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 June 30, 1997

                                       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 June 30, 1997                     Commission File No. 0-21444

                             AFG Investment Trust C
--------------------------------------------------------------------------------
             (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

98 North Washington Street, Boston, MA 02114
--------------------------------------------------------------------------------
(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 C

                                    FORM 10-Q

                                      INDEX

                                                                            Page
                                                                            ----

PART I. FINANCIAL INFORMATION:

    Item 1.   Financial Statements

      Statement of Financial Position
        at June 30, 1997 and December 31, 1996                                 3

      Statement of Operations
        for the three and six months ended June 30, 1997 and 1996              4

      Statement of Cash Flows
        for the six months ended June 30, 1997 and 1996                        5

      Notes to the Financial Statements                                     6-10

    Item 2.   Management's Discussion and Analysis of Financial
              Condition and Results of Operations                          11-16


PART II. OTHER INFORMATION:

      Items 1 - 6                                                             17


                                       2
<PAGE>

                             AFG Investment Trust C

                         STATEMENT OF FINANCIAL POSITION
                       June 30, 1997 and December 31, 1996

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                            June 30,     December 31,
                                                              1997          1996
                                                         ------------   -------------

<S>                                                      <C>            <C>         
ASSETS

Cash and cash equivalents                                $ 17,675,211   $ 10,634,493

Rents receivable                                            2,748,814      2,139,372

Accounts receivable - affiliate                               661,479      6,484,537

Equipment at cost, net of accumulated depreciation
   of $47,978,830 and $43,782,922 at June 30, 1997
   and December 31, 1996, respectively                     30,096,275     35,868,028

Organization costs, net of accumulated amortization
   of $3,583 and $3,083 at June 30, 1997           
   and December 31, 1996, respectively                            417            917
                                                         ------------   ------------

          Total assets                                   $ 51,182,196   $ 55,127,347
                                                         ============   ============

LIABILITIES AND PARTICIPANTS' CAPITAL
                                     
Notes payable                                            $ 15,840,764   $ 19,084,751
Accrued interest                                              313,092        188,983
Accrued liabilities                                            15,000         23,985
Accrued liabilities - affiliate                                92,324        264,123
Deferred rental income                                        304,523        209,535
Cash distributions payable to participants                    302,484        302,484
                                                         ------------   ------------

          Total liabilities                                16,868,187     20,073,861
                                                         ------------   ------------

Participants' capital (deficit):
   Managing Trustee                                          (110,922)      (103,527)
   Special Beneficiary                                       (922,355)      (861,348)
   Beneficiary Interests (2,011,014 Interests;
      initial purchase price of $25 each)                  35,347,286     36,018,361
                                                         ------------   ------------

          Total participants' capital                      34,314,009     35,053,486
                                                         ------------   ------------

          Total liabilities and participants' capital    $ 51,182,196   $ 55,127,347
                                                         ============   ============
</TABLE>

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


                                        3
<PAGE>

                             AFG Investment Trust C

                             STATEMENT OF OPERATIONS
            for the three and six months ended June 30, 1997 and 1996

                                   (Unaudited)

<TABLE>
<CAPTION>
                                            Three Months               Six Months
                                           Ended June 30,             Ended June 30,
                                         1997         1996         1997         1996
                                      ----------  -----------   ----------  ------------

<S>                                   <C>         <C>           <C>         <C>         
Income:

    Lease revenue                     $4,063,164  $ 5,149,521   $8,057,574  $ 10,614,823

    Interest income                      211,436       88,422      409,267        97,115

    Gain (loss) on sale of equipment     175,766      (89,278)     210,303      (531,398)
                                      ----------  -----------   ----------  ------------

         Total income                  4,450,366    5,148,665    8,677,144    10,180,540
                                      ----------  -----------   ----------  ------------

Expenses:

    Depreciation and amortization      3,168,569    3,879,128    6,434,415     7,878,387

    Interest expense                     290,750      420,073      601,672       885,535

    Equipment management fees
      - affiliate                        167,750      203,102      337,141       420,700

    Operating expenses - affiliate        99,230       79,888      228,494       114,345
                                      ----------  -----------   ----------  ------------

         Total expenses                3,726,299    4,582,191    7,601,722     9,298,967
                                      ----------  -----------   ----------  ------------

Net income                            $  724,067  $   566,474   $1,075,422  $    881,573
                                      ==========  ===========   ==========  ============

Net income
   per Beneficiary Interest           $     0.33  $      0.26   $     0.49  $       0.40
                                      ==========  ===========   ==========  ============

Cash distributions declared
   per Beneficiary Interest           $     0.41  $      0.31   $     0.82  $       0.63
                                      ==========  ===========   ==========  ============
</TABLE>

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


                                       4
<PAGE>

                             AFG Investment Trust C

                             STATEMENT OF CASH FLOWS
                 for the six months ended June 30, 1997 and 1996

                                   (Unaudited)

                                                         1997          1996
                                                      -----------   -----------

Cash flows from (used in) operating activities:
Net income                                            $ 1,075,422   $   881,573

Adjustments to reconcile net income to net cash
  from operating activities:
    Depreciation and amortization                       6,434,415     7,878,387
    (Gain) loss on sale of equipment                     (210,303)      531,398

Changes in assets and liabilities
  Decrease (increase) in:
    rents receivable                                     (609,442)      796,625
    accounts receivable - affiliate                     5,823,058      (450,917)
  Increase (decrease) in:                                 
    accrued interest                                      124,109       (54,951)
    accrued liabilities                                    (8,985)       (7,500)
    accrued liabilities - affiliate                      (171,799)       54,503
    deferred rental income                                 94,988       (14,632)
                                                      -----------   -----------

        Net cash from operating activities             12,551,463     9,614,486
                                                      -----------   -----------

Cash flows from (used in) investing activities:
   Purchase of equipment                               (1,142,548)   (1,239,741)
   Proceeds from equipment sales                          690,689     4,127,248
                                                      -----------   -----------

        Net cash from (used in) investing activities     (451,859)    2,887,507
                                                      -----------   -----------

Cash flows from (used in) financing activities:
   Proceeds from notes payable                                 --       997,888
   Principal payments - notes payable                  (3,243,987)   (7,788,134)
   Distributions paid                                  (1,814,899)   (1,396,075)
                                                      -----------   -----------

        Net cash used in financing activities          (5,058,886)   (8,186,321)
                                                      -----------   -----------

Net increase in cash and cash equivalents               7,040,718     4,315,672

Cash and cash equivalents at beginning of period       10,634,493       279,116
                                                      -----------   -----------

Cash and cash equivalents at end of period            $17,675,211   $ 4,594,788
                                                      ===========   ===========

Supplemental disclosure of cash flow information:
    Cash paid during the period for interest          $   477,563   $   940,486
                                                      ===========   ===========

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


                                        5
<PAGE>

                             AFG Investment Trust C
                        Notes to the Financial Statements

                                  June 30, 1997
                                   (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 1996 Annual Report. Except as disclosed herein, there
has been no material change to the information presented in the footnotes to the
1996 Annual Report.

     In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary to present fairly the financial
position at June 30, 1997 and December 31, 1996 and results of operations for
the three and six month periods ended June 30, 1997 and 1996 have been made and
are reflected.

NOTE 2 - CASH

     At June 30, 1997, the Trust had $17,565,000 invested in reverse repurchase
agreements secured by U.S. Treasury Bills or interests in U.S. Government
securities. Approximately $16,000,000 of the Trust's cash is expected to be used
to acquire reinvestment equipment during the third quarter of 1997.

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.
Rents from Reno Air, Inc. ("Reno Air"), as provided for in the lease agreement,
are adjusted monthly for changes in the London Inter-Bank Offered Rate
("LIBOR"). Future rents from Reno Air, included below, reflect the most recent
LIBOR effected rental payment. The leases are accounted for as operating leases
and are noncancellable. Rents received prior to their due dates are deferred.
Future minimum rents of $17,401,379 are due as follows:

     For the year ending June 30, 1997             $ 10,762,892
                                  1998                4,171,075
                                  1999                1,448,071
                                  2000                  652,005
                                  2001                  287,596
                            Thereafter                   79,740
                                                   ------------
                                 Total             $ 17,401,379
                                                   ============


                                        6
<PAGE>

                             AFG Investment Trust C
                        Notes to the Financial Statements

                                   (Continued)

NOTE 4 - EQUIPMENT

     The following is a summary of equipment owned by the Trust at June 30,
1997. In the opinion of Equis Financial Group ("EFG"), the acquisition cost of
the equipment did not exceed its fair market value.

                                                   Remaining
                                                   Lease Term        Equipment
         Equipment Type                             (Months)          at Cost
-------------------------------                    ----------      -------------

Aircraft                                             42-75         $ 16,504,999
Computers & peripherals                               6-66           12,118,859
Retail store fixtures                                30-54           11,112,212
Locomotives                                          30-79            9,438,818
Materials handling                                    6-78            8,972,525
Construction & mining                                30-66            7,958,503
Manufacturing                                        54-66            3,815,155
Commercial printing                                     60            3,542,761
Communications                                       24-34            2,004,394
Research & test                                      30-54            1,667,223
Tractors and heavy duty trucks                       12-54              285,299
Furniture & fixtures                                    54              239,785
Trailers/intermodal containers                       45-54              229,343
Photocopying                                         30-54              118,652
Energy systems                                          30               63,900
Medical                                                 30                2,206
Miscellaneous                                           30                  471
                                                                   ------------

                                      Total equipment cost           78,075,105

                                  Accumulated depreciation          (47,978,830)
                                                                   ------------

                Equipment, net of accumulated depreciation         $ 30,096,275
                                                                   ============

     At June 30, 1997, the Trust's equipment portfolio included equipment having
a proportionate original cost of $28,589,094, representing approximately 37% of
total equipment cost.

     At June 30, 1997, the cost and net book value of equipment held for sale or
re-lease was approximately $1,123,000 and $296,000, respectively. The Managing
Trustee is actively seeking the sale or re-lease of all equipment not on lease.

NOTE 5 - 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 six month periods ended June 30, 1997 and
1996, which were paid or accrued by the Trust to EFG or its Affiliates, are as
follows:


                                        7
<PAGE>

                             AFG Investment Trust C
                        Notes to the Financial Statements

                                   (Continued)

                                                      1997             1996
                                                  ------------     -----------

Equipment acquisition fees                        $     33,278     $    36,109
Equipment management fees                              337,141         420,700
Administrative charges                                  39,462          10,500
Reimbursable operating expenses
     due to third parties                              189,032         103,845
                                                  ------------    ------------

                                    Total         $    598,913    $    571,154
                                                  ============    ============

     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
June 30, 1997, the Trust was owed $661,479 by EFG for such funds and the
interest thereon. These funds were remitted to the Trust in July 1997.

NOTE 6 - NOTES PAYABLE

     Notes payable at June 30, 1997 consisted of installment notes of
$15,840,764 payable to banks and institutional lenders. The notes bear interest
rates ranging between 5.1% and 11.25%, except for one note which bears a
fluctuating interest rate based on LIBOR plus a margin (5.69% at June 30, 1997).
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 $282,421 and $2,867,081 at the
expiration of the primary lease terms related to the Reno Air aircraft and
certain rail equipment, respectively. The carrying amount of notes payable
approximates fair value at June 30, 1997.

     The annual maturities of the notes payable are as follows:

     For the year ending June 30, 1998           $  7,921,069
                                  1999              2,901,130
                                  2000                981,726
                                  2001              3,451,818
                                  2002                257,873
                            Thereafter                327,148
                                                 ------------

                                 Total           $ 15,840,764
                                                 ============

NOTE 7 - LEGAL PROCEEDINGS

     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 have been discussing settlement with
respect 


                                       8
<PAGE>

                             AFG Investment Trust C
                        Notes to the Financial Statements

                                   (Continued)

to this matter for some time, to date, the negotiations have been unsuccessful.
Notwithstanding these discussions, EFG recently filed an Amended and
Supplemental Complaint alleging a further default by National Steel under the
MLA and EFG recently filed a Summary Judgment on all claims and counterclaims.
The matter remains pending before the Court. The Trust has not experienced any
material losses as a result of this action.

     On June 24, 1997, four plaintiffs (the "Plaintiffs") owning limited partner
units or beneficiary interests in eight investment programs sponsored by EFG
filed a lawsuit, as a derivative action, on behalf of the Trust and 27 other
investment programs (collectively, the "Nominal Defendants") in the Superior
Court of the Commonwealth of Massachusetts for the County of Suffolk against EFG
and certain of EFG's affiliates, including the Managing Trustee of the Trust and
four other wholly-owned subsidiaries of EFG which are the general partner or
managing trustee of one or more of the investment programs, (collectively, the
"Managing Defendants"), and certain other entities and individuals that have
control of the Managing Defendants and the Nominal Defendants (the "Controlling
Defendants"). The Plaintiffs assert claims of breach of fiduciary duty, breach
of contract, unjust enrichment, and equitable relief and seek various remedies,
including compensatory and punitive damages to be determined at trial.

     The Managing Trustee and EFG are in the early stages of evaluating the
nature and extent of the claims asserted in this lawsuit and cannot predict its
outcome with any degree of certainty. However, based upon all of the facts
presently being considered by management, the Managing Trustee and EFG do not
believe that any likely outcome will have a material adverse effect on the
Trust. The Managing Trustee, EFG and their affiliates intend to vigorously
defend against the lawsuit.

NOTE 8 - ISSUANCE OF CLASS B INTERESTS AND OFFER TO REDEEM CLASS A 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 would 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
Beneficiary Interests held by all Beneficiaries. A majority of Beneficiary
Interests, representing 1,215,771 or 60.5% of all Beneficiary Interests, voted
in favor of the Amendment; 174,315 or 8.7% of all Beneficiary Interests voted
against the Amendment; and 49,787 or 2.5% of all Beneficiary Interests
abstained. Approximately 72% of all Beneficiary Interests participated in the
vote. Accordingly, the Trust Agreement was amended.

     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 


                                       9
<PAGE>

                             AFG Investment Trust C
                        Notes to the Financial Statements

                                   (Continued)

Prospectus sent to the Beneficiaries. On July 17, 1997, the offering closed and
on July 18, 1997 the Trust issued 3,024,740 Class B Interests at $5.00 per
interest, thereby generating $15,123,700 in aggregate Class B capital
contributions. Class A Beneficiaries purchased 5,520 Class B Interests,
generating $27,600 of aggregate capital contributions, and the Special
Beneficiary, EFG, purchased 3,019,220 Class B Interests, generating $15,096,100
of such aggregate capital contributions.

     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 intends to use a portion of the net cash proceeds realized
from the offering of the Class B Interests to pay a one-time special cash
distribution to the Class A Beneficiaries of the Trust. The Managing Trustee
expects to declare and pay this special cash distribution on or before August
31, 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 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. The
Trust will use a portion of the net proceeds realized from the offering of the
Class B Interests to purchase the Class A Beneficiary Interests tendered as a
result of the offer. The Tender Documents describe, among other things, the
terms of the offer and the purchase price per Class A Beneficiary Interest being
offered by the Trust.


                                       10
<PAGE>

                             AFG Investment Trust C

                                    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 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, i) the
ability of the Trust to satisfy its equipment reinvestment requirements and ii)
the ability of EFG to collect all rents due under the attendant lease agreements
and to successfully remarket the Partnership's equipment upon the expiration of
such leases.

Three and six months ended June 30, 1997 compared to the three and six months
ended June 30, 1996:

Overview

     As an equipment leasing trust, AFG Investment Trust C (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 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 six months ended June 30, 1997, the Trust recognized
lease revenue of $4,063,164 and $8,057,574, respectively, compared to $5,149,521
and $10,614,823 for the same periods in 1996. The decrease in lease revenue from
1996 to 1997 is attributable to the sale of the Trust's interest in a vessel to
the lessee in December 1996 and primary lease term expirations. In the
near-term, lease revenue is expected to increase, due to reinvestment of
available proceeds in other equipment, including cash proceeds realized from the
Trust's sale of its interest in a Boeing 747-SP aircraft leased to United
Airlines, Inc. (the "United Aircraft") in February 1996, as discussed below and
the net proceeds resulting from the Trust's sale of its interest in the vessel.
Over time, 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 six months ended June 30, 1997 was
$211,436 and $409,267, respectively, compared to $88,422 and $97,115 for the
same periods in 1996. Interest income was generated from temporary investment of
available cash in short-term money market instruments. Interest income was
higher in the three and six months ended June 30, 1997 than in the same periods
in 1996 due to interest earned on sale proceeds 


                                       11
<PAGE>

                             AFG Investment Trust C

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION

associated with the aircraft and vessel, discussed above. 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.

     During the three and six months ended June 30, 1997, the Trust sold
equipment having a net book value of $352,857 and $480,386, respectively, to
existing lessees and third parties. These sales resulted in a net gain, for
financial statement purposes, of $175,766 and $210,303, respectively.

     On February 5, 1996, the Trust concluded the sale of its interest in a
Boeing 747-SP to the lessee, United Air Lines, Inc., ("United"). The Trust
recognized a net loss of $1,313,122 in connection with this transaction, of
which $880,717 was recognized as Write-Down of Equipment in 1995. The remainder
of $432,405 was recognized as a loss on sale of equipment on the accompanying
Statement of Operations for the three months ended March 31, 1996. In addition
to lease rents, the Trust received net sale proceeds of $4,048,779 from United
for the aircraft. The Managing Trustee is actively pursuing the reinvestment of
all such proceeds in other equipment and anticipates a significant amount of
equipment will be purchased during the third quarter of 1997. A portion of such
reinvestment was completed in March 1996 through the acquisition of an 8.86%
ownership interest in an aircraft (the "Reno Aircraft") at an aggregate cost to
the Trust of $1,239,741. To acquire its interest in the Reno Aircraft, the Trust
obtained long-term financing of $997,888 from a third-party lender and utilized
cash proceeds of $241,853 from the sale of the United Aircraft. During the three
and six months ended June 30, 1996, the Trust sold other equipment having a net
book value of $150,327 and $177,462, respectively, to existing lessees and third
parties. These sales resulted in a net loss, for financial statement purposes,
of $89,278 and $98,993, respectively.

     It cannot be determined whether future sales of equipment will result in a
net gain or 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 to 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 six months ended
June 30, 1997 was $3,168,569 and $6,434,415, respectively, compared to
$3,879,128 and $7,878,387 for the same periods in 1996. 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.


                                       12
<PAGE>

                             AFG Investment Trust C

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION

     Interest expense was $290,750 and $601,672, or 7.2% and 7.5% of lease
revenue for the three and six months ended June 30, 1997, respectively, compared
to $420,073 and $885,535, or 8.2% and 8.3% of lease revenue for the same periods
in 1996. 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, 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 4.1% and 4.2% of lease revenue for the three and six
months ended June 30, 1997, respectively, compared to 3.9% and 4% of lease
revenue for the same periods in 1996. 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, insurance and legal fees, as well as
printing, distribution and remarketing expenses. Collectively, operating
expenses represented 2.4% and 2.8% of lease revenue for the three and six months
ended June 30, 1997, respectively, compared to 1.6% and 1.1% of lease revenue
for of the same periods in 1996. The increase in operating expenses from 1996 to
1997 was due primarily to professional service costs incurred in connection with
the Solicitation and Registration Statements described in Note 8 to the
accompanying financial statements and an increase in administrative charges. 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.

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 six months ended June 30, 1997,
operating activities generated net cash inflows of $6,439,129, after reductions
for equipment sale proceeds of $2,265,436 received in connection with the sale
of the vessel and debt proceeds of $3,846,898 which relate to the leveraging of
certain rail equipment in the Trust's portfolio. These sale and debt proceeds
were due from EFG at December 31, 1996 and received by the Trust in January
1997. For the six months ended June 30, 1996, the Trust generated net cash
inflows from operating activities of $9,614,486. In the future, operating cash
flows are expected to increase due to the acquisition of reinvestment equipment,
as described below. 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.


                                       13
<PAGE>

                             AFG Investment Trust C

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION

     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. The Trust expended $1,142,548 and
$1,239,741 during the six months ended June 30, 1997 and 1996, respectively, to
acquire equipment pursuant to the reinvestment provisions of the Trust's
prospectus. During the six months ended June 30, 1997, the Trust realized net
sale proceeds of $690,689 compared to $4,127,248 (including the proceeds from
the United sale) for the same period in 1996. 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. Cash inflows of
$997,888 in 1996 resulted from leveraging a portion of the Trust's equipment
portfolio with third-party lenders (see Results of Operations). 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 anticipated leveraging
to be obtained in connection with the acquisition of reinvestment equipment, see
below. Thereafter, the amount 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 $282,421 and $2,867,081 at the
expiration of the primary lease terms related to the Reno Aircraft and certain
rail equipment, respectively.

     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 month. The payment of such distributions is presented as a
component of financing activities. For the six months ended June 30, 1997, the
Trust declared total cash distributions of Distributable Cash From Operations
and Distributable Cash From Sales and Refinancings of $1,814,899. In accordance
with the Trust Agreement, the Beneficiaries were allocated 90.75% of these
distributions, or $1,647,021, the Special Beneficiary was allocated 8.25% or
$149,729, and the Managing Trustee was allocated 1%, or $18,149.

     For financial reporting purposes, the Managing Trustee and the Special
Beneficiary each has accumulated a capital deficit at June 30, 1997. This is the
result of aggregate cash distributions to these Participants being in excess of
their aggregate capital contributions ($1,000 each) and their respective
allocations of financial statement net income or loss. Ultimately, the existence
of a capital deficit for the Managing Trustee or the Special Beneficiary for
financial reporting purposes is not indicative of any further capital
obligations to the Trust by either the Managing Trustee or the Special
Beneficiary. However, for income tax purposes, the Trust Agreement requires that
income be allocated first to those Participants having negative tax capital
account balances so as to eliminate any such balances. 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. No such
requirement exists with respect to the Special Beneficiary. At December 31,
1996, the Managing Trustee had a positive tax capital account balance.

     At June 30, 1997, the Trust had aggregate future minimum lease payments of
$17,401,379 from contractual lease agreements (see Note 3 to the financial
statements), of which $15,840,764 will be used to amortize the 


                                       14
<PAGE>

                             AFG Investment Trust C

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION

principal balance of notes payable (see Note 6 to the financial statements).
Presently, the Trust expects to acquire approximately $78,000,000 of
reinvestment equipment using cash of approximately $16,000,000 and additional
indebtedness, which will be amortized from the associated rental streams.
Additional cash inflows will be realized from future remarketing activities,
such as lease renewals and 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 become 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.

     Cash distributions paid to the Participants 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 Beneficiary
Interest (the rate established and paid from the Trust's inception through
September 1995) to an annualized rate of $1.26 per Beneficiary Interest
commencing in October 1995. In October 1996, the Managing Trustee increased the
annualized distribution rate to $1.64 per Beneficiary Interest and expects that
the Trust will be able to sustain this distribution rate throughout 1997.
However, 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 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 Participants
should expect that cash distribution rates will fluctuate over the long term as
a result of future remarketing activities.

     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 


                                       15
<PAGE>

                             AFG Investment Trust C

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION

3,024,740 Class B Interests at $5.00 per interest, thereby generating
$15,123,700 in aggregate Class B capital contributions. Class A Beneficiaries
purchased 5,520 Class B Interests, generating $27,600 of aggregate capital
contributions, and the Special Beneficiary, EFG, purchased 3,019,220 Class B
Interests, generating $15,096,100 of such aggregate capital contributions.

     As described in the Prospectus for the offering of the Class B Interests,
the Managing Trustee intends to use a portion of the net cash proceeds realized
from the offering of the Class B Interests to pay a one-time special cash
distribution to the Class A Beneficiaries of the Trust. The Managing Trustee
expects to declare and pay this special cash distribution on or before August
31, 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 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. The
Trust will use a portion of the net proceeds realized from the offering of the
Class B Interests to purchase the Class A Beneficiary Interests tendered as a
result of the offer. The Tender Documents describe, among other things, the
terms of the offer and the purchase price per Class A Beneficiary Interest being
offered by the Trust.


                                       16
<PAGE>

                             AFG Investment Trust C

                                    FORM 10-Q

                           PART II. OTHER INFORMATION

Item 1.                             Legal Proceedings
                                    Response:

                                    Refer to Note 7 to the financial statements
                                    herein.

Item 2.                             Changes in Securities
                                    Response:

                                    On July 18, 1997, the Trust issued 3,024,740
                                    Class B Interests at $5.00 per interest,
                                    generating $15,123,700 in aggregate Class B
                                    capital contributions. Class A Beneficiaries
                                    purchased 5,520 Class B Interests,
                                    generating $27,600 of such aggregate capital
                                    contributions, and the Special Beneficiary,
                                    EFG, purchased 3,019,220 Class B Interests,
                                    generating $15,096,100 of such aggregate
                                    capital contributions. Subsequently, EFG
                                    transferred its Class B Interests to a
                                    special-purpose company, Equis II
                                    Corporation. (See Note 8 to the accompanying
                                    financial statements.)

                                    The Trust Agreement grants limited voting
                                    rights to the Class A Beneficiaries and
                                    Class B Beneficiaries. However, each Class A
                                    Beneficiary and Class B Beneficiary is
                                    entitled to cast one vote for each Interest
                                    owned by him or her. Equis II Corporation
                                    has voting control of the Trust through its
                                    ownerhsip of its Class B Interests.

                                    Future cash distributions with respect to
                                    the Class B Interests will be subordinate to
                                    certain distributions with respect to the
                                    Class A Interests.

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


                                       17
<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 C


                   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:  August 14, 1997


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


                   Date:  August 14, 1997


                                       18