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 March 31, 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 16 pages.


<PAGE>



                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

            FORM 10-Q - For the Quarterly Period Ended March 31, 1997




                                      INDEX


Part I.       Financial Information                                     Page


         Item 1.      Financial Statements

              a)  Balance Sheets - March 31, 1997 and
                  December 31, 1996.......................................3
              b)  Statements of Income - Three Months Ended
                  March 31, 1997 and 1996.................................4

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

              d)  Statements of Cash Flows - Three Months
                  Ended March 31, 1997 and 1996...........................6

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

         Item 2.      Management's Discussion and Analysis of
                      Financial Condition and Results of Operations......10



Part II.      Other Information

         Item 1.      Legal Proceedings..................................14

         Item 5.      Other Information..................................14

         Item 6.      Exhibits and Reports on Form 8-K...................15

         Signature    ...................................................16

                                        2

<PAGE>



                          Part I. Financial Information

Item 1.       Financial Statements

                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

                                 BALANCE SHEETS
                                   (Unaudited)

                                                    March 31,      December 31,
                                                      1997             1996
                                                      ----             ----
ASSETS:

CASH AND CASH EQUIVALENTS                         $ 23,197,768    $ 23,989,285

RENT AND OTHER RECEIVABLES                             989,410         943,708

AIRCRAFT, net of accumulated depreciation of
   $89,838,001 in 1997 and $88,490,049 in 1996      28,839,443      30,187,395

OTHER ASSETS, net of accumulated amortization
   of $2,191,165 in 1997 and $2,188,151 in 1996         52,354          22,099
                                                  ------------    ------------

                                                  $ 53,078,975    $ 55,142,487
                                                  ============    ============

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT):

PAYABLE TO AFFILIATES                             $    216,361    $    216,319

ACCOUNTS PAYABLE AND ACCRUED
   LIABILITIES                                         277,031         322,513

LESSEE SECURITY DEPOSITS                             1,137,356       1,124,529

MAINTENANCE RESERVES                                 5,258,503       5,409,620
                                                  ------------    ------------

        Total Liabilities                            6,889,251       7,072,981
                                                  ------------    ------------

PARTNERS' CAPITAL (DEFICIT):
   General Partner                                  (3,994,189)     (3,975,366)
   Limited Partners, 499,964 units
      issued and outstanding                        50,183,913      52,044,872
                                                  ------------    ------------

        Total Partners' Capital                     46,189,724      48,069,506
                                                  ------------    ------------

                                                  $ 53,078,975    $ 55,142,487
                                                  ============    ============

        The accompanying notes are an integral part of these statements.

                                        3

<PAGE>



                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

                              STATEMENTS OF INCOME
                                   (Unaudited)



                                                 Three Months Ended March 31,
                                                 ----------------------------

                                                     1997             1996
                                                     ----             ----
REVENUES:
       Rent from operating leases                $2,132,642        $3,141,763
       Interest                                     291,123           411,039
       Other                                         16,333              --
                                                 ----------        ----------

               Total Revenues                     2,440,098         3,552,802
                                                 ----------        ----------

EXPENSES:
       Depreciation and amortization              1,350,966         2,022,332
       Management fees to general partner           106,632           142,088
       Provision for credit losses                     --             307,127
       Operating                                      5,318            97,675
       Administration and other                      79,386            62,961
                                                 ----------        ----------

               Total Expenses                     1,542,302         2,632,183
                                                 ----------        ----------

NET INCOME                                       $  897,796        $  920,619
                                                 ==========        ==========

NET INCOME ALLOCATED
       TO THE GENERAL PARTNER                    $  258,935        $  321,652
                                                 ==========        ==========

NET INCOME ALLOCATED TO
       LIMITED PARTNERS                          $  638,861        $  598,967
                                                 ==========        ==========

NET INCOME PER LIMITED
       PARTNERSHIP UNIT                          $     1.28        $     1.20
                                                 ==========        ==========


        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
                                        Three Months Ended March 31, 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                           258,935        638,861        897,796

   Cash distributions to partners      (277,758)    (2,499,820)    (2,777,578)
                                   ------------   ------------   ------------

Balance, March 31, 1997            $ (3,994,189)  $ 50,183,913   $ 46,189,724
                                   ============   ============   ============


        The accompanying notes are an integral part of these statements.

                                        5

<PAGE>



                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                    Three Months Ended March 31,
                                                    ----------------------------

                                                          1997         1996
                                                          ----         ----
OPERATING ACTIVITIES:
      Net income                                      $    897,796 $    920,619
      Adjustments to reconcile net income to
        net cash provided by operating activities:
        Depreciation and amortization                    1,350,966    2,022,332
        Provision for credit losses                           --        307,127
        Changes in operating assets and liabilities:
           Increase in rent and other receivables          (45,702)    (309,131)
           Increase in other assets                        (33,269)        --
           Increase in payable to affiliates                    42        6,055
           Increase (decrease) in accounts payable
               and accrued liabilities                     (45,482)      60,904
           Increase in lessee security deposits             12,827       12,435
           Decrease in maintenance reserves               (151,117)    (625,052)
           Decrease in deferred income                        --       (382,500)
                                                      ------------ ------------

             Net cash provided by operating activities   1,986,061    2,012,789
                                                      ------------ ------------

INVESTING ACTIVITIES:
      Principal payments on notes receivable                  --      1,477,205
                                                      ------------ ------------

             Net cash provided by investing activities        --      1,477,205
                                                      ------------ ------------

FINANCING ACTIVITIES:
      Cash distributions to partners                    (2,777,578)  (3,471,972)
                                                      ------------ ------------

             Net cash used in financing activities      (2,777,578)  (3,471,972)
                                                      ------------ ------------

CHANGES IN CASH AND CASH
      EQUIVALENTS                                         (791,517)      18,022

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

CASH AND CASH EQUIVALENTS AT
      END OF PERIOD                                   $ 23,197,768 $ 23,474,053
                                                      ============ ============

        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.       Proposed Sale of Aircraft

During the first  quarter of 1997,  the  Partnership  received,  and the General
Partner (upon recommendation of its servicer) has determined that it would be in
the best interests of the  Partnership to accept an offer to purchase all of the
Partnership's aircraft (the "Aircraft") and certain of its notes receivable by a
special  purpose company (the  "Purchaser").  The Purchaser is managed by Triton
Aviation  Services  Limited,  a privately  held  aircraft  leasing  company (the
"Purchaser's  Manager")  which was formed in 1996.  Each  Aircraft is to be sold
subject to the existing  leases,  and as part of the  transaction  the Purchaser
assumes all obligations  relating to maintenance reserves and security deposits,
if any,  relating  to such  leases.  At the same time cash  balances  related to
maintenance  reserves and security deposits,  if any, will be transferred to the
Purchaser.

The total  proposed  purchase  price  (the  "Purchase  Price") to be paid by the
Purchaser in the contemplated  transaction  would be $29,748,000  which would be
allocable to the Aircraft and to certain notes  receivable  by the  Partnership.
The Purchaser  proposes to pay  $3,351,410 of the Purchase  Price in cash at the
closing and the balance of $26,396,590 would be paid by delivery of a promissory
note (the  "Promissory  Note") by the Purchaser.  The  Promissory  Note would be
repaid in equal  quarterly  installments  over a period of seven  years  bearing
interest at a rate of 12% per annum with a balloon  principal payment at the end
of year seven.  The  Purchaser  would have the right to  voluntarily  prepay the
Promissory  Note in whole or in part at any time without  penalty.  In addition,
the Promissory Note would be subject to mandatory partial  prepayment in certain
specified instances.

Under the terms of the  contemplated  transaction,  the Aircraft,  including any
income or proceeds  therefrom  and any  maintenance  reserves  or deposits  with
respect  thereto,  constitute  the sole source of payments  under the Promissory
Note.  No security  interest over the Aircraft or the leases would be granted in
favor of the  Partnership,  but the equity  interests in the Purchaser  would be
pledged  to the  Partnership.  The  Purchaser  would  have the right to sell the
Aircraft,  or any of them,  without the consent of the Partnership,  except that
the Partnership's  consent would be required in the event that the proposed 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.  The Purchaser  would undertake to
keep the  Aircraft  and  leases  free of any lien,  security  interest  or other
encumbrance other than (i) inchoate  materialmen's  liens and the like, and (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.  The Purchaser will

                                        7

<PAGE>



be 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 and, (iv) demand loans from another SPC
(defined below) at a market rate of interest.

It is also  contemplated  that each of Polaris  Aircraft Income Fund II, Polaris
Aircraft Income Fund III,  Polaris  Aircraft Income Fund V and Polaris  Aircraft
Income Fund VI would sell 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.
Under the  terms of the  contemplated  transaction,  Purchaser's  Manager  would
undertake 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 to be guaranteed  by Triton  Investments  Limited,  the
parent  of  the  Purchaser's   Manager  and  such  guarantor  will  provide  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.  Furthermore,
pursuant to the  respective  operating  agreements  of each SPC,  including  the
Purchaser,  the  Purchaser's  Manager  would  provide to each SPC all normal and
customary management services including remarketing,  sales and repossession, if
necessary.  Provided that the Purchaser is not in default in making payments due
under the Promissory Note to the  Partnership,  the Purchaser would be 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.

The Purchaser  would be deemed to have  purchased  the Aircraft  effective as of
April 1, 1997  notwithstanding the actual closing date. The Purchaser would have
the  right to  receive  all  income  and  proceeds,  including  rents  and notes
receivables,  from the Aircraft  accruing from and after April 1, 1997,  and the
Promissory Note would commence bearing interest as of April 1, 1997.

The Partnership has agreed to consult with Purchaser's Manager before taking any
significant  action  pertaining to the Aircraft  after the effective date of the
purchase  offer.  The  Purchaser  also has the  right  to make  all  significant
decisions  regarding  the  Aircraft  from and  after the date of  completion  of
definitive  documentation  legally  binding the Purchaser and the Partnership to
the  transaction,  even  if a  delay  occurs  between  the  completion  of  such
documentation and the closing of the title transfer to the Purchaser.

In the event the Partnership receives and elects 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 deems  more  favorable,  the  Purchaser  has the right to (i) match the
offer,  or (ii) decline to match the offer and be entitled to compensation in an
amount equal to 1 1/2% of the Purchaser's proposed Purchase Price.

The Partnership adopted, effective January 1, 1996, SFAS No. 121 "Accounting for
the  Impairment of Long-Lived  Assets and for  Long-Lived  Assets to be Disposed
Of." That statement  requires that long-lived  assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be  recoverable.  The purchase  offer  constitutes  a change in
circumstances  which,  pursuant to SFAS No. 121,  requires  the  Partnership  to
review the Aircraft for  impairment.  As  previously  discussed in Note 3 of the
Partnership's financial statements for the year ended December 31, 1996 included
in Form 10-K, the  Partnership  has determined  that an impairment  loss must be
recognized.  In determining  the amount of the impairment  loss, the Partnership
estimated the "fair value" of the Aircraft based on the proposed  Purchase Price
reflected in the contemplated transaction, less the estimated costs and expenses
of the proposed  sale. The  Partnership is deemed to have an impairment  loss to
the extent that the carrying value exceeded the fair value.  Management believes
the assumptions  related to the fair value of impaired assets represent the best
estimates based on reasonable and supportable assumptions and projections.

It should be noted that there can be no  assurance  that the  contemplated  sale
transaction will be consummated. The contemplated transaction remains subject to
execution of definitive documentation and various other contingencies.

                                        8

<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
                                             March 31, 1997    March 31, 1997
                                             --------------    --------------

Aircraft Management Fees                        $104,334          $ 56,971
Out-of-Pocket Administrative Expense
     Reimbursement                               119,670           127,977
Out-of-Pocket Operating and
     Remarketing Expense Reimbursement           100,100            31,413
                                                --------          --------
                                                $324,104          $216,361
                                                ========          ========




                                        9

<PAGE>



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

At March 31, 1997,  Polaris  Aircraft Income Fund IV (the  Partnership)  owned a
portfolio of 13 used commercial jet aircraft out of its original portfolio of 33
aircraft.  The portfolio  includes 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 were returned to
the Partnership in September and October 1996. 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. Two
Boeing 727-100  aircraft,  that were transferred to the Partnership by ATA, were
sold in 1994.


Remarketing Update

Proposed  Sale of Aircraft - During the first quarter of 1997,  the  Partnership
received,  and the General  Partner  (upon  recommendation  of its servicer) has
determined  that it would be in the best interests of the  Partnership to accept
an offer to purchase all of the  Partnership's  aircraft  (the  "Aircraft")  and
certain of its notes receivable by a special purpose company (the  "Purchaser").
The Purchaser is managed by Triton Aviation Services  Limited,  a privately held
aircraft leasing company (the  "Purchaser's  Manager") which was formed in 1996.
Each Aircraft is to be sold subject to the existing  leases,  and as part of the
transaction  the  Purchaser  assumes all  obligations  relating  to  maintenance
reserves and security  deposits,  if any,  relating to such leases.  At the same
time cash balances  related to maintenance  reserves and security  deposits,  if
any, will be transferred to the Purchaser.

The total  proposed  purchase  price  (the  "Purchase  Price") to be paid by the
Purchaser in the contemplated  transaction  would be $29,748,000  which would be
allocable to the Aircraft and to certain notes  receivable  by the  Partnership.
The Purchaser  proposes to pay  $3,351,410 of the Purchase  Price in cash at the
closing and the balance of $26,396,590 would be paid by delivery of a promissory
note (the  "Promissory  Note") by the Purchaser.  The  Promissory  Note would be
repaid in equal  quarterly  installments  over a period of seven  years  bearing
interest at a rate of 12% per annum with a balloon  principal payment at the end
of year seven.  The  Purchaser  would have the right to  voluntarily  prepay the
Promissory  Note in whole or in part at any time without  penalty.  In addition,
the Promissory Note would be subject to mandatory partial  prepayment in certain
specified instances.

Under the terms of the  contemplated  transaction,  the Aircraft,  including any
income or proceeds  therefrom  and any  maintenance  reserves  or deposits  with
respect  thereto,  constitute  the sole source of payments  under the Promissory
Note.  No security  interest over the Aircraft or the leases would be granted in
favor of the  Partnership,  but the equity  interests in the Purchaser  would be
pledged  to the  Partnership.  The  Purchaser  would  have the right to sell the
Aircraft,  or any of them,  without the consent of the Partnership,  except that
the Partnership's  consent would be required in the event that the proposed 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.  The Purchaser  would undertake to
keep the  Aircraft  and  leases  free of any lien,  security  interest  or other
encumbrance other than (i) inchoate  materialmen's  liens and the like, and (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.  The Purchaser will
be 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 and, (iv) demand loans from another SPC
(defined below) at a market rate of interest.

It is also  contemplated  that each of Polaris  Aircraft Income Fund II, Polaris
Aircraft Income Fund III,  Polaris  Aircraft Income Fund V and Polaris  Aircraft

                                       10

<PAGE>



Income Fund VI would sell 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.
Under the  terms of the  contemplated  transaction,  Purchaser's  Manager  would
undertake 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 to be guaranteed  by Triton  Investments  Limited,  the
parent  of  the  Purchaser's   Manager  and  such  guarantor  will  provide  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.  Furthermore,
pursuant to the  respective  operating  agreements  of each SPC,  including  the
Purchaser,  the  Purchaser's  Manager  would  provide to each SPC all normal and
customary management services including remarketing,  sales and repossession, if
necessary.  Provided that the Purchaser is not in default in making payments due
under the Promissory Note to the  Partnership,  the Purchaser would be 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.

The Purchaser  would be deemed to have  purchased  the Aircraft  effective as of
April 1, 1997  notwithstanding the actual closing date. The Purchaser would have
the  right to  receive  all  income  and  proceeds,  including  rents  and notes
receivables,  from the Aircraft  accruing from and after April 1, 1997,  and the
Promissory Note would commence bearing interest as of April 1, 1997.

The Partnership has agreed to consult with Purchaser's Manager before taking any
significant  action  pertaining to the Aircraft  after the effective date of the
purchase  offer.  The  Purchaser  also has the  right  to make  all  significant
decisions  regarding  the  Aircraft  from and  after the date of  completion  of
definitive  documentation  legally  binding the Purchaser and the Partnership to
the  transaction,  even  if a  delay  occurs  between  the  completion  of  such
documentation and the closing of the title transfer to the Purchaser.

In the event the Partnership receives and elects 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 deems  more  favorable,  the  Purchaser  has the right to (i) match the
offer,  or (ii) decline to match the offer and be entitled to compensation in an
amount equal to 1 1/2% of the Purchaser's proposed Purchase Price.

It should be noted that there can be no  assurance  that the  contemplated  sale
transaction will be consummated. The contemplated transaction remains subject to
execution of definitive documentation and various other contingencies.


Partnership Operations

The  Partnership  recorded  net  income  of  $897,796,   or  $1.28  per  limited
partnership  unit,  for the three months  ended March 31, 1997,  compared to net
income of $920,619, or $1.20 per unit, for the same period in 1996.

Rental  revenues,  net of related  management  fees,  decreased during the three
months  ended  March 31,  1997 as  compared  to the same  period  in 1996.  This
decrease was the result of 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.


                                       11

<PAGE>



Operating  results during the first three months of 1996 reflect a provision for
credit losses  recorded in 1996 for certain rent and interest  receivables  from
Viscount  combined with legal expenses incurred during the first quarter of 1996
related to the Viscount default and Chapter 11 bankruptcy filing.

The  Partnership  has 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 is reflected in the provision for credit losses in the Partnership's
statement of operations  for the three months ended March 31, 1996. In addition,
the Partnership  recognized legal costs of approximately  $97,000 related to the
Viscount  default and its Chapter 11  bankruptcy  filing.  These legal costs are
reflected as operating expense in the Partnership's  statement of operations for
the three months ended March 31, 1996.

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.

Interest  income  decreased  during the three  months  ended  March 31,  1997 as
compared  to the same  period 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 months ended March
31, 1997 as compared to the same period in 1996,  due to  increases  in printing
and postage costs combined with an increase in outside services.


Liquidity and Cash Distributions

Liquidity - As previously  discussed in the Form 10-K,  the  Continental  leases
provide for payment by the Partnership of the costs of certain maintenance work,
Airworthiness Directive (AD) compliance, aircraft modification and refurbishment
costs,  which are not to exceed  approximately  $4.9 million, a portion of which
will be recovered with interest through payments from Continental over the lease
terms.  The  Partnership  is  currently  obligated  to  pay  or  finance  up  to
approximately $2.3 million in remaining qualifying costs under the agreement.

The ATA leases  specify  that the  Partnership  may  finance up to two  aircraft
hushkits at an aggregate cost of approximately  $5.2 million, a portion of which
would be partially  recovered  with interest  through  payments from ATA over an
extended lease term.

The  Partnership  receives  maintenance  reserve  payments  from  certain of its
lessees that may be  reimbursed to the lessee or applied  against  certain costs
incurred by the Partnership for maintenance work performed on the  Partnership's
aircraft,  as specified in the leases.  Maintenance  reserve  balances,  if any,
remaining  at the  termination  of the lease may be used by the  Partnership  to
offset future maintenance expenses,  recognized as revenue, or reimbursed to the
lessee. The net maintenance  reserve balances  aggregate  $5,258,503 as of March
31, 1997.

The  Partnership  is retaining  cash  reserves to finance a portion of the costs
that may be incurred  under the leases with  Continental  and ATA,  and to cover
other cash  requirements,  including  the  potential  costs of  remarketing  the
Partnership aircraft.

Cash  Distributions - Cash  distributions to limited partners were $2,499,820 or
$5.00 per  limited  partnership  unit,  and  $3,124,775,  or $6.25  per  limited

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<PAGE>



partnership  unit  during  the  three  months  ended  March  31,  1997 and 1996,
respectively. The timing and amount of future cash distributions to partners are
not yet known and will depend on the Partnership's future cash requirements, the
receipt from  Continental of  modification  financing  payments;  the receipt of
rental payments from Continental,  ATA, IAG and TBG Airways; and consummation of
the Sale Transaction and timely  performance by the Purchaser of its obligations
to the Partnership under the Promissory Note.

                                       13

<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),  there  are a number of  pending  legal  actions  or
proceedings involving the Partnership.  There have been no material developments
with respect to any such  actions or  proceedings  during the period  covered by
this report except:

Equity Resources, Inc, et al v. Polaris Investment Management Corporation, et al
- On or about April 18, 1997, an action entitled Equity Resources  Group,  Inc.,
et al v.  Polaris  Investment  Management  Corporation,  et al was  filed in the
Superior Court for the County of Middlesex,  Commonwealth of Massachusetts.  The
complaint  names  each of Polaris  Investment  Management  Corporation,  Polaris
Aircraft  Income Fund II,  Polaris  Aircraft  Income Fund III, the  Partnership,
Polaris  Aircraft  Income  Fund  V and  Polaris  Aircraft  Income  Fund  VI,  as
defendants.   The   complaint   alleges  that  Polaris   Investment   Management
Corporation, as general partner of each of the partnerships,  committed a breach
of  its  fiduciary  duties,   violated  applicable   partnership  law  statutory
requirement,  and breached  provisions of the partnership  agreements of each of
the foregoing  partnerships by failing to solicit a vote of the limited partners
in each of such partnership in connection with the Sale Transaction described in
Note 2 and in failing to disclose  material facts relating to such  transaction.
Plaintiffs filed a motion seeking to enjoin the Sale  Transaction,  which motion
was denied by the court on May 6, 1997.

Other  Proceedings  - Item 10 in Part III of the  Partnership's  1996  Form 10-K
discusses  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 except:

In Re Prudential  Securities Inc. Limited Partnership  Litigation - On April 22,
1997, the Polaris defendants entered into a settlement agreement with plaintiffs
pursuant to which,  among other  things,  the Polaris  defendants  agreed to pay
$22.5 million to a class of unitholders  previously  certified by the Court.  On
April 29,  1997,  Judge  Pollack  signed an order  preliminarily  approving  the
settlement.  Under the terms of the order, (i) lead class counsel is required to
mail a notice to all class  members on or before  May 13,  1997  describing  the
terms of the  settlement;  (ii)  requests for  exclusion  from the class must be
mailed to the  Claims  Administrator  no later than June 27,  1997;  and (iii) a
hearing on the fairness of the  settlement  and other matters is scheduled to be
held before Judge Pollack on August 1, 1997.


Item 5.           Other Information

The General Partner has determined that it would be in the best interests of the
Partnership to withhold its consent to any proposal to transfer interests in the
Partnership  received  after April 21, 1997 for the balance of 1997.  Due to the
number of transfers  which occurred prior to April 21, 1997, the General Partner
concluded that this action was necessary to prevent the  Partnership  from being
treated as a  "publicly-traded  partnership" as defined in the Internal  Revenue
Code. A  "publicly-traded  partnership"  is treated as a corporation for Federal
income tax purposes,  with the result that such an entity pays Federal corporate
income tax on its taxable  income and its partners must include in their taxable
income  as  dividends  all  distributions  received  to  the  extent  that  such
distributions  are paid out of  current  and  accumulated  earnings.  Thus,  the
General  Partner is taking this action in an attempt to protect the  Partnership
against the risk of such an adverse tax consequence.

                                       14

<PAGE>





Item 6.           Exhibits and Reports on Form 8-K

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

                  27.  Financial Data Schedule.

b)      Reports on Form 8-K

                  No reports on Form 8-K were filed by the Registrant during the
                  quarter for which this report is filed.


                                       15

<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




         May 8, 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)

                                       16