<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      June 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 June 30, 1998            Commission File No. 0-21390


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

Delaware                                            04-3157230
(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 B

                                    FORM 10-Q

                                      INDEX



<TABLE>
<CAPTION>


                                                                         Page

<S>                                                                       <C>
PART I.  FINANCIAL INFORMATION:

    Item 1.   Financial Statements

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

      Statement of Operations
        for the three and six months ended June 30, 1998 and 1997           4

      Statement of Cash Flows
        for the six months ended June 30, 1998 and 1997                     5

      Notes to the Financial Statements                                  6-14


    Item 2.   Management's Discussion and Analysis of Financial
              Condition and Results of Operations                       15-19


PART II.  OTHER INFORMATION:

    Items 1 - 6                                                            20

</TABLE>


                                       2
<PAGE>

                             AFG Investment Trust B

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

                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                      June 30,               December 31,
                                                                         1998                   1997
ASSETS

<S>                                                               <C>                  <C>                
Cash and cash equivalents                                         $       4,875,069    $         3,893,242

Restricted cash                                                           3,121,763              3,121,763

Rents receivable                                                             43,701                675,629

Accounts receivable - affiliate                                             150,837                350,009

Equipment at cost, net of accumulated depreciation
   of $14,362,258 and $14,796,020 at June 30, 1998
   and December 31, 1997, respectively                                    7,475,174              9,173,514
                                                                  -----------------    -------------------

        Total assets                                              $      15,666,544    $        17,214,157
                                                                  =================    ===================


LIABILITIES AND PARTICIPANTS' CAPITAL

Notes payable                                                     $       1,103,087    $         2,038,628
Accrued interest                                                              3,820                 27,395
Accrued liabilities                                                         142,474                 11,550
Accrued liabilities - affiliate                                               1,873                 49,597
Deferred rental income                                                       13,084                 35,275
Cash distributions payable to participants                                  235,141                235,577
                                                                  -----------------    -------------------

        Total liabilities                                                 1,499,479              2,398,022
                                                                  -----------------    -------------------

Participants' capital (deficit):
     Managing Trustee                                                        (1,849)                 3,535
     Special Beneficiary                                                    (15,252)                29,162
     Class A Beneficiary Interests (582,017 Interests;
       initial purchase price of $25 each)                               10,526,688             10,864,150
     Class B Beneficiary Interests (1,000,961 Interests;
       initial purchase price of $5 each)                                 4,448,853             4,710,663
     Treasury Interests (83,477 Interests at Cost)                         (791,375)             (791,375)
                                                                  -----------------    ------------------

        Total participants' capital                                      14,167,065             14,816,135
                                                                  -----------------    -------------------

        Total liabilities and participants' capital               $      15,666,544    $        17,214,157
                                                                  =================    ===================

</TABLE>



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


                                       3
<PAGE>

                             AFG Investment Trust B

                             STATEMENT OF OPERATIONS
            for the three and six months ended June 30, 1998 and 1997

                                   (Unaudited)

<TABLE>
<CAPTION>

                                                            Three Months                          Six Months
                                                           Ended June 30,                       Ended June 30,
                                                          1998             1997               1998            1997
                                                    ---------------  ---------------    --------------  ----------
<S>                                                 <C>              <C>                <C>             <C>           
Income:

    Lease revenue                                   $       589,802  $     1,361,952    $    1,563,454  $    2,710,570

    Interest income                                         100,618           38,874           197,442          78,074

    Gain on sale of equipment                               106,744            3,303            90,033           6,463
                                                    ---------------  ---------------    --------------  --------------

         Total income                                       797,164        1,404,129         1,850,929       2,795,107
                                                    ---------------  ---------------    --------------  --------------


Expenses:

    Depreciation and amortization                           589,271        1,010,685         1,246,030       2,031,113

    Interest expense                                         19,962           70,676            43,447         115,786

    Equipment management fees
      - affiliate                                            29,109           57,244            76,727         114,503

    Operating expenses - affiliate                          188,099           54,942           246,709          96,579
                                                    ---------------  ---------------    --------------  --------------

         Total expenses                                     826,441        1,193,547         1,612,913       2,357,981
                                                    ---------------  ---------------    --------------  --------------


Net income (loss)                                   $       (29,277) $       210,582    $      238,016  $      437,126
                                                    ===============  ===============    ==============  ==============


Net income (loss)
   per Class A Beneficiary Interest                 $            --  $         0.29     $         0.24  $         0.60
                                                    ===============  ==============     ==============  ==============

   per Class B Beneficiary Interest                 $        (0.03)  $           --     $         0.07  $           --
                                                    ==============   ==============     ==============  ==============

Cash distributions declared
   per Class A Beneficiary Interest                 $         0.41   $         0.41     $         0.82  $         0.82
                                                    ==============   ==============     ==============  ==============

   per Class B Beneficiary Interest                 $         0.16   $           --     $         0.33  $           --
                                                    ==============   ==============     ==============  ==============

</TABLE>



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



                                       4
<PAGE>

                             AFG Investment Trust B

                             STATEMENT OF CASH FLOWS
                 for the six months ended June 30, 1998 and 1997

                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                             1998              1997
                                                                                        ----------------  -----------
<S>                                                                                <C>               <C>             
Cash flows from (used in) operating activities:
Net income                                                                         $        238,016  $        437,126

Adjustments to reconcile net income to net cash from operating activities:
        Depreciation and amortization                                                     1,246,030         2,031,113
        Gain on sale of equipment                                                           (90,033)           (6,463)

Changes in assets and liabilities 
    Decrease (increase) in:
        rents receivable                                                                    631,928          (382,673)
        accounts receivable - affiliate                                                     199,172           (53,143)
    Increase (decrease) in:
        accrued interest                                                                    (23,575)           21,276
        accrued liabilities                                                                 130,924            (8,250)
        accrued liabilities - affiliate                                                     (47,724)           (9,978)
        deferred rental income                                                              (22,191)           56,076
                                                                                   ----------------  ----------------

           Net cash from operating activities                                             2,262,547         2,085,084
                                                                                   ----------------  ----------------

Cash flows from investing activities:
    Proceeds from equipment sales                                                           542,343            26,384
                                                                                   ----------------  ----------------

           Net cash from investing activities                                               542,343            26,384
                                                                                   ----------------  ----------------

Cash flows used in financing activities:
    Principal payments - notes payable                                                     (935,541)         (936,388)
    Distributions paid                                                                     (887,522)         (600,595)
                                                                                   ----------------  ----------------

           Net cash used in financing activities                                         (1,823,063)       (1,536,983)
                                                                                   ----------------  ----------------

Net increase in cash and cash equivalents                                                   981,827           574,485

Cash and cash equivalents at beginning of period                                          3,893,242         2,829,093
                                                                                   ----------------  ----------------

Cash and cash equivalents at end of period                                         $      4,875,069  $      3,403,578
                                                                                   ================  ================

Supplemental disclosure of cash flow information:
       Cash paid during the period for interest                                    $         67,022  $         94,510
                                                                                   ================  ================


</TABLE>



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



                                       5
<PAGE>

                             AFG Investment Trust B

                        Notes to the Financial Statements
                                  June 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 June 30, 1998 and December 31, 1997 and results of operations for
the three and six month periods ended June 30, 1998 and 1997 have been made and
are reflected.


NOTE 2 - CASH

     At June 30, 1998, the Trust had $7,888,941 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 $3,121,763 which
is classified as Restricted Cash and represents the remaining net proceeds
realized from the offering of the Class B Interests less the portion thereof
used to pay a special distribution to the Class A Beneficiaries and to redeem
Class A Interests (see Notes 8 and 9). A portion of these funds will be used to
pay a Class B Capital Distribution (see Note 11). The remainder is expected to
be used according to terms negotiated in conjunction with settling the Class
Action Lawsuit described in Note 7.


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 $1,546,323 are due as follows:


<TABLE>
<S>                                  <C>            <C>             
     For the year ending June 30,     1999           $        804,363
                                      2000                    294,098
                                      2001                    208,642
                                      2002                    159,480
                                      2003                     79,740
                                                     ----------------

                                     Total           $      1,546,323
                                                     ================


</TABLE>



                                       6
<PAGE>

                             AFG Investment Trust B

                        Notes to the Financial Statements

                                   (Continued)


NOTE 4 - EQUIPMENT

     The following is a summary of equipment owned by the Trust at June 30,
1998. Remaining Lease Term (Months), as used below, represents the number of
months remaining from June 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 Equis Financial Group Limited Partnership ("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                                                           0-54            $    8,018,105
Computers and peripherals                                           0-6                 4,072,272
Materials handling                                                 0-27                 3,571,550
Communications                                                      0-6                 2,908,263
General plant and warehouse                                           0                 1,576,077
Construction and mining                                            0-30                   836,390
Manufacturing                                                         0                   449,902
Tractors and heavy duty trucks                                     0-15                   245,851
Trailers/intermodal containers                                        0                   128,443
Photocopying                                                          0                    20,055
Retail store fixtures                                                 0                    10,524
                                                                                   --------------

                                                   Total equipment cost                21,837,432

                                               Accumulated depreciation               (14,362,258)
                                                                                   ---------------
                             Equipment, net of accumulated depreciation            $    7,475,174
                                                                                   ==============
</TABLE>


     At June 30, 1998, the Trust's equipment portfolio included equipment having
a proportionate original cost of $12,327,808, representing approximately 56% of
total equipment cost.

     At June 30, 1998, the cost and net book value of equipment held for sale or
re-lease was approximately $7,637,000 and $4,471,000, respectively. This
equipment includes the Trust's proportionate interest in a McDonnell Douglas
MD-82 aircraft formerly leased to Alaska Airlines, Inc. with a cost and net book
value of $6,778,365 and $4,337,129, respectively. The Managing Trustee is
currently holding discussions with a potential lessee regarding the re-lease of
this aircraft. 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 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, 1998 and
1997, which were paid or accrued by the Trust to EFG or its Affiliates, are as
follows:



                                       7
<PAGE>
                             AFG Investment Trust B

                        Notes to the Financial Statements

                                  (Continued)
<TABLE>
<CAPTION>
                                                     1998                   1997
                                                 -------------          --------

<S>                                              <C>                    <C>         
     Equipment management fees                   $      76,727          $    114,503
     Administrative charges                             35,262                30,654
     Reimbursable operating expenses         
       due to third parties                            211,447                65,925
                                                 -------------          ------------

                                    Total        $     323,436          $    211,082
                                                 =============          ============
</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
June 30, 1998, the Trust was owed $150,837 by EFG for such funds and the
interest thereon. These funds were remitted to the Trust in July 1998.

     Refer to Note 8 regarding the purchase of Class B Interests by an
affiliate, Equis II Corporation and a change in ownership of the Managing
Trustee.


NOTE 6 - NOTES PAYABLE

     Notes payable at June 30, 1998 consisted of installment notes of $1,103,087
payable to banks and institutional lenders. The notes bear interest rates
ranging between 5.69% and 6.84%, except for one note which bears a fluctuating
interest rate based on LIBOR (5.66% at June 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 a balloon
payment obligation of $282,421 at the expiration of the primary lease term
related to its interest in an aircraft leased to Reno Air, Inc. The carrying
amount of notes payable approximates fair value at June 30, 1998.

     The annual maturities of the notes payable are as follows:

<TABLE>

<S>                                   <C>                   <C>         
     For the year ending June 30,     1999                 $    399,683
                                      2000                      113,911
                                      2001                      123,188
                                      2002                      133,221
                                      2003                      333,084
                                                           ------------

                                     Total                 $  1,103,087
                                                           ============

</TABLE>

NOTE 7 - 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."
                                       8
<PAGE>
                             AFG Investment Trust B

                        Notes to the Financial Statements

                                  (Continued)

     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 and
remains pending. Ultimately, the Court must review and approve the Stipulation
of Settlement prior to its becoming effective. Further, the Stipulation of
Settlement prescribes certain conditions necessary to effecting a settlement and
contemplates various changes that, if effected, would alter the future
operations of the Nominal Defendants (see Note 10). To the extent that the
Stipulation of Settlement is approved by the Court, 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 Stipulation of Settlement will be
approved by the Court. However, the Managing Trustee and its affiliates, in
consultation with counsel, concur that there is a reasonable basis to believe
that the Stipulation of Settlement will be approved by the Court. In the absence
of a Stipulation of Settlement approved by the Court, the Defendants intend to
defend vigorously against the claims asserted in the Class Action Lawsuit. The
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 8 - 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 




                                       9
<PAGE>
                             AFG Investment Trust B

                        Notes to the Financial Statements

                                  (Continued)

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 Class A 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 Class A Beneficiaries. A majority of Class A Interests,
representing 369,960 Interests or 55.6% of all Class A Interests, voted in favor
of the Amendment; 69,792 Interests or 10.5% of all Class A Interests voted
against the Amendment; and 24,444 Interests or 3.7% of all Class A Interests
abstained. Approximately 69.8% 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 1,000,961 Class B Interests at $5.00 per interest, thereby
generating $5,004,805 in aggregate Class B capital contributions. Class A
Beneficiaries purchased 3,588 Class B Interests, generating $17,940 of such
aggregate capital contributions, and the Special Beneficiary, EFG, purchased
997,373 Class B Interests, generating $4,986,865 of such aggregate capital
contributions. The Trust incurred offering costs in the amount of $50,048 and
professional service costs of $62,170 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
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 $979,449, to Class A Beneficiaries on August 15, 1997. See Note 9
regarding the redemption of Class A Interests.


NOTE 9 - REDEMPTION OF CLASS A INTERESTS

     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. On
October 10, 1997, the Trust used $785,295 of the net proceeds realized from the
issuance of the Class B Interests to purchase 82,837 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 


                                       10
<PAGE>
                             AFG Investment Trust B

                        Notes to the Financial Statements

                                  (Continued)

the Trust. On December 1, 1997, the Trust used an additional $6,080 of such
proceeds to purchase 640 additional Class A Interests.


NOTE 10 - 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 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 839 Class A Interests owned by affiliates of
EFG), regardless of how few Class A Interests were actually voted.

     The results of the voting are presented herein and reflect that a majority
of Class A Interests were voted in favor of each of the proposals. Therefore,
the Trust Agreement will be 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 7 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 $500,709 (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 $1,126,596 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 originally expired on September 8, 1996, will be
reinstated until December 31, 2001; and (v) acquisition fees paid to EFG in
connection with reinvestment assets acquired after the Amendment date 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%.

     The voting results submitted by the Beneficiaries on the Consent of
Beneficiary forms returned to the Managing Trustee in connection with the
Solicitation Statement are summarized below:


                                       11
<PAGE>
                             AFG Investment Trust B

                        Notes to the Financial Statements

                                  (Continued)

Proposal 1. Subject to attaining a settlement in the Class Action Lawsuit,
provide for a special cash distribution to Class A Beneficiaries.
<TABLE>
<CAPTION>

                                                                 Class A Interests         Class B Interests

<S>                                                                        <C>                     <C>      
Total Interests of record                                                  582,657                 1,000,961
Total votes returned                                                       254,205                   999,029
Percentage returned                                                          43.6%                     99.8%
Votes in favor                                                             234,160                   999,029
Percentage (of total returned) in favor                                      92.1%                      100%
Votes against                                                                9,800                         0
Percentage (of total returned) against                                        3.9%                         0
Votes abstaining                                                            10,245                         0
Percentage (of total returned) abstaining                                     4.0%                         0

</TABLE>

Proposal 2. Subject to attaining a settlement in the Class Action Lawsuit,
provide for an additional commitment of funds to the Trust by Equis II
Corporation.

<TABLE>
<CAPTION>

                                                                 Class A Interests         Class B Interests

<S>                                                                        <C>                     <C>      
Total Interests of record                                                  582,657                 1,000,961
Total votes returned                                                       254,205                   999,029
Percentage returned                                                          43.6%                     99.8%
Votes in favor                                                             232,720                   999,029
Percentage (of total returned) in favor                                      91.6%                      100%
Votes against                                                               11,240                         0
Percentage (of total returned) against                                        4.4%                         0
Votes abstaining                                                            10,245                         0
Percentage (of total returned) abstaining                                     4.0%                         0

</TABLE>

Proposal 3. Permit the Trust to acquire property in addition to equipment.

<TABLE>
<CAPTION>

                                                                 Class A Interests         Class B Interests

<S>                                                                        <C>                     <C>      
Total Interests of record                                                  582,657                 1,000,961
Total votes returned                                                       254,205                   999,029
Percentage returned                                                          43.6%                     99.8%
Votes in favor                                                             224,400                   999,029
Percentage (of total returned) in favor                                      88.3%                      100%
Votes against                                                               17,760                         0
Percentage (of total returned) against                                        7.0%                         0
Votes abstaining                                                            12,045                         0
Percentage (of total returned) abstaining                                     4.7%                         0

</TABLE>

                                       12
<PAGE>
                             AFG Investment Trust B

                        Notes to the Financial Statements

                                  (Continued)

Proposal 4.  Extend the Trust's reinvestment period.

<TABLE>
<CAPTION>

                                                                 Class A Interests         Class B Interests

<S>                                                                        <C>                     <C>      
Total Interests of record                                                  582,657                 1,000,961
Total votes returned                                                       254,205                   999,029
Percentage returned                                                          43.6%                     99.8%
Votes in favor                                                             218,882                   999,029
Percentage (of total returned) in favor                                      86.1%                      100%
Votes against                                                               19,678                         0
Percentage (of total returned) against                                        7.7%                         0
Votes abstaining                                                            15,645                         0
Percentage (of total returned) abstaining                                     6.2%                         0

</TABLE>

Proposal 5. Modify certain fees payable to the Managing Trustee and EFG.

<TABLE>
<CAPTION>

                                                                 Class A Interests         Class B Interests

<S>                                                                        <C>                     <C>      
Total Interests of record                                                  582,657                 1,000,961
Total votes returned                                                       254,205                   999,029
Percentage returned                                                          43.6%                     99.8%
Votes in favor                                                             228,880                   999,029
Percentage (of total returned) in favor                                      90.0%                      100%
Votes against                                                               12,360                         0
Percentage (of total returned) against                                        4.9%                         0
Votes abstaining                                                            12,965                         0
Percentage (of total returned) abstaining                                     5.1%                         0

</TABLE>

Proposal 6. Subject to attaining a settlement in the Class Action Lawsuit,
impose voting restrictions on Class B Interests.

<TABLE>
<CAPTION>

                                                                 Class A Interests         Class B Interests

<S>                                                                        <C>                     <C>      
Total Interests of record                                                  582,657                 1,000,961
Total votes returned                                                       254,205                   999,029
Percentage returned                                                          43.6%                     99.8%
Votes in favor                                                             229,121                   999,029
Percentage (of total returned) in favor                                      90.1%                      100%
Votes against                                                               12,519                         0
Percentage (of total returned) against                                        4.9%                         0
Votes abstaining                                                            12,565                         0
Percentage (of total returned) abstaining                                     5.0%                         0

</TABLE>

                                       13
<PAGE>
                             AFG Investment Trust B

                        Notes to the Financial Statements

                                  (Continued)

Proposal 7. Remove the current limitations on the amount and terms of the debt
the Trust may incur and modify the requirements with respect to joint ventures.

<TABLE>
<CAPTION>

                                                                 Class A Interests         Class B Interests

<S>                                                                        <C>                     <C>      
Total Interests of record                                                  582,657                 1,000,961
Total votes returned                                                       254,205                   999,029
Percentage returned                                                          43.6%                     99.8%
Votes in favor                                                             219,199                   999,029
Percentage (of total returned) in favor                                      86.2%                      100%
Votes against                                                               17,641                         0
Percentage (of total returned) against                                        7.0%                         0
Votes abstaining                                                            17,365                         0
Percentage (of total returned) abstaining                                     6.8%                         0


</TABLE>

NOTE 11 - SUBSEQUENT EVENT

     The Managing Trustee and certain of its affiliates were named as defendants
in the Class Action Lawsuit discussed in Note 7 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 10 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 $500,709, approximately $.75 per Class A
Interest, and (ii) invest $1,126,596 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), $1,500,540 in total,
was returned to Equis II Corporation and the other third party Class B capital
contributors on July 6, 1998.


                                       14
<PAGE>

                             AFG Investment Trust B

                                    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 B (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 7 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.

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


Three and six months ended June 30, 1998 compared to the three and six months
ended June 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 7 to the accompanying financial statements.
The Trust's operations commenced in 1992.


Results of Operations

     For the three and six months ended June 30, 1998, the Trust recognized
lease revenue of $589,802 and $1,563,454, respectively, compared to $1,361,952
and $2,710,570 for the same periods in 1997. The decrease in lease revenue from
1997 to 1998 is due to primary lease term expirations and the sale of equipment.
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 8 to the accompanying financial statements; however, the extent of such
impact cannot be determined at this time.



                                       15
<PAGE>

     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, 1998 was
$100,618 and $197,442, respectively, compared to $38,874 and $78,074 for the
same periods in 1997. Generally, interest income is generated from the temporary
investment of rental receipts and equipment sale proceeds in short-term
instruments. Interest income in 1998 includes interest earned on unexpended
proceeds resulting from the issuance of Class B Interests (see below). Future
interest income will fluctuate in relation to prevailing interest rates, the
collection of lease revenue and the proceeds from equipment sales.

     During the three and six months ended June 30, 1998, the Trust sold
equipment having a net book value of $285,905 and $452,310, respectively, to
existing lessees and third parties. These sales resulted in a net gain, for
financial statement purposes of $106,744 and $90,033, respectively, compared to
a net gain for the same periods in 1997 of $3,303 and $6,463 on equipment having
a net book value of $8,367 and $19,921, respectively.

     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 six months ended
June 30, 1998 was $589,271 and $1,246,030, respectively, compared to $1,010,685
and $2,031,113 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 $19,962 and $43,447 or 3.4% and 2.8% of lease revenue
for the three and six months ended June 30, 1998, respectively, compared to
$70,676 and $115,786 or 5.2% and 4.3% of lease revenue for the same periods in
1997. In the future, interest expense is expected to decline in amount and as a
percentage of lease revenue as the principal balance of notes payable is reduced
through the application of rent receipts to outstanding debt.


                                       16
<PAGE>


     Management fees were approximately 4.9% of lease revenue for each of the
three and six month periods ended June 30, 1998 compared to 4.2% for each of 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 $188,099 and
$246,709 for the three and six months ended June 30, 1998, respectively,
compared to $54,942 and $96,579 for the same periods in 1997. During the six
months ended June 30, 1998, the Trust accrued $108,000 for certain legal
expenses related to the Class Action Lawsuit described in Note 7 to the
financial statements. Additionally, operating expenses increased from 1997 to
1998 due to professional service costs incurred in connection with the
Solicitation Statement described in Note 10 to the accompanying 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.


Liquidity and Capital Resources and Discussion of Cash Flows

     The Trust by its nature is a limited life entity which was established for
specific purposes described in the preceding "Overview". As an equipment leasing
program, the Trust's principal operating activities derive from asset rental
transactions. Accordingly, the Trust's principal source of cash from operations
is provided by the collection of periodic rents. These cash inflows are used to
satisfy debt service obligations associated with leveraged leases, and to pay
management fees and operating costs. Operating activities generated net cash
inflows of $2,262,547 and $2,085,084 for the six months ended June 30, 1998 and
1997, respectively. Future renewal, re-lease and equipment sale activities will
cause a decline in the Trust's primary-term lease revenue and corresponding
sources of operating cash. Overall, expenses associated with rental activities,
such as management fees, and net cash flow from operating activities will also
decline as the 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 realized from asset disposal transactions is reported under investing
activities on the accompanying Statement of Cash Flows. During the six months
ended June 30, 1998, the Trust realized equipment sale proceeds of $542,343
compared to $26,384 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.


                                       17
<PAGE>


     The Trust obtained long-term financing in connection with certain equipment
leases. The repayments of principal related to such indebtedness are reported as
components 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 future
periods, the amount of cash used to repay debt obligations will decline as the
principal balance of notes payable is reduced through the collection and
application of rents. However, the Trust has a balloon payment obligation of
$282,421 at the expiration of the primary lease term related to its interest in
an aircraft leased to Reno Air, Inc.

     For financial reporting purposes, the Managing Trustee and the Special
Beneficiary each has accumulated a capital deficit at June 30, 1998. 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. At December 31,
1997, the Managing Trustee had a positive tax capital account balance. No such
requirement exists with respect to the Special Beneficiary.

     At June 30, 1998, the Trust had aggregate future minimum lease payments of
$1,546,323 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 $1,103,087 (see Note 6 to the financial statements).
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.

     On July 18, 1997, the Trust issued 1,000,961 Class B Interests at $5.00 per
interest, thereby generating $5,004,805 in aggregate Class B capital
contributions. Class A Beneficiaries purchased 3,588 Class B Interests,
generating $17,940 of such aggregate capital contributions, and the Special
Beneficiary, EFG, purchased 997,373 Class B Interests, generating $4,986,865 of
such aggregate capital contributions. The Trust incurred offering costs in the
amount of $50,048 and professional service costs of $62,170 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 8 to the
accompanying financial statements).



                                       18
<PAGE>

      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 $979,449, 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 $785,295 of the net proceeds realized from the issuance of the
Class B Interests to purchase 82,837 of the Class A Interests tendered as a
result of the offer. On December 1, 1997, the Trust used an additional $6,080 of
such proceeds to purchase 640 additional Class A Interests. The remaining net
proceeds from the Class B offering of $3,121,763 will be used to pay a Class B
Capital Distribution and according to terms negotiated in connection with
settling the Class Action Lawsuit described in Note 7 (see also Notes 9, 10 and
11 to the accompanying financial statements).

     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. 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 throughout 1997 and the six
months ended June 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 Interest 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 45 days following the end
of each calendar month. The payment of such distributions is presented as a
component of financing activities. For the six months ended June 30, 1998, the
Trust declared total cash distributions of $887,086. The Beneficiaries were
allocated $804,982 ($476,672 for Class A Beneficiaries and $328,310 for Class B
Beneficiaries); the Special Beneficiary was allocated $73,228; and the Managing
Trustee was allocated $8,876.

     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 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 B

                                    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:  None

        Item 3.          Defaults upon Senior Securities
                         Response:  None

        Item 4.          Submission of Matters to a Vote of Security Holders
                         Response:

                         Refer to Note 10 to the financial statements herein.

        Item 5.          Other Information
                         Response:  None

        Item 6(a).       Exhibits
                         Response:  None

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

                                       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 B


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


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


                               Date:    August 14, 1998
                                        ---------------------------------------


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


                               Date:    August 14, 1998
                                        ---------------------------------------


                                       21