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

                                   FORM 10- K

                                   (Mark One)

[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

                 For the fiscal year ended     DECEMBER 31, 2001
                                               -----------------

                                       OR

     [          ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                               SECURITIES EXCHANGE
                          ACT OF 1934 [NO FEE REQUIRED]

                   For the transition period from          to

                     Commission file number          0-19137
                                                     -------

                  AIRFUND II INTERNATIONAL LIMITED PARTNERSHIP
                  --------------------------------------------
             (Exact name of registrant as specified in its charter)

    Massachusetts                                                 04-3057290
    (State or other jurisdiction of                             (IRS Employer
   incorporation or organization)                         Identification No.)

    88 Broad Street, Boston, MA                                        02110
   (Address of principal executive offices)                        (Zip Code)

      Registrant's telephone number, including area code     (617) 854-5800
                                                             --------------

    Securities registered pursuant to Section 12(b) of the Act          NONE
                                                                        ----

     Title of each class                        Name of each exchange on which
                                   registered


           Securities registered pursuant to Section 12(g) of the Act:

            2,714,647 Units Representing Limited Partnership Interest
            ---------------------------------------------------------
                                (Title of class)

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
                                                         -

Indicate  by  check mark if disclosure of delinquent filers pursuant to Item 405
of  Regulation S-K is not contained herein, and will not be contained herein, to
the  best of registrant's knowledge, in definite proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form  10-K.  [  ]

State  the  aggregate  market value of the voting stock held by nonaffiliates of
the  registrant.  Not  applicable.  Securities  are  nonvoting for this purpose.
Refer  to  Item  12  for  further  information.


<PAGE>
                  AIRFUND II INTERNATIONAL LIMITED PARTNERSHIP

                                   FORM 10- K

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>


                                                  Page

PART I
<S>       <C>                                                                                    <C>
Item 1.   Business                                                                                3

Item 2.   Properties                                                                              6

Item 3.   Legal Proceedings                                                                       6

Item 4.   Submission of Matters to a Vote of Security Holders                                    10


PART II

Item 5.   Market for the Partnership's Securities and Related Security Holder Matters            11

Item 6.   Selected Financial Data                                                                12

Item 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations  13

Item 7A.  Quantitative and Qualitative Disclosures about Market Risks                            21

Item 8.   Financial Statements and Supplementary Data                                            21

Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   45


PART III

Item 10.  Directors and Executive Officers of the Partnership                                    46

Item 11.  Executive Compensation                                                                 47

Item 12.  Security Ownership of Certain Beneficial Owners and Management                         48

Item 13.  Certain Relationships and Related Transactions                                         48


PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K                        50
</TABLE>




<PAGE>
PART  I

Item  1.  Business.
-------------------

     (a)  General  Development  of  Business

AIRFUND  II  International Limited Partnership (the "Partnership") was organized
as a limited partnership under the Massachusetts Uniform Limited Partnership Act
(the "Uniform Act") on July 20, 1989 for the purpose of acquiring and leasing to
third  parties  a  specified  portfolio  of used commercial aircraft.  Partners'
capital  initially consisted of contributions of $1,000 from the General Partner
(AFG Aircraft Management Corporation, a Massachusetts corporation) and $100 from
the  Initial  Limited  Partner  (AFG  Assignor  Corporation,  a  Massachusetts
corporation).  The  Partnership issued 2,714,647 units, representing assignments
of limited partnership interests (the "Units"), to 4,192 investors.  Unitholders
and  Limited  Partners (other than the Initial Limited Partner) are collectively
referred  to as Recognized Owners.  The General Partner is an affiliate of Equis
Financial  Group Limited Partnership (formerly known as American Finance Group),
a  Massachusetts  limited  partnership ("EFG").  The common stock of the General
Partner  is owned by EFG.  The General Partner is not required to make any other
capital  contributions  to  the  Partnership except as may be required under the
Uniform  Act  and  Section  6.1(b)  of  the  Amended  and Restated Agreement and
Certificate of Limited Partnership (the "Restated Agreement, as amended", or the
"Partnership  Agreement").

     (b)  Financial  Information  About  Industry  Segments

The  Partnership  is  engaged  in only one operating industry segment: financial
services.  Historically,  the  Partnership has acquired used commercial aircraft
and  leased  the  aircraft to creditworthy lessees on a full-payout or operating
lease  basis.  Full-payout  leases  are  those  in  which aggregate undiscounted
noncancellable  rents  equal  or  exceed  the  acquisition  cost  of  the leased
equipment.  Operating  leases  are  those  in  which  the aggregate undiscounted
noncancellable  rental payments are less than the acquisition cost of the leased
equipment.  Industry  segment  data  is  not  applicable.

See  "Management's Discussion and Analysis of Financial Condition and Results of
Operations"  included  in  Item  7  herein.


     (c)  Narrative  Description  of  Business

The  Partnership  was  organized  to  acquire  a  specified  portfolio  of  used
commercial  jet aircraft subject to various full-payout and operating leases and
to  lease  the  aircraft to third parties as income-producing investments.  More
specifically,  the  Partnership's  primary investment objectives were to acquire
and  lease  aircraft  that  would:

     1.  Generate  quarterly  cash  distributions;

     2.  Preserve  and  protect  invested  capital;  and

     3.  Maintain  substantial residual value for ultimate sale of the aircraft.

     The  Partnership  has the additional objective of providing certain federal
income  tax  benefits.

The initial Interim Closing date of the Offering of Units of the Partnership was
May  17,  1990.  The  initial  purchase  of  aircraft  and  the associated lease
commitments  occurred  on  May  18,  1990.  Additional purchases of aircraft (or
proportionate interests in aircraft) occurred at each of five subsequent Interim
Closings,  the  last of which occurred on June 28, 1991, the Final Closing.  The
Restated  Agreement, as amended, provides that the Partnership will terminate no
later than December 31, 2005. However, the Partnership is a Nominal Defendant in
a  Class  Action  Lawsuit,  the  outcome  of which could significantly alter the
nature  of  the  Partnership's  organization and its future business operations.

The  Partnership  has  no  employees;  however,  it  is  managed  pursuant  to a
Management  Agreement  with  EFG  or one of its affiliates (the "Manager").  The
Manager's  role,  among other things, is to (i) evaluate, select, negotiate, and
consummate  the  acquisition  of  aircraft, (ii) manage the leasing, re-leasing,
financing,  and  refinancing  of  aircraft,  and  (iii)  arrange  the  resale of
aircraft.  The  Manager  is compensated for such services as provided for in the
Restated  Agreement,  as  amended.

EFG  is  a  Massachusetts limited partnership formerly known as American Finance
Group  ("AFG").  AFG  was  established  in  1988  as  a  Massachusetts  general
partnership  and  succeeded  American  Finance  Group,  Inc.,  a  Massachusetts
corporation  organized  in  1980.  EFG  and  its subsidiaries (collectively, the
"Company")  are  engaged  in  various aspects of the equipment leasing business,
including  EFG's role as Manager or Advisor to the Partnership and several other
direct-participation equipment leasing programs sponsored or co-sponsored by EFG
(the  "Other Investment Programs").  The Company arranges to broker or originate
equipment  leases,  acts  as  remarketing  agent and asset manager, and provides
leasing  support  services,  such  as  billing,  collecting, and asset tracking.

The  general  partner  of  EFG,  with  a  1%  controlling  interest,  is  Equis
Corporation,  a  Massachusetts corporation owned and controlled entirely by Gary
D.  Engle,  its  President,  Chief  Executive  Officer and sole Director.  Equis
Corporation  also  owns  a  controlling 1% general partner interest in EFG's 99%
limited  partner,  GDE  Acquisition  Limited  Partnership ("GDE LP").  Mr. Engle
established  Equis  Corporation and GDE LP in December 1994 for the sole purpose
of  acquiring  the  business  of  AFG.

In  January  1996,  the Company sold certain assets of AFG relating primarily to
the  business  of originating new leases, and the name "American Finance Group,"
and  its  acronym,  to  a  third party.  AFG changed its name to Equis Financial
Group  Limited  Partnership  after the sale was concluded.  Pursuant to terms of
the  sale agreements, EFG specifically reserved the rights to continue using the
name  American  Finance Group and its acronym in connection with the Partnership
and  the  Other Investment Programs and to continue managing all assets owned by
the  Partnership  and  the  Other  Investment  Programs.

The Partnership's investment in commercial aircraft is, and will continue to be,
subject  to  various  risks,  including  physical  deterioration,  technological
obsolescence,  and credit quality and defaults by lessees.  A principal business
risk  of  owning  and  leasing  aircraft is the possibility that aggregate lease
revenues  and  aircraft  sale  proceeds  will  be  insufficient  to  provide  an
acceptable  rate  of  return  on invested capital after payment of all operating
expenses.  Another  risk is that the credit quality of the lease may deteriorate
after  a  lease is made.  In addition, the leasing industry is very competitive.
The  Partnership  is  subject  to considerable competition when the aircraft are
re-leased  or  sold  at  the expiration of current lease terms.  The Partnership
must  compete  with  lease  programs offered directly by manufacturers and other
equipment  leasing  companies,  many  of which have greater resources, including
lease programs organized and managed similarly to the Partnership, and including
other  EFG-sponsored partnerships and trusts, which may seek to re-lease or sell
aircraft  within  their own portfolios to the same customers as the Partnership.
The  terrorist attacks on September 11, 2001 and the commencement of hostilities
thereafter  may  adversely  affect the Partnership's ability to re-lease or sell
equipment.  In addition, default by a lessee under a lease may cause aircraft to
be returned to the Partnership at a time when the General Partner or the Manager
is  unable  to  arrange  for  the re-lease or sale of such aircraft.  This could
result  in  the  loss  of  a material portion of anticipated revenues.  Aircraft
condition,  age,  passenger  capacity, distance capability, fuel efficiency, and
other  factors  influence  market  demand  and  market  values for passenger jet
aircraft.

Two  of  the  Partnership's aircraft currently operate in international markets.
All  rents  due  under  the  leases  of  these  aircraft are denominated in U.S.
dollars.  However,  the  operation  of  the  aircraft  in  international markets
exposes  the  Partnership  to  certain  political,  credit  and  economic risks.
Regulatory  requirements  of  other  countries  governing aircraft registration,
maintenance,  liability  of  lessors  and  other  matters  may apply.  Political
instability,  changes in national policy, competitive pressures, fuel shortages,
recessions  and other political and economic events adversely affecting world or
regional  trading  markets  or a particular foreign lessee could also create the
risk  that  a  foreign  lessee would be unable to perform its obligations to the
Partnership.  The  recognition in foreign courts of judgments obtained in United
States  courts  may  be difficult or impossible to obtain and foreign procedural
rules  may  otherwise  delay  such  recognition.  It  may  be  difficult for the
Partnership  to  obtain possession of aircraft used outside the United States in
the  event  of  default by the lessee or to enforce its rights under the related
lease.  Moreover,  foreign  jurisdictions may confiscate or expropriate aircraft
without  paying  adequate  compensation.

Notwithstanding  the  foregoing,  the ultimate realization of residual value for
any aircraft is dependent upon many factors, including EFG's ability to sell and
re-lease  the  aircraft.  Changes  in  market  conditions,  industry  trends,
technological  advances,  and  other events could converge to enhance or detract
from  asset  values at any given time.  Accordingly, EFG will attempt to monitor
changes  in the airline industry in order to identify opportunities which may be
advantageous  to  the Partnership and which will maximize total cash returns for
each  aircraft.

The  General  Partner  will  determine when each aircraft should be sold and the
terms  of such sale based upon numerous factors with a view toward achieving the
investment  objectives of the Partnership.  The General Partner is authorized to
sell the aircraft prior to the expiration of the initial lease terms and intends
to  monitor  and  evaluate  the  market  for resale of the aircraft to determine
whether an aircraft should remain in the Partnership's portfolio or be sold.  As
an  alternative  to  sale,  the  Partnership  may enter re-lease agreements when
considered  advantageous  by  the  General  Partner  and  the  Manager.

Revenue  from  major individual lessees which accounted for 10% or more of lease
revenue  during the years ended December 31, 2001, 2000 and 1999 is incorporated
herein  by  reference  to  Note 2 to the financial statements included in Item 8
herein.  Refer  to  Item 14(a)(3) for lease agreements filed with the Securities
and  Exchange  Commission.

In  connection  with  a  preliminary  settlement  agreement  for  a Class Action
Lawsuit,  the  court  permitted the Partnership to invest in any new investment,
including but not limited to new equipment or other business activities, subject
to certain limitations. On March 8, 2000, the Partnership loaned $3,640,000 to a
newly  formed  real  estate  company, Echelon Residential Holdings LLC ("Echelon
Residential  Holdings") to finance the acquisition of real estate assets by that
company.  Echelon  Residential  Holdings,  through  a  wholly  owned  subsidiary
("Echelon  Residential  LLC"),  used  the  loan  proceeds,  along  with the loan
proceeds  from  similar  loans  by  ten affiliated partnerships representing $32
million  in  the  aggregate,  to acquire various real estate assets from Echelon
International  Corporation,  an  unrelated  Florida-based  real  estate company.
Echelon  Residential  Holding's  interest  in Echelon Residential LLC is pledged
pursuant  to a pledge agreement to the partnerships as collateral for the loans.
The  loan  made  by the Partnership to Echelon Residential Holdings is, and will
continue  to  be,  subject  to  various  risks, including the risk of default by
Echelon  Residential  Holdings, which could require the Partnership to foreclose
under  the  pledge  agreement  on  its interests in Echelon Residential LLC. The
ability of Echelon Residential Holdings to make loan payments and the amount the
Partnership  may  realize  after  a  default  would  be dependent upon the risks
generally  associated  with  the real estate lending business including, without
limitation,  the existence of senior financing or other liens on the properties,
general  or  local economic conditions, property values, the sale of properties,
interest  rates,  real  estate  taxes,  other operating expenses, the supply and
demand  for  properties involved, zoning and environmental laws and regulations,
rent  control  laws  and  other  governmental  rules.  A  default  by  Echelon
Residential  Holdings  could  have  a material adverse effect on the future cash
flow  and  operating  results  of  the  Partnership.

During  the  second  quarter  of  2001,  the  General  Partner  determined  that
recoverability  of  the  loan  receivable had been impaired and at June 30, 2001
recorded  an  impairment  of  $318,500, reflecting the General Partner's current
assessment  of  the  amount  of  loss  that  is  likely  to  be  incurred by the
Partnership.  In  addition  to  the  write-down  recorded  at June 30, 2001, the
Partnership  reserved  all  accrued  interest  of  $590,772 recorded on the loan
receivable from inception through March 31, 2001 and ceased accruing interest on
its  loan receivable from Echelon Residential Holdings, effective April 1, 2001.
The  total impairment of $909,272 is recorded as write-down of impaired loan and
interest  receivable  in  the  accompanying Statement of Operations for the year
ended  December  31,  2001.

The  write-down of the loan receivable from Echelon Residential Holdings and the
related  accrued interest was precipitated principally by a slowing U.S. economy
and  its  effects on the real estate development industry.  The economic outlook
for  the  properties  that existed when the loan was funded has deteriorated and
inhibited  the  ability  of  Echelon  Residential Holdings' management to secure
low-cost  sources  of  development  capital,  including  but  not  limited  to
joint-venture  or  equity partners.  In response to these developments and lower
risk  tolerances  in  the  credit markets, the management of Echelon Residential
Holdings  decided  in  the second quarter of 2001 to concentrate its prospective
development  activities within the southeastern United States and, therefore, to
dispose  of  development  sites  located  elsewhere.  In  May  2001,  Echelon
Residential  Holdings  closed  its Texas-based development office; and since the
beginning  of  2001,  the  company has sold five of nine properties (two in July
2001, one in October 2001, one in November 2001 and one in February 2002).  As a
result  of these developments, the General Partner does not believe that Echelon
Residential  Holdings  will  realize the profit levels originally believed to be
achievable  from either selling these properties as a group or developing all of
them  as  multi-family  residential  communities.

The  Restated Agreement, as amended, prohibits the Partnership from making loans
to  the  General  Partner  or  its affiliates.  Since the acquisition of several
parcels  of  real  estate  from the owner had to occur prior to the admission of
certain independent third parties as equity owners, Echelon Residential Holdings
and  its  wholly  owned  subsidiary,  Echelon  Residential  LLC,  were formed in
anticipation  of  their  admission.  The General Partner agreed to an officer of
the Manager serving as the initial equity holder of Echelon Residential Holdings
and  as  an  unpaid manager of Echelon Residential Holdings.  The officer made a
$185,465  equity  investment in Echelon Residential Holdings.  His return on his
equity  investment  is restricted to the same rate of return as the partnerships
realize  on  their  loans.  There  is  a  risk  that the court may object to the
general  partner's  action in structuring the loan in this way since the officer
may be deemed an affiliate and the loans in violation of the prohibition against
loans  to  affiliates  in the Partnership Agreement and the court's statement in
its  order  permitting  New  Investments  that  all  other  provisions  of  the
Partnership  Agreements  governing the investment objectives and policies of the
Partnership  shall  remain  in full force and effect.  The court may require the
partnerships  to  restructure  or  divest  the  loan.

The  Investment  Company Act of 1940 (the "1940 Act") places restrictions on the
capital  structure  and  business activities of companies registered thereunder.
The  Partnership  has  active  business  operations  in  the  financial services
industry,  including  equipment  leasing  and  the  loan  to Echelon Residential
Holdings.  The Partnership does not intend to engage in investment activities in
a  manner  or  to an extent that would require the Partnership to register as an
investment  company  under  the  1940  Act.  However,  it  is  possible that the
Partnership unintentionally may have engaged, or may in the future, engage in an
activity  or  activities  that  may be construed to fall within the scope of the
1940  Act.  The  General Partner is engaged in discussions with the staff of the
Securities  and  Exchange  Commission  ("SEC")  regarding  whether  or  not  the
Partnership  may  be  an  inadvertent investment company as a consequence of the
above-referenced  loan.    The  1940  Act,  among  other  things,  prohibits  an
unregistered investment company from offering securities for sale or engaging in
any  business  in  interstate  commerce  and, consequently, leases and contracts
entered  into  by partnerships that are unregistered investment companies may be
voidable.  The  General  Partner  has  consulted  counsel  and believes that the
Partnership is not an investment company.  If the Partnership were determined to
be an unregistered investment company, its business would be adversely affected.
The  General  Partner has determined to take action to resolve the Partnership's
status  under  the  1940  Act  by  means that may include disposing or acquiring
certain  assets  that  it  might  not  otherwise  dispose  or  acquire.


(d) Financial Information About Foreign and Domestic Operations and Export Sales

Not  applicable.

Item  2.  Properties.
---------------------

None.

Item  3.  Legal  Proceedings.
-----------------------------

Action  involving  Rosenblum,  et  al.
--------------------------------------

In  January  1998,  certain  plaintiffs  (the  "Plaintiffs")  filed  a class and
derivative  action, captioned Leonard Rosenblum, et al. v. Equis Financial Group
                              --------------------------------------------------
Limited  Partnership,  et  al.,  in  the  United  States  District Court for the
-----------------------------
Southern  District  of  Florida  (the  "Court") on behalf of a proposed class of
-------
investors  in  28  equipment  leasing  programs  sponsored by EFG, including the
----
Partnership  (collectively,  the "Nominal Defendants"), against EFG and a number
----
of  its  affiliates, including the General Partner, as defendants (collectively,
the  "Defendants").  Certain  of  the Plaintiffs, on or about June 24, 1997, had
filed an earlier derivative action, captioned Leonard Rosenblum, et al. v. Equis
-                                             ----------------------------------
Financial  Group  Limited  Partnership,  et  al.,  in  the Superior Court of the
-----------------------------------------------
Commonwealth  of  Massachusetts  on behalf of the Nominal Defendants against the
------
Defendants.  Both  actions  are  referred  to  herein collectively as the "Class
--
Action  Lawsuit".
--

The  Plaintiffs have asserted, among other things, claims against the Defendants
on  behalf  of  the Nominal Defendants for violations of the Securities Exchange
Act of 1934, common law fraud, breach of contract, breach of fiduciary duty, and
violations  of  the  partnership  or  trust  agreements  that govern each of the
Nominal  Defendants.  The Defendants have denied, and continue to deny, that any
of them have committed or threatened to commit any violations of law or breached
any  fiduciary  duties  to  the  Plaintiffs  or  the  Nominal  Defendants.

On August 20, 1998, the court preliminarily approved a Stipulation of Settlement
setting  forth  terms pursuant to which a settlement of the Class Action Lawsuit
was  intended  to  be  achieved  and  which, among other things, was at the time
expected  to reduce the burdens and expenses attendant to continuing litigation.
Subsequently  an  Amended  Stipulation  of Settlement was approved by the court.
The  Amended  Stipulation,  among other things, divided the Class Action Lawsuit
into  two  separate  sub-classes that could be settled individually.  On May 26,
1999,  the  Court issued an Order and Final Judgment approving settlement of one
of  the  sub-classes.  Settlement  of  the  second  sub-class,  involving  the
Partnership and 10 affiliated partnerships remained pending due, in part, to the
complexity  of  the  proposed  settlement pertaining to this class.  On March 6,
2000,  the  court  preliminarily  approved  a  Second  Amended  Stipulation that
modified  certain  of  the  settlement  terms  applying to the settlement of the
Partnership  sub-class  contained  in the Amended Stipulation. The settlement of
the Partnership sub-class was premised on the consolidation of the Partnerships'
net  assets  (the "Consolidation"), subject to certain conditions, into a single
successor  company  ("Newco").  The  potential  benefits  and  risks  of  the
Consolidation  were  to  be  presented in a Solicitation Statement that would be
mailed  to  all  of  the  partners  of  the Exchange Partnerships as soon as the
associated regulatory review process was completed and at least 60 days prior to
the  fairness  hearing.  A preliminary Solicitation Statement was filed with the
Securities  and  Exchange  Commission  on  August  24,  1998.

One  of  the  principal  objectives of the Consolidation was to create a company
that would have the potential to generate more value for the benefit of existing
limited partners than other alternatives, including continuing the Partnership's
customary  business  operations  until  all  of  its  assets are disposed in the
ordinary  course  of business.  To facilitate the realization of this objective,
the  Amended Stipulation provided, among other things, that commencing March 22,
1999, the Exchange Partnerships could collectively invest up to 40% of the total
aggregate  net  asset  values  of  all  of  the  Exchange  Partnerships  in  any
investment,  including  additional  equipment and other business activities that
the general partners of the Exchange Partnerships and EFG reasonably believed to
be  consistent  with the anticipated business interests and objectives of Newco,
subject  to  certain  limitations.  The  Second Amended Stipulation, among other
things, quantified the 40% limitation using a whole dollar amount of $32 million
in  the  aggregate.

On March 8, 2000, the Exchange Partnerships collectively made a $32 million loan
as  permitted  by  the  Second  Amended  Stipulation approved by the Court.  The
Partnership's portion of the aggregate loan is $3,640,000.  The loan consists of
a  term loan to Echelon Residential Holdings, a newly-formed real estate company
that  is owned by several independent investors and, in his individual capacity,
James A. Coyne, Executive Vice President of EFG. In addition, certain affiliates
of  the  General  Partner  made  loans  to Echelon Residential Holdings in their
individual  capacities.  Echelon  Residential  Holdings,  through a wholly owned
subsidiary  (Echelon  Residential  LLC),  used the loan proceeds, along with the
loan proceeds from similar loans by ten affiliated partnerships representing $32
million  in  the  aggregate,  to acquire various real estate assets from Echelon
International  Corporation, an unrelated Florida-based real estate company.  The
loan has a term of 30 months maturing on September 8, 2002 and bears interest at
the  annual rate of 14% for the first 24 months and 18% for the final six months
of  the  term.  Interest  accrues and compounds monthly but is not payable until
maturity.  Echelon  Residential Holdings has pledged its membership interests in
Echelon Residential LLC to the Exchange Partnerships as collateral for the loan.

In  the  absence  of  the  Court's  authorization  to  enter into new investment
activities,  the  Partnership's Restated Agreement, as amended, would not permit
such  activities  without  the approval of limited partners owning a majority of
the  Partnership's  outstanding Units.  Consistent with the Amended Stipulation,
the  Second  Amended Stipulation provides terms for unwinding any new investment
transactions  in  the  event  that  the  Consolidation  is  not  effected or the
Partnership  objects  to  its  participation  in  the  Consolidation.

While  the  Court's  August  20,  1998  Order  enjoined  certain  class members,
including  all  of  the partners of the Partnership, from transferring, selling,
assigning,  giving, pledging, hypothecating, or otherwise disposing of any Units
pending  the  Court's  final  determination  of whether the settlement should be
approved,  the  March 22, 1999 Order permitted the partners to transfer Units to
family  members  or  as  a  result  of  the  divorce, disability or death of the
partner.  No  other  transfers  are  permitted  pending  the  Court's  final
determination  of  whether  the settlement should be approved.  The provision of
the  August  20,  1998  Order  which  enjoined  the  General  Partners  of  the
Partnerships from, among other things, recording any transfers not in accordance
with  the  Court's  order  remains  effective.

On  March  12,  2001, after a status conference and hearing, the Court issued an
order that required the parties, no later than May 15, 2001, to advise the Court
on  (a)  whether  the SEC has completed its review of the solicitation statement
and  related  materials  submitted  to  the  SEC in connection with the proposed
settlement,  and (b) whether parties request the Court to schedule a hearing for
final  approval  of  the  proposed  settlement  or  are withdrawing the proposed
settlement  from  judicial  consideration  and  resuming  the  litigation of the
Plaintiffs'  claims.  The  Court  also  directed  the  parties to use their best
efforts  to  assist the SEC so that its regulatory review may be completed on or
before  May  15,  2001.

On  May  11,  2001,  the  general  partners of the Partnerships that are nominal
defendants in the Class Action Lawsuit received a letter dated May 10, 2001 from
the  Associate  Director  and  Chief  Counsel  of  the  Division  of  Investment
Management  of  the  SEC  informing  the  general partners that the staff of the
Division  believes  that  American  Income  Partners  V-A  Limited  Partnership,
American  Income  Partners  V-B Limited Partnership, AmericanIncome Partners V-C
Limited  Partnership, American Income Partners V-D Limited Partnership, American
Income  Fund I-A, American Income Fund I-B, American Income Fund I-E and AIRFUND
II  International  Limited  Partnership  (the  "Designated  Partnerships")  are
investment  companies as defined in Section 3(a)(1)(C) of the 1940 Act.  The SEC
staff noted that Section 7 of the 1940 Act makes it unlawful for an unregistered
investment company, among other things, to offer, sell, purchase, or acquire any
security or engage in any business in interstate commerce.  Accordingly, Section
7 would prohibit any partnership that is an unregistered investment company from
engaging  in  any  business in interstate commerce, except transactions that are
merely  incidental  to  its  dissolution.  The  SEC staff asked that the general
partners  advise  them  within  the next 30 days as to what steps the Designated
Partnerships  will  take  to  address  their status under the 1940 Act.  The SEC
staff  asserted  that  the  notes  evidencing  the  loans to Echelon Residential
Holdings  are  investment  securities  and  the  ownership  of the notes by said
partnerships  cause  them  to  be  investment companies and that, in the case of
American  Income  Partners  V-A Limited Partnership and V-B Limited Partnership,
they  may  have become investment companies when they received the securities of
Semele  Group  Inc.  ("Semele")  as  part  of the compensation for the sale of a
vessel  to Semele in 1997.  The general partners have consulted with counsel who
specializes  in the 1940 Act and, based on counsel's advice, do not believe that
the  Designated  Partnerships  are  investment  companies.

The  letter  also  stated  that  the Division is considering whether to commence
enforcement  action with respect to this matter.  Noting that the parties to the
Class  Action  Lawsuit  were  scheduled  to  appear before the court in the near
future  to  consider a proposed settlement, and that the SEC staff believed that
its views, as expressed in the letter, would be relevant to the specific matters
that will be considered by the court at the hearing, the SEC staff submitted the
letter  to  the  court  for  its  consideration.

On  May  15,  2001,  Defendants' Counsel filed with the court Defendants' Status
Report  pursuant to the Court's March 12, 2001 Order.  Defendants reported that,
notwithstanding  the  parties'  best  efforts,  the  staff  of  the  SEC has not
completed  its  review  of  the  solicitation  statement  in connection with the
proposed  settlement  of  the Class Action Lawsuit.  Nonetheless, the Defendants
stated their belief that the parties should continue to pursue the court's final
approval  of  the  proposed  settlement.

Plaintiffs'  Counsel  also submitted a Plaintiffs' Status Report to the court on
May  15,  2001 in which they reported that the SEC review has not been concluded
and  that  they notified the Defendants that they would not agree to continue to
stay  the  further  prosecution of the litigation in favor of the settlement and
that they intend to seek court approval to immediately resume active prosecution
of  the claims of the Plaintiffs.  Plaintiffs' Counsel stated in the Report that
the  "[p]laintiffs  continue  to  believe  that  the  settlement  is in the best
interests  of  the  Operating Partnership Sub-class.  However, since the SEC has
yet  to complete its review of the proxy, the Plaintiffs do not believe that the
litigation  should  continue  to  be  stayed  so  that  the SEC may continue its
regulatory  review  for  an  indefinite  period  of time." Subsequently, after a
status  conference  on  May  31, 2001, the court issued an order on June 4, 2001
setting  a  trial  date  of  March  4, 2002, referring the case to mediation and
referring  discovery  to  a  magistrate  judge.  The Defendant's and Plaintiff's
Counsel continued to negotiate toward a settlement and have reached agreement on
a  Revised  Stipulation  of  Settlement (the "Revised Settlement") that does not
involve  a  Consolidation.  As part of the Revised Settlement, EFG has agreed to
buy  the loans made by the Exchange Partnerships to Echelon Residential Holdings
for an aggregate of $32 million plus interest at 7.5% per annum, if they are not
repaid prior to or at their scheduled maturity date. The Revised Settlement also
provides  for  the  liquidation  of  the  Exchange  Partnerships' assets, a cash
distribution  and  the dissolution of the Partnerships including the liquidation
and  dissolution  of this Partnership. The court held a hearing on March 1, 2002
to  consider  the  Revised  Settlement.  After  the hearing, the court issued an
order  preliminarily  approving  the  Revised  Settlement  and providing for the
mailing of notice to the Operating Partnership Sub-Class of a hearing on June 7,
2002  to  determine whether the settlement on the terms and conditions set forth
in the Revised Settlement is fair, reasonable and adequate and should be finally
approved  by  the  court  and  a  final  judgment  entered  in  the  matter.

There can be no assurance that the Revised Settlement of the sub-class involving
the  Exchange  Partnerships  will  receive final Court approval and be effected.
However,  in  the  absence  of  a  final  settlement  approved by the Court, the
Defendants  intend to defend vigorously against the claims asserted in the Class
Action Lawsuit.  Neither the General Partner nor its affiliates can predict with
any  degree of certainty the cost of continuing litigation to the Partnership or
the  ultimate outcome.  Assuming the proposed settlement were effected according
to  its terms, the Partnership's share of legal fees and expenses related to the
Class  Action  Lawsuit  and  the Consolidation was estimated to be approximately
$512,000,  of  which  approximately  $332,000 was expensed by the Partnership in
1998  and  additional  amounts of $89,000, $41,000, and $50,000 were expensed by
the  Partnership  in  2001,  2000,  and  1999,  respectively.

In  addition to the foregoing, the Partnership is a party to other lawsuits that
have  arisen  out of the conduct of its business, principally involving disputes
or  disagreements  with  lessees  over  lease  terms and conditions as described
below:

First  action  involving  Transmeridian  Airlines
-------------------------------------------------

On  October  11,  1996,  Prime  Air  Inc.  d/b/a  Transmeridian  Airlines  (the
"Plaintiff")  filed  an  action  in  the  61st Judicial District Court of Harris
County,  Texas  (the  "Court")  entitled  Prime  Air,  Inc.  d/b/a Transmeridian
                                          --------------------------------------
Airlines  v.  Investors  Asset Holding Corp. ("IAHC"), as Trustee for Airfund II
       -------------------------------------------------------------------------
International  Limited  Partnership,  PLM  International  ("PLM"),  and  NavCom
  -----------------------------------------------------------------------------
Aviation,  Inc. (collectively, the "Defendants").  In that action, the Plaintiff
  ------------
claimed  damages  of more than $3 million for alleged breach of contract, fraud,
civil  conspiracy,  tortious  interference  of  business  relations,  negligent
misrepresentation, negligence and gross negligence, and punitive damages against
the  Defendants in connection with Transmeridian's lease of a Boeing 727-251 ADV
jet  aircraft from the Partnership.  On November 7, 1996, PLM removed the action
to United States District Court for the Southern District of Texas.  On February
14,  1997,  the  Defendants  answered  the  Plaintiff's  Complaint  denying  the
allegations  made  therein  and  asserting  various  defenses.

On  July  31,  1998, the Court granted IAHC's motion to strike Plaintiff's fraud
and  negligent  misrepresentation  claims  due  to  failure  to  plead  with
particularity.  Extensive  discovery  was conducted on the merits of Plaintiff's
claims.  The  Plaintiff,  at  one  point,  provided  an  expert  report  seeking
approximately  $30  million  in damages.  The Plaintiff later provided a revised
expert  report  claiming  actual  damages  of  approximately  $8.5  million  and
Plaintiff  continued  to  seek  punitive  damages  and  both  pre-judgment  and
post-judgment  interest.  On  March 18, 1999, the Court entered summary judgment
in  favor  of  IAHC and PLM on all remaining claims.  The Plaintiff subsequently
filed a motion to alter or amend the judgment, or in the alternative, to certify
the  Court's  Order  for  Interlocutory  Appeal.  On  April  30, 1999, the Court
declined  to  alter or amend its judgment and entered final judgment in favor of
IAHC  and  PLM  on  all  remaining claims.  The Plaintiff appealed to the United
States  Court  of  Appeals  for  the  5th  Circuit.  The Court of Appeals denied
Transmeridian's appeal, affirmed the District Court's judgement in IAHC's favor,
and  subsequently  denied  Transmeridian's request for rehearing.  Transmeridian
has  not  sought  further  review  of the District Court's judgment.  There have
been,  however,  subsequent  proceedings in the District Court on IAHC's request
for  the  assessment  of  costs  in  the  amount  of  approximately  $35,000.

In  connection  with  this  litigation, the Partnership has incurred substantial
legal fees, exceeding $1 million.  An action seeking recovery of these costs was
filed  on  behalf  of  the  Partnership in November 1999.  See "Indemnity action
against  Transmeridian  Airlines  and  Apple  Vacations"  described  below.

Second  action  involving  Transmeridian  Airlines
--------------------------------------------------

On  November  9,  1998,  Investors  Asset  Holding  Corp.,  as  Trustee  for the
Partnership  (the  "Plaintiff"),  filed  an  action  in  Superior  Court  of the
Commonwealth  of  Massachusetts  in Suffolk County against Prime Air, Inc. d/b/a
Transmeridian  Airlines  ("Transmeridian"),  Atkinson & Mullen Travel, Inc., and
Apple  Vacations,  West,  Inc.,  both  d/b/a  Apple Vacations, asserting various
causes  of  action  for declaratory judgment and breach of contract.  The action
subsequently  was  removed  to  United States District Court for the District of
Massachusetts.  The  Plaintiff  filed  an Amended Complaint asserting claims for
breaches  of  contract  and  covenant  of  good  faith  and fair dealing against
Transmeridian  and  breach  of  guaranty  against  Apple  Vacations.

In October 1998, an aircraft leased by Transmeridian (being the same aircraft in
the  above-referenced  "First  action  involving  Transmeridian  Airlines")  was
damaged in an on-ground accident at the Caracas, Venezuela airport.  The cost to
repair  the  aircraft  was  estimated to be at least $350,000.  In addition, the
Partnership  had to lease two substitute engines at a cost of $82,000 per month.
During  the  year ended December 31, 1999, the Partnership incurred total engine
lease  costs  of  $984,000.  This  was  partially  offset by lease rents paid by
Transmeridian  of $560,000 during the same period.  However, as of September 11,
1999,  Transmeridian ceased paying rent on this aircraft.  The Plaintiff alleged
that Transmeridian, among other things, has impeded the Partnership's ability to
terminate  the  two  engine  lease contracts between the Partnership and a third
party.  The  Plaintiff  intends to pursue insurance coverage and also to enforce
written guarantees issued by Apple Vacations that absolutely and unconditionally
guarantee Transmeridian's performance under the lease and is seeking recovery of
all  costs,  lost  revenue  and monetary damages in connection with this matter.

Indemnity  action  against  Transmeridian  Airlines  and  Apple  Vacations
--------------------------------------------------------------------------

On November 12, 1999, Investors Asset Holding Corp. ("IAHC"), as trustee for the
Partnership,  filed  an  action against Transmeridian Airlines (f/k/a Prime Air,
Inc.)  and  Atkinson  &  Mullen Travel, Inc. (d/b/a Apple Vacations) under Civil
Action  No.  H-99-3804  in  the  United  States  District Court for the Southern
District  of  Texas,  Houston  Division, seeking recovery of attorneys' fees and
related costs incurred in defending the action described above under the heading
"First  action  involving  Transmeridian Airlines."  The suit sought recovery of
expenses pursuant to the indemnification provisions of the lease agreement under
which  Transmeridian leased the Boeing 727-251 aircraft. The amount being sought
was  over  $1 million.  On September 1, 2000, IHAC filed with the Court a motion
for  partial  summary  judgment,  seeking  judgment  on  liability  (i.e.  that
Transmeridian  and  Apple  Vacations  are  liable under the lease agreements and
guarantees).  IHAC  also  filed a motion for leave to join in this litigation an
affiliate  of  Apple's,  Apple  Vacations,  West,  inc., which also gave written
guarantees  of  Transmeridian's  performance  under  the  lease  agreements.

As of March 13, 2002, the parties settled all claims involved in these lawsuits.
The  material  terms  of  settlement  provide:  (i)  in  exchange for payment of
$2,100,000  from  Apple  to the Plaintiffs all claims arising from or related to
the  lawsuits;  (ii)  the  Plaintiffs  shall  have  Allowed  Claims  against the
bankruptcy estate of Transmeridian in the aggregate amount of $2,700,000;  (iii)
the  Plaintiff will be paid $400,000 from the insurance proceeds relating to the
aircraft  loss; and (iv) each of the parties will receive mutual releases of all
claims  and  counterclaims.

The  Partnership  has  received  and recorded $1,563,000 in the first quarter of
2002,  as  its  share  of  the  $2,100,000 payment.  The Partnership has not yet
received  or  recorded  its  share  of the $400,000 from the insurance proceeds.
Additionally,  the  Partnership  recognized  $969,686  as  income  in the fourth
quarter  of  2001  that  had  been  held in escrow pending the resolution of the
litigation.

Action  involving  Northwest  Airlines,  Inc.
---------------------------------------------

On  September  22,  1995, Investors Asset Holding Corp. and First Security Bank,
N.A.,  trustees  of  the  Partnership and certain affiliated investment programs
(collectively,  the  "Plaintiffs"),  filed  an  action in United States District
Court  for  the  District  of Massachusetts against a lessee of the Partnership,
Northwest  Airlines,  Inc.  ("Northwest").  The Complaint alleges that Northwest
did  not  fulfill  its  maintenance  and  return  obligations  under  its  Lease
Agreements  with  the  Plaintiffs  and  seeks  declaratory  judgment  concerning
Northwest's  obligations and monetary damages.  Northwest filed an Answer to the
Plaintiffs'  Complaint  and a motion to transfer the venue of this proceeding to
Minnesota.  The  Court  denied  Northwest's  motion.  On June 29, 1998, a United
States  Magistrate  Judge recommended entry of partial summary judgment in favor
of  the  Plaintiffs.  Northwest  appealed this decision.  On April 15, 1999, the
United States District Court Judge adopted the Magistrate Judge's recommendation
and  entered partial summary judgment in favor of the Plaintiffs on their claims
for  declaratory  judgment.  The  parties  then  undertook  a  second  phase  of
discovery,  focused  on  damages.  This  second phase of damages is scheduled to
conclude  in  April  2001  with  the  completion  of depositions of the parties'
experts.  In  February  2001, the District Court also denied summary judgment on
certain  of  the  Plaintiffs'  other  claims,  including  their  tort claims for
conversion.

This  matter  was  tried  during  August  2001.  Subsequent  to  the evidentiary
hearings,  the  parties submitted proposed findings.  Final argument was held on
October  29,  2001.  The  court  has  the  matter  under  advisement.



Item  4.  Submission  of  Matters  to  a  Vote  of  Security  Holders.
----------------------------------------------------------------------

None.

<PAGE>
PART  II

Item  5.   Market  for  the Partnership's Securities and Related Security Holder
--------------------------------------------------------------------------------
Matters.
--------

     (a)  Market  Information

There  is no public market for the resale of the Units and it is not anticipated
that  a  public  market  for  resale  of  the  Units  will  develop.

     (b)  Approximate  Number  of  Security  Holders

At  December  31,  2001,  there  were  3,929  record  holders  of  Units  in the
Partnership.

     (c)  Dividend  History  and  Restrictions

Historically,  the  amount  of cash distributions to be paid to the Partners has
been  determined  on  a quarterly basis (see detail below).  The Partnership did
not  declare distributions in any of the years ended December 31, 2001, 2000 and
1999.

The  Partnership  is a Nominal Defendant in a Class Action Lawsuit.  The General
Partner  has  continued  to  suspend the payment of quarterly cash distributions
pending  final resolution of the Class Action Lawsuit.  Accordingly, future cash
distributions  are  not  expected  to  be paid until the Class Action Lawsuit is
settled  or  adjudicated.

In  any  given  year,  it  is  possible that Recognized Owners will be allocated
taxable  income  in  excess  of  distributed  cash. This discrepancy between tax
obligations  and  cash  distributions may or may not continue in the future, and
cash  may  or  may  not  be  available for distribution to the Recognized Owners
adequate  to  cover  any  tax  obligation.

There  are no formal restrictions under the Restated Agreement, as amended, that
materially  limit  the  Partnership's  ability to pay cash distributions, except
that  the General Partner may suspend or limit cash distributions to ensure that
the  Partnership  maintains  sufficient working capital reserves to cover, among
other  things, operating costs and potential expenditures, such as refurbishment
costs  to  remarket aircraft upon lease expiration.  In addition to the need for
funds  in  connection  with  the  Class  Action Lawsuit, liquidity is especially
important  as  the Partnership matures and sells aircraft, because the remaining
aircraft portfolio consists of fewer revenue-producing assets that are available
to  cover  prospective cash disbursements.  Insufficient liquidity could inhibit
the  Partnership's ability to sustain its operations or maximize the realization
of  proceeds  from  remarketing  its  remaining  aircraft.

In  particular,  the  Partnership must contemplate the potential liquidity risks
associated  with  its investment in commercial jet aircraft.  The management and
remarketing  of  aircraft can involve, among other things, significant costs and
lengthy  remarketing  initiatives.  Although  the  Partnership's  lessees  are
required  to  maintain the aircraft during the period of lease contract, repair,
maintenance,  and/or refurbishment costs at lease expiration can be substantial.
For  example,  an  aircraft  that is returned to the Partnership meeting minimum
airworthiness  standards, such as flight hours or engine cycles, nonetheless may
require  heavy  maintenance  in  order  to bring its engines, airframe and other
hardware  up to standards that will permit its prospective use in commercial air
transportation.

At  December  31, 2001, the Partnership's equipment portfolio included ownership
interests  in  three  commercial  jet  aircraft,  one  of  which is a Boeing 737
aircraft.  The  Boeing  737  aircraft  is a Stage 2 aircraft, meaning that it is
prohibited  from  operating  in the United States unless it is retro-fitted with
hush-kits  to meet Stage 3 noise regulations promulgated by the Federal Aviation
Administration.  During  2000,  the  aircraft was re-leased to Air Slovakia BWJ,
Ltd.  through  September  2003.  In  January  2002 this lease was amended, which
includes  a  revised  lease  expiration  date of August 2002.  The remaining two
aircraft  in  the  Partnership's  portfolio  already are Stage 3 compliant.  The
lease  term  associated with one of the McDonnell Douglas MD-82 aircraft expired
in 2001 and the aircraft is currently off lease.  The third aircraft has a lease
term  expiring  in  September  2004.

Recent  changes in the economic condition of the airline industry have adversely
affected  the  demand  for and market values for commercial jet aircraft.  These
changes  could  adversely  affect  the  operations  of  the  Partnership and the
residual value of its commercial jet aircraft.  Currently, two of the commercial
jet aircraft in which the Partnership has a proportionate ownership interest are
subject  to  contracted  lease agreements.  The General Partner is attempting to
remarket  a  McDonnell Douglas MD-82 aircraft, which was returned to the General
Partner  upon  its  lease  expiration  in  April  2001.

In  October  2000,  the  Partnership  and  certain  of its affiliates executed a
conditional  sales  agreement  with  Royal  Aviation  Inc.  for  the sale of the
Partnership's  interest a Boeing 737-2H4 aircraft.  The sale of the aircraft was
recorded by the Partnership as a sales-type lease, with a lease term expiring in
January  2002.  In  the  fourth  quarter  of  2001, Royal Aviation Inc. declared
bankruptcy  and  as a result, has defaulted on this conditional sales agreement.
The  General  Partner  is  negotiating  for  the  return  of  the  aircraft.

Cash  distributions  consist  of  Distributable  Cash  From  Operations  and
Distributable  Cash  From  Sales  or  Refinancings.

"Distributable  Cash  From  Operations"  means  the  net  cash  provided  by the
Partnership's  normal  operations after general expenses and current liabilities
of  the  Partnership  are  paid, reduced by any reserves for working capital and
contingent  liabilities  to  be  funded  from  such  cash,  to the extent deemed
reasonable by the General Partner, and increased by any portion of such reserves
deemed  by the General Partner not to be required for Partnership operations and
reduced  by  all accrued and unpaid Equipment Management Fees and, after Payout,
further  reduced  by  all  accrued  and  unpaid  Subordinated  Remarketing Fees.
Distributable  Cash From Operations does not include any Distributable Cash From
Sales  or  Refinancings.

"Distributable  Cash  From  Sales  or  Refinancings"  means  Cash  From Sales or
Refinancings as reduced by (i) (a) for a period of two years from Final Closing,
Cash  From  Sales  or  Refinancings,  which  the  General  Partner  at  its sole
discretion  reinvests  in additional aircraft, provided, however, that Cash From
Sales  or  Refinancings  will  be  reinvested  in  additional  aircraft  only if
Partnership  revenues  are  sufficient  to  make distributions to the Recognized
Owners  in  the amount of the income tax, if any, due from a Recognized Owner in
the  33%  combined federal and state income tax bracket as a result of such sale
or  refinancing  of  aircraft,  and  (b)  amounts  realized  from  any  loss  or
destruction  of  any aircraft which the General Partner reinvests in replacement
aircraft  to  be  leased  under  the  original  lease  of  the lost or destroyed
aircraft,  and  (ii) any accrued and unpaid Equipment Management Fees and, after
Payout,  any  accrued  and  unpaid  Subordinated  Remarketing  Fees.

"Cash  From  Sales  or Refinancings" means cash received by the Partnership from
Sale  or  Refinancing  transactions,  as  (i)  reduced  by  (a)  all  debts  and
liabilities  of  the  Partnership  required  to  be  paid as a result of Sale or
Refinancing  transactions,  whether  or  not then due and payable (including any
liabilities  on  aircraft  sold  which  are  not  assumed  by  the buyer and any
remarketing  fees required to be paid to persons not affiliated with the General
Partner,  but  not  including  any  Subordinated Remarketing Fees required to be
paid) and (b) any reserves for working capital and contingent liabilities funded
from  such  cash to the extent deemed reasonable by the General Partner and (ii)
increased  by  any portion of such reserves deemed by the General Partner not to
be  required for Partnership operations.  In the event the Partnership accepts a
note  in  connection  with  any  Sale  or  Refinancing transaction, all payments
subsequently received in cash by the Partnership with respect to such note shall
be  included  in Cash From Sales or Refinancings, regardless of the treatment of
such  payments  by  the  Partnership  for  tax  or  accounting purposes.  If the
Partnership  receives  purchase  money obligations in payment for aircraft sold,
which  are  secured  by  liens  on such aircraft, the amount of such obligations
shall  not  be included in Cash From Sales or Refinancings until the obligations
are  fully  satisfied.

Each  distribution  of Distributable Cash From Operations and Distributable Cash
From  Sales  or Refinancings of the Partnership shall be made as follows:  Prior
to Payout, (i) Distributable Cash From Operations will be distributed 95% to the
Recognized Owners and 5% to the General Partner and (ii) Distributable Cash From
Sales  or  Refinancings shall be distributed 99% to the Recognized Owners and 1%
to the General Partner.  After Payout, (i) all Distributions will be distributed
99%  to  the  General  Partner and 1% to the Recognized Owners until the General
Partner  has  received  an  amount  equal to 5% of all Distributions made by the
Partnership  and  (ii)  thereafter,  all  Distributions  will be made 90% to the
Recognized  Owners  and  10%  to  the  General  Partner.

"Payout"  is  defined  as  the  first  time  when  the  aggregate  amount of all
distributions to the Recognized Owners of Distributable Cash From Operations and
Distributable Cash From Sales or Refinancings equals the aggregate amount of the
Recognized  Owners'  original  capital  contributions  plus  a cumulative annual
return  of  10% (compounded quarterly and calculated beginning with the last day
of  the  month  of the Partnership's Closing Date) on their aggregate unreturned
capital  contributions.  For  purposes of this definition, capital contributions
shall  be  deemed to have been returned only to the extent that distributions of
cash  to  the  Recognized  Owners  exceed  the  amount  required  to satisfy the
cumulative annual return of 10% (compounded quarterly) on the Recognized Owners'
aggregate  unreturned capital contributions, such calculation to be based on the
aggregate  unreturned capital contributions outstanding on the first day of each
fiscal  quarter.

Item  6.  Selected  Financial  Data.
------------------------------------

The  following  data  should  be  read  in conjunction with Item 7 "Management's
Discussion  and  Analysis  of Financial Condition and Results of Operations" and
the  financial  statements  included  in  Item  8  herein.

For  each  of  the  years  in  the  five  year  period  ended December 31, 2001:

<TABLE>
<CAPTION>


 Summary of Operations                      2001         2000        1999         1998          1997
---------------------------------------  -----------  ----------  ----------  ------------  ------------
<S>                                      <C>          <C>         <C>         <C>           <C>

Operating and sales-type lease revenue.  $  561,781   $  556,906  $1,841,170  $ 3,130,704   $ 3,224,618

Total income. . . . . . . . . . . . . .  $1,837,178   $2,391,472  $5,218,458  $ 3,416,813   $ 3,335,253

Interest income . . . . . . . . . . . .  $  276,711   $  649,016  $  267,788  $   158,844   $   110,635

Net income (loss) . . . . . . . . . . .  $ (631,893)  $  898,601  $1,892,009  $(1,208,085)  $(1,762,752)

Per Unit:
 Net income (loss). . . . . . . . . . .  $    (0.22)  $     0.31  $     0.66  $     (0.42)  $     (0.62)

 Cash distributions declared. . . . . .  $       --   $       --  $       --  $        --   $        --


 Financial Position
---------------------------------------

Total assets. . . . . . . . . . . . . .  $9,525,039   $9,972,750  $9,112,479  $ 8,076,569   $ 9,765,106

Total long-term obligations . . . . . .  $1,038,675   $  906,869  $  981,775  $ 1,896,665   $ 2,677,520

Partners' capital . . . . . . . . . . .  $7,790,759   $8,422,652  $7,524,051  $ 5,632,042   $ 6,840,127
</TABLE>





Item 7.  Management's Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
of  Operations.
---------------

                Year ended December 31, 2001 compared to the year
          ended December 31, 2000 and the year ended December 31, 2000
                  compared to the year ended December 31, 1999


Certain  statements in this Form 10-K of the Partnership that are not historical
fact  constitute  "forward-looking statements" within the meaning of the Private
Securities  Litigation  Reform Act of 1995 and are subject to a variety of risks
and  uncertainties.  There  are  a  number  of  factors  that could cause actual
results  to  differ  materially  from  those  expressed  in  any forward-looking
statements  made  herein.  These  factors  include,  but are not limited to, the
outcome  of  the  Class  Action  Lawsuit,  the  remarketing of the Partnership's
equipment,  and  the  performance  of  the  Partnership's  non-equipment assets.

Overview
--------

As  an  equipment  leasing partnership, the Partnership was organized to acquire
and  lease  a  portfolio  of commercial jet aircraft subject to lease agreements
with  third  parties.  During  1990  and  1991,  the  Partnership purchased four
commercial jet aircraft and a proportionate interest in two additional aircraft,
which  were  leased  by  major  carriers,  engaged  in passenger transportation.
Initially, each aircraft generated rental revenue pursuant to primary-term lease
agreements.  Currently,  all  of  the  aircraft  in  the  Partnership's original
portfolio  have  been re-leased, renewed, exchanged for other aircraft, or sold.
At  December  31,  2001,  the  Partnership's  equipment  portfolio  included
proportionate  ownership  interests in three aircraft.  In addition, in 2000 the
Partnership  entered  into a conditional sales agreement related to its interest
in  an  aircraft.  Presently,  the Partnership is a Nominal Defendant in a Class
Action Lawsuit, the outcome of which could significantly alter the nature of the
Partnership's  organization and its future business operations.  Pursuant to the
Restated  Agreement, as amended, the Partnership is scheduled to be dissolved by
December  31,  2005.

The  1940  Act  places  restrictions  on  the  capital  structure  and  business
activities  of  companies  registered  thereunder.  The  Partnership  has active
business  operations  in  the  financial  services industry, including equipment
leasing  and the loan to Echelon Residential Holdings.  The Partnership does not
intend to engage in investment activities in a manner or to an extent that would
require the Partnership to register as an investment company under the 1940 Act.
However,  it  is possible that the Partnership unintentionally may have engaged,
or  may in the future, engage in an activity or activities that may be construed
to  fall  within  the  scope of the 1940 Act.  The General Partner is engaged in
discussions  with  the staff of the SEC regarding whether or not the Partnership
may  be  an  inadvertent  investment  company  as  a  consequence  of  the
above-referenced  loan.  The  1940  Act,  among  other  things,  prohibits  an
unregistered investment company from offering securities for sale or engaging in
any  business  in  interstate  commerce  and, consequently, leases and contracts
entered  into  by partnerships that are unregistered investment companies may be
voidable.  The  General  Partner  has  consulted  counsel  and believes that the
Partnership is not an investment company.  If the Partnership were determined to
be an unregistered investment company, its business would be adversely affected.
The  General  Partner has determined to take action to resolve the Partnership's
status  under  the  1940  Act  by  means that may include disposing or acquiring
certain  assets  that  it  might  not  otherwise  dispose  or  acquire.


Critical  Accounting  Policies  and  Estimates
----------------------------------------------

The preparation of financial statements in conformity with accounting principles
generally  accepted  in  the  United States requires the General Partner to make
estimates  and  assumptions  that  affect  the amounts reported in the financial
statements.  On a regular basis, the General Partner reviews these estimates and
assumptions  including  those  related  to  revenue recognition, asset lives and
depreciation,  allowance  for  doubtful  accounts,  allowance  for  loan  loss,
impairment of long-lived assets and contingencies.  These estimates are based on
the  General  Partner's  historical  experience and on various other assumptions
believed  to  be  reasonable under the circumstances.  Actual results may differ
from  these  estimates  under  different assumptions or conditions.  The General
Partner  believes,  however,  that  the  estimates,  including  those  for  the
above-listed  items,  are  reasonable.
The  General  Partner believes the following critical accounting policies, among
others,  are  subject  to  significant  judgments  and  estimates  used  in  the
preparation  of  these  financial  statements:
Revenue  Recognition:  Rents are payable to the Partnership monthly or quarterly
---------------------
and  no  significant amounts are calculated on factors other than the passage of
time.  The  majority  of the Partnership's leases are accounted for as operating
leases  and  are  noncancellable.  Rents  received  prior to their due dates are
deferred.  Lease  payments  for  the  sales-type  lease  are due monthly and the
related  revenue  is  recognized  by a method which produces a constant periodic
rate  of  return  on  the  outstanding  investment  in  the  lease.

Asset lives and depreciation method: The Partnership's primary business involves
------------------------------------
the  purchase  and  subsequent lease of long-lived equipment.  The Partnership's
depreciation  policy  is  intended  to  allocate  the cost of equipment over the
period  during  which  it  produces  economic  benefit.  The principal period of
economic benefit is considered to correspond to each asset's primary lease term,
which  generally  represents  the  period of greatest revenue potential for each
asset.  Accordingly,  to the extent that an asset is held on primary lease term,
the Partnership depreciates the difference between (i) the cost of the asset and
(ii)  the  estimated  residual  value of the asset on a straight-line basis over
such  term.  For  purposes  of  this policy, estimated residual values represent
estimates  of  equipment values at the date of the primary lease expiration.  To
the  extent that an asset is held beyond its primary lease term, the Partnership
continues  to  depreciate  the  remaining  net  book  value  of  the  asset on a
straight-line  basis  over  the  asset's  remaining  economic  life.
Allowance  for  doubtful  accounts:  The  Partnership  maintains  allowances for
-----------------------------------
doubtful  accounts  for  estimated  losses  resulting  from the inability of the
-----
lessees  to  make  the  lease  payments  required  under  the  contracted  lease
-----
agreements.  These  estimates are primarily based on the amount of time that has
-----
elapsed  since  the  related  payments  were  due  as well as specific knowledge
related  to  the  ability  of the lessees to make the required payments.  If the
financial condition of the Partnership's lessees were to deteriorate, additional
allowances  could  be required that would increase expenses.  Conversely, if the
financial  condition  of  the  lessees  were  to improve or if legal remedies to
collect  past  due  amounts were successful, the allowance for doubtful accounts
could  be  reduced,  thereby  decreasing  expenses.
Allowance  for  loan  losses:       The  Partnership  periodically evaluates the
-----------------------------
collectibility  of  its  loan's  contractual  principal  and  interest  and  the
----
existence  of  loan  impairment  indicators,  including contemporaneous economic
----
conditions,  situations  which  could affect the borrower's ability to repay its
----
obligation, the estimated value of the underlying collateral, and other relevant
--
factors.  Real  estate  values  are discounted using a present value methodology
over  the  period  between  the  financial  reporting  date  and  the  estimated
disposition  date  of  each property.  A loan is considered to be impaired when,
based  on  current  information  and events, it is probable that the Partnership
will  be unable to collect all amounts due according to the contractual terms of
the loan agreement, which includes both principal and interest.  A provision for
loan  losses is charged to earnings based on the judgment of the General Partner
of  the  amount  necessary  to maintain the allowance for loan losses at a level
adequate  to  absorb  probable  losses.

Impairment  of  long-lived  assets:  On  a  regular  basis,  the General Partner
-----------------------------------
reviews  the  net  carrying  value  of  equipment to determine whether it can be
------
recovered  from  undiscounted  future cash flows.  Adjustments to reduce the net
-----
carrying  value of equipment are recorded in those instances where estimated net
--
realizable  value  is  considered  to  be  less  than net carrying value and are
reflected  separately  on the accompanying Statement of Operations as write-down
of  equipment.  Inherent  in the Partnership's estimate of net realizable values
are  assumptions regarding estimated future cash flows.  If these assumptions or
estimates  change  in  the  future,  the Partnership could be required to record
impairment  charges  for  these  assets.
Contingencies  and  litigation:  The Partnership is subject to legal proceedings
-------------------------------
involving  ordinary and routine claims related to its business. In addition, the
Partnership  is  also involved in a class action lawsuit. The ultimate legal and
financial  liability  with  respect  to  such  matters  cannot be estimated with
certainty  and  requires  the  use  of  estimates  in  recording liabilities for
potential litigation settlements.  Estimates for losses from litigation are made
after  consultation  with  outside  counsel.  If  estimates  of potential losses
increase  or  the  related  facts  and  circumstances  change in the future, the
Partnership  may  be  required  to  adjust  amounts  recorded  in  its financial
statements.


Results  of  Operations
-----------------------

For the year ended December 31, 2001, the Partnership recognized operating lease
revenue  of  $548,377  compared  to  $554,415 and $1,841,170 for the years ended
December  31,  2000  and  1999,  respectively.  In 2001, increased lease revenue
resulting  from  the  September  2000 re-lease of two aircraft was offset by the
effects  of  the  expiration  of  the  lease  term  related to the Partnership's
interest  in  a  McDonnell  Douglas  MD-82  aircraft,  as  discussed below.  The
decrease  in  lease  revenue  from  1999  to  2000  resulted  primarily from the
expiration  of lease terms related to the Partnership's interest in three Boeing
737-2H4 aircraft and a McDonnell Douglas MD-82 aircraft, as discussed below, and
the  sales  of  the  Partnership's  Boeing  727-208  ADV aircraft and its Boeing
727-251  ADV  aircraft in April 1999 and May 2000, respectively.  In the future,
operating  lease revenue is expected to decline due to lease term expiration and
aircraft  sales.  See  discussion  below related to the Partnership's sales-type
lease  revenue  for  the  year  ended  December  31,  2001  and  2000.

The  Partnership's  aircraft  interests  represent  a  proportionate  ownership
interests.  The remaining interests are owned by an affiliated equipment leasing
program  sponsored  by  EFG.  The  Partnership  and  each affiliate individually
report,  in proportion to their respective ownership interests, their respective
shares  of  assets,  liabilities,  revenues,  and  expenses  associated with the
aircraft.

The  lease  terms  related  to  three  Boeing  737-2H4  aircraft,  in  which the
Partnership  held a proportionate interest, expired on December 31, 1999 and the
aircraft were stored pending their remarketing.  In July 2000, one of the Boeing
737-2H4 aircraft was sold, resulting in $255,645 of proceeds and a net gain, for
financial  statement  purposes,  of $43,102.  In September 2000, a second Boeing
737-2H4  aircraft  was  re-leased, with a lease term expiring in September 2003.
In  January  2002  this  lease  was  amended,  which  includes  a  revised lease
expiration  date  of  August  2002.  The  Partnership recognized operating lease
revenues of $112,746, $45,088, and $126,431, related to this aircraft during the
years  ended  December  31,  2001, 2000 and 1999, respectively.  The Partnership
entered into a conditional sales agreement to sell its interest in the remaining
Boeing  737-2H4  aircraft  as  described  below.

The  lease term associated with a McDonnell Douglas MD-82 aircraft, in which the
Partnership  holds an ownership interest, expired in January 2000.  The aircraft
was  re-leased  in  September  2000  to Aerovias De Mexico, S.A. de C.V., with a
lease  term  expiring  in  September 2004.  The Partnership recognized operating
lease  revenues  of  $294,089,  $121,406, and $214,197, related to this aircraft
during  the  years  ended  December  31,  2001,  2000  and  1999,  respectively.

The General Partner is attempting to remarket the second McDonnell Douglas MD-82
aircraft,  in which the Partnership holds an ownership interest.  The lease term
associated  with  this  aircraft  expired  in  April  2001  and  the aircraft is
currently  off  lease.  The  Partnership  recognized  operating lease revenue of
$141,541, $317,854 and $212,786, related to this aircraft during the years ended
December  31,  2001,  2000  and  1999,  respectively.

Interest  income  for  the year ended December 31, 2001 was $276,711 compared to
$649,016  and  $267,788  for  the  years  ended  December  31,  2000  and  1999,
respectively.  Interest income is typically generated from temporary investments
of  rental  receipts  and  equipment sale proceeds in short-term instruments and
interest  earned  on  the loan receivable from Echelon Residential Holdings. The
amount  of future interest income from the short-term instruments is expected to
fluctuate  as  a  result  of  changing  interest  rates  and  the amount of cash
available  for  investment,  among  other  factors.

Interest  income included $144,686 and $446,086 for the years ended December 31,
2001  and  2000,  respectively,  earned  on  the  loan  receivable  from Echelon
Residential  Holdings.  During  the  second quarter of 2001, the General Partner
determined  that  recoverability of the loan receivable had been impaired and at
June  30,  2001  recorded  an  impairment  of  $318,500,  reflecting the General
Partner's current assessment of the amount of loss that is likely to be incurred
by  the  Partnership.  In  addition to the write-down recorded at June 30, 2001,
the  Partnership  reserved all accrued interest of $590,772 recorded on the loan
receivable from inception through March 31, 2001 and ceased accruing interest on
its  loan receivable from Echelon Residential Holdings, effective April 1, 2001.
The  total impairment of $909,272 is recorded as write-down of impaired loan and
interest  receivable  in  the  year  ended  December  31,  2001.

In  the  fourth  quarter  of  2001, a court judgment was entered in favor of the
Partnership  and certain affiliates related to the Transmeridian litigation.  As
a  result,  the  Partnership  recognized  $969,686  as  other  income  that  was
previously  held  in  escrow.  In  addition, the Partnership received settlement
proceeds  of  approximately  $1,563,000 from the defendants in March 2002, which
will  be  recognized as other income in the first quarter of 2002.  See Note 8 -
Legal  Proceedings.

Other  income  for  the  year  ended  December  31, 2000 reflects the receipt of
$245,977  of unused aircraft maintenance reserves related to a sold aircraft and
$55,000  for  the  sale  of  certain  aircraft  records.

During  the  year  ended  December  31,  2001, the Partnership donated two fully
depreciated  Rolls-Royce  engines, which had been warehoused, to two educational
institutions.  After  attempting  to  remarket  the  engines  for some time, the
General  Partner  concluded that the storage costs being incurred to store these
engines  was  in  excess  of  any  potential  sales  proceeds.  The engines were
originally  from  the aircraft leased to Classic Airways Limited, see discussion
below.

In  October  2000,  the  Partnership  and  certain  of its affiliates executed a
conditional  sales  agreement  with  Royal  Aviation  Inc.  for  the sale of the
Partnership's  interest  in a Boeing 737-2H4 aircraft and recorded a net gain on
sale  of  equipment, for financial statement purposes, of $91,471.  The title to
the  aircraft  was  to transfer to Royal Aviation Inc., at the expiration of the
lease  term.  The  sale  of  the  aircraft  was recorded by the Partnership as a
sales-type  lease,  with a lease term expiring in January 2002.  During the year
ended  December  31,  2000,  the  Partnership  recorded  a  net  gain on sale of
equipment,  for  financial  statement  purposes, of $91,471 for its proportional
interest  in  the aircraft.  For the years ended December 31, 2001 and 2000, the
Partnership  recognized  sales-type  lease  revenue  of  $13,404  and  $2,491,
respectively.  In  the  fourth  quarter  of  2001,  Royal Aviation Inc. declared
bankruptcy  and  as a result, has defaulted on this conditional sales agreement.
The  General  Partner  is  negotiating  for  the return of the aircraft.   As of
December 31, 2001, no allowance on the investment in sales-type lease was deemed
necessary  based  on the comparison of estimated fair value of the Partnership's
interest  in the aircraft and the Partnership's net investment in the sales-type
lease.

The  Partnership's  Boeing  727-251  ADV  aircraft  was  damaged in an on-ground
accident  in  October  1998  while  being  leased  on  a month-to-month basis by
Transmeridian  Airlines,  Inc.  ("Transmeridian").  In  September  1999,
Transmeridian  ceased  paying  rent with respect to this aircraft.  In May 2000,
the  Partnership  sold  the  Boeing  727-251  ADV  aircraft to a third party for
proceeds  of  $750,000.  This aircraft was fully depreciated at the time of sale
resulting  in  a net gain, for financial statement purposes, of $750,000 for the
year  ended  December  31,  2000.  The  Partnership  recognized lease revenue of
$70,000  and  $560,000  related to this aircraft during the years ended December
31,  2000  and  1999,  respectively.

In  April 1999, the Partnership sold its Boeing 727-208 ADV aircraft, previously
leased  to  American  Trans  Air,  Inc.,  to  the  lessee  for  net  proceeds of
$3,109,500.  The  aircraft  was fully depreciated at the time of sale, resulting
in a net gain, for financial statement purposes, of $3,109,500.  The Partnership
recognized  lease revenue of approximately $246,000 related to this aircraft for
the  year  ended  December  31,  1999.

It  cannot  be  determined whether future sales of aircraft will result in a net
gain  or  a  net loss to the Partnership, as such transactions will be dependent
upon  the  condition  and type of aircraft being sold and their marketability at
the  time  of  sale.

The  ultimate  realization  of residual value for any aircraft will be dependent
upon  many  factors,  including EFG's ability to sell and re-lease the aircraft.
Changes in market conditions, industry trends, technological advances, and other
events could converge to enhance or detract from asset values at any given time.
EFG  attempts  to  monitor  these  changes  and the airline industry in order to
identify  opportunities  which  may be advantageous to the Partnership and which
will  maximize  total  cash  returns  for  each  aircraft.

The  total economic value realized for each aircraft is comprised of all primary
lease  term  revenue  generated  from  that aircraft, together with its residual
value.  The  latter  consists of cash proceeds realized upon the aircraft's sale
in  addition  to all other cash receipts obtained from renting the aircraft on a
re-lease,  renewal or month-to-month basis.  Consequently, the amount of gain or
loss  reported  in the financial statements is not necessarily indicative of the
total  residual  value  the  Partnership  achieved  from  leasing  the aircraft.

Interest expense was $91,570, $103,919 and $120,701 for the years ended December
31,  2001,  2000  and  1999, respectively.  In the future, interest expense will
decline  as  the  principal  balance  of  notes  payable  is reduced through the
application  of  rent  receipts  to outstanding debt.  See additional discussion
below  regarding  the  refinancing  of  the  debt  in  2001.

Management fees of $39,218, $29,913 and $92,059 for the years ended December 31,
2001,  2000  and  1999,  respectively.  Management fees are based on 5% of gross
lease  revenue  generated  by  operating  leases  and  2% of gross lease revenue
generated  by  full  payout  leases.

Operating  expenses were $996,629, $1,061,428 and $2,059,346 for the years ended
December  31,  2001,  2000  and  1999, respectively.  Operating expenses in 2001
included  approximately  $46,000  of  storage  costs  for  an aircraft which was
returned  to  the  General Partner in April 2001, upon its lease expiration.  In
2000  and  1999,  the  Partnership  accrued approximately $149,000 and $201,000,
respectively, for the reconfiguration costs and completion of a D-Check incurred
to  facilitate  the remarketing of the McDonnell Douglas MD-82 aircraft released
in September 2000.  In 2000, the Partnership also accrued approximately $201,000
for  a  required  D-check  for  a  second  McDonnell Douglas MD-82 aircraft.  In
addition,  the  Partnership  incurred  legal  fees  in  connection  with  the
lease-related  litigation  described  in  Note  9  to  the  financial statements
included  in  Item  8.  Operating  expenses  in the year ended December 31, 1999
included  engine  leasing  costs  of  $984,000  incurred related to the aircraft
leased  to  Transmeridian  Airlines ("Transmeridian") and legal costs related to
the Partnership's ongoing litigation.  Operating expenses in 2001, 2000 and 1999
also  included approximately $89,000, $41,000 and $50,000, respectively, related
to  the  Class  Action Lawsuit.  Other operating expenses consist principally of
professional  service costs, such as audit and legal fees, as well as insurance,
printing,  distribution  and  other  remarketing  expenses.

Depreciation  expense  was $261,382, $297,611 and $1,054,343 for the years ended
December  31, 2001, 2000 and 1999, respectively.  During the year ended December
31,  2001, the Partnership also recorded a write-down of equipment, representing
an impairment to the carrying value of the Partnership's interest in a McDonnell
Douglas  MD-82  aircraft  returned  in  April 2001 and currently off lease.  The
resulting  charge  of $171,000 was based on a comparison of estimated fair value
and  carrying value of the Partnership's interest in the aircraft.  The estimate
of  the  fair  value  was  based  on  (i)  information provided by a third-party
aircraft  broker  and  (ii) EFG's assessment of prevailing market conditions for
similar  aircraft.  Aircraft  condition,  age,  passenger  capacity,  distance
capability,  fuel  efficiency,  and  other  factors  influence market demand and
market  values  for  passenger  jet  aircraft.


Liquidity  and  Capital  Resources  and  Discussion  of  Cash  Flows
--------------------------------------------------------------------

The  events  of  September  11,  2001 and the slowing U.S. economy could have an
adverse  effect  on  market  values  for  the  Partnership's  assets  and  the
Partnership's ability to negotiate future lease agreements.  Notwithstanding the
foregoing, it currently is not possible for the General Partner to determine the
long-term  effects,  if  any,  that  these  events  may  have  on  the  economic
performance  of  the  Partnership's  equipment  portfolio.  The  Partnership's
equipment portfolio consists entirely of commercial jet aircraft.  The events of
September  11,  2001  adversely  affected  market  demand  for both new and used
commercial  aircraft  and  weakened the financial position of most airlines.  No
direct  damage  occurred to any of the Partnership's assets as a result of these
events  and  while  it  is  currently  not  possible  for the General Partner to
determine  the  ultimate  long-term economic consequences of these events to the
Partnership,  the  General  Partner  expects  that  the resulting decline in air
travel will suppress market prices for used aircraft in the short term and could
inhibit  the viability of the airline industry.  In the event of a default by an
aircraft  lessee, the Partnership could suffer material losses.  At December 31,
2001,  the  Partnership has collected substantially all rents owed from aircraft
lessees.  The  General  Partner is monitoring the situation and will continue to
evaluate  potential  implications  to  the  Partnership's financial position and
future  liquidity.
The  Partnership  by  its  nature  is  a limited life entity.  The Partnership's
principal  operating  activities  derive  from  aircraft  rental  transactions.
Accordingly,  the  Partnership's principal source of cash from operations is the
collection  of  periodic  rents.  These  cash  inflows  are used to satisfy debt
service obligations associated with leveraged leases, and to pay management fees
and  operating  costs.  Operating  activities  generated  a  net  cash inflow of
$948,216 for the year ended December 31, 2001, compared to a net cash outflow of
$182,996  in  2000  and  net  cash inflow of $99,270 in 1999.  Overall, expenses
associated  with  rental  activities, such as management fees, and net cash flow
from operating activities will decline as the Partnership remarket its aircraft.
The  Partnership, however, may continue to incur significant costs to facilitate
the  successful  remarketing  of  its  aircraft  in the future.  Ultimately, the
Partnership  will  dispose  of  all  aircraft  under  lease.  This  will  occur
principally  through sale transactions whereby each aircraft will be sold to the
existing lessee or to a third party.  Generally, this will occur upon expiration
of  each aircraft's primary or renewal/re-lease term.  The amount of future cash
from  interest  income is expected to fluctuate as a result of changing interest
rates  and the level of cash available for investment, among other factors.  The
loan to Echelon Residential Holdings and accrued interest thereon is due in full
at  maturity  on  September  8,  2002  (see  discussion  below).

Cash  realized  from  aircraft disposal transactions is reported under investing
activities  on  the  accompanying  Statement  of Cash Flows.  For the year ended
December  31,  2000,  the  Partnership  realized net cash proceeds of $1,005,645
related  to  its  Boeing  737-2H4  and  727-251  ADV  aircraft.  In  1999,  the
Partnership  received sales proceeds of $3,109,500 related to its Boeing 727-208
ADV  aircraft  formerly  leased  to  ATA.  Future  inflows of cash from aircraft
disposals  will vary in timing and amount and will be influenced by many factors
including,  but  not  limited to, the frequency and timing of lease expirations,
the  type  of  aircraft  being  sold, their condition and age, and future market
conditions.

At  December  31,  2001,  the Partnership was due aggregate future minimum lease
payments  of  $851,809 from contractual operating lease agreements, a portion of
which  will  be  used  to  amortize  the  principal  balance of notes payable of
$1,038,675.  At  the  expiration  of  the  individual lease terms underlying the
Partnership's  future  minimum  lease  payments,  the  Partnership will sell its
aircraft or enter re-lease or renewal agreements when considered advantageous by
the  General Partner and EFG.  Such future remarketing activities will result in
the realization of additional cash inflows in the form of sale proceeds or rents
from  renewals and re-leases, the timing and extent of which cannot be predicted
with  certainty.  This  is  because  the timing and extent of remarketing events
often  is  dependent upon the needs and interests of the existing lessees.  Some
lessees  may  choose  to  renew their lease contracts, while others may elect to
return  the  aircraft.  In the latter instances, the aircraft could be re-leased
to  another  lessee  or  sold  to  a  third  party.

In  August  1998,  a  lessee  of  the  Partnership,  Classic  Airways  Limited
("Classic"),  ceased  paying  rent to the Partnership with respect to a Lockheed
L-1011-100  Aircraft  (the "Aircraft") and the Partnership terminated the lease.
Classic  then filed for receivership in the United Kingdom ("UK") and was placed
in  liquidation.  Prior  to  its liquidation, Classic had incurred and failed to
pay  significant  airport  ground  fees  to  BAA  plc,  Eurocontrol,  and  CAA
(collectively,  the  "Airport  Authorities").  Classic's  failure  to  pay  such
charges  resulted  in detention of the Aircraft by BAA plc.  The total of ground
fees and expenses asserted by the Airport Authorities, which continued to accrue
after  the  detention began, exceeded $1,500,000 at November 30, 1999.  Prior to
that  date,  the  General Partner had attempted to reach a negotiated settlement
with  the  Airport  Authorities  so  that  the Aircraft could be returned to the
Partnership.  Those  negotiations  were  unsuccessful  and  the  General Partner
determined that the amount of fees owed to the Airport Authorities was in excess
of  the  Aircraft's  value  and, therefore, it would not be in the Partnership's
best  interests  to  pay  these  fees.

BAA plc obtained a judgment from a UK Court entitling it to sell the aircraft to
satisfy  the  unpaid  charges and, on December 8, 1999, the Aircraft was sold at
auction.  It  is  believed  that  the sale price was insufficient to satisfy the
aggregate  fees  owed  to the Airport Authorities.  Accordingly, the Partnership
will  not  realize  any portion of the sale proceeds obtained by BAA plc nor any
future  residual  value  from  the Aircraft.  Notwithstanding the foregoing, the
Partnership  held  the  Aircraft's records, which were sold for $55,000 in 2000.
In addition, the Partnership had retained two engines that had been removed from
the  Aircraft  for maintenance prior to Classic's liquidation.  After attempting
to  remarket  these  engines  for some time, the Partnership donated them to two
educational  institutions  in  2001  (see  discussion  above).  At  the  date of
Classic's  liquidation,  the  Partnership  had accrued $160,000 of rental income
which  had  not  been collected from Classic and all of which was written off as
uncollectible  in  the  third  quarter of 1998.  The Aircraft, including the two
engines  that  were removed for maintenance, had been fully depreciated prior to
the auction by BAA plc.  Subsequent to the auction, the Aircraft (except for the
two  engines)  was  written  off  by  the  Partnership.

In  connection  with  a  preliminary  settlement  agreement  for  a Class Action
Lawsuit,  the  court  permitted the Partnership to invest in any new investment,
including but not limited to new equipment or other business activities, subject
to certain limitations. On March 8, 2000, the Partnership loaned $3,640,000 to a
newly  formed  real  estate company, Echelon Residential Holdings to finance the
acquisition  of  real  estate  assets  by  that  company.  Echelon  Residential
Holdings,  through a wholly owned subsidiary (Echelon Residential LLC), used the
loan proceeds, along with the loan proceeds from similar loans by ten affiliated
partnerships  representing $32 million in the aggregate, to acquire various real
estate assets from Echelon International Corporation, an unrelated Florida-based
real  estate  company.  Echelon  Residential  Holding's  interest  in  Echelon
Residential LLC is pledged pursuant to a pledge agreement to the partnerships as
collateral  for  the  loans.  The  loan  has  a  term  of 30 months, maturing on
September  8,  2002,  and an annual interest rate of 14% for the first 24 months
and  18% for the final six months. Interest accrues and compounds monthly and is
payable  at  maturity.

The  loan  made  by the Partnership to Echelon Residential Holdings is, and will
continue  to  be,  subject  to  various  risks, including the risk of default by
Echelon  Residential  Holdings, which could require the Partnership to foreclose
under  the  pledge  agreement  on  its interests in Echelon Residential LLC. The
ability of Echelon Residential Holdings to make loan payments and the amount the
Partnership  may  realize  after  a  default  would  be dependent upon the risks
generally  associated  with  the real estate lending business including, without
limitation,  the existence of senior financing or other liens on the properties,
general  or  local economic conditions, property values, the sale of properties,
interest  rates,  real  estate  taxes,  other operating expenses, the supply and
demand  for  properties involved, zoning and environmental laws and regulations,
rent  control  laws  and  other  governmental  rules.  A  default  by  Echelon
Residential  Holdings  could  have  a material adverse effect on the future cash
flow  and  operating  results  of the Partnership.  The Partnership periodically
evaluates  the  collectibility  of the loan's contractual principal and interest
and  the  existence  of  loan  impairment  indicators.

The  write-down of the loan receivable from Echelon Residential Holdings and the
related  accrued  interest  discussed  above  was  precipitated principally by a
slowing  U.S.  economy  and its effects on the real estate development industry.
The  economic  outlook  for the properties that existed when the loan was funded
has  deteriorated  and  inhibited  the  ability of Echelon Residential Holdings'
management  to secure low-cost sources of development capital, including but not
limited  to joint-venture or equity partners.  In response to these developments
and  lower  risk  tolerances  in  the  credit markets, the management of Echelon
Residential  Holdings  decided  in the second quarter of 2001 to concentrate its
prospective  development  activities  within the southeastern United States and,
therefore,  to  dispose  of  development  sites located elsewhere.  In May 2001,
Echelon  Residential  Holdings  closed  its  Texas-based development office; and
since  the  beginning of 2001, the company has sold five of nine properties (two
in  July  2001,  one  in  October 2001, one in November 2001 and one in February
2002).  As  a result of these developments, the General Partner does not believe
that  Echelon  Residential  Holdings  will  realize the profit levels originally
believed  to  be  achievable  from either selling these properties as a group or
developing  all  of  them  as  multi-family  residential  communities.

The  Restated Agreement, as amended, prohibits the Partnership from making loans
to  the  General  Partner  or  its affiliates.  Since the acquisition of several
parcels  of  real  estate  from the owner had to occur prior to the admission of
certain independent third parties as equity owners, Echelon Residential Holdings
and  its  wholly  owned  subsidiary,  Echelon  Residential  LLC,  were formed in
anticipation  of  their  admission.  The General Partner agreed to an officer of
the Manager serving as the initial equity holder of Echelon Residential Holdings
and  as  an  unpaid manager of Echelon Residential Holdings.  The officer made a
$185,465  equity  investment in Echelon Residential Holdings.  His return on his
equity  investment  is restricted to the same rate of return as the partnerships
realize  on  their  loans.  There  is  a  risk  that the court may object to the
General  Partner's  action in structuring the loan in this way since the officer
may be deemed an affiliate and the loans in violation of the prohibition against
loans  to  affiliates  in the Partnership Agreement and the court's statement in
its  order  permitting  New  Investments  that  all  other  provisions  of  the
Partnership  Agreements  governing the investment objectives and policies of the
Partnership  shall  remain  in full force and effect.  The court may require the
partnerships  to  restructure  or  divest  the  loan.

The  Partnership  obtained  long-term  financing  in  connection  with  certain
aircraft.  The origination of such indebtedness and the subsequent repayments of
principal  are  reported  as  components  of  financing  activities  in  the
Partnership's  Statement  of  Cash Flows.  The corresponding note agreements are
recourse  only  to  the  specific  equipment  financed and to the minimum rental
payments  contracted  to be received during the debt amortization periods (which
generally  coincides with the lease terms).  As rental payments are collected, a
portion  of all of the rental payments is used to repay associated indebtedness.
In the future, the amount of cash used to repay debt obligations will decline as
the  principal  balance  of  notes payable is reduced through the collection and
application  of  rents.

In  February  2001, the Partnership's and certain affiliated investment programs
collectively,  (the  "Programs")  refinanced  the  outstanding  indebtedness and
accrued  interest  related  to  the  aircraft.  In  addition  to refinancing the
Programs'  total  existing  indebtedness and accrued interest of $4,758,845, the
Programs  received  additional  debt  proceeds of $3,400,177.  The Partnership's
aggregate  share of the refinanced and new indebtedness was $1,211,860 including
$706,832  used  to  repay  the existing indebtedness on the refinanced aircraft.
The  Partnership  used  a  portion  of  its  share of the additional proceeds of
$505,028  to  repay  the  outstanding  balance  of  the indebtedness and accrued
interest  related  to  a  second  aircraft  of  $130,852  and  certain  aircraft
reconfiguration  costs  that  the  Partnership had accrued at December 31, 2000.
The  new  indebtedness  bears  a  fixed  interest  rate  of  7.65%, principal is
amortized  monthly  and  the Partnership has a balloon payment obligation at the
expiration  of  the  lease term of $404,138 in September 2004.   During the year
ended  December 31, 2000, the Partnership refinanced the indebtedness associated
with the same aircraft and in addition to refinancing the existing indebtedness,
received  additional  debt  proceeds  of  $201,247.

There  are no formal restrictions under the Restated Agreement, as amended, that
materially  limit  the  Partnership's  ability to pay cash distributions, except
that  the General Partner may suspend or limit cash distributions to ensure that
the  Partnership  maintains  sufficient working capital reserves to cover, among
other  things, operating costs and potential expenditures, such as refurbishment
costs  to  remarket aircraft upon lease expiration.  In addition to the need for
funds  in  connection  with  the  Class  Action Lawsuit, liquidity is especially
important  as  the Partnership matures and sells aircraft, because the remaining
aircraft portfolio consists of fewer revenue-producing assets that are available
to  cover  prospective cash disbursements.  Insufficient liquidity could inhibit
the  Partnership's ability to sustain its operations or maximize the realization
of  proceeds  from  remarketing  its  remaining  aircraft.

The  management  and  remarketing  of  aircraft can involve, among other things,
significant  costs  and  lengthy  remarketing  initiatives.  Although  the
Partnership's lessees are required to maintain the aircraft during the period of
lease  contract,  repair,  maintenance,  and/or  refurbishment  costs  at  lease
expiration can be substantial.  For example, an aircraft that is returned to the
Partnership  meeting  minimum  airworthiness  standards, such as flight hours or
engine  cycles,  nonetheless may require heavy maintenance in order to bring its
engines,  airframe  and  other  hardware  up  to  standards that will permit its
prospective  use  in  commercial  air  transportation.

At  December  31, 2001, the Partnership's equipment portfolio included ownership
interests  in  three  commercial  jet  aircraft,  one  of  which is a Boeing 737
aircraft.  The  Boeing  737  aircraft  is a Stage 2 aircraft, meaning that it is
prohibited  from  operating  in the United States unless it is retro-fitted with
hush-kits  to meet Stage 3 noise regulations promulgated by the Federal Aviation
Administration.  During  2000,  the  aircraft was re-leased to Air Slovakia BWJ,
Ltd.  through  September  2003.  In  January  2002 this lease was amended, which
includes  a  revised  lease  expiration  date  of August 2002. The remaining two
aircraft  in  the  Partnership's  portfolio  already are Stage 3 compliant.  The
lease  term  associated with one of the McDonnell Douglas MD-82 aircraft expired
in 2001 and the aircraft is currently off lease.  The third aircraft has a lease
term  expiring  in  September  2004.

Recent  changes in the economic condition of the airline industry have adversely
affected  the  demand  for and market values for commercial jet aircraft.  These
changes  could  adversely  affect  the  operations  of  the  Partnership and the
residual value of its commercial jet aircraft.  Currently, two of the commercial
jet aircraft in which the Partnership has a proportionate ownership interest are
subject  to  contracted  lease  agreements  except  one  McDonnell Douglas MD-82
aircraft, which was returned to the General Partner upon its lease expiration in
April  2001.  The  General  Partner  is  attempting  to  remarket this aircraft.

The  Partnership's  capital  account  balances  for  federal  income tax and for
financial reporting purposes are different primarily due to differing treatments
of  income  and expense items for income tax purposes in comparison to financial
reporting  purposes.  For  instance,  selling  commissions  and organization and
offering  costs  pertaining  to  syndication  of  the  Partnership's  limited
partnership  units  are  not deductible for federal income tax purposes, but are
recorded  as  a reduction of partners' capital for financial reporting purposes.
Therefore,  such  differences are permanent differences between capital accounts
for  financial  reporting  and  federal  income tax purposes.  Other differences
between  the  bases  of  capital  accounts  for federal income tax and financial
reporting  purposes occur due to timing differences consisting of the cumulative
difference  between  income  or  loss  for  tax purposes and financial statement
income  or  loss.  The  principal component of the cumulative difference between
financial statement income or loss and tax income or loss results from different
depreciation  policies  for  book  and  tax  purposes.

For  financial reporting purposes, the General Partner has accumulated a capital
deficit  at  December  31,  2001.  This  is  the  result  of  aggregate  cash
distributions to the General Partner being in excess of its capital contribution
of  $1,000  and  its  allocation  of  financial  statement  net  income or loss.
Ultimately,  the  existence  of  a  capital  deficit for the General Partner for
financial  reporting  purposes  is  not  indicative  of  any  further  capital
obligations  to the Partnership by the General Partner.  The Restated Agreement,
as  amended,  requires that upon the dissolution of the Partnership, the General
Partner will be required to contribute to the Partnership an amount equal to any
negative  balance  which may exist in the General Partner's tax capital account.
At  December  31,  2001,  the General Partner had a positive tax capital account
balance.

In  any  given  year,  it  is  possible that Recognized Owners will be allocated
taxable  income  in  excess  of  distributed  cash. This discrepancy between tax
obligations  and  cash  distributions may or may not continue in the future, and
cash  may  or  may  not  be  available for distribution to the Recognized Owners
adequate  to  cover  any  tax  obligation.

The  outcome  of  the  Class  Action  Lawsuit  will  be  the principal factor in
determining  the  future  of  the  Partnership's  operations.   In addition, the
General  Partner  will  continue  to  suspend  the  payment  of  quarterly  cash
distributions  pending  final  resolution  of  the  Class  Action  Lawsuit.
Accordingly,  future  cash  distributions  are not expected to be paid until the
Class  Action  Lawsuit  is  adjudicated.

Item  7A.  Quantitative  and  Qualitative  Disclosures  about  Market  Risks.
-----------------------------------------------------------------------------

The  Partnership's  financial  statements include financial instruments that are
exposed  to  interest  rate  risks.

The  Partnership  has  one  note payable outstanding at December 31, 2001, which
bears  a  fixed interest rate of 7.65%.  The fair market value of fixed interest
rate  debt  may  be adversely impacted due to a decrease in interest rates.  The
effect  of  interest  rate fluctuations on the Partnership during the year ended
December  31,  2001  was  not  material.

The  Partnership's  loan to Echelon Residential Holdings matures on September 8,
2002,  currently  earns  interest  at a fixed annual rate of 14% and will earn a
fixed annual rate of 18% for the last 6 months of the loan, with interest due at
maturity.  Investments  earning  a  fixed  rate  of interest may have their fair
market  value adversely impacted due to a rise in interest rates.  The effect of
interest  rate  fluctuations  on  the  Partnership  in  2001  was  not material.
However,  during the second quarter of 2001, the General Partner determined that
recoverability  of  the  loan  receivable had been impaired and at June 30, 2001
recorded  an  impairment  of  $318,500,  reflecting  the  General Partner's then
assessment  of  the amount of loss likely to be incurred by the Partnership.  In
addition  to  the write-down recorded at June 30, 2001, the Partnership reserved
all  accrued interest of $590,772 recorded on the loan receivable from inception
through  March 31, 2001 and ceased accruing interest on its loan receivable from
Echelon  Residential  Holdings,  effective  April  1,  2001.

Item  8.  Financial  Statements  and  Supplementary  Data.
----------------------------------------------------------

Financial  Statements:
<TABLE>
<CAPTION>

<S>                                                         <C>
      Report of Independent Certified Public Accountants .  22

      Statement of Financial Position
      at December 31, 2001 and 2000. . . . . . . . . . . .  23

      Statement of Operations
      for the years ended December 31, 2001, 2000 and 1999  24

      Statement of Changes in Partners' Capital
      for the years ended December 31, 2001, 2000 and 1999  25

      Statement of Cash Flows
      for the years ended December 31, 2001, 2000 and 1999  26

      Notes to the Financial Statements. . . . . . . . . .  27

    ADDITIONAL FINANCIAL INFORMATION:

    Schedule of Excess (Deficiency) of Total Cash
    Generated to Cost of Equipment Disposed. . . . . . . .  42

    Statement of Cash and Distributable Cash
    From Operations, Sales and Refinancings. . . . . . . .  43

    Schedule of Costs Reimbursed to the General Partner
    and its Affiliates as Required by Section 10.4 of the
    Amended and Restated Agreement and Certificate
    of Limited Partnership . . . . . . . . . . . . . . . .  44
</TABLE>




<PAGE>

                  REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
                  --------------------------------------------------



To  the  Partners  of  AIRFUND  II  International  Limited  Partnership:

We  have  audited  the  accompanying  balance sheets of AIRFUND II International
Limited Partnership as of December 31, 2001 and 2000, and the related statements
of  operations,  changes  in  partners'  capital, and cash flows for each of the
three  years in the period ended December 31, 2001. Our audits also included the
financial  statement schedule listed in the Index at Item 14(a). These financial
statements  and schedule are the responsibility of the Partnership's management.
Our  responsibility  is  to express an opinion on these financial statements and
schedule  based  on  our  audits.

We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States.  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  AIRFUND II International
Limited  Partnership  at  December  31,  2001  and  2000, and the results of its
operations  and  its  cash flows for each of the three years in the period ended
December  31,  2001, in conformity with accounting principles generally accepted
in  the  United  States.  Also,  in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a  whole,  presents  fairly  in  all material respects the information set forth
therein.

Our  audits  were  conducted  for the purpose of forming an opinion on the basic
financial  statements  taken  as  a whole.  The Additional Financial Information
identified  in  the  Index  at  Item  8  is presented for purposes of additional
analysis  and  is  not  a required part of the basic financial statements.  Such
information  has been subjected to the auditing procedures applied in our audits
of  the  basic financial statements and, in our opinion, is fairly stated in all
material  respects  in  relation  to  the  basic financial statements taken as a
whole.

     /S/  ERNST  &  YOUNG  LLP

Tampa,  Florida
March  26,  2002

<PAGE>
                                       23
                  AIRFUND II INTERNATIONAL LIMITED PARTNERSHIP

                         STATEMENT OF FINANCIAL POSITION

                           DECEMBER 31, 2001 AND 2000





<TABLE>
<CAPTION>


                                                               2001          2000
ASSETS
<S>                                                        <C>           <C>

Cash and cash equivalents                                  $ 3,907,407   $ 2,827,385
Rents receivable, net of allowance of $43,919
  at December 31, 2001                                          60,747       116,820
Accounts receivable - affiliate                                    984        33,452
Other assets                                                     4,859        24,508
Interest receivable - loan, net of allowance of $590,772
  at December 31, 2001                                               -       446,086
Loan receivable, net of allowance of $318,500
  at December 31, 2001                                       3,321,500     3,640,000
Net investment in sales-type lease                              17,755       240,330
Equipment at cost, net of accumulated depreciation
  of $2,585,327 and $8,152,945 at December 31, 2001
  and 2000, respectively                                     2,211,787     2,644,169
                                                           ------------  ------------

      Total assets                                         $ 9,525,039   $ 9,972,750
                                                           ============  ============


LIABILITIES AND PARTNERS' CAPITAL

Notes payable                                              $ 1,038,675   $   906,869
Accrued interest                                                 6,611         7,161
Accrued liabilities                                            666,106       591,617
Accrued liabilities - affiliate                                 22,888        17,207
Deferred rental income                                               -        27,244
                                                           ------------  ------------
     Total liabilities                                       1,734,280     1,550,098
                                                           ------------  ------------

Partners' capital (deficit):
   General Partner                                          (2,605,919)   (2,574,324)
   Limited Partnership Interests
   (2,714,647 Units; initial purchase price of $25 each)    10,396,678    10,996,976
                                                           ------------  ------------
     Total partners' capital                                 7,790,759     8,422,652
                                                           ------------  ------------

     Total liabilities and partners' capital               $ 9,525,039   $ 9,972,750
                                                           ============  ============
</TABLE>








   The accompanying notes are an integral part of these financial statements.
<PAGE>
                  AIRFUND II INTERNATIONAL LIMITED PARTNERSHIP

                             STATEMENT OF OPERATIONS

              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999



<TABLE>
<CAPTION>

                                                         2001         2000        1999
<S>                                                   <C>          <C>         <C>
INCOME

Operating lease revenue                               $  548,377   $  554,415  $1,841,170
Sales-type lease revenue                                  13,404        2,491           -
Interest income                                          132,025      202,930     267,788
Interest income - loan                                   144,686      446,086           -
Gain on sale of equipment                                      -      884,573   3,109,500
Other income                                             998,686      300,977           -
                                                      -----------  ----------  ----------
  Total income                                         1,837,178    2,391,472   5,218,458
                                                      -----------  ----------  ----------

EXPENSES

Depreciation                                             261,382      297,611   1,054,343
Write-down of equipment                                  171,000            -           -
Interest expense                                          91,570      103,919     120,701
Equipment management fees - affiliate                     39,218       29,913      92,059
Operating expenses - affiliate                           996,629    1,061,428   2,059,346
Write-down of impaired loan and interest receivable      909,272            -           -
                                                      -----------  ----------  ----------
  Total expenses                                       2,469,071    1,492,871   3,326,449
                                                      -----------  ----------  ----------

Net income (loss)                                     $ (631,893)  $  898,601  $1,892,009
                                                      ===========  ==========  ==========



Net income (loss) per limited partnership unit        $    (0.22)  $     0.31  $     0.66
                                                      ===========  ==========  ==========
Cash distributions declared
   per limited partnership unit                       $        -   $        -  $        -
                                                      ===========  ==========  ==========
</TABLE>


















   The accompanying notes are an integral part of these financial statements.
<PAGE>
                  AIRFUND II INTERNATIONAL LIMITED PARTNERSHIP

                    STATEMENT OF CHANGES IN PARTNERS' CAPITAL

              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999



<TABLE>
<CAPTION>

                                 General
                                 Partner     Limited Partners
                                  Amount          Units           Amount        Total
                               ------------  ----------------  ------------  -----------
<S>                            <C>           <C>               <C>           <C>
 Balance at December 31, 1998  $(2,713,854)         2,714,647  $ 8,345,896   $5,632,042

   Net income - 1999                94,600                  -    1,797,409    1,892,009
                               ------------  ----------------  ------------  -----------

 Balance at December 31, 1999   (2,619,254)         2,714,647   10,143,305    7,524,051

   Net income - 2000                44,930                  -      853,671      898,601
                               ------------  ----------------  ------------  -----------

 Balance at December 31, 2000   (2,574,324)         2,714,647   10,996,976    8,422,652

   Net loss - 2001                 (31,595)                 -     (600,298)    (631,893)
                               ------------  ----------------  ------------  -----------

 Balance at December 31, 2001  $(2,605,919)         2,714,647  $10,396,678   $7,790,759
                               ============  ================  ============  ===========
</TABLE>

































   The accompanying notes are an integral part of these financial statements.
<PAGE>
                  AIRFUND II INTERNATIONAL LIMITED PARTNERSHIP

                             STATEMENT OF CASH FLOWS

              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

<TABLE>
<CAPTION>

                                                             2001          2000          1999
<S>                                                       <C>          <C>           <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net income (loss)                                         $ (631,893)  $   898,601   $ 1,892,009
Adjustments to reconcile net income (loss) to net
 cash provided by (used in) operating activities:
  Depreciation                                               261,382       297,611     1,054,343
  Bad debt expense                                            43,919             -             -
  Write-down of equipment                                    171,000             -             -
  Gain on sale of equipment                                        -      (884,573)   (3,109,500)
  Sales-type lease revenue                                   (13,404)       (2,491)            -
  Write-down of impaired loan and interest receivable        909,272             -             -
Changes in assets and liabilities:
  Rents receivable                                            12,154      (116,820)       39,933
  Accounts receivable - affiliate                             32,468       (31,976)       69,702
  Other assets                                                19,649         7,234        93,992
  Interest receivable - loan                                (144,686)     (446,086)            -
  Collections on net investment in sales-type lease          235,979        58,928             -
  Accrued interest                                              (550)       (6,195)      (11,770)
  Accrued liabilities                                         74,489       128,293         4,839
  Accrued liabilities - affiliate                              5,681       (61,386)       62,339
  Deferred rental income                                     (27,244)      (24,136)        3,383
                                                          -----------  ------------  ------------
    Net cash provided by (used in) operating activities      948,216      (182,996)       99,270
                                                          -----------  ------------  ------------

CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES
Proceeds from equipment sales                                      -     1,005,645     3,109,500
Loan receivable                                                    -    (3,640,000)            -
                                                          -----------  ------------  ------------
    Net cash provided by (used in) investing activities            -    (2,634,355)    3,109,500
                                                          -----------  ------------  ------------

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES
Proceeds from notes payable                                  505,028       201,247             -
Principal payments - notes payable                          (373,222)     (276,153)     (914,890)
                                                          -----------  ------------  ------------
    Net cash provided by (used in) financing activities      131,806       (74,906)     (914,890)
                                                          -----------  ------------  ------------

Net increase (decrease) in cash and cash equivalents       1,080,022    (2,892,257)    2,293,880
Cash and cash equivalents at beginning of year             2,827,385     5,719,642     3,425,762
                                                          -----------  ------------  ------------
Cash and cash equivalents at end of year                  $3,907,407   $ 2,827,385   $ 5,719,642
                                                          ===========  ============  ============


SUPPLEMENTAL INFORMATION
Cash paid during the year for interest                    $   92,120   $   110,114   $   132,471
                                                          ===========  ============  ============

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
Equipment sold on sales-type lease                        $        -   $   296,767   $         -
                                                          ===========  ============  ============
</TABLE>


See  Note  7  to  the  financial  statements  regarding  the  refinancing of the
Partnership's  notes  payable  in  February  2001.







   The accompanying notes are an integral part of these financial statements.

<PAGE>

                                        28

                  AIRFUND II INTERNATIONAL LIMITED PARTNERSHIP

                        NOTES TO THE FINANCIAL STATEMENTS

                                DECEMBER 31, 2001


NOTE  1  -  ORGANIZATION  AND  PARTNERSHIP  MATTERS
---------------------------------------------------

AIRFUND  II  International Limited Partnership (the "Partnership") was organized
as a limited partnership under the Massachusetts Uniform Limited Partnership Act
(the "Uniform Act") on July 20, 1989 for the purpose of acquiring and leasing to
third  parties  a  specified  portfolio  of used commercial aircraft.  Partners'
capital  initially consisted of contributions of $1,000 from the General Partner
(AFG Aircraft Management Corporation, a Massachusetts corporation) and $100 from
the  Initial  Limited  Partner  (AFG  Assignor  Corporation,  a  Massachusetts
corporation).  The  Partnership issued 2,714,647 units, representing assignments
of limited partnership interests (the "Units"), to 4,192 investors.  Unitholders
and  Limited  Partners (other than the Initial Limited Partner) are collectively
referred  to as Recognized Owners.  The General Partner is an affiliate of Equis
Financial  Group Limited Partnership (formerly known as American Finance Group),
a  Massachusetts  limited  partnership ("EFG").  The common stock of the General
Partner  is owned by EFG.  The General Partner is not required to make any other
capital  contributions  to  the  Partnership except as may be required under the
Uniform  Act  and  Section  6.1(b)  of  the  Amended  and Restated Agreement and
Certificate  of  Limited  Partnership  (the  "Restated  Agreement, as amended").

EFG  is  a  Massachusetts  partnership  formerly known as American Finance Group
("AFG").  AFG was established in 1988 as a Massachusetts general partnership and
succeeded American Finance Group, Inc., a Massachusetts corporation organized in
1980.  EFG  and  its  subsidiaries  (collectively, the "Company") are engaged in
various  aspects  of  the  equipment  leasing  business, including EFG's role as
Equipment  Manager  or  Advisor  to  the  Partnership  and  several  other
direct-participation equipment leasing programs sponsored or co-sponsored by EFG
(the  "Other Investment Programs").  The Company arranges to broker or originate
equipment  leases,  acts  as  remarketing  agent and asset manager, and provides
leasing  support  services,  such  as  billing,  collecting, and asset tracking.

The  general  partner  of  EFG,  with  a  1%  controlling  interest,  is  Equis
Corporation,  a  Massachusetts corporation owned and controlled entirely by Gary
D.  Engle,  its  President,  Chief  Executive  Officer and sole Director.  Equis
Corporation  also  owns  a  controlling 1% general partner interest in EFG's 99%
limited  partner,  GDE  Acquisition  Limited  Partnership  ("GDE  LP").  Equis
Corporation  and  GDE  LP were established in December 1994 by Mr. Engle for the
sole  purpose  of  acquiring  the  business  of  AFG.

In 1990, EFG assigned its Equipment Management Agreement with the Partnership to
AF/AIP  Programs  Limited  Partnership,  and AF/AIP Programs Limited Partnership
entered  into  an  identical  management  agreement  with  EFG.

On  June  28, 1991, the Offering of Units of the Partnership was concluded.  The
Partnership  issued  an  aggregate  of  2,714,647  Units in six Interim Closings
during  the  period May 17, 1990 through June 28, 1991.  The initial purchase of
the  aircraft  and  the  associated  lease commitments occurred on May 18, 1990.
Additional  purchases  of  aircraft  (or  proportionate  interests  in aircraft)
occurred subsequent to each Closing.  The six Interim Closings which occurred in
1990  and  1991  and  the  associated Units issued, purchase price and number of
investors  who became Recognized Owners of the Partnership are summarized below.
<TABLE>
<CAPTION>


..                         .               .         Recognized
       Closing Date  Units Issued  Purchase Price     Owners
-------------------  ------------  ---------------  ----------
<S>                  <C>           <C>              <C>
May 17, 1990. . . .     1,725,100  $    43,127,500       2,600
August 2, 1990. . .       317,986        7,949,650         494
October 1, 1990 . .       159,510        3,987,750         251
December 27, 1990 .       246,845        6,171,125         398
February 15, 1991 .       112,796        2,819,900         173
June 28, 1991 . . .       152,410        3,810,250         276
                     ------------  ---------------  ----------

  Totals. . . . . .     2,714,647  $    67,866,175       4,192
                     ============  ===============  ==========
</TABLE>


Pursuant  to  the Restated Agreement, as amended, distributions of Distributable
Cash  From  Operations  and Distributable Cash From Sales or Refinancings of the
Partnership  shall  be  made as follows: Prior to Payout, (i) Distributable Cash
From  Operations  will be distributed 95% to the Recognized Owners and 5% to the
General  Partner and (ii) Distributable Cash From Sales or Refinancings shall be
distributed  99%  to the Recognized Owners and 1% to the General Partner.  After
Payout, (i) all Distributions will be distributed 99% to the General Partner and
1%  to  the  Recognized  Owners until the General Partner has received an amount
equal  to  5%  of all Distributions made by the Partnership and (ii) thereafter,
all  Distributions  will  be  made  90%  to the Recognized Owners and 10% to the
General  Partner.

Under  the  terms  of  a  Management  Agreement between the Partnership and EFG,
management  services  are  provided by EFG to the Partnership at fees based upon
acquisitions  of  equipment  and  revenues  from  leases.

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES
----------------------------------------------------------

Cash  and  Cash  Equivalents
----------------------------

The  Partnership  classifies  as cash and cash equivalent amounts on deposits in
banks  and  liquid investment instruments purchased with an original maturity of
three  months  or  less.

Revenue  Recognition
--------------------

Effective  January 1, 2000, the Partnership adopted the provisions of Securities
Exchange  Commission  Staff Accounting Bulletin No. 101, "Revenue Recognition in
Financial  Statements"  ("SAB  No. 101").  SAB No. 101 provides guidance for the
recognition,  presentation  and  disclosure  of revenue in financial statements.
The  adoption  of  SAB  No.  101  had  no  impact on the Partnership's financial
statements.

Rents  are payable to the Partnership monthly, quarterly or semi-annually and no
significant  amounts  are  calculated on factors other than the passage of time.
The  leases are accounted for as operating leases and are noncancellable.  Rents
received  prior  to  their  due  dates  are deferred.  In certain instances, the
Partnership  may  enter  renewal  or re-lease agreements which expire beyond the
Partnership's  anticipated  dissolution date.  This circumstance is not expected
to  prevent  the orderly wind-up of the Partnership's business activities as the
General  Partner  and EFG would seek to sell the then-remaining equipment assets
either  to  the lessee or to a third party, taking into consideration the amount
of  future  noncancellable  rental  payments associated with the attendant lease
agreements.  Future  minimum  rents from operating leases of $851,809 are due as
follows:

<TABLE>
<CAPTION>

<S>                                 <C>    <C>
  For the year ending December 31,   2002  $361,660
                                     2003   294,089
                                     2004   196,060
                                           --------

..                                   Total  $851,809
                                           ========
</TABLE>


In  January  2002,  the  Programs  executed  a lease amendment with the existing
lessee,  Air  Slovakia  BWJ  Ltd. ("Air Slovakia") to restructure the lease of a
Boeing  737  aircraft, which had been scheduled to expire in September 2003.  In
accordance  with  the  lease amendment, the lease term was revised and the lease
will  terminate  in  August  2002.

Lease  payments for the sales-type lease are due monthly and the related revenue
is  recognized  by a method which produces a constant periodic rate of return on
the  outstanding  investment  in  the  lease.  Unearned  income is recognized as
sales-type  lease  revenue  over  the  lease  term  using  the  interest method.

Revenue  from  major individual lessees which accounted for 10% or more of lease
revenue  during  the years ended December 31, 2001, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>

<S>                               <C>       <C>       <C>
                                      2001      2000      1999
                                  --------  --------  --------

Aerovias De Mexico, S.A. de C.V.  $294,089  $ 92,311  $     --
Finnair OY . . . . . . . . . . .  $141,541  $346,949  $634,658
Air Slovakia . . . . . . . . . .  $112,746  $     --  $     --
Transmeridian Airlines, Inc. . .  $     --  $ 70,000  $560,000
Southwest Airlines, Inc. . . . .  $     --  $     --  $380,699
American Trans Air, Inc. . . . .  $     --  $     --  $245,533
</TABLE>



Use  of  Estimates
------------------

The  preparation  of  the  financial  statements  in  conformity with accounting
principles generally accepted in the United States requires the use of estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying  notes.  Actual  results  could  differ  from  those  estimates.

Equipment  on  Lease
--------------------

All  aircraft  were  acquired from EFG or one of its Affiliates.  Equipment Cost
means the actual cost paid by the Partnership to acquire the aircraft, including
acquisition  fees.  Equipment  cost  reflects  the  actual  price  paid  for the
aircraft  by  EFG  or the Affiliate plus all actual costs incurred by EFG or the
Affiliate  while  carrying the aircraft less the amount of all rents received by
EFG  or  the  Affiliate  prior  to  selling  the  aircraft.

Depreciation
------------

The  Partnership's  depreciation  policy  is  intended  to  allocate the cost of
aircraft  over  the  period  during  which  they  produce economic benefit.  The
principal  period  of  economic  benefit  is  considered  to  correspond to each
aircraft's  primary  lease  term,  which term generally represents the period of
greatest  revenue  potential for each aircraft.  Accordingly, to the extent that
an  aircraft  is  held  on  primary  lease term, the Partnership depreciates the
difference  between (i) the cost of the aircraft and (ii) the estimated residual
value  of the aircraft on a straight-line basis over such term.  For purposes of
this policy, estimated residual values represent estimates of aircraft values at
the  date  of  the  primary lease expiration.  To the extent that an aircraft is
held  beyond its primary lease term, the Partnership continues to depreciate the
remaining  net  book  value  of  the  aircraft on a straight-line basis over the
aircraft's  remaining  economic  life.

The ultimate realization of residual value for any type of aircraft is dependent
upon  many  factors,  including  EFG's  ability  to  sell and re-lease aircraft.
Changing  market  conditions,  industry trends, technological advances, and many
other  events  can converge to enhance or detract from asset values at any given
time.

Remarketing  and  Maintenance  Expenses
---------------------------------------

The  Partnership expenses storage and remarketing costs associated with aircraft
and  other  equipment  under  lease  as  incurred.

Generally,  the  costs  of  scheduled  inspections  and  repairs  and  routine
maintenance  for aircraft and other equipment under lease are the responsibility
of  the  lessee.  For  aircraft  under lease, scheduled airframe inspections and
repairs,  such as "D checks", are generally the responsibility of the lessee. In
certain  situations,  the  Partnership  may  be  responsible for reimbursing the
lessee  for  a  portion of such costs paid by the lessee prior to the redelivery
date  (i.e.,  the  expiration  of  the lease term) or may be entitled to receive
additional  payments from the lessee based on the terms and conditions set forth
in the lease arrangement which considers, among other things, the amount of time
remaining  until  the next scheduled maintenance event.  The Partnership records
the  amount  payable  or  receivable,  with  a corresponding charge or credit to
operations.

Allowance  for  Loan  Losses
----------------------------

In  accordance  with  Statement  of  Financial  Accounting  Standards  No.  114,
"Accounting  by  Creditors  for  Impairment  of  a  Loan"  ("SFAS No. 114"), the
Partnership  periodically evaluates the collectibility of its loan's contractual
principal  and  interest  and  the  existence  of  loan  impairment  indicators,
including contemporaneous economic conditions, situations which could affect the
borrower's  ability  to  repay  its  obligation,  the  estimated  value  of  the
underlying  collateral,  and  other  relevant  factors.  Real  estate values are
discounted  using  a  present  value  methodology  over  the  period between the
financial reporting date and the estimated disposition date of each property.  A
loan is considered to be impaired when, based on current information and events,
it  is  probable  that the Partnership will be unable to collect all amounts due
according  to  the  contractual terms of the loan agreement, which includes both
principal  and  interest.  A  provision  for  loan losses is charged to earnings
based on the judgment of the Partnership's management of the amount necessary to
maintain  the  allowance  for loan losses at a level adequate to absorb probable
losses.

Net  Investment  in  Sales-Type  Lease
--------------------------------------
For  leases that qualify as sales-type leases, the Partnership recognizes profit
or  loss  at lease inception to the extent the fair value of the property leased
differs  from  the  carrying  value.  For  balance sheet purposes, the aggregate
lease  payments  receivable  are  recorded  on the balance sheet net of unearned
income  as net investment in sales-type lease.  Unearned income is recognized as
sales-type  lease  revenue  over  the  lease  term  using  the  interest method.

Impairment  of  Long-Lived  Assets
----------------------------------
The  carrying  values  of long-lived assets are reviewed for impairment whenever
events  or  changes in circumstances indicate that the recorded value may not be
recoverable.  If  this  review  results in an impairment, as determined based on
the  estimated  undiscounted  cash  flow,  the  carrying  value  of  the related
long-lived  asset  is  adjusted  to  fair  value.
Accrued  Liabilities  -  Affiliate
----------------------------------

Unpaid  operating  expenses paid by EFG on behalf of the Partnership and accrued
but  unpaid  administrative  charges and management fees are reported as Accrued
Liabilities  -  Affiliate.

Contingencies
-------------

It  is  the Partnership's policy to recognize a liability for goods and services
during  the  period when the goods or services are received.  To the extent that
the  Partnership  has  a contingent liability, meaning generally a liability the
payment  of  which  is subject to the outcome of a future event, the Partnership
recognizes  a  liability  in  accordance  with Statement of Financial Accounting
Standards  No.  5  "Accounting  for  Contingencies"  ("SFAS No. 5").  SFAS No. 5
requires  the recognition of contingent liabilities when the amount of liability
can  be  reasonably  estimated  and  the  liability  is  probable.

The  Partnership  is  a  Nominal  Defendant  in  a  Class  Action  Lawsuit.  The
Defendant's  and  Plaintiff's  Counsel have negotiated a Revised Settlement.  As
part  of  the  Revised  Settlement,  EFG has agreed to buy the loans made by the
Partnership  and  10  affiliated partnerships (the ''Exchange Partnerships'') to
Echelon  Residential  Holdings  for an aggregate of $32 million plus interest at
7.5%  per  annum, if they are not repaid prior to or at their scheduled maturity
date.  The  Revised Settlement also provides for the liquidation of the Exchange
Partnerships'  assets,  a  cash  distribution  and  the  dissolution  of  the
Partnerships  including the liquidation and dissolution of this Partnership. The
court held a hearing on March 1, 2002 to consider the Revised Settlement.  After
the  hearing,  the  court  issued  an  order preliminarily approving the Revised
Settlement  and providing for the mailing of notice to the Operating Partnership
Sub-Class  of  a  hearing on June 7, 2002 to determine whether the settlement on
the terms and conditions set forth in the Revised Settlement is fair, reasonable
and  adequate  and  should be finally approved by the court and a final judgment
entered  in  the  matter.  The  Partnership's  estimated  exposure  for  costs
anticipated  to be incurred in pursuing the settlement proposal is approximately
$512,000  consisting  principally  of  legal fees and other professional service
costs.  These  costs  are  expected  to  be  incurred  regardless of whether the
proposed  settlement  ultimately  is  effected.  The  Partnership  expensed
approximately  $332,000 of these costs in 1998 following the Court's approval of
the  initial  settlement  plan.  The  cost  estimate is subject to change and is
monitored  by  the General Partner based upon the progress of the litigation and
other  pertinent information.  As a result, the Partnership accrued and expensed
additional  amounts of approximately $89,000, $41,000 and $50,000 for such costs
during  2001,  2000  and  1999, respectively.  See Note 8 additional discussion.

The  Investment  Company Act of 1940 (the "1940 Act") places restrictions on the
capital  structure  and  business activities of companies registered thereunder.
The  Partnership  has  active  business  operations  in  the  financial services
industry,  including  equipment  leasing  and  the  loan  to Echelon Residential
Holdings.  The Partnership does not intend to engage in investment activities in
a  manner  or  to an extent that would require the Partnership to register as an
investment  company  under  the  1940  Act.  However,  it  is  possible that the
Partnership unintentionally may have engaged, or may in the future, engage in an
activity  or  activities  that  may be construed to fall within the scope of the
1940  Act.  The  General Partner is engaged in discussions with the staff of the
Securities  and  Exchange  Commission  ("SEC")  regarding  whether  or  not  the
Partnership  may  be  an  inadvertent investment company as a consequence of the
above-referenced  loan.  The  1940  Act,  among  other  things,  prohibits  an
unregistered investment company from offering securities for sale or engaging in
any  business  in  interstate  commerce  and, consequently, leases and contracts
entered  into  by partnerships that are unregistered investment companies may be
voidable.  The  General  Partner  has  consulted  counsel  and believes that the
Partnership is not an investment company.  If the Partnership were determined to
be an unregistered investment company, its business would be adversely affected.
The  General  Partner has determined to take action to resolve the Partnership's
status  under  the  1940  Act  by  means that may include disposing or acquiring
certain  assets  that  it  might  not  otherwise  dispose  or  acquire.

Allocation  of  Profits  and  Losses
------------------------------------

For  financial  statement  purposes,  net  income  or  loss is allocated to each
Partner  according  to  their  respective  ownership  percentages  (95%  to  the
Recognized  Owners  and  5%  to  the  General  Partner).  See  Note 8 concerning
allocation  of  income  or  loss  for  income  tax  purposes.

Net  Income  (Loss)  Per  Unit
------------------------------

Net  income  (loss) per unit is based on 2,714,647 Units outstanding during each
of  the  three  years  in  the period ended December 31, 2001 and computed after
allocation  of  the  General  Partner's  5%  share  of  net  income  (loss).

Provision  for  Income  Taxes
-----------------------------

No  provision  or  benefit  from  income  taxes  is included in the accompanying
financial  statements.  The  Partners  are  responsible  for  reporting  their
proportionate  shares  of the Partnership's taxable income or loss and other tax
attributes  on  their  separate  tax  returns.

New  Accounting  Pronouncements
-------------------------------

Statement  of  Financial  Accounting  Standards No. 141, "Business Combinations"
("SFAS  No.  141"),  requires  the  purchase  method  of accounting for business
combinations  initiated  after  June  30,  2001  and  eliminates  the
pooling-of-interests  method.  The Partnership believes the adoption of SFAS No.
141  has  not  had  a  material  impact  on  its  financial  statements.

Statement  of  Financial  Accounting  Standards  No.  142,  "Goodwill  and Other
Intangible  Assets"  ("SFAS  No. 142"), was issued in July 2001 and is effective
January  1, 2002.  SFAS No. 142 requires, among other things, the discontinuance
of  goodwill  amortization.  SFAS  No.  142  also  includes  provisions  for the
reclassification  of  certain  existing  recognized  intangibles  as  goodwill,
reassessment  of  the  useful  lives  of  existing  recognized  intangibles,
reclassification of certain intangibles out of previously reported goodwill, and
the identification of reporting units for purposes of assessing potential future
impairments  of  goodwill.  SFAS  No. 142 requires the Partnership to complete a
transitional goodwill impairment test six months from the date of adoption.  The
Partnership  believes  the  adoption  of  SFAS  No. 142 will not have a material
impact  on  its  financial  statements.

Statement  of  Financial  Accounting  Standards  No.  144  "Accounting  for  the
Impairment  or  Disposal  of  Long-Lived Assets" ("SFAS No. 144"), was issued in
October  2001  and replaces Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be  Disposed  Of".  The accounting model for long-lived assets to be disposed of
by sale applies to all long-lived assets, including discontinued operations, and
replaces  the  provisions  of  Accounting  Principles  Bulletin  Opinion No. 30,
"Reporting  Results  of  Operations  -  Reporting  the  Effects of Disposal of a
Segment  of  a  Business", for the disposal of segments of a business.  SFAS No.
144  requires  that  those  long-lived  assets  be  measured at the lower of the
carrying  amount or fair value less cost to sell, whether reported in continuing
operations  or  in  discontinued operations.  Therefore, discontinued operations
will  no  longer  be  measured  at  net  realizable value or include amounts for
operating  losses  that  have  not yet occurred.  SFAS No. 144 also broadens the
reporting of discontinued operations to include all components of an entity with
operations  that  can be distinguished from the rest of the entity and that will
be  eliminated  from  the  ongoing  operations  of  the  entity  in  a  disposal
transaction.  The  provisions  of  SFAS  No.  144  are  effective  for financial
statements  issued  for  fiscal  years  beginning  after  December 15, 2001 and,
generally, are to be applied prospectively.    The Partnership believes that the
adoption  of  SFAS  No.  144  will  not  have a material impact on its financial
statements.


NOTE  3  -  EQUIPMENT
---------------------

The following is a summary of equipment owned by the Partnership at December 31,
2001.  Remaining  Lease  Term  (Months), as used below, represents the number of
months  remaining  from  December  31,  2001  under  contracted  lease terms.  A
remaining lease term equal to zero reflects equipment held for sale or re-lease.
<TABLE>
<CAPTION>

<S>                                             <C>          <C>           <C>
..                                               Remaining
..                                               Lease Term   Equipment
 Equipment Type                                    (Months)  at Cost       Location
----------------------------------------------  -----------  ------------  ---------

One McDonnell Douglas MD-82                               0  $ 2,078,640   Off Lease
One McDonnell Douglas MD-82
(Aerovias de Mexico S.A. de C.V)                         32    2,078,640   Foreign
One Boeing 737-2H4 (Air Slovakia)                         8      639,834   Foreign
                                                             ------------
   Total equipment cost. . . . . . . . . . . .            -    4,797,114
   Accumulated depreciation        .                      -   (2,585,327)
                                                             ------------
   Equipment, net of accumulated depreciation             -  $ 2,211,787
                                                             ============
</TABLE>



The  cost  of  each  of  the  Partnership's  aircraft  represents  proportionate
ownership  interests.  The  remaining  interests  are  owned by other affiliated
partnerships  sponsored  by  EFG.  All  Partnerships  individually  report,  in
proportion  to  their respective ownership interests, their respective shares of
assets,  liabilities,  revenues,  and  expenses  associated  with  the aircraft.

Certain of the Partnership's aircraft and the related lease payment streams were
used  to  secure  the  Partnership's  term  loans  with third-party lenders. The
preceding summary includes leveraged equipment having an aggregate original cost
of  approximately $2,079,000 and a net book value of approximately $1,107,000 at
December  31,  2001.

The  Partnership entered into a three-year lease agreement with Air Slovakia for
its  proportionate  interest  in  a Boeing 737-2H4 aircraft, effective September
2000.  In  accordance  with  the lease amendment described above, the lease term
was  revised  and  the  lease  will  terminate  in August 2002.  The Partnership
entered  into  a  four-year  re-lease agreement with Aerovias de Mexico, S.A. de
C.V.  for  its  proportionate  interest  in  a McDonnell Douglas MD-82 aircraft,
effective  September  2000.  Under  the terms of this agreement, the Partnership
are  to  receive  rents  of approximately $1,176,000 over the term of the lease.

Generally,  the  costs  associated  with maintaining, insuring and operating the
Partnership's  aircraft are incurred by the respective lessees pursuant to terms
specified  in  their individual lease agreements with the Partnership.  However,
the  Partnership  has  purchased  supplemental  insurance coverage to reduce the
economic  risk  arising  from  certain losses.  Specifically, the Partnership is
insured  under  supplemental  policies  for  "Aircraft Hull Total Loss Only" and
"Aircraft  Hull  Total  Loss  Only  War  and  Other  Perils."

As aircraft are sold to third parties, or otherwise disposed of, the Partnership
recognizes  a gain or loss equal to the difference between the net book value of
the  aircraft  at the time of sale or disposition and the proceeds realized upon
sale  or  disposition.  The  ultimate realization of estimated residual value in
the  aircraft  is  dependent upon, among other things, EFG's ability to maximize
proceeds  from  selling  or re-leasing the aircraft.  The summary above includes
aircraft  held  for  re-lease  or  sale  with  an original cost of approximately
$2,079,000  and a net book value of approximately $936,000 at December 31, 2001,
which  represents  the  McDonnell Douglas MD-82 aircraft returned in April 2001.
The  General  Partner is actively seeking the sale or re-lease of this aircraft.

The  Partnership accounts for impairment of long-lived assets in accordance with
Statement  of  Financial  Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
which was issued in March 1995.  SFAS No. 121 requires that long-lived assets be
reviewed  for  impairment  whenever  events or changes in circumstances indicate
that  the  net book value of the assets may not be recoverable from undiscounted
future  cash  flows.  During  the  year ended December 31, 2001, the Partnership
recorded  a  write-down of equipment, representing an impairment to the carrying
value  of  the  Partnership's  interest  in the McDonnell Douglas MD-82 aircraft
which  is  off-lease  as  discussed above.  The resulting charge of $171,000 was
based  on  a  comparison  of  estimated  fair  value  and  carrying value of the
Partnership's  interest  in  the  aircraft.


NOTE  4  -  LOAN  RECEIVABLE
----------------------------
On  March  8, 2000, the Exchange Partnerships collectively loaned $32 million to
Echelon  Residential  Holdings,  a  newly  formed  real estate company.  Echelon
Residential  Holdings  is  owned by several investors, including James A. Coyne,
Executive  Vice  President  of the general partner of EFG.  In addition, certain
affiliates  of the General Partner made loans to Echelon Residential Holdings in
their  individual  capacities.
In  the  Class  Action Lawsuit, there is a risk that the court may object to the
General  Partner's  action  in  structuring  the  loan in this way since the EFG
officer may be deemed an affiliate and the loans in violation of the prohibition
against  loans  to  affiliates  in  the  Partnership  Agreement  and the court's
statement  in  its order permitting New Investments that all other provisions of
the  Partnership  Agreements governing the investment objectives and policies of
the  Partnership  shall  remain in full force and effect.  The court may require
the  partnerships  to  restructure  or  divest  the  loan.
The  Partnership's  original  loan was $3,640,000. Echelon Residential Holdings,
through  a  wholly-owned  subsidiary  (Echelon  Residential  LLC), used the loan
proceeds  to  acquire  various  real  estate  assets  from Echelon International
Corporation, an unrelated Florida-based real estate company. The loan has a term
of  30 months, maturing on September 8, 2002, and an annual interest rate of 14%
for  the  first 24 months and 18% for the final six months. Interest accrues and
compounds  monthly  and  is  payable  at  maturity.  In  connection  with  the
transaction, Echelon Residential Holdings has pledged a security interest in all
of  its  right, title and interest in and to its membership interests in Echelon
Residential LLC to the Exchange Partnerships as collateral.  Echelon Residential
Holdings  has no material business interests other than those connected with the
real  estate  properties  owned  by  Echelon  Residential  LLC.
The  summarized  financial  information  for  Echelon Residential Holdings as of
December  31,  2001  and  2000, and for the year ended December 31, 2001 and the
period  March  8, 2000 (commencement of operations) through December 31, 2000 is
as  follows:
<TABLE>
<CAPTION>

                                             2001           2000
                                         -------------  ------------
<S>                                      <C>            <C>
 Total assets  .. . . . . . . . . . . .  $ 85,380,902   $68,580,891
 Total liabilities  . . . . . . . . . .  $ 94,352,739   $70,183,162
 Minority interest  . . . . . . . . . .  $  1,570,223   $ 2,257,367
 Total deficit   .. . . . . . . . . . .  $(10,542,060)  $(3,859,638)

 Total revenues  .. . . . . . . . . . .  $ 14,564,771   $ 5,230,212
 Total expenses, minority interest
   and equity in loss of unconsolidated
   joint venture. . . . . . . . . . . .  $ 23,137,076   $11,936,238
 Net loss  .. . . . . . . . . . . . . .  $ (8,572,305)  $(6,706,026)
</TABLE>



During  the  second  quarter  of  2001,  the  General  Partner  determined  that
recoverability  of  the  loan  receivable had been impaired and at June 30, 2001
recorded  an  impairment  of  $318,500, reflecting the General Partner's current
assessment  of  the  amount  of  loss  that  is  likely  to  be  incurred by the
Partnership.  In  addition  to  the  write-down  recorded  at June 30, 2001, the
Partnership  reserved  all  accrued  interest  of  $590,772 recorded on the loan
receivable from inception through March 31, 2001 and ceased accruing interest on
its  loan receivable from Echelon Residential Holdings, effective April 1, 2001.
The  total impairment of $909,272 is recorded as write-down of impaired loan and
interest  receivable  in  the  year  ended  December  31,  2001.

The  write-down of the loan receivable from Echelon Residential Holdings and the
related  accrued interest was precipitated principally by a slowing U.S. economy
and  its  effects on the real estate development industry.  The economic outlook
for  the  properties  that existed when the loan was funded has deteriorated and
inhibited  the  ability  of  Echelon  Residential Holdings' management to secure
low-cost  sources  of  development  capital,  including  but  not  limited  to
joint-venture  or  equity partners.  In response to these developments and lower
risk  tolerances  in  the  credit markets, the management of Echelon Residential
Holdings  decided  in  the second quarter of 2001 to concentrate its prospective
development  activities within the southeastern United States and, therefore, to
dispose  of  development  sites  located  elsewhere.  In  May  2001,  Echelon
Residential  Holdings  closed  its Texas-based development office; and since the
beginning  of  2001,  the  company has sold five of nine properties (two in July
2001, one in October 2001, one in November 2001 and one in February 2002).  As a
result  of these developments, the General Partner does not believe that Echelon
Residential  Holdings  will  realize the profit levels originally believed to be
achievable  from either selling these properties as a group or developing all of
them  as  multi-family  residential  communities.


NOTE  5  -  NET  INVESTMENT  IN  SALES-TYPE  LEASE
--------------------------------------------------

The  Partnership's  net  investment  in  a sales-type lease is the result of the
conditional  sale  of  the  Partnership's proportionate interest in a Boeing 737
aircraft  executed in October 2000. The title to the aircraft was to transfer to
Royal  Aviation  Inc.,  at  the  expiration  of the lease term.  The sale of the
aircraft  was  recorded  by  the Partnership as a sales-type lease, with a lease
term  expiring  in  January  2002.  For  the  year  ended December 31, 2000, the
Partnership  recorded  a  net gain on sale of equipment, for financial statement
purposes,  of  $91,471  for  the  Partnership's  proportional  interest  in  the
aircraft.  The  net  book  value  of  equipment sold on sales-type lease totaled
$296,767,  which  was  a non-cash transaction.  In addition, the Partnership has
recognized  sales-type  lease  revenue  from  this  lease of $13,404 and $2,491,
respectively,  during  the  years ended December 31, 2001 and 2000.  At December
31,  2001,  the  components of the net investment in the sales-type lease are as
follows:
<TABLE>
<CAPTION>

<S>                                             <C>
Total minimum lease payments to be received     $19,427
Less:  Unearned income . . . . . . . . . . . .    1,672
                                                -------
            Net investment in sales-type lease  $17,755
                                                =======
</TABLE>


Unearned  income  is being amortized to revenue over the lease term, expiring in
January  2002.

In  the fourth quarter of 2001, Royal Aviation Inc. declared bankruptcy and as a
result,  has defaulted on this conditional sales agreement.  The General Partner
is  negotiating  for  the  return of the aircraft.   As of December 31, 2001, no
allowance  on  the  investment in sales-type lease was deemed necessary based on
the  comparison  of  estimated  fair  value of the Partnership's interest in the
aircraft  and  the  Partnership's  net  investment  in  the  sales-type  lease.



NOTE  6  -  RELATED  PARTY  TRANSACTIONS
----------------------------------------

All  operating expenses incurred by the Partnership are paid by EFG on behalf of
the  Partnership and EFG is reimbursed at its actual cost for such expenditures.
Fees and other costs incurred during each of the three years in the period ended
December  31,  2001, which were paid or accrued by the Partnership to EFG or its
Affiliates,  are  as  follows:
<TABLE>
<CAPTION>

<S>                              <C>         <C>         <C>
                                       2001        2000        1999
                                 ----------  ----------  ----------

Equipment management fees . . .  $   39,218  $   29,913  $   92,059
Administrative charges. . . . .      42,026      72,967      71,699
Reimbursable operating expenses
 due to third parties . . . . .     954,603     988,461   1,987,647
                                 ----------  ----------  ----------

 Total. . . . . . . . . . . . .  $1,035,847  $1,091,341  $2,151,405
                                 ==========  ==========  ==========
</TABLE>



As  provided under the terms of the Management Agreement, EFG is compensated for
its  services  to  the  Partnership.  Such  services  include  acquisition  and
management  of  equipment.  For  acquisition services, EFG was compensated by an
amount  equal  to  3.07%  of  Equipment Base Price paid by the Partnership.  For
management  services,  EFG  is  compensated  by  an  amount equal to 5% of gross
operating  lease rental revenue and 2% of gross full payout lease rental revenue
received  by  the Partnership.  Both acquisition and management fees are subject
to  certain  limitations  defined  in  the  Management  Agreement.

Administrative  charges  represent amounts owed to EFG, pursuant to Section 10.4
of  Restated  Agreement, as amended, for persons employed by EFG who are engaged
in  providing administrative services to the Partnership. Reimbursable operating
expenses  due  to  third  parties  represent  costs paid by EFG on behalf of the
Partnership  which  are  reimbursed  to  EFG  at  actual  cost.

All  aircraft  were  purchased  from  EFG  or  one  of  its  Affiliates.  The
Partnership's acquisition cost was determined by the method described in Note 2,
Equipment  on  Lease.

All  rents  and  the  proceeds  from  the sale of equipment are paid directly to
either  EFG  or  to  a  lender.  EFG  temporarily  deposits collected funds in a
separate interest-bearing escrow account prior to remittance to the Partnership.
At  December  31,  2001, the Partnership was owed $984 by EFG for such funds and
the  interest  thereon.  These funds were remitted to the Partnership in January
2002.

An  affiliate  of  the General Partner owns Units in the Partnership as follows:
<TABLE>
<CAPTION>

<S>                                    <C>          <C>
                                       Number of    Percent of Total
Affiliate                              Units Owned  Outstanding Units

Old North Capital Limited Partnership       40,000               1.47%
-------------------------------------  -----------  ------------------
</TABLE>


Old  North  Capital  Limited  Partnership  ("ONC")  is  a  Massachusetts limited
partnership  formed in 1995. The general partner of ONC is controlled by Gary D.
Engle  and  the  limited  partnership interests of ONC are owned by Semele Group
Inc.  ("Semele").  Gary  D.  Engle  is  Chairman  and Chief Financial Officer of
Semele  and President, Chief Executive Officer, sole shareholder and Director of
EFG's  general  partner.


NOTE  7  -  NOTES  PAYABLE
--------------------------

The  Partnership  has  one  note payable outstanding at December 31, 2001 in the
amount  of  $1,038,675.  This  installment  note  is  non-recourse  and  is
collateralized  by  Partnership's  interest in an aircraft leased to Aerovias de
Mexico,  S.  A.  de  C.V.  and  assignment  of the related lease payments.  This
indebtedness  bears  a  fixed  interest  rate  of  7.65%, principal is amortized
monthly  and  the Partnership has a balloon payment obligation at the expiration
of  the  lease  term  of  $404,138  in  September  2004.

In  February  2001,  the  Partnership and certain affiliated investment programs
(collectively  "the  Programs")  refinanced  the  outstanding  indebtedness  and
accrued interest related to the aircraft on lease to Aerovias de Mexico, S.A. de
C.V.  In  addition  to refinancing the Programs' total existing indebtedness and
accrued  interest  of $4,758,845, the Programs received additional debt proceeds
of  $3,400,177.  The  Partnership's  aggregate  share  of the refinanced and new
indebtedness  was  $1,211,860  including  $706,832  used  to  repay the existing
indebtedness  on the refinanced aircraft.  The Partnership used a portion of its
share of the additional proceeds of $505,028 to repay the outstanding balance of
the  indebtedness  and accrued interest related to the aircraft then on lease to
Finnair  OY  of  $130,852  and  certain  aircraft reconfiguration costs that the
Partnership  had  accrued  at  December  31,  2000.

Management  believes  that  the carrying amount of the note payable approximates
fair value at December 31, 2001 based on its experience and understanding of the
market  for  instruments  with  similar  terms.

The  annual  maturities  of  the  note  payable  are  as  follows:
<TABLE>
<CAPTION>

<S>                               <C>    <C>
For the year ending December 31,   2002  $  224,166
                                   2003     240,082
                                   2004     574,427
                                         ----------

  .                               Total  $1,038,675
                                         ==========
</TABLE>



NOTE  8  -  INCOME  TAXES
-------------------------

The  Partnership  is  not  a  taxable  entity  for  federal income tax purposes.
Accordingly,  no provision for income taxes has been recorded in the accounts of
the  Partnership.

For  financial  statement purposes, the Partnership allocates net income or loss
to  each  class  of  partner according to their respective ownership percentages
(95%  to  the Recognized Owners and 5% to the General Partner).  This convention
differs  from  the  income  or  loss  allocation requirements for income tax and
Dissolution  Event purposes as delineated in the Restated Agreement, as amended.
For  income tax reporting purposes, the Partnership allocates net income or loss
in accordance with such agreement.  The Restated Agreement, as amended, requires
that  upon  dissolution of the Partnership, the General Partner will be required
to  contribute  to the Partnership an amount equal to any negative balance which
may  exist  in the General Partner's tax capital account.  At December 31, 2001,
the  General  Partner  had  a  positive  tax  capital  account  balance.

The  following  is  a  reconciliation  between  net  income  (loss) reported for
financial  statement  and  federal  income  tax reporting purposes for the years
ended  December  31,  2001,  2000  and  1999:
<TABLE>
<CAPTION>

<S>                                         <C>         <C>          <C>
                                                 2001         2000         1999
                                            ----------  -----------  ----------

Net loss . . . . . . . . . . . . . . . . .  $(631,893)  $  898,601   $1,892,009
  Write-down of loan receivable. . . . . .    318,500           --           --
      Bad debt expense   . . . . . . . . .     43,919           --           --
  Financial statement depreciation in
    excess of (less than) tax depreciation    268,727      (56,850)     673,872
  Deferred rental income . . . . . . . . .    (27,244)     (24,136)       3,383
  Other. . . . . . . . . . . . . . . . . .   (139,596)     318,871       64,000
                                            ----------  -----------  ----------
Net income (loss) for federal income
    tax reporting purposes . . . . . . . .  $(167,587)  $1,136,486   $2,633,264
                                            ==========  ===========  ==========
</TABLE>


The  principal  component  of  "Other"  consists  of  the difference between the
federal  income  tax and financial statement gain or loss on aircraft disposals.
It  also  includes  reversal  of  certain  maintenance  reserves.

The  following  is  a  reconciliation  between  partners'  capital  reported for
financial  statement  and  federal  income  tax reporting purposes for the years
ended  December  31,  2001  and  2000:

<TABLE>
<CAPTION>

<S>                                                           <C>           <C>
                                                                     2001          2000
                                                              ------------  ------------

Partners' capital. . . . . . . . . . . . . . . . . . . . . .  $ 7,790,759   $ 8,422,652
 Add back selling commissions and organization
 and offering costs. . . . . . . . . . . . . . . . . . . . .    7,085,240     7,085,240
 Cumulative difference between federal income tax
 and financial statement income (loss) . . . . . . . . . . .     (234,927)     (699,233)
                                                              ------------  ------------
Partners' capital for federal income tax reporting purposes.  $14,641,072   $14,808,659
                                                              ============  ============
</TABLE>


The  cumulative  difference  between  federal income tax and financial statement
income  (loss)  represents  a  timing  difference.

NOTE  9  -  LEGAL  PROCEEDINGS
------------------------------

Action  involving  Rosenblum,  et  al.
--------------------------------------

In  January  1998,  certain  plaintiffs  (the  "Plaintiffs")  filed  a class and
derivative  action, captioned Leonard Rosenblum, et al. v. Equis Financial Group
                              --------------------------------------------------
Limited  Partnership,  et  al.,  in  the  United  States  District Court for the
-----------------------------
Southern  District  of  Florida  (the  "Court") on behalf of a proposed class of
-------
investors  in  28  equipment  leasing  programs  sponsored by EFG, including the
----
Partnership  (collectively,  the "Nominal Defendants"), against EFG and a number
----
of  its  affiliates, including the General Partner, as defendants (collectively,
the  "Defendants").  Certain  of  the Plaintiffs, on or about June 24, 1997, had
filed an earlier derivative action, captioned Leonard Rosenblum, et al. v. Equis
-                                             ----------------------------------
Financial  Group  Limited  Partnership,  et  al.,  in  the Superior Court of the
-----------------------------------------------
Commonwealth  of  Massachusetts  on behalf of the Nominal Defendants against the
------
Defendants.  Both  actions  are  referred  to  herein collectively as the "Class
--
Action  Lawsuit".
--

The  Plaintiffs have asserted, among other things, claims against the Defendants
on  behalf  of  the Nominal Defendants for violations of the Securities Exchange
Act of 1934, common law fraud, breach of contract, breach of fiduciary duty, and
violations  of  the  partnership  or  trust  agreements  that govern each of the
Nominal  Defendants.  The Defendants have denied, and continue to deny, that any
of them have committed or threatened to commit any violations of law or breached
any  fiduciary  duties  to  the  Plaintiffs  or  the  Nominal  Defendants.

On August 20, 1998, the court preliminarily approved a Stipulation of Settlement
setting  forth  terms pursuant to which a settlement of the Class Action Lawsuit
was  intended  to  be  achieved  and  which, among other things, was at the time
expected  to reduce the burdens and expenses attendant to continuing litigation.
Subsequently  an  Amended  Stipulation  of Settlement was approved by the court.
The  Amended  Stipulation,  among other things, divided the Class Action Lawsuit
into  two  separate  sub-classes that could be settled individually.  On May 26,
1999,  the  Court issued an Order and Final Judgment approving settlement of one
of  the  sub-classes.  Settlement  of  the  second  sub-class,  involving  the
Partnership and 10 affiliated partnerships remained pending due, in part, to the
complexity  of  the proposed settlement pertaining to this class. The settlement
of  the  Partnership  sub-class  was  premised  on  the  consolidation  of  the
Partnerships'  net  assets (the "Consolidation"), subject to certain conditions,
into  a  single  successor  company.  The  potential  benefits  and risks of the
Consolidation  were  to  be  presented in a Solicitation Statement that would be
mailed  to  all  of  the  partners  of  the Exchange Partnerships as soon as the
associated  Securities  and  Exchange  Commission  review process was completed.

On May 15, 2001, Defendants' Counsel reported to the court that, notwithstanding
the parties' best efforts, the review of the solicitation statement by the staff
of  the  SEC  in  connection  with  the  proposed settlement of the Class Action
Lawsuit had not been completed.  Nonetheless, the Defendants stated their belief
that  the  parties  should  continue to pursue the court's final approval of the
proposed  settlement.

Plaintiffs' Counsel also reported that the SEC review has not been concluded and
that  they  had notified the Defendants that they would not agree to continue to
stay  the  further  prosecution of the litigation in favor of the settlement and
that  they  intended  to  seek  court  approval  to  immediately  resume  active
prosecution  of  the claims of the Plaintiffs. Subsequently, the court issued an
order setting a trial date of March 4, 2002, referring the case to mediation and
referring  discovery  to  a  magistrate  judge.

The  Defendant's  and  Plaintiff's  Counsel  continued  to  negotiate  toward  a
settlement  and  have  reached  agreement on a Revised Stipulation of Settlement
(the "Revised Settlement") that does not involve a Consolidation. As part of the
Revised  Settlement,  EFG  has  agreed  to  buy  the  loans made by the Exchange
Partnerships  to  Echelon  Residential  Holdings for an aggregate of $32 million
plus  interest  at  7.5%  per annum, if they are not repaid prior to or at their
scheduled  maturity  date.  The  Revised  Settlement  also  provides  for  the
liquidation  of  the  Exchange Partnerships' assets, a cash distribution and the
dissolution  of  the  Partnerships  including the liquidation and dissolution of
this  Partnership.  The  court  held  a hearing on March 1, 2002 to consider the
Revised  Settlement.  After the hearing, the court issued an order preliminarily
approving  the Revised Settlement and providing for the mailing of notice to the
Operating  Partnership  Sub-Class  of  a  hearing  on  June 7, 2002 to determine
whether  the  settlement  on  the  terms and conditions set forth in the Revised
Settlement  is  fair,  reasonable and adequate and should be finally approved by
the court and a final judgment entered in the matter.    The Partnership's share
of  legal  fees  and  expenses  related  to  the  Class  Action  Lawsuit and the
Consolidation was estimated to be approximately $512,000, of which approximately
$332,000  was  expensed  by  the  Partnership  in 1998 and additional amounts of
$89,000,  $41,000,  and  $50,000 were expensed by the Partnership in 2001, 2000,
and  1999,  respectively.

In  addition to the foregoing, the Partnership is a party to other lawsuits that
have  arisen  out of the conduct of its business, principally involving disputes
or  disagreements  with  lessees  over  lease  terms and conditions as described
below:

First  action  involving  Transmeridian  Airlines
-------------------------------------------------

On  October  11,  1996,  Prime  Air  Inc.  d/b/a  Transmeridian  Airlines  (the
"Plaintiff")  filed  an  action  in  the  61st Judicial District Court of Harris
County,  Texas  (the  "Court")  entitled  Prime  Air,  Inc.  d/b/a Transmeridian
                                          --------------------------------------
Airlines  v.  Investors  Asset Holding Corp. ("IAHC"), as Trustee for Airfund II
       -------------------------------------------------------------------------
International  Limited  Partnership,  PLM  International  ("PLM"),  and  NavCom
  -----------------------------------------------------------------------------
Aviation,  Inc. (collectively, the "Defendants").  In that action, the Plaintiff
  ------------
claimed  damages  of more than $3 million for alleged breach of contract, fraud,
civil  conspiracy,  tortious  interference  of  business  relations,  negligent
misrepresentation, negligence and gross negligence, and punitive damages against
the  Defendants in connection with Transmeridian's lease of a Boeing 727-251 ADV
jet  aircraft from the Partnership.  On November 7, 1996, PLM removed the action
to United States District Court for the Southern District of Texas.  On February
14,  1997,  the  Defendants  answered  the  Plaintiff's  Complaint  denying  the
allegations  made  therein  and  asserting  various  defenses.

On  July  31,  1998, the Court granted IAHC's motion to strike Plaintiff's fraud
and  negligent  misrepresentation  claims  due  to  failure  to  plead  with
particularity.  Extensive  discovery  was conducted on the merits of Plaintiff's
claims.  The  Plaintiff,  at  one  point,  provided  an  expert  report  seeking
approximately  $30  million  in damages.  The Plaintiff later provided a revised
expert  report  claiming  actual  damages  of  approximately  $8.5  million  and
Plaintiff  continued  to  seek  punitive  damages  and  both  pre-judgment  and
post-judgment  interest.  On  March 18, 1999, the Court entered summary judgment
in  favor  of  IAHC and PLM on all remaining claims.  The Plaintiff subsequently
filed a motion to alter or amend the judgment, or in the alternative, to certify
the  Court's  Order  for  Interlocutory  Appeal.  On  April  30, 1999, the Court
declined  to  alter or amend its judgment and entered final judgment in favor of
IAHC  and  PLM  on  all  remaining claims.  The Plaintiff appealed to the United
States  Court  of  Appeals  for  the  5th  Circuit.  The Court of Appeals denied
Transmeridian's appeal, affirmed the District Court's judgement in IAHC's favor,
and  subsequently  denied  Transmeridian's request for rehearing.  Transmeridian
has  not  sought  further  review  of the District Court's judgment.  There have
been,  however,  subsequent  proceedings in the District Court on IAHC's request
for  the  assessment  of  costs  in  the  amount  of  approximately  $35,000.

In  connection  with  this  litigation, the Partnership has incurred substantial
legal fees, exceeding $1 million.  An action seeking recovery of these costs was
filed  on  behalf  of  the  Partnership in November 1999.  See "Indemnity action
against  Transmeridian  Airlines  and  Apple  Vacations"  described  below.

Second  action  involving  Transmeridian  Airlines
--------------------------------------------------

On  November  9,  1998,  Investors  Asset  Holding  Corp.,  as  Trustee  for the
Partnership  (the  "Plaintiff"),  filed  an  action  in  Superior  Court  of the
Commonwealth  of  Massachusetts  in Suffolk County against Prime Air, Inc. d/b/a
Transmeridian  Airlines  ("Transmeridian"),  Atkinson & Mullen Travel, Inc., and
Apple  Vacations,  West,  Inc.,  both  d/b/a  Apple Vacations, asserting various
causes  of  action  for declaratory judgment and breach of contract.  The action
subsequently  was  removed  to  United States District Court for the District of
Massachusetts.  The  Plaintiff  filed  an Amended Complaint asserting claims for
breaches  of  contract  and  covenant  of  good  faith  and fair dealing against
Transmeridian  and  breach  of  guaranty  against  Apple  Vacations.

In October 1998, an aircraft leased by Transmeridian (being the same aircraft in
the  above-referenced  "First  action  involving  Transmeridian  Airlines")  was
damaged in an on-ground accident at the Caracas, Venezuela airport.  The cost to
repair  the  aircraft  was  estimated to be at least $350,000.  In addition, the
Partnership  had to lease two substitute engines at a cost of $82,000 per month.
During  the  year ended December 31, 1999, the Partnership incurred total engine
lease  costs  of  $984,000.  This  was  partially  offset by lease rents paid by
Transmeridian  of $560,000 during the same period.  However, as of September 11,
1999,  Transmeridian ceased paying rent on this aircraft.  The Plaintiff alleged
that Transmeridian, among other things, has impeded the Partnership's ability to
terminate  the  two  engine  lease contracts between the Partnership and a third
party.  The  Plaintiff  intends to pursue insurance coverage and also to enforce
written guarantees issued by Apple Vacations that absolutely and unconditionally
guarantee Transmeridian's performance under the lease and is seeking recovery of
all  costs,  lost  revenue  and monetary damages in connection with this matter.

Indemnity  action  against  Transmeridian  Airlines  and  Apple  Vacations
--------------------------------------------------------------------------

On November 12, 1999, Investors Asset Holding Corp. ("IAHC"), as trustee for the
Partnership,  filed  an  action against Transmeridian Airlines (f/k/a Prime Air,
Inc.)  and  Atkinson  &  Mullen Travel, Inc. (d/b/a Apple Vacations) under Civil
Action  No.  H-99-3804  in  the  United  States  District Court for the Southern
District  of  Texas,  Houston  Division, seeking recovery of attorneys' fees and
related costs incurred in defending the action described above under the heading
"First  action  involving  Transmeridian Airlines."  The suit sought recovery of
expenses pursuant to the indemnification provisions of the lease agreement under
which  Transmeridian leased the Boeing 727-251 aircraft. The amount being sought
was  over  $1 million.  On September 1, 2000, IHAC filed with the Court a motion
for  partial  summary  judgment,  seeking  judgment  on  liability  (i.e.  that
Transmeridian  and  Apple  Vacations  are  liable under the lease agreements and
guarantees).  IHAC  also  filed a motion for leave to join in this litigation an
affiliate  of  Apple's,  Apple  Vacations,  West,  inc., which also gave written
guarantees  of  Transmeridian's  performance  under  the  lease  agreements.

As of March 13, 2002, the parties settled all claims involved in these lawsuits.
The  material  terms  of  settlement  provide:  (i)  in  exchange for payment of
$2,100,000  from  Apple  to the Plaintiffs all claims arising from or related to
the  lawsuits;  (ii)  the  Plaintiffs  shall  have  Allowed  Claims  against the
bankruptcy estate of Transmeridian in the aggregate amount of $2,700,000;  (iii)
IAHC  will be paid $400,000 from the insurance proceeds relating to the aircraft
loss;  and  (iv)  each of the parties will receive mutual releases of all claims
and  counterclaims.

The  Partnership  has  received  and recorded $1,563,000 in the first quarter of
2002,  as  its  share  of  the  $2,100,000 payment.  The Partnership has not yet
received  or  recorded  its  share  of the $400,000 from the insurance proceeds.
Additionally,  the  Partnership  recognized  $969,686  as  income  in the fourth
quarter  of  2001  that  had  been  held in escrow pending the resolution of the
litigation.


Action  involving  Northwest  Airlines,  Inc.
---------------------------------------------

On  September  22,  1995, Investors Asset Holding Corp. and First Security Bank,
N.A.,  trustees  of  the  Partnership and certain affiliated investment programs
(collectively,  the  "Plaintiffs"),  filed  an  action in United States District
Court  for  the  District  of Massachusetts against a lessee of the Partnership,
Northwest  Airlines,  Inc.  ("Northwest").  The Complaint alleges that Northwest
did  not  fulfill  its  maintenance  and  return  obligations  under  its  Lease
Agreements  with  the  Plaintiffs  and  seeks  declaratory  judgment  concerning
Northwest's  obligations and monetary damages.  Northwest filed an Answer to the
Plaintiffs'  Complaint  and a motion to transfer the venue of this proceeding to
Minnesota.  The  Court  denied  Northwest's  motion.  On June 29, 1998, a United
States  Magistrate  Judge recommended entry of partial summary judgment in favor
of  the  Plaintiffs.  Northwest  appealed this decision.  On April 15, 1999, the
United States District Court Judge adopted the Magistrate Judge's recommendation
and  entered partial summary judgment in favor of the Plaintiffs on their claims
for  declaratory  judgment.  The  parties  then  undertook  a  second  phase  of
discovery,  focused  on  damages.  This  second phase of damages is scheduled to
conclude  in  April  2001  with  the  completion  of depositions of the parties'
experts.  In  February  2001, the District Court also denied summary judgment on
certain  of  the  Plaintiffs'  other  claims,  including  their  tort claims for
conversion.

This  matter  was  tried  during  August  2001.  Subsequent  to  the evidentiary
hearings,  the  parties submitted proposed findings.  Final argument was held on
October  29,  2001.  The  court  has  the  matter  under  advisement.

NOTE  10  -  QUARTERLY  RESULTS  OF  OPERATIONS  (Unaudited)
------------------------------------------------------------

The  following is a summary of the quarterly results of operations for the years
ended  December  31,  2001  and  2000:

                                  Three Months Ended
<TABLE>
<CAPTION>


                                               March 31,     June 30,     September 30,    December 31,     Total
                                               ----------  ------------  ---------------  --------------  ----------
<S>                                            <C>         <C>           <C>              <C>             <C>
                                                     2001
                                               ----------

Total operating and sales-type lease revenue.  $  159,346  $   158,464   $      137,891   $     106,080   $ 561,781
Net income (loss) . . . . . . . . . . . . . .      99,232   (1,090,843)        (209,893)        569,611    (631,893)
Net income (loss) per
  limited partnership unit. . . . . . . . . .        0.03        (0.38)           (0.07)           0.20       (0.22)

                                                     2000
                                               ----------

Total operating and sales-type lease revenue.  $  109,420  $   148,602   $      106,446   $     192,438   $ 556,906
Net income (loss) . . . . . . . . . . . . . .      33,059    1,072,002         (205,791)           (669)    898,601
Net income (loss) per
  limited partnership unit. . . . . . . . . .        0.01         0.37            (0.07)          (0.00)       0.31
</TABLE>



The Partnership's net loss in the three months ended June 30, 2001, is primarily
the  result  of  a  write-down of the impaired loan and interest receivable from
Echelon  Residential  Holdings  and  a  write-down  of equipment of $909,272 and
$125,000,  respectively.

The  Partnership's  net  income  in  the  three  months  ended  June 30, 2000 is
primarily  the  result  of  the  sale  of  a  Boeing 727-251 ADV aircraft, which
resulted  in  a  net  gain,  for  financial  statement  purposes,  of  $750,000.


<PAGE>

                                       43

                        ADDITIONAL FINANCIAL INFORMATION


<PAGE>
                  AIRFUND II INTERNATIONAL LIMITED PARTNERSHIP

         SCHEDULE OF EXCESS (DEFICIENCY) OF TOTAL CASH GENERATED TO COST
                              OF EQUIPMENT DISPOSED

              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999


The  Partnership  classifies  all  rents from leasing aircraft as lease revenue.
Upon  expiration  of  the primary lease terms, aircraft may be sold, rented on a
month-to-month  basis  or re-leased for a defined period under a new or extended
lease  agreement.  The  proceeds  generated  from  selling  or  re-leasing  the
aircraft,  in  addition  to  any  month-to-month  revenue,  represent  the total
residual  value  realized for each aircraft.  Therefore, the financial statement
gain  or  loss,  which reflects the difference between the net book value of the
aircraft  at the time of sale or disposition and the proceeds realized upon sale
or  disposition  may not reflect the aggregate residual proceeds realized by the
Partnership  for  such  aircraft.

The  following  is  a  summary  of  cash excess (deficiency) associated with the
aircraft  dispositions which occurred in the years ended December 31, 2001, 2000
and  1999.

<TABLE>
<CAPTION>


                                                       2001 (1)       2000         1999
                                                     ------------  -----------  -----------
<S>                                                  <C>           <C>          <C>
Rents earned prior to disposal of
  equipment, net of interest charges                 $ 4,600,436   $10,868,406  $25,196,334

Sale proceeds realized upon
  disposition of equipment                                     -     1,005,645    3,109,500
                                                     ------------  -----------  -----------

Total cash generated from rents
  and equipment sale proceeds                          4,600,436    11,874,051   28,305,834

Original acquisition cost of equipment disposed        6,000,000    10,372,547   23,572,848
                                                     ------------  -----------  -----------

Excess (deficiency) of total cash generated to cost
  of equipment disposed                              $(1,399,564)  $ 1,501,504  $ 4,732,986
                                                     ============  ===========  ===========
</TABLE>




(1)  During  the year ended December 31, 2001, the Partnership donated two fully
depreciated  Rolls-Royce  engines, which had been warehoused, to two educational
institutions.  The engines were originally from an L-1011-100 aircraft which had
been leased to Classic Airways Limited ("Classic") prior to Classic being placed
in  liquidation.  British  Airport  Authorities  impounded  the  aircraft due to
Classic's  failure  to  pay  airport  ground  fees  and the aircraft was sold at
auction  in  1999.  The  proceeds  were  less  than  the  outstanding  fees  and
therefore  the  Partnership  received  no  portion  of  the sales proceeds.  The
Partnership  had,  however,  retained  the  two  engines.  After  attempting  to
remarket  the  engines  for  some  time,  the General Partner concluded that the
storage  costs  being  incurred  to  store  these  engines  was in excess of any
potential  sales  proceeds.



<PAGE>
                  AIRFUND II INTERNATIONAL LIMITED PARTNERSHIP

            STATEMENT OF CASH AND DISTRIBUTABLE CASH FROM OPERATIONS,
                             SALES AND REFINANCINGS

                      FOR THE YEAR ENDED DECEMBER 31, 2001


<TABLE>
<CAPTION>


                                                             .          Sales and
                                                         Operations   Refinancings      Total
                                                        ------------  -------------  -----------
<S>                                                     <C>           <C>            <C>
Net income (loss)                                       $  (631,893)  $           -  $ (631,893)

Add:
  Depreciation                                              261,382               -     261,382
  Collections on investment in sales-type lease             235,979               -     235,979
  Bad debt expense                                           43,919               -      43,919
  Write-down of equipment                                   171,000               -     171,000
  Management fees                                            39,218               -      39,218
  Write-down of impaired loan and interest receivable       909,272               -     909,272
Less:
  Sales-type lease revenue                                  (13,404)              -     (13,404)
  Principal reduction of notes payable                     (373,222)              -    (373,222)
                                                        ------------  -------------  -----------
  Cash from operations, sales and refinancings              642,251               -     642,251

Less:
  Management fees                                           (39,218)              -     (39,218)
                                                        ------------  -------------  -----------

  Distributable cash from operations,
    sales and refinancings                                  603,033               -     603,033

Other sources and uses of cash:
  Cash and cash equivalents at beginning of year                  -       2,827,385   2,827,385
  Net change in receivables and accruals                    (28,039)              -     (28,039)
  Net proceeds from notes payable refinancing                     -         505,028     505,028
                                                        ------------  -------------  -----------

Cash and cash equivalents at end of year                $   574,994   $   3,332,413  $3,907,407
                                                        ============  =============  ===========
</TABLE>



<PAGE>
                  AIRFUND II INTERNATIONAL LIMITED PARTNERSHIP

                       SCHEDULE OF COSTS REIMBURSED TO THE
                 GENERAL PARTNER AND ITS AFFILIATES AS REQUIRED
                   BY SECTION 10.4 OF THE AMENDED AND RESTATED
                AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP

                      FOR THE YEAR ENDED DECEMBER 31, 2001


For  the  year  ended  December 31, 2001, the Partnership reimbursed the General
Partner  and  its  Affiliates  for  the  following  costs:



     Operating  expenses     $     916,459



<PAGE>



Item  9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting and
--------------------------------------------------------------------------------
Financial  Disclosure.
----------------------

None.

<PAGE>
PART  III

Item  10.  Directors  and  Executive  Officers  of  the  Partnership.
---------------------------------------------------------------------

     (a-b)  Identification  of  Directors  and  Executive  Officers

The  Partnership  has  no Directors or Officers.  As indicated in Item 1 of this
report,  AFG  Aircraft Management Corporation is the sole General Partner of the
Partnership.  Under  the  Restated Agreement, as amended, the General Partner is
solely  responsible  for  the  operation  of  the  Partnership's properties. The
Recognized  Owners  have  no  right  to  participate  in  the  control  of  the
Partnership's  general  operations,  but  they do have certain voting rights, as
described  in  Item  12 herein.  The names, titles and ages of the Directors and
Executive  Officers  of the General Partner as of March 15, 2002 are as follows:

DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  GENERAL  PARTNER  (See  Item  13)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>


                  Name                     Title                      Age    Term
----------------------  --------------------------------------------  ---  ---------
<S>                     <C>                                           <C>  <C>
Geoffrey A. MacDonald   Chairman of the general                         .  Until a
..                       partner of EFG and a Director                   .  successor
..                       of the General Partner                         53  is duly
..                                                                  .    .  elected
Gary D. Engle           President and Chief Executive                   .  and
..                       Officer of the general partner of EFG           .  qualified
..                       and President and a Director                    .
..                       of the General Partner                         53

Michael J. Butterfield  Executive Vice President and Chief
..                       Operating Officer of the general partner
..                       of EFG and Treasurer of the General Partner    42

Gail D. Ofgant          Senior Vice President, Lease Operations
..                       of the general partner of EFG and
..                       Senior Vice President of the General Partner   36
</TABLE>


     (c)  Identification  of  Certain  Significant  Persons
-----------------------------------------------------------


None.
-----

     (d)  Family  Relationship
------------------------------

No  family relationship exists among any of the foregoing Partners, Directors or
--------------------------------------------------------------------------------
Executive  Officers.
--------------------

(e)  Business  Experience
-------------------------

Mr. MacDonald, age 53, has been a Director of the General Partner since 1998 and
--------------------------------------------------------------------------------
served  as  its  President  from 1988 through August 2001.  Mr. McDonald is also
--------------------------------------------------------------------------------
Chairman  of  the  Board  of  the  general  partner  of EFG.  Mr. McDonald was a
--------------------------------------------------------------------------------
co-founder  of  EFG's predecessor, American Finance Group, which was established
--------------------------------------------------------------------------------
in  1980.  Mr.  MacDonald  is  a  member  of  the  Board  of Managers of Echelon
--------------------------------------------------------------------------------
Development  Holdings  LLC.  Prior  to  co-founding  American Finance Group, Mr.
--------------------------------------------------------------------------------
MacDonald  held  various  positions  in  the  equipment leasing industry and the
--------------------------------------------------------------------------------
ethical  pharmaceutical  industry with Eli Lilly & Company.  Mr. MacDonald holds
--------------------------------------------------------------------------------
an  M.B.A.  from  Boston  College  and  a  B.A.  degree  from  the University of
--------------------------------------------------------------------------------
Massachusetts  (Amherst).
-------------------------
Mr.  Engle, age 53, is Director and President of the General Partner.  Mr. Engle
--------------------------------------------------------------------------------
is  the  sole  shareholder,  Director,  President and Chief Executive Officer of
--------------------------------------------------------------------------------
Equis  Corporation,  the general partner of EFG.  Mr. Engle is also Chairman and
--------------------------------------------------------------------------------
Chief  Executive  Officer  of  Semele  Group Inc. ("Semele") and a member of the
--------------------------------------------------------------------------------
Board  of  Managers  of Echelon Development Holdings LLC. Mr. Engle controls the
--------------------------------------------------------------------------------
general  partners  of  Atlantic Acquisition Limited Partnership ("AALP") and Old
--------------------------------------------------------------------------------
North  Capital  Limited  Partnership  ("ONC").  Mr. Engle joined EFG in 1990 and
--------------------------------------------------------------------------------
acquired  control  of  EFG  and  its  subsidiaries  in December 1994.  Mr. Engle
--------------------------------------------------------------------------------
co-founded  Cobb  Partners Development, Inc., a real estate and mortgage banking
--------------------------------------------------------------------------------
company,  where  he  was  a principal from 1987 to 1989.  From 1980 to 1987, Mr.
--------------------------------------------------------------------------------
Engle  was  Senior  Vice  President and Chief Financial Officer of Arvida Disney
--------------------------------------------------------------------------------
Company,  a  large-scale community development organization owned by Walt Disney
--------------------------------------------------------------------------------
Company.  Prior  to  1980, Mr. Engle served in various management consulting and
--------------------------------------------------------------------------------
institutional brokerage capacities.  Mr. Engle has an M.B.A. degree from Harvard
--------------------------------------------------------------------------------
University  and  a  B.S.  degree from the University of Massachusetts (Amherst).
--------------------------------------------------------------------------------

Mr.  Butterfield,  age  42, has served as Treasurer of the General Partner since
--------------------------------------------------------------------------------
1996.  Joining  EFG  in  June  1992, Mr. Butterfield is currently Executive Vice
--------------------------------------------------------------------------------
President,  Chief  Operating Officer, Treasurer and Clerk of the general partner
--------------------------------------------------------------------------------
of EFG.  Mr. Butterfield is also Chief Financial Officer and Treasurer of Semele
--------------------------------------------------------------------------------
and  Vice  President, Finance and Clerk of Equis/Echelon Management Corporation,
--------------------------------------------------------------------------------
the  manager  of Echelon Residential LLC.  Prior to joining EFG, Mr. Butterfield
--------------------------------------------------------------------------------
was  an  audit  manager  with  Ernst  & Young LLP, which he joined in 1987.  Mr.
--------------------------------------------------------------------------------
Butterfield was also employed in public accounting and industry positions in New
--------------------------------------------------------------------------------
Zealand  and  London  (UK)  prior  to  coming  to the United States in 1987. Mr.
--------------------------------------------------------------------------------
Butterfield  attained  his  Associate Chartered Accountant (A.C.A.) professional
--------------------------------------------------------------------------------
qualification  in  New  Zealand and has completed his C.P.A. requirements in the
--------------------------------------------------------------------------------
United  States.  Mr.  Butterfield  holds  a Bachelor of Commerce degree from the
--------------------------------------------------------------------------------
University  of  Otago,  Dunedin,  New  Zealand.
-----------------------------------------------

Ms.  Ofgant,  age 36, has served as Senior Vice President of the General Partner
--------------------------------------------------------------------------------
since  1997.  Ms.  Ofgant  joined EFG in July 1989 and held various positions in
--------------------------------------------------------------------------------
the organization before becoming Senior Vice President of the general partner of
--------------------------------------------------------------------------------
EFG  in  1998.  Ms.  Ofgant  is  Senior  Vice  President  and Assistant Clerk of
--------------------------------------------------------------------------------
Equis/Echelon  Management  Corporation,  the manager of Echelon Residential LLC.
--------------------------------------------------------------------------------
From  1987  to  1989, Ms. Ofgant was employed by Security Pacific National Trust
--------------------------------------------------------------------------------
Company.  Ms.  Ofgant  holds  a  B.S.  degree  from  Providence  College.
-------------------------------------------------------------------------

     (f)  Involvement  in  Certain  Legal  Proceedings
------------------------------------------------------

None.
-----

     (g)  Promoters  and  Control  Persons
------------------------------------------

Not  applicable.
----------------

Item  11.  Executive  Compensation.
-----------------------------------

     (a)  Cash  Compensation

Currently,  the  Partnership  has no employees.  However, under the terms of the
Restated Agreement, as amended, the Partnership is obligated to pay all costs of
personnel  employed  full or part-time by the Partnership, including officers or
employees  of  the  General  Partner or its Affiliates.  There is no plan at the
present  time  to  make  any partners or employees of the General Partner or its
Affiliates  employees of the Partnership.  The Partnership has not paid and does
not  propose to pay any options, warrants or rights to the officers or employees
of  the  General  Partner  or  its  Affiliates.

     (b)  Compensation  Pursuant  to  Plans

None.

     (c)  Other  compensation

Although  the Partnership has no employees, as discussed in Item 11(a), pursuant
to Section 10.4(c) of the Restated Agreement, as amended, the Partnership incurs
a  monthly  charge  for  personnel  costs  of the Manager for persons engaged in
providing  administrative  services  to  the  Partnership.  A description of the
remuneration  paid  by  the  Partnership  to  the  Manager  for such services is
included  in  Item 13 herein, and in Note 6 to the financial statements included
in  Item  8,  herein.

     (d)     Stock  Options  and  Stock  Appreciation  Rights.

Not  applicable.

     (e)     Long-Term  Incentive  Plan  Awards  Table.

Not  applicable.

     (f)     Defined  Benefit  or  Actuarial  Plan  Disclosure.

Not  applicable.

     (g)  Compensation  of  Directors

None.

     (h)  Termination  of  Employment  and  Change  of  Control  Arrangement

There exists no remuneration plan or arrangement with the General Partner or its
Affiliates which results or may result from their resignation, retirement or any
other  termination.

Item  12.  Security  Ownership  of  Certain  Beneficial  Owners  and Management.
--------------------------------------------------------------------------------

By  virtue  of  its  organization  as a limited partnership, the Partnership has
outstanding  no  securities  possessing  traditional voting rights.  However, as
provided  for  in Section 11.2(a) of the Restated Agreement, as amended (subject
to  Sections 11.2(b) and 11.3), a majority interest of the Recognized Owners has
voting  rights  with  respect  to:

1.     Amendment  of  the  Restated  Agreement;

2.     Termination  of  the  Partnership;

3.     Removal  of  the  General  Partner;  and

4.     Approval  or disapproval of the sale of all, or substantially all, of the
assets  of the Partnership (except in the orderly liquidation of the Partnership
upon  its  termination  and  dissolution).

No person or group is known by the General Partner to own beneficially more than
5%  of  the  Partnership's  2,714,647  outstanding  Units  as of March 15, 2002.

The  ownership  and  organization  of EFG is described in Item 1 of this report.

Item  13.  Certain  Relationships  and  Related  Transactions.
--------------------------------------------------------------

The  General  Partner of the Partnership is AFG Aircraft Management Corporation,
an  affiliate  of  EFG.

     (a)  Transactions  with  Management  and  Others

All  operating expenses incurred by the Partnership are paid by EFG on behalf of
the  Partnership and EFG is reimbursed at its actual cost for such expenditures.
Fees and other costs incurred during the years ended December 31, 2001, 2000 and
1999,  which  were  paid or accrued by the Partnership to EFG or its Affiliates,
are  as  follows:

<TABLE>
<CAPTION>

<S>                                              <C>         <C>         <C>
                                                       2001        2000        1999
                                                 ----------  ----------  ----------

Equipment management fees                        $   39,218  $   29,913  $   92,059
Administrative charges                               42,026      72,967      71,699
Reimbursable operating expenses
 due to third parties                               954,603     988,461   1,987,647
                                                 ----------  ----------  ----------

                                          Total  $1,035,847  $1,091,341  $2,151,405
                                                 ==========  ==========  ==========
</TABLE>



As  provided under the terms of the Management Agreement, EFG is compensated for
its  services  to  the  Partnership.  Such  services  include  acquisition  and
management  of  equipment.  For  acquisition services, EFG was compensated by an
amount  equal  to  3.07%  of  Equipment Base Price paid by the Partnership.  For
management  services,  EFG  is  compensated  by  an  amount equal to 5% of gross
operating  lease  rental  revenues  and  2%  of  gross  full payout lease rental
revenues  received by the Partnership.  Both acquisition and management fees are
subject  to  certain  limitations  defined  in  the  Management  Agreement.

Administrative  charges  represent  amounts  owed  to  EFG,  pursuant to Section
10.4(c)  of  the Restated Agreement, as amended, for persons employed by EFG who
are  engaged  in  providing  administrative  services  to  the  Partnership.
Reimbursable operating expenses due to third parties represent costs paid by EFG
on  behalf  of  the  Partnership  which  are  reimbursed  to EFG at actual cost.

All  aircraft  were  purchased  from  EFG  or  one  of  its  Affiliates.  The
Partnership's  acquisition cost was determined by the method described in Note 2
to  the  financial  statements  included  in  Item  8,  herein.

All  rents and proceeds from the sale of aircraft are paid directly to EFG or to
a  lender.  EFG  temporarily  deposits  collected  funds  in  a  separate
interest-bearing  escrow  account  prior  to  remittance to the Partnership.  At
December  31,  2001, the Partnership was owed $984 by EFG for such funds and the
interest thereon.  These funds were remitted to the Partnership in January 2002.

In 1990, EFG assigned its equipment Management Agreement with the Partnership to
AF/AIP  Programs  Limited  Partnership,  and AF/AIP Programs Limited Partnership
entered  into  an  identical  management  agreement  with  EFG.  AF/AIP Programs
Limited Partnership also entered into a nonexclusive confirmatory agreement with
EFG's  former  majority  owned  subsidiary, AIRFUND Corporation ("AFC"), for the
provision  of  aircraft  remarketing  services.

An  affiliate  of  the General Partner owns Units in the Partnership as follows:
<TABLE>
<CAPTION>

<S>                                    <C>          <C>
                                       Number of    Percent of Total
Affiliate                              Units Owned  Outstanding Units

Old North Capital Limited Partnership       40,000               1.47%
-------------------------------------  -----------  ------------------
</TABLE>


Old  North  Capital  Limited  Partnership  ("ONC")  is  a  Massachusetts limited
partnership  formed in 1995. The general partner of ONC is controlled by Gary D.
Engle  and the limited partnership interests of ONC are owned by Semele. Gary D.
Engle  is  Chairman  and  Chief Financial Officer of Semele and President, Chief
Executive  Officer,  sole  shareholder  and  Director  of EFG's general partner.

The  discussions  of  the loan to Echelon Residential Holdings in Items 1(b) and
1(c)  above  are  incorporated  herein  by  reference.

     (b)  Certain  Business  Relationships

None.

     (c)  Indebtedness  of  Management  to  the  Partnership

None.

     (d)  Transactions  with  Promoters

Not  applicable.

<PAGE>
                                       53

PART  IV

Item  14.  Exhibits,  Financial  Statement  Schedules  and  Reports on Form 8-K.
--------------------------------------------------------------------------------

     (a)  Documents  filed  as  part  of  this  report:

     (1)     All  Financial  Statements:

          The financial statements are filed as part of this report under Item 8
"Financial  Statements  and  Supplementary  Data".

     (2)     Financial  Statement  Schedules:

          Schedule  II  -  Valuation  and  Qualifying  Accounts:
<TABLE>
<CAPTION>

<S>                                <C>
Allowance for rents receivable
---------------------------------
   Balance at December 31, 2000    $      -
   Additions to allowance            43,919
                                   --------
   Balance at December 31, 2001    $ 43,919
                                   ========

Allowance for interest receivable
---------------------------------
   Balance at December 31, 2000    $      -
   Additions to allowance           590,772
                                   --------
   Balance at December 31, 2001    $590,772
                                   ========

Allowance for loan receivable
---------------------------------
   Balance at December 31, 2000    $      -
   Additions to allowance           318,500
                                   --------
   Balance at December 31, 2001    $318,500
                                   ========
</TABLE>



All  other  schedules  for  which provision is made in the applicable accounting
regulation  of the Securities and Exchange Commission are not required under the
related  instructions  or  are  inapplicable  and  therefore  have been omitted.

     (3)     Exhibits:

Except  as  set forth below, all Exhibits to Form 10-K, as set forth in Item 601
of  Regulation  S-K,  are  not  applicable.

A  list  of  exhibits  filed  or  incorporated  by  reference  is  as  follows:

           Exhibit
          Number
      ----------

               2.1     Plaintiffs'  and Defendants' Joint Motion to Modify Order
Preliminarily  Approving  Settlement,  Conditionally Certifying Settlement Class
and  Providing  for Notice of, and Hearing on, the Proposed Settlement was filed
in the Registrant's Annual Report on Form 10-K/A for the year ended December 31,
1998  as  Exhibit  2.1  and  is  incorporated  herein  by  reference.

               2.2     Plaintiffs'  and  Defendants' Joint Memorandum in Support
of  Joint  Motion  to  Modify  Order  Preliminarily  Approving  Settlement,
Conditionally  Certifying  Settlement  Class  and  Providing  for Notice of, and
Hearing  on, the Proposed Settlement was filed in the Registrant's Annual Report
on  Form  10-K/A  for  the  year  ended  December 31, 1998 as Exhibit 2.2 and is
incorporated  herein  by  reference.

               2.3     Order  Preliminarily  Approving Settlement, Conditionally
Certifying  Settlement  Class  and  Providing for Notice of, and Hearing on, the
Proposed  Settlement  (August  20,  1998)  was  filed in the Registrant's Annual
Report on Form 10-K/A for the year ended December 31, 1998 as Exhibit 2.3 and is
incorporated  herein  by  reference.

               2.4     Modified  Order  Preliminarily  Approving  Settlement,
Conditionally  Certifying  Settlement  Class  and  Providing  for Notice of, and
Hearing  on,  the  Proposed  Settlement  (March  22,  1999)  was  filed  in  the
Registrant's  Annual  Report on Form 10-K/A for the year ended December 31, 1998
as  Exhibit  2.4  and  is  incorporated  herein  by  reference.

       2.5          Plaintiffs'  and  Defendants' Joint Memorandum in Support of
Joint  Motion  to  Further  Modify  Order  Preliminarily  Approving  Settlement,
Conditionally  Certifying  Settlement  Class  and  Providing  for Notice of, and
Hearing  on, the Proposed Settlement was filed in the Registrant's Annual Report
on  Form  10-K  for  the  year  ended  December  31,  1999 as Exhibit 2.5 and is
incorporated  herein  by  reference.

     2.6          Second  Modified  Order  Preliminarily  Approving  Settlement,
Conditionally  Certifying  Settlement  Class  and  Providing  for Notice of, and
Hearing  on,  the  Proposed  Settlement  (March  5,  2000)  was  filed  in  the
Registrant's  Annual Report on Form 10-K for the year ended December 31, 1999 as
Exhibit  2.6  and  is  incorporated  herein  by  reference.

     2.7          Proposed  Order  Granting  Joint  Motion  to  Continue  Final
Approval  Settlement  Hearing  (March  13,  2001)  was filed in the Registrant's
Annual  Report  on Form 10-K for the year ended December 31, 2000 as Exhibit 2.7
and  is  incorporated  herein  by  reference.

          2.8          Order  Setting  Trial  Date  and  Discovery  Deadlines,
Referring  Case to Mediation and Referring Discovery to United States Magistrate
Judge (June 4, 2001) was filed in the Registrant's Annual Report on Form 10-K/A,
Amendment  No.  2,  for  the  year ended December 31, 2000 as Exhibit 2.8 and is
incorporated  herein  by  reference.

2.9          Plaintiffs'  and  Defendants' Joint Motion for Preliminary Approval
of  Revised  Stipulation  of  Settlement and request for hearing is filed in the
Registrant's  Annual Report on Form 10-K for the year ended December 31, 2001 as
Exhibit  2.9  and  is  included  herein.

2.10          Plaintiffs'  and  Defendants' Joint Memorandum in Support of Joint
Motion for Preliminary Approval of Revised Stipulation of Settlement is filed in
the Registrant's Annual Report on Form 10-K for the year ended December 31, 2001
as  Exhibit  2.10  and  is  included  herein.

2.11          Order Preliminarily Approving Settlement, Conditionally Certifying
Settlement  Class  and  Providing  for  Notice  of, and Hearing on, the Proposed
Settlement  (March  1,  2002) is filed in the Registrant's Annual Report on Form
10-K  for  the  year  ended  December  31,  2001 as Exhibit 2.11 and is included
herein.

     4          Amended  and  Restated  Agreement  and  Certificate  of  Limited
Partnership  included  as  Exhibit  A  to  the Prospectus, which was included in
Registration  Statement on Form S-1 (No. 33-25334) and is incorporated herein by
reference.

          10.1     Promissory  Note  in the principal amount of $3,640,000 dated
March  8,  2000  between  the  Registrant,  as  lender,  and Echelon Residential
Holdings  LLC,  as borrower, was filed in the Registrant's Annual Report on Form
10-K  for  the  year ended December 31, 1999 as Exhibit 10.1 and is incorporated
herein  by  reference.

          10.2     Pledge  Agreement  dated  March  8,  2000  between  Echelon
Residential  Holdings  LLC  (Pledgor)  and  American Income Partners V-A Limited
Partnership,  as  Agent  for  itself  and  the  Registrant,  was  filed  in  the
Registrant's  Annual Report on Form 10-K for the year ended December 31, 1999 as
Exhibit  10.2  and  is  incorporated  herein  by  reference.

          99(a)     Lease  agreement  with American Trans Air, Inc. was filed in
the Registrant's Annual Report on Form 10-K for the year ended December 31, 1996
as  Exhibit  99  (f)  and  is  incorporated  herein  by  reference.

          99(b)     Lease  agreement  with Southwest Airlines, Inc. was filed in
the Registrant's Annual Report on Form 10-K for the year ended December 31, 1997
as  Exhibit  99  (f)  and  is  incorporated  herein  by  reference.

          99(c)     Lease  agreement  with Southwest Airlines, Inc. was filed in
the Registrant's Annual Report on Form 10-K for the year ended December 31, 1997
as  Exhibit  99  (g)  and  is  incorporated  herein  by  reference.

          99(d)     Lease  agreement  with Southwest Airlines, Inc. was filed in
the Registrant's Annual Report on Form 10-K for the year ended December 31, 1997
as  Exhibit  99  (h)  and  is  incorporated  herein  by  reference.

          99(e)     Lease  agreement  with  Finnair  OY  was  filed  in  the
Registrant's  Annual Report on Form 10-K for the year ended December 31, 1997 as
Exhibit  99  (i)  and  is  incorporated  herein  by  reference.

          99(f)     Lease  agreement  with  Finnair  OY  was  filed  in  the
Registrant's  Annual Report on Form 10-K for the year ended December 31, 1997 as
Exhibit  99  (j)  and  is  incorporated  herein  by  reference.

          99(g)     Lease  agreement with Transmeridian Airlines, Inc. was filed
in  the  Registrant's Annual Report on Form 10-K for the year ended December 31,
1997  as  Exhibit  99  (k)  and  is  incorporated  herein  by  reference.

          99(h)     Lease  agreement  with  Classic Airways Limited was filed in
the Registrant's Annual Report on Form 10-K for the year ended December 31, 1998
as  Exhibit  99  (k)  and  is  incorporated  herein  by  reference.

          99(i)     Lease  agreement  with  Aerovias De Mexico, S.A. de C.V. was
filed in the Registrant's Annual Report on Form 10-K for the year ended December
31,  2000  as  Exhibit  99  (i)  and  is  incorporated  herein  by  reference.

          99(j)     Aircraft Conditional Sale Agreement with Royal Aviation Inc.
was  filed  in  the  Registrant's  Annual Report on Form 10-K for the year ended
December  31,  2000  as  Exhibit 99 (j) and is incorporated herein by reference.

          99(k)     Lease  agreement with Air Slovakia BWJ, Ltd was filed in the
Registrant's  Annual Report on Form 10-K for the year ended December 31, 2000 as
Exhibit  99  (k)  and  is  incorporated  herein  by  reference.

         99(l)          Lease  agreement with Air Slovakia BWJ, Ltd. is filed in
the Registrant's Annual Report on Form 10-K for the year ended December 31, 2001
as  Exhibit  99  (l)  and  is  included  herein.
                                               -


(b)       Reports  on  Form  8-K

None.

(c)     Other  Exhibits

None.

(c)          Financial  Statement  Schedules:


Consolidated  Financial  Statements  for  Echelon Residential Holdings LLC as of
December  31, 2001 and 2000 and for the year ended December 31, 2001 and for the
period  March  8,  2000  (Date  of  Inception)  through  December  31,  2000 and
Independent  Auditors'  Report.


<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below, by the following persons, on behalf of the registrant and
in  the  capacities  and  on  the  dates  indicated.


                  AIRFUND II International Limited Partnership


     By:  AFG  Aircraft  Management  Corporation,
     a  Massachusetts  corporation  and  the
     General  Partner  of  the  Registrant.






<TABLE>
<CAPTION>

<S>                                                    <C>
By: /s/   Geoffrey A. MacDonald                        By: /s/   Gary D. Engle
-----------------------------------------------------  --------------------------------------
Geoffrey A. MacDonald                                  Gary D. Engle
Chairman of the general partner of EFG                 President and Chief Executive Officer
and a Director of the General Partner                  of the general partner of EFG,
..                                                      and President and a Director of
..                                                      the General Partner
..                                                      (Principal Executive Officer)




Date: March 29, 2002                                   Date: March 29, 2002
-----------------------------------------------------  --------------------------------------




By: /s/   Michael J. Butterfield
-----------------------------------------------------
Michael J. Butterfield
Executive Vice President and Chief Operating Officer
of the general partner of EFG and Treasurer
of the General Partner
(Principal Financial and Accounting Officer)



Date: March 29, 2002
-----------------------------------------------------
</TABLE>




<PAGE>