of  the
Partnership,  as previously  discussed in the Liquidity section, and the receipt
of note payments from Triton.



                                       15

<PAGE>



                           Part II. Other Information


Item 1.  Legal Proceedings

As  discussed  in Item 3 of Part I of  Polaris  Aircraft  Income  Fund IV's (the
Partnership) 1996 Annual Report to the Securities and Exchange  Commission (SEC)
on Form 10-K (Form 10-K) and in Item 1 of Part II of the Partnership's Quarterly
Report to the SEC on Form 10-Q (Form 10-Q) for the period  ended March 31, 1997,
there are a number  of  pending  legal  actions  or  proceedings  involving  the
Partnership. Except as discussed below, there have been no material developments
with respect to any such  actions or  proceedings  during the period  covered by
this report.

Equity Resources, Inc., et al. v. Polaris Investment Management Corporation,  et
al. - On May 12, 1997,  plaintiffs appealed the Superior Court's denial of their
motion seeking to enjoin the sale by the  Partnership of certain of its aircraft
and notes  receivable.  On May 15, 1997, the Appellate Court denied  plaintiffs'
appeal.  On May 19, 1997,  plaintiffs  appealed the Superior  Court's  denial of
their  motion  to the  Supreme  Court of  Massachusetts.  The  Supreme  Court of
Massachusetts  denied  plaintiffs'  appeal on May 29, 1997. On May 23, 1997, the
defendants filed a motion to dismiss the action.

Ron Wallace v. Polaris Investment Management  Corporation,  et al. - On or about
June 18,  1997,  a  purported  class  action  entitled  Ron  Wallace v.  Polaris
Investment  Management  Corporation,  et al.  was  filed on  behalf  of the unit
holders of Polaris  Aircraft Income Funds II through VI in the Superior Court of
the State of California,  County of San Francisco.  The complaint  names each of
Polaris Investment Management  Corporation (PIMC), GE Capital Aviation Services,
Inc.  (GECAS),  Polaris Aircraft Leasing  Corporation,  Polaris Holding Company,
General Electric Capital  Corporation,  certain executives of PIMC and GECAS and
John E. Flynn, a former PIMC  executive,  as defendants.  The complaint  alleges
that defendants committed a breach of their fiduciary duties with respect to the
Sale  Transaction  involving the  Partnership  as described in Item 2, under the
caption "Remarketing Update -- Sale of Aircraft to Triton."

Other Proceedings - Item 10 in Part III of the Partnership's  1996 Form 10-K and
Item 1 in Part II of the Partnership's  Form 10-Q for the period ended March 31,
1997 discuss certain  actions which have been filed against  Polaris  Investment
Management  Corporation  and others in connection  with the sale of interests in
the  Partnership  and the management of the  Partnership.  With the exception of
Novak, et al v. Polaris Holding  Company,  et al, (which has been dismissed,  as
discussed in the 1996 Form 10-K) where the  Partnership was named as a defendant
for procedural purposes, the Partnership is not a party to these actions. Except
as discussed below, there have been no material developments with respect to any
of the actions described therein during the period covered by this report.

The  following  actions  have been settled  pursuant to a  settlement  agreement
entered into on June 6, 1997:

- Thelma Abrams, et al. v. Polaris Holding Company, et al.
- Sara J. Bishop, et al. v. Kidder, Peabody & Co. Incorporated, et al.
- Enita V. Elphick, et al. v. Kidder, Peabody & Co. Incorporated, et al.
- Janet K. Johnson, et al. v. Polaris Holding Company, et al.
- Wayne W. Kuntz, et al. v. Polaris Holding Company, et al.
- Joyce H. McDevitt, et al. v. Polaris Holding Company, et al.
- Mary Grant Tarrer, et al. v. Kidder, Peabody & Co. Incorporated, et al.
- Harry R. Wilson, et al. v. Polaris Holding Company, et al.
- George Zicos, et al. v. Polaris Holding Company, et al.

- Michael J. Ouellette,  et al. v. Kidder,  Peabody & Co. Incorporated,  et al.;
Thelma A. Rolph, et al. v. Polaris Holding Company, et al.; Carl L. Self, et al.
v.  Polaris  Holding  Company,  et al.  - On or  about  March  21,  1997,  three
complaints were filed in the Superior Court of the State of California,

                                       16

<PAGE>



County  of  Sacramento   naming  as  defendants   Kidder,   Peabody  &  Company,
Incorporated,  Polaris Holding Company,  Polaris  Aircraft Leasing  Corporation,
Polaris  Investment  Management  Corporation,  Polaris  Securities  Corporation,
Polaris Jet Leasing,  Inc., Polaris Technical  Services,  Inc., General Electric
Company,   General   Electric   Capital   Services,   General  Electric  Capital
Corporation,  GE Capital Aviation  Services and Does 1-100. The first complaint,
entitled Michael J. Ouellette, et al. v. Kidder Peabody & Co., et al., was filed
by over 50 individual  plaintiffs who purchased limited partnership units in one
or more of Polaris  Aircraft Income Funds I-VI. The second  complaint,  entitled
Thelma A. Rolph,  et al. v. Polaris Holding  Company,  et al., was filed by over
500 individual plaintiffs who purchased limited partnership units in one or more
of Polaris  Aircraft  Income Funds I-VI. The third  complaint,  entitled Carl L.
Self,  et al.  v.  Polaris  Holding  Company,  et al.,  was  filed  by over  500
individual  plaintiffs who purchased limited partnership units in one or more of
Polaris Aircraft Income Funds I-VI. Each complaint  alleges  violations of state
common law, including fraud, negligent misrepresentation and breach of fiduciary
duty,  and  violations  of the rules of the National  Association  of Securities
Dealers,  Inc. Each complaint seeks to recover compensatory damages and punitive
damages in an  unspecified  amount,  interest  and  rescission  with  respect to
Polaris Aircraft Income Funds I-VI and all other limited partnerships alleged to
have been sold by Kidder Peabody to the plaintiffs.


Item 6.  Exhibits and Reports on Form 8-K

a)  Exhibits (numbered in accordance with Item 601 of Regulation S-K)

    27.  Financial Data Schedules (Filed electronically only)

b)  Reports on Form 8-K

    A Current  Report on Form 8-K,  dated May 28,  1997,  reporting  the sale of
    assets under Item 2 was filed on June 12, 1997.


                                       17

<PAGE>



                                    SIGNATURE



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

                                   POLARIS AIRCRAFT INCOME FUND IV,
                                   A California Limited Partnership
                                   (Registrant)
                                   By: Polaris Investment
                                       Management Corporation,
                                       General Partner




         August 12, 1997               By: /S/Marc A. Meiches
---------------------------------          ------------------
                                           Marc A. Meiches
                                           Chief Financial Officer
                                           (principal financial officer and
                                           principal accounting officer of
                                           Polaris Investment Management
                                           Corporation, General Partner of
                                           the Registrant)

                                       18