<PAGE>



                           AMERICAN INCOME PARTNERS V

                American Income Partners V-D Limited Partnership

                Annual Report to the Partners, December 31, 1997


<PAGE>





                        ADDITIONAL FINANCIAL INFORMATION


<PAGE>




Dear Investor:

We are pleased to provide the Annual Report for American Income Partners V-D
Limited Partnership which contains important information concerning the recent
operating results and current financial position of your investment program.
Please refer to the index on the following page for a listing of information
contained in this report.

If you have any questions about your investment program or, if you would like a
copy of Form 10-K for this program, please contact our Investor Services
Representatives at 1-800-247-3863.

Very truly yours,

/s/ GEOFFREY A. MACDONALD

Geoffrey A. MacDonald
Chairman and Co-founder


<PAGE>

                AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP
                     INDEX TO ANNUAL REPORT TO THE PARTNERS

<TABLE>
<CAPTION>
                                                                            Page
                                                                           ------
<S>                                                                      <C>
SELECTED FINANCIAL DATA                                                       2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS                                         3-6

FINANCIAL STATEMENTS:

Report of Independent Auditors                                                7

Statement of Financial Position
at December 31, 1997 and 1996                                                 8

Statement of Operations
for the years ended December 31, 1997, 1996 and 1995                          9

Statement of Changes in Partners' Capital
for the years ended December 31, 1997, 1996 and 1995                         10

Statement of Cash Flows
for the years ended December 31, 1997, 1996 and 1995                         11

Notes to the Financial Statements                                           12-19

ADDITIONAL FINANCIAL INFORMATION:

Schedule of Excess (Deficiency) of Total Cash
Generated to Cost of Equipment Disposed                                      20

Statement of Cash and Distributable Cash
From Operations, Sales and Refinancings                                      21

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                             22

</TABLE>



                                      -1-
<PAGE>


                             SELECTED FINANCIAL DATA

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

        For each of the five years in the period ended December 31, 1997:

<TABLE>
<CAPTION>
         Summary of
         Operations               1997          1996          1995          1994         1993
------------------------      ------------  ------------  ------------  -----------   -----------
<S>                           <C>           <C>           <C>           <C>           <C>
Lease revenue                 $   653,111   $ 1,816,273   $ 2,179,607   $ 2,992,070   $ 3,663,342

Net income (loss)             $   720,339   $ 1,656,646   $   733,938   $   213,680   $(1,165,153)

Per Unit:
     Net income (loss)        $      1.42   $      3.28   $      1.45   $      0.42   $     (2.30)

     Cash distributions       $      0.56   $      4.52   $      2.00   $      2.50   $      2.50


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

Total assets                  $ 3,443,037   $ 3,551,413   $ 4,132,437   $ 5,673,509   $ 8,184,084

Total long-term obligations   $      --     $   307,479   $    86,802   $ 1,182,287   $ 2,683,780

Partners' capital             $ 3,363,706   $ 2,927,711   $ 3,555,934   $ 3,833,000   $ 4,883,075

</TABLE>



                                      -2-
<PAGE>



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                Year ended December 31, 1997 compared to the year
          ended December 31, 1996 and the year ended December 31, 1996
                  compared to the year ended December 31, 1995

        Certain statements in this annual report of American Income Partner's
V-D Limited Partnership (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 important 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 described in Note 6 to the accompanying
financial statements and the ability of Equis Financial Group Limited
Partnership (formerly American Finance Group), a Massachusetts limited
partnership ("EFG"), to collect all rents due under the attendant lease
agreements and successfully remarket the Partnership's equipment upon the
expiration of such leases.

     The Year 2000 Issue is the result of computer programs being written using
two digits rather than four digits to define the applicable year. EFG's computer
programs were designed and written using four digits to define the applicable
year. As a result, EFG does not anticipate system failure or miscalculations
causing disruptions of operations. Based on recent assessments, EFG determined
that minimal modification of software is required so that its network operating
system will function properly with respect to dates in the year 2000 and
thereafter. EFG believes that with these modifications to the existing operating
system, the Year 2000 Issue will not pose significant operational problems for
its computer systems. EFG will utilize internal resources to upgrade software
for Year 2000 modifications and anticipates completing the Year 2000 project by
December 31, 1998, which is prior to any anticipated impact on its operating
system. The total cost of the Year 2000 project is expected to be insignificant
and have no effect on the results of operations of the Partnership.

Overview

     The Partnership was organized in 1990 as a direct-participation equipment
leasing program to acquire a diversified portfolio of capital equipment subject
to lease agreements with third parties. The value of the Partnership's equipment
portfolio decreases over time due to depreciation resulting from age and usage
of the equipment, as well as technological changes and other market factors. In
addition, the Partnership does not replace equipment as it is sold; therefore,
its aggregate investment value in equipment declines from asset disposals
occurring in the normal course. The Partnership's stated investment objectives
and policies contemplated that the Partnership would wind-up its operations
within approximately seven years of its inception. Presently, the Partnership is
a Nominal Defendant in a Class Action Lawsuit. The outcome of the Class Action
Lawsuit could alter the nature of the Partnership's organization and its future
business operations. See Note 6 to the accompanying financial statements.

Results of Operations

     For the year ended December 31, 1997, the Partnership recognized lease
revenue of $653,111 compared to $1,816,273 and $2,179,607 for the years ended
December 31, 1996 and 1995, respectively. Lease revenue in 1996 includes the
receipt of $516,712 of lease termination rents received in connection with the
sale of the Partnership's interest in two Boeing 727-251 Advanced aircraft in
July 1996 (see below). The decrease in lease revenue from 1995 to 1997 was
expected and resulted principally from primary lease term expirations and the
sale of equipment. The Partnership also earns interest income from temporary
investments of rental receipts and equipment sales proceeds in short-term
instruments.

     The Partnership's equipment portfolio includes certain assets in which the
Partnership holds a proportionate ownership interest. In such cases, the
remaining interests are owned by an affiliated equipment leasing program
sponsored by EFG. Proportionate equipment ownership enables the Partnership to
further diversify its equipment



                                      -3-
<PAGE>

portfolio by participating in the ownership of selected assets, thereby reducing
the general levels of risk which could result from a concentration in any single
equipment type, industry or lessee. 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 equipment.

     In 1997, the Partnership sold equipment having a net book value of $709,387
to existing lessees and third parties. These sales resulted in a net gain, for
financial statement purposes, of $389,295 compared to a net gain of $703,591 in
1996 on equipment having a net book value of $858,150 and a net gain of $229,279
in 1995 on equipment having a net book value of $199,826. The 1996 equipment
sales included the sale of the Partnership's interest in two Boeing 727-251
Advanced Aircraft with an original cost and net book value of $4,536,732 and
$740,021, respectively, sold to the existing lessee in July 1996. In connection
with this sale, the Partnership realized sale proceeds of $1,195,994 which
resulted in a net gain, for financial statement purposes, of $455,973. This
equipment was sold prior to the expiration of the related lease term, resulting
in the receipt by the Partnership of lease termination rents, described above.

     During July 1996, the Partnership transferred its ownership interest in
certain trailers to a third party for cash consideration of $60,170 (See Note 3
to the financial statements). The trailers had a net book value of $22,808 at
the time of the transfer, resulting in a net gain, for financial statement
purposes, of $37,362. In September 1996, the Partnership replaced these trailers
with comparable trailers and leased such to a new lessee. The transaction was
structured as a like-kind exchange for income tax reporting purposes. The net
carrying value of the new trailers, $357,884, was net of $36,574, representing
the proportionate amount of gain deferred on the original trailers. The
Partnership funded this transaction with $58,901 of the cash consideration and
long-term financing of $335,557. The unused cash consideration of $1,269 was
recognized as proceeds from equipment sales. The associated deferred gain of
$788 was recognized as Gain on Sale of Equipment on the Statement of Operations
in 1996.

     It cannot be determined whether future sales of equipment 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 equipment being sold and its
marketability at the time of sale. In addition, the amount of gain or loss
reported for financial statement purposes is partly a function of the amount of
accumulated depreciation associated with the equipment being sold.

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

     The total economic value realized upon final disposition of each asset is
comprised of all primary lease term revenue generated from that asset, together
with its residual value. The latter consists of cash proceeds realized upon the
asset's sale in addition to all other cash receipts obtained from renting the
asset on a re-lease, renewal or month-to-month basis. The Partnership classifies
such residual rental payments as lease revenue. 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 equipment.

     Depreciation and amortization expense was $261,657, $753,448 and $1,441,415
for the years ended December 31, 1997, 1996 and 1995, respectively. For
financial reporting purposes, 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 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.

     Interest expense was $18,835 or 2.9% of lease revenue in 1997, $15,362 or
less than 1% of lease revenue in 1996 and $57,049 or 2.6% of lease revenue in
1995. Interest expense in both 1997 and 1996 resulted from financing obtained
from a third-party lender in connection with the like-kind exchange transaction
which occurred during the third quarter of 1996, described above. The
Partnership's notes payable were fully amortized during the year ending December
31, 1997.



                                      -4-
<PAGE>

     Management fees were 4.6%, 4.9% and 4.3% of lease revenue during the years
ended December 31, 1997, 1996 and 1995, respectively. Management fees during the
year ended December 31, 1996 include $4,617, resulting from an underaccrual in
1995. 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 consist principally of administrative charges,
professional service costs, such as audit and legal fees, as well as printing,
distribution and remarketing expenses. In certain cases, equipment storage or
repairs and maintenance costs may be incurred in connection with equipment being
remarketed. Collectively, operating expenses were $142,702, $102,919 and
$128,644 for the year ended December 31, 1997, 1996 and 1995, respectively. The
increase in operating expenses from 1996 to 1997 resulted primarily from
increases in administrative charges and professional service fees. Operating
expenses were higher in 1995 than 1996 due to maintenance costs incurred
associated with the Partnership's interest in an aircraft engine. The amount of
future operating expenses cannot be predicted with certainty; however, such
expenses are usually higher during the acquisition and liquidation phases of a
partnership. Other fluctuations typically occur in relation to the volume and
timing of remarketing activities.

Liquidity and Capital Resources and Discussion of Cash Flows

     The Partnership by its nature is a limited life entity which was
established for specific purposes described in the preceding "Overview". As an
equipment leasing program, the Partnership's principal operating activities
derive from asset rental transactions. Accordingly, the Partnership's principal
source of cash from operations is generally provided by the collection of
periodic rents. These cash inflows are used to satisfy debt service obligations
associated with leveraged leases, and continue to be used to pay management fees
and operating costs. Operating activities generated net cash inflows of
$611,077, $1,772,557 and $1,953,038 in 1997, 1996 and 1995, respectively. Future
renewal, re-lease and equipment sale activities will continue to cause a decline
in the Partnership's lease revenue and corresponding sources of operating cash.
Overall, expenses associated with rental activities, such as management fees,
and net cash flow from operating activities will also decline as the Partnership
experiences a higher frequency of remarketing events.

     Ultimately, the Partnership will dispose of all assets under lease. This
will occur principally through sale transactions whereby each asset will be sold
to the existing lessee or to a third party. Generally, this will occur upon
expiration of each asset's primary or renewal/re-lease term. In certain
instances, casualty or early termination events may result in the disposal of an
asset. Such circumstances are infrequent and usually result in the collection of
stipulated cash settlements pursuant to terms and conditions contained in the
underlying lease agreements.

     Cash realized from asset disposal transactions is reported under investing
activities on the accompanying Statement of Cash Flows. During 1997, the
Partnership realized $904,590 in equipment sale proceeds compared to $1,563,010
and $429,105 in 1996 and 1995, respectively. Future inflows of cash from asset
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 equipment being sold, its condition and age, and future market
conditions.

     The Partnership obtained long-term financing in connection with certain
equipment leases. The repayments of principal related to such indebtedness are
reported as a component of financing activities. The Partnership's notes payable
were fully amortized during the year ended December 31, 1997 utilizing rental
payments and a portion of the Partnership's available cash.

     Cash distributions to the General Partner and Recognized Owners are
declared and generally paid within fifteen days following the end of each
calendar quarter. The payment of such distributions is presented as a component
of financing activities. For the year ended December 31, 1997, the Partnership
declared total cash distributions of Distributable Cash From Operations and
Distributable Cash From Sales and Refinancings of $284,344. In accordance with
the Amended and Restated Agreement and Certificate of Limited Partnership, the
Recognized Owners were allocated 95% of these distributions, or $270,127, and
the General Partner was allocated 5%, or $14,217. The fourth quarter 1997 cash
distribution was paid on January 13, 1998.



                                      -5-
<PAGE>

     Cash distributions paid to the Recognized Owners consist of both a return
of and a return on capital. Cash distributions do not represent and are not
indicative of yield on investment. Actual yield on investment cannot be
determined with any certainty until conclusion of the Partnership and will be
dependent upon the collection of all future contracted rents, the generation of
renewal and/or re-lease rents, and the residual value realized for each asset at
its disposal date. Future market conditions, technological changes, the ability
of EFG to manage and remarket the assets, and many other events and
circumstances, could enhance or detract from individual asset yields and the
collective performance of the Partnership's equipment portfolio.

     The future liquidity of the Partnership will be influenced by the
foregoing, as well as the outcome of the Class Action Lawsuit described in Note
6 to the accompanying financial statements. The General Partner anticipates that
cash proceeds resulting from the collection of contractual rents and the outcome
of residual activities will satisfy the Partnership's future expense
obligations. However, the amount of cash available for distribution in future
periods will fluctuate. Equipment lease expirations and asset disposals will
cause the Partnership's net cash from operating activities to diminish over
time; and equipment sale proceeds will vary in amount and period of realization.
In addition, the Partnership may be required to incur asset refurbishment or
upgrade costs in connection with future remarketing activities. Accordingly,
fluctuations in the level of future quarterly cash distributions are
anticipated.



                                      -6-
<PAGE>



                         REPORT OF INDEPENDENT AUDITORS

To the Partners of American Income Partners V-D Limited Partnership:

        We have audited the accompanying statements of financial position of
American Income Partners V-D Limited Partnership as of December 31, 1997 and
1996, 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,
1997. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

        In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of American Income
Partners V-D Limited Partnership at December 31, 1997 and 1996, and the results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.

        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 to Annual Report to the Partners 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.

                                                               ERNST & YOUNG LLP

Boston, Massachusetts
March 10, 1998



                                      -7-
<PAGE>


                AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP

                         STATEMENT OF FINANCIAL POSITION
                           December 31, 1997 and 1996

<TABLE>
<CAPTION>
                                                       1997          1996
                                                   -----------    -----------
<S>                                                <C>            <C>
ASSETS

Cash and cash equivalents                          $ 2,772,762    $ 1,867,874

Rents receivable                                        38,705         15,859

Accounts receivable - affiliate                         36,232        101,298

Equipment at cost, net of accumulated
     depreciation of $2,918,957 and $4,761,138
     at December 31, 1997 and 1996, respectively       595,338      1,566,382
                                                   -----------    -----------
        Total assets                               $ 3,443,037    $ 3,551,413
                                                   -----------    -----------
                                                   -----------    -----------
LIABILITIES AND PARTNERS' CAPITAL

Notes payable                                      $      --      $   307,479
Accrued interest                                          --            1,336
Accrued liabilities                                      9,200         23,245
Accrued liabilities - affiliate                         12,822         20,837
Deferred rental income                                     440        194,980
Cash distributions payable to partners                  56,869         75,825
                                                   -----------    -----------
        Total liabilities                               79,331        623,702
                                                   -----------    -----------
Partners' capital (deficit):
     General Partner                                  (363,867)      (385,667)
     Limited Partnership Interests
     (480,227 Units; initial purchase
     price of $25 each)                              3,727,573      3,313,378
                                                   -----------    -----------
        Total partners' capital                      3,363,706      2,927,711
                                                   -----------    -----------
        Total liabilities and partners' capital    $ 3,443,037    $ 3,551,413
                                                   -----------    -----------
                                                   -----------    -----------
</TABLE>

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


                                      -8-
<PAGE>

                AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP

                             STATEMENT OF OPERATIONS
              for the years ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                         1997         1996         1995
                                      ----------   ----------   ----------
<S>                                   <C>          <C>          <C>
Income:
     Lease revenue                    $  653,111   $1,816,273   $2,179,607

     Interest income                     131,193       97,019       45,357

     Gain on sale of equipment           389,295      704,379      229,279
                                      ----------   ----------   ----------
         Total income                  1,173,599    2,617,671    2,454,243
                                      ----------   ----------   ----------
Expenses:

     Depreciation and amortization       261,657      753,448    1,441,415

     Interest expense                     18,835       15,362       57,049

     Equipment management fees
       - affiliate                        30,066       89,296       93,197

     Operating expenses - affiliate      142,702      102,919      128,644
                                      ----------   ----------   ----------
         Total expenses                  453,260      961,025    1,720,305
                                      ----------   ----------   ----------

Net income                            $  720,339   $1,656,646   $  733,938
                                      ----------   ----------   ----------
                                      ----------   ----------   ----------
Net income
     per limited partnership unit     $     1.42   $     3.28   $     1.45
                                      ----------   ----------   ----------
                                      ----------   ----------   ----------
Cash distributions declared
     per limited partnership unit     $     0.56   $     4.52   $     2.00
                                      ----------   ----------   ----------
                                      ----------   ----------   ----------
</TABLE>


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



                                      -9-
<PAGE>





                AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP

                    STATEMENT OF CHANGES IN PARTNERS' CAPITAL
              for the years ended December 31, 1997, 1996 and 1995


<TABLE>
<CAPTION>
                                  General         Recognized Owners
                                  Partner     -------------------------
                                  Amount         Units         Amount         Total
                               -----------    -----------   -----------    -----------
<S>                            <C>                <C>       <C>            <C>
Balance at December 31, 1994   $  (340,403)       480,227   $ 4,173,403    $ 3,833,000

Net income - 1995                   36,697           --         697,241        733,938

Cash distributions declared        (50,550)          --        (960,454)    (1,011,004)
                               -----------    -----------   -----------    -----------

Balance at December 31, 1995      (354,256)       480,227     3,910,190      3,555,934

Net income - 1996                   82,832           --       1,573,814      1,656,646

Cash distributions declared       (114,243)          --      (2,170,626)    (2,284,869)
                               -----------    -----------   -----------    -----------

Balance at December 31, 1996      (385,667)       480,227     3,313,378      2,927,711

Net income - 1997                   36,017           --         684,322        720,339

Cash distributions declared        (14,217)          --        (270,127)      (284,344)
                               -----------    -----------   -----------    -----------

Balance at December 31, 1997   $  (363,867)       480,227   $ 3,727,573    $ 3,363,706
                               -----------    -----------   -----------    -----------
                               -----------    -----------   -----------    -----------
</TABLE>


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



                                      -10-
<PAGE>



                AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP

                             STATEMENT OF CASH FLOWS
              for the years ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                        1997          1996            1995
                                                    -----------    -----------    -----------
<S>                                                 <C>            <C>            <C>
Cash flows from (used in) operating activities:
Net income                                          $   720,339    $ 1,656,646    $   733,938

Adjustments to reconcile net income
 to net cash from operating activities:
     Depreciation and amortization                      261,657        753,448      1,441,415
     Gain on sale of equipment                         (389,295)      (704,379)      (229,279)

Changes in assets and liabilities:
     Decrease (increase) in:
         Rents receivable                               (22,846)        34,015         78,404
         Accounts receivable - affiliate                 65,066         29,379         33,893
     Increase (decrease) in:
         Accrued interest                                (1,336)          (693)       (14,928)
         Accrued liabilities                            (14,045)         3,245          4,500
         Accrued liabilities - affiliate                 (8,015)         9,164        (73,919)
         Deferred rental income                            (448)        (8,268)       (20,986)
                                                    -----------    -----------    -----------
           Net cash from operating activities           611,077      1,772,557      1,953,038
                                                    -----------    -----------    -----------
Cash flows from investing activities:
     Proceeds from equipment sales                      904,590      1,563,010        429,105
                                                    -----------    -----------    -----------
           Net cash from investing activities           904,590      1,563,010        429,105
                                                    -----------    -----------    -----------
Cash flows used in financing activities:
     Principal payments - notes payable                (307,479)      (114,880)    (1,095,485)
     Distributions paid                                (303,300)    (2,461,795)    (1,074,192)
                                                    -----------    -----------    -----------
           Net cash used in financing activities       (610,779)    (2,576,675)    (2,169,677)
                                                    -----------    -----------    -----------
Net increase in cash and cash equivalents               904,888        758,892        212,466

Cash and cash equivalents at beginning of year        1,867,874      1,108,982        896,516
                                                    -----------    -----------    -----------
Cash and cash equivalents at end of year            $ 2,772,762    $ 1,867,874    $ 1,108,982
                                                    -----------    -----------    -----------
                                                    -----------    -----------    -----------
Supplemental disclosure of cash flow information:
     Cash paid during the year for interest         $    20,171    $    16,055    $    71,977
                                                    -----------    -----------    -----------
                                                    -----------    -----------    -----------
</TABLE>

Supplemental disclosure of non-cash investing and financing activity:

     The Partnership received $194,092 from a lessee prior to 1997, representing
     an equipment purchase option. These funds were classified as deferred
     rental income on the Statement of Financial Position at December 31, 1996.
     During the year ended December 31, 1997, the Partnership sold the equipment
     and such funds were recognized as sales proceeds. See also Note 3 to the
     financial statements for 1996 non-cash activities.


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



                                      -11-
<PAGE>



                AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP
                        Notes to the Financial Statements

                                December 31, 1997

NOTE 1 - ORGANIZATION AND PARTNERSHIP MATTERS

       American Income Partners V-D Limited Partnership (the "Partnership") was
organized as a limited partnership under the Massachusetts Uniform Limited
Partnership Act (the "Uniform Act") on May 21, 1990 for the purpose of acquiring
and leasing to third parties a diversified portfolio of capital equipment.
Partners' capital initially consisted of contributions of $1,000 from the
General Partner (AFG Leasing IV Incorporated) and $100 from the Initial Limited
Partner (AFG Assignor Corporation). On September 27, 1990, the Partnership
issued 480,227 units, representing assignments of limited partnership interests
(the "Units"), to 806 investors. Unitholders and Limited Partners (other than
the Initial Limited Partner) are collectively referred to as Recognized Owners.
The Partnership has one General Partner, AFG Leasing IV Incorporated, a
Massachusetts corporation and an affiliate of Equis Financial Group Limited
Partnership (formerly American Finance Group) a Massachusetts limited
partnership ("EFG"). The common stock of the General Partner is owned by AF/AIP
Programs Limited Partnership, of which AFG and a wholly-owned subsidiary are the
99% limited partners and AFG Programs, Inc., which is wholly-owned by Geoffrey
A. MacDonald, is the 1% General Partner. The General Partner is not required to
make any other capital contributions 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").

       Significant operations commenced September 28, 1990 when the Partnership
made its initial equipment purchase. Pursuant to the Restated Agreement, as
amended, Distributable Cash From Operations and Distributable Cash From Sales or
Refinancings will be allocated 95% to the Recognized Owners and 5% to the
General Partner.

       Under the terms of a management agreement between the Partnership and
AF/AIP Programs Limited Partnership and the terms of an identical management
agreement between AF/AIP Programs Limited Partnership and EFG (collectively, the
"Management Agreement"), management services are provided by EFG to the
Partnership at fees which the General Partner believes to be competitive for
similar services (see Note 4).

       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 and Chief Executive Officer. 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 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.




NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




                                      -12-
<PAGE>

                AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP
                        Notes to the Financial Statements

                                   (Continued)


Statement of Cash Flows

       The Partnership considers liquid investment instruments purchased with a
maturity of three months or less to be cash equivalents. From time to time, the
Partnership invests excess cash with large institutional banks in federal agency
discount notes and reverse repurchase agreements with overnight maturities.
Under the terms of the agreements, title to the underlying securities passes to
the Partnership. The securities underlying the agreements are book entry
securities. At December 31, 1997, the Partnership had $2,668,538 invested in
federal agency discount notes and in reverse repurchase agreements secured by
U.S. Treasury Bills or interests in U.S. Government securities.

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 leases are accounted for as operating leases and are noncancellable. Rents
received prior to their due dates are deferred. Future minimum rents of $373,158
are due as follows:

<TABLE>
<S>                                          <C>                 <C>
       For the year ending December 31,        1998               $   148,918
                                               1999                    93,398
                                               2000                    84,778
                                               2001                    46,064
                                                                  -----------
                                              Total                $  373,158
                                                                  -----------
                                                                  -----------
</TABLE>

       Revenue from major individual lessees which accounted for 10% or more of
lease revenue during the years ended December 31, 1997, 1996 and 1995 is as
follows:

<TABLE>
<CAPTION>
                                     1997          1996          1995
                                   --------      --------     ---------
<S>                                <C>           <C>           <C>
Transnet Limited                   $161,114      $   --        $   --
Ford Motor Company                 $ 90,897      $   --        $   --
Awin Leasing Company, Inc.         $ 84,778      $   --        $   --
Northwest Airlines, Inc.           $   --        $936,905      $720,331
Consolidated Rail Corporation      $   --        $218,922      $218,923
</TABLE>

Use of Estimates

       The preparation of the financial statements in conformity with generally
accepted accounting principles 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




                                      -13-
<PAGE>

                AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP
                        Notes to the Financial Statements

                                   (Continued)


        All equipment was acquired from EFG, one of its affiliates, including
other equipment leasing programs sponsored by EFG, or from third-party sellers.
Equipment cost represents asset base price plus acquisition fees and was
determined in accordance with the Restated Agreement, as amended, and certain
regulatory guidelines. Asset base price is affected by the relationship of the
seller to the Partnership as summarized herein. Where the seller of the
equipment was EFG or an affiliate, asset base price was the lower of (i) the
actual price paid for the equipment by EFG or the affiliate plus all actual
costs accrued by EFG or the affiliate while carrying the equipment less the
amount of all rents earned by EFG or the affiliate prior to selling the
equipment or (ii) fair market value as determined by the General Partner in its
best judgment, including all liens and encumbrances on the equipment and other
actual expenses. Where the seller of the equipment was a third party who did not
manufacture the equipment, asset base price was the lower of (i) the price
invoiced by the third party or (ii) fair market value as determined by the
General Partner. Where the seller of the equipment was a third party who also
manufactured the equipment, asset base price was the manufacturer's invoice
price, which price was considered to be representative of fair market value.

Depreciation and Amortization

        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 term 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 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.
Periodically, the General Partner evaluates the net carrying value of equipment
to determine whether it exceeds estimated net realizable value. 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.

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

        Organization costs were amortized using the straight-line method over a
period of five years.

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 (see Note 4).

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 5 concerning
allocation of income or loss for income tax purposes.

Net Income and Cash Distributions Per Unit



                                      -14-
<PAGE>

                AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP
                        Notes to the Financial Statements

                                   (Continued)


        Net income and cash distributions per Unit are based on 480,227 Units
outstanding during each of the three years in the period ended December 31, 1997
and computed after allocation of the General Partner's 5% share of net income
and cash distributions.

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 tax returns.

NOTE 3 - EQUIPMENT

        The following is a summary of equipment owned by the Partnership at
December 31, 1997. Remaining Lease Term (Months), as used below, represents the
number of months remaining from December 31, 1997 under contracted lease terms
and is presented as a range when more than one lease agreement is contained in
the stated equipment category. A Remaining Lease Term equal to zero reflects
equipment either held for sale or re-lease or being leased on a month-to-month
basis. In the opinion of EFG, the acquisition cost of the equipment did not
exceed its fair market value.

<TABLE>
<CAPTION>
                                              Remaining
                                              Lease Term        Equipment
            Equipment Type                     (Months)           at Cost                   Location
--------------------------------             -----------       ------------       ------------------------------
<S>                                          <C>               <C>                <C>
Aircraft                                               0        $ 1,160,990       FL
Materials handling                                   0-8            939,826       CA/IL/MI/MN/NE/NY/OH/PA/WA/WI
Trailers/intermodal containers                     42-43            357,884       GA
Tractors and heavy duty trucks                      0-14            301,746       CO/NJ/WV
Communications                                       0-2            229,633       CA/FL/GA/LA/MS/OK/SC/TN/TX/UT
Construction and mining                             0-13            151,097       AL/GA/IL
Computer and peripherals                               0            107,488       AK/CA/CT/KS/LA/MI/MS/ND/NM/OK
                                                                                  PA/TX/UT/WV/WY

Research and test                                      4            105,805       CA
Manufacturing                                          8             95,459       NJ
Motor vehicles                                        14             64,367       NJ
                                                                -----------
                                    Total equipment cost          3,514,295

                                Accumulated depreciation         (2,918,957)
                                                                -----------
              Equipment, net of accumulated depreciation        $   595,338
                                                                -----------
                                                                -----------
</TABLE>

        During July 1996, the Partnership transferred its ownership interest in
certain trailers, previously leased to The Atchison Topeka and Santa Fe
Railroad, to a third party for cash consideration of $60,170. The trailers had a
net book value of $22,808 at the time of the transfer, which resulted in a net
gain, for financial statement purposes, of $37,362. In September 1996, the
Partnership replaced these trailers with comparable trailers and leased such to
a new lessee. The transaction was structured as a like-kind exchange for income
tax reporting purposes. The net carrying value of the new trailers, $357,884,
was net of $36,574, representing the proportionate amount of gain deferred on
the original trailers. The Partnership funded this transaction with $58,901 of
the cash consideration and long-term financing of $335,557. The unused cash
consideration of $1,269 was recognized as proceeds from equipment sales. The
associated deferred gain of $788 was recognized as Gain on Sale of Equipment on
the Statement of Operations in 1996.



                                      -15-
<PAGE>

                AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP
                        Notes to the Financial Statements

                                   (Continued)


        In certain cases, the cost of the Partnership's equipment represents a
proportionate ownership interest. The remaining interests are owned by EFG or 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 equipment. Proportionate equipment ownership
enables the Partnership to further diversify its equipment portfolio by
participating in the ownership of selected assets, thereby reducing the general
levels of risk which could result from a concentration in any single equipment
type, industry or lessee. At December 31, 1997, the Partnership's equipment
portfolio included equipment having a proportionate original cost of $1,332,708,
representing approximately 38% of total equipment cost.

        Generally, the costs associated with maintaining, insuring and operating
the Partnership's equipment are incurred by the respective lessees pursuant to
terms specified in their individual lease agreements with the Partnership.

        As equipment is 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 equipment at the time of sale or disposition and the proceeds
realized upon sale or disposition. The ultimate realization of estimated
residual value in the equipment is dependent upon, among other things, EFG's
ability to maximize proceeds from selling or re-leasing the equipment upon the
expiration of the primary lease terms. The summary above includes equipment held
for sale or re-lease with an original cost and net book value of approximately
$1,267,000 and $323,000, respectively, at December 31, 1997. This equipment
includes the Partnership's proportionate interest in a Pratt & Whitney JT9D-7J
jet engine, formerly leased to Southern Air Transport, Inc., having a cost and
net book value of approximately $1,161,000 and $323,000, respectively. The
General Partner is actively seeking the sale or re-lease of all equipment not on
lease. In addition, the summary above also includes equipment being leased on a
month-to-month basis.

NOTE 4 - 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 the years ended December 31,
1997, 1996 and 1995, which were paid or accrued by the Partnership to EFG or its
Affiliates, are as follows:

<TABLE>
<CAPTION>
                                         1997       1996       1995
                                       --------   --------   --------
<S>                                    <C>        <C>        <C>
Equipment management fees              $ 30,066   $ 89,296   $ 93,197
Administrative charges                   58,303     37,037     20,544
Reimbursable operating
     expenses due to third parties       84,399     65,882    108,100
                                       --------   --------   --------
                               Total   $172,768   $192,215   $221,841
                                       --------   --------   --------
                                       --------   --------   --------
</TABLE>

        As provided under the terms of the Management Agreement, EFG is
compensated for its services to the Partnership. Such services include all
aspects of acquisition, management and sale of equipment. For acquisition
services, EFG is compensated by an amount equal to 2.23% of Equipment Base Price
paid by the Partnership. For management services, EFG is compensated by an
amount equal to the lesser of (i) 5% of gross operating lease rental revenue and
2% of gross full payout lease rental revenue received by the Partnership or (ii)
fees which the General Partner reasonably believes to be competitive for similar
services for similar equipment. Both of these fees are subject to certain
limitations defined in the Management Agreement. Compensation to EFG for
services connected to the sale of equipment is calculated as the lesser of (i)
3% of gross sale proceeds or (ii) one-half of reasonable brokerage fees
otherwise payable under arm's length circumstances. Payment of



                                      -16-
<PAGE>

                AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP
                        Notes to the Financial Statements

                                   (Continued)


the remarketing fee is subordinated to Payout and is subject to certain
limitations defined in the Management Agreement.

        Administrative charges represent amounts owed to EFG, pursuant to
Section 10.4 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.

        All equipment was acquired from EFG, one of its affiliates, including
other equipment leasing programs sponsored by EFG, or from third-party sellers.
The Partnership's Purchase Price was determined by the method described in
Note 2 - Equipment on Lease.

        All rents and 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, 1997, the Partnership was owed $36,232 by EFG for such funds and
the interest thereon. These funds were remitted to the Partnership in January
1998.

        Atlantic Acquisition Limited Partnership ("AALP") and Old North Capital
Limited Partnership ("ONC"), both Massachusetts limited partnerships formed in
1995 owned and controlled by certain principals of EFG, own 20,888 Units or
4.35% and 1,240 Units or 0.26% of the total outstanding units of the
Partnership, respectively. EFG owns a Class D interest in AALP and a 49% limited
partnership interest in ONC, both of which it acquired in December 1996.

NOTE 5 - 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 purposes, the Partnership allocates net income or net
loss in accordance with the provisions of 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, 1997, the General Partner had a positive tax
capital account balance.

        The following is a reconciliation between net income reported for
financial statement and federal income tax reporting purposes for the years
ended December 31, 1997, 1996 and 1995:



                                      -17-
<PAGE>

                AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP
                        Notes to the Financial Statements

                                   (Continued)


<TABLE>
<CAPTION>
                                                                   1997          1996           1995
                                                               -----------    -----------    -----------
<S>                                                            <C>            <C>            <C>
Net income                                                     $   720,339    $ 1,656,646    $   733,938
     Financial statement depreciation
       in excess of (less than) tax depreciationdepreciation       (24,133)       137,148        195,845
     Deferred rental income                                       (194,540)        (8,268)       (20,986)
     Other                                                         639,021       (881,535)       116,488
                                                               -----------    -----------    -----------
Net income for federal income tax
     reporting purposes                                        $ 1,140,687    $   903,991    $ 1,025,285
                                                               -----------    -----------    -----------
                                                               -----------    -----------    -----------
</TABLE>

      The principal component of "Other" consists of the differences between the
tax gain or loss on equipment disposals and the financial statement gain or loss
on disposals.

      The following is a reconciliation between partners' capital reported for
financial statement and federal income tax reporting purposes for the years
ended December 31, 1997 and 1996:

<TABLE>
<CAPTION>
                                                                  1997          1996
                                                              -----------    -----------
<S>                                                           <C>            <C>
Partners' capital                                             $ 3,363,706    $ 2,927,711

Add back selling commissions and organization
     and offering costs                                         1,345,638      1,345,638

Financial statement distributions in excess of
     tax distributions                                              2,843          3,791

Cumulative difference between federal income tax
     and financial statement income (loss)                       (403,255)      (823,603)
                                                              -----------    -----------
Partners' capital for federal income tax reporting purposes   $ 4,308,932    $ 3,453,537
                                                              -----------    -----------
                                                              -----------    -----------
</TABLE>

      Financial statement distributions in excess of tax distributions and
cumulative difference between federal income tax and financial statement income
(loss) represent timing differences.

NOTE 6 - LEGAL PROCEEDINGS

        On or about January 15, 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.


                                      -18-
<PAGE>

                AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP
                        Notes to the Financial Statements

                                   (Continued)

        On March 9, 1998, counsel for the Defendants and the Plaintiffs
entered into a Memorandum of Understanding setting forth the terms pursuant
to which a settlement of the Class Action Lawsuit is intended to be achieved
and which, among other things, is expected to reduce the burdens and expenses
attendant to continuing litigation.  The Memorandum of Understanding
represents a preliminary step towards a comprehensive Stipulation of
Settlement between the parties that must be presented to and approved by the
Court as a condition precedent to effecting a settlement.  The Memorandum of
Understanding (i) prescribes a number of conditions necessary to achieving a
settlement, including providing the partners (or beneficiaries, as
applicable) of the Nominal Defendants with the opportunity to vote on any
settlement and (ii) contemplates various changes that, if effected, would
alter the future operations of the Nominal Defendants.  With respect to the
Partnership and 10 affiliated partnerships (hereafter referred to as the
"Exchange Partnerships"), the Memorandum of Understanding provides for the
restructuring of their respective business operations into a single successor
company whose securities would be listed and traded on a national stock
exchange.  The partners of the Exchange Partnerships would receive both
common stock in the new company and a cash distribution in exchange for their
existing partnership interests.  Such a transaction would, among other
things, allow for the consolidation of the Partnership's operating expenses
with other similarly-organized equipment leasing programs.  To the extent
that the parties agree upon a Stipulation of Settlement that is approved by
the Court, the complete terms thereof will be communicated to all of the
partners (or beneficiaries) of the Nominal Defendants to enable them to vote
thereon.

        There can be no assurance that the parties will agree upon a
Stipulation of Settlement,  or that it will be approved by the Court, or that
the outcome of the voting by the partners (or beneficiaries) of the Nominal
Defendants, including the Partnership, will result in a settlement finally
being effected or in the Partnership being included in any such settlement.
The General Partner and its affiliates, in consultation with counsel, concur
that there is a reasonable basis to believe that a Stipulation of Settlement
will be agreed upon by the parties and approved by the Court.  In the absence
of a Stipulation of Settlement approved by the Court, the Defendants intend
to defend vigorously against the claims asserted in the Class Action Lawsuit.
 The General Partner and its affiliates cannot predict with any degree of
certainty the ultimate outcome of such litigation.

        On July 27, 1995, EFG, on behalf of the Partnership and other
EFG-sponsored investment programs, filed an action in the Commonwealth of
Massachusetts Superior Court Department of the Trial Court in and for the County
of Suffolk, for damages and declaratory relief against a lessee of the
Partnership, National Steel Corporation ("National Steel"), under a certain
Master Lease Agreement ("MLA") for the lease of certain equipment. EFG is
seeking the reimbursement by National Steel of certain sales and/or use taxes
paid to the State of Illinois and other remedies provided by the MLA. On August
30, 1995, National Steel filed a Notice of Removal which removed the case to the
United States District Court, District of Massachusetts. On September 7, 1995,
National Steel filed its Answer to EFG's Complaint along with Affirmative
Defenses and Counterclaims, seeking declaratory relief and alleging breach of
contract, implied covenant of good faith and fair dealing and specific
performance. EFG filed its Answer to these counterclaims on September 29, 1995.
Though the parties have been discussing settlement with respect to this matter
for some time, to date, the negotiations have been unsuccessful. Notwithstanding
these discussions, EFG recently filed an Amended and Supplemental Complaint
alleging further default under the MLA and the matter remains pending before the
Court.



                                      -19-
<PAGE>


                AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP

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

              for the years ended December 31, 1997, 1996 and 1995

      The Partnership classifies all rents from leasing equipment as lease
revenue. Upon expiration of the primary lease terms, equipment 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 equipment, in addition to any month-to-month revenue, represent the total
residual value realized for each item of equipment. Therefore, the financial
statement gain or loss, which reflects the difference between the net book value
of the equipment 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 equipment.

      The following is a summary of cash excess associated with equipment
dispositions occurring in the years ended December 31, 1997, 1996 and 1995:

<TABLE>
<CAPTION>
                                             1997        1996          1995
                                          ----------   ----------   ----------
<S>                                       <C>          <C>          <C>
Rents earned prior to disposal of
     equipment, net of interest charges   $2,680,821   $6,375,173   $1,260,881

Sale proceeds realized upon disposition
     of equipment                          1,098,682    1,563,010      429,105
                                          ----------   ----------   ----------
Total cash generated from rents
     and equipment sale proceeds           3,779,503    7,938,183    1,689,986

Original acquisition cost of equipment
     disposed                              2,813,225    6,821,144    1,293,887
                                          ----------   ----------   ----------
Excess of total cash generated to cost
     of equipment disposed                $  966,278   $1,117,039   $  396,099
                                          ----------   ----------   ----------
                                          ----------   ----------   ----------
</TABLE>



                                      -20-
<PAGE>


                AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP

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

                      for the year ended December 31, 1997

<TABLE>
<CAPTION>
                                                                     Sales and
                                                  Operations         Refinancings          Total
                                                 -----------         -----------         -----------
<S>                                              <C>                 <C>                 <C>
Net income                                       $   331,044         $   389,295         $   720,339

Add:
     Depreciation and amortization                   261,657                --               261,657
     Management fees                                  30,066                --                30,066
     Book value of disposed equipment                   --               709,387             709,387

Less:
     Principal reduction of notes payable           (307,479)               --              (307,479)
                                                 -----------         -----------         -----------
     Cash from operations, sales and
     refinancings                                    315,288           1,098,682           1,413,970

Less:
     Management fees                                 (30,066)               --               (30,066)
                                                 -----------         -----------         -----------
     Distributable cash from operations,
     sales and refinancings                          285,222           1,098,682           1,383,904

Other sources and uses of cash:
     Cash at beginning of year                     1,867,874                --             1,867,874
     Net change in receivables and
     accruals                                         18,376            (194,092)           (175,716)

Less:
     Cash distributions paid                            --              (303,300)           (303,300)
                                                 -----------         -----------         -----------
Cash at end of year                              $ 2,171,472         $   601,290         $ 2,772,762
                                                 -----------         -----------         -----------
                                                 -----------         -----------         -----------

</TABLE>



                                      -21-
<PAGE>

                AMERICAN INCOME PARTNERS V-D 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

                                December 31, 1997

        For the year ended December 31, 1997, the Partnership reimbursed the
General Partner and its Affiliates for the following costs:

<TABLE>
<S>                                   <C>
         Operating expenses           $      162,956

</TABLE>



                                      -22-