<PAGE>

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

                                   FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 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 March 31, 1997             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.)

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

                                                                       PAGE
                                                                     --------

PART I. FINANCIAL INFORMATION:

   Item 1. Financial Statements

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

     Statement of Operations
       for the three months ended March 31, 1997 and 1996                 4

     Statement of Cash Flows
       for the three months ended March 31, 1997 and 1996                 5

     Notes to the Financial Statements                                  6-9

   Item 2. Management's Discussion and Analysis of Financial
           Condition and Results of Operations                        10-14

PART II. OTHER INFORMATION:

   Items 1--6                                                            15


                                     2

<PAGE>

                            AFG INVSTMENT TRUST B

                         STATMENT OF FINANCIAL POSITION
                     March 31, 1997 and December 31, 1996 

                                (Unaudited)

<TABLE>
<CAPTION>
                                                                   MARCH 31,    DECEMBER 31,
                                                                     1997           1996
                                                                 -------------  -------------
<S>                                                              <C>            <C>
ASSETS
Cash and cash equivalents......................................   $ 3,337,820    $ 2,829,093

Rents receivable...............................................       366,938        339,293

Accounts receivable--affiliate.................................       225,359        154,395

Equipment at cost, net of accumulated depreciation of
  $13,171,894 and $12,161,949 at March 31, 1997 and December
  31, 1996, respectively.......................................    12,275,979     13,307,711

Organization costs, net of accumulated amortization of $4,583
  and $4,333 at March 31, 1997 and December 31, 1996,
  respectively.................................................           417            667
                                                                  -----------    -----------
        Total assets...........................................   $16,206,513    $16,631,159
                                                                  -----------    -----------
                                                                  -----------    -----------
LIABILITIES AND PARTICIPANTS' CAPITAL
Notes payable..................................................   $ 3,915,823    $ 4,352,811
Accrued interest...............................................        41,956         36,571
Accrued liabilities............................................        18,750         23,250
Accrued liabilities--affiliate.................................        53,178         47,178
Deferred rental income.........................................       124,760         45,550
Cash distributions payable to participants.....................       200,199        200,199
                                                                  -----------    -----------
        Total liabilities......................................     4,354,666      4,705,559
                                                                  -----------    -----------
Participants' capital (deficit):
    Managing Trustee...........................................       (31,120)       (30,382)
    Special Beneficiary........................................      (263,978)      (257,894)
    Beneficiary Interests (665,494 Interests; initial purchase
       price of $25 each)......................................    12,146,945     12,213,876
                                                                  -----------    -----------
        Total participants' capital............................    11,851,847     11,925,600
                                                                  -----------    -----------
        Total liabilities and participants' capital............   $16,206,513    $16,631,159
                                                                  -----------    -----------
                                                                  -----------    -----------
</TABLE>

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

                                    3

<PAGE>

                          AFG INVESTMENT TRUST B

                          STATEMENT OF OPERATIONS
           for the three months ended March 31, 1997 and 1996

                                (Unaudited)

<TABLE>
<CAPTION>
                                                                        1997          1996
                                                                    ------------  ------------
<S>                                                                 <C>           <C>
Income:

  Lease revenue...................................................   $1,348,618    $1,479,254

  Interest income.................................................       39,200         4,551

  Gain (loss) on sale of equipment................................        3,160      (184,016)
                                                                     ----------    ----------
     Total income.................................................    1,390,978     1,299,789
                                                                     ------------  ----------
Expenses:

  Depreciation and amortization...................................    1,020,428     1,145,057

  Interest expense................................................       45,110       110,025

  Equipment management fees--affiliate............................       57,259        62,453

  Operating expenses--affiliate...................................       41,637        16,893
                                                                     ----------    ----------
     Total expenses...............................................    1,164,434     1,334,428
                                                                     ----------    ----------
Net income (loss).................................................   $  226,544    $  (34,639)
                                                                     ----------    ----------
                                                                     ----------    ----------
Net income (loss) per Beneficiary Interest........................   $     0.31    $    (0.05)
                                                                     ----------    ----------
                                                                     ----------    ----------
Cash distributions declared per Beneficiary Interest..............   $     0.41    $     0.32
                                                                     ----------    ----------
                                                                     -----------   ----------
</TABLE>

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

                                  4

<PAGE>

                        AFG INVESTMENT TRUST B

                        STATMENT OF CASH FLOWS
          for the three months ended March 31, 1997 and 1996

                              (Unaudited)

<TABLE>
<CAPTION>

                                                                         1997          1996
                                                                     ------------   -----------
<S>                                                                  <C>            <C>
Cash flows from (used in) operating activities:
Net income (loss).................................................   $  226,544     $   (34,639)

Adjustments to reconcile net income (loss) to net cash from
  operating activities:
     Depreciation and amortization................................    1,020,428       1,145,057
     (Gain) loss on sale of equipment.............................       (3,160)        184,016

Changes in assets and liabilities
  Decrease (increase) in:
     rents receivable.............................................      (27,645)        277,621
     accounts receivable--affiliate...............................      (70,964)       (112,870)
  Increase (decrease) in:
     accrued interest.............................................        5,385         (50,495)
     accrued liabilities..........................................       (4,500)           (250)
     accrued liabilities--affiliate...............................        6,000          21,225
     deferred rental income.......................................       79,210          87,542
                                                                     ----------     -----------
        Net cash from operating activities........................    1,231,298       1,517,207
                                                                     ----------     -----------

Cash flows from (used in) investing activities:
  Purchase of equipment...........................................           --      (1,441,796)
  Proceeds from equipment sales...................................       14,714       1,694,513
                                                                     ----------     -----------
        Net cash from investing activities........................       14,714         252,717
                                                                     ----------     -----------

Cash flows from (used in) financing activities:
  Proceeds from notes payable.....................................           --         997,888
  Principal payments--notes payable...............................     (436,988)     (1,251,120)
  Distributions paid..............................................     (300,297)       (230,998)
                                                                     ----------     -----------
        Net cash used in financing activities.....................     (737,285)       (484,230)
                                                                     ----------     -----------
Net increase in cash and cash equivalents.........................      508,727       1,285,694

Cash and cash equivalents at beginning of period..................    2,829,093         337,293
                                                                     ----------     -----------
Cash and cash equivalents at end of period........................   $3,337,820     $ 1,622,987
                                                                     ----------     -----------
                                                                     ----------     -----------
Supplemental disclosure of cash flow information:
  Cash paid during the period for interest........................   $   39,725     $   160,520
                                                                     ----------     -----------
                                                                     ----------     -----------
</TABLE>

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

                                       5

<PAGE>

                             AFG INVESTMENT TRUST B

                       NOTES TO THE FINANCIAL STATEMENTS
                                 MARCH 31, 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 March 31, 1997 and December 31, 1996 and results of operations 
for the three month periods ended March 31, 1997 and 1996 have been made and 
are reflected.

NOTE 2--CASH

    At March 31, 1997, the Trust had $3,225,000 invested in reverse 
repurchase agreements secured by U.S. Treasury Bills or interests in U.S. 
Government securities.

NOTE 3--REVENUE RECOGNITION

    Rents are payable to the Trust monthly, quarterly or semi-annually and no 
significant amounts are calculated on factors other than the passage of time. 
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 $6,300,854 are due as follows:


     For the year ending March 31, 1998        $4,569,601
                                   1999           941,638
                                   2000           284,922
                                   2001           225,603
                                   2002           159,480
                             Thereafter           119,610
                                               ----------
                                  Total        $6,300,854
                                               ----------
                                               ----------

                                    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 March 31, 
1997. In the opinion of Equis Financial Group ("EFG"), (formerly American 
Finance Group), 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..........................................................         9-71    $  8,018,105
Computers and peripherals.........................................         1-21       4,509,566
Materials handling................................................         1-43       4,466,295
Communications....................................................        12-21       3,039,531
General plant and warehouse.......................................            9       1,576,077
Construction and mining...........................................         1-46       1,200,577
Retail store fixtures.............................................         6-12       1,107,881
Tractors and heavy duty trucks....................................         8-30         605,644
Manufacturing.....................................................          5-9         449,902
Furniture and fixtures............................................            7         284,019
Trailers/intermodal containers....................................         9-15         128,443
Photocopying......................................................          1-8          61,833
                                                                                   ------------
                                                           Total equipment cost      25,447,873

                                                       Accumulated depreciation     (13,171,894)
                                                                                   ------------

                                     Equipment, net of accumulated depreciation    $ 12,275,979
                                                                                   ------------
                                                                                   ------------
</TABLE>

    At March 31, 1997, the Trust's equipment portfolio included equipment 
having a proportionate original cost of $11,023,146, representing 
approximately 43% of total equipment cost.

    At March 31, 1997, the cost and net book value of equipment held for sale 
or re-lease was approximately $451,000 and $100,000, 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 three month periods ended March 31, 
1997 and 1996, which were paid or accrued by the Trust to EFG or its 
Affiliates, are as follows:


                                                           1997        1996
                                                         ---------  ----------
Equipment acquisition fees..............................      --      $ 52,786
Equipment management fees...............................  $57,259       62,453
Administrative charges..................................   10,530        5,250
Reimbursable operating expenses
  due to third parties..................................   31,107       11,643
                                                          -------     --------
          Total.........................................  $98,896     $132,132
                                                          -------     --------
                                                          -------     --------

                                    7

<PAGE>

                          AFG INVESTMENT TRUST B

                   NOTES TO THE FINANCIAL STATEMENTS

                               (CONTINUED)

    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 
March 31, 1997, the Trust was owed $225,359 by EFG for such funds and the 
interest thereon. These funds were remitted to the Trust in April 1997.

NOTE 6--NOTES PAYABLE

    Notes payable at March 31, 1997 consisted of installment notes of 
$3,915,823 payable to banks and institutional lenders. The notes bear 
interest rates ranging between 5.7% and 7.7%, except for one note which bears 
a fluctuating interest rate based on LIBOR plus a margin (5.7% at March 31, 
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 a balloon payment obligation of $282,421 at the expiration of 
the primary lease term related to the Reno Air aircraft. The carrying amount 
of notes payable approximates fair value at March 31, 1997.

     The annual maturities of the notes payable are as follows:


     For the year ending March 31, 1998        $2,650,656
                                   1999           542,127
                                   2000           111,702
                                   2001           120,800
                                   2002           130,639
                             Thereafter           359,899
                                               ----------
                                  Total        $3,915,823
                                               ----------
                                               ----------

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 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.

NOTE 8--SOLICITATION AND REGISTRATION STATEMENTS

    On October 26, 1996, the Managing Trustee, on behalf of the Trust, filed 
a Solicitation Statement with the Securities and Exchange Commission which 
was subsequently sent to the Beneficiaries pursuant to Regulation 

                                    8

<PAGE>

                          AFG INVESTMENT TRUST B

                   NOTES TO THE FINANCIAL STATEMENTS

                               (CONTINUED)


14A of Section 14 of the Securities Exchange Act. The Solicitation Statement 
sought to solicit the consent of the Beneficiaries to a proposed amendment 
("the Amendment") to the Amended and Restated Declaration of Trust (the 
"Trust Agreement").

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

    Pursuant to the Trust Agreement, the adoption of the Amendment required 
the consent of the Beneficiaries holding more than fifty percent in the 
aggregate of the Interests held by all Beneficiaries. A majority of 
Beneficiary Interests, representing 369,960 or 55.6% of all Beneficiary 
Interests, voted in favor of the Amendment; 69,792 or 10.5% of all 
Beneficiary Interests voted against the Amendment; and 24,444 or 3.7% of all 
Beneficiary Interests abstained. Approximately 69.8% of all Beneficiary 
Interests participated in the vote. Accordingly, the Amendment was adopted.

    On February 12, 1997, the Trust filed a Registration Statement on Form 
S-1 (which was amended on April 11, 1997 and May 9, 1997) with the Securities 
and Exchange Commission which covers, among other things, the creation and 
sale of a new class of beneficiary interests in the Trust (the "Class B 
Interests"). A portion of the proceeds from the offering of the Class B 
Interests would be used to make a one-time special cash distribution to 
existing Beneficiaries (the "Class A Beneficiaries") of the Trust and to 
enable the Trust to redeem a portion of the existing Beneficiary Interests 
(the "Class A Interests"). The characteristics of the Class B Interests, 
associated risk factors, and other matters of importance to the Beneficiaries 
and prospective purchasers of the Class B Interests are contained in the 
Registration Statement. Presently, the Registration Statement is undergoing 
regulatory review and has not been declared effective.

                                    9

<PAGE>

                              AFG INVEST TRUST B

                                   FORM 10-Q

                         PART I. FINANCIAL INFORMATION


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS.

Three months ended March 31, 1997 compared to the three months ended March 
31, 1996:

OVERVIEW

    As an equipment leasing trust, AFG Investment Trust B (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 months ended March 31, 1997, the Trust recognized lease 
revenue of $1,348,618 compared to $1,479,254 for the same period in 1996. The 
decrease in lease revenue from 1996 to 1997 is due to the Trust's sale of its 
interest in a Boeing 747-SP aircraft leased to United Air Lines, Inc. (the 
"United Aircraft") in February 1996, as discussed below, primary lease term 
expirations and the sale of other equipment. The Trust also earns interest 
income from temporary investments of rental receipts and equipment sales 
proceeds in short-term instruments.

    The Trust's equipment portfolio includes certain assets in which the 
Trust holds a proportionate ownership interest. In such cases, the remaining 
interests are owned by 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.

    During the three months ended March 31, 1997, the Trust sold equipment 
having a net book value of $11,554 to existing lessees and third parties. 
These sales resulted in a net gain, for financial statement purposes, of 
$3,160.

    On February 5, 1996, the Trust concluded the sale of its interest in the 
United Aircraft to the lessee, United Air Lines Inc., ("United"), as reported 
in Note 3 to the Trust's 1996 Annual Report. The Trust recognized a net loss 
of $560,982 in connection with this transaction, of which $384,782 was 
recognized as Write-Down of Equipment in 1995. The remainder of $176,200 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 $1,684,292 from United for the 
aircraft. A portion of such sale proceeds was reinvested in other equipment 
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 

                                    10

<PAGE>

                              AFG INVEST TRUST B

                                   FORM 10-Q

                         PART I. FINANCIAL INFORMATION


$241,853 from the sale of the United Aircraft. During the three months ended 
March 31, 1996, the Trust sold other equipment having a net book value of 
$18,037 to existing lessees and third parties. These sales resulted in a net 
loss, for financial statement purposes, of $7,816.

    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 was $1,020,428 and $1,145,057 for 
the three months ended March 31, 1997 and 1996, respectively. 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 $45,110 or 3.3% of lease revenue for the three 
months ended March 31, 1997 compared to $110,025 or 7.4% of lease revenue for 
the same period in 1996. Interest expense in future periods will continue to 
decline as the principal balance of notes payable is reduced through the 
application of rent receipts to outstanding indebtedness.

    Management fees were 4.2% of lease revenue during each of the three month 
periods ended March 31, 1997 and 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 and legal fees, as well as 
printing, distribution and remarketing expenses. Collectively, operating 
expenses represented 3.1% and 1.1% of lease revenue during the three months 
ended March 31, 1997 and 1996, respectively. 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. 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.

                                    11

<PAGE>

                              AFG INVEST TRUST B

                                   FORM 10-Q

                         PART I. FINANCIAL INFORMATION


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 $1,231,298 and $1,517,207 in the 
three months ended March 31, 1997 and 1996, respectively. Future renewal, 
re-lease and equipment sale activities will cause a gradual 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 decline as the Trust 
experiences a higher frequency of remarketing events.

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

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

    Cash expended for asset acquisitions and cash realized from asset 
disposal transactions are reported under investing activities on the 
accompanying Statement of Cash Flows. The Trust expended $1,441,796 to 
acquire equipment during the three months ended March 31, 1996. This amount 
reflects the acquisition of an ownership interest in a commercial jet 
aircraft at a cost of $1,239,741, pursuant to the reinvestment provisions of 
the Trust's prospectus and an original equipment acquisition of $202,055. The 
reinvestment equipment was financed through a combination of leveraging and 
the sale proceeds available from the aircraft transaction, discussed above. 
There were no equipment acquisitions during the same period in 1997. During 
the three months ended March 31, 1997, the Trust realized equipment sale 
proceeds of $14,714. During the same period in 1996, the Trust realized 
equipment sale proceeds of $1,694,513, including $1,684,292 of proceeds from 
the United Aircraft. 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. 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 

                                    12

<PAGE>

                              AFG INVEST TRUST B

                                   FORM 10-Q

                         PART I. FINANCIAL INFORMATION


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 the Reno Aircraft.

    Cash distributions to the Managing Trustee, the Special Beneficiary and 
the Beneficiaries are declared and generally paid within 45 days following 
the end of each calendar month. The payment of such distributions is 
presented as a component of financing activities. For the three months ended 
March 31, 1997, the Trust declared total cash distributions of Distributable 
Cash From Operations and Distributable Cash From Sales and Refinancings of 
$300,297. In accordance with the Trust Agreement, the Beneficiaries were 
allocated 90.75% of these distributions, or $272,520; the Special Beneficiary 
was allocated 8.25%, or $24,774; and the Managing Trustee was allocated 1%, 
or $3,003.

    For financial reporting purposes, the Managing Trustee and the Special 
Beneficiary each have accumulated a capital deficit at March 31, 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 March 31, 1997, the Trust had aggregate future minimum lease payments 
of $6,300,854 from contractual lease agreements (see Note 3 to the financial 
statements), of which $3,915,823 will be used to amortize the principal 
balance of notes payable (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.

    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.

                                    13

<PAGE>

                              AFG INVEST TRUST B

                                   FORM 10-Q

                         PART I. FINANCIAL INFORMATION


    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 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.

                                    14

<PAGE>

                             AFG INVEST 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: None

Item 5.                   Other Information
                          Response: None

Item 6(a).                Exhibits
                          Response: None

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

                                    15

<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:  May 15, 1997
                -----------------------------------------------------


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


         Date:   May 15, 1997
                -----------------------------------------------------

                                    16