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

                                   FORM 10-Q

(Mark One)

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

For the quarterly period ended      September 30, 1996
                               ------------------------------------------------
 
                                       OR

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

For the transition period from______________________to__________________________

                              ______________________


For Quarter Ended September 30, 1996                 Commission File No. 0-21396


 
                            AFG Investment Trust A
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
 
<S>                                                   <C>
Delaware                                                      04-3145953
----------------------------------------------------      --------------
(State or other jurisdiction of                            (IRS Employer
incorporation or organization)                          Identification No.)
 
98 North Washington Street, Boston, MA                         02114
----------------------------------------------------      --------------
(Address of principal executive offices)                     (Zip Code)
 
Registrant's telephone number, including area code        (617) 854-5800
                                                          --------------
 
</TABLE>
--------------------------------------------------------------------------------
   (Former name, former address and former fiscal year, if changed since last
                                    report.)

  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 
                                               ---      ---   

               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS

    Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court 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______ No_____

                                       
<PAGE>
 
                             AFG Investment Trust A

                                   FORM 10-Q

                                     INDEX



       
       

PART I.  FINANCIAL INFORMATION:
<TABLE>
<CAPTION>
                                                                                           Page
Item 1.  Financial Statements                                                              ----
<S>                                                                       <C>
 
     Statement of Financial Position
       at September 30, 1996 and December 31, 1995                                           3
 
     Statement of Operations
       for the three and nine months ended September 30, 1996 and 1995                       4
 
     Statement of Cash Flows
       for the nine months ended September 30, 1996 and 1995                                 5
 
     Notes to the Financial Statements                                                     6-9
 

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                             10-13


PART II. OTHER INFORMATION:

  Items 1 - 6                                                                               14

</TABLE>

                                       2
<PAGE>
 
                             AFG Investment Trust A

                        STATEMENT OF FINANCIAL POSITION
                    September 30, 1996 and December 31, 1995

                                  (Unaudited)
<TABLE>
<CAPTION>
 
                                          September 30,   December 31,
                                               1996           1995
                                          --------------  -------------
<S>                                       <C>             <C>
ASSETS
------
Cash and cash equivalents                   $ 1,736,547    $   455,262

Rents receivable                                602,669        642,680

Accounts receivable - affiliate                  56,575         83,314

Equipment at cost, net of accumulated
 depreciation of $10,401,833 and
 $8,310,244 at September 30, 1996
 and December 31, 1995, respectively         12,542,686     15,420,535
                  
Organization costs, net of accumulated
 amortization of $4,417 and $3,667 at 
 September 30, 1996 and December 31, 
 1995, respectively                                 583          1,333
                                            -----------    -----------
                                                    
         Total assets                       $14,939,060    $16,603,124
                                            ===========    ===========
 
LIABILITIES AND PARTICIPANTS' CAPITAL
-------------------------------------
 
Notes payable                               $ 4,983,396    $ 6,323,893
Accrued interest                                 60,250         83,426
Accrued liabilities                              20,950         24,135
Accrued liabilities - affiliate                  16,817          4,744
Deferred rental income                           38,984         39,853
Cash distributions payable to        
 participants                                   165,220        127,092
                                            -----------    -----------

        Total liabilities                     5,285,617      6,603,143
                                            -----------    -----------
Participants' capital (deficit):
   Managing Trustee                             (26,796)       (23,330)
   Special Beneficiary                         (228,318)      (199,729)
   Beneficiary Interests
   (549,218 Interests; initial 
     purchase price of $25 each)              9,908,557     10,223,040
                                            -----------    -----------

        Total participants' capital           9,653,443      9,999,981
                                            -----------    -----------

        Total liabilities and               $14,939,060    $16,603,124
         participants' capital              ===========    ===========
 
 
</TABLE>
                  The accompanying notes are an integral part
                        of these financial statements.

                                       3
<PAGE>
 
                             AFG Investment Trust A

                            STATEMENT OF OPERATIONS
        for the three and nine months ended September 30, 1996 and 1995

                                  (Unaudited)

<TABLE>
<CAPTION>
 
 
                                                    Three Months             Nine Months
                                                 Ended September 30,     Ended September 30,
                                                1996            1995          1996          1995
                                            --------------  ------------  ------------  ------------
<S>                                       <C>           <C>           <C>           <C>
Income:

        Lease revenue                      $1,204,560    $1,295,833    $3,632,314    $3,974,862

        Interest income                        22,647        13,570        61,448        33,569

        Loss on sale of equipment              (3,362)     (165,750)     (153,423)     (243,017)

                                           ----------    ----------    ----------    ----------
          Total income                      1,223,845     1,143,653     3,540,339     3,765,414
                                           ----------    ----------    ----------    ----------
 
Expenses:

        Depreciation and amortization         885,534       795,943     2,749,045     2,573,436

        Write-down of equipment                    --       311,621            --       311,621

        Interest expense                       84,429       135,214       301,126       412,356

        Interest expense - affiliate               --            --            --           364

        Equipment management fees
          - affiliate                          46,024        50,739       139,027       150,479

        Operating expenses - affiliate         30,102        30,863        87,639        91,891
                                           ----------    ----------    ----------    ----------

          Total expenses                    1,046,089     1,324,380     3,276,837     3,540,147
                                           ----------    ----------    ----------    ----------
 
Net income (loss)                          $  177,756    $ (180,727)   $  263,502    $  225,267
                                           ==========    ==========    ==========    ==========
 
Net income (loss)
        per Beneficiary Interest           $    0.29     $    (0.30)   $     0.44    $     0.37
                                           =========     ==========    ==========    ==========
Cash distributions declared
        per Beneficiary Interest           $     0.38    $     0.53    $     1.01    $     1.79
                                           ==========    ==========    ==========    ==========
</TABLE>
                  The accompanying notes are an integral part
                        of these financial statements.

                                       4
<PAGE>
 
                             AFG Investment Trust A

                            STATEMENT OF CASH FLOWS
             for the nine months ended September 30, 1996 and 1995

                                  (Unaudited)
<TABLE>
<CAPTION>
 
                                              1996          1995
                                          ------------  ------------
<S>                                       <C>           <C>
Cash flows from (used in) operating
 activities:                              
Net income                                $   263,502   $   225,267

Adjustments to reconcile net income to
 net cash from operating activities:
       Depreciation and amortization        2,749,045     2,573,436
       Loss on sale of equipment              153,423       243,017
       Write-down of equipment                     --       311,621

Changes in assets and liabilities
   Decrease (increase) in:
       rents receivable                        40,011       (47,498)
       accounts receivable - affiliate         26,739       (97,722)
   Increase (decrease) in:
       accrued interest                       (23,176)       24,061
       accrued interest - affiliate                --           364
       accrued liabilities                     (3,185)        2,385
       accrued liabilities - affiliate         12,073       (69,211)
       deferred rental income                    (869)      (22,380)
                                          -----------   -----------

          Net cash from operating         
           activities                       3,217,563     3,143,340
                                          -----------   -----------
Cash flows from (used in) investing
 activities:                              
   Purchase of equipment                   (1,441,796)   (2,564,706)
   Proceeds from equipment sales            1,417,927     1,622,020
                                          -----------   -----------

          Net cash used in investing      
           activities                        (23,869)     (942,686)
                                         -----------   -----------
Cash flows from (used in) financing
 activities:                                  
   Proceeds from notes payable                997,888     1,747,173
   Principal payments - notes payable      (2,338,385)   (2,091,781)
      Distributions paid                     (571,912)   (1,143,977)
                                          -----------   -----------
 
          Net cash used in financing       
           activities                      (1,912,409)   (1,488,585)
                                          -----------   -----------
Net increase in cash and cash               
 equivalents                                1,281,285       712,069

Cash and cash equivalents at beginning  
 of period                                    455,262         6,471
                                          -----------   -----------

Cash and cash equivalents at end of       
 period                                   $ 1,736,547   $   718,540
                                          ===========   ===========
 
Supplemental disclosure of cash flow
 information:                             
   Cash paid during the period for        $   324,302   $   388,295
    interest                              ===========   ===========
    
 
</TABLE>

Supplemental schedule of non-cash investing and financing activities:
  During 1995, the Trust sold equipment to a third party which assumed related
  debt and interest of $96,913 and $625, respectively.
  
                  The accompanying notes are an integral part
                        of these financial statements.

                                       5
<PAGE>
 
                             AFG Investment Trust A

                       Notes to the Financial Statements
                               September 30, 1996

                                  (Unaudited)



NOTE 1 - BASIS OF PRESENTATION
------------------------------

  The financial statements presented herein are prepared in conformity with
generally accepted accounting principles and the instructions for preparing Form
10-Q under Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission and are unaudited.  As such, these financial statements do not
include all information and footnote disclosures required under generally
accepted accounting principles for complete financial statements and,
accordingly, the accompanying financial statements should be read in conjunction
with the footnotes presented in the 1995 Annual Report.  Except as disclosed
herein, there has been no material change to the information presented in the
footnotes to the 1995 Annual Report.

  In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary to present fairly the financial
position at September 30, 1996 and December 31, 1995 and results of operations
for the three and nine month periods ended September 30, 1996 and 1995 have been
made and are reflected.


NOTE 2 - CASH
-------------

  At September 30, 1996, the Trust had $1,635,000 invested in reverse repurchase
agreements secured by U.S. Treasury Bills or interests in U.S. Government
securities.


NOTE 3 - REVENUE RECOGNITION
----------------------------

  Rents are payable to the Trust 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.  Future minimum rents of
$7,716,233 are due as follows:
<TABLE>
<CAPTION>
 
<S>                                  <C>    <C>
    For the year ending September 30, 1997  $4,297,517
                                      1998   2,307,322
                                      1999     478,099
                                      2000     224,124
                                      2001     186,611
                                Thereafter     222,560
                                            ----------
 
                                     Total  $7,716,233
                                            ==========
</TABLE>

  During March 1996, the Trust acquired an 8.86% proportionate ownership
interest in an MD-87 jet aircraft leased by Reno Air, Inc. (the "Reno Aircraft")
- See Note 4 herein.  The Trust will receive approximately $157,000 of rental
revenue in each of the years in the period ending September 30, 2002 and $39,000
in the year ending September 30, 2003, pursuant to the Reno Aircraft lease
agreement.  Rents from the Reno Aircraft, as provided for in the lease
agreement, are adjusted monthly for changes of the London Inter-Bank Offered
Rate ("LIBOR").  Future rents from the Reno Aircraft, included above, reflect
the most recent LIBOR effected rental payment.

                                       6
<PAGE>
 
                             AFG Investment Trust A
                             ----------------------

                       Notes to the Financial Statements

                                  (Continued)



NOTE 4 - EQUIPMENT
------------------

  The following is a summary of equipment owned by the Trust at September 30,
1996.  In the opinion of American Finance Group ("AFG"), the acquisition cost of
the equipment did not exceed its fair market value.
<TABLE>
<CAPTION>
 
                                             Lease Term      Equipment
Equipment Type                                (Months)        at Cost
--------------                                ---------      ---------
<S>                          <C>                        <C>
 
Aircraft                                      60-81       $  6,814,662
Materials handling                            12-60          3,723,929
Retail store fixtures                         36-60          2,992,236
Vessels                                          72          2,399,580
Computers and peripherals                      9-62          2,226,777
Construction and mining                       36-84          1,945,484
Communications                                   56          1,802,423
Research and test                                60            459,282
Manufacturing                                    48            442,590
Energy systems                                   60            108,975
Photocopying                                  24-36             28,581
                                                          ------------
 
                               Total equipment cost         22,944,519
 
                           Accumulated depreciation        (10,401,833)
                                                          ------------
 
         Equipment, net of accumulated depreciation       $ 12,542,686
                                                          ============
 
</TABLE>

  On September 29, 1995, the Trust entered into an agreement with United Air
Lines, Inc. ("United") to transfer the Trust's proportionate ownership interest
in a Boeing 747-SP aircraft (the "United Aircraft"), to United for cash
consideration of $1,609,894, including unpaid rents through the date of sale,
which event concluded in February 1996.  In March 1996, the Trust acquired an
8.86% ownership interest in the Reno Aircraft, pursuant to the reinvestment
provisions of the Trust's prospectus, at a cost of $1,239,741.  To acquire the
interest in the Reno Aircraft, the Trust obtained leveraging of $997,888 from a
third-party lender and utilized cash proceeds of $241,853 from the sale of the
United Aircraft.  The Managing Trustee intends to reinvest the remaining
proceeds from the sale of the United Aircraft in other equipment in 1996.

  At September 30, 1996, the Trust's equipment portfolio included equipment
having a proportionate original cost of $8,519,757, representing approximately
37% of total equipment cost.

  The summary above includes equipment held for sale or re-lease with a cost and
net book value of approximately $213,000 and $70,000, respectively, at September
30, 1996.  The Managing Trustee is actively seeking the sale or re-lease of all
equipment not on lease.

                                       7
<PAGE>
 
                             AFG Investment Trust A

                       Notes to the Financial Statements

                                  (Continued)



NOTE 5 - RELATED PARTY TRANSACTIONS
-----------------------------------

  All operating expenses incurred by the Trust are paid by AFG on behalf of the
Trust and AFG is reimbursed at its actual cost for such expenditures.  Fees and
other costs incurred during the nine month periods ended September 30, 1996 and
1995, which were paid or accrued by the Trust to AFG or its Affiliates, are as
follows:
<TABLE>
<CAPTION>
 
                                            1996      1995
                                          --------  --------
<S>                                       <C>       <C>
 
  Equipment acquisition fees              $ 36,109  $ 45,771
  Interest on note payable - affiliate          --       364
  Equipment management fees                139,027   150,479
  Administrative charges                    15,750    15,750
  Reimbursable operating expenses
     due to third parties                   71,889    76,141
                                          --------  --------
 
                        Total             $262,775  $288,505
                                          ========  ========
 
</TABLE>

  All rents and proceeds from the sale of equipment are paid directly to either
AFG or to a lender.  AFG temporarily deposits collected funds in a separate
interest-bearing escrow account prior to remittance to the Trust.  At September
30, 1996, the Trust was owed $56,575 by AFG for such funds and the interest
thereon.  These funds were remitted to the Trust in October 1996.


NOTE 6 - NOTES PAYABLE
----------------------

  Notes payable at September 30, 1996 consisted of installment notes of
$4,983,396 payable to banks and institutional lenders.  The notes bear interest
rates ranging between 5.7% and 9.17%, except for one note which bears a
fluctuating interest rate based on LIBOR plus a margin (5.4% at September 30,
1996).  All of the installment notes are non-recourse and are collateralized by
the equipment and assignment of the related lease payments. Generally, the
installment notes will be fully amortized by noncancellable rents.  However, the
Trust has a balloon payment obligation at the expiration of the primary lease
term related to the Reno Aircraft.  The carrying amount of notes payable
approximates fair value at September 30, 1996.

  The annual maturities of the notes payable are as follows:
<TABLE>
<CAPTION>
 
<S>                                  <C>    <C>
    For the year ending September 30, 1997  $2,623,202
                                      1998   1,346,630
                                      1999     319,975
                                      2000     111,206
                                      2001     121,530
                                Thereafter     460,853
                                            ----------
 
                                     Total  $4,983,396
                                            ==========
 
</TABLE>

                                       8
<PAGE>
 
                             AFG Investment Trust A

                       Notes to the Financial Statements

                                  (Continued)
                                        


NOTE 7 - SUBSEQUENT EVENT
-------------------------

  On October 26, 1996, the Managing Trustee, on behalf of the Trust, filed a
Solicitation Statement with the Securities and Exchange Commission which was
subsequently sent to the Beneficiaries pursuant to Regulation 14A of  Section 14
of the Securities Exchange Act.  The Solicitation Statement seeks to solicit the
consent of the Beneficiaries to a proposed amendment ("the Amendment") to the
Amended and Restated Declaration of Trust (the "Trust Agreement").

  The Amendment would (i) amend the provisions of the Trust Agreement governing
the redemption of Interests to permit the Trust to offer to redeem outstanding
interests at such times, in such amounts, in such manner and at such prices as
the Managing Trustee may determine from time to time, in accordance with
applicable law; and (ii) add a provision to the Trust Agreement that would
permit the Trust to issue, at the discretion of the Managing Trustee and without
further consent or approval of the Beneficiaries, an additional class of
security with such designations, preferences and relative, participating,
optional or other special rights, powers and duties as the Managing Trustee may
fix.  Such a security, if it were to be offered and sold, would provide the
Trust with the funds to a) implement more expansive Interest redemption
opportunities for Beneficiaries without using Trust funds which may otherwise be
available for current cash distributions; and b) make a special one-time
distribution to the Beneficiaries.

  Pursuant to the Trust Agreement, the adoption of the Amendment requires the
consent of the Beneficiaries holding more than fifty percent in the aggregate of
the Interests held by all Beneficiaries.  To be valid, consent forms must be
received by the Managing Trustee by December 6, 1996 (subject to extension at
the discretion of the Managing Trustee).  The outcome of this solicitation can
not be determined at this time.

                                       9
<PAGE>
 
                             AFG Investment Trust A

                                   FORM 10-Q

                         PART I.  FINANCIAL INFORMATION


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

Three and nine months ended September 30, 1996 compared to the three and nine
-----------------------------------------------------------------------------
months ended September 30, 1995:
-------------------------------

Overview
--------

  As an equipment leasing trust, the Trust was organized to acquire a
diversified portfolio of capital equipment subject to lease agreements with
third parties.  The Trust was designed to progress through three principal
phases:  acquisitions, operations, and liquidation.  During the operations
phase, a period of approximately six years, all equipment in the Trust's
portfolio will progress through various stages.  Initially, all equipment will
generate rental revenues under primary term lease agreements.  During the life
of the Trust, these agreements will expire on an intermittent basis and
equipment held pursuant to the related leases will be renewed, re-leased or
sold, depending on prevailing market conditions and the assessment of such
conditions by AFG to obtain the most advantageous economic benefit.  Over time,
a greater portion of the Trust's original equipment portfolio will become
available for remarketing and cash generated from operations and from sales or
refinancings will begin to fluctuate.  Ultimately, all equipment will be sold
and the Trust will be dissolved.  The Trust's operations commenced in 1992.


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

  For the three and nine months ended September 30, 1996, the Trust recognized
lease revenue of $1,204,560 and $3,632,314, respectively, compared to $1,295,833
and $3,974,862 for the same periods in 1995.  The decrease in lease revenue from
1995 to 1996 is due primarily to the Trust's sale of its interest in the United
Aircraft in February 1996, as discussed below.  In the near-term, lease revenue
is expected to increase due to reinvestment of the proceeds from the sale of the
United Aircraft in other equipment.  Over time, the level of lease revenue will
decline due to the expiration of the Trust's primary lease term agreements.  The
Trust also earns interest income from temporary investments of rental receipts
and equipment sales proceeds in short-term instruments.

  The Trust's equipment portfolio includes certain assets in which the Trust
holds a proportionate ownership interest.  In such cases, the remaining
interests are owned by AFG or an affiliated equipment leasing program sponsored
by AFG.  Proportionate equipment ownership enables the Trust 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.  The Trust 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.

  On February 5, 1996, the Trust concluded the sale of its interest in a Boeing
747-SP to the lessee, United Air Lines, Inc., as reported in Note 3 to the
Trust's 1995 Annual Report.  The Trust recognized a net loss of $458,638 in
connection with this transaction, of which $311,621 was recognized as Write-Down
of Equipment in 1995.  The remainder of $147,017 was recognized as a loss on
sale of equipment on the accompanying financial statements for the nine months
ended September 30, 1996.  In addition to lease rents, the Trust received net
sale proceeds of $1,392,779 from United for the aircraft.  The Trust plans to
reinvest substantially all of such proceeds in other equipment in 1996, a
portion of which was completed in March 1996 through the acquisition of an 8.86%
ownership interest in the Reno Aircraft at an aggregate cost of $1,239,741.  To
acquire the interest in the Reno Aircraft, the Trust obtained long-term
financing of $997,888 from a third-party lender and utilized cash proceeds of

                                       10
<PAGE>
 
                             AFG Investment Trust A

                                   FORM 10-Q

                         PART I.  FINANCIAL INFORMATION

$241,853 from the sale of the United Aircraft.  During the three and nine months
ended September 30, 1996, the Trust sold other equipment having a net book value
of $10,997 and $31,554, respectively, to existing lessees and third parties.
These sales resulted in net losses, for financial statement purposes, of $3,362
and $6,406, respectively.

  During the three and nine months ended September 30, 1995, the Trust sold
equipment having a net book value of $482,501 and $1,962,575, respectively, to
existing lessees and third parties.  These sales resulted in net losses, for
financial statement purposes, of $165,750 and $243,017, respectively.  The
equipment sales during the nine months ended September 30, 1995  included the
Trust's interest in a vessel with an original cost and net book value of
$1,948,190 and $1,449,673, respectively, which the Trust sold to an existing
lessee in June 1995.  In connection with this sale, the Trust realized sale
proceeds of $1,285,318 and the purchaser assumed related debt and interest of
$96,913 and $625, respectively, which resulted in a net loss, for financial
statement purposes, of $66,817.  This equipment was sold prior to the expiration
of the related lease term.  The sale proceeds were fully reinvested in other
equipment in 1995.

  It cannot be determined whether future sales of equipment will result in a net
gain or a net loss to the Trust, 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 AFG'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.  AFG attempts to monitor these changes in order to identify
opportunities which may be advantageous to the Trust 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 Trust 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 Trust achieved from leasing the equipment.

  Depreciation and amortization expense was $885,534 and $2,749,045 for the
three and nine months ended September 30, 1996, respectively, compared  $795,943
and $2,573,436 for the same periods in 1995.  For financial reporting purposes,
to the extent that an asset is held on primary lease term, the Trust 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 Trust continues to depreciate the remaining
net book value of the asset on a straight-line basis over the asset's remaining
economic life.  The overall increase in depreciation expense from 1995 to 1996
reflects the acquisition of equipment subsequent to September 30, 1995.

  Interest expense was  $84,429 and $301,126 or 7% and 8.3% of lease revenue for
the three and nine months ended September 30, 1996, respectively, compared to
$135,214 and $412,720 or 10.4% of lease revenue for each of  the same periods in
1995.  Interest expense in the near-term is expected to increase due to
anticipated leveraging to be obtained to finance the acquisition of reinvestment
equipment, discussed above.  Thereafter, 

                                       11
<PAGE>
 
                             AFG Investment Trust A

                                   FORM 10-Q

                         PART I.  FINANCIAL INFORMATION

interest expense will decline in amount and as a percentage of lease revenue as
the principal balance of notes payable is reduced through the application of
rent receipts to outstanding debt.

  Management fees were 3.8% of lease revenue for each of the three and nine
month periods ended September 30, 1996 compared to 3.9% and 3.8% of lease
revenue for the same periods 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.  Collectively, operating expenses represented 2.5% and
2.4% of lease revenue for the three and nine months ended September 30, 1996,
respectively, compared to 2.4% and 2.3% of lease revenue for the same periods in
1995.  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 trust.


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

  The Trust 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 Trust's principal operating activities derive from asset
rental transactions.  Accordingly, the Trust's principal source of cash from
operations is provided by 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
net cash inflows of $3,217,563 and $3,143,340 for the nine months ended
September 30, 1996 and 1995, respectively.  In the near-term, net cash inflows
generated from operating activities are expected to increase due to the receipt
of additional lease revenue from additional reinvestment equipment to be
purchased during the remainder of 1996.  Subsequently, future renewal, re-lease
and equipment sale activities will cause a gradual decline in the Trust'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 decline as the Trust experiences a higher
frequency of remarketing events.

  Ultimately, the Trust 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 expended for equipment acquisitions and cash realized from asset disposal
transactions are reported under investing activities on the accompanying
Statement of Cash Flows.  During the nine month periods ended September 30, 1996
and 1995, the Trust expended $1,441,796 and $2,564,706, respectively, to acquire
equipment, including reinvestment equipment discussed above. During the nine
months ended September 30, 1996, the Trust realized net cash proceeds of
$1,417,927 compared to $1,622,020 for the same period in 1995.  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 Trust obtained long-term financing in connection with certain equipment
leases.  The origination of such indebtedness and the subsequent repayments of
principal are reported as components of financing activities.

                                       12
<PAGE>
 
                             AFG Investment Trust A

                                   FORM 10-Q

                         PART I.  FINANCIAL INFORMATION

Cash inflows of $997,888 and $1,747,173 in 1996 and 1995, respectively, resulted
from leveraging a portion of the Trust's equipment portfolio with third-party
lenders. Each note payable is recourse only to the specific equipment financed
and to the minimum rental payments contracted to be received during the debt
amortization period (which period generally coincides with the lease rental
term). As rental payments are collected, a portion or all of the rental payment
is used to repay the associated indebtedness. In the near-term, the amount of
cash used to repay debt obligations will increase due to leveraging expected to
be obtained to finance the acquisition of additional reinvestment equipment.
Subsequently, 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. However, the Trust has a balloon payment obligation at the
expiration of the primary lease term related to the Reno Aircraft.

  Cash distributions to the Managing Trustee, the Special Beneficiary and the
Beneficiaries are declared and generally paid within 45 days following the end
of each calendar month.  The payment of such distributions is presented as a
component of financing activities.  For the nine months ended September 30,
1996, the Trust declared total cash distributions of Distributable Cash From
Operations and Distributable Cash From Sales and Refinancings of $610,040.  In
accordance with the Amended and Restated Declaration of Trust, the Beneficiaries
were allocated 90.75% of these distributions, or $553,611; the Special
Beneficiary was allocated 8.25%, or $50,328; and the Managing Trustee was
allocated 1%, or $6,101.

  Cash distributions paid to the Participants consist of both a return of and a
return on capital.  To the extent that cash distributions consist of Cash From
Sales or Refinancings, substantially all of such cash distributions should be
viewed as a return of 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 Trust 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 AFG 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 Trust's equipment portfolio.

  The future liquidity of the Trust will be influenced by the foregoing and will
be greatly dependent upon the collection of contractual rents and the outcome of
residual activities.  The Managing Trustee anticipates that cash proceeds
resulting from these sources will satisfy the Trust'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 Trust's net cash from operating activities to diminish over time; and
equipment sale proceeds will vary in amount and period of realization.
Accordingly, fluctuations in the level of monthly cash distributions will occur
during the life of the Trust.

                                       13
<PAGE>
 
                             AFG Investment Trust A

                                   FORM 10-Q

                          PART II.  OTHER INFORMATION



     Item 1.             Legal Proceedings
                         Response: None
 
     Item 2.             Changes in Securities
                         Response:  None

     Item 3.             Defaults upon Senior Securities
                         Response:  None

     Item 4.             Submission of Matters to a Vote of Security Holders
                         Response:  None

     Item 5.             Other Information
                         Response:  None

     Item 6(a).          Exhibits
                         Response:  None

     Item 6(b).          Reports on Form 8-K
                         Response:  None

                                       14
<PAGE>
 
                                 SIGNATURE PAGE



  Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on behalf of the registrant and in the capacity and
on the date indicated.



                             AFG Investment Trust A


                  By:  AFG ASIT Corporation, a Massachusetts
                       corporation and the Managing Trustee of
                       the Registrant.


                  By:  /s/  Michael J. Butterfield
                       ---------------------------
                       Michael J. Butterfield
                       Treasurer of AFG ASIT Corporation
                       (Duly Authorized Officer and
                       Principal Accounting Officer)


                Date:  November 13, 1996
                       -----------------



                  By:  /s/  Gary M. Romano
                       -------------------------------
                       Gary M. Romano
                       Clerk of AFG ASIT Corporation
                       (Duly Authorized Officer and
                       Principal Financial Officer)


                Date:  November 13, 1996
                       -----------------

                                       15