INDEPENDENT AUDITORS' REPORT






The Owners
TWA Trust S/N 49183

We have audited the accompanying  balance sheet of the TWA Trust S/N 49183 as of
December 31, 1998, and the related statements of operations,  changes in owners'
equity, and cash flows for the year then ended.  These financial  statements are
the responsibility of the owner's  management.  Our responsibility is to express
an opinion on these financial statements based on our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of the TWA Trust S/N 49183 as of
December 31, 1998,  and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles. The
accompanying  1999 and 1997  financial  statements  were not  audited by us, and
accordingly, we express no opinion or any other form of assurance on them.



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


<PAGE>

<TABLE>
<CAPTION>


                                             TWA TRUST S/N 49183
                                                  (A TRUST)
                                                BALANCE SHEETS
                                                 DECEMBER 31,
                                          (IN THOUSANDS OF DOLLARS)





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

  <S>                                                                    <C>               <C>
  Aircraft equipment held for lease, at cost                             $       13,957    $        13,957
  Less accumulated depreciation                                                 (10,468)            (6,978)
                                                                         -----------------------------------
      Net equipment                                                               3,489              6,979

  Accounts receivable                                                               200                 --
  Lease negotiation fees, less accumulated
        amortization of $34 in 1999 and $17 in 1998                                  34                 51
  Prepaid expenses                                                                    2                  2
                                                                         -----------------------------------
        Total assets                                                     $        3,725    $         7,032
                                                                         ===================================


  LIABILITIES AND OWNERS' EQUITY

  Liabilities:
  Accounts payable and accrued expenses                                  $             1    $            2
  Due to affiliates                                                                   20                20
  Lessee deposits                                                                    123               123
                                                                          -----------------------------------
    Total liabilities                                                                144               145

  Owners' equity                                                                   3,581             6,887
                                                                          ------------------------------------

        Total liabilities and owners' equity                             $         3,725    $        7,032
                                                                          ===================================



</TABLE>
















      See accompanying auditors' report and notes to financial statements.



<PAGE>
<TABLE>
<CAPTION>


                                             TWA TRUST S/N 49183
                                                  (A TRUST)
                                           STATEMENTS OF OPERATIONS
                                       FOR THE YEARS ENDED DECEMBER 31,
                                          (IN THOUSANDS OF DOLLARS)


                                                                                                         For the period
                                                                                                          from 12/30/97
                                                                                                           (inception)
                                                                                                             through
                                                                       1999                 1998            12/31/97
                                                                    (unaudited)                            (unaudited)
                                                                 --------------------------------------------------------
  REVENUES

  <S>                                                               <C>                 <C>                 <C>
  Lease revenue                                                   $        2,401      $         2,355     $         --
                                                                  -------------------------------------------------------
    Total revenues                                                         2,401                2,355               --
                                                                  -------------------------------------------------------

  EXPENSES

  Depreciation and amortization expense                                    3,507                6,995               --
  Management fees to affiliate                                               120                  118               --
  Insurance expense                                                           18                    9               --
  Administrative expenses to affiliates                                       28                   20               --
  Administrative expenses                                                     --                    1                1
                                                                  ------------------------------------------------------
    Total expenses                                                         3,673                7,143                1
                                                                  -------------------------------------------------------

        Net loss                                                  $       (1,272)     $        (4,788)    $         (1)
                                                                  =======================================================


</TABLE>













      See accompanying auditors' report and notes to financial statements.


<PAGE>



                               TWA TRUST S/N 49183
                                    (A TRUST)
                 STATEMENTS OF CHANGES IN OWNERS' EQUITY FOR THE
  PERIOD FROM INCEPTION DECEMBER 30, 1997 THROUGH DECEMBER 31, 1997 AND FOR THE
                     YEARS ENDED DECEMBER 31, 1998 AND 1999
                            (IN THOUSANDS OF DOLLARS)







  Owners' capital contribution                              $        1,365

  Net loss                                                              (1)
                                                            ----------------

   Owners' equity at December 31, 1997 (unaudited)                   1,364

  Owners' capital contribution                                      12,660

  Net loss                                                          (4,788)

  Distributions paid                                                (2,349)
                                                            ----------------

   Owners' equity at December 31, 1998                               6,887

  Net loss                                                          (1,272)

  Distributions paid                                                (2,034)
                                                            ----------------

    Owners' equity at December 31, 1999 (unaudited)         $        3,581
                                                            ================

























      See accompanying auditors' report and notes to financial statements.


<PAGE>
<TABLE>
<CAPTION>



                                             TWA TRUST S/N 49183
                                                  (A TRUST)
                                           STATEMENTS OF CASH FLOWS
                                       FOR THE YEARS ENDED DECEMBER 31,
                                          (IN THOUSANDS OF DOLLARS)


                                                                                                       For the period
                                                                                                       from 12/30/97
                                                                                                        (inception)
                                                                                                          through
                                                                      1999                1998            12/31/97
                                                                  (unaudited)                           (unaudited)
                                                               ---------------------------------------------------------

  OPERATING ACTIVITIES

  <S>                                                           <C>                <C>               <C>
  Net loss                                                      $        (1,272)   $        (4,788 ) $             (1)
  Adjustments to reconcile net loss to net cash
      provided by (used in) operating activities:
    Depreciation and amortization                                         3,507              6,995                 --
    Changes in operating assets and liabilities:
      Accounts receivable                                                  (200)                --                 --
      Prepaid expenses                                                       --                 (2)                --
      Accounts payable and accrued expenses                                  (1)                 1                  1
      Due to affiliates                                                      --                 20                 --
      Lessee deposits                                                        --                123                 --
                                                                --------------------------------------------------------
        Net cash provided by operating activities                         2,034              2,349                 --
                                                                --------------------------------------------------------

  Investing activities

  Payments for the purchase of aircraft                                      --            (12,285)                --
  Payment for aircraft acquisition deposit                                   --                 --             (1,365)
  Payment of acquisition fees to affiliate                                   --               (307)                --
  Payment of lease negoitation fees to affiliate                             --                (68)                --
                                                                --------------------------------------------------------
        Net cash used in investing activities                                --            (12,660)            (1,365)
                                                                --------------------------------------------------------

  Financing activities

  Owners' capital contributions                                              --             12,660              1,365
  Distributions paid                                                     (2,034)            (2,349)                --
                                                                --------------------------------------------------------
        Net cash (used in) provided by financing activities              (2,034)            10,311              1,365
                                                                --------------------------------------------------------

  Net change in cash and cash equivalents                                    --                 --                 --
  Cash and cash equivalents at beginning of period                           --                 --                 --
                                                                --------------------------------------------------------
  Cash and cash equivalents at end of year                      $            --    $            --   $             --
                                                                ========================================================
</TABLE>












      See accompanying auditors' report and notes to financial statements.


<PAGE>



                               TWA TRUST S/N 49183
                                    (A TRUST)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     ORGANIZATION

In December 1997, PLM Equipment Growth & Income Fund VII (EGFVII),  a California
limited partnership, and Professional Lease Management Income Fund I (Fund I), a
Delaware Limited Liability Company,  (the Owners) entered into a Trust Agreement
(the  Trust)  with  PLM  Transportation  Equipment  Corp.(TEC),  a  wholly-owned
subsidiary  of PLM  International,  Inc.,  by the  terms of  which  TEC is owner
trustee for the benefit of the Owners as equal  co-beneficiaries.  The Trust was
established for the purpose of purchasing a McDonnell  Douglas MD-82  commercial
aircraft.  The Trust has no employees nor operations other than the operation of
the MD-82 commercial aircraft.
The Trust estate is owned 50% by EGF VII and 50% by Fund I.

PLM Financial  Services  Inc.,  (FSI) is the General  Partner of EGF VII and the
Manager of Fund I. FSI is a wholly-owned subsidiary of PLM International, Inc.

The aircraft  was  purchased  in January  1998 for $13.7  million.  EGF VII paid
acquistion and lease  negotiation fees of $0.4 million to FSI, no fees were paid
by Fund I. The aircraft was purchased subject to a lease to Trans World Airlines
with a term expiring in December 2001.

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

     OPERATIONS

The aircraft in the Trust 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 Trust for managing the aircraft (Note
2). FSI, in conjunction with its subsidiaries, sells transportation equipment to
investor programs and third parties,  manages pools of transportation  equipment
under agreements with the investor programs, and is a general partner in limited
partnerships.

     CASH AND CASH EQUIVALENTS

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

     ACCOUNTING FOR LEASES

The  aircraft  under the Trust is leased  under an  operating  lease.  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 in accordance  with Financial  Accounting  Standards
Board  Statement No. 13 "Accounting  for Leases".  Lease  origination  costs are
amortized equally over 48 months.

     DEPRECIATION

Depreciation  of  aircraft  equipment  is  computed  using the  double-declining
balance method,  taking a full month's depreciation in the month of acquisition,
based  upon an  estimated  useful  life  of 4  years.  Acquisition  fees of $0.3
million,  which were paid to FSI,  were  capitalized  as part of the cost of the
equipment and amortized over the life of the aircraft.


<PAGE>



                               TWA TRUST S/N 49183
                                    (A TRUST)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     AIRCRAFT

In accordance with the Financial  Accounting  Standards Board Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of", FSI reviews the carrying  value of the aircraft under the Trust
at least quarterly, and whenever circumstances indicated that the carrying value
of the aircraft may not be  recoverable  in relation to expected  future  market
conditions for the purpose of assessing  recoverability of the recorded amounts.
If  projected  undiscounted  future  cash flows and fair value are less than the
carrying value of the aircraft,  a loss on revaluation would have been recorded.
No reductions to the carrying value of the aircraft were required during 1999 or
1998.

     REPAIRS AND MAINTENANCE

Repair and  maintenance  for the  aircraft  are  usually the  obligation  of the
lessee.

     NET LOSS AND CASH DISTRIBUTIONS TO OWNERS

The net loss and cash  distributions  of the Trust are  allocated to the Owners.
The net loss are generally  allocated to the Owners based on their percentage of
ownership  in  the  Trust.  Certain  depreciable  and  amortizable  amounts  are
allocated  specifically to EGF VII, such as depreciation on acquisition fees and
amortization on lease negotiation fees. Cash  distributions are allocated 50% to
EGF VII and 50% to Fund I.

     COMPREHENSIVE INCOME

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

2.   GENERAL PARTNER AND TRANSACTIONS WITH AFFILIATES

Under the equipment management agreement,  IMI receives a monthly management fee
equal to the  lessor of (i) the fees that  would be  charged  by an  independent
third party for similar  services for similar  equipment or (ii) 5% of the gross
lease revenues  attributable  to equipment that is subject to operating  leases.
The Trust's management fee expense to affiliate was $0.1 million during 1999 and
1998.

The Trust reimbursed FSI $28,000 and $20,000 during 1999 and 1998, respectively,
for data processing and  administrative  expenses  directly  attributable to the
Trust. No fees were reimbursed to FSI during 1997.

Trust  management  fees  payable to IMI was $20,000 as of December  31, 1999 and
1998.



<PAGE>



                               TWA TRUST S/N 49183
                                    (A TRUST)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

3.   EQUIPMENT

Revenues were earned by placing the aircraft on an operating  lease. A four-year
lease with Trans World Airlines was signed upon the  acquisition of the aircraft
in 1998.

The aircraft in the Trust is used as  collateral  against the senior loan of the
Owners.

The  aircraft  lease is  accounted  for as an operating  lease.  Future  minimum
rentals under  noncancelable  operating  leases, as of December 31, 1999, during
each of the next five years are approximately $2.4 million in 2000, $2.3 million
in 2001, and $0 thereafter.

4.   GEOGRAPHIC INFORMATION

The aircraft was leased and operated in North America.

5.   INCOME TAXES

The Trust is not subject to income  taxes,  as any income or loss is included in
the tax  return of the  individual  partners  and  members  owning  the  Owners.
Accordingly,  no  provision  for  income  taxes has been  made in the  financial
statements of the Trust.

As of December 31, 1999, the financial  statement  carrying amount of assets and
liabilities  was  approximately  $4.5 million lower than the federal  income tax
basis  of  such  assets  and  liabilities,   primarily  due  to  differences  in
depreciation methods and lessees' prepaid deposits.

6.   CONCENTRATIONS OF CREDIT RISK

Financial instruments,  which potentially subject the Trust to concentrations of
credit risk, consist principally of lease receivables. The aircraft in the Trust
was on lease to only one customer during 1999 and 1998. This lessee, Trans World
Airlines, accounted for all of the revenue.

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