<PAGE>

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

                                    FORM 10-Q


(Mark One)

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

For the quarterly period ended      September 30, 1998
                               -------------------------------------------------
                                       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, 1998                 Commission File No. 0-25648

                             AFG Investment Trust D
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          Delaware                                             04-3157232
--------------------------------                          -------------------
(State or other jurisdiction of                              (IRS Employer
  incorporation or organization)                          Identification No.)


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

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

--------------------------------------------------------------------------------
(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 D


                                    FORM 10-Q

                                      INDEX
<TABLE>
<CAPTION>
                                                                                                           Page
                                                                                                           ----
<S>                                                                                                       <C>
PART I.       FINANCIAL INFORMATION:

     Item 1.  Financial Statements

         Statement of Financial Position
              at September 30, 1998 and December 31, 1997 ..............................................       3

         Statement of Operations
              for the three and nine months ended September 30, 1998 and 1997 ..........................       4

         Statement of Cash Flows
              for the nine months ended September 30, 1998 and 1997 ....................................       5

         Notes to the Financial Statements .............................................................    6-12


     Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations ......................................................   13-19


PART II. OTHER INFORMATION:

        Items 1 - 6 ....................................................................................      20
</TABLE>



                                       2

<PAGE>

                             AFG Investment Trust D

                         STATEMENT OF FINANCIAL POSITION
                    September 30, 1998 and December 31, 1997

                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                 September 30,              December 31,
ASSETS                                                                               1998                       1997
------                                                                        ------------------           ------------
<S>                                                                            <C>                  <C>                
Cash and cash equivalents ..................................................   $       6,156,113    $         4,218,502
Restricted cash ............................................................           5,101,315             10,712,105
Cash held in escrow ........................................................           3,074,209              3,017,318
Rents receivable ...........................................................           1,291,189              2,133,873
Accounts receivable - affiliate ............................................             489,200                508,209
Investment - affiliate .....................................................             712,313                     --
Equipment at cost, net of accumulated depreciation
  of $44,587,747 and $38,811,298 at September 30, 1998
  and December 31, 1997, respectively ......................................          62,963,350             72,711,968
Organization costs, net of accumulated amortization
  of $5,000 and $4,250 at September 30, 1998
  and December 31, 1997, respectively ......................................                  --                    750
                                                                               -----------------    -------------------

         Total assets ......................................................   $      79,787,689    $        93,302,725
                                                                               -----------------    -------------------
                                                                               -----------------    -------------------

LIABILITIES AND PARTICIPANTS' CAPITAL

Notes payable ..............................................................   $      36,507,192    $        43,102,250
Accrued interest ...........................................................             361,160                492,620
Accrued liabilities ........................................................             153,000                 11,550
Accrued liabilities - affiliate ............................................              95,155                113,323
Deferred rental income .....................................................             155,281                 39,331
Cash distributions payable to participants .................................             417,939                480,436
                                                                               -----------------    -------------------

         Total liabilities .................................................          37,689,727             44,239,510
                                                                               -----------------    -------------------

Participants' capital (deficit):
  Managing Trustee .........................................................              13,743                (45,553)
  Special Beneficiary ......................................................             113,383               (379,308)
  Class A Beneficiary Interests (1,934,755 and 1,935,755 Interests
   at September 30,1988 and December 31, 1997, respectively,
   initial purchase price of $25 each) .....................................          34,610,260             36,477,495
  Class B Beneficiary Interests (3,142,083 Interests;
   initial purchase price of $5 each) ......................................           8,975,898             14,616,903
  Treasury Interests (154,275 and 153,275 Interests at September 30, 1998 and
   December 31, 1997, respectively,
   at Cost) ................................................................          (1,615,322)            (1,606,322)
                                                                               -----------------    -------------------

         Total participants' capital .......................................          42,097,962             49,063,215
                                                                               -----------------    -------------------

         Total liabilities and participants' capital .......................   $      79,787,689    $        93,302,725
                                                                               -----------------    -------------------
                                                                               -----------------    -------------------
</TABLE>
                     The accompanying notes are an integral
                       part of these financial statements.

                                       3

<PAGE>

                             AFG Investment Trust D

                             STATEMENT OF OPERATIONS
         for the three and nine months ended September 30, 1998 and 1997

                                   (Unaudited)
<TABLE>
<CAPTION>
                                                         Three Months                                Nine Months
                                                      Ended September 30,                        Ended September 30,
                                                    1998              1997                    1998               1997
                                               --------------   --------------          ---------------    ----------
<S>                                            <C>               <C>                     <C>                <C>          
Income:
     Lease revenue .........................   $   4,902,809     $   4,821,059           $  14,482,399      $  14,411,576

     Interest income .......................         172,028           254,187                 612,151            500,325

     Gain (loss) on sale of equipment ......           9,268          (860,449)               (110,235)          (951,347)
                                               -------------     -------------           -------------      -------------

           Total income ....................       5,084,105         4,214,797              14,984,315         13,960,554
                                               -------------     -------------           -------------      -------------


Expenses:

     Depreciation and amortization .........       2,506,436         3,124,338               8,475,754          9,336,856

     Interest expense ......................         822,351           547,250               2,652,655          1,854,193

     Equipment management fees
       - affiliate .........................         234,149           224,727                 685,949            660,444

     Operating expenses - affiliate ........          87,616           232,331                 388,427            460,518
                                               -------------     -------------           -------------      -------------

           Total expenses ..................       3,650,552         4,128,646              12,202,785         12,312,011
                                               -------------     -------------           -------------      -------------


Net income .................................   $   1,433,553     $      86,151           $   2,781,530      $   1,648,543
                                               -------------     -------------           -------------      -------------
                                               -------------     -------------           -------------      -------------

Net income
  per Class A Beneficiary Interest .........   $        0.07     $          --           $        0.26      $        0.68
                                               -------------     -------------           -------------      -------------
                                               -------------     -------------           -------------      -------------

  per Class B Beneficiary Interest .........   $        0.35     $          --           $        0.43      $          --
                                               -------------     -------------           -------------      -------------
                                               -------------     -------------           -------------      -------------

Cash distributions declared
  per Class A Beneficiary Interest .........   $        0.41     $        1.73           $        1.23      $        2.55
                                               -------------     -------------           -------------      -------------
                                               -------------     -------------           -------------      -------------

  per Class B Beneficiary Interest .........   $        1.89     $        0.13           $        2.22      $        0.13
                                               -------------     -------------           -------------      -------------
                                               -------------     -------------           -------------      -------------
</TABLE>


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

                                       4

<PAGE>

                             AFG Investment Trust D

                             STATEMENT OF CASH FLOWS
              for the nine months ended September 30, 1998 and 1997

                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                               1998                    1997
                                                                                        ------------------    ----------------
<S>                                                                                     <C>                   <C>            
Cash flows from (used in) operating activities:
Net income .........................................................................    $     2,781,530       $     1,648,543

Adjustments to reconcile net income to net cash from operating activities:
         Depreciation and amortization .............................................          8,475,754             9,336,856
         Loss on sale of equipment .................................................            110,235               951,347

Changes in assets and liabilities Decrease (increase) in:
         cash held in escrow .......................................................            (56,891)                   --
         rent receivable ...........................................................            842,684             1,568,015
         accounts receivable - affiliate ...........................................             19,009             3,414,576
     Increase (decrease) in:
         accrued interest ..........................................................           (131,460)             (399,779)
         accrued liabilities .......................................................            141,450                   475
         accrued liabilities - affiliate ...........................................            (18,168)              (39,897)
         deferred rental income ....................................................            115,950              (149,948)
                                                                                        ---------------       ---------------

              Net cash from operating activities ...................................         12,280,093            16,330,188
                                                                                        ---------------       ---------------

Cash flows from (used in) investing activities:
     Purchase of equipment .........................................................           (179,510)          (30,166,351)
     Proceeds from equipment sales .................................................          1,342,889             2,602,580
     Investment - affiliate ........................................................           (712,313)                   --
                                                                                        ---------------       ---------------

              Net cash from (used in) investing activities .........................            451,066           (27,563,771)
                                                                                        ---------------       ---------------

Cash flows from (used in) financing activities:
     Proceeds from capital contributions ...........................................                 --            15,710,415
     Payment of offering costs .....................................................                 --              (157,104)
     Restricted cash ...............................................................          5,610,790                    --
     Purchase of Treasury Interests ................................................             (9,000)                   --
     Proceeds from notes payable ...................................................                 --            25,042,248
     Principal payments - notes payable ............................................         (6,595,058)           (9,253,988)
     Distributions paid ............................................................         (9,800,280)           (6,178,531)
                                                                                        ----------------      ----------------

              Net cash from (used in) financing activities .........................        (10,793,548)           25,163,040
                                                                                        ---------------       ---------------

Net increase in cash and cash equivalents ..........................................          1,937,611            13,929,457

Cash and cash equivalents at beginning of period ...................................          4,218,502             6,640,347
                                                                                        ---------------       ---------------

Cash and cash equivalents at end of period .........................................    $     6,156,113       $    20,569,804
                                                                                        ---------------       ---------------
                                                                                        ---------------       ---------------

Supplemental disclosure of cash flow information:
     Cash paid during the period for interest ......................................    $     2,784,115       $     2,253,973
                                                                                        ---------------       ---------------
                                                                                        ---------------       ---------------

</TABLE>

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

                                       5

<PAGE>

                             AFG Investment Trust D

                        Notes to the Financial Statements
                               September 30, 1998

                                   (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 1997 Annual Report. Except as disclosed herein, there
has been no material change to the information presented in the footnotes to the
1997 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, 1998 and December 31, 1997 and results of operations
for the three and nine months ended September 30, 1998 and 1997 have been made
and are reflected.


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

     At September 30, 1998, the Trust had $10,137,611 invested in federal agency
discount notes and reverse repurchase agreements secured by U.S. Treasury Bills
or interests in U.S. Government securities. Such cash includes $5,101,315 which
is classified as Restricted Cash and represents the remaining net proceeds
realized from the offering of the Class B Interests less ( i ) the portion
thereof used to pay a special distribution to the Class A Beneficiaries and to
redeem Class A Interests (see Notes 9 and 10) and ( ii ) the portion thereof
used to pay a capital distribution to the Class B Beneficiaries (see Note 12).
The remainder is expected to be used according to terms negotiated in
conjunction with settling the Class Action Lawsuit described in Note 8.


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. In certain instances, the Trust
may enter primary-term, renewal or re-lease agreements which expire beyond the
Trust's anticipated dissolution date. This circumstance is not expected to
prevent the orderly wind-up of the Trust's business activities as the Managing
Trustee and the Advisor would seek to sell the then-remaining equipment assets
either to the lessee or to a third party, taking into consideration the amount
of future non-cancelable rental payments associated with the attendant lease
agreements. Future minimum rents of $23,626,696 are due as follows:
<TABLE>
<CAPTION>
       <S>                                                 <C>            
           For the year ending September 30, 1999 ...........    $    11,155,958
                                             2000 ...........          6,246,685
                                             2001 ...........          3,263,719
                                             2002 ...........          2,916,983
                                             2003 ...........             43,351
                                                                 ---------------

                                     Total ..................    $    23,626,696
                                                                 ---------------
                                                                 ---------------
</TABLE>

                                       6

<PAGE>

                             AFG Investment Trust D

                        Notes to the Financial Statements

                                   (Continued)


NOTE 4 - INVESTMENT - AFFILIATE
-------------------------------

     During the three months ended September 30, 1998, the Trust purchased
limited partnership units (the "Units") in AFG International Limited Partnership
(the "Partnership"), a real estate limited partnership sponsored by Equis
Financial Group Limited Partnership ("EFG") that owns two commercial buildings
leased to an investment grade educational institution. The Trust purchased 7.25
Units at a cost of $100,000 per unit for an aggregate purchase price of
$725,000. As a result of the purchase of the Units, the Trust owns approximately
22.5% of the Partnership. The Trust accounts for its investment in the
Partnership under the equity method of accounting. As such, the carrying value
of the Trust's investment in the Partnership is increased or decreased by an
amount equal to the Trust's share of the Partnership's income or losses,
respectively, and decreased for any distributions received from the Partnership.


NOTE 5 - EQUIPMENT
------------------

     The following is a summary of equipment owned by the Trust at September 30,
1998. Remaining Lease Term (Months), as used below, represents the number of
months remaining from September 30, 1998 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
            --------------                                 ---------------                   -------------
<S>                                                            <C>                      <C>           
Aircraft                                                           1-51                     $   52,946,296
Vessels                                                              48                         13,875,360
Locomotives                                                          21                         10,684,643
Construction and mining                                            0-45                          6,209,244
Materials handling                                                 0-56                          5,294,425
Retail store fixtures                                              0-15                          4,926,665
Computers and peripherals                                          0-22                          4,890,270
Manufacturing                                                       0-3                          3,849,469
Miscellaneous                                                      3-26                          3,564,191
Tractors & heavy duty trucks                                        0-6                            545,117
Research & test                                                    9-18                            501,012
Trailers/intermodal containers                                        0                            187,461
Motor vehicles                                                        6                             38,499
Photocopying                                                        0-6                             31,913
Communications                                                        0                              6,532
                                                                                            --------------

                                                      Total equipment cost                     107,551,097

                                                  Accumulated depreciation                     (44,587,747)
                                                                                            --------------

                                Equipment, net of accumulated depreciation                  $   62,963,350
                                                                                            --------------
                                                                                            --------------
</TABLE>

                                       7

<PAGE>

                             AFG Investment Trust D

                        Notes to the Financial Statements

                                   (Continued)


     At September 30, 1998, the Trust's equipment portfolio included equipment
having a proportionate original cost of $43,672,499, representing approximately
41% of total equipment cost.

     At September 30, 1998, the cost and net book value of equipment held for
sale or re-lease was approximately $195,000 and $32,000, respectively. The
Managing Trustee is actively seeking the sale or re-lease of all equipment not
on lease. In addition, the summary above includes equipment being leased on a
month-to-month basis.


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

     All operating expenses incurred by the Trust are paid by EFG on behalf of
the Trust and EFG is reimbursed at its actual cost for such expenditures. Fees
and other costs incurred during the nine month periods ended September 30, 1998
and 1997, which were paid or accrued by the Trust to EFG or its Affiliates, are
as follows:

<TABLE>
<CAPTION>
                                                                            1998                  1997
                                                                      ----------------      ----------------
<S>                                                                      <C>                   <C>          
Reimbursement of offering costs ...................................      $          --         $     157,104
Equipment acquisition fees ........................................              2,556               869,818
Equipment management fees .........................................            685,949               660,444
Administrative charges ............................................             60,138                56,373
Reimbursable operating expenses
     due to third parties .........................................            328,289               404,145
                                                                         -------------         -------------

                                Total .............................      $   1,076,932         $   2,147,884
                                                                         -------------         -------------
                                                                         -------------         -------------
</TABLE>


     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 Trust. At
September 30, 1998, the Trust was owed $489,200 by EFG for such funds and the
interest thereon. These funds were remitted to the Trust in October 1998.

     Refer to Note 9 regarding the purchase of Class B Interests by an
affiliate, Equis II Corporation and a change in ownership of the Managing
Trustee. Refer also to Note 4 regarding the Trust's investment in an affiliate
during the three months ended September 30, 1998.


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

     Notes payable at September 30, 1998 consisted of installment notes of
$36,507,192 payable to banks and institutional lenders. The notes bear interest
rates ranging between 6.7% and 13.75%, except for one note, which bears a
fluctuating interest rate based on LIBOR (5.59% at September 30, 1998) plus a
margin. 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 balloon payment obligations of $22,162,280, $1,476,981 and $282,421 at
the expiration of the primary lease terms related to an aircraft leased to
Scandinavian Airlines System ("SAS"), certain rail equipment, and its interest
in an aircraft leased to Reno Air, Inc., respectively. On November 9, 1998,
pursuant to the lease agreement, SAS, gave the Trust notice of its intent to
exercise its option to extend the term of the existing lease for a period of two
years, effective upon the expiration of the primary lease term. The Managing
Trustee is currently negotiating the terms of the extension with SAS and no
agreement has been executed to date. As a result of SAS exercising the 

                                       8

<PAGE>

                             AFG Investment Trust D

                        Notes to the Financial Statements

                                   (Continued)




renewal lease option, the balloon payment would be postponed until the
termination of the two-year extension period and would be equal to the
unamortized balance of this indebtedness at such date. The carrying value of
notes payable approximates fair value at September 30, 1998.



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

       <S>                                                  <C>             
           For the year ending September 30, 1999 ...........   $     28,105,864
                                             2000 ...........          4,641,159
                                             2001 ...........          1,751,160
                                             2002 ...........          1,709,289
                                             2003 ...........            299,720
                                                                ----------------

                                            Total ...........   $     36,507,192
                                                                ----------------
                                                                ----------------
</TABLE>

NOTE 8 - 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
Trust (collectively, the "Nominal Defendants"), against EFG and a number of its
affiliates, including the Managing Trustee, as defendants (collectively, the
"Defendants"). Certain of the Plaintiffs, on or about June 24, 1997, had filed
an earlier derivative action, captioned Leonard Rosenblum, et al. v. Equis
Financial Group Limited Partnership, et al., in the Superior Court of the
Commonwealth of Massachusetts on behalf of the Nominal Defendants against the
Defendants. Both actions are referred to herein collectively as the "Class
Action Lawsuit."

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

     On July 16, 1998, counsel for the Defendants and the Plaintiffs executed a
Stipulation of Settlement 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 Stipulation of Settlement was based upon and supersedes a
Memorandum of Understanding between the parties dated March 9, 1998, which
outlined the terms of a possible settlement. The Stipulation of Settlement was
filed with the Court on July 23, 1998. On August 20, 1998, the Court issued its
"Order Preliminarily Approving Settlement, Conditionally Certifying Settlement
Class and Providing for Notice of, and Hearing on, the Proposed Settlement".

     The Stipulation of Settlement prescribes certain conditions necessary to
effecting the settlement and contemplates various changes that, if effected,
would alter the future operations of the Nominal Defendants (see Note 11). The
Stipulation of Settlement is subject to change pending a final ruling by the
Court that will be preceded by a hearing open to all interested parties. The
Court has scheduled a hearing date for December 11, 1998. Currently, it is
anticipated that a request for extension will be filed with the Court to permit,
among other things, sufficient time to complete certain regulatory review
requirements. Class members will be notified of the

                                       9

<PAGE>

                             AFG Investment Trust D

                        Notes to the Financial Statements

                                   (Continued)


final hearing date in advance. To the extent that the Court issues a final order
with respect to the Stipulation of Settlement, the complete terms thereof will
be communicated to all of the beneficiaries (or partners) of the Nominal
Defendants.

     There can be no assurance that the Court will issue a final order approving
the Stipulation of Settlement. However, the Managing Trustee and its affiliates,
in consultation with counsel, concur that there is a reasonable basis to believe
that a final settlement will be achieved. However, in the absence of a final
settlement approved by the Court, the Defendants intend to defend vigorously
against the claims asserted in the Class Action Lawsuit. The Managing Trustee
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 Trust 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 Trust, 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 discussed settlement with respect to this
matter for some time, the negotiations were unsuccessful. Notwithstanding these
discussions, EFG filed an Amended and Supplemental Complaint alleging further
default under the MLA and EFG filed a motion for Summary Judgment on all claims
and counterclaims. The Court held a hearing on EFG's motion in December 1997 and
the Court recently entered a decision dismissing certain of National Steel's
counterclaims and finding in favor of EFG on certain issues and in favor of
National Steel on other issues. The parties have since resumed settlement
discussions. The Trust does not anticipate that it will experience any material
losses as a result of this action.


NOTE 9 - ISSUANCE OF CLASS B INTERESTS
--------------------------------------

     On October 26, 1996, the Trust filed a Solicitation Statement with the
United States Securities and Exchange Commission (the "SEC") which subsequently
was sent to the Beneficiaries pursuant to Regulation 14A of Section 14 of the
Securities Exchange Act. The Solicitation Statement sought the consent of the
Beneficiaries to a proposed amendment (the "Amendment") to the Amended and
Restated Declaration of Trust (the "Trust Agreement") which would (i) amend the
provisions of the Trust Agreement governing the redemption of Beneficiary
Interests to permit the Trust to offer to redeem outstanding Beneficiary
Interests at such times, in such amounts, in such manner and at such prices as
the Managing Trustee might 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
might affix. The funds obtained through the issuance of such a security were
intended to be used by the Trust to (a) expand redemption opportunities for
Beneficiaries without using Trust funds which might otherwise be available for
cash distributions; and (b) make a special one-time cash distribution to the
Beneficiaries.

     Pursuant to the Trust Agreement, the adoption of the Amendment required the
consent of the Beneficiaries holding more than 50% in the aggregate of the Class
A Interests held by all Beneficiaries. A majority of the Class 

                                       10

<PAGE>

                       Notes to the Financial Statements

                                  (Continued)

A Interests, representing 1,210,746 Interests or 58% of all Class A Interests,
voted in favor of the Amendment; 229,836 Interests or 11% of all Class A
Interests voted against the Amendment; and 39,233 Interests or 2% of all Class A
Interests abstained. Approximately 71% of all Class A Interests participated in
the vote. Accordingly, the Amendment was adopted.

     On February 12, 1997, the Trust filed a Registration Statement on Form S-1
with the SEC, which became effective June 10, 1997. The Registration Statement
covered the issuance and sale of a new class of beneficiary interests in the
Trust (the "Class B Interests"). The characteristics of the Class B Interests,
associated risk factors and other matters of importance to the Beneficiaries and
purchasers of the Class B Interests were set forth in a Prospectus sent to the
Beneficiaries. On July 17, 1997, the offering closed and on July 18, 1997 the
Trust issued 3,142,083 Class B Interests at $5.00 per interest, thereby
generating $15,710,415 in aggregate Class B capital contributions. Class A
Beneficiaries purchased 1,400 Class B Interests, generating $7,000 of such
aggregate capital contributions, and the Special Beneficiary, EFG, purchased
3,140,683 Class B Interests, generating $15,703,415 of such aggregate capital
contributions. The Trust incurred offering costs in the amount of $157,104 and
professional service costs of $159,066 in connection with this offering.

     Subsequently, EFG transferred its Class B Interests to a special-purpose
company, Equis II Corporation, a Delaware corporation. EFG also transferred its
ownership of AFG ASIT Corporation, the Managing Trustee of the Trust, to Equis
II Corporation. As a result, Equis II Corporation has voting control of the
Trust through its ownership of the majority of all of the Trust's outstanding
voting interests, as well as its ownership of AFG ASIT Corporation. Equis II
Corporation is controlled by EFG's President and Chief Executive Officer, Gary
D. Engle. Accordingly, control of the Managing Trustee did not change as a
result of the foregoing transactions.

     As described in the Prospectus for the offering of the Class B Interests,
the Managing Trustee used a portion of the net cash proceeds realized from the
issuance of the Class B Interests to pay a one-time special cash distribution of
approximately $1.47 per Class A Interest to the Class A Beneficiaries of the
Trust. The Managing Trustee declared and paid this special cash distribution,
aggregating $3,075,818, to the Class A Beneficiaries on August 15, 1997 (see
also Note 12).


NOTE 10 - REDEMPTION OF CLASS A INTERESTS
-----------------------------------------

     On August 7, 1997, the Trust commenced an offer to purchase up to 45% of
the outstanding Class A Interests of the Trust by filing a Form 13E-4, Issuer
Tender Offer Statement, with the SEC and distributing to the Class A
Beneficiaries information (the "Tender Documents") concerning the offer. On
October 10, 1997, the Trust used $1,606,322 of the net proceeds realized from
the offering of the Class B Interests to purchase 153,275 of the Class A
Interests tendered as a result of the offer. The Tender Documents described,
among other things, the terms of the offer and the purchase price per Class A
Interest being offered by the Trust. On April 28, 1998, the Trust used an
additional $9,000 of such proceeds to purchase 1,000 of the remaining Class A
Interests.


NOTE 11 - SOLICITATION STATEMENT
--------------------------------

     On May 5, 1998, the Trust filed a definitive Solicitation Statement with
the United States Securities and Exchange Commission in connection with the
solicitation by the Trust of the consent of the Beneficiaries to a proposed
amendment (the "Amendment") to the Second Amended and Restated Declaration of
Trust (the "Trust Agreement"). The Solicitation Statement and Consent of
Beneficiary were mailed to all of the Beneficiaries of the Trust on May 6, 1998.
The Beneficiaries were requested to use the Consent of Beneficiary to vote on
seven proposals and return their votes on or before June 5, 1998. Equis II
Corporation, which has voting control of the 

                                       11

<PAGE>

                       Notes to the Financial Statements

                                  (Continued)

Trust, agreed to vote all of its Class B Interests in the same manner in which
the majority of the Class A Interests were actually voted. Accordingly, the
Amendment would be adopted or rejected based upon the voting results of the
majority of Class A Interests that were actually voted (including 44,084 Class A
Interests owned by affiliates of EFG), regardless of how few Class A Interests
were actually voted.

     The results of the voting reflect that a majority of Class A Interests
voted in favor of each of the proposals. Therefore, the Trust Agreement was
amended to (i) broaden the Trust's stated investment policies and objectives and
permit the Trust to invest in assets other than leased equipment and (ii) modify
the Trust's financing provisions to eliminate any cap on the amount of aggregate
Trust indebtedness and permit the Trust to use cross-collateralized and other
recourse debt structures.

     In addition, subject to attaining a settlement in the Class Action Lawsuit
described in Note 8 herein, the Trust Agreement will be modified in the
following principal respects: (i) the Trust will pay a Special Cash Distribution
to the Class A Beneficiaries of record as of September 1, 1997, or to their
successors or assigns, totaling $1,572,405 (or approximately $0.75 per Class A
Beneficiary Interest) using a portion of the Class B capital contributions that
otherwise would be distributed as a Class B Capital Distribution to Equis II
Corporation, the parent company of the Managing Trustee and an affiliate of EFG;
(ii) Equis II Corporation will be required to reduce its prospective Class B
Capital Distributions by $3,537,910 and treat such amount as a long-term equity
investment in the Trust; (iii) certain voting restrictions will be placed upon
the Class B Interests owned by Equis II Corporation; (iv) the Trust's
reinvestment period, which presently is scheduled to expire on February 6, 1999,
will be extended until December 31, 2002; and (v) acquisition fees paid to EFG
in connection with reinvestment assets acquired after the Amendment date
(meaning reinvestment assets acquired after the present reinvestment period
expires on February 6, 1999) will be reduced from a maximum of 3% to 1% and
management fees earned in connection with such assets will be reduced from a
maximum of 5% to 2%.


NOTE 12 - CLASS B CAPITAL DISTRIBUTION
--------------------------------------

     The Managing Trustee and certain of its affiliates were named as defendants
in the Class Action Lawsuit discussed in Note 8 herein. In connection with this
litigation and subject to a settlement being effected, the Managing Trustee has
agreed to adopt certain modifications to the Trust Agreement as described in the
Solicitation Statement referred to in Note 11 herein. One aspect of the proposed
settlement would result in using of a portion of Equis II Corporation's Class B
Capital Contribution to the Trust to (i) pay a second special cash distribution
to Class A Beneficiaries totaling $1,572,405, approximately $.75 per Class A
Interest, and (ii) invest $3,537,910 in the Trust's long-term business
activities. The remainder of the Class B Capital Contributions (not otherwise
used to repurchase Class A Interests in the Tender Offer closed on October 10,
1997 or to pay for offering and related costs associated with the Class B
Interests or to pay the first special cash distribution), $5,601,790 in total,
was returned to Equis II Corporation and the other third party Class B capital
contributors on July 6, 1998.

                                       12

<PAGE>

                             AFG Investment Trust D

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION

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

     Certain statements in this quarterly report of AFG Investment Trust D ("the
Trust") 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 8 to the accompanying financial statements, and the ability of
Equis Financial Group Limited Partnership (formerly American Finance Group)
("EFG") to collect all rents due under the attendant lease agreements and to
successfully remarket the Trust's equipment, upon the expiration of such leases.


Year 2000 Issue
---------------

     The Year 2000 Issue generally refers to the capacity of computer
programming logic to correctly identify the calendar year. Many companies
utilize computer programs or hardware with date sensitive software or embedded
chips that could interpret dates ending in "00" as the year 1900 rather than the
year 2000. In certain cases, such errors could result in system failures or
miscalculations that disrupt the operations of the affected businesses. The
Trust uses information systems provided by EFG and has no information systems of
its own. EFG has adopted a plan to address the Year 2000 Issue that consists of
four phases: assessment, remediation, testing, and implementation and has
elected to utilize principally internal resources to perform all phases.
Presently, EFG anticipates completing its Year 2000 project by December 31, 1998
at a di minimus cost to the Trust. Aggregate costs for the entire project are
anticipated to be less than $50,000, all of which will have been expensed as
incurred.

     EFG's primary information software was coded by IBM at the point of
original design to use a four-digit field to identify calendar year. All of the
Trust's lease billings, cash receipts and equipment remarketing processes are
performed using this proprietary software. In addition, EFG has gathered
information about the Year 2000 readiness of significant vendors and third party
servicers and continues to monitor developments in this area. All of EFG's
peripheral computer technologies, such as its network operating system and
third-party software applications, including payroll, depreciation processing,
and electronic banking, have been evaluated for potential programming changes
and are expected to require only minor modifications to function properly with
respect to dates in the year 2000 and thereafter. Moreover, EFG understands that
each of its and the Trust's significant vendors and third-party servicers are in
the process, or have completed the process, of making their systems Year 2000
compliant. Substantially all parties queried have indicated that their systems
will be Year 2000 compliant by the end of 1998. Presently, EFG is not aware of
any outside customer with a Year 2000 Issue that would have a material effect on
the Trust's results of operations, liquidity, or financial position. However,
non-compliance on the part of a lessee could, under a worse case scenario,
result in lost revenues to the Trust.

     EFG believes that its Year 2000 compliance plan will be effective in
resolving all material Year 2000 risks in a timely manner and that the Year 2000
Issue will not pose significant operational problems with respect to its
computer systems or result in a system failure or disruption of its or the
Trust's business operations. However, EFG has no means of ensuring that all
customers, vendors and third-party servicers will conform ultimately to Year
2000 standards. The effect of this risk to the Trust is not determinable.

                                       13

<PAGE>

                             AFG Investment Trust D

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION


Three and nine months ended September 30, 1998 compared to the three and nine
months ended September 30, 1997:

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 EFG 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
fluctuate. Presently, the Trust is a Nominal Defendant in a Class Action
Lawsuit. The outcome of the Class Action Lawsuit could alter the future business
operations of the Trust. See Note 8 to the accompanying financial statements.
The Trust's operations commenced in 1993.


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

     For the three and nine months ended September 30, 1998, the Trust
recognized lease revenue of $4,902,809 and $14,482,399, respectively, compared
to $4,821,059 and $14,411,576, for the same periods in 1997. In the near-term,
aggregate rental revenues are expected to increase due to reinvestment of
available proceeds in other equipment. In addition, the level of lease revenue
to be recognized by the Trust in the future is expected to be impacted by the
Amendment to the Trust Agreement described in Note 9 to the accompanying
financial statements; however, the extent of such impact cannot be determined at
this time. Over the long term, the level of lease revenue will decline due to
the expiration of the Trust's primary lease term agreements.

     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 EFG or an affiliated equipment leasing program sponsored by EFG.
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.

     Interest income for the three and nine months ended September 30, 1998 was
$172,028 and $612,151, respectively, compared to $254,187 and $500,325 for the
same periods in 1997. Interest income was generated from temporary investments
of available cash in short-term money market instruments. Interest income in
1998 includes interest earned on unexpended proceeds from the issuance of Class
B Interests (see below). The amount of future interest income is expected to
fluctuate in relation to prevailing interest rates and the collection of lease
revenue and equipment sales proceeds.

     For the three and nine months ended September 30, 1998, the Trust sold
equipment having a net book value of $1,258,181 and $1,453,124, respectively, to
existing lessees and third parties. These sales resulted in a net gain of $9,268
and a net loss of $110,235, respectively, for financial statement purposes,
compared to a net loss of $860,449 and $951,347 on equipment having a net book
value of $5,615,691 and $6,192,565 for the same periods in 1997.

                                       14

<PAGE>

                             AFG Investment Trust D

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION

     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 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 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 for the three and nine months ended
September 30, 1998 was $2,506,436 and $8,475,754, respectively, compared to
$3,124,338 and $9,336,856 for the same periods in 1997. 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.

     Interest expense was $822,351 and $2,652,655 or 16.8% and 18.3% of lease
revenue for the three and nine months ended September 30, 1998, respectively,
compared to $547,250 and $1,854,193 or 11.4% and 12.9% of lease revenue for each
of the same periods in 1997. The increase in interest expense from 1997 to 1998
is the result of indebtedness obtained in connection with reinvestment
equipment. Interest expense in the near-term may increase due to the financing
of any newly acquired assets. Thereafter, 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
indebtedness.

     Management fees were 4.8% and 4.7% of lease revenue for the three and nine
month periods ended September 30, 1998, respectively, compared to 4.7% and 4.6%
of lease revenue for the same periods in 1997. 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. Operating expenses were $87,616 and
$388,427 during the three and nine months ended September 30, 1998,
respectively, compared to $232,331 and $460,518 during the same periods in 1997.
During the nine months ended September 30, 1998, the Trust accrued or paid
$128,000 for certain legal expenses related to the Class Action Lawsuit
described in Note 8 to the financial statements. 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. Other
fluctuations typically occur in relation to the volume and timing of remarketing
activities.

                                       15

<PAGE>

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. For the nine months ended September 30,
1998, operating activities generated net cash inflows of $12,280,093 compared to
$12,732,115 for the same period in 1997. (The latter has been adjusted to
reflect (i) equipment sale proceeds of $1,618,000 received in connection with
the sale of a vessel and (ii) debt proceeds of $1,980,073 from leveraging
certain rail equipment, both of which amounts were due from EFG at December 31,
1996 and reflected as cash inflows on the accompanying 1997 Statement of Cash
Flows.) In the near-term, net cash inflows generated from operating activities
are expected to increase due to the acquisition of reinvestment equipment.
Subsequently, renewal, re-lease and equipment sale activities will cause the
Trust's primary-term lease revenue and corresponding sources of operating cash
to decline. 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.

     The Trust's equipment is leased by a number of creditworthy,
investment-grade companies and, to date, the Trust has not experienced any
material collection problems and has not considered it necessary to provide an
allowance for doubtful accounts. Notwithstanding a positive collection history,
there is no assurance that all future contracted rents will be collected or that
the credit quality of the Trust's lessees will be maintained. Collection risk
could increase in the future, particularly as the Trust remarkets its equipment
and enters re-lease agreements with different lessees. The Managing Trustee will
continue to evaluate and monitor the Trust's experience in collecting accounts
receivable to determine whether a future allowance for doubtful accounts may
become appropriate.

     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 asset acquisitions and cash realized from asset disposal
transactions are reported under investing activities on the accompanying
Statement of Cash Flows. The Trust expended $179,510 and $30,166,351 to acquire
equipment during the nine months ended September 30, 1998 and 1997,
respectively, pursuant to the reinvestment provisions of the Trust Agreement.
During the nine months ended September 30, 1998, the Trust realized equipment
sale proceeds of $1,342,889, compared to $2,602,580 during the same period in
1997. 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. In addition, the Trust's
investment in an affiliated limited partnership is reported under investing
activities during the nine months ending September 30, 1998 (see Note 4 to the
accompanying financial statements).

         The Trust 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. 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 is expected to increase as a result of leveraging to 

                                       16

<PAGE>

                             AFG Investment Trust D

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION

be obtained in connection with the acquisition of reinvestment equipment.
Thereafter, the amount of debt repayments will decline as the principal balance
of notes payable is reduced through the collection and application of rents.
However, the Trust has balloon payment obligations of $22,162,280, $1,476,981
and $282,421 at the expiration of the primary lease terms related to the Trust's
proportionate ownership interest in a Boeing 767-300 ER aircraft lease to
Scandinavian Airlines System ("SAS"), certain rail equipment and an MD-87 jet
aircraft leased to Reno Air, Inc., respectively. On November 9, 1998, pursuant
to the lease agreement, SAS gave the Trust notice of its intent to exercise its
option to extend the term of the existing lease for a period of two years,
effective upon the expiration of the primary lease term. The Managing Trustee is
currently negotiating the terms of the extension with SAS and no agreement has
been executed to date. As a result of SAS exercising the renewal lease option,
the balloon payment would be postponed until the termination of the two-year
extension period and would be equal to the unamortized balance of this
indebtedness at such date.

     In accordance with the Trust Agreement, upon the dissolution of the Trust,
the Managing Trustee will be required to contribute to the Trust an amount equal
to any negative balance which may exist in the Managing Trustee's tax capital
account. At December 31, 1997, the Managing Trustee had a negative tax capital
account balance of $228,373.

     At September 30, 1998, the Trust had aggregate future minimum lease
payments of $23,626,696 from contractual lease agreements (see Note 3 to the
financial statements), a portion of which will be used to amortize the principal
balance of notes payable of $36,507,192 (see Note 7 to the financial statements
and discussion above). Additional cash inflows will be realized from future
remarketing activities, such as lease renewals and equipment sales, as well as
from lease revenues generated by equipment acquisitions from the Trust's
reinvestment activities. The Trust expects to acquire additional reinvestment
equipment using on-hand cash and additional indebtedness. The extent of the
Trust's total future reinvestment activities will be influenced in part by
future equipment sales; the timing and extent of which cannot be predicted with
certainty. This is because the timing and extent of equipment sales is often
dependent upon the needs and interests of the existing lessees. Some lessees may
choose to renew their lease contracts, while others may elect to return the
equipment. In the latter instances, the equipment could be re-leased to another
lessee or sold to a third party. Accordingly, as the Trust matures and a greater
level of its equipment assets becomes available for remarketing, the cash flows
of the Trust will become less predictable. In addition, the Trust will have cash
outflows to satisfy interest on indebtedness and to pay management fees and
operating expenses. Ultimately, the Trust is expected to meet its future
disbursement obligations and to distribute any excess of cash inflows over cash
outflows to the Participants in accordance with the Trust Agreement. However,
several factors, including month-to-month lease extensions, lessee defaults,
equipment casualty events, and early lease terminations could alter the Trust's
anticipated cash flows as described herein and in the accompanying financial
statements and result in fluctuations to the Trust's periodic cash distribution
payments.

     On July 18, 1997, the Trust issued 3,142,083 Class B Interests at $5.00 per
interest, thereby generating $15,710,415 in aggregate Class B capital
contributions. Class A Beneficiaries purchased 1,400 Class B Interests,
generating $7,000 of such aggregate capital contributions, and the Special
Beneficiary, EFG, purchased 3,140,683 Class B Interests, generating $15,703,415
of such aggregate capital contributions. The Trust incurred offering costs in
the amount of $157,104 and professional service costs of $159,066 in connection
with this offering. Subsequently, EFG transferred its Class B Interests to a
special-purpose company, Equis II Corporation, a Delaware corporation. EFG also
transferred its ownership of AFG ASIT Corporation, the Managing Trustee of the
Trust, to Equis II Corporation. As a result, Equis II Corporation has voting
control of the Trust through its ownership of the majority of the Trust's
outstanding voting interests, as well as its ownership of AFG ASIT Corporation.
Equis II Corporation is controlled by EFG's President and Chief Executive
Officer, Gary D. Engle. Accordingly, control of the Managing Trustee did not
change as a result of the foregoing transactions (see also Note 9 to the
accompanying financial statements).

                                       17

<PAGE>

                             AFG Investment Trust D

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION

     As described in the Prospectus for the offering of the Class B Interests,
the Managing Trustee used a portion of the net cash proceeds realized from the
offering of the Class B Interests to pay a one-time special cash distribution of
approximately $1.47 per Class A Interest to the Class A Beneficiaries of the
Trust. The Managing Trustee declared and paid this special cash distribution,
aggregating $3,075,818, to Class A Beneficiaries on August 15, 1997.

     On August 7, 1997, the Trust commenced an offer to purchase up to 45% of
the outstanding Class A Beneficiary Interests of the Trust. On October 10, 1997,
the Trust used $1,606,322 of the net proceeds realized from the issuance of the
Class B Interests to purchase 153,275 of the Class A Interests tendered as a
result of the offer. On April 28, 1998, the Trust used an additional $9,000 of
such proceeds to purchase 1,000 of the remaining Class A Interests. On July 6,
1998, the Trust used $5,601,790 of such proceeds to pay a capital distribution
to the Class B Beneficiaries. The remaining net proceeds from the Class B
offering of $5,101,315 will be used according to terms negotiated in connection
with settling the Class Action Lawsuit described in Note 8 (see also Notes 10,
11 and 12 to the accompanying financial statements).

     Cash distributions paid to the Beneficiaries 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 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 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 Trust's equipment portfolio.

     It is the intention of the Managing Trustee to maintain a cash distribution
level that is consistent with the operating cash flows of the Trust and to
optimize the long-term value of the Trust. A distribution level that is higher
than the Trust's operating cash flows could compromise the Trust's working
capital position, as well as its ability to refurbish or upgrade equipment in
response to lessee requirements or other market circumstances and, during its
reinvestment period, to purchase replacement equipment as original equipment is
remarketed. Accordingly, in order to better align monthly cash distributions
with the Trust's operating cash flows, the Managing Trustee reduced the level of
monthly cash distributions from an annualized rate of $2.52 per Class A Interest
(the rate established and paid from the Trust's inception through September
1995) to an annualized rate of $1.26 per Class A Interest commencing in October
1995. In October 1996, the Managing Trustee increased the annualized
distribution rate to $1.64 per Class A Interest and has sustained this
distribution rate through the nine months ended September 30, 1998. For the
Class B Beneficiaries, the Managing Trustee established and paid, from the
Trust, an annualized distribution of $0.66 per Class B Beneficiary commencing
July 18, 1997. Future distributions, with respect to Class B Interests, will be
subordinate to certain distributions with respect to Class A Interests.

     Cash distributions to the Managing Trustee, the Special Beneficiary and the
Beneficiaries are declared and generally paid within fifteen 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, 1998,
the Trust declared total cash distributions of Distributable Cash From
Operations of $9,737,785. Of the total distributions, the Beneficiaries were
allocated $9,355,205 ($2,377,256 to Class A Beneficiaries and $6,977,949 to
Class B Beneficiaries); the Special Beneficiary was allocated $341,220; and the
Managing Trustee was allocated $41,360.

     The nature of the Trust's principal cash flows gradually will shift from
rental receipts to equipment sale proceeds as the Trust matures. As this occurs,
the Trust's cash flows will become more volatile in that certain of the Trust's
equipment leases will be renewed and certain of its assets will be sold. In some
cases, the Trust may

                                       18

<PAGE>

                             AFG Investment Trust D

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION

be required to expend funds to refurbish or otherwise improve the equipment
being remarketed in order to make it more desirable to a potential lessee or
purchaser. The Trust's Advisor, EFG, and the Managing Trustee will attempt to
monitor and manage these events to maximize the residual value of the Trust's
equipment and will consider these factors, in addition to the collection of
contractual rents, the retirement of scheduled indebtedness and the Trust's
future working capital and equipment requirements, in establishing future cash
distribution rates. Ultimately, the Beneficiaries should expect that cash
distribution rates will fluctuate over the long term as a result of future
remarketing activities.

                                       19

<PAGE>

                             AFG Investment Trust D

                                    FORM 10-Q

                           PART II. OTHER INFORMATION

<TABLE>
<CAPTION>

     <S>                        <C>
        Item 1. ..................     Legal Proceedings
                                       Response:

                                       Refer to Note 8 to the financial
                                       statements herein.

        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
</TABLE>

                                       20

<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 D


                               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, 1998
                                    --------------------------------------------


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


                               Date:  November 13, 1998
                                    --------------------------------------------

                                       21