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 September 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 17 pages.


                                        

<PAGE>



                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

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




                                      INDEX


Part I.       Financial Information                                        Page


         Item 1.  Financial Statements

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

              b)  Statements of Operations - Three and Nine Months
                  Ended September 30, 1997 and 1996..........................4

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

              d)  Statements of Cash Flows - Nine Months
                  Ended September 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..........................16

         Signature    ......................................................17

                                        2

<PAGE>



                          Part I. Financial Information
                          -----------------------------
Item 1.  Financial Statements

                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

                                 BALANCE SHEETS
                                   (Unaudited)

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

CASH AND CASH EQUIVALENTS                       $ 18,065,499     $ 23,989,285

RENT AND OTHER RECEIVABLES                              --            943,708

NOTE RECEIVABLE                                   18,545,096             --

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

OTHER ASSETS                                            --             22,099
                                                ------------     ------------

                                                $ 36,610,595     $ 55,142,487
                                                ============     ============

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT):

PAYABLE TO AFFILIATES                           $    161,649     $    216,319

ACCOUNTS PAYABLE AND ACCRUED
   LIABILITIES                                       415,096          322,513

LESSEE SECURITY DEPOSITS                                --          1,124,529

MAINTENANCE RESERVES                                   1,006        5,409,620
                                                ------------     ------------

        Total Liabilities                            577,751        7,072,981
                                                ------------     ------------

PARTNERS' CAPITAL (DEFICIT):
   General Partner                                (4,095,869)      (3,975,366)
   Limited Partners, 499,964 units
      issued and outstanding                      40,128,713       52,044,872
                                                ------------     ------------

        Total Partners' Capital                   36,032,844       48,069,506
                                                ------------     ------------

                                                $ 36,610,595     $ 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 OPERATIONS
                                   (Unaudited)


<CAPTION>
                                          Three Months Ended    Nine Months Ended
                                            September 30,         September 30,
                                            -------------         -------------
                                           1997       1996       1997       1996
                                           ----       ----       ----       ----
<S>                                   <C>         <C>         <C>         <C>
REVENUES:
   Rent from operating leases         $   94,889  $2,361,349  $3,813,721  $8,664,507
   Interest                              193,370     324,128     756,218   1,077,051
   Gain on sale of aircraft              951,579        --       951,579       --
   Other                                 779,893      15,386     807,388      15,386
                                      ----------  ----------  ----------  ----------

           Total Revenues              2,019,731   2,700,863   6,328,906   9,756,944
                                      ----------  ----------  ----------  ----------

EXPENSES:
   Depreciation and amortization           3,013   1,986,210   2,685,475   6,030,874
   Management fees to general partner       --       118,067     106,632     418,225
   Provision for credit losses              --       281,902        --       589,029
   Operating                              56,807      71,674     113,659     252,222
   Administration and other               84,269      74,150     277,562     221,981
                                      ----------  ----------  ----------  ----------

           Total Expenses                144,089   2,532,003   3,183,328   7,512,331
                                      ----------  ----------  ----------  ----------

NET INCOME                            $1,875,642  $  168,860  $3,145,578  $2,244,613
                                      ==========  ==========  ==========  ==========

NET INCOME ALLOCATED
   TO THE GENERAL PARTNER             $  885,108  $  314,136  $1,397,721  $  959,786
                                      ==========  ==========  ==========  ==========

NET INCOME (LOSS) ALLOCATED
   TO LIMITED PARTNERS                $  990,534  $ (145,276) $1,747,857  $1,284,827
                                      ==========  ==========  ==========  ==========

NET INCOME (LOSS) PER
   LIMITED PARTNERSHIP UNIT           $     1.98  $    (0.29) $     3.50  $     2.57
                                      ==========  ==========  ==========  ==========


        The accompanying notes are an integral part of these statements.
</TABLE>
                                        4

<PAGE>
<TABLE>


                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

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

<CAPTION>
                                          Year Ended December 31, 1996 and
                                         Nine Months Ended September 30, 1997
                                         ------------------------------------
                                           General      Limited
                                           Partner      Partners       Total
                                           -------      --------       -----
<S>                                     <C>          <C>           <C>
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                             1,397,721     1,747,857     3,145,578

   Cash distributions to partners        (1,518,224)  (13,664,016)  (15,182,240)
                                        -----------  ------------  ------------

Balance, September 30, 1997             $(4,095,869) $ 40,128,713  $ 36,032,844
                                        ===========  ============  ============


        The accompanying notes are an integral part of these statements.
</TABLE>
                                        5

<PAGE>
<TABLE>


                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<CAPTION>
                                                               Nine Months Ended September 30,
                                                               -------------------------------
                                                                       1997          1996
                                                                       ----          ----
<S>                                                               <C>           <C>
OPERATING ACTIVITIES:
      Net income                                                  $  3,145,578  $  2,244,613
      Adjustments to reconcile net income to
        net cash provided by operating activities:
        Depreciation and amortization                                2,685,475     6,030,874
        Gain on sale of aircraft                                      (951,579)         --
        Net provision for credit losses                                   --        (440,689)
        Changes in operating  assets and  liabilities,
           net of effect of sale of aircraft:
           Decrease in rent and other receivables                        3,219     1,010,747
           Increase (decrease) in payable to affiliates                 (2,949)       10,193
           Increase (decrease) in accounts payable
           and accrued liabilities                                     (88,016)      181,852
           Decrease in lessee security deposits                     (1,124,529)      (12,768)
           Increase (decrease) in maintenance reserves              (5,408,614)      574,061
           Decrease in deferred income                                    --        (382,500)
                                                                  ------------  ------------

              Net cash provided by (used in) operating activities   (1,741,415)    9,216,383
                                                                  ------------  ------------

INVESTING ACTIVITIES:
      Proceeds from sale of aircraft                                 4,940,755          --
      Payments to Purchaser related to sale of aircraft             (1,792,380)         --
      Principal payments on notes receivable                         7,851,494     2,740,104
                                                                  ------------  ------------

              Net cash provided by investing activities             10,999,869     2,740,104
                                                                  ------------  ------------

FINANCING ACTIVITIES:
      Cash distributions to partners                               (15,182,240)  (10,415,917)
                                                                  ------------  ------------

              Net cash used in financing activities                (15,182,240)  (10,415,917)
                                                                  ------------  ------------

CHANGES IN CASH AND CASH
      EQUIVALENTS                                                   (5,923,786)    1,540,570

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

CASH AND CASH EQUIVALENTS AT
      END OF PERIOD                                               $ 18,065,499  $ 24,996,601
                                                                  ============  ============

        The accompanying notes are an integral part of these statements.
</TABLE>
                                        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 had
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 was initially 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.  As
discussed in the next paragraph, these payment amounts have been adjusted due to
the Purchaser's  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
possibility  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 portion of the
note payment  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


                                        7

<PAGE>



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

In August 1997 and September  1997, the Purchaser made  prepayments of principal
on  the  Promissory  Note  of  $1,891,402  and  $5,000,000,   respectively.  The
$1,891,402  prepayment was the result of the Purchaser  selling two aircraft and
the $5,000,000 was a voluntary  prepayment by the  Purchaser.  As a result,  the
remaining quarterly installments of principal and interest have been adjusted to
$946,157  and the  balloon  payment  due March  31,  2004 has been  adjusted  to
$3,831,026.

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;  and (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  of  $5,461,043  related to
maintenance  reserves and security  deposits were  transferred  to the Purchaser
after the Aircraft closing dates.


                                        8

<PAGE>



Neither PIMC nor GE Capital Aviation Services, Inc. (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 was not accounted for as a sale at the closing date.
This  transaction  was recorded  using the deposit  method of  accounting  which
required the  Partnership to continue to report on its financial  statements the
Aircraft,  other  assets,  liabilities  and any  related  debt even if they were
assumed by Triton. Cash received from Triton, including the initial down payment
and subsequent  collection of principal and interest,  was reported as a deposit
on the  contract.  In  August  and  September  1997,  the  Partnership  received
prepayments of principal from Triton of $1,891,402 and $5,000,000, respectively.
As a result, sale treatment was recorded on September 30, 1997.

In accordance  with GAAP, the Partnership  recognized  rental income through the
closing date for the Aircraft which occurred from May 28, 1997 to July 21, 1997.
The Partnership recorded rental income from operating leases, interest and other
income totaling  $94,889 and $1,603,571  during the three months ended September
30, 1997 and June 30,  1997,  respectively,  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 sales proceeds  received by the  Partnership.  Interest  collected on the
Promissory  Note prior to sale  accounting  treatment  was  recorded  as part of
Triton's initial  investment and has been subsequently  recognized as additional
sales proceeds upon sale accounting treatment in accordance with GAAP.

The Aircraft  transferred pursuant to the definitive  documentation  executed on
May 28, 1997 had 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  was  included  in
depreciation and amortization expense on the statement of operations.




                                        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 the
                                       Three Months Ended        Payable at
                                       September 30, 1997     September 30, 1997
                                       ------------------     ------------------

Out-of-Pocket Administrative Expense
     Reimbursement                          $ 98,724              $ 54,198
Out-of-Pocket Operating and
     Remarketing Expense Reimbursement        56,081               107,451
                                            --------              --------

                                            $154,805              $161,649
                                            ========              ========









                                       10

<PAGE>



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

In May  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 had 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. 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  could be  obtained,  the  terms of the  transaction  negotiated  by GECAS


                                       11

<PAGE>



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 was initially 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
possibility  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 was not reflected in the June 30, 1997 balance sheet due to
the  Partnership  using the deposit  method of  accounting  as  discussed in The
Accounting Treatment of the Transaction.

In August 1997 and September  1997, the Purchaser made  prepayments of principal
on  the  Promissory  Note  of  $1,891,402  and  $5,000,000,   respectively.  The
$1,891,402  prepayment was the result of the Purchaser  selling two aircraft and
the $5,000,000 was a voluntary  prepayment by the  Purchaser.  As a result,  the
remaining quarterly installments of principal and interest have been adjusted to
$946,157  and the  balloon  payment  due March  31,  2004 has been  adjusted  to
$3,831,026.

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;  and (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


                                       12

<PAGE>



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  of  $5,461,043  related to
maintenance  reserves and security  deposits were  transferred  to the Purchaser
after the Aircraft closing dates.

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 was not accounted for as a sale at the closing date.
This  transaction  was recorded  using the deposit  method of  accounting  which
required the  Partnership to continue to report on its financial  statements the
Aircraft,  other  assets,  liabilities  and any  related  debt even if they were
assumed by Triton. Cash received from Triton, including the initial down payment
and subsequent  collection of principal and interest,  was reported as a deposit
on the  contract.  In  August  and  September  1997,  the  Partnership  received
prepayments of principal from Triton of $1,891,402 and $5,000,000, respectively.
As a result, sale treatment was recorded on September 30, 1997.

In accordance  with GAAP, the Partnership  recognized  rental income through the
closing date for the Aircraft which occurred from May 28, 1997 to July 21, 1997.
The Partnership recorded rental income from operating leases, interest and other
income totaling  $94,889 and $1,603,571  during the three months ended September
30, 1997 and June 30,  1997,  respectively,  related to the  Aircraft.  However,
under the terms of the  transaction,  Triton was entitled to receive  payment of


                                       13

<PAGE>



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 sales proceeds  received by the  Partnership.  Interest  collected on the
Promissory  Note prior to sale  accounting  treatment  was  recorded  as part of
Triton's initial  investment and has been subsequently  recognized as additional
sales proceeds upon sale accounting treatment in accordance with GAAP.

The Aircraft  transferred pursuant to the definitive  documentation  executed on
May 28, 1997 had 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  was  included  in
depreciation and amortization expense on the statement of operations.


Partnership Operations

The  Partnership  recorded  net  income  of  $1,875,642,  or $1.98  per  limited
partnership unit for the three months ended September 30, 1997,  compared to net
income of $168,860,  or an allocated  net loss of $0.29 per limited  partnership
unit,  for the same  period in 1996.  The  Partnership  recorded  net  income of
$3,145,578,  or $3.50 per limited  partnership  unit for the nine  months  ended
September 30, 1997,  compared to net income of $2,244,613,  or $2.57 per limited
partnership unit, for the same period in 1996.

The Partnership  reported  decreases in rent from operating  leases,  management
fees and  depreciation  expense during the three and nine months ended September
30,  1997,  as  compared  to the same  period  in  1996,  due to the sale of the
remaining  Aircraft  to  Triton.  As  discussed  in  Note  2  to  the  financial
statements,  the Partnership did not recognize this  transaction as a sale until
September 30, 1997, at which time it recognized a gain on sale of $951,579.

During 1996, the Partnership  recorded  provisions for credit losses aggregating
$589,029 for certain rent and interest  receivables from Viscount and recognized
legal expenses  aggregating $250,000 incurred during the first three quarters of
1996 related to the Viscount default and Chapter 11 bankruptcy filing.

Interest income  decreased  during the three and nine months ended September 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.

The  Partnership  recognized  as other  revenue  in the third  quarter  of 1997,
maintenance  reserves  aggregating  $779,893  that were  previously  paid to the
Partnership by a former lessee for the aircraft that was sold to Triton in 1997.

Administration  and other  expenses  increased  during the three and nine months
ended  September  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 all payments due on the Promissory Note from
Triton during the nine months ended September 30, 1997. PIMC has determined that
the  Partnership  maintain cash reserves as a prudent measure to insure that the
Partnership  has  available  funds  in  the  event  Triton  defaults  under  the
Promissory  Note  and  for  other   contingencies   including  expenses  of  the
Partnership.

                                       14

<PAGE>



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  September  30,  1997  were  $8,664,376,  or  $17.33  per  limited
partnership unit, compared to $3,124,775,  or $6.25 per limited partnership unit
for the three months ended  September 30, 1996.  Cash  distributions  to limited
partners  during the nine months ended September 30, 1997 were  $13,664,016,  or
$27.33 per  limited  partnership  unit,  compared to  $9,374,325,  or $18.75 per
limited  partnership  unit for the nine months ended  September  30,  1996.  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)  and need to retain cash reserves,  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 periods  ended March 31, 1997
and June 30, 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. - As previously disclosed, on May 23, 1997, the defendants filed a motion to
dismiss this action.  Subsequently,  plaintiffs  voluntarily sought dismissal of
their suit  without  prejudice.  On  September  16,  1997,  the court  dismissed
plaintiffs' complaint without prejudice.

Ron Wallace v. Polaris Investment Management Corporation,  et al. - On September
2,  1997,  an amended  complaint  was filed  adding  additional  plaintiffs.  On
September 16, 1997, the Polaris  defendants  filed a demurrer seeking to dismiss
the  amended  complaint.  Simultaneously  with the filing of the  demurrer,  the
Polaris  defendants  sought a stay of  discovery.  The  hearing on the  demurrer
occurred on November 4, 1997. On November 5, 1997, the court granted the Polaris
defendants' demurrer and ordered that plaintiffs be given 10 days leave to amend
their complaint to plead demand futility.

On or about  October 14, 1997,  the  plaintiffs  in this action filed a separate
Petition for Writ of Mandate in the San Francisco  Superior  Court  entitled Ron
Wallace,  et al. v. Polaris  Investment  Management  Corp.,  et al.,  seeking to
obtain  access  to  all  the   Partnership's   books,   records  and  documents.
Subsequently, pursuant to an agreement between the parties, plaintiffs agreed to
dismiss  their  Petition  for Writ of Mandate  with  prejudice  and the  Polaris
defendants agreed to withdraw its motion seeking a stay of discovery.

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 periods ended March 31,
1997 and June 30, 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.  There have been no material  developments  with  respect to any of the
actions described therein during the period covered by this report.


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.

b)  Reports on Form 8-K

    A  Current  Report  on Form  8-K/A,  dated May 28,  1997,  amending  certain
    exhibits listed in Item 7, was filed on August 18, 1997.


                                       16

<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




        November 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)

                                       17