UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                              ---------------------
                                    FORM 10-K



     [X]       Annual Report  Pursuant to Section 13 or 15(d) of the  Securities
               Exchange Act of 1934 For the fiscal year ended December 31, 1998.

     [  ]      Transition Report Pursuant to Section 13 or 15(d) of the 
               Securities Exchange Act of 1934
               For the transition period from              to

                         Commission file number 33-32258
                             -----------------------



                           PLM EQUIPMENT GROWTH FUND V
             (Exact name of registrant as specified in its charter)


          California                                     94-3104548
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                        Identification No.)

One Market, Steuart Street Tower
  Suite 800, San Francisco, CA                             94105-1301
    (Address of principal                                   (Zip code)
     executive offices)


        Registrant's telephone number, including area code (415) 974-1399
                             -----------------------


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days. Yes X No ______

Aggregate market value of voting stock:  N/A

An index of exhibits filed with this Form 10-K is located on page 50.

Total number of pages in this report:  53.


<PAGE>



                                     PART I

ITEM 1.    BUSINESS

(A)  Background

In November 1989, PLM Financial Services,  Inc. (FSI or the General Partner),  a
wholly-owned subsidiary of PLM International,  Inc. (PLM International or PLMI),
filed a  Registration  Statement  on Form S-1 with the  Securities  and Exchange
Commission with respect to a proposed offering of 10,000,000 limited partnership
units (the units)  including  2,500,000  optional units, in PLM Equipment Growth
Fund V, a California limited  partnership (the Partnership,  the Registrant,  or
EGF  V).  The  Registration  Statement  also  proposed  offering  an  additional
1,250,000  Class B units through a reinvestment  plan.  The General  Partner has
determined that it will not adopt this  reinvestment  plan for the  Partnership.
The  Partnership's  offering became effective on April 11, 1990. FSI, as General
Partner,  owns a 5% interest in the Partnership.  The Partnership engages in the
business of investing in a diversified  equipment portfolio consisting primarily
of  used,  long-lived,   low-obsolescence   capital  equipment  that  is  easily
transportable by and among prospective users.

The  Partnership  was formed to engage in the  business of owning and managing a
diversified  pool of used and new  transportation-related  equipment and certain
other items of equipment.

The Partnership's primary objectives are:

     (1) to maintain a diversified portfolio of low-obsolescence  equipment with
long lives and high residual  values which were  purchased with the net proceeds
of the initial Partnership offering, supplemented by debt financing, and surplus
operating cash during the investment phase of the Partnership.  All transactions
over $1.0  million  must be approved by the PLMI Credit  Review  Committee  (the
"Committee')  which  is made up of  members  of  PLMI's  senior  management.  In
determining a lessee's  creditworthiness,  the Committee  will  consider,  among
other factors, the lessee's financial  statements,  internal and external credit
ratings, and letters of credit;

     (2) to generate sufficient net operating cash flow from lease operations to
meet liquidity  requirements  and to generate cash  distributions to the limited
partners  until  such  time  as  the  General  Partner   commences  the  orderly
liquidation of the  Partnership  assets or unless the  Partnership is terminated
earlier upon sale of all Partnership property or by certain other events;

     (3) to selectively  sell equipment when the General Partner  believes that,
due to market conditions,  market prices for equipment exceed inherent equipment
values or expected  future  benefits  from  continued  ownership of a particular
asset.  Proceeds from these sales, together with excess net operating cash flows
from  operations (net cash provided by operating  activities plus  distributions
from  unconsolidated  special-purpose  entities  (USPEs))  are used to repay the
Partnership's outstanding indebtedness and for distributions to the partners;

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

The offering of units of the  Partnership  closed on December  23,  1991.  As of
December 31, 1998, there were 9,081,028 units  outstanding.  The General Partner
contributed $100 for its 5% general partner interest in the Partnership.

Beginning in the  Partnership's  seventh year of operation,  which  commenced on
January 1, 1999, the General Partner stopped  reinvesting  cash flow and surplus
funds,  which,  if any, less  reasonable  reserves,  will be  distributed to the
partners.  During the period between the seventh year of operation and the ninth
year of operation,  the Partnership  will not be able to purchase any additional
equipment.  In the ninth year of  operations  of the  Partnership,  the  General
Partner  intends to begin the  dissolution and liquidation of the Partnership in
an orderly  fashion,  unless the Partnership is terminated  earlier upon sale of
all  of  the  equipment  or by  certain  other  events.  In no  event  will  the
Partnership be extended beyond December 31, 2010.

Table  1,  below,  lists  the  equipment  and  the  cost  of  equipment  in  the
Partnership's   portfolio,   and  the  cost  of  investments  in  unconsolidated
special-purpose entities as of December 31, 1998 (in thousands of dollars):
<TABLE>
<CAPTION>

                                                      TABLE 1

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

     Owned equipment held for operating leases:

       <S>     <C>                                                      <C>                            <C>
           5   737-200 Stage II commercial aircraft                     Boeing                         $   27,658
           1   DC-9-32 Stage II commercial aircraft                     McDonnell Douglas                  10,056
           2   DHC-8-102 commuter aircraft                              DeHavilland                         7,628
           1   DHC-8-300 commuter aircraft                              DeHavilland                         5,748
           1   Product tanker                                           Kaldnes M/V                        16,276
           1   Brown water vessel                                       Marine Fabricators                  9,614
         333   Refrigerated marine containers                           Various                             6,237
       1,127   Various marine containers                                Various                             5,605
          85   Sulphur tank railcars                                    ACF/RTC                             2,907
         121   Covered hopper railcars                                  Various                             2,863
         106   Anhydrous ammonia tank railcars                          GATX                                2,484
          72   Tank railcars                                            Various                             1,881
          44   Mill gondola railcars                                    Bethlehem Steel                     1,248
         182   Refrigerated trailers                                    Various                             5,520
         148   Piggyback refrigerated trailers                          Oshkosh                             2,261
         125   Dry trailers                                             Various                             1,529
                                                                                                       -----------
               Total owned equipment held for operating leases                                         $  109,515<F1>
                                                                                                       ===========

     Investments in unconsolidated special-purpose entities:

        0.50   Bulk carrier                                             Nipponkai & Toyama             $    9,705<F2>
        0.48   Product tanker                                           Boelwerf-Temse                      9,492<F2>
        0.50   Product tanker                                           Kaldnes M/V                         8,249<F2>
        0.17   Two trusts comprised of:
                 Three 737-200 Stage II commercial aircraft             Boeing                              4,706<F3>
                 Two Stage II JT8D aircraft engines                     Pratt & Whitney                       195<F3>
                 Portfolio of aircraft rotables                         Various                               325<F3>
        0.25   Equipment on direct finance lease:
                 Two DC-9 Stage III commercial aircraft                 McDonnell Douglas                   3,005<F4>
                                                                                                       -----------
               Total investments in unconsolidated special-purpose entities                            $   35,677<F1>
                                                                                                       ===========

<FN>

<F1> Includes equipment and investments purchased with the proceeds from capital
contributions,   undistributed  cash  flow  from  operations,   and  Partnership
borrowings.  Includes costs capitalized,  subsequent to the date of acquisition,
and equipment acquisition fees paid to PLM Transportation  Equipment Corporation
(TEC), a wholly-owned  subsidiary of FSI, or PLM Worldwide  Management  Services
(WMS), a wholly-owned  subsidiary of PLM  International.  All equipment was used
equipment at the time of purchase, except 125 dry van trailers and 150 piggyback
refrigerated trailers. 

<F2> Jointly owned:  EGF V and an affiliated program.

<F3> Jointly owned:  EGF V and three affiliated programs.

<F4> Jointly owned:  EGF V and two affiliated programs.

</FN>

</TABLE>

The equipment is generally  leased under  operating  leases with terms of one to
six years.  The  Partnership's  marine  containers  are leased to  operators  of
utilization-type  leasing pools,  which include  equipment owned by unaffiliated
parties.  In such instances,  revenues received by the Partnership  consist of a
specified  percentage of revenues  generated by leasing the pooled  equipment to
sublessees,  after  deducting  certain direct  operating  expenses of the pooled
equipment.

As of  December  31,  1998,  approximately  67%  of  the  Partnership's  trailer
equipment operated in rental yards owned and maintained by PLM Rental, Inc., the
short-term trailer rental subsidiary of PLM International  doing business as PLM
Trailer Leasing.  Revenues collected under short-term rental agreements with the
rental yards'  customers are credited to the owners of the related  equipment as
received.  Direct expenses associated with the equipment are charged directly to
the  Partnership.  An allocation of other  indirect  expenses of the rental yard
operations is charged to the Partnership monthly.

The lessees of the equipment  include but are not limited to: Chevron USA, Mobil
Oil  Corporation,  Chembulk  Trading,  Inc., Halla Merchant Marine Company Ltd.,
Scanports Shipping Ltd., E. I. Dupont,  Transamerica Leasing,  Marfort Shipping,
Inc., Canadian Airlines International, Varig South America, Aero California, and
Continental Airlines, Inc.

(B) Management of Partnership Equipment

The  Partnership  has entered into an equipment  management  agreement  with PLM
Investment  Management,  Inc.  (IMI), a wholly-owned  subsidiary of FSI, for the
management  of  the  Partnership's   equipment.   The  Partnership's  management
agreement with IMI is to co-terminate  with the dissolution of the  Partnership,
unless the limited  partners vote to terminate the agreement  prior to that date
or at the  discretion  of the  General  Partner.  IMI has agreed to perform  all
services  necessary to manage the equipment on behalf of the  Partnership and to
perform or contract for the  performance of all  obligations of the lessor under
the Partnership's  leases. In consideration for its services and pursuant to the
partnership agreement,  IMI is entitled to a monthly management fee (see Notes 1
and 2 to the audited financial statements).

(C)  Competition 

(1)  Operating Leases versus Full Payout Leases

Generally,  the equipment  owned or invested in by the Partnership is leased out
on an  operating  lease  basis  wherein  the rents  received  during the initial
noncancelable  term of the lease are  insufficient to recover the  Partnership's
purchase  price of the  equipment.  The short- to mid-term  nature of  operating
leases generally  commands a higher rental rate than the longer-term full payout
leases and offers lessees relative flexibility in their equipment commitment. In
addition, the rental obligation under an operating lease need not be capitalized
on the lessee's balance sheet.

The Partnership  encounters  considerable  competition from lessors that utilize
full payout leases on new equipment,  i.e.,  leases that have terms equal to the
expected  economic  life  of  the  equipment.  While  some  lessees  prefer  the
flexibility offered by a shorter-term  operating lease, other lessees prefer the
rate  advantages  possible with a full payout lease.  Competitors may write full
payout  leases  at  considerably  lower  rates  and for  longer  terms  than the
Partnership offers, or larger competitors with a lower cost of capital may offer
operating leases at lower rates,  which may put the Partnership at a competitive
disadvantage.

(2)  Manufacturers and Equipment Lessors

The Partnership competes with equipment manufacturers who offer operating leases
and full payout leases.  Manufacturers may provide  ancillary  services that the
Partnership  cannot offer, such as specialized  maintenance  service  (including
possible substitution of equipment),  training,  warranty services, and trade-in
privileges.

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

(D)  Demand

The Partnership operates in the following operating segments:  aircraft leasing,
marine vessel leasing,  marine container leasing,  railcar leasing,  and trailer
leasing.  Each  equipment  leasing  segment  engages in  short-term  to mid-term
operating leases to a variety of customers.  Except for those aircraft leased to
passenger air carriers, the Partnership's  equipment and investments are used to
transport materials and commodities, rather than people.

The following  section describes the international and national markets in which
the Partnership's capital equipment operates:

(1) Aircraft

(a)  Commercial Aircraft

The world's major  airlines  experienced a fourth  consecutive  year of profits,
showing a combined  marginal net income (net income  measured as a percentage of
revenue)  of 6%,  compared  to the  industry's  historical  annual  rate  of 1%.
Airlines recorded positive marginal net annual income of 2% in 1995, 4% in 1996,
6% in 1997,  and 6% in 1998.  The two factors that have led to this  increase in
profitability are improvements in yield management systems and reduced operating
costs,  particularly  lowered fuel costs.  These higher levels of  profitability
have allowed many airlines to re-equip their fleets with new aircraft, resulting
in a record number of orders for manufacturers.

Major  airlines  increased  their fleets from 7,181 aircraft in 1997 to 7,323 in
1998,  which has  resulted  in more used  aircraft  available  on the  secondary
market. Despite these increases, the number of Stage II aircraft in these fleets
(similar to those owned by the Partnership)  decreased by 26% from 1997 to 1998,
and  sharper  decreases  are  expected  in 1999.  This  trend is due to  Federal
Aviation  Regulation  section C36.5,  which requires airlines to convert 100% of
their fleets to Stage III aircraft,  which have lower noise levels than Stage II
aircraft,  by the year 2000 in the United States and the year 2002 in Canada and
Europe.  Stage II aircraft can be modified to Stage III with the installation of
a  hushkit  that  significantly  reduces  engine  noise.  The  cost  of  hushkit
installation ranges from $1.0 to $2.0 million for the types of aircraft owned by
the Partnership.

Orders for new aircraft  have risen rapidly  worldwide in recent  years:  691 in
1995,  1,182 in 1996, 1,328 in 1997, and an estimated 1,500 in 1998. As a result
of this increase in orders,  manufacturers  have expanded their production,  and
new aircraft deliveries have increased from 482 in 1995, 493 in 1996, and 674 in
1997, to an estimated 825 in 1998.

The industry now has in place two of the three  conditions that led to financial
problems in the early 1990s: potential excess orders and record deliveries.  The
missing element is a worldwide recession. Should a recession occur, the industry
will experience  another period of excess aircraft capacity and surplus aircraft
on the ground.

The Partnership's fleet consists of a mix of Stage II narrowbody  (single-aisle)
commercial aircraft and aircraft that have had hushkits installed to comply with
Stage III  regulations.  The Stage II aircraft are positioned  with air carriers
outside  of  Stage  III-legislated  areas,   scheduled  for  Stage  III  hushkit
installation  in 1999,  or  anticipated  to be sold or leased  outside Stage III
areas before the year 2000.

(b)  Commuter Aircraft

Major changes have occurred in the commuter market due to the 1993  introduction
of small regional jets. The original  concept for regional jets was to take over
the North American hub-and-spoke routes served by the large turboprops, but they
are also finding successful niches in point-to-point routes. The introduction of
this smaller  aircraft has allowed major  airlines to shift the regional jets to
those marginal routes previously operated by narrowbody (single-aisle) aircraft,
allowing  larger-capacity  aircraft  to  be  more  efficiently  employed  in  an
airline's route system.

The Partnership leases commuter turboprops containing from 36 to 50 seats. These
aircraft all fly in North  America,  which  continues to be the  fastest-growing
market for commuter  aircraft in the world. The  Partnership's  aircraft possess
unique performance capabilities,  compared to other turboprops, which allow them
to readily operate at maximum  payloads from unimproved  surfaces,  hot and high
runways,  and short  runways.  However,  the growing use of regional jets in the
commuter  market has resulted in an increase in demand for regional  jets at the
expense of turboprops. Several major turboprop programs have been terminated and
all  turboprop  manufacturers  are  cutting  back on  production  due to reduced
demand.


<PAGE>


(c)  Aircraft Engines

Availability has decreased over the past two years for the Pratt & Whitney Stage
II JT8D  engine,  which  powers many of the  Partnership's  Stage II  commercial
aircraft.  This decrease in supply is due primarily to the limited production of
spare parts to support these engines.  Due to the fact that demand for this type
of aircraft currently exceeds supply,  the partnership  expects to sell its JT8D
engines in 1999.

(d)  Rotables

Aircraft  rotables,  or  components,  are  replacement  spare  parts  held in an
airline's  inventory.  They are  recycled  parts that are first  removed from an
aircraft or engine, overhauled,  and then recertified,  returned to an airline's
inventory,  and ultimately  refit to an aircraft in as-new  condition.  Rotables
carry  identification  numbers that allow them to be individually tracked during
their use.

The types of rotables owned and leased by the Partnership  include landing gear,
certain engine components,  avionics,  auxiliary power units, replacement doors,
control surfaces,  pumps, and valves. The market for the Partnership's  rotables
remains stable.

The  Partnership  expects  to sell the  rotables  used on its Stage II  aircraft
during 1999 as part of a package to sell several aircraft, engines, and rotables
jointly owned by the Partnership and an affiliated program.

(2)  Marine Vessels

The  Partnership  owns or has  investments  in  small to  medium-sized  dry bulk
vessels and product tankers that trade in worldwide  markets and carry commodity
cargoes. Demand for commodity shipping closely follows worldwide economic growth
patterns,  which can alter demand by causing  changes in volume on trade routes.
The General Partner operates the  Partnership's  vessels through spot and period
charters,  an  operating  approach  that  provides the  flexibility  to adapt to
changing market situations.

The markets for both dry bulk vessels and product tankers  weakened in 1998. Dry
bulk vessels  experienced  a decline in freight  rates,  as demand for commodity
shipments remained flat and fleet capacity increased  marginally.  Freight rates
for product tankers  weakened during the course of the year, after a very strong
1997. Demand for product shipments  decreased,  while the fleet grew moderately.
The Asian recession has had significant  effects on world shipping markets,  and
demand is unlikely to improve until Pacific Rim economies experience a sustained
recovery. (a) Dry Bulk Vessels

Freight rates for dry bulk vessels  decreased  for all ship sizes in 1998,  with
the largest  vessels  experiencing  the  greatest  declines.  After a relatively
stable year in 1997,  rates  declined due to a decrease in cargo tonnage  moving
from the Pacific  Basin and Asia to western  ports.  The size of the overall dry
bulk carrier  fleet  decreased by 3%, as measured by the number of vessels,  but
increased by 1%, as measured by deadweight  (dwt)  tonnage.  While  scrapping of
ships was a significant  factor in 1998  (scrapping  increased by 50% over 1997)
overall  there was no material  change in the size of the dry bulk vessel fleet,
as deliveries and scrappings were nearly equal.

Total dry trade (as  measured  in  deadweight  tons) was flat,  compared to a 3%
growth in 1997. As a result, the market had no foundation for increasing freight
rates, and charter rates declined as trade not only failed to grow, but actually
declined due to economic  disruptions in Asia.  Overall  activity is expected to
remain flat in 1999, with trade in two of the three major commodities  static or
decreasing in volume.  Iron ore volume is expected to decrease,  and grain trade
is anticipated to be flat, while a bright spot remains in an estimated  increase
in steam coal trade.

Ship values experienced a significant decline in 1998, as expectations for trade
growth  were  dampened.  The  decline in ship  values was also driven by bargain
pricing for newbuilding in Asian yards.

The uncertainty in forecasts is the Asian economic  situation;  if there is some
recovery  from the  economic  shake-up  that started in the second half of 1997,
then  1999 has  prospects  for  improvement.  The  delivery  of ships in 1999 is
expected to be less than in 1998, and high scrapping levels should continue. Dry
bulk  shipping  is a cyclical  business -- inducing  capital  investment  during
periods of high freight rates and discouraging  investment during periods of low
rates. The current environment thus discourages investment. However, the history
of the industry  implies that this period will be followed by one of  increasing
rates and investment in new ships, driven by growth in demand. Over time, demand
grows at an average of 3% a year,  so when  historic  levels of growth in demand
resume, the industry is expected to experience a significant increase in freight
rates and ship values.

(b)  Product Tankers

Product  tanker  markets  experienced  a year in which a fall in  product  trade
volume and an increase in total fleet size  induced a decline in freight  rates.
Charter rates for  standard-sized  product tankers  averaged  $10,139 per day in
1998,  compared  to $13,277 per day in 1997.  The  weakening  in rates  resulted
primarily  from a decrease  in product  import  levels to the United  States and
Japan.  Significantly lower crude oil prices worldwide induced higher volumes of
imports of crude oil to the United States, thereby lessening domestic demand for
refined products.  Product trade in 1998 fell by an estimated 5% worldwide.  The
crude oil trade,  which is closely  related to  product  trades,  especially  in
larger vessels,  remained stable in 1998. Crude trade grew 1% in volume,  led by
imports to Europe, which grew 6%.

Overall,  the entire product tanker fleet grew only 1% in 1998. Supply growth in
1998 was moderated by high  scrapping  levels,  especially  of larger ships.  In
1999,  the fleet is expected to receive an  additional 9% in capacity from newly
built deliveries, most of which will be in large tankers (above 80,000 dwt tons)
carrying crude products. Smaller tankers (below 80,000 dwt tons) are expected to
receive 7% in new deliveries over current fleet levels.

While these new deliveries  represent a high  percentage of the existing  fleet,
the tanker  markets are now  beginning to feel the effects of the United  States
Oil Pollution Act of 1990.  Under the act,  older  tankers are  restricted  from
trading to the United  States  once they exceed 25 years old if they do not have
double  bottoms  and/or double hulls.  Similar  though  somewhat less  stringent
restrictions  are in place in other  countries  with  developed  economies.  The
retirement  of older,  noncomplying  tankers  may allow the fleet to absorb what
would  otherwise  be an  excessive  number of new orders in  relation to current
demand prospects. Given that a large proportion of the current tanker fleet does
not meet these regulatory requirements, coupled with anticipated flat demand yet
continuing high delivery  levels,  charter rates for 1999 are not anticipated to
increase significantly from 1998 levels.

Two of the Partnership's  tankers are  single-bottom,  single-hull  tankers that
will be restricted from trading in the United States when they reach 25 years of
age, in 2000 and 2001, respectively. At those times, the General Partner intends
to move the vessels to markets not affected by these regulations.

(3)      Marine Containers

The marine container market began 1998 with industrywide  utilization in the low
80% range.  This  percentage  eroded  somewhat  during the year,  while per diem
rental  rates  remained  steady.   One  factor  affecting  the  market  was  the
availability   of   historically   low-priced   marine   containers  from  Asian
manufacturers.  This trend is expected to remain in 1999,  and will  continue to
put pressure on economic results fleetwide.

The trend  toward  industrywide  consolidation  continued  in 1998,  as the U.S.
parent company of one of the industry's top ten container lessors announced that
it would be outsourcing  the management of its container  fleet to a competitor.
While  this  announcement  has yet to be  finalized,  over the long  term,  such
industrywide  consolidation  should bring more  rationalization to the container
leasing  market and result in both  higher  fleetwide  utilization  and per diem
rates.

(4)  Railcars

(a)  Pressurized Tank Railcars

Pressurized tank cars transport primarily two chemicals: liquefied petroleum gas
(natural  gas) and  anhydrous  ammonia  (fertilizer).  Natural  gas is used in a
variety of ways in businesses,  electric plants, factories,  homes, and now even
cars.  The demand for  fertilizer  is driven by a number of  factors,  including
grain prices,  the status of  government  farm subsidy  programs,  the amount of
farming acreage and mix of crops planted,  weather patterns,  farming practices,
and the value of the U.S. dollar.

In North  America,  1998 carload  originations  of both  chemicals and petroleum
products  remained  relatively  constant,  compared to 1997. The 98% utilization
rate of the  Partnership's  pressurized  tank  cars  was  consistent  with  this
statistic.

(b)  General Purpose (Nonpressurized) Tank Railcars

Tank cars that do not require  pressurization are used to transport a variety of
bulk liquid  commodities and chemicals,  including  certain  petroleum fuels and
products,  liquified asphalt, lubricating and vegetable oils, molten sulfur, and
corn syrup. The largest  consumers of chemical  products are the  manufacturing,
automobile, and housing sectors. Because the bulk liquid industry is so diverse,
its overall  health is reflected by such  general  indicators  as changes in the
Gross  Domestic  Product,  personal  consumption  expenditures,   retail  sales,
currency exchange rates, and national and international economic forecasts.

In North  America,  railcar  loadings  for the  commodity  group  that  includes
chemicals and petroleum  products remained  essentially  unchanged,  compared to
1997. The Partnership's general purpose cars continue to be in high demand, with
utilization over 98% in 1998.

(c) Covered Hopper (Grain) Railcars

Covered hopper railcars are used to transport grain to domestic food processors,
poultry  breeders,  cattle feed lots, and for export.  Demand for covered hopper
cars  softened In 1998, as total North  American  grain  shipments  declined 8%,
compared to 1997,  with grain  shipments  within Canada  contributing to most of
this  decrease.  This has put downward  pressure on lease rates,  which has been
exacerbated by a significant increase in the number of covered hopper cars built
in the last few years.  Since 1988, there has been a nearly 20% increase in rail
transportation  capacity  assigned to agricultural  service.  In 1996, just over
one-half of all new railcars  built were  covered  hopper  cars;  in 1997,  this
percentage dropped somewhat, to 38% of all cars built.

The Partnership's covered hopper cars were not impacted by the decrease in lease
rates during 1998, as all of the cars continued to operate on long-term leases.

(d)  Mill Gondola Railcars

Mill  gondolas are railcars  that are  typically  used to carry scrap steel from
steel  processors  to small steel mills called  minimills for recycling In 1997,
minimills  were  responsible  for 43% of the total  steel  output in the  United
States,  relatively  unchanged  from the 42% level of 1996.  North  American car
loadings of scrap steel fell slightly in 1998, down 4% over 1997 levels.

All of the Partnership's  mill gondolas continued to operate on long-term leases
during 1998.

(5)  Trailers

(a)  Intermodal Trailers

Intermodal  (piggyback)  trailers  are used to ship goods  either by truck or by
rail.  Activity  within the North American  intermodal  trailer market  declined
slightly in 1998, with trailer shipments down 4% from 1997 levels, due primarily
to rail service problems  associated with the mergers in this area.  Utilization
of the intermodal  per diem rental fleet,  consisting of  approximately  170,000
units, was 73%. Intermodal utilization in 1999 is expected to decline another 2%
from 1998 levels,  due to a slight leveling off of overall economic  activity in
1999, after a robust year in 1998.

The General  Partner  has  initiated  expanded  marketing  and asset  management
efforts for its intermodal  trailers,  from which it expects to achieve improved
trailer  utilization and operating  results.  During 1998,  average  utilization
rates for the Partnership's intermodal trailer fleet approached 80%.


<PAGE>



(b)  Over-the-Road Dry Trailers

The U.S. over-the-road nonrefrigerated (dry) trailer market continued to recover
in 1998, with a strong domestic economy resulting in heavy freight volumes.  The
leasing outlook continues to be positive, as equipment surpluses of recent years
are being  absorbed by a buoyant  market.  In addition to high freight  volumes,
declining  fuel  prices  have led to a strong  trucking  industry  and  improved
equipment demand.

The  Partnership's  nonrefrigerated  van fleet  experienced  strong  utilization
throughout 1998, with utilization  rates remaining well above 70% throughout the
year.

(c)  Over-the-Road Refrigerated Trailers

The temperature-controlled  over-the-road trailer market remained strong in 1998
as  freight  levels  improved  and  equipment   oversupply  was  reduced.   Many
refrigerated  equipment  users retired  older  trailers and  consolidated  their
fleets, making way for new,  technologically  improved units.  Production of new
equipment is backlogged  into the third quarter of 1999. In light of the current
tight  supply of  trailers  available  on the  market,  it is  anticipated  that
trucking companies and other refrigerated  trailer users will look outside their
own fleets more  frequently  by leasing  trailers on a short-term  basis to meet
their equipment needs.

This  leasing  trend  should  benefit the  Partnership,  which makes most of its
trailers  available for short-term  leasing from rental yards owned and operated
by a PLM International subsidiary. The Partnership's utilization of refrigerated
trailers showed  improvement in 1998, with  utilization  rates  approaching 70%,
compared to 60% in 1997.

(E)   Government Regulations

The use,  maintenance,  and  ownership  of equipment  are  regulated by federal,
state,  local, or foreign  government  authorities.  Such regulations may impose
restrictions and financial burdens on the Partnership's  ownership and operation
of  equipment.  Changes  in  government  regulations,   industry  standards,  or
deregulation  may also  affect  the  ownership,  operation,  and  resale  of the
equipment.  Substantial  portions of the Partnership's  equipment  portfolio are
either registered or operated internationally.  Such equipment may be subject to
adverse  political,   government,  or  legal  actions,  including  the  risk  of
expropriation  or loss arising from  hostilities.  Certain of the  Partnership's
equipment is subject to extensive  safety and operating  regulations,  which may
require  its  removal  from  service  or  extensive  modification  to meet these
regulations,  at considerable cost to the Partnership.  Such regulations include
but are not limited to:

     (1) the U.S. Oil Pollution  Act of 1990,  which  established  liability for
     operators  and owners of vessels and mobile  offshore  drilling  units that
     create environmental pollution.  This regulation has resulted in higher oil
     pollution  liability  insurance.  The  lessee  of the  equipment  typically
     reimburses the Partnership for these additional costs;

     (2) the U.S. Department of Transportation's  Aircraft Capacity Act of 1990,
     which limits or  eliminates  the  operation of  commercial  aircraft in the
     United  States  that  do not  meet  certain  noise,  aging,  and  corrosion
     criteria.  In addition,  under U.S.  Federal  Aviation  Regulations,  after
     December 31, 1999, no person may operate an aircraft to or from any airport
     in the  contiguous  United  States  unless that  aircraft has been shown to
     comply with Stage III noise levels.  The  Partnership has Stage II aircraft
     that do not meet  Stage  III  requirements.  These  Stage II  aircraft  are
     scheduled  either to be modified to meet Stage III  requirements,  sold, or
     re-leased in countries that do not require this regulation  before the year
     2000. The cost to install a hushkit to meet quieter Stage III  requirements
     is approximately $1.5 million, depending on the type of aircraft;

     (3) the Montreal  Protocol on  Substances  that Deplete the Ozone Layer and
     the U.S. Clean Air Act  Amendments of 1990,  which call for the control and
     eventual  replacement  of  substances  that  have  been  found  to cause or
     contribute  significantly  to harmful  effects on the  stratospheric  ozone
     layer and which are used extensively as refrigerants in refrigerated marine
     cargo containers and over-the-road refrigerated trailers;

     (4)  the  U.S.   Department   of   Transportation's   Hazardous   Materials
     Regulations,  which regulate the classification and packaging  requirements
     of hazardous  materials and which apply  particularly to the  Partnership's
     tank railcars.

As of December  31,  1998,  the  Partnership  was in  compliance  with the above
governmental  regulations.  Typically,  costs  related  to  extensive  equipment
modifications to meet government regulations are passed on to the lessee of that
equipment.

ITEM 2.    PROPERTIES

The Partnership  neither owns nor leases any properties other than the equipment
it has  purchased  and its  interests in entities that own equipment for leasing
purposes.  As of  December  31,  1998,  the  Partnership  owned a  portfolio  of
transportation  and related  equipment  and  investments  in equipment  owned by
unconsolidated special-purpose entities (USPEs) as described in Item 1, Table 1.
The Partnership acquired equipment with the proceeds of the Partnership offering
of $184.3 million through the first quarter of 1992, with proceeds from the debt
financing of $38.0  million,  and by reinvesting a portion of its operating cash
flow in additional equipment.

The  Partnership  maintains its principal  office at One Market,  Steuart Street
Tower, Suite 800, San Francisco,  California  94105-1301.  All office facilities
are provided by FSI without reimbursement by the Partnership.

ITEM 3.    LEGAL PROCEEDINGS

PLM  International,  (the  Company) and various of its  affiliates  are named as
defendants in a lawsuit filed as a purported class action on January 22, 1997 in
the Circuit Court of Mobile County,  Mobile,  Alabama,  Case No.  CV-97-251 (the
Koch action).  Plaintiffs, who filed the complaint on their own and on behalf of
all class  members  similarly  situated  (the class),  are six  individuals  who
invested in certain California limited partnerships (the Partnerships) for which
the Company's wholly-owned subsidiary,  PLM Financial Services, Inc. (FSI), acts
as the general partner, including the Partnership, PLM Equipment Growth Funds IV
and VI, and PLM Equipment Growth & Income Fund VII (the Growth Funds). The state
court ex parte  certified  the  action  as a class  action  (i.e.,  solely  upon
plaintiffs'  request and without the Company being given the opportunity to file
an  opposition).  The  complaint  asserts  eight  causes of action  against  all
defendants,   as   follows:   fraud   and   deceit,    suppression,    negligent
misrepresentation  and  suppression,   intentional  breach  of  fiduciary  duty,
negligent  breach  of  fiduciary  duty,  unjust  enrichment,   conversion,   and
conspiracy.  Additionally,  plaintiffs  allege a cause  of  action  against  PLM
Securities Corp. for breach of third party beneficiary contracts in violation of
the  National   Association  of  Securities  Dealers  rules  of  fair  practice.
Plaintiffs  allege that each  defendant  owed  plaintiffs  and the class certain
duties due to their  status as  fiduciaries,  financial  advisors,  agents,  and
control persons.  Based on these duties,  plaintiffs  assert  liability  against
defendants  for improper  sales and marketing  practices,  mismanagement  of the
Growth Funds,  and concealing  such  mismanagement  from investors in the Growth
Funds.  Plaintiffs seek unspecified  compensatory and recissory damages, as well
as punitive damages,  and have offered to tender their limited partnership units
back to the defendants.

In March 1997,  the  defendants  removed the Koch action from the state court to
the United States District Court for the Southern District of Alabama,  Southern
Division (Civil Action No. 97-0177-BH-C) based on the district court's diversity
jurisdiction,  following which plaintiffs filed a motion to remand the action to
the state court. Removal of the action to federal court automatically  nullified
the state court's ex parte  certification  of the class.  In September 1997, the
district court denied plaintiffs' motion to remand the action to state court and
dismissed without  prejudice the individual claims of the California  plaintiff,
reasoning that he had been fraudulently joined as a plaintiff.  In October 1997,
defendants filed a motion to compel arbitration of plaintiffs' claims,  based on
an agreement to arbitrate contained in the limited partnership agreement of each
Growth  Fund,  and to stay  further  proceedings  pending  the  outcome  of such
arbitration.  Notwithstanding plaintiffs' opposition, the district court granted
defendants' motion in December 1997.

Following  various  unsuccessful  requests that the district court  reverse,  or
otherwise certify for appeal, its order denying plaintiffs' motion to remand the
case to state court and dismissing the California plaintiff's claims, plaintiffs
filed with the U.S.  Court of Appeals for the Eleventh  Circuit a petition for a
writ of mandamus  seeking to reverse the district  court's  order.  The Eleventh
Circuit  denied  plaintiffs'  petition in  November  1997,  and  further  denied
plaintiffs  subsequent  motion in the  Eleventh  Circuit for a rehearing on this
issue.  Plaintiffs also appealed the district court's order granting defendants'
motion  to compel  arbitration,  but in June 1998  voluntarily  dismissed  their
appeal pending settlement of the Koch action, as discussed below.

On June 5, 1997, the Company and the  affiliates who are also  defendants in the
Koch action were named as defendants in another  purported class action filed in
the San Francisco  Superior Court,  San Francisco,  California,  Case No. 987062
(the Romei action).  The plaintiff is an investor in the Partnership,  and filed
the  complaint  on her own behalf and on behalf of all class  members  similarly
situated who invested in certain California  limited  partnerships for which FSI
acts as the general partner,  including the Growth Funds. The complaint  alleges
the same facts and the same nine  causes of action as in the Koch  action,  plus
five  additional  causes of action  against all of the  defendants,  as follows:
violations of California  Business and Professions  Code Sections 17200, et seq.
for  alleged  unfair  and  deceptive   practices,   constructive  fraud,  unjust
enrichment, violations of California Corporations Code Section 1507, and a claim
for treble damages under California Civil Code Section 3345.

On July 31,  1997,  defendants  filed with the  district  court for the Northern
District of California  (Case No. C-97-2847 WHO) a petition (the petition) under
the Federal  Arbitration Act seeking to compel arbitration of plaintiff's claims
and for an order staying the state court proceedings  pending the outcome of the
arbitration.  In connection with this motion,  plaintiff agreed to a stay of the
state court  action  pending the  district  court's  decision on the petition to
compel  arbitration.  In October 1997,  the district  court denied the Company's
petition  to  compel  arbitration,  but in  November  1997,  agreed  to hear the
Company's motion for  reconsideration  of this order. The hearing on this motion
has been taken off calendar and the district  court has  dismissed  the petition
pending  settlement of the Romei  action,  as discussed  below.  The state court
action  continues to be stayed pending such  resolution.  In connection with her
opposition  to the petition to compel  arbitration,  plaintiff  filed an amended
complaint  with the state court in August 1997 alleging two new causes of action
for violations of the California Securities Law of 1968 (California Corporations
Code  Sections  25400 and  25500) and for  violation  of  California  Civil Code
Sections 1709 and 1710.  Plaintiff  also served  certain  discovery  requests on
defendants.  Because of the stay, no response to the amended complaint or to the
discovery is currently required.

In May 1998, all parties to the Koch and Romei actions entered into a memorandum
of understanding  (MOU) related to the settlement of those actions (the monetary
settlement).  The  monetary  settlement  contemplated  by the MOU  provides  for
stipulating to a class for settlement purposes,  and a settlement and release of
all claims  against  defendants  and third party brokers in exchange for payment
for the benefit of the class of up to $6.0 million.  The final settlement amount
will  depend on the  number  of claims  filed by  authorized  claimants  who are
members  of the  class,  the  amount of the  administrative  costs  incurred  in
connection with the settlement, and the amount of attorneys' fees awarded by the
Alabama  district court. The Company will pay up to $0.3 million of the monetary
settlement, with the remainder being funded by an insurance policy.

The  parties to the  monetary  settlement  have also agreed in  principle  to an
equitable  settlement (the equitable  settlement)  which  provides,  among other
things,  (a) for the extension of the operating  lives of the  Partnership,  PLM
Equipment Growth Fund VI, and PLM Equipment Growth & Income Fund VII (the Funds)
by judicial  amendment to each of their partnership  agreements,  such that FSI,
the general  partner of each such Fund, will be permitted to reinvest cash flow,
surplus partnership funds or retained proceeds in additional  equipment into the
year 2004, and will liquidate the partnerships'  equipment in 2006; (b) that FSI
be entitled to earn front end fees (including  acquisition and lease negotiation
fees) in excess of the compensatory  limitations set forth in the North American
Securities  Administrators  Association,  Inc.  Statement  of Policy by judicial
amendment  to the  Partnership  Agreements  for  each  Fund;  (c) for a one time
redemption  of up to 10% of the  outstanding  units of each  Fund at 80% of such
partnership's  net asset  value;  and (d) for the deferral of a portion of FSI's
management  fees.  The  equitable  settlement  also  provides for payment of the
equitable  settlement  attorneys' fees from Partnership  funds in the event that
distributions paid to investors in the Funds during the extension period reach a
certain internal rate of return.

Defendants will continue to deny each of the claims and contentions and admit no
liability in connection with the proposed  settlements.  The monetary settlement
remains  subject to  numerous  conditions,  including  but not  limited  to: (a)
agreement and execution by the parties of a settlement agreement (the settlement
agreement),  (b) notice to and  certification of the monetary class for purposes
of the  monetary  settlement,  and (c)  preliminary  and final  approval  of the
monetary  settlement by the Alabama  district  court.  The equitable  settlement
remains  subject to  numerous  conditions,  including  but not  limited  to: (a)
agreement and execution by the parties of the settlement  agreement,  (b) notice
to the current  unitholders in the Funds (the equitable class) and certification
of  the  equitable  class  for  purposes  of  the  equitable   settlement,   (c)
preparation,  review  by the  Securities  and  Exchange  Commission  (SEC),  and
dissemination  to the members of the equitable class of solicitation  statements
regarding  the  proposed  extensions,  (d)  disapproval  by less than 50% of the
limited partners in each of the Funds of the proposed  amendments to the limited
partnership agreements,  (e) judicial approval of the proposed amendments to the
limited  partnership  agreements,  and (f) preliminary and final approval of the
equitable  settlement by the Alabama district court.  The parties  submitted the
settlement agreement to the Alabama district court on February 12, 1999, and the
preliminary class certification  hearing is scheduled for March 24, 1999. If the
district court grants  preliminary  approval,  notices to the monetary class and
equitable  class will be sent  following  review by the SEC of the  solicitation
statements  to be prepared in  connection  with the  equitable  settlement.  The
monetary  settlement,  if approved,  will go forward  regardless  of whether the
equitable  settlement is approved or not. The Company  continues to believe that
the  allegations of the Koch and Romei actions are completely  without merit and
intends to continue to defend this matter vigorously if the monetary  settlement
is not consummated.

The  Partnership  is involved as plaintiff  or defendant in various  other legal
actions incident to its business.  Management does not believe that any of these
actions will be material to the financial condition of the Company.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Partnership's limited partners during
the fourth quarter of its fiscal year ended December 31, 1998.













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<PAGE>


                                     PART II


ITEM 5.    MARKET FOR THE PARTNERSHIP'S EQUITY AND RELATED UNITHOLDER MATTERS

Pursuant  to the terms of the  partnership  agreement,  net  income  (loss)  and
distributions  of the  Partnership  are  generally  allocated 95% to the limited
partners and 5% to the General Partner,  subject to certain special allocations.
Special  allocations of income are made to the General Partner to the extent, if
any, necessary to cause the capital account balance of the General Partner to be
zero as of the close of such year. The General Partner will generally receive an
annual  allocation of income equal to the General  Partner's cash  distributions
paid during the current year. The remaining  interests in the profits and losses
and cash distributions of the Partnership are allocated to the limited partners.
As of December 31, 1998,  there were 9,743 limited partners holding units in the
Partnership.

There are several  secondary  markets in which limited  partnership units trade.
Secondary markets are characterized as having few buyers for limited partnership
interests and, therefore,  are generally viewed as inefficient  vehicles for the
sale of limited partnership units. Presently,  there is no public market for the
units and none is likely to develop.  To prevent the units from being considered
"publicly  traded"  and  thereby  to avoid  taxation  of the  Partnership  as an
association  treated as a corporation under the Internal Revenue Code, the units
will not be transferable  without the consent of the General Partner,  which may
be withheld in its absolute  discretion.  The General Partner intends to monitor
transfers of units in an effort to ensure that they do not exceed the percentage
or number permitted by certain safe harbors  promulgated by the Internal Revenue
Service. A transfer may be prohibited if the intended  transferee is not an U.S.
citizen or if the transfer  would cause any portion of the units of a "Qualified
Plan" as defined by the  Employee  Retirement  Income  Security  Act of 1974 and
Individual  Retirement  Accounts to exceed the allowable  limit. The Partnership
may  redeem  a  certain  number  of  units  each  year  under  the  terms of the
Partnership's limited partnership  agreement,  beginning January 1, 1994. If the
number of units made available for purchase by limited  partners in any calendar
year exceeds the number that can be purchased with  reinvestment  plan proceeds,
then the Partnership may, subject to certain terms and conditions,  redeem up to
2% of the  outstanding  units each year. The purchase price to be offered by the
Partnership for these units will be equal to 110% of the  unrecovered  principal
attributable to the units. The unrecovered  principal for any unit will be equal
to the excess of (i) the capital contribution attributable to the unit over (ii)
the distributions from any source paid with respect to the units. As of December
31, 1998, the Partnership agreed to purchase  approximately  18,100 units for an
aggregate  price of $0.1 million.  The General  Partner  anticipates  that these
units  will be  repurchased  in the first and  second  quarters  of 1999.  As of
December 31, 1998, the Partnership has repurchased a cumulative total of 138,904
units at a cost of $1.5 million. In addition to these units, the General Partner
may purchase additional units on behalf of the Partnership in the future.











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<PAGE>


ITEM 6.    SELECTED FINANCIAL DATA

Table 2, below, lists selected financial data for the Partnership:

                                     TABLE 2

                      For the Years Ended December 31, (In
               thousands of dollars, except weighted-average unit
                                    amounts)

<TABLE>
<CAPTION>

                                                1998          1997            1996            1995            1994
                                              -------------------------------------------------------------------------

<S>                                         <C>            <C>              <C>           <C>             <C>          
Operating results:
  Total revenues                            $    24,129    $   41,123       $  44,322     $    39,142     $   44,291   
  Net gain on disposition
    of equipment                                    814        10,990          14,199           3,835          4,920
  Equity in net income (loss) of uncon-
    solidated special-purpose entities              234          (264 )          (116 )            --             --
  Net income                                      2,370         7,921          12,441           2,045          3,193

At year-end:
  Total assets                              $    61,376    $   80,033       $  98,419     $   102,109     $  120,114   
  Total liabilities                              26,970        35,947          46,123          44,092         44,221
  Notes payable                                  23,588        32,000          40,463          38,000         38,000

Cash distribution                           $    12,008    $   15,346       $  18,083     $    19,342     $   19,420   
                                                                                                                   `
Cash distribution representing
    a return of capital to the limited
    partners                                $     9,638    $    7,425       $   5,642     $    17,297     $   16,227   

Per weighted-average limited partnership unit:

  Net income                                $      0.20    $     0.79       $    1.26     $      0.12     $     0.24   

  Cash distribution                         $      1.26    $     1.60       $    1.87     $      2.00     $     2.00   

  Cash distribution representing
    a return of capital                     $      1.06    $     0.81       $    0.61     $      1.89     $     1.76   


</TABLE>










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<PAGE>


ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
           RESULTS OF OPERATIONS

(A)  Introduction

Management's  discussion  and  analysis of  financial  condition  and results of
operations  relates to the financial  statements of PLM Equipment  Growth Fund V
(the Partnership).  The following  discussion and analysis of operations focuses
on the performance of the  Partnership's  equipment in various segments in which
it operates and its effect on the Partnership's overall financial condition.

(B)  Results of Operations - Factors Affecting Performance

(1)  Re-leasing Activity and Repricing Exposure to Current Economic Conditions

The exposure of the Partnership's  equipment  portfolio to repricing risk occurs
whenever the leases for the equipment expire or are otherwise terminated and the
equipment must be remarketed.  Major factors influencing the current market rate
for  Partnership  equipment  include supply and demand for similar or comparable
types of  transport  capacity,  desirability  of the  equipment  in the  leasing
market,  market  conditions  for the  particular  industry  segment in which the
equipment is to be leased, overall economic conditions,  and various regulations
concerning  the use of the  equipment.  Equipment that is idle or out of service
between the expiration of one lease and the assumption of a subsequent lease can
result in a  reduction  of  contribution  to the  Partnership.  The  Partnership
experienced  re-leasing or repricing  activity in 1998 primarily in its trailer,
marine vessels, and marine container portfolios.

   (a) Trailers:  The  Partnership's  trailer  portfolio  operates in short-term
rental  facilities or with short-line  railroad  systems.  The relatively  short
duration of most leases in these operations exposes the trailers to considerable
re-leasing activity.  Contributions from the Partnership's  trailers were higher
than projected due to higher utilization and lease rates.

   (b) Marine vessels:  Certain of the  Partnership's  marine vessels operate in
the voyage  charter  market.  Voyage  charters are usually short in duration and
reflect the  short-term  demand and pricing  trends in the vessel  market.  As a
result of this, the Partnership  experienced a decrease in lease revenues due to
the weakness in the voyage  charter  market.  Voyage charter lease revenues were
partially  offset by the higher  operating  costs  associated  with this type of
charter.

   (c) Marine containers:  All of the Partnership's marine containers are leased
to operators of utilization-type  leasing pools and, as such, are highly exposed
to  repricing  activity.  The  Partnership  saw lower  re-lease  rates and lower
utilization on the remaining marine containers fleet during 1998.

   (d) Other: While market conditions and other factors may have had some impact
on lease rates in other markets in which the  Partnership  owns  equipment,  the
majority of this equipment was unaffected.

(2)  Equipment Liquidations and Nonperforming Lessee

Liquidation  of  Partnership   equipment  and   investments  in   unconsolidated
special-purpose  entities  (USPEs)  represents  a  reduction  in the size of the
equipment  portfolio  and may  result  in  reductions  of  contributions  to the
Partnership.  Lessees not performing under the terms of their leases,  either by
not paying rent, not  maintaining or operating the equipment in accordance  with
the conditions of the leases, or other possible departures from the lease terms,
can result not only in  reductions  in  contributions,  but also may require the
Partnership  to assume  additional  costs to  protect  its  interests  under the
leases,  such as  repossession  or legal fees. The  Partnership  experienced the
following in 1998:

     (a)  Liquidations:  During  the year,  the  Partnership  disposed  of owned
equipment  that included  marine  containers,  trailers,  and  railcars,  and an
interest in a USPE trust that owned a commercial  aircraft for total proceeds of
$6.2 million.

     (b)   Non-performing   lessee:  A  Brazilian  lessee  is  having  financial
difficulties.  The lessee has  contacted  the  General  Partner and asked for an
extended repayment schedule for the lease payment arrearage. The General Partner
is currently in  negotiation  with the lessee to work out a suitable  settlement
for both parties to collect the two months lease payments that are overdue.

<PAGE>


(3)  Equipment Valuation

In accordance  with  Financial  Accounting  Standards  Board  Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be  Disposed  Of,"  the  General  Partner  reviews  the  carrying  value  of the
Partnership's  equipment  portfolio  at least  quarterly in relation to expected
future market conditions for the purpose of assessing the  recoverability of the
recorded  amounts.  If the  projected  undiscounted  future  lease  revenue plus
residual  values are less than the carrying  value of the  equipment,  a loss on
revaluation  is recorded.  No reductions  were required to the carrying value of
the equipment during 1998, 1997, or 1996.

As of December 31, 1998, the General  Partner  estimated the current fair market
value of the  Partnership's  equipment  portfolio,  including the  Partnership's
interest in equipment  owned by USPEs,  to be $90.8  million.  This  estimate is
based on recent market  transactions for equipment  similar to the Partnership's
equipment portfolio and the Partnership's  interest in equipment owned by USPEs.
Ultimate  realization  of  fair  market  value  by the  Partnership  may  differ
substantially from the estimate due to specific market conditions, technological
obsolescence,  and government regulations, among other factors, that the General
Partner cannot accurately predict.

(C)  Financial Condition - Capital Resources, Liquidity, and Unit 
     Redemption Plan

The General Partner purchased the Partnership's initial equipment portfolio with
capital raised from its initial equity  offering of $184.3 million and permanent
debt financing of $38.0 million.  No further capital  contributions from limited
partners are permitted under the terms of the Partnership's  limited partnership
agreement.  The Partnership  relies on operating cash flow to meet its operating
obligations and make cash distributions to limited partners.

For the year ended December 31, 1998, the Partnership generated $16.2 million in
operating cash (net cash provided by operating  activities plus  non-liquidating
cash distributions from USPEs) to meet its operating obligations, make principal
debt payments, and pay distributions of $12.0 million to the partners.

Pursuant to the terms of the limited partnership agreement, beginning January 1,
1994, if the number of units made available for purchase by limited  partners in
any calendar  year exceeds the number that can be  purchased  with  reinvestment
plan  proceeds,   then  the  Partnership  may,  subject  to  certain  terms  and
conditions,  redeem up to 2% of the outstanding  limited  partnership units each
year.  The purchase  price to be offered for such units will be equal to 110% of
the unrecovered principal attributed to the units. The unrecovered principal for
any  unit  will  be  equal  to  the  excess  of  (i)  the  capital  contribution
attributable to the unit over (ii) the  distributions  from any source paid with
respect to the  units.  As of  December  31,  1998,  the  Partnership  agreed to
purchase  approximately 18,100 units for an aggregate price of $0.1 million. The
General  Partner  anticipates  that these units will be repurchased in the first
and second quarters of 1999. In addition to these units, the General Partner may
purchase additional units on behalf of the Partnership in the future.

During 1998 the Partnership borrowed $1.0 million for 1 day, $0.5 million for 13
days and $0.5 million for 14 days from the General Partner.  The General Partner
charged the  Partnership  market  interest  rates.  Total  interest  paid to the
General Partner was $3,000.

The General  Partner has not  planned any  expenditures,  nor is it aware of any
contingencies  that would  cause it to require  any  additional  capital to that
mentioned above.

The General  Partner had entered into a joint $50.0 million credit facility (the
Committed Bridge  Facility) on behalf of the  Partnership,  PLM Equipment Growth
Fund VI, PLM Equipment Growth & Income Fund VII,  Professional  Lease Management
Income Fund I, all  affiliated  investment  programs;  American  Finance  Group,
Inc.(AFG),  a  subsidiary  of PLM  International,  and TEC  Acquisub,  Inc.,  an
indirect  wholly-owned  subsidiary of the General Partner.  The Committed Bridge
Facility  was  amended  and  restated  on  December  15,  1998,  to  remove  the
Partnership and AFG as eligible borrowers.




<PAGE>


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

(1)  Comparison of the Partnership's Operating Results for the Years Ended 
     December 31, 1998 and 1997

(a)  Owned Equipment Operations

Lease  revenues  less  direct  expenses  (defined  as  repair  and  maintenance,
equipment operating,  and asset-specific  insurance expenses) on owned equipment
decreased  during the year ended  December 31, 1998,  when  compared to the same
period of 1997. Gains or losses from the sale of equipment and certain expenses,
such as depreciation and amortization  and general and  administrative  expenses
relating  to  the  operating  segments  (see  Note 5 to  the  audited  financial
statements),  are not  included  in the  owned  equipment  operation  discussion
because  they are  indirect  in nature and not a result of  operations,  but the
result of owning a portfolio of equipment.  The following  table  presents lease
revenues less direct expenses by segment (in thousands of dollars):

<TABLE>
<CAPTION>

                                                                                For the Years
                                                                             Ended December 31,
                                                                            1998             1997
                                                                         ----------------------------
  <S>                                                                    <C>                 <C>      
  Aircraft and aircraft engines                                          $  8,823            9,304    
  Marine vessels                                                            2,777            2,650
  Trailers                                                                  2,150            1,918
  Rail equipment                                                            1,928            2,062
  Marine containers                                                         1,206            2,057

</TABLE>

Aircraft and aircraft engines:  Aircraft lease revenues and direct expenses were
$8.9 million and $0.1  million,  respectively,  for the year ended  December 31,
1998, compared to $9.4 million and $0.1 million,  respectively,  during the same
period of 1997. The decrease in aircraft contribution was due to the sale of two
commuter aircraft and an aircraft engine during 1997.

Marine  vessels:  Marine  vessel lease  revenues and direct  expenses  were $7.5
million and $4.7 million,  respectively,  for the year ended  December 31, 1998,
compared  to $12.8  million  and $10.1  million,  respectively,  during the same
period of 1997. The decrease in marine vessel lease revenues was due to the sale
of two marine  vessels  during the fourth quarter of 1997 offset in part, by the
purchase of an additional  marine vessel during March 1998. Marine vessel direct
operating  expenses  also  decreased,  a direct result of the sale of two marine
vessels.  Overall,  marine  vessel  contribution  increased  as a result  of the
purchase of the marine  vessel which is operating  under a bareboat  charter and
the receipt of a $0.3 million loss-of-hire  insurance refund from Transportation
Equipment Indemnity Company,  Ltd., an affiliate of the General Partner,  due to
lower  claims  from  the  insured   Partnership  and  other  insured  affiliated
partnerships.

Trailers:  Trailer lease revenues and direct expenses were $2.8 million and $0.7
million,  respectively,  for the year ended December 31, 1998,  compared to $2.8
million and $0.8  million,  respectively,  during the same  period of 1997.  The
trailer  contribution  increased  during 1998 due to fewer  maintenance  repairs
needed to trailers in the PLM affiliated rental yards, when compared to 1997.

Rail  equipment:  Rail equipment  lease  revenues and direct  expenses were $2.5
million and $0.6 million,  respectively,  for the year ended  December 31, 1998,
compared to $2.5 million and $0.5 million, respectively,  during the same period
of 1997.  The decrease in railcar  contribution  was due to required  repairs to
certain railcars during 1998 that were not needed during 1997.

Marine containers: Marine container lease revenues and direct expenses were $1.2
million  and  $10,000,  respectively,  for the year  ended  December  31,  1998,
compared to $2.1  million and $17,000,  respectively,  during the same period of
1997.  The  number  of  marine  containers  owned  by the  Partnership  has been
declining over the past two years due to sales and  dispositions.  The result of
this declining fleet has been a decrease in marine container contribution.

(b)  Indirect Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $15.9 million for the year ended  December 31, 1998
decreased from $21.4 million for the same period in 1997.  Significant variances
are explained as follows:

     (i) A $4.5 million decrease in depreciation  and amortization  expense from
1997  levels was caused  primarily  by the sale of two  marine  vessels  and two
commuter  aircraft during 1997 and equipment  sales during 1998,  along with the
double-declining  balance  method  of  depreciation  which  results  in  greater
depreciation  in the  first  years an  asset  is  owned.  These  decreases  were
partially  offset by the purchase of a marine vessel during the first quarter of
1998.

     (ii) A $0.6 million decrease in interest expense was due to a lower average
outstanding debt balance when compared to the same period of 1997.

     (iii) A $0.3 million  decrease in  management  fees to affiliate was due to
lower lease revenues.

     (iv) A $0.2 million  decrease in  administrative  expenses was due to lower
costs for professional  services needed to collect past-due receivables due from
certain  nonperforming  lessees and lower costs  associated with the Partnership
trailers at the PLM-affiliated short-term rental yards.

     (v) A $0.1  million  increase in bad debt  expenses  was due to the General
Partner's  evaluation  of the  collectibility  of  receivables  due from certain
lessees.

(c)  Net Gain on Disposition of Owned Equipment

The net gain on the  disposition  of equipment  for the year ended  December 31,
1998 totaled $0.8 million,  which  resulted from the sale of marine  containers,
railcars,  and trailers,  with an aggregate net book value of $1.7 million,  for
proceeds of $2.5 million.  The net gain on the disposition of equipment for 1997
totaled $11.0  million,  which resulted from the sale of an aircraft  engine,  a
commuter aircraft, marine containers, trailers, and a railcar, with an aggregate
net book value of $4.7 million,  for proceeds of $7.8  million,  and the sale of
two marine  vessels with a net book value of $10.9 million for proceeds of $18.0
million.  Included  in the gain of $7.9  million  from  the  sale of the  marine
vessels is the unused portion of accrued drydocking of $0.8 million.

(d)  Interest and Other Income

Interest and other income decreased $0.2 million for the year ended December 31,
1998,  when  compared to the same period of 1997.  A decrease of $0.3 million in
other income was due to the  repossession  of the aircraft  that was on a direct
finance lease during 1997 (see Note 7 to the audited financial statements). This
decrease was offset,  in part, by an increase of $0.1 million in interest income
due to higher  average  cash  balances  available  for  investment  in 1998 when
compared to 1997.

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

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

<TABLE>
<CAPTION>

                                                                                For the Years
                                                                              Ended December 31,
                                                                            1998              1997
                                                                         -----------------------------
  <S>                                                                    <C>               <C>        
  Aircraft, rotable components, and aircraft engines                     $     386         $  1,215   
  Marine vessels                                                              (152 )         (1,479 )
  ===================================================================================      ===========
      Equity in net income (loss) of USPEs                               $     234         $   (264 ) 
  ===================================================================================      ===========

</TABLE>

Aircraft,  rotable components, and aircraft engines: As of December 31, 1998 and
1997,  the  Partnership  had an interest in two trusts that own a total of three
commercial aircraft, two aircraft engines, and a portfolio of aircraft rotables,
and also had an interest in an entity owning two commercial aircraft on a direct
finance lease. During the year ended December 31, 1998, revenues of $1.2 million
were  offset  by  depreciation  expense,  direct  expenses,  and  administrative
expenses of $0.8 million. During the same period of 1997, lease revenues of $2.3
million were offset by depreciation expense, direct expenses, and administrative
expenses of $1.0 million.  The decrease in lease  revenues is due to the renewal
of the  leases  for three  commercial  aircraft,  two  aircraft  engines,  and a
portfolio of aircraft rotables at lower rates than were in place during the same
period of 1997. The decrease in depreciation  expense, when compared to the same
period of 1997, was due to the double-declining  balance method of depreciation,
which results in greater depreciation in the first years an asset is owned.

Marine  vessels:  As of December  31, 1998 and 1997,  the  Partnership  owned an
interest in three marine vessels. During the year ended December 31, 1998, lease
revenues of $6.4 million were offset by depreciation  expense,  direct expenses,
and  administrative  expenses of $6.6  million.  During the same period of 1997,
lease  revenues of $4.2  million  were offset by  depreciation  expense,  direct
expenses,  and administrative  expenses of $5.7 million.  The primary reason for
the increase in lease revenues and depreciation  expense,  direct expenses,  and
administrative expenses during 1998 was the purchase of an interest in an entity
that owns a marine vessel during the third quarter of 1997.

(f)  Net Income

As a result of the foregoing,  the  Partnership's  net income for the year ended
December  31, 1998 was $2.4  million,  compared to a net income of $7.9  million
during the same period in 1997.  The  Partnership's  ability to operate  assets,
liquidate  assets,  and re-lease  those assets whose leases expire is subject to
many factors,  and the Partnership's  performance during the year ended December
31, 1998 is not  necessarily  indicative  of future  periods.  In the year ended
December 31, 1998,  the  Partnership  distributed  $11.4  million to the limited
partners, or $1.26 per weighted-average limited partnership unit.

(2)  Comparison  of the  Partnership's  Operating  Results  for the Years  Ended
December 31, 1997 and 1996

(a)  Owned Equipment Operations

Lease revenues less direct expenses  (defined as repair and maintenance,  marine
equipment operation,  and asset-specific  insurance expenses) on owned equipment
decreased  during the year ended  December 31, 1997,  when  compared to the same
period of 1996. Gains or losses from the sale of equipment and certain expenses,
such as depreciation and amortization  and general and  administrative  expenses
relating  to  the  operating  segments  (see  Note 5 to  the  audited  financial
statements),  are not  included  in the  owned  equipment  operation  discussion
because  they are  indirect  in nature and not a result of  operations,  but the
result of owning a portfolio of equipment.  The following  table  presents lease
revenues less direct expenses by segment (in thousands of dollars):

<TABLE>
<CAPTION>

                                                                              For the Years Ended
                                                                                 December 31,
                                                                            1997               1996
                                                                         -------------------------------
  <S>                                                                    <C>                <C>      
  Aircraft and aircraft engines                                          $   9,304          $   6,348
  Marine vessels                                                             2,650              4,910
  Rail equipment                                                             2,062              1,532
  Marine containers                                                          2,057              2,790
  Trailers                                                                   1,918              1,567
  Mobile offshore drilling unit                                                 --              1,062

</TABLE>

Aircraft and aircraft engines:  Aircraft lease revenues and direct expenses were
$9.4 million and $0.1  million,  respectively,  for the year ended  December 31,
1997, compared to $6.5 million and $0.1 million,  respectively,  during the same
period of 1996. The increase in aircraft contribution was due to the transfer of
two commercial aircraft into the Partnership from unconsolidated special-purpose
entities and the purchase of three commercial  aircraft and a commuter  aircraft
during  the  second  and  third  quarters  of 1996.  The  increase  in  aircraft
contribution  caused by these events was offset,  in part,  by a decrease in the
contribution  from the aircraft engine that was off lease and subsequently  sold
during 1997. This engine was on lease during 1996.

Marine  vessels:  Marine  vessel lease  revenues and direct  expenses were $12.8
million and $10.1 million,  respectively,  for the year ended December 31, 1997,
compared to $14.0 million and $9.1 million, respectively, during the same period
of 1996.  The decrease in marine  vessel  contribution  was primarily due to the
sale of two marine  vessels  during the  fourth  quarter of 1997.  Additionally,
marine  vessel  liability  insurance  increased  $1.0  million  during 1997 when
compared to 1996.

Rail  equipment:  Rail equipment  lease  revenues and direct  expenses were $2.5
million and $0.5 million,  respectively,  for the year ended  December 31, 1997,
compared to $2.4 million and $0.9 million, respectively,  during the same period
of 1996.  Although the railcar fleet remained  relatively the same size for both
years, the increase in railcar contribution  resulted from a decrease in repairs
required on certain of the railcars in the fleet during 1997,  when  compared to
the same period of 1996.

Marine containers: Marine container lease revenues and direct expenses were $2.1
million  and  $17,000,  respectively,  for the year  ended  December  31,  1997,
compared to $2.8 million and $25,000,  respectively,  during the same quarter of
1996.  The  number  of  marine  containers  owned  by the  Partnership  has been
declining over the past 12 months due to sales and  dispositions.  The result of
this declining fleet has been a decrease in marine container contribution.

Trailers:  Trailer lease revenues and direct expenses were $2.8 million and $0.8
million,  respectively,  for the year ended December 31, 1997,  compared to $2.0
million and $0.5  million,  respectively,  during the same  period of 1996.  The
number of trailers that  transferred  to the  PLM-affiliated  short-term  rental
yards increased during 1996,  resulting in a larger number of the  Partnership's
trailers  operating in the rental yards during 1997,  when  compared to the same
period of 1996.  Trailers  earned  higher  lease rates  while in the  affiliated
short-term  rental  yards than they earned  during the same period of 1996 while
they were on term lease;  however, the trailers also incurred higher maintenance
costs.

Mobile offshore  drilling unit: Mobile offshore drilling unit lease revenues and
direct expenses were $1.1 million and $3,000,  respectively,  for the year ended
December  31,  1996.  The  elimination  of the  mobile  offshore  drilling  unit
contribution during 1997 was due to the sale of this equipment during the second
quarter of 1996.

(b)  Indirect Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $21.4 million for the year ended  December 31, 1997
increased  from  $21.1  million  for the same  period in 1996.  The  significant
variances are explained as follows:

     (i) A $0.8 million increase in depreciation and amortization  expenses from
1996 levels  reflects the purchase of three  commercial  aircraft and a commuter
aircraft,  and the transfer of two  commercial  aircraft from USPEs during 1996;
the  increase  was  offset  in part by the  double-declining  balance  method of
depreciation and the sale of two marine vessels during 1997.

     (ii) A $0.3 million  decrease in bad debt  expenses was due to the recovery
of receivables previously reserved for as bad debts.

     (iii)  A $0.2  million  decrease  in  interest  expense  was due to a lower
average balance outstanding on the notes payable in 1997 compared to 1996.

(c)  Net Gain on Disposition of Owned Equipment

The net gain on the  disposition  of equipment  for the year ended  December 31,
1997 totaled $11.0 million,  which resulted from the sale of an aircraft engine,
a  commuter  aircraft,  marine  containers,  trailers,  and a  railcar,  with an
aggregate net book value of $4.7 million,  for proceeds of $7.8 million, and the
sale of two marine  vessels with a net book value of $10.9  million for proceeds
of $18.0  million.  Included  in the gain of $7.9  million  from the sale of the
marine vessels is the unused portion of accrued drydocking of $0.8 million.  For
the same period in 1996, a $14.2  million net gain  resulted  from the sale of a
mobile  offshore  drilling  unit,  with a net book value of $10.7  million,  for
proceeds of $21.3 million,  and marine containers,  aircraft engines, a commuter
aircraft,  a trailer  and  railcars,  with an  aggregate  net book value of $5.1
million, for proceeds of $8.7 million.

(d)  Interest and Other Income

Interest and other income decreased $0.7 million for the year ended December 31,
1997, when compared to the same period of 1996. This was partially due to a $0.3
business  interruption  claim that was received  during 1996.  No such claim was
received during 1997. In addition, interest income decreased $0.3 million due to
lower average cash balances  available for investment  throughout  most of 1997,
when compared to the same period of 1996. Additionally, interest income from the
direct finance lease decreased $0.1 million, due to a lower balance due from the
lessee and the  termination  of the direct finance lease during 1997 (see Note 7
to the audited financial statements).


<PAGE>


(e)  Equity in Net Income (Loss) of USPEs

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

<TABLE>
<CAPTION>

                                                                              For the Years Ended
                                                                                  December 31,
                                                                            1997               1996
                                                                         -------------------------------
  <S>                                                                    <C>                <C>        
  Aircraft, rotable components, and aircraft engines                     $   1,215          $    (265 )
  Marine vessels                                                            (1,479 )              149
  ===================================================================================       ============
      Equity in net lossof USPEs                                         $    (264 )        $    (116 )
  ===================================================================================       ============

</TABLE>

Aircraft, rotable components, and aircraft engines: As of December 31, 1997, the
Partnership  had an interest in two trusts that own three  commercial  aircraft,
two aircraft engines,  and a portfolio of aircraft rotables;  an interest in two
commercial  aircraft on a direct finance lease;  and an interest in a commercial
aircraft that was transferred  from a direct finance lease (see Notes 4 and 5 to
the audited  financial  statements).  As of December 31, 1996,  the  Partnership
owned the  interest in the two trusts that own three  commercial  aircraft,  two
aircraft engines,  and a portfolio of aircraft rotables,  as well as an interest
in two  commercial  aircraft on a direct  finance  lease.  During the year ended
December 31, 1997, revenues of $2.3 million were offset by depreciation expense,
direct  expenses,  and  administrative  expenses of $1.0  million.  During 1996,
revenues of $3.3 million were offset by depreciation  expense,  direct expenses,
and  administrative  expenses of $3.5  million.  The  decrease  in revenues  and
expenses was due to the transfer of two  commercial  aircraft  from the USPEs to
the Partnership during 1996, which was offset in part by the revenue earned from
the  interest  in the  direct  finance  lease that was  purchased  in the fourth
quarter of 1996.

Marine vessels:  As of December 31, 1997, the  Partnership  owned an interest in
three marine  vessels,  one of which was  purchased on the last day of the third
quarter of 1997. As of December 31, 1996, the  Partnership  owned an interest in
two marine  vessels.  During the year ended December 31, 1997,  revenues of $4.2
million were offset by depreciation expense, direct expenses, and administrative
expenses of $5.7 million. During the same period of 1996, lease revenues of $3.9
million were offset by depreciation expense, direct expenses, and administrative
expenses of $3.7  million.  The primary  reason for the increase in revenues and
expenses  during 1997 was due to the purchase of an additional  marine vessel in
the third quarter of 1997.

(f)  Net Income

As a result of the foregoing,  the  Partnership's  net income for the year ended
December  31, 1997 was $7.9  million,  compared  to net income of $12.4  million
during  the same  period in 1996.  The  Partnership's  ability  to  operate  and
liquidate assets,  secure leases,  and re-lease those assets whose leases expire
is subject to many factors,  and the Partnership's  performance  during the year
ended December 31, 1997 is not necessarily  indicative of future periods. In the
year ended December 31, 1997, the Partnership  distributed  $14.6 million to the
limited partners, or $1.60 per weighted-average limited partnership unit.

(E)  Geographic Information

Certain  of the  Partnership's  equipment  operates  in  international  markets.
Although these operations expose the Partnership to certain currency, political,
credit, and economic risks, the General Partner believes these risks are minimal
or has  implemented  strategies  to control the risks.  Currency  risks are at a
minimum because all invoicing,  with the exception of a small number of railcars
operating in Canada, is conducted in U.S. dollars. Political risks are minimized
by avoiding  operations in countries that do not have a stable  judicial  system
and established  commercial business laws. Credit support strategies for lessees
range from letters of credit supported by U.S. banks to cash deposits.  Although
these credit support mechanisms  generally allow the Partnership to maintain its
lease yield,  there are risks associated with  slow-to-respond  judicial systems
when legal  remedies  are  required to secure  payment or  repossess  equipment.
Economic  risks are  inherent  in all  international  markets,  and the  General
Partner  strives to minimize this risk with market  analysis prior to committing
equipment  to a  particular  geographic  area.  Refer  to Note 6 to the  audited
financial  statements for information on the lease revenues,  net income (loss),
and net book value of equipment in various geographic regions.

Revenues and net operating income by geographic  region are impacted by the time
period  the  asset is owned  and the  useful  life  ascribed  to the  asset  for
depreciation  purposes.  Net  income  (loss)  from  equipment  is  significantly
impacted  by  depreciation  charges,  which are  greatest  in the early years of
ownership due to the use of the double-declining balance method of depreciation.
The relationships of geographic revenues,  net income (loss), and net book value
of equipment are expected to change  significantly in the future, as assets come
off  lease and  decisions  are made to either  redeploy  the  assets in the most
advantageous geographic location or sell the assets.

The  Partnership's  equipment  on lease to U.S.  domiciled  lessees  consists of
trailers, railcars, and aircraft. During 1998, U.S. lease revenues accounted for
23% of the total lease revenues of wholly- and  partially-owned  equipment while
net income  accounted for $2.2 million of the total aggregate net income for the
Partnership  of $2.4 million.  The primary  reason for this is that a large gain
was realized from the sale of assets in the United States.

The  Partnership's  owned  equipment  on  lease  to  Canadian-domiciled  lessees
consists  of  railcars  and  aircraft.  During  1998,  Canadian  lease  revenues
accounted  for 14% of the total lease  revenues  of wholly- and  partially-owned
equipment,  and  recorded  net  income of $1.6  million,  compared  to the total
aggregate net income for the Partnership of $2.4 million.

The Partnership's owned aircraft on lease to a South  American-domiciled  lessee
during  1998  accounted  for 10% of the total  lease  revenues  of  wholly-  and
partially-owned  equipment, and recorded a net loss of $0.5 million, compared to
the total aggregate net income for the Partnership of $2.4 million.

The  Partnership's  ownership  share of  equipment  owned by USPEs on lease to a
Mexican-domiciled  lessee  consisted of aircraft on a direct  finance  lease and
recorded a net income of $0.4 million of the  Partnership's  total aggregate net
income of $2.4 million.

The  Partnership's  ownership  share  of  equipment  owned  by USPEs on lease to
European-domiciled lessees consisted of aircraft, aircraft engines, and aircraft
rotables,  and accounted for 3% of lease revenues of wholly and partially  owned
equipment and $39,000 of the  Partnership's  total  aggregate net income of $2.4
million.

The  Partnership's  owned equipment and its ownership share in USPEs on lease to
lessees  in the  rest of the  world  consisted  of  marine  vessels  and  marine
containers.  During 1998, lease revenues for these lessees  accounted for 50% of
the total lease revenues of wholly- and partially-owned equipment and recorded a
net income of $1.4 million,  compared to the total  aggregate net income for the
Partnership of $2.4 million.

(F) Effects of Year 2000

It is possible that the General Partner's  currently installed computer systems,
software  products,  and other business systems,  or the Partnership's  vendors,
service  providers,  and customers,  working either alone or in conjunction with
other  software or systems,  may not accept  input of,  store,  manipulate,  and
output  dates on or after  January  1, 2000  without  error or  interruption  (a
problem  commonly  known  as the  "Year  2000"  or  "Y2K"  problem).  Since  the
Partnership  relies  substantially on the General  Partner's  software  systems,
applications,  and  control  devices in  operating  and  monitoring  significant
aspects of its business,  any Year 2000 problem  suffered by the General Partner
could have a material adverse effect on the  Partnership's  business,  financial
condition, and results of operations.

The General Partner has  established a special Year 2000 oversight  committee to
review  the  impact  of Year  2000  issues on its  software  products  and other
business  systems  in  order to  determine  whether  such  systems  will  retain
functionality  after  December  31, 1999.  The General  Partner (a) is currently
integrating Year  2000-compliant  programming code into its existing  internally
customized and internally developed transaction  processing software systems and
(b) the General Partner's  accounting and asset management software systems have
either already been made Year 2000-compliant or Year 2000-compliant  upgrades of
such systems are planned to be implemented by the General Partner before the end
of  fiscal  1999.  Although  the  General  Partner  believes  that its Year 2000
compliance  program  can be  completed  by  the  end of  1999,  there  can be no
assurance that the  compliance  program will be completed by that date. To date,
the  costs  incurred  and  allocated  to the  Partnership  to  become  Year 2000
compliant have not been material.  Also, the General Partner believes the future
cost  allocable to the  Partnership  to become Year 2000  compliant  will not be
material.

It is possible that certain of the  Partnership's  equipment lease portfolio may
not be  Year  2000  compliant.  The  General  Partner  is  currently  contacting
equipment  manufacturers  of the  Partnership's  leased  equipment  portfolio to
assure Year 2000 compliance or to develop  remediation  strategies.  The General
Partner does not expect that  non-Year 2000  compliance of its leased  equipment
portfolio will have an adverse material impact on its financial statements.

Some risks  associated  with the Year 2000 problem are beyond the ability of the
Partnership  or the General  Partner to control,  including  the extent to which
third  parties  can  address  the Year 2000  problem.  The  General  Partner  is
communicating with vendors, services providers, and customers in order to assess
the Year 2000  compliance  readiness of such parties and the extent to which the
Partnership is vulnerable to any third-party  Year 2000 issues.  There can be no
assurance  that the  software  systems of such parties will be converted or made
Year 2000  compliant in a timely manner.  Any failure by the General  Partner or
such other parties to make their  respective  systems Year 2000 compliant  could
have a material adverse effect on the business,  financial position, and results
of operations  from the  Partnership.  The General  Partner will make an ongoing
effort to recognize and evaluate potential exposure relating to third-party Year
2000  noncompliance,  and will develop a contingency plan if the General Partner
determines that third-party noncompliance will have a material adverse effect on
the Partnership's business, financial position, or results of operation.

The General  Partner is currently  developing a contingency  plan to address the
possible  failure of any  systems  due to the Year 2000  problems.  The  General
Partner anticipates these plans will be completed by September 30, 1999.

(G)  Accounting Pronouncements

In June 1998, the Financial  Accounting  Standards Board issued  "Accounting for
Derivative   Instruments  and  Hedging   Activities"   (SFAS  No.  133),   which
standardizes  the  accounting  for  derivative  instruments,  including  certain
derivative instruments embedded in other contracts,  by requiring that an entity
recognize  those items as assets or  liabilities  in the  statement of financial
position and measure  them at fair value.  This  statement is effective  for all
quarters of fiscal years beginning after June 15, 1999. As of December 31, 1998,
the  General  Partner is  reviewing  the effect this  standard  will have on the
Partnership's consolidated financial statements.

(H)  Inflation

Inflation had no significant impact on the Partnership's operations during 1998,
1997, or 1996.

(I)  Forward-Looking Information

Except for historical  information contained herein, the discussion in this Form
10-K contains  forward-looking  statements that involve risks and uncertainties,
such as statements of the Partnership's  plans,  objectives,  expectations,  and
intentions.  The cautionary  statements made in this Form 10-K should be read as
being applicable to all related forward-looking  statements wherever they appear
in this Form 10-K. The Partnership's actual results could differ materially from
those discussed here.

(J)  Outlook for the Future

Since the  Partnership  is in its  holding or  passive  liquidation  phase,  the
General  Partner will be seeking to  selectively  re-lease or sell assets as the
existing leases expire.  Sale decisions will cause the operating  performance of
the Partnership to decline over the remainder of its life.

Several factors may affect the Partnership's  operating  performance in 1999 and
beyond,  including  changes in the markets for the  Partnership's  equipment and
changes in the regulatory environment in which that equipment operates.

The Partnership's operation of a diversified equipment portfolio in a broad base
of markets is  intended  to reduce its  exposure  to  volatility  in  individual
equipment sectors.

The  ability  of the  Partnership  to  realize  acceptable  lease  rates  on its
equipment in the different equipment markets is contingent on many factors, such
as specific market conditions and economic activity, technological obsolescence,
and government or other regulations. The unpredictability of these factors makes
it difficult for the General Partner to clearly define trends or influences that
may impact the performance of the Partnership's  equipment.  The General Partner
continuously  monitors both the  equipment  markets and the  performance  of the
Partnership's  equipment  in these  markets.  The  General  Partner  may make an
evaluation to reduce the Partnership's exposure to equipment markets in which it
determines  that it cannot  operate  equipment and achieve  acceptable  rates of
return.

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

(1)  Repricing Risk

Certain  portions of the  Partnership's  aircraft,  railcar,  marine  container,
marine  vessel,  and trailer  portfolios  will be remarketed in 1999 as existing
leases   expire,    exposing   the   Partnership   to   considerable   repricing
risk/opportunity.  Additionally,  the General Partner may select to sell certain
underperforming  equipment or equipment  whose  continued  operation  may become
prohibitively expensive. In either case, the General Partner intends to re-lease
or sell  equipment at prevailing  market  rates;  however,  the General  Partner
cannot  predict  these future  rates with any  certainty at this time and cannot
accurately assess the effect of such activity on future Partnership performance.

(2)  Impact of Government Regulations on Future Operations

The General  Partner  operates the  Partnership's  equipment in accordance  with
current applicable regulations (see Item 1, Section E, Government  Regulations).
However, the continuing implementation of new or modified regulations by some of
the  authorities  mentioned  previously,  or others,  may  adversely  affect the
Partnership's  ability to continue to own or operate equipment in its portfolio.
Additionally,  regulatory  systems  vary  from  country  to  country,  which may
increase the burden to the Partnership of meeting regulatory  compliance for the
same equipment  operated between countries.  Currently,  the General Partner has
observed  rising  insurance  costs to operate  certain  vessels into U.S. ports,
resulting from  implementation  of the U. S. Oil Pollution Act of 1990.  Ongoing
changes  in  the  regulatory   environment,   both  in  the  United  States  and
internationally,  cannot be predicted  with  accuracy,  and preclude the General
Partner from determining the impact of such changes on Partnership operations or
sale of equipment.  Under U.S. Federal Aviation Regulations,  after December 31,
1999, no person may operate an aircraft to or from any airport in the contiguous
United States unless that aircraft has been shown to comply with Stage III noise
levels. The Partnership's  Stage II aircraft are scheduled to be either modified
to meet Stage III  requirements,  sold,  or re-leased  in countries  that do not
require this regulation before the year 2000.

(3)  Distributions

Pursuant to the limited  partnership  agreement,  the Partnership  will cease to
reinvest in  additional  equipment  beginning in its seventh year of  operation,
which  commenced on January 1, 1999. The General Partner intends to continue its
strategy of selectively redeploying equipment to achieve competitive returns. By
the  end of the  reinvestment  period,  the  General  Partner  intends  to  have
assembled an equipment  portfolio capable of achieving a level of operating cash
flow for the remaining  life of the  Partnership  that is sufficient to meet its
obligations and sustain a predictable level of distributions to the partners.

The General Partner will evaluate the level of distributions the Partnership can
sustain over extended periods of time and,  together with other  considerations,
may  adjust  the  level of  distributions  accordingly.  In the long  term,  the
difficulty in predicting  market  conditions  and the  availability  of suitable
equipment  acquisitions preclude the General Partner from accurately determining
the impact of its  redeployment  strategy on  liquidity  or future  distribution
levels.

The  Partnership's  permanent debt obligation  began to mature in February 1997.
The General  Partner  believes that  sufficient  cash flow from  operations  and
equipment sales will be available in the future for repayment of debt.


<PAGE>



ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Partnership's  primary  market risk  exposure is that of interest  rate and
currency  risk. The  Partnership's  senior secured note is a variable rate debt.
The   Partnership   estimates  a  one  percent   increase  or  decrease  in  the
Partnership's  variable  rate debt  would  result in an  increase  or  decrease,
respectively, in interest expense of $0.2 million in 1999, $0.1 million in 2000,
and  $39,000 in 2001.  The  Partnership  estimates  a two  percent  increase  or
decrease in the Partnership's  variable rate debt would result in an increase or
decrease,  respectively,  in  interest  expense of $0.4  million  in 1999,  $0.2
million in 2000, and $0.1 million in 2001.

During 1998,  76% of the  Partnership's  total lease  revenues  from wholly- and
partially-owned equipment came from non-United States domiciled lessees. Most of
the  Partnership's  leases require payment in United States (U.S.) currency.  If
these  lessees  currency  devalues  against the U.S.  dollar,  the lessees could
potentially  encounter  difficulty in making the U.S. dollar  denominated  lease
payments.

ITEM 8.                         FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  financial  statements  for the  Partnership  are  listed  on the  Index  to
Financial Statements included in Item 14(a) of this Annual Report on Form 10-K.

ITEM 9. CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
        FINANCIAL DISCLOSURE

None.





















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<PAGE>


                                    PART III

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

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

<TABLE>
<CAPTION>

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

<S>                                      <C>     <C>                                                               
Robert N. Tidball                        60      Chairman of the Board, Director, President, and Chief Executive
                                                 Officer, PLM International, Inc.;
                                                 Director, PLM Financial Services, Inc.;
                                                 Vice President, PLM Railcar Management Services, Inc.; President,
                                                 PLM Worldwide Management Services Ltd.

Randall L.-W. Caudill                    51      Director, PLM International, Inc.

Douglas P. Goodrich                      52      Director and Senior Vice President, PLM International, Inc.;
                                                 Director and President, PLM Financial Services, Inc.; President,
                                                 PLM Transportation Equipment Corporation; President, PLM Railcar
                                                 Management Services, Inc.

Warren G. Lichtenstein                   33      Director, PLM International, Inc.

Howard M. Lorber                         50      Director, PLM International, Inc.

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

Robert L. Witt                           58      Director, PLM International, Inc.

J. Michael Allgood                       50      Vice President and Chief Financial Officer, PLM International,
                                                 Inc. and PLM Financial Services, Inc.

Robin L. Austin                          52      Vice President, Human Resources, PLM International, Inc. and PLM
                                                 Financial Services, Inc.

Stephen M. Bess                          52      President, PLM Investment Management, Inc.; Vice President and
                                                 Director, PLM Financial Services, Inc.

Richard K Brock                          36      Vice President and Corporate Controller, PLM International, Inc.
                                                 and PLM Financial Services, Inc.

James C. Chandler                        50      Vice President, Planning and Development, PLM International, Inc.
                                                 and PLM Financial Services, Inc.

Susan C. Santo                           36      Vice President, Secretary, and General Counsel, PLM
                                                 International, Inc. and PLM Financial Services, Inc.

Janet M. Turner                          42      Vice President, Investor Relations and Corporate Communications,
                                                 PLM International, Inc. and PLM Investment Management, Inc.

</TABLE>

Robert N.  Tidball  was  appointed  Chairman  of the  Board in  August  1997 and
President and Chief Executive Officer of PLM International in March 1989. At the
time of his  appointment  as  President  and  Chief  Executive  Officer,  he was
Executive Vice President of PLM International.  Mr. Tidball became a director of
PLM  International  in April 1989.  Mr.  Tidball was appointed a Director of PLM
Financial Services, Inc. in July 1997 and was elected President of PLM Worldwide
Management Services Limited in February 1998. He has served as an officer of PLM
Railcar  Management  Services,  Inc.  since June 1987. Mr. Tidball was Executive
Vice President of Hunter Keith,  Inc., a  Minneapolis-based  investment  banking
firm,  from March  1984 to  January  1986.  Prior to Hunter  Keith,  he was Vice
President, General Manager, and Director of North American Car Corporation and a
director of the American Railcar Institute and the Railway Supply Association.

Randall L.-W.  Caudill was elected to the Board of Directors in September  1997.
He is  President  of  Dunsford  Hill  Capital  Partners,  a San  Francisco-based
financial  consulting firm serving emerging growth companies.  Prior to founding
Dunsford  Hill Capital  Partners,  Mr.  Caudill held senior  investment  banking
positions at Prudential  Securities,  Morgan Grenfell Inc., and The First Boston
Corporation. Mr. Caudill also serves as a director of Northwest Biotherapeutics,
Inc., VaxGen, Inc., SBE, Inc., and RamGen, Inc.

Douglas  P.  Goodrich  was  elected  to the  Board of  Directors  in July  1996,
appointed  Senior  Vice  President  of PLM  International  in  March  1994,  and
appointed Director and President of PLM Financial  Services,  Inc. in June 1996.
Mr.  Goodrich  has also served as Senior Vice  President  of PLM  Transportation
Equipment Corporation since July 1989 and as President of PLM Railcar Management
Services,  Inc. since September 1992,  having been a Senior Vice President since
June 1987.  Mr.  Goodrich was an executive  vice  president of G.I.C.  Financial
Services  Corporation of Chicago,  Illinois, a subsidiary of Guardian Industries
Corporation, from December 1980 to September 1985.

Warren G.  Lichtenstein  was elected to the Board of Directors in December 1998.
Mr.  Lichtenstein  is the Chief  Executive  Officer of Steel  Partners II, L.P.,
which is PLM International's  largest  shareholder,  currently owning 16% of the
Company's common stock. Additionally,  Mr. Lichtenstein is Chairman of the Board
of Aydin Corporation,  a NYSE-listed defense  electronics  concern, as well as a
director of Gateway  Industries,  Rose's Holdings,  Inc., and Saratoga  Beverage
Group,  Inc. Mr.  Lichtenstein is a graduate of the University of  Pennsylvania,
where he received a Bachelor of Arts degree in economics.

Howard M.  Lorber was elected to the Board of  Directors  in January  1999.  Mr.
Lorber is President and Chief Operating  Officer of New Valley  Corporation,  an
investment banking and real estate concern. He is also Chairman of the Board and
Chief  Executive  Officer  of  Nathan's  Famous,  Inc.,  a  fast  food  company.
Additionally,  Mr. Lorber is a director of United Capital  Corporation and Prime
Hospitality  Corporation and serves on the boards of several  community  service
organizations.  He is a graduate of Long Island University,  where he received a
Bachelor  of Arts  degree and a Masters  degree in  taxation.  Mr.  Lorber  also
received charter life  underwriter and chartered  financial  consultant  degrees
from the American  College in Bryn Mawr,  Pennsylvania.  He is a trustee of Long
Island University and a member of the Corporation of Babson College.

Harold R. Somerset was elected to the Board of Directors of PLM International in
July 1994.  From February 1988 to December 1993, Mr.  Somerset was President and
Chief Executive  Officer of California & Hawaiian Sugar Corporation (C&H Sugar),
a subsidiary of Alexander & Baldwin,  Inc. Mr. Somerset joined C&H Sugar in 1984
as Executive Vice President and Chief  Operating  Officer,  having served on its
Board of Directors  since 1978.  Between 1972 and 1984, Mr.  Somerset  served in
various  capacities  with  Alexander & Baldwin,  Inc., a publicly  held land and
agriculture company headquartered in Honolulu,  Hawaii, including Executive Vice
President of Agriculture  and Vice President and General  Counsel.  Mr. Somerset
holds a law  degree  from  Harvard  Law  School  as well as a  degree  in  civil
engineering  from the  Rensselaer  Polytechnic  Institute and a degree in marine
engineering from the U.S. Naval Academy.  Mr. Somerset also serves on the boards
of directors for various other companies and organizations, including Longs Drug
Stores, Inc., a publicly held company.

Robert L. Witt was elected to the Board of Directors  in June 1997.  Since 1993,
Mr. Witt has been a principal with WWS  Associates,  a consulting and investment
group specializing in start-up situations and private  organizations about to go
public.  Prior to that, he was Chief Executive Officer and Chairman of the Board
of Hexcel  Corporation,  an international  advanced materials company with sales
primarily in the aerospace,  transportation, and general industrial markets. Mr.
Witt also serves on the boards of  directors  for various  other  companies  and
organizations.

J. Michael Allgood was appointed Vice President and Chief  Financial  Officer of
PLM International in October 1992 and Vice President and Chief Financial Officer
of PLM Financial Services,  Inc. in December 1992. Between July 1991 and October
1992,  Mr.  Allgood  was a  consultant  to  various  private  and  public-sector
companies  and  institutions   specializing  in  financial   operations  systems
development.  In October 1987, Mr. Allgood  co-founded  Electra Aviation Limited
and its holding  company,  Aviation  Holdings Plc of London,  where he served as
Chief Financial Officer until July 1991. Between June 1981 and October 1987, Mr.
Allgood  served as a first vice  president  with  American  Express Bank Ltd. In
February 1978,  Mr. Allgood  founded and until June 1981 served as a director of
Trade Projects  International/Philadelphia  Overseas  Finance  Company,  a joint
venture with  Philadelphia  National Bank. From March 1975 to February 1978, Mr.
Allgood served in various capacities with Citibank, N.A.

Robin  L.  Austin  became  Vice  President,  Human  Resources  of PLM  Financial
Services,  Inc. in 1984, having served in various capacities with PLM Investment
Management,  Inc., including Director of Operations, from February 1980 to March
1984.  From June 1970 to September 1978, Ms. Austin served on active duty in the
United  States Marine Corps and served in the United States Marine Corp Reserves
from 1978 to 1998.  She retired as a Colonel of the United  States  Marine Corps
Reserves  in 1998.  Ms.  Austin  has  served  on the Board of  Directors  of the
Marines'  Memorial  Club  and is  currently  on the  Board of  Directors  of the
International Diplomacy Council.

Stephen M. Bess was appointed a Director of PLM Financial Services, Inc. in July
1997.  Mr. Bess was appointed  President of PLM Investment  Management,  Inc. in
August  1989,   having  served  as  Senior  Vice  President  of  PLM  Investment
Management,  Inc. beginning in February 1984 and as Corporate  Controller of PLM
Financial Services, Inc. beginning in October 1983. Mr. Bess served as Corporate
Controller  of  PLM,  Inc.  beginning  in  December  1982.  Mr.  Bess  was  Vice
President-Controller  of Trans Ocean Leasing  Corporation,  a container  leasing
company, from November 1978 to November 1982, and Group Finance Manager with the
Field  Operations  Group of Memorex  Corporation,  a  manufacturer  of  computer
peripheral equipment, from October 1975 to November 1978.

Richard K Brock was appointed  Vice  President  and Corporate  Controller of PLM
International and PLM Financial Services, Inc. in June 1997, having served as an
accounting  manager  beginning in September 1991 and as Director of Planning and
General  Accounting  beginning  in  February  1994.  Mr.  Brock  was a  division
controller of Learning Tree International,  a technical education company,  from
February 1988 through July 1991.

James C.  Chandler  became  Vice  President,  Planning  and  Development  of PLM
International  in  April  1996.  From  1994 to 1996  Mr.  Chandler  worked  as a
consultant to public  companies,  including PLM, in the  formulation of business
growth  strategies.  Mr.  Chandler was Director of Business  Development at Itel
Corporation from 1987 to 1994, serving with both the Itel  Transportation  Group
and Itel Rail.

Susan C. Santo  became Vice  President,  Secretary,  and General  Counsel of PLM
International and PLM Financial Services,  Inc. in November 1997. She has worked
as an  attorney  for PLM  International  since  1990 and  served  as its  Senior
Attorney since 1994.  Previously,  Ms. Santo was engaged in the private practice
of law in San  Francisco.  Ms. Santo  received her J.D.  from the  University of
California, Hastings College of the Law.

Janet M. Turner became Vice President of Investor  Services of PLM International
in  1994,   having  previously  served  as  Vice  President  of  PLM  Investment
Management,  Inc.  since 1990.  Before 1990,  Ms.  Turner held the  positions of
manager of systems development and manager of investor relations at the Company.
Prior  to  joining  PLM  in  1984,   she  was  a  financial   analyst  with  The
Toronto-Dominion Bank in Toronto, Canada.

The directors of PLM  International,  Inc. are elected for a three-year term and
the directors of PLM Financial Services, Inc. are elected for a one-year term or
until their successors are elected and qualified.  No family relationships exist
between  any  director or  executive  officer of PLM  International  Inc. or PLM
Financial Services,  Inc., PLM Transportation Equipment Corp., or PLM Investment
Management, Inc.




<PAGE>


ITEM 11.   EXECUTIVE COMPENSATION

The Partnership has no directors, officers, or employees. The Partnership had no
pension,  profit  sharing,  retirement,  or similar benefit plan in effect as of
December 31, 1998.


ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     (A) Security Ownership of Certain Beneficial Owners

         The  General  Partner is  generally  entitled  to a 5%  interest in the
         profits and losses (subject to certain special  allocations of income),
         cash available for distributions,  and net disposition  proceeds of the
         Partnership.  As of December  31,  1998,  no investor  was known by the
         General  Partner  to  beneficially  own  more  than  5% of the  limited
         partnership units of the Partnership.

     (B) Security Ownership of Management

         Neither  the  General  Partner  and its  affiliates  nor any officer or
         director of the  General  Partner  and its  affiliates  own any limited
         partnership units of the Partnership as of December 31, 1998.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     (A) Transactions with Management and Others

         During 1998, the Partnership  paid or accrued the following fees to FSI
         or its affiliates: management fees, $1.1 million, equipment acquisition
         fees,  $0.5  million;   lease  negotiation  fees,  $0.1  million,   and
         administrative and data processing  services performed on behalf of the
         Partnership,  $1.0  million.  The  Partnership  paid  $0.1  million  to
         Transportation  Equipment Indemnity Company Ltd. (TEI), a wholly-owned,
         Bermuda-based subsidiary of PLM International,  for insurance coverages
         during 1998;  these  amounts  were paid  substantially  to  third-party
         reinsurance underwriters or from risk pools managed by TEI on behalf of
         affiliated  programs and PLM  International,  which  provide  threshold
         coverages on marine vessel loss of hire and hull and machinery  damage.
         All pooling  arrangement  funds are either paid out to cover applicable
         losses  or  refunded  pro rata by TEI.  During  1998,  the  Partnership
         received a loss-of-hire  insurance  refund from TEI of $0.3 million due
         to  lower  claims  from  the  insured  Partnership  and  other  insured
         affiliated programs for insurance coverages during previous years.

         During 1998, the USPEs paid or accrued the following fees to FSI or its
         affiliates   (based  on  the   Partnership's   proportional   share  of
         ownership):  management fees, $0.4 million; and administrative and data
         processing  services,  $0.1 million.  The USPEs paid $47,000 to TEI and
         also  received  a refund  from  TEI of $0.1  million  for  loss-of-hire
         insurance coverages during 1998.











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<PAGE>


                                                      PART IV

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (A) 1.    Financial Statements

               The  financial  statements  listed in the  accompanying  Index to
               Financial  Statements  are filed as part of this Annual Report on
               Form 10-K.

     (B) Reports on Form 8-K

         None.

     (C) Exhibits

         4.    Limited  Partnership  Agreement of  Partnership.  Incorporated by
               reference to the Partnership's Registration Statement on Form S-1
               (Reg. No.  33-32258),  which became effective with the Securities
               and Exchange Commission on April 11, 1990.

         10.1  Management  Agreement  between  Partnership  and  PLM  Investment
               Management,  Inc.  incorporated by reference to the Partnership's
               Registration  Statement on Form S-1 (Reg.  No.  33-32258),  which
               became  effective with the Securities and Exchange  Commission on
               April 11, 1990.

         10.2  Loan  Agreement,  amended and restated as of  September  26, 1996
               regarding  Senior  Notes due  November 8, 1999.  Incorporated  by
               reference to the  Partnership's  Annual Report on Form 10-K filed
               with the Securities and Exchange Commission on March 18, 1997.

         10.3  Amendment  No. 1 to the Amended  and  Restated  $38,000,000  Loan
               Agreement,  dated  as  of  December  29,  1997.  Incorporated  by
               reference to the  Partnership's  Annual Report on Form 10-K filed
               with the Securities and Exchange Commission on March 31, 1998.

24.      Powers of Attorney. 











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<PAGE>


                                                         SIGNATURES

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

The Partnership has no directors or officers.  The General Partner has signed on
behalf of the Partnership by duly authorized officers.


Dated: March 17, 1999                 PLM EQUIPMENT GROWTH FUND V
                                      PARTNERSHIP

                                      By:  PLM Financial Services, Inc. 
                                           General Partner


                                      By:  /s/ Douglas P. Goodrich  
                                           ----------------------------  
                                           Douglas P. Goodrich
                                           President and Director


                                      By:  /s/ Richard K Brock   
                                           ----------------------------- 
                                           Richard K Brock
                                           Vice President and
                                           Corporate Controller


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  directors of the  Partnership's  General
Partner on the dates indicated.


Name                    Capacity                  Date



*_________________                             
Robert N. Tidball       Director, FSI           March 17, 1999



*_________________                            
Douglas P. Goodrich     Director, FSI           March 17, 1999



*__________________                        
Stephen M. Bess         Director, FSI           March 17, 1999


*Susan Santo,  by signing her name hereto,  does sign this document on behalf of
the persons indicated above pursuant to powers of attorney duly executed by such
persons and filed with the Securities and Exchange Commission.


/s/ Susan C. Santo
-----------------------        
Susan C. Santo
Attorney-in-Fact



<PAGE>


                           PLM EQUIPMENT GROWTH FUND V
                             (A Limited Partnership)
                          INDEX TO FINANCIAL STATEMENTS

                                  (Item 14(a))


                                                                    Page

Independent auditors' report                                          32

Balance sheets as of December 31, 1998 and 1997                       33

Statements of income for the years ended
     December 31, 1998, 1997, and 1996                                34

Statements of changes in partners' capital for the
     years ended December 31, 1998, 1997, and 1996                    35

Statements of cash flows for the years ended
     December 31, 1998, 1997, and 1996                                36

Notes to financial statements                                         37-49


All other  financial  statement  schedules  have been  omitted,  as the required
information  is not pertinent to the  Registrant or is not material,  or because
the  information  required  is included in the  financial  statements  and notes
thereto.



<PAGE>


                          INDEPENDENT AUDITORS' REPORT



The Partners
PLM Equipment Growth Fund V:


We have audited the  accompanying  financial  statements of PLM Equipment Growth
Fund V (the  Partnership),  as listed  in the  accompanying  index to  financial
statements.   These  financial   statements  are  the   responsibility   of  the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We have  conducted our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of PLM Equipment Growth Fund V as
of December  31, 1998 and 1997 and the  results of its  operations  and its cash
flows for each of the years in the three-year  period ended December 31, 1998 in
conformity with generally accepted accounting principles.



/S/ KPMG LLP
--------------------------


SAN FRANCISCO, CALIFORNIA
March 12, 1999


<PAGE>



                           PLM EQUIPMENT GROWTH FUND V
                             (A Limited Partnership)
                                 BALANCE SHEETS
                                  December 31,

                 (in thousands of dollars, except unit amounts)


<TABLE>
<CAPTION>


                                                                                       1998                 1997
                                                                                  -----------------------------------
  <S>                                                                             <C>                  <C>         
  Assets

  Equipment held for operating leases, at cost                                    $    109,515         $    104,902
  Less accumulated depreciation                                                        (68,711 )            (62,320 )
                                                                                  -----------------------------------
    Net equipment                                                                       40,804               42,582

  Cash and cash equivalents                                                              1,774                9,884
  Restricted cash                                                                          108                  111
  Accounts receivable, less allowance for doubtful accounts of
      $77 in 1998 and $113 in 1997                                                       3,188                3,229
  Investments in unconsolidated special-purpose entities                                15,144               22,758
  Lease negotiation fees to affiliate, less accumulated
      amortization of $293 in 1998 and $325 in 1997                                        119                  156
  Debt issuance costs, less accumulated amortization
      of $405 in 1998 and $331 in 1997                                                     118                  192
  Debt placement fees to affiliate, less accumulated
      amortization of $340 in 1998 and $292 in 1997                                         40                   87
  Prepaid expenses and other assets                                                         81                  114
  Equipment acquisition deposits                                                            --                  920
                                                                                  -----------------------------------

        Total assets                                                              $     61,376         $     80,033
                                                                                  ===================================

  Liabilities and partners' capital

  Liabilities
  Accounts payable and accrued expenses                                           $        593         $      1,826
  Due to affiliates                                                                        339                  477
  Lessee deposits and reserve for repairs                                                2,450                1,644
  Note payable                                                                          23,588               32,000
                                                                                  -----------------------------------
    Total liabilities                                                                   26,970               35,947
                                                                                  -----------------------------------

  Partners' capital
  Limited partners (limited partnership units of 9,081,028 and
        9,086,608 as of December 31, 1998 and 1997, respectively)                       34,406               44,086
  General Partner                                                                           --                   --
                                                                                  -----------------------------------
    Total partners' capital                                                             34,406               44,086
                                                                                  -----------------------------------

        Total liabilities and partners' capital                                   $     61,376         $     80,033
                                                                                  ===================================

</TABLE>











                       See accompanying notes to financial
                                  statements.

<PAGE>

                           PLM EQUIPMENT GROWTH FUND V
                             (A Limited Partnership)
                              STATEMENTS OF INCOME
                        For the Years Ended December 31,
         (in thousands of dollars, except weighted-average unit amounts)

<TABLE>
<CAPTION>


                                                                            1998            1997           1996
                                                                         -------------------------------------------
  Revenues

  <S>                                                                    <C>             <C>            <C>             
  Lease revenue                                                          $  22,911       $  29,493      $  28,763       
  Interest and other income                                                    404             640          1,360
  Net gain on disposition of equipment                                         814          10,990         14,199
                                                                         -------------------------------------------
      Total revenues                                                        24,129          41,123         44,322
                                                                         -------------------------------------------

  Expenses

  Depreciation and amortization                                             11,237          15,693         14,941
  Repairs and maintenance                                                    2,278           2,690          2,843
  Equipment operating expenses                                               3,763           6,088          6,016
  Insurance expense to affiliate                                              (214 )           838            768
  Other insurance expenses                                                     259           1,933            985
  Management fees to affiliate                                               1,133           1,480          1,458
  Interest expense                                                           1,950           2,593          2,789
  General and administrative expenses to affiliates                            974             981            838
  Other general and administrative expenses                                    586             731            903
  Provision for (recovery of) bad debts                                         27             (89 )          224
                                                                         -------------------------------------------
      Total expenses                                                        21,993          32,938         31,765
                                                                         -------------------------------------------

  Equity in net income (loss) of unconsolidated
    special-purpose entities                                                   234            (264 )         (116 )
  ------------------------------------------------------------------------------------------------------------------
  Net income                                                             $   2,370       $   7,921      $  12,441       
                                                                         ===========================================

  Partners' share of net income

  Limited partners                                                       $   1,796       $   7,154      $  11,524       
  General Partner                                                              574             767            917
                                                                         -------------------------------------------

  Total                                                                  $   2,370       $   7,921      $  12,441       
                                                                         ===========================================

  Net income per weighted-average limited partnership unit               $    0.20       $    0.79      $    1.26       
                                                                         ===========================================

  Cash distribution                                                      $  12,008       $  15,346      $  18,083       
                                                                         ===========================================

  Cash distribution per weighted-average limited
      partnership unit                                                   $    1.26       $    1.60      $    1.87       
                                                                         ===========================================

</TABLE>









                       See accompanying notes to financial
                                  statements.

<PAGE>

                           PLM EQUIPMENT GROWTH FUND V
                             (A Limited Partnership)
                   STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
                        For the Years Ended December 31,
                            (in thousands of dollars)

<TABLE>
<CAPTION>


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

  <S>                                                <C>                  <C>              <C>       
  Partners' capital as of December 31, 1995          $    58,017          $    --          $   58,017

  Net income                                                11,524              917              12,441

  Repurchase of limited partnership units                      (79 )             --                 (79 )

  Cash distribution                                        (17,166 )           (917 )           (18,083 )
                                                       ---------------------------------------------------

    Partners' capital as of December 31, 1996               52,296               --              52,296

  Net income                                                 7,154              767               7,921

  Repurchase of limited partnership units                     (785 )             --                (785 )

  Cash distribution                                        (14,579 )           (767 )           (15,346 )
                                                       ---------------------------------------------------

    Partners' capital as of December 31, 1997               44,086               --              44,086

  Net income                                                 1,796              574               2,370

  Repurchase of limited partnership units                      (42 )             --                 (42 )

  Cash distribution                                        (11,434 )           (574 )           (12,008 )
                                                       ---------------------------------------------------

    Partners' capital as of December 31, 1998          $    34,406          $    --          $   34,406
  ========================================================================================================

</TABLE>





















                       See accompanying notes to financial
                                  statements.


<PAGE>




                           PLM EQUIPMENT GROWTH FUND V
                             (A Limited Partnership)
                            STATEMENTS OF CASH FLOWS
                        For the Years Ended December 31,
                            (in thousands of dollars)

<TABLE>
<CAPTION>

                                                                            1998            1997             1996
                                                                        -----------------------------------------------
  <S>                                                                    <C>             <C>            <C> 
  Operating activities
  Net income                                                             $    2,370      $    7,921     $     12,441 
  Adjustments to reconcile net income to net cash
        provided by (used in) operating activities:
    Depreciation and amortization                                            11,237          15,693           14,941
    Net gain on disposition of equipment                                       (814 )       (10,990 )        (14,199 )
    Equity in net (income) loss of unconsolidated
      special-purpose entities                                                 (234 )           264              116
    Changes in operating assets and liabilities:
      Restricted cash                                                             3             442             (330 )
      Accounts and note receivable, net                                          40            (374 )           (455 )
      Prepaid expenses and other assets                                          33             443             (364 )
      Accounts payable and accrued expenses                                  (1,233 )           766             (294 )
      Due to affiliates                                                        (138 )          (222 )           (414 )
      Lessee deposits and reserve for repairs                                   806          (1,438 )            285
  --------------------------------------------------------------------------------------------------------------------
         Net cash provided by operating activities                           12,070          12,505           11,727
                                                                         ---------------------------------------------

  Investing activities
  Proceeds from disposition of equipment                                      2,488          25,831           29,992
  Payments for purchase of equipment and capitalized repairs                 (9,482 )          (165 )        (21,378 )
  Payments for equipment acquisition deposits                                    --            (920 )             --
 Principal payments received on direct finance lease                            --              --             327
 Investment in and equipment purchased and placed in
    unconsolidated special-purpose entities                                     --         (10,453 )        (8,952 )
 Distribution from unconsolidated special-purpose entities                   4,124           3,018           4,348
 Distributions from liquidation of unconsolidated
       special-purpose entities                                              3,724              --              --
 Payments of acquisition fees to affiliate                                    (468 )            --            (936 )
 Payments of lease negotiation fees to affiliate                              (104 )            --            (214 )
                                                                        ---------------------------------------------
       Net cash provided by investing activities                               282          17,311           3,187
                                                                        ---------------------------------------------

 Financing activities
 Proceeds from short-term note payable                                       3,950           9,110           8,073
 Payments of short-term note payable                                        (3,950 )       (11,573 )        (5,610 )
 Payments of note payable                                                   (8,412 )        (6,000 )            --
 Proceeds from short-term loan from affiliate                                1,981           1,610              --
 Payment of short-term loan to affiliate                                    (1,981 )        (1,610 )            --
 Cash distribution paid to General Partner                                    (574 )          (767 )          (917 )
 Cash distribution paid to limited partners                                (11,434 )       (14,579 )       (17,166 )
 Payment for loan costs                                                         --              --            (136 )
 Repurchase of limited partnership units                                       (42 )          (785 )           (79 )
                                                                        ---------------------------------------------
       Net cash used in financing activities                               (20,462 )       (24,594 )       (15,835 )
                                                                        ---------------------------------------------

 Net (decrease) increase in cash and cash equivalents                       (8,110 )         5,222            (921 )
 Cash and cash equivalents at beginning of year                              9,884           4,662           5,583
                                                                        ---------------------------------------------
 Cash and cash equivalents at end of year                               $    1,774      $    9,884      $    4,662
                                                                        =============================================

 Supplemental information
 Interest paid                                                          $    2,047      $    2,843      $    2,815
                                                                        =============================================

</TABLE>


                       See accompanying notes to financial
                                  statements.

<PAGE>

                           PLM EQUIPMENT GROWTH FUND V
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

1.   Basis of Presentation

     Organization

     PLM  Equipment  Growth  Fund  V,  a  California  limited  partnership  (the
     Partnership),  was formed on November 14, 1989 to engage in the business of
     owning,   leasing,   or   otherwise   investing   in   predominately   used
     transportation and related equipment. PLM Financial Services, Inc. (FSI) is
     the General Partner of the Partnership. FSI is a wholly-owned subsidiary of
     PLM International, Inc. (PLM International).

     Beginning in the Partnership's seventh year of operations,  which commenced
     on January 1, 1999, the General  Partner stopped  reinvesting  excess cash.
     Surplus  cash,  less  reasonable  reserves,  will  be  distributed  to  the
     partners.  Beginning in the  Partnership's  ninth year of  operations,  the
     General   Partner   intends  to  begin  an  orderly   liquidation   of  the
     Partnership's  assets.  The Partnership  will be terminated by December 31,
     2010,  unless  terminated  earlier upon sale of all equipment or by certain
     other events.

     FSI  manages  the  affairs of the  Partnership.  The net income  (loss) and
     distributions of the Partnership are generally allocated 95% to the limited
     partners  and  5% to  the  General  Partner,  subject  to  certain  special
     allocations   (see  Net  Income  (Loss)  and   Distributions   Per  Limited
     Partnership Unit,  below).  The General Partner is entitled to subordinated
     incentive  fees equal to 5% of cash available for  distribution  and of net
     disposition proceeds (as defined in the partnership  agreement),  which are
     distributed by the Partnership  after the limited  partners have received a
     certain minimum rate of return.

     The General  Partner has  determined  that it will not adopt a reinvestment
     plan for the  Partnership.  If the  number  of  units  made  available  for
     purchase by limited  partners in any calendar  year exceeds the number that
     can be purchased with reinvestment plan proceeds,  then the Partnership may
     redeem up to 2% of the  outstanding  units  each  year,  subject to certain
     terms and  conditions.  The purchase price to be offered by the Partnership
     for  these  units  will  be  equal  to 110%  of the  unrecovered  principal
     attributable to the units.  The unrecovered  principal for any unit will be
     equal to the excess of (i) the  capital  contribution  attributable  to the
     unit over (ii) the  distributions  from any source paid with respect to the
     units.  For the  years  ended  December  31,  1998,  1997,  and  1996,  the
     Partnership had  repurchased  5,580,  82,411 and 6,925 limited  partnership
     units for $42,000, $0.8 million, and $0.1 million, respectively.

     As of December 31, 1998, the Partnership agreed to repurchase approximately
     18,100 units for an aggregate  price of  approximately  $0.1  million.  The
     General  Partner  anticipates  that these units will be  repurchased in the
     first and second quarters of 1999. In addition to these units,  the General
     Partner may purchase  additional  units on behalf of the Partnership in the
     future.

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

     Operations

     The  equipment  owned by the  Partnership  is managed,  under a  continuing
     management  agreement,   by  PLM  Investment  Management,   Inc.  (IMI),  a
     wholly-owned  subsidiary of FSI. IMI receives a monthly management fee from
     the   Partnership  for  managing  the  equipment  (see  Note  2).  FSI,  in
     conjunction with its subsidiaries, sells equipment to investor programs and
     third  parties,  manages  pools  of  equipment  under  agreements  with the
     investor programs, and is a general partner of other programs.

<PAGE>

                           PLM EQUIPMENT GROWTH FUND V
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

1.   Basis of Presentation  (continued)

     Accounting for Leases

     The Partnership's leasing operations generally consist of operating leases.
     Under  the  operating  lease  method of  accounting,  the  leased  asset is
     recorded at cost and  depreciated  over its estimated  useful life.  Rental
     payments  are recorded as revenue  over the lease term.  Lease  origination
     costs  are   capitalized   and  amortized  over  the  term  of  the  lease.
     Periodically,  the  Partnership  leases  equipment  with  lease  terms that
     qualify for direct finance lease  classification,  as required by Financial
     Accounting Standards Board Statement No. 13, "Accounting for Leases".

     Depreciation and Amortization

     Depreciation of  transportation  equipment,  held for operating  leases, is
     computed on the  double-declining  balance  method,  taking a full  month's
     depreciation in the month of acquisition, based upon estimated useful lives
     of 15 years for  railcars  and  typically  12 years for most other types of
     equipment.  The depreciation  method changes to  straight-line  when annual
     depreciation expense using the straight-line method exceeds that calculated
     by the double-declining balance method.  Acquisition fees and certain other
     acquisition  costs  have  been  capitalized  as  part  of the  cost  of the
     equipment.  Lease negotiation fees are amortized over the initial equipment
     lease term.  Debt issuance costs are amortized over the term of the related
     loan (see Note 8).  Major  expenditures  that are  expected  to extend  the
     useful  lives  or  reduce  future  operating   expenses  of  equipment  are
     capitalized and amortized over the remaining life of the equipment.

     Transportation Equipment

     In accordance with the Financial Accounting Standards Board's Statement No.
     121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
     Assets to Be Disposed Of", the General  Partner  reviews the carrying value
     of the  Partnership's  equipment at least quarterly in relation to expected
     future market conditions for the purpose of assessing recoverability of the
     recorded  amounts.  If projected  undiscounted  future  lease  revenue plus
     residual  values are less than the carrying value of the equipment,  a loss
     on  revaluation  is  recorded.  No  reductions  to the  carrying  value  of
     equipment were required during either 1998, 1997, or 1996.

     Equipment held for operating leases is stated at cost.

     Investments in Unconsolidated Special-Purpose Entities

     The Partnership has interests in  unconsolidated  special-purpose  entities
     (USPEs) that own  transportation  equipment.  These interests are accounted
     for using the equity method.

     The  Partnership's  investment  in USPEs  includes  acquisition  and  lease
     negotiation  fees paid by the Partnership to PLM  Transportation  Equipment
     Corporation  (TEC) and PLM Worldwide  Management  Services (WMS).  TEC is a
     wholly-owned  subsidiary of FSI and WMS is a wholly-owned subsidiary of PLM
     International.  The Partnership's interest in USPEs are managed by IMI. The
     Partnership's  equity  interest  in the  net  income  (loss)  of  USPEs  is
     reflected  net  of  management   fees  paid  or  payable  to  IMI  and  the
     amortization of acquisition and lease negotiation fees paid to TEC and WMS.



<PAGE>


                           PLM EQUIPMENT GROWTH FUND V
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

1.   Basis of Presentation  (continued)

     Repairs and Maintenance

Repair and maintenance costs related to marine vessels,  railcars,  and trailers
     are usually the obligation of the Partnership. Maintenance costs of most of
     the other  equipment  are the  obligation  of the  lessee.  If they are not
     covered by the lessee,  they are generally  charged  against  operations as
     incurred.  To  meet  the  maintenance   requirements  of  certain  aircraft
     airframes  and  engines,  reserve  accounts  are  prefunded  by the lessee.
     Estimated costs  associated  with marine vessel  drydocking are accrued and
     charged to income  ratably  over the period prior to such  drydocking.  The
     reserve  accounts are included in the balance sheet as lessee  deposits and
     reserve for repairs.

     Net Income (Loss) and Distributions Per Limited Partnership Unit 

     The net income (loss) of the Partnership is generally  allocated 95% to the
     limited  partners and 5% to the General  Partner.  Special  allocations  of
     income are made to the General Partner to the extent, if any,  necessary to
     cause the capital  account  balance of the General Partner to be zero as of
     the close of such year. Cash distributions of the Partnership are generally
     allocated 95% to the limited partners and 5% to the General Partner and may
     include amounts in excess of net income.  The limited  partners' net income
     (loss) are  allocated  among the  limited  partners  based on the number of
     limited  partnership  units owned by each limited partner and on the number
     of days of the year each limited partner is in the Partnership.

     Cash  distributions are recorded when paid. Monthly  unitholders  receive a
     distribution check 15 days after the close of the previous month's business
     and quarterly  unitholders  receive a distribution  check 45 days after the
     close of the quarter.

     Cash  distributions  to investors in excess of net income are  considered a
     return of  capital.  Cash  distributions  to the  limited  partners of $9.6
     million,   $7.4  million,  and  $5.6  million  in  1998,  1997,  and  1996,
     respectively, were deemed to be a return of capital.

     Cash  distributions  related to the fourth quarter of 1998 of $1.4 million,
     1997 and 1996 of $2.8  million  for each year,  were paid  during the first
     quarter of 1999, 1998, or 1997, respectively.

     Net Income (Loss) Per Weighted-Average Partnership Unit

     Net income  (loss) per  weighted-average  Partnership  unit was computed by
     dividing  net  income  (loss)  attributable  to  limited  partners  by  the
     weighted-average  number of Partnership units deemed outstanding during the
     year. The  weighted-average  number of Partnership units deemed outstanding
     during the years ended  December 31, 1998,  1997,  and 1996 was  9,082,093,
     9,107,121, and 9,170,232, respectively.

     Cash and Cash Equivalents 

     The  Partnership  considers  highly  liquid  investments  that are  readily
     convertible  to known amounts of cash with original  maturities of one year
     or  less as cash  equivalents.  The  carrying  amount  of cash  equivalents
     approximates  fair  market  value  due  to  the  short-term  nature  of the
     investments.

     Comprehensive Income

     During 1998, the Partnership adopted Financial Accounting Standards Board's
     Statement  No.  130,  "Reporting   Comprehensive  Income,"  which  requires
     enterprises  to report,  by major  component  and in total,  all changes in
     equity from nonowner sources.  The Partnership's net income (loss) is equal
     to  comprehensive  income for the years ended December 31, 1998,  1997, and
     1996.




<PAGE>


                           PLM EQUIPMENT GROWTH FUND V
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

1.   Basis of Presentation  (continued)

     Restricted Cash

     As of  December  31,  1998 and 1997,  restricted  cash  represented  lessee
     security deposits held by the Partnership.

2.   General Partner and Transactions with Affiliates

     An  officer of PLM  Securities  Corp.,  a  wholly-owned  subsidiary  of the
     General  Partner,  contributed $100 of the  Partnership's  initial capital.
     Under  the  equipment  management   agreement,   IMI,  subject  to  certain
     reductions,  receives a monthly management fee attributable either to owned
     equipment or interests in equipment  owned by the USPEs equal to the lesser
     of (i) the fees that  would be charged by an  independent  third  party for
     similar  services  for similar  equipment  or (ii) the sum of (a) 5% of the
     gross lease revenues attributable to equipment that is subject to operating
     leases,  (b) 2% of the gross lease  revenues,  as defined in the agreement,
     that is subject to full  payout net  leases,  or (c) 7% of the gross  lease
     revenues  attributable  to  equipment,  if any, that is subject to per diem
     leasing  arrangements and thus is operated by the Partnership.  Partnership
     management  fees of $0.2  million  and  $0.4  million  were  payable  as of
     December 31, 1998 and 1997,  respectively.  The Partnership's  proportional
     share of USPE  management  fee expense of $0.1  million  were payable as of
     December 31, 1998 and 1997. The  Partnership's  proportional  share of USPE
     management  fee expense was $0.4  million,  $0.3  million and $0.3  million
     during 1998, 1997, and 1996,  respectively.  The Partnership reimbursed FSI
     for data processing and  administrative  expenses directly  attributable to
     the  Partnership  in the amount of $1.0  million,  $1.0  million,  and $0.8
     million  during  1998,  1997,  and 1996,  respectively.  The  Partnership's
     proportional  share of USPE data  processing  and  administrative  expenses
     reimbursed  to FSI was $0.1  million  during  1998,  1997,  and 1996.  Debt
     placement  fees  were  paid  to  FSI  in an  amount  equal  to  1%  of  the
     Partnership's long-term borrowings.

     The Partnership paid $0.1 million,  $0.8 million, and $0.8 million in 1998,
     1997, and 1996, respectively, to Transportation Equipment Indemnity Company
     Ltd.  (TEI),  an affiliate of the General  Partner,  which provides  marine
     insurance   coverage   and  other   insurance   brokerage   services.   The
     Partnership's  proportional share of USPE marine insurance coverage paid to
     TEI was $47,000,  $0.3 million,  and $0.2 million  during 1998,  1997,  and
     1996,  respectively.  A  substantial  portion  of this  amount  was paid to
     third-party reinsurance underwriters or placed in risk pools managed by TEI
     on behalf of  affiliated  programs  and PLM  International,  which  provide
     threshold  coverages on marine  vessel loss of hire and hull and  machinery
     damage.  All  pooling  arrangement  funds  are  either  paid  out to  cover
     applicable  losses or refunded  pro rata by TEI.  Also,  during  1998,  the
     Partnership  and the USPEs received a $0.4 million  loss-of-hire  insurance
     refund from TEI due to lower claims from the insured  Partnership and other
     insured affiliated  programs.  PLM International  plans to liquidate TEI in
     1999. During 1998, TEI did not provide the same level of insurance coverage
     as had been provided during 1997 and 1996.  These services were provided by
     an unaffiliated third party.

     The  Partnership  and the  USPEs  paid or  accrued  lease  negotiation  and
     equipment  acquisition fees of $0.6 million, $0.5 million, and $1.6 million
     to TEC and WMS in 1998, 1997, and 1996, respectively.

     As of December 31, 1998,  approximately  67% of the  Partnership's  trailer
     equipment  was in  rental  facilities  operated  by PLM  Rental,  Inc.,  an
     affiliate of the General  Partner,  doing business as PLM Trailer  Leasing.
     Revenues  collected  under  short-term  rental  agreements  with the rental
     yards'  customers  are  credited to the owners of the related  equipment as
     received.  Direct  expenses  associated  with  the  equipment  are  charged
     directly to the  Partnership.  An  allocation  of indirect  expenses of the
     rental yard operations is charged to the Partnership monthly.

     The  Partnership  owned certain  equipment in conjunction  with  affiliated
     programs during 1998, 1997, and 1996 (see Note 4).



<PAGE>


                           PLM EQUIPMENT GROWTH FUND V
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

2.   General Partner and Transactions with Affiliates (continued)

     The  Partnership  borrowed  $2.0  million and $1.6 million from the General
     Partner  for a period  of time  during  1998 and  1997,  respectively.  The
     General Partner charged the Partnership  market interest rates for the time
     the loan was  outstanding.  Total interest paid to the General  Partner was
     $3,000 and $10,000 during 1998 and 1997, respectively.  There were no loans
     made by the General Partner to the Partnership in 1996.

     The balance due to affiliates as of December 31, 1998 included $0.2 million
     due to FSI and its affiliates  for management  fees and $0.1 million due to
     affiliated  USPEs.  The balance due to  affiliates  as of December 31, 1997
     included $0.4 million due to FSI and its affiliates for management fees and
     $0.1 million due to affiliated USPEs.

3.   Equipment

     The  components  of owned  equipment  as of December 31 were as follows (in
thousands of dollars):

<TABLE>
<CAPTION>

           Equipment Held for Operating Leases                1998                 1997
  ------------------------------------------------------ ------------------------------------
    <S>                                                  <C>                   <C>         
    Aircraft and rotable components                      $     51,090          $    49,838 
    Marine vessels                                             25,890               16,276
    Marine containers                                          11,842               17,592
    Rail equipment                                             11,383               11,500
    Trailers                                                    9,310                9,696
                                                         ------------------------------------
                                                              109,515              104,902
    Less accumulated depreciation                             (68,711 )            (62,320 )
                                                         ------------------------------------
                                                         ====================================
      Net equipment                                      $     40,804          $    42,582 
                                                         ====================================
</TABLE>

     Revenues are earned by placing the  equipment  under  operating  leases.  A
     portion of the  Partnership's  marine  containers is leased to operators of
     utilization-type leasing pools that include equipment owned by unaffiliated
     parties. In such instances, revenues received by the Partnership consist of
     a  specified  percentage  of  revenues  generated  by  leasing  the  pooled
     equipment to sublessees,  after deducting certain direct operating expenses
     of the pooled  equipment.  Rents for railcars are based on mileage traveled
     or a fixed rate; rents for all other equipment are based on fixed rates.

     As of December 31, 1998,  all owned  equipment was on lease or operating in
     PLM-affiliated  short-term trailer rental yards except for 10 railcars with
     a net book  value of $0.1  million.  As of  December  31,  1997,  all owned
     equipment was on lease or operating in  PLM-affiliated  short-term  trailer
     rental yards.

     As of December 31, 1997, the  Partnership  had entered into a commitment to
     purchase a marine vessel for $9.2 million.  The Partnership  made a deposit
     of $0.9 million toward this purchase which is included in the balance sheet
     as  equipment  acquisition  deposits.  During March 1998,  the  Partnership
     completed  the purchase of the marine  vessel for $9.6  million,  including
     acquisition fees of $0.4 million paid to FSI.

     The Partnership also purchased a Boeing 737-200 hushkit which was installed
     on one of the Partnership's stage II aircraft during 1998 for $1.3 million,
     including acquisition fees of $0.1 million paid to FSI.

     During 1998, the Partnership disposed of marine containers,  railcars,  and
     trailers,  with an  aggregate  net  book  value of $1.7  million,  for $2.5
     million.




<PAGE>


                           PLM EQUIPMENT GROWTH FUND V
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

3.   Equipment (continued)

     During 1997, the  Partnership  disposed of an aircraft  engine,  a commuter
     aircraft,  marine containers,  railcars, and trailers with an aggregate net
     book value of $4.7 million, for $7.8 million. The Partnership also sold two
     marine vessels with a net book value of $10.9 million for proceeds of $18.0
     million.  Included in the gain of $7.9  million from the sale of the marine
     vessels is the unused portion of accrued drydocking $0.8 million.

     Periodically,  PLM International purchases groups of assets whose ownership
     may be allocated among affiliated programs and PLM International. Generally
     in  these  cases,  only  assets  that  are on  lease  are  purchased  by an
     affiliated program.  PLM International  generally assumes the ownership and
     remarketing  risks associated with off-lease  equipment.  Allocation of the
     purchase  price is  determined  by a combination  of  third-party  industry
     sources,  recent transactions,  and published fair market value references.
     During 1996, PLM International  realized a $0.7 million gain on the sale of
     69 off-lease  railcars purchased by PLM International as part of a group of
     assets in 1994 that had been allocated to PLM Equipment Growth Funds IV and
     VI,  and PLM  Equipment  Growth  &  Income  Fund  VII,  Professional  Lease
     Management Income Fund I, LLC, and PLM International.

     All wholly- and  partially-owned  equipment  on lease is  accounted  for as
     operating  leases,  except for one finance lease.  Future  minimum  rentals
     under noncancelable  operating leases, as of December 31, 1998, for wholly-
     and  partially-owned  equipment  during  each of the next  five  years  are
     approximately  $13.7 million in 1999, $9.2 million in 2000, $6.3 million in
     2001, $3.8 million in 2002, and $3.9 million thereafter. Contingent rentals
     based upon utilization were approximately $1.4 million,  $2.2 million,  and
     $3.1 million in 1998, 1997, and 1996, respectively.

4.   Investments in Unconsolidated Special-Purpose Entities

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

<TABLE>
<CAPTION>

                                                                                            1998              1997
                                                                                        ------------------------------
         <S>                                                                            <C>              <C>       
         48% interest in an entity owning a product tanker                              $   6,890        $    8,266
         25% interest in two commercial aircraft on direct finance lease                    2,771             2,863
         17% interest in two trusts owning a total of three commercial aircraft,
                    two aircraft engines, and a portfolio of aircraft rotables              2,059             4,027
         50% interest in an entity owning a bulk carrier                                    1,872             2,277
         50% interest in an entity owning a product tanker                                  1,552             1,547
         60% interest in a trust that owned a commercial aircraft                              --             3,778
       -------------------------------------------------------------------------------------------       -----------
             Net investments                                                            $  15,144        $   22,758
                                                                                        ==========       ===========

</TABLE>

     During 1997,  the  Partnership  purchased an interest in an entity owning a
     product  tanker  for  $9.1  million  and  incurred  acquisition  and  lease
     negotiation  fees to FSI of $0.5  million.  In  addition,  during  1997 the
     Partnership received a partial interest in an entity that owns a commercial
     aircraft in exchange for past due receivables  and the outstanding  balance
     on a direct  finance  lease (see Note 7). The  Partnership  liquidated  its
     interest in this entity in January  1998 when the  aircraft was sold at its
     approximate book value. The Partnership  received  liquidating  proceeds of
     $3.7 million.


<PAGE>


                           PLM EQUIPMENT GROWTH FUND V
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

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

     The following  summarizes the financial  information  for the USPEs and the
     Partnership's  interest  therein as of and for the years ended  December 31
     (in thousands of dollars):

<TABLE>
<CAPTION>

                                          1998                        1997                          1996
                                                 Net                          Net                        Net
                                   Total         Interest        Total         Interest        Total    Interest
                                   USPEs            of           USPEs            of           USPEs      of
                                                 Partnership                  Partnership               Partnership
                                ---------------------------   ---------------------------   ---------------------------
            <S>                 <C>             <C>            <C>            <C>           <C>           <C>       
            Net Investments     $    44,678     $   15,144     $   67,208     $   22,758    $    48,660   $   12,673
            Lease revenues           12,317          7,194         17,510          5,868         30,337        7,054
            Net income (loss)         2,048            234          4,604           (264 )       (1,692 )       (116 )

</TABLE>

5.   Operating Segments

     The Partnership  operates or operated primarily in six operating  segments:
     aircraft leasing, marine container leasing, marine vessel leasing,  trailer
     leasing,  railcar leasing, and mobile offshore drilling unit (Rig) leasing.
     Each equipment leasing segment engages in short-term to mid-term  operating
     leases to a variety of customers.

     The General  Partner  evaluates  the  performance  of each segment based on
     profit or loss from  operations  before  allocation  of  interest  expense,
     general and  administrative  expenses,  and  certain  other  expenses.  The
     segments are managed  separately due to different  business  strategies for
     each operation.

     The  following  tables  present a summary  of the  operating  segments  (in
thousands of dollars):

<TABLE>
<CAPTION>

                                                      Marine     Marine
                                           Aircraft  Container   Vessel   Trailer    Railcar   All
     For the Year Ended December 31, 1998  Leasing   Leasing    Leasing   Leasing    Leasing   Other<F1>    Total
     ------------------------------------  -------   -------    -------   -------    -------   ----         -----
     <S>                                   <C>       <C>        <C>       <C>        <C>       <C>        <C>     
     Revenues
       Lease revenue                       $  8,903  $  1,217   $  7,478  $  2,817   $  2,496  $     --   $ 22,911
       Interest income and other                 45        11         74        --         25       249        404
       Gain on disposition of equipment          --       665         --       144          5        --        814
                                           ------------------------------------------------------------------------
         Total revenues                       8,948     1,893      7,552     2,961      2,526       249     24,129
                                           ------------------------------------------------------------------------

     Costs and expenses
       Operations support                       422        71      5,073       853        740        60      7,219
       Depreciation and amortization          6,846       846      1,894       809        695       147     11,237
       Interest expense                          --        --         --        --         --     1,950      1,950
       General and administrative expenses       68         1         54       632         48       757      1,560
       Provision  for  (recovery  of)  bad       --        --         --        30         (3 )      --         27
     debts
                                           ------------------------------------------------------------------------
         Total costs and expenses             7,336       918      7,021     2,324      1,480     2,914     21,993
                                           ------------------------------------------------------------------------
     Equity in net income (loss) of USPEs       386        --       (152 )      --         --        --        234
                                           ------------------------------------------------------------------------
                                           ========================================================================
         Net income (loss)                 $  1,998  $    975   $    379  $    637   $  1,046  $ (2,665 ) $  2,370
                                           ========================================================================

     As of December 31, 1998
         Total assets                      $ 24,765  $  3,281   $ 22,112  $  4,052   $  4.060  $  3.106   $ 61,376
                                           ========================================================================

<FN>

<F1>  Includes  interest  income  and costs  not  identifiable  to a  particular
segment,  such as general  and  administrative,  interest  expense,  and certain
operations support expense.

</FN>


</TABLE>



<PAGE>

                           PLM EQUIPMENT GROWTH FUND V
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

5.   Operating Segments (continued)

<TABLE>
<CAPTION>

                                                      Marine     Marine
                                           Aircraft  Container   Vessel   Trailer    Railcar   All
     For the Year Ended December 31, 1997  Leasing   Leasing    Leasing   Leasing    Leasing   Other<F1>    Total
     ------------------------------------  -------   -------    -------   -------    -------   ----         -----

     <S>                                   <C>       <C>        <C>       <C>        <C>       <C>        <C>     
     Revenues
       Lease revenue                       $  9,388  $  2,073   $ 12,760  $  2,758   $  2,514  $     --   $ 29,493
       Interest income and other                388        12         65        --         19       156        640
       Gain  (loss)  on   disposition   of    2,259       828      7,902         6         (5 )      --     10,990
     equipment
                                           ------------------------------------------------------------------------
         Total revenues                      12,035     2,913     20,727     2,764      2,528       156     41,123
                                           ------------------------------------------------------------------------

     Costs and expenses
       Operations support                       438       120     10,747     1,027        622        75     13,029
       Depreciation and amortization         10,037     1,286      2,413       994        813       150     15,693
       Interest expense                          --        --         --        --         --     2,593      2,593
       General and administrative expenses       53         1        116       563         46       933      1,712
       Provision  for  (recovery  of)  bad     (127 )       4         --       (20 )       54        --        (89 )
     debts
                                           ------------------------------------------------------------------------
         Total costs and expenses            10,401     1,411     13,276     2,564      1,535     3,751     32,938
                                           ------------------------------------------------------------------------
     Equity in net income (loss) of USPEs     1,215        --     (1,479 )      --         --        --       (264 )
                                           ------------------------------------------------------------------------
                                           ========================================================================
         Net income (loss)                 $  2,849  $  1,502   $  5,972  $    200   $    993  $ (3,595 ) $  7,921
                                           ========================================================================

     As of December 31, 1997
         Total assets                      $ 35,802  $  5,956   $ 15,953  $  5,061   $  4,796  $ 12,465   $ 80,033
                                           ========================================================================

<FN>

<F1>  Includes  interest  income  and costs  not  identifiable  to a  particular
segment,  such as general  and  administrative,  interest  expense,  and certain
operations support expense.

</FN>


</TABLE>

<TABLE>
<CAPTION>

                                                      Marine     Marine
                                           Aircraft  Container   Vessel     Rig      Railcar   All 
     For the Year Ended December 31, 1996  Leasing   Leasing    Leasing   Leasing    Leasing   Other<F2>    Total
     ------------------------------------  -------   -------    -------   -------    -------   ----         -----

     <S>                                   <C>       <C>        <C>       <C>        <C>       <C>        <C>     
     Revenues
       Lease revenue                       $  6,453  $  2,816   $ 14,005  $  1,062   $  2,390  $  2,037   $ 28,763
       Interest income and other                 26        --        406        --         --       928      1,360
       Gain  (loss)  on   disposition   of    3,259       426         --    10,521        (12 )       5     14,199
     equipment
                                           ------------------------------------------------------------------------
         Total revenues                       9,738     3,242     14,411    11,583      2,378     2,970     44,322
                                           ------------------------------------------------------------------------

     Costs and expenses
       Operations support                       389       167      9,794        56      1,023       641     12,070
       Depreciation and amortization          6,838     1,803      3,312       802        885     1,301     14,941
       Interest expense                          --        --         --        --         --     2,789      2,789
       General and administrative expenses       47         1         76         9         50     1,558      1,741
       Provision  for  (recovery  of)  bad      126        --         --        --        (28 )     126        224
     debts
                                           ------------------------------------------------------------------------
         Total costs and expenses             7,400     1,971     13,182       867      1,930     6,415     31,765
                                           ------------------------------------------------------------------------
     Equity in net income (loss) of USPEs      (265 )      --        149        --         --        --       (116 )
                                           ------------------------------------------------------------------------
                                           ========================================================================
         Net income (loss)                 $  2,073  $  1,271   $  1,378  $ 10,716   $    448  $ (3,445 ) $ 12,441
                                           ========================================================================

     As of December 31, 1996
         Total assets                      $ 46,689  $  9,608   $ 22,923  $     --   $  5,500  $ 13,699   $ 98,419
                                           ========================================================================

<FN>

<F2> Includes  interest  income  and  costs  not  identifiable  to a  particular
     segment, such as general and administrative,  interest expense, and certain
     operations  support expenses.  Also includes income and expenses from owned
     trailers.

</FN>

</TABLE>

6.   Geographic Information

     The  Partnership  owns  certain  equipment  that  is  leased  and  operated
     internationally.  A limited number of the  Partnership's  transactions  are
     denominated in a foreign  currency.  Gains or losses resulting from foreign
     currency transactions are included in the results of operations and are not
     material.






<PAGE>



                           PLM EQUIPMENT GROWTH FUND V
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

6.   Geographic Information (continued)

     The Partnership  leases or leased its aircraft,  railcars,  mobile offshore
     drilling  unit,  and  trailers  to  lessees  domiciled  in five  geographic
     regions: North America, South America, Europe, Asia, and Australia.  Marine
     vessels and marine  containers are leased to multiple  lessees in different
     regions that operate worldwide.

     The table below sets forth  lease  revenues  by  geographic  region for the
     Partnership's owned equipment and investments in USPEs, grouped by domicile
     of the lessee as of and for the years ended  December 31 (in  thousands  of
     dollars):

<TABLE>
<CAPTION>

                                             Owned Equipment                       Investments in USPEs
                                   -------------------------------------     ----------------------------------
                Region                 1998        1997        1996             1998        1997        1996
       --------------------------  -------------------------------------    -----------------------------------
       <S>                         <C>          <C>         <C>             <C>         <C>          <C>        
       United States               $    7,109   $   7,553   $   7,806       $       --  $       --   $      --  
       Canada                           4,096       4,096       1,821               --          --       1,509
       South America                    3,011       3,011         763               --          --          --
       Asia                                --          --       1,062               --          --          --
       Europe                              --          --         493              780       1,765       1,765
       Rest of the world                8,695      14,833      16,818            6,414       4,103       3,780
                                   -------------------------------------    -------------------------------------
                                   =====================================    =====================================
         Lease revenues            $   22,911   $  29,493   $  28,763       $    7,194  $    5,868   $   7,054  
                                   =====================================    =====================================
</TABLE>

     The following table sets forth net income (loss)  information by region for
     the owned  equipment and  investments in USPEs for the years ended December
     31 (in thousands of dollars):

<TABLE>
<CAPTION>

                                                 Owned Equipment                     Investments in USPEs
                                       -------------------------------------  -----------------------------------
                     Region                    1998         1997        1996          1998         1997        1996
       -----------------------------------  -------------------------------------  -----------------------------------
       <S>                                  <C>         <C>           <C>          <C>         <C>            <C>       
       United States                        $    2,199  $    4,549    $  1,543     $      --   $       --     $    --   
       Canada                                    1,555         926        (555 )          --           --        (753 )
       South America                              (478 )    (2,712 )    (1,419 )          --           --          --
       Asia                                         --          --      10,715            --           --          --
       Europe                                       --          --       3,190            39          773         490
       Mexico                                       --          --          --           407          442          (2 )
       Rest of the world                         1,505       8,950       2,500          (152 )     (1,479 )       149
                                            -------------------------------------  -------------------------------------
         Regional income (loss)                  4,781      11,713      15,974           294         (264 )      (116 )
       Administrative and other                 (2,645 )    (3,528 )    (3,417 )         (60 )         --          --
                                            =====================================  =====================================
         Net income (loss)                  $    2,136  $    8,185    $ 12,557     $     234   $     (264 )   $  (116 ) 
                                            =====================================  =====================================
</TABLE>

     The net book value of these  assets as of  December  31 are as follows  (in
thousands of dollars):

<TABLE>
<CAPTION>

                                             Owned Equipment                       Investments in USPEs
                                   -------------------------------------     ----------------------------------
                Region                 1998        1997        1996             1998        1997        1996
       --------------------------  -------------------------------------    -----------------------------------
       <S>                         <C>          <C>         <C>             <C>         <C>          <C>        
       United States               $   11,670   $  14,602   $  20,465       $       --  $       --   $      --  
       Canada                          10,467      11,366      14,065               --          --          --
       South America                    5,008       8,345      13,909               --          --          --
       Europe                              --          --          --            2,059       4,027       4,565
       Mexico                              --          --          --            2,772       2,863       2,768
       Rest of the world               13,659       8,269      25,024           10,313      12,090       5,340
                                   -------------------------------------    -------------------------------------
                                       40,804      42,582      73,463           15,144      18,980      12,673
       Equipment held for sale             --          --          --               --       3,778          --
                                   =====================================    =====================================
         Net book value            $   40,804   $  42,582   $  73,463       $   15,144  $   22,758   $  12,673  
                                   =====================================    =====================================
</TABLE>



<PAGE>


                           PLM EQUIPMENT GROWTH FUND V
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

7.   Net Investment in Direct Finance Lease

     During 1995, the Partnership entered into a direct finance lease related to
     the installation of a Stage III hushkit on an Boeing 727-200 aircraft, at a
     cost of $2.5  million.  The  Partnership  incurred  acquisition  and  lease
     negotiation  fees of  $139,000 to TEC  related to this  transaction.  Gross
     lease payments of $3.8 million were to be received over a five-year period,
     which commenced in December 1995.

     During 1997, the lessee  encountered  financial  difficulties.  The General
     Partner   established   reserves  against  these  receivables  due  to  the
     determination  that  collection  of these lease  payments  were  uncertain.
     During June 1997, the Partnership, together with two affiliated programs to
     which the lessee also owed  past-due  receivables,  repossessed  the Boeing
     727-200  aircraft.  This is the aircraft on which the Stage III hushkit was
     installed  and that was owned by the lessee and pledged as security for the
     financing of the hushkit. As a result, the balance due from the lessee from
     the direct  finance lease and the balances due to affiliated  programs were
     reclassified to an investment in an entity that owns a commercial  aircraft
     (see Note 4). The fair market value of the  Partnership's  interest in this
     aircraft approximated its outstanding receivable from the lessee.

8.   Notes Payable

     In  November  1991,  the   Partnership   borrowed  $38.0  million  under  a
     nonrecourse  loan  agreement.  The  loan  was  secured  by  certain  marine
     containers,  five marine  vessels,  and one mobile  offshore  drilling unit
     owned by the Partnership.

     During 1996,  the  Partnership  sold some of the assets in which the lender
     had a secured  interest.  On September 26, 1996,  the existing  senior loan
     agreement  was amended and restated to reduce the interest  rate,  to grant
     increased  flexibility  in  allowable  collateral,   to  pledge  additional
     equipment to the lenders,  and to amend the loan repayment schedule from 16
     consecutive  equal  quarterly  installments  to  20  consecutive  quarterly
     installments  with lower payments of principal for the first four payments.
     The Partnership  incurred a loan amendment fee of $133,000 to the lender in
     connection with the restatement of this loan.  Pursuant to the terms of the
     loan  agreement,   the  Partnership  must  comply  with  certain  financial
     covenants and maintain certain financial ratios.

     On December 29, 1997,  the existing  senior loan  agreement was amended and
     restated to allow the  Partnership to deduct the next  scheduled  principal
     payment from the equipment sales  proceeds,  which had previously been used
     to paydown the loan.

     The  Partnership  made  the  regularly  scheduled  principal  payments  and
     quarterly interest payments at a rate of LIBOR plus 1.2% per annum (6.6% at
     December  31,  1998 and 7.0% at  December  31,  1997) to the  lender of the
     senior loan during 1998 and 1997. The  Partnership  also paid the lender of
     the senior loan an additional $0.5 million from equipment sale proceeds, as
     required by the loan agreement.

     The General  Partner had entered into a joint $50.0 million credit facility
     (the Committed Bridge Facility) on behalf of the Partnership, PLM Equipment
     Growth Fund VI, PLM  Equipment  Growth & Income  Fund VII and  Professional
     Lease  Management  Income  Fund  I,  all  affiliated  investment  programs;
     American Finance Group,  Inc.(AFG), a subsidiary of PLM International,  and
     TEC  Acquisub,  Inc.,  an indirect  wholly-owned  subsidiary of the General
     Partner. The Committed Bridge Facility was amended and restated on December
     15, 1998, to remove the Partnership and AFG as eligible borrowers.

9.   Concentrations of Credit Risk

     As of December 31, 1998, the only  Partnership  customer that accounted for
     10% or more of the total consolidated  revenues for the owned equipment and
     partially owned equipment during 1998 was


<PAGE>


                           PLM EQUIPMENT GROWTH FUND V
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

9.   Concentrations of Credit Risk (continued)

     Canadian Airlines  International  (10% in 1998). No single lessee accounted
     for more than 10% of the consolidated revenues for the years ended December
     31, 1997 and 1996. In 1996,  however,  Dual Marine Company,  also a lessee,
     purchased the mobile offshore drilling unit that they were leasing from the
     Partnership.  The lease  revenues and the gain from the sale  accounted for
     23% of total consolidated revenues during 1996.

     As of  December  31,  1998 and  1997,  the  General  Partner  believes  the
     Partnership  had no other  significant  concentrations  of credit risk that
     could have a material adverse effect on the Partnership.

10.  Income Taxes

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

     As of December 31, 1998, there were temporary  differences of approximately
     $40.7 million  between the financial  statement  carrying values of certain
     assets and  liabilities and the federal income tax basis of such assets and
     liabilities,   primarily  due  to  differences  in  depreciation   methods,
     equipment  reserves,  provisions for bad debts,  lessees' prepaid deposits,
     and the tax treatment of underwriting commissions and syndication costs.

11.  Contingencies

     PLM International, (the Company) and various of its affiliates are named as
     defendants  in a lawsuit  filed as a purported  class action on January 22,
     1997 in the  Circuit  Court of Mobile  County,  Mobile,  Alabama,  Case No.
     CV-97-251 (the Koch action).  Plaintiffs,  who filed the complaint on their
     own and on behalf of all class members similarly  situated (the class), are
     six individuals  who invested in certain  California  limited  partnerships
     (the  Partnerships) for which the Company's  wholly-owned  subsidiary,  PLM
     Financial Services, Inc. (FSI), acts as the general partner,  including the
     Partnership, PLM Equipment Growth Funds IV and VI, and PLM Equipment Growth
     & Income Fund VII (the Growth  Funds).  The state court ex parte  certified
     the action as a class action  (i.e.,  solely upon  plaintiffs'  request and
     without the Company being given the opportunity to file an opposition). The
     complaint  asserts  eight  causes  of action  against  all  defendants,  as
     follows:  fraud and deceit,  suppression,  negligent  misrepresentation and
     suppression,  intentional  breach of fiduciary  duty,  negligent  breach of
     fiduciary   duty,   unjust   enrichment,    conversion,   and   conspiracy.
     Additionally,  plaintiffs  allege a cause of action  against PLM Securities
     Corp. for breach of third party  beneficiary  contracts in violation of the
     National   Association  of  Securities  Dealers  rules  of  fair  practice.
     Plaintiffs allege that each defendant owed plaintiffs and the class certain
     duties due to their status as fiduciaries,  financial advisors, agents, and
     control persons. Based on these duties, plaintiffs assert liability against
     defendants for improper sales and marketing practices, mismanagement of the
     Growth Funds,  and  concealing  such  mismanagement  from  investors in the
     Growth  Funds.  Plaintiffs  seek  unspecified  compensatory  and  recissory
     damages,  as well as punitive  damages,  and have  offered to tender  their
     limited partnership units back to the defendants.

     In March 1997, the defendants  removed the Koch action from the state court
     to the United States  District Court for the Southern  District of Alabama,
     Southern  Division  (Civil Action No.  97-0177-BH-C)  based on the district
     court's diversity  jurisdiction,  following which plaintiffs filed a motion
     to remand the action to the state  court.  Removal of the action to federal
     court  automatically  nullified the state court's ex parte certification of
     the class. In September 1997, the district court denied  plaintiffs' motion
     to remand the action to state court and  dismissed  without  prejudice  the
     individual claims of the California  plaintiff,  reasoning that he had been
     fraudulently  joined as a plaintiff.  In October 1997,  defendants  filed a
     motion to compel arbitration of plaintiffs'  claims,  based on an agreement
     to arbitrate contained in the limited partnership  agreement of each Growth
     Fund, and to



<PAGE>


                           PLM EQUIPMENT GROWTH FUND V
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

11.  Contingencies (continued)

     stay  further   proceedings   pending  the  outcome  of  such  arbitration.
     Notwithstanding   plaintiffs'   opposition,   the  district  court  granted
     defendants' motion in December 1997.

     Following various unsuccessful requests that the district court reverse, or
     otherwise  certify  for appeal,  its order  denying  plaintiffs'  motion to
     remand the case to state court and dismissing  the  California  plaintiff's
     claims,  plaintiffs  filed with the U.S.  Court of Appeals for the Eleventh
     Circuit a petition  for a writ of mandamus  seeking to reverse the district
     court's order. The Eleventh Circuit denied plaintiffs' petition in November
     1997,  and further  denied  plaintiffs  subsequent  motion in the  Eleventh
     Circuit  for a  rehearing  on this  issue.  Plaintiffs  also  appealed  the
     district court's order granting  defendants' motion to compel  arbitration,
     but in June 1998 voluntarily  dismissed their appeal pending  settlement of
     the Koch action, as discussed below.

     On June 5, 1997, the Company and the affiliates who are also  defendants in
     the Koch action were named as defendants in another  purported class action
     filed in the San Francisco Superior Court, San Francisco,  California, Case
     No.  987062  (the  Romei  action).  The  plaintiff  is an  investor  in the
     Partnership, and filed the complaint on her own behalf and on behalf of all
     class members similarly situated who invested in certain California limited
     partnerships  for  which FSI acts as the  general  partner,  including  the
     Growth Funds. The complaint alleges the same facts and the same nine causes
     of action as in the Koch  action,  plus  five  additional  causes of action
     against  all  of the  defendants,  as  follows:  violations  of  California
     Business and  Professions  Code Sections  17200, et seq. for alleged unfair
     and deceptive practices,  constructive fraud, unjust enrichment, violations
     of  California  Corporations  Code  Section  1507,  and a claim for  treble
     damages under California Civil Code Section 3345.

     On July 31, 1997, defendants filed with the district court for the Northern
     District of California  (Case No.  C-97-2847 WHO) a petition (the petition)
     under  the  Federal  Arbitration  Act  seeking  to  compel  arbitration  of
     plaintiff's  claims and for an order  staying the state  court  proceedings
     pending the outcome of the  arbitration.  In  connection  with this motion,
     plaintiff  agreed to a stay of the state court action  pending the district
     court's  decision on the petition to compel  arbitration.  In October 1997,
     the district court denied the Company's petition to compel arbitration, but
     in November 1997,  agreed to hear the Company's motion for  reconsideration
     of this order.  The hearing on this motion has been taken off  calendar and
     the district  court has  dismissed the petition  pending  settlement of the
     Romei action,  as discussed  below.  The state court action continues to be
     stayed pending such  resolution.  In connection  with her opposition to the
     petition to compel  arbitration,  plaintiff filed an amended complaint with
     the state  court in  August  1997  alleging  two new  causes of action  for
     violations  of  the   California   Securities   Law  of  1968   (California
     Corporations Code Sections 25400 and 25500) and for violation of California
     Civil Code Sections 1709 and 1710.  Plaintiff also served certain discovery
     requests  on  defendants.  Because of the stay,  no response to the amended
     complaint or to the discovery is currently required.

     In May 1998,  all  parties  to the Koch and Romei  actions  entered  into a
     memorandum  of  understanding  (MOU)  related  to the  settlement  of those
     actions (the monetary settlement).  The monetary settlement contemplated by
     the MOU provides for stipulating to a class for settlement purposes,  and a
     settlement  and release of all claims  against  defendants  and third party
     brokers in exchange  for payment for the benefit of the class of up to $6.0
     million.  The final  settlement  amount will depend on the number of claims
     filed by authorized  claimants who are members of the class,  the amount of
     the  administrative  costs incurred in connection with the settlement,  and
     the amount of attorneys' fees awarded by the Alabama  district  court.  The
     Company will pay up to $0.3 million of the  monetary  settlement,  with the
     remainder being funded by an insurance policy.

     The parties to the monetary  settlement have also agreed in principle to an
     equitable settlement (the equitable settlement) which provides, among other
     things,  (a) for the extension of the operating  lives of the  Partnership,
     PLM Equipment  Growth Fund VI, and PLM  Equipment  Growth & Income Fund VII
     (the Funds) by judicial amendment to each of their partnership  agreements,
     such that FSI, the


<PAGE>


                           PLM EQUIPMENT GROWTH FUND V
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

11.  Contingencies (continued)

     general partner of each such Fund, will be permitted to reinvest cash flow,
     surplus partnership funds or retained proceeds in additional equipment into
     the year 2004, and will liquidate the partnerships'  equipment in 2006; (b)
     that FSI be  entitled  to earn front end fees  (including  acquisition  and
     lease negotiation fees) in excess of the compensatory limitations set forth
     in the North American Securities Administrators Association, Inc. Statement
     of Policy by judicial  amendment  to the  Partnership  Agreements  for each
     Fund; (c) for a one time redemption of up to 10% of the  outstanding  units
     of each Fund at 80% of such  partnership's net asset value; and (d) for the
     deferral of a portion of FSI's  management  fees. The equitable  settlement
     also provides for payment of the equitable settlement  attorneys' fees from
     Partnership funds in the event that  distributions paid to investors in the
     Funds during the extension period reach a certain internal rate of return.

     Defendants  will  continue to deny each of the claims and  contentions  and
     admit no  liability  in  connection  with  the  proposed  settlements.  The
     monetary settlement remains subject to numerous  conditions,  including but
     not limited to: (a)  agreement and execution by the parties of a settlement
     agreement (the settlement  agreement),  (b) notice to and  certification of
     the  monetary  class  for  purposes  of the  monetary  settlement,  and (c)
     preliminary  and final  approval of the monetary  settlement by the Alabama
     district  court.  The  equitable  settlement  remains  subject to  numerous
     conditions,  including  but not limited to: (a)  agreement and execution by
     the  parties  of the  settlement  agreement,  (b)  notice  to  the  current
     unitholders in the Funds (the  equitable  class) and  certification  of the
     equitable class for purposes of the equitable settlement,  (c) preparation,
     review by the Securities and Exchange  Commission  (SEC), and dissemination
     to the members of the equitable class of solicitation  statements regarding
     the proposed  extensions,  (d)  disapproval by less than 50% of the limited
     partners  in each of the Funds of the  proposed  amendments  to the limited
     partnership agreements, (e) judicial approval of the proposed amendments to
     the limited partnership agreements,  and (f) preliminary and final approval
     of the equitable  settlement  by the Alabama  district  court.  The parties
     submitted  the  settlement  agreement  to the  Alabama  district  court  on
     February 12,  1999,  and the  preliminary  class  certification  hearing is
     scheduled  for March 24,  1999.  If the district  court grants  preliminary
     approval,  notices to the monetary  class and equitable  class will be sent
     following review by the SEC of the  solicitation  statements to be prepared
     in connection with the equitable  settlement.  The monetary settlement,  if
     approved, will go forward regardless of whether the equitable settlement is
     approved or not. The Company  continues to believe that the  allegations of
     the Koch and Romei  actions  are  completely  without  merit and intends to
     continue to defend this matter vigorously if the monetary settlement is not
     consummated.

     The  Partnership  is involved as plaintiff  or  defendant in various  other
     legal actions  incident to its business.  Management  does not believe that
     any of these  actions  will be material to the  financial  condition of the
     Company.

12.  Subsequent Event

     During  February  1999,  the  Partnership  made  its  regularly   scheduled
     principal payment of $2.0 million to the lender of the senior loan.

     During February and March 1999, the  Partnership  sold part of its interest
     in two trusts that owned a total of three stage II commercial aircraft with
     a net  book  value  of $1.7  million  for  proceeds  of $3.0  million.  The
     Partnership  expects to sell its  remaining  interest in the two trust that
     still  own two  stage II  aircraft  engines  and a  portfolio  of  aircraft
     rotables before the end of March 1999.





<PAGE>


                           PLM EQUIPMENT GROWTH FUND V

                                INDEX OF EXHIBITS



  Exhibit                                                                Page

     4.   Limited Partnership Agreement of Partnership.                  *     

    10.1  Management  Agreement  between the  Partnership  and           *
          PLM  Investment Management, Inc.

    10.2  Amended and Restated $38,000,000 Loan Agreement, dated as of 
          September 26, 1996.                                            *

    10.3  Amendment No. 1 to the Amended and Restated $38,000,000 
          Loan Agreement,  dated as of  December 29, 1997.               *

    24.   Powers of Attorney.                                          51-53


*  Incorporated by reference.  See page 29 of this report.