UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-QSB
 
 
 
 [ X ]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2004
 
 OR
 
 [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to .
 
 
 Commission File Number 0-25648
 
 
 AFG Investment Trust D
 (Name of Small Business Issuer in its charter)
 
 
 
 Delaware  04-3157233
 (State or other jurisdiction of                                                                                           (I.R.S. Employer Identification No.)
 incorporation or organization)
 
 
 1050 Waltham Street, Suite 310, Lexington, MA  02421
 (Address of principal executive offices)                                                                                                             (Zip Code)
 
 
 Issuer's telephone number, including area code : (781) 676-0009
 
 
 Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X . NO  .
 
 
 Shares of Class A interests outstanding as of May 14, 2004: 1,934,755
 Shares of Class B interests outstanding as of May 14, 2004: 3,142,083
 
 
 Transitional Small Business Disclosure Format: YES  . NO X .
 
 
 
 
 
 
 
    
 
 
 
 AFG INVESTMENT TRUST D
 
 FORM 10-QSB
 
 INDEX
 
 PART I. FINANCIAL INFORMATION:


PageItem 1. Financial Statements (unaudited)Condensed Balance Sheetsat March 31, 2004 and December 31, 2003


3Condensed Statements of Incomefor the Three Months Ended March 31, 2004 and 2003


4Condensed Statement of Changes in Participants Capitalfor the Three Months Ended March 31, 2004


5Condensed Statements of Cash Flowsfor the Three Months Ended March 31, 2004 and 2003


6Notes to the Condensed Financial Statements


7Item 2. Management's Discussion and Analysis of FinancialCondition and Results of Operations


12Item 3. Controls and Procedures


19PART II. OTHER INFORMATION:Item 1  5.


21Item 6. Exhibits and reports on Form 8-K


21 
 
 
  
   AFG INVESTMENT TRUST D
 CONDENSED BALANCE SHEETS
 (in thousands of dollars, except share amounts)
 (unaudited)
 
 March 31,
2004


December 31,
2003AssetsCash and cash equivalents

$
402

$
725Accounts receivable  affiliate


92


43Loan receivable - EFG/Kettle Development LLC


516


516Investment  affiliate


273


286Interest in EFG/Kettle Development LLC


4,076


4,134Interest in EFG Kirkwood, LLC


2,881


1,868Interest in MILPI Holdings, LLC


8,569


7,752Interest in C & D IT, LLC


1,157


1,157Investments  other


78


79Other assets, net of accumulated amortization of $350and $331 at March 31, 2004 and December 31, 2003, respectively


249


232Equipment at cost, net of accumulated depreciationof $16,749 and $16,186 at March 31, 2004 and December
31, 2003, respectively


1,801


2,425Total assets

$
20,094

$
19,217Liabilities and participants' capitalNote payable

$
4,150

$
4,452Accrued liabilities


194


270Deferred rental income


-


20Total liabilities


4,344


4,742Commitments and ContingenciesParticipants' capital (deficit):Managing Trustee


13


(17
)Special beneficiary


107


-Class A beneficiary interests (1,934,755 interests,initial purchase price of $25 each)


16,347


15,395Class B beneficiary interests (3,142,083 interests,initial purchase price of $5 each)


230


-Treasury interests (154,275 Class A interests at cost)


(1,615
)

(1,615
)Accumulated other comprehensive income


668


712Total participants' capital


15,750


14,475Total liabilities and participants' capital

$
20,094

$
19,217 
 
 
  
 
 AFG INVESTMENT TRUST D
 CONDENSED STATEMENTS OF INCOME
 For the Three Months Ended March 31,
 (in thousands of dollars, except per share amounts)
 (unaudited)
 
 2004


2003.RevenueLease revenue

$
383

$
1,214Interest income


6


20Gain on disposal of equipment


52


15Total revenue


441


1,249ExpensesDepreciation and amortization


633


977Interest expense


57


453Management fees - affiliates


64


106Operating expenses


141


145Operating expenses  affiliate


43


35Total expenses


938


1,716Income (Loss) from Equity InterestsEquity in net income of other investments


1


-Equity in net loss of EFG/Kettle Development LLC and affiliate


(15
)

(38
)Equity in net income of EFG Kirkwood LLC


1,013


863Equity in net income of MILPI Holdings, LLC


817


395Total income from equity interests


1,816


1,220Net income

$
1,319

$
753Net incomeper Class A Beneficiary Interest

$
0.49

$
0.26per Class B Beneficiary Interest

$
0.07

$
0.04Average Class A Beneficiary Interests outstanding


1,934,755


1,934,755Average Class B Beneficiary Interests outstanding


3,142,083


3,142,083 
 The accompanying notes are an integral part of these financial statements.   AFG INVESTMENT TRUST D
 CONDENSED STATEMENTS OF CHANGES IN PARTICIPANTS CAPITAL
 For the Three Months Ended March 31, 2004
 (in thousands of dollars, except shares)
 (unaudited)
 
 
 Managing Trustee

Special Beneficiary

Class A Beneficiaries

-
Class B Beneficiaries

Treasury

Accumulated Other ComprehensiveAmount

Amount

Interests

Amount

Interests

Amount

Interests

Amount

Income (Loss)

TotalBalance at December 31, 2003
$ (17)

$ -

1,934,755

$ 15,395

3,142,083

$ -

154,275

$ (1,615)

$ 712

$ 14,475Net income
30

107

-

952

-

230

-

-

-

1,319Foreign currency translation adjustment
-

-

-

-

-

-

-

-

(44)

(44)Comprehensive income


















1,275Balance at March 31, 2004
$ 13

$ 107

1,934,755

$ 16,347

3,142,083

$ 230

154,275

$ (1,615)

$ 668

$ 15,750 
 The accompanying notes are an integral part of these financial statements.   
 
 AFG INVESTMENT TRUST D
 CONDENSED STATEMENTS OF CASH FLOWS
 For the Three Months Ended March 31,
 (in thousands of dollars)
 (unaudited)
 
 2004

2003Cash flows provided by (used in) operating activitiesNet income
$ 1,319

$ 753Adjustments to reconcile net income to net cash provided by (used in) operating activities:Depreciation and amortization
633

977Gain on disposition of equipment
(52)

(15)Change in equity interests
(1,772)

(1,220)Changes in assets and liabilities:Accounts receivable  affiliate
(49)

(261)Other assets
(37)

8Accrued liabilities
(76)

76Deferred rental income
(20)

(9)Net cash (used in) provided by operating activities
(54)

309Cash flows provided by investing activitiesProceeds from equipment sales
62

15Investment  affiliate
15

123Net cash provided by investing activities
77

138Cash flows used in financing activitiesPrincipal payments - note payable
(302)

(551)Net cash used in financing activities
(302)

(551)Net decrease in cash and cash equivalents
(279­)

(104)Effect of foreign exchange rate changes
(44)

-Cash and cash equivalents at beginning of year
725

438Cash and cash equivalents at end of period
$ 402

$ 334Supplemental informationCash paid during the period for interest
$ 58

$ 326 
 
 The accompanying notes are an integral part of these financial statements.   
 NOTE 1  BASIS OF PRESENTATION
 
 The unaudited financial statements presented herein are prepared in conformity with generally accepted accounting principles in the United States of America and the instructions for preparing Form 10-QSB under Rule 310 of Regulation S-B of the Securities and Exchange Commission (SEC). Rule 310 provides that disclosures that would substantially duplicate those contained in the most recent annual report to shareholders may be omitted from interim financial statements. The accompanying unaudited condensed financial statements have been prepared on that basis and, therefore, should be read in conjunction with the financial statements and notes presented in the 2003 Annual Report (Form 10-KSB) of AFG Investment Trust C (the Trust) on file with the United States Securities and Exchange Commission. Except as disclosed herein, there have been no material changes to the information presented in the notes to the 2003 Annual Report in Form 10-KSB.
 
 In the opinion of management, all adjustments (consisting of normal and recurring accruals) considered necessary to present fairly the Trusts balance sheet at March 31, 2004 and December 31, 2003, statements of income for the three month period ended March 31, 2004 and 2003, statements of changes in participants capital for the three months ended March 31, 2004 and statements of cash flows for the three months ended March 31, 2004 and 2003 have been made and are reflected.
 
 Certain amounts previously reported have been reclassified to conform to the March 31, 2004 financial statement presentation. These reclassifications did not effect total assets, total liabilities, participants capital or net income.
 
 NOTE 2 - EQUIPMENT
 
 The following is a summary of equipment owned by the Trust at March 31, 2004 and December 31, 2003. Remaining Lease Term (Months), as used below, represents the number of months remaining from March 31, 2004 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 off-lease or being leased on a month-to-month basis. Equipment consists of the following at March 31, 2004 and December 31, 2003 (in thousands of dollars):
 
 RemainingLease Term as ofMarch 31, 2004Equipment Type


(Months)


March 31, 2004


December 31, 2003Aircraft


9

$
13,608

$
13,608Locomotives


0


4,272


4,272Construction and mining


0


306


306Materials handling


0-1


318


379Other


0


46


46Total equipment cost


-


18,550


18,611Accumulated depreciation


-


(16,749
)

(16,186
)Equipment, net of accumulated depreciation


-

$
1,801

$
2,425 
 Depreciation expense on equipment was $0.6 million and $1.0 million for the three months ended March 31, 2004 and 2003, respectively.
 
 At March 31, 2004, the Trusts ownership interest in aircraft and related lease payment streams are used to secure a term loan with a third-party lender. The preceding summary of equipment includes leveraged equipment having an original cost of $13.6 million and a net book value of $1.5 million at March 31, 2004.
 
 The summary above includes off-lease equipment at March 31, 2004 held for re-lease with an original cost of $4.4 million and a net book value of $0.3 million.
 
 NOTE 3 - INTEREST IN EFG/KETTLE DEVELOPMENT LLC
 
 The Trust and AFG Investment Trust C ("Trust C") each own 50% of EFG/Kettle Development LLC (Kettle Valley), a Delaware limited liability company, which owns a non-controlling 49.9% indirect ownership interest in a real estate development in Kelowna, British Columbia in Canada, called Kettle Valley.
 
 The Trusts ownership interest in Kettle Valley and affiliates is accounted for on the equity method. The Trust recorded a net loss of $15,000 and $38,000 during the three months ended March 31, 2004 and 2003, respectively. During the three months ended March 31, 2004, the Trust recorded a foreign currency translation adjustment of $44,000 reflecting a strengthening of the U.S. dollar against the Canadian dollar which is included in accumulated other comprehensive income (loss) and reported as part of statements of changes in participants capital .
 
 The table below provides Kettle Valley Development Limited Partnerships summarized consolidated statements of operations data for the three months ended March 31, 2004 and 2003 (in thousands of dollars):
 
 March 31,
2004


March 31,
2003Total revenues

$
1,182

$
530Total expenses


1,181


684Net income (loss)

$
1

$
(154
) 
 NOTE 4 - INTEREST IN EFG KIRKWOOD LLC
 
 The Trust, Trust C and two affiliated corporations, Equis II and Semele Group, Inc. (Semele), own EFG Kirkwood LLC ("EFG Kirkwood"). The Trust, Trust C and Equis II collectively own 100% of the Class A membership interests in EFG Kirkwood and Semele owns 100% of the Class B membership interests in EFG Kirkwood. The Trust holds a non-controlling 30% of EFG Kirkwoods Class A membership interests.
 
 The Trusts ownership interest in EFG Kirkwood is accounted for on the equity method.  The Trust recorded income of $1.0 million and $0.9 million for the three months ended March 31, 2004 and 2003, respectively, which represented its pro-rata share of the net income of EFG Kirkwood.
 
 The table below provides EFG Kirkwoods summarized consolidated statements of operations data for the three months ended March 31, 2004 and 2003, respectively (in thousands of dollars):
 
 March 31,
2004


March 31,
2003Equity income on investments

$
3,373

$
2,875 
 EFG Kirkwood owns membership interests in Mountain Resort Holdings LLC (Mountain Resort) and Mountain Springs Resorts LLC (Mountain Springs). The table below provides comparative summarized statements of operations data for Mountain Resort and Mountain Springs for the three months ended March 31, 2004 and 2003. The operating companies have a fiscal year end of April 30th which is different from the Trust (in thousands dollars):
 
 For the Three


For the ThreeMonths Ended


Months EndedMarch 31,


March 31,2004


2003Mountain ResortTotal revenues

$
15,985

$
16,508Total expenses


10,542


11,194Net income

$
5,443

$
5,314Mountain SpringsTotal revenues

$
11,042

$
8,841Total expenses


7,349


6,397Net income

$
3,693

$
2,444 
 EFG Kirkwood guarantees the payment of obligations under a revolving line of credit between DSC/Purgatory LLC (Purgatory), a subsidiary of Mountain Springs, and a third party lender. Another shareholder in Purgatory also guarantees this line of credit. Either party may be called on by the lender to fulfill Purgatorys obligations. The amount of the guarantee consists of the outstanding balance of the line of credit which cannot exceed the maximum borrowing capacity under the line of $3.5 million. As of March 31, 2004, there were no borrowings outstanding on the line of credit which expires in October 2004.
 
 NOTE 5 - INTEREST IN MILPI HOLDINGS, LLC
 
 The Trust has a 50% non-controlling ownership interest in MILPI Holding, LLC (MILPI), which is accounted for on the equity method. The Trust recorded income of $0.8 million and $0.4 million for the three months ended March 31, 2004 and 2003, respectively.
 
 The tables below provide summarized consolidated statement of operations data for MILPI for the three months ended March 31, 2004 and 2003, respectively (in thousands of dollars):
 
 .
.


Three Months Ended


Three Months Ended.


March 31,
2004


March 31,
2003Total revenues

$
3,109

$
1,986Equity income in managed programs


172


308Total expenses


1,088


842Other income, net


18


115Provision for taxes


673


482Net income

$
1,538

$
1,085 
 NOTE 6  INVESTMENT - AFFILIATE
 
 The Trust owns 7.25 limited partnership units (the "Units") in AFG International Limited Partnership (the "Partnership"), a real estate limited partnership sponsored by Equis Financial Group Limited Partnership (EFG) that owns two commercial buildings leased to an investment grade educational institution. The Trust purchased the Units for approximately $0.7 million. The Trust owns approximately 23% of the Partnership. The Trust accounts for its investment in the Partnership under the equity method of accounting. The Trust recorded income of approximately $2,000 and $0 for the three months ended March 31, 2004 and 2003, respectively. The Trust received distributions of $15,000 and $0.1 million during the three months ended March 31, 2004 and 2003, respectively.
 
 NOTE 7 - RELATED PARTY TRANSACTIONS
 
 Various 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 months ended March 31, 2004 and 2003, which were paid or accrued by the Trust to EFG or its affiliates, are as follows (in thousands of dollars):
 
 March 31,
2004


March 31,
2003Management fees

$
64

$
106Administrative charges


43


35Total

$
107

$
141 
 Administrative charges represent amounts owed to EFG, pursuant to Section 10.4(c) of the Trust Agreement, for persons employed by EFG who are engaged in providing administrative services to the Trust.
 
 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, 2004, the Trust was owed $0.1 million by EFG for such funds and the interest thereon. These funds were remitted to the Trust in April 2004.
 
 NOTE 8 - NOTE PAYABLE
 
 Note payable at March 31, 2004 consists of a note in the amount of $4.2 million, which bears a fluctuating interest rate based on LIBOR plus 3.5% (4.7% at March 31, 2004). The installment note is non-recourse and is collateralized by the Trusts aircraft and assignment of the related lease payments. This note will be partially paid down by the remaining contracted lease payments. The Trust has a balloon payment obligation of $3.0 million at the expiration of the debt in January 2005.
 
 NOTE 9  CONTINGENCIES
 
 The SEC staff has informed the Trust that it believes the Trust may be an unregistered investment company within the meaning of the The Investment Company Act of 1940 (the Act). The Trust, after consulting with counsel, does not believe that it is an unregistered investment company. However, it is possible that the Trust may have unintentionally engaged in an activity or activities that may be construed to fall within the scope of the Act. If necessary, the Trust intends to avoid being deemed an investment company by means that may include disposing assets that they might not otherwise dispose of.
 
 The Trust is subject to various claims and proceeding in the normal course of business. Management believes that the disposition of such matters is not expected to have a material adverse effect on the financial position of the Trust or its results of operations.
 
 NOTE 10 - SEGMENT REPORTING
 
 The Trust has three principal operating segments: 1) Equipment Leasing 2) Equipment Management and 3) Real Estate Ownership, Development & Management. The Equipment Leasing segment includes acquiring and leasing equipment to third parties. The Trust is no longer allowed to purchase new equipment as its acquisition phase has ended. The Equipment Management segment includes the majority of the Trust's equity interest in MILPI, which owns 100% of PLM International, Inc., a company in the equipment leasing management business, excluding its ownership in RMLP, Inc. The Real Estate segment includes the ownership, management and development of commercial properties, recreational properties, condominiums, interval ownership units, townhomes, single family homes and land sales included in the Trusts ownership interests in EFG Kirkwood, C & D IT LLC, Kettle Valley and MILPI through its subsidiary RMLP, Inc. Other includes corporate assets, which consist of cash and certain receivables.
 
 The Trusts reportable segments offer different products or services and are managed separately because each requires different operating strategies and management expertise. There are no material intersegment sales or transfers.
 
 Segment information for the years ended March 31, 2004 and 2003 is summarized below (in thousands of dollars).
 
 For the Three Months Ended
Equipment

Equipment

RealMarch 31, 2004
Leasing

Management

Estate

Other

TotalRevenue:Lease revenue
$ 383

$ -

$ -

$ -

$ 383Interest income
-

-

5

1

6Gain on disposal of equipment
52

-

-

-

52Total revenue
435

-

5

1

441Expenses:Depreciation and amortization
633

-

-

-

633Interest expense
57

-

-

-

57Management fees  affiliates
19

24

20

1

64Operating expenses
25

-

-

116

141Operating expenses - affiliates
43

-

-

-

43Total expenses
777

24

20

117

938Equity Interests:Equity in net lincome of other investments
-

-

-

1

1Equity in net loss of EFG/Kettle Development LLC
-

-

(15)

-

(15)Equity in net income of EFG Kirkwood LLC
-

-

1,013

-

1,013Equity in net income of MILPI Holdings, LLC
-

817

-

-

817Total income (loss) income from equity interests
-

817

998

1

1,816Net (loss) income
$ (342)

$ 793

$ 983

$ (115)

$ 1,319Total assets as of March 31, 2004
$ 1,929

$ 6,379

$ 11,313

$ 473

$ 20,094For the Three Months Ended
Equipment

Equipment

RealMarch 31, 2003
Leasing

Management

Estate

Other

TotalRevenue:Lease revenue
$ 1,214

$ -

$ -

$ -

$ 1,214Interest income
-

-

20

-

20Gain on sale of equipment
15

-

-

-

15Total revenue
1,229

-

20

-

1,249Expenses:Depreciation and amortization
977

-

-

-

977Interest expense
453

-

-

-

453Management fees  affiliates
61

24

20

1

106Operating expenses
1

-

-

144

145Operating expenses - affiliates
35

-

-

-

35Total expenses
1,527

24

20

145

1,716Equity Interests:Equity in net loss of EFG/Kettle Development LLC
-

-

(38)

-

(38)Equity in net income of EFG Kirkwood LLC
-

-

863

-

863Equity in net income of MILPI Holdings, LLC
-

395

-

-

395Total income from equity interests
-

395

825

-

1,220Net (loss) income
$ (298)

$ 371

$ 825

$ (145)

$ 753 
 NOTE 11RECENT ACCOUNTING PRONOUNCEMENTS
 
 In January 2003, FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46). FIN 46 requires the Trust to evaluate all existing arrangements to identify situations where the Trust has a variable interest, commonly evidenced by a guarantee arrangement or other commitment to provide financial support, in a variable interest entity, commonly a thinly capitalized entity, and further determine when such variable interest requires the Trust to consolidate the variable interest entities financial statements with its own. The Trust is required to perform this assessment by December 31, 2004 and consolidate any variable interest entities for which the Trust will absorb a majority of the entities expected losses or receive a majority of the expected residual gains.
 
 The Trust is still in the process of evaluating its impact and has not completed its analysis or concluded on the impact that FIN 46 will have on the Trust.
 
 NOTE 12  SUBSEQUENT EVENT
 
 In April 2004, the Trusts investment  affiliate sold one of its commercial buildings to an unrelated third party. The Trust received a cash distribution of $0.6 million related to the sale.
  
 AFG INVESTMENT TRUST D
 
 FORM 10-QSB
 
 PART I. FINANCIAL INFORMATION
 
 
 
 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
 
 Forward-looking Information
 
 Certain statements in this quarterly report of AFG Investment Trust D (the Trust) that are not historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to a variety of risks and uncertainties. There are a number of important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made herein. These factors include, but are not limited to, the collection of the Trusts contracted rents, the realization of residual proceeds for the Trusts equipment, the performance of the Trusts non-equipment assets, and future economic conditions.
 
 Contingencies and Litigation
 
 The Securities and Exchange Commission staff has informed the Trust that it believes the Trust may be an unregistered investment company within the meaning of The Investment Company Act of 1940 (the Act). The Trust, after consulting with counsel, does not believe that it is an unregistered investment company. However, it is possible that the Trust may have unintentionally engaged in an activity or activities that may be construed to fall within the scope of the Act. If necessary, the Trust intends to avoid being deemed an investment company by means that may include disposing assets that they might not otherwise dispose of.
 
 The Trust is subject to legal proceedings involving ordinary and routine claims related to its business when quantifiable, estimates for losses from litigation are made after consultation with outside counsel. If estimates of potential losses increase or the related facts and circumstances change in the future, the Trust may be required to adjust amounts recorded in its financial statements.
 
 Critical Accounting Policies and Estimates
 
 The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires AFG ASIT Corporation (the Managing Trustee) to make estimates and assumptions that affect the amounts reported in the financial statements. On a regular basis, the Managing Trustee reviews these estimates and assumptions including those related to revenue recognition, asset lives and depreciation, impairment of long-lived assets and contingencies. These estimates are based on the Managing Trustees historical experience and on various other assumptions believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The Managing Trustee believes, however, that the estimates, including those for the above-listed items, are reasonable.
 
 The Managing Trustee believes the following critical accounting policies, among others, are subject to significant judgments and estimates used in the preparation of these financial statements:
 
 Revenue Recognition: Rents are payable to the Trust monthly or quarterly and no significant amounts are calculated on factors other than the passage of time. The Trusts leases are accounted for as operating leases and are noncancellable. Rents received prior to their due dates are deferred.
 
 Asset lives and depreciation method: The Trusts primary business involves the purchase and subsequent lease of long-lived equipment. The Trust's depreciation policy is intended to allocate the cost of equipment over the period during which it produces economic benefit. The principal period of economic benefit is considered to correspond to each asset's primary lease term, which generally represents the period of greatest revenue potential for each asset. Accordingly, 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 the 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.
 
 Impairment of long-lived assets: The Trust evaluates long-lived assets for impairment whenever events or circumstances indicate that the carrying bases of such assets may not be recoverable. Whenever circumstances indicate that an impairment may exist, the company evaluates future cash flows of the asset to the carrying value. If projected undiscounted future cash flows are lower than the carrying value of the asset, a loss is recorded. The loss recorded is equal to the difference between the carrying amount and the fair value of the asset. The fair value of the asset is determined based on a valuation model, which includes expected discounted future cash flows of the asset, current market prices and managements market knowledge. The fair market value of long-lived assets secured by non-recourse debt is determined based on a valuation model which includes expected future cash flows and the recoverable value. The recoverable value is determined based on managements decision to either sell, re-lease or return the asset to the lender. No impairments were recorded during the three months ended March 31, 2004.
 
 The Managing Trustee evaluates the net realizable value of significant equipment assets, such as aircraft, individually. All other assets are evaluated collectively by equipment type unless the Managing Trustee learns of specific circumstances, such as a lessee default, technological obsolescence, or other market developments, which could affect the net realizable value of particular assets. Adjustments to reduce the net carrying value of equipment are recorded in those instances where estimated net realizable value is considered to be less than net carrying value and are reflected separately on the accompanying Statements of Income as impairment of equipment.
 
 Results of Operations
 
 Segment Reporting
 
 The Trust has three principal operating segments: 1) Equipment Leasing 2) Equipment Management and 3) Real Estate Ownership, Development & Management. The Equipment Leasing segment includes acquiring and leasing equipment to third parties. The Trust is no longer allowed to purchase new equipment as its acquisition phase has ended. The Equipment Management segment includes the majority of the Trust's equity interest in MILPI, which owns 100% of PLM International, Inc., a company in the equipment leasing management business, excluding its ownership in RMLP, Inc. The Real Estate segment includes the ownership, management and development of commercial properties, recreational properties, condominiums, interval ownership units, townhomes, single family homes and land sales included in the Trusts ownership interests in EFG Kirkwood, C & D IT LLC, Kettle Valley and MILPI through its subsidiary RMLP, Inc. Other includes corporate assets, which consist of cash and certain receivables.
 
 The Trusts reportable segments offer different products or services and are managed separately because each requires different operating strategies and management expertise. There are no material intersegment sales or transfers.
 
 Equipment Leasing
 
 For the three months ended March 31, 2004, the Trust recognized lease revenue of $0.4 million compared to $1.2 million for same period in 2003. The decrease in lease revenue from 2003 to 2004 resulted primarily from lease term expirations and the sale of equipment. Future lease term expirations and equipment sales will result in a reduction in the lease revenue recognized as the Trust is no longer allowed to purchase equipment.
 
 During the three months ended March 31, 2004 and 2003, the Trust sold fully depreciated equipment to existing lessees and third parties. These sales resulted in a gain of $0.1 million. In the three months ended March 31, 2003, the Trust sold equipment for a gain of $15,000.
 
 Depreciation expense was $0.6 million and $1.0 million for the three months ended March 31, 2004 and 2003, respectively. Depreciation and amortization decreased by $0.4 million from 2003 to 2004. The decrease in depreciation for the respective periods is attributable to the sale of the Trusts leasing equipment.
 
 Interest expense on third party debt was $0.1 million and $0.5 million for the three months ended March 31, 2004 and 2003, respectively. The decrease in interest expense is attributable to lower average outstanding debt balances in the quarter ended March 31, 2004 compared to the same period in 2003.
 
 Management fees- affiliate from equipment leasing were $19,000 and $0.1 million for the three months ended March 31, 2004 and 2003, respectively. 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, subject to certain limitations.
 
 Operating expenses and operating expenses  affiliates were $0.1 million and $36,000 for the three months ended March 31, 2004 and 2003, respectively. The increase in operating expenses is attributable to an increase in selling and remarketing costs related to the disposition of the Trusts assets. Operating expenses consist primarily of administrative charges, professional service costs, such as audit and legal fees, as well as printing and remarketing expenses. 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.
 
 Equipment Management
 
 During the three months ended March 31, 2004 and 2003, the Trust recorded income of $0.8 million and $0.4 million, respectively, from its ownership interest in MILPI. This income represents the Trusts share of net income of MILPI recorded under the equity method of accounting.
 
 During the three months ended March 31, 2004 and 2003, MILPI recognized revenues of $3.1 million and $2.0 million, respectively. MILPIs total revenues increased by $1.1 million in the three months ended March 31, 2004 compared to the same period in 2003. The increase in revenues is primarily attributable to a $1.2 million increase in gains related to disposition of equipment, $0.2 million increase in operating lease revenue, a $0.2 million increase in acquisition and lease negotiation fees resulting from an increase in equipment placed in the managed programs. These increases were partially offset by a decrease in management fees of $0.5 million. Management fees are primarily based on gross revenues generated by equipment under management and decreased due to asset dispositions in the managed programs.
 
 The $1.1 million increase in revenue was offset by an increase in expense of $0.2 million. The increase is primarily attributable to a $0.2 million increase in depreciation expense. The increase in depreciation is associated with an increase in equipment held on lease.
 
 MILPI also incurred income tax expense of approximately $0.7 million and $0.5 million for the three months ended March 31, 2004 and 2003, respectively.
 
 Real Estate
 
 Interest income for the three months ended March 31, 2004 was $5,000 compared to $20,000 for the same period in 2003. Interest income is generated from loans made to affiliates. Interest income decreased in the three months ended March 31, 2004 compared to the same period in 2003 due to the Trust renegotiating the terms of its loan to Kettle Valley in the first quarter of 2003 resulting in additional interest income. No similar event occurred in 2004.
 
 Management fees paid to EFG for non-equipment assets were $20,000 for each of the three months ended March 31, 2004 and 2003. Management fees for non-equipment assets, excluding cash, are 1% of such assets under management.
 
 Kettle Valley
 
 Kettle Valley is a real estate development company located in Kelowna, British Columbia, Canada. The project, which is being developed by Kettle Valley Development Limited Partnership, consists of approximately 280 acres of land that is zoned for 1,120 residential units in addition to commercial space. To date, 220 residential units have been constructed and sold and 25 additional units are under construction.
 
 The Trust indirectly has an approximately 25% ownership interest in Kettle Valley. For the three months ended March 31, 2004 and 2003, the Trust recorded a loss of $15,000 and $38,000, respectively, from its ownership interest in Kettle Valley. These losses represent the Trusts share of the net losses of Kettle Valley recorded under the equity method of accounting.
 
 During the three months ended March 31, 2004 and 2003, Kettle Valley recorded revenues of $1.2 million and $0.5 million, respectively, and incurred total expenses of $1.2 million and $0.7 million, respectively. The increase in revenues and total expenses is the result of an increase in the number of lot and home sales in the three months ended March 31, 2004 compared to the same period in 2003.
 
 EFG Kirkwood
 
 The Trust owns 30% of the Class A membership interests of EFG Kirkwood, a joint venture between the Trust, Trust C and two affiliated companies, Equis II and Semele Group, Inc. (Semele). AFG ASIT Corporation, the Managing Trustee of the Trust and a subsidiary of Semele, also is the manager of EFG Kirkwood. EFG Kirkwoods assets consist of two minority interest investments accounted for under the equity method of accounting. The investments consist of an interest in two ski resorts: Mountain Resort Holdings LLC (Mountain Resort) and Mountain Springs Resorts LLC (Mountain Springs).
 
 Mountain Resort, through four wholly owned subsidiaries, owns and operates the Kirkwood Mountain Resort, a ski resort located in northern California, a public utility that services the local community, and land that is held for residential and commercial development. Mountain Springs, through a wholly owned subsidiary, owns a controlling interest in DSC/Purgatory LLC ("Purgatory") in Durango, Colorado.
 
 For the three months ended March 31, 2004 and 2003, the Trust recorded income of $1.0 million and $0.9 million, respectively, from its ownership interest in EFG Kirkwood. This income represents the Trusts share of the net income of EFG Kirkwood recorded under the equity method of accounting. Due to the seasonal nature of EFG Kirkwoods operations, the financial results of the three months ended March 31, 2004 and 2003 are not indicative of future periods. These three month periods include the periods of peak income activity for the resorts. See below for discussion of the operating results of the resorts.
 
 Mountain Resort Operating Results
 
 During the three months ended March 31, 2004, Mountain Resort recorded total revenues of approximately $16.0 million compared to approximately $16.5 million for the same period in 2003. The decrease in total revenues from 2003 to 2004 of $0.5 million is the result of an increase in residential-related revenues, offset, in part by a decrease in ski related revenue. Ski-related revenues decreased approximately $0.7 million. The decrease in ski-related revenues resulted from a decrease in visitors to the resort compared to the same period last year, as a result of unfavorable weather conditions during the winter season.
 
 Residential-related and other operations revenues increased approximately $0.2 million for the three months ended 2004 compared to 2003. The increase in residential-related and other operations revenues was primarily attributable to improved real estate sales volume during 2004 compared to 2003.
 
 During the three months ended March 31, 2004 and 2003, Mountain Resort recorded total expenses of $10.5 million and $11.2 million, respectively. The decrease in total expenses of $0.7 million is due to the reduction of operational support expenses due to restructuring.
 
 Mountain Springs
 
 During the three months ended March 31, 2004, Mountain Springs recorded total revenues of $11.0 million compared to $8.8 million for the same period of 2003. The increase in total revenues from 2003 to 2004 of $2.2 million is the result of an increase in visitors to the resort compared to the same period last year, as a result of improved weather conditions during the winter season.
 
 Total expenses were approximately $7.3 million for the three months ended March 31, 2004 compared to approximately $6.4 million for the same period in 2003. The increase in total expenses for the three months ended March 31, 2004 compared to the same period in 2003 of approximately $0.9 million is a result of an increased cost of sales corresponding to the increase in revenues.
 
 Liquidity and Capital Resources and Discussion of Cash Flows
 
 The Trust by its nature is a limited life entity. The Trust has a scheduled termination date of December 31, 2006. In the first quarter of 2004, the beneficial interest holders approved a resolution, which among other things, allow the Trust to adopt a plan of liquidation and dissolution prior to 2006. The Managing Trustee anticipates that this will be adopted in 2004. The beneficial interest holders also authorized the sale of MILPI Holdings, LLC to an entity controlled by Gary Engle and Jim Coyne. This sale could be completed in 2004. The Trust could have other significant asset sales in 2004. The Managing Trustee does not anticipate any distributions to the beneficial interest holders until all assets are sold and all liabilities are paid.
 
 The Trust's principal operating activities derive from asset rental transactions. These cash inflows are used to satisfy debt service obligations associated with the assets, and to pay management fees and operating costs. Operating activities used cash of $0.1 million during the three months ended March 31, 2004.
 
 Accounts receivable-affiliate increased by $49,000, or 114%. Receivable from affiliates consists of rent or proceeds from the sale of equipment by EFG, an affiliated entity. 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 and remits to the Trust on a monthly basis. At March 31, 2004, the Trust was owed $0.1 million by EFG for such funds compared to $43,000 at December 31, 2003. The Trust was paid in full by EFG in April 2004.
 
 The Trusts interest in affiliate decreased by $13,000 or 4% during the three month period ended March 31, 2004. The decrease is attributable to a cash dividend of $15,000 received on the investment during the three months ended March 31,2004. The decrease was offset in part by equity income of $2,000 recorded during the first quarter of 2004.
 
 The Trusts investment in Kettle Valley decreased by $0.1 million during 2004 or 1%. The decrease is due to the Trust recording a net foreign currency translation adjustment of $44,000 reflecting a strengthening of the U.S. dollar  against the Canadian dollar which is included in accumulated other comprehensive income and reported as part of the statement of changes in participants capital . In addition, the Trust recorded an equity loss of $15,000 from Kettle Valley.
 
 Investment in EFG Kirkwood increased by $1.0 million or 54% during the three month period ended March 31, 2004. The increase is attributable to equity income of $1.0 million recorded during the first quarter of 2004. Due to the seasonal nature of EFG Kirkwoods operations, the financial results of the three months ended March 31, 2004 are not indicative of future periods. This three month period includes the period of peak income activity for the resorts.
 
 The Trusts interest in MILPI increased by $0.8 million or 11% during the three month period ended March 31, 2004. The increase in the investment was attributable to equity income of $0.8 million recorded during the quarter, which is primarily related to gains on the disposition of equipment.
 
 Equipment held for lease decreased by $0.6 million or 26% during 2004. The decrease is primarily attributable to depreciation expense recorded during the period.
 
 The Trusts balance in note payable decreased by $0.3 million or 7% during the three month period ended March 31, 2004. The decrease in attributable to principal payments made during the period.
 
 Accrued liabilities decreased by $0.1 million or 28% during the period ended March 31, 2004. A decrease in accrued liabilities is due to accrued expenses related to selling and remarketing costs accrued at December 31, 2003 related to the disposition of the Trusts locomotives in the fourth quarter of 2003. A similar charge did not incur in the three months ended March 31, 2004.
 
 At March 31, 2004, the Trust was due aggregate future minimum lease payments of $1.0 million from contractual lease agreements, a portion of which will be used to pay down the principal balance of note payable of $4.2 million. Additional cash inflows may 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.
 
 During the three months ended March 31, 2004, the Trust sold fully depreciated equipment to existing lessees and third parties. These sales resulted in a gain on sale of $0.1 million. Future inflows of cash from equipment 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.
 
 Equity Interest Investments
 
 The Trust owns equity interest investments in equipment management and several real estate companies, which are accounted for under the equity method of accounting. The financial position and liquidity of these companies have a material impact on the Trust. A description of the Trusts minority interest investments and a brief summary of the financial position are summarized below:
 
 The Trust has minority interest investments in the following entities as of March 31, 2004 (in thousands of dollars):
 
 March 31,
2004


December 31,
2003Interest in MILPI Holdings, LLC

$
8,569

$
7,752Interest in EFG/Kettle Development LLC


4,076


4,134Interest in Kirkwood, LLC


2,881


1,868Interest in C & D IT, LLC


1,157


1,157Investment  affiliate


273


286Investment - other


78


79Total

$
17,034

$
15,276 
 MILPI Holdings, LLC
 
 MILPI Holdings, LLC operates in the equipment management and real estate segments. As of March 31, 2004, MILPI had $18.5 million of equity investments in several equipment leasing programs, which comprised approximately 45% of MILPIs total assets. At March 31, 2004, MILPI had $5.5 million in cash and cash equivalents which represents 13% of MILPIs total assets. At March 31, 2004, MILPI had $2.5 million in railcar equipment which represented 6% of its total assets. The railcars held for lease may be sold to affiliated programs or unaffiliated third parties in 2004. MILPIs investment in RMLP, Inc. totaled $10.4 million at March 31, 2004 representing 26% of its total assets. As of March 31, 2004, MILPI had no outstanding borrowings in the warehouse facility. The warehouse credit facility is shared by MILPI and several of its managed equipment leasing programs. All borrowings are guaranteed by MILPI. There were no other outstanding borrowings on this facility by MILPI or any of the other eligible borrowers.
 
 MILPI had positive cash flows from operations of $0.4 million during the three months ended March 31, 2004. Cash flows from operations were used to finance operating costs and purchase additional assets to increase the Companys railcar portfolio. MILPI did not declare or pay dividends to the Trusts in 2004 nor does it anticipate any dividends will be declared or paid in the remainder of 2004.
 
 Kettle Valley
 
 Kettle Valley is a real estate development company located in Kelowna, British Columbia, Canada. Kettle Valley has historically operated at a net loss and has sustained negative cash flows from operations. As of March 31, 2004, the company has approximately $0.5 million in cash and $1.2 million in debt to third parties. The real estate is in the early phase of development and may incur losses and negative cash flow in the future. Kettle Valley expects to pay existing obligations with the sales proceeds from future lot sales. Lot and home sales were 14 and 3, respectively, in the three months ended March 31, 2004 compared to 7 lots and 1 homes sold in 2003. Kettle Valley did not pay dividends in 2004 or 2003 and does not anticipate paying dividends in the near future until lots sales and cash flow from home construction and sales are sufficient to support operations. Future capital needs that may be required by Kettle Valley are expected to be financed by the other equity holders or outside investors.
 
 EFG Kirkwood
 
 EFG Kirkwood was formed for the purpose of acquiring a minority interest in two real estate investments. The investments consist of an interest in two ski resorts: Mountain Resort and Mountain Springs. EFG Kirkwood has no other significant assets other than its interest in the ski resorts.
 
 Mountain Springs: Mountain Springs, through a wholly owned subsidiary, owns a controlling interest in Purgatory in Durango, Colorado. Purgatory is a ski and mountain recreation resort covering 2,500 acres, situated on 40 miles of terrain with 75 ski trails. Mountain Spring's primary cash flows come from its ski operations during the ski season, which is heavily dependent on snowfall. Additional cash flow is provided by its real estate development activities and by the resorts summer recreational programs. When out of season, operations are funded by available cash and through the use of a $3.5 million dollar line of credit, which is guaranteed by EFG Kirkwood as well as another investor in Purgatory.
 
 At March 31, 2004, Mountain Springs had current assets of $4.2 million, which consisted of cash of $2.0 million, accounts receivable of $1.4 million and inventories and other assets totaling $0.8 million. Long-term assets consist primarily of buildings, equipment and real estate totaling approximately $25.8 million.
 
 Liabilities totaled approximately $6.5 million at March 31, 2004 and consisted primarily of debt and notes outstanding.
 
 Mountain Springs also owns 51% of Durango Mountain Land Company, which owns 500 acres of real estate under development. Mountain Springs signed an operating agreement in which it was agreed that Durango Mountain Land Company would acquire, develop, and otherwise operate this real estate.
 
 Mountain Resort: Mountain Resort is primarily a ski and mountain recreation resort with more than 2,000 acres of terrain, located approximately 32 miles south of Lake Tahoe. The resort receives approximately 70% of its revenues from winter ski operations, primarily ski, lodging, retail and food and beverage services with the remainder of the revenues generated from summer outdoor activities, including mountain biking, hiking and other activities. Mountain Resorts primary cash flows come from its ski operations during the ski season, which is heavily dependent on snowfall. Excess cash flows will be used to finance development on the real estate surrounding the resort.
 
 At March 31, 2004, Mountain Resort had current assets of approximately $13.3 million, which consisted of cash of $9.3 million, accounts receivable of $2.9 million, and inventory and other assets of $1.1 million. Long-term assets consisted primarily of buildings, equipment and real estate totaling $38.5 million.
 
 Liabilities were approximately $26.8 million, which consisted primarily of long-term senior notes and affiliated debt.
 
 Both Mountain Springs and Mountain Resort are subject to a number of risks, including weather-related risks and the risks associated with real estate development and resort ownership. The ski resort business is seasonal in nature and insufficient snow during the winter season can adversely affect the profitability of a given resort. Many operators of ski resorts have greater resources and experience in the industry than the Trust, its affiliates and its joint venture partners.
 
 C&D IT LLC
 
 The Trust and Trust D each own 50% of C & D IT LLC, a Delaware limited liability company, to which each Trust contributed $1.0 million, for a 25% interest in the Rancho Malibu Limited Partnership. The Trusts ownership interest in C & D IT LLC is accounted for on the equity method. C & D IT LLC did not pay or declare any dividends in 2004.
 
 Investment - affiliate
 
 The Trust owns 7.25 limited partnership units (the "Units") in AFG International Limited Partnership (the "Partnership"), a real estate limited partnership sponsored by Equis Financial Group Limited Partnership (EFG) that owns two commercial buildings leased to an investment grade educational institution. The Trust purchased for the Units for approximately $0.7 million. The Trust owns approximately 23% of the Partnership. The Trust accounts for its investment in the Partnership under the equity method of accounting. The Trust recorded income of approximately $2,000 and $0 for the three months ended March 31, 2004 and 2003, respectively. The Trust received distributions of $15,000 and $0.1 million during the three months ended March 31, 2004 and 2003, respectively.
 
 Outlook for the Future
 
 Several other factors may affect the Trusts operating performance during the remainder of 2004 and beyond including:
 
 -asset sales
 -changes in markets for the Trusts equipment;
 -changes in the regulatory environment in which the Trusts equipment operates; and
 -changes in the real estate markets in which the Trust has ownership interest.
 
 The future out look for the different operating segments of the Trust is as follows:
 
 Asset Sales
 
 The Trust has a scheduled termination date of December 31, 2006. In the first quarter of 2004, the beneficial interest holders approved a resolution, which among other things, allow the Trust to adopt a plan of liquidation and dissolution prior to 2006. The Managing Trustee anticipates that this will be adopted in 2004. The beneficial interest holders also authorized the sale of MILPI Holdings, LLC to an entity controlled by Gary Engle and Jim Coyne. This sale could be completed in 2004. The Trust could have other significant asset sales in 2004. The Managing Trustee does not anticipate any distributions to the beneficial interest holders until all assets are sold and all liabilities are paid.
 
 Real Estate
 
 The Trust has a minority interest in two ski resorts, which are subject to the risks of the tourism industry. The resorts are subject to a number of risks, including weather-related risks. The ski resort business is seasonal in nature and insufficient snow during the winter season can adversely affect the profitability of a given resort. Many operators of ski resorts have greater resources and experience in the industry than the Trust, its affiliates and its joint venture partners.
 
 The Trust also has a minority interest in several real estate development companies, some of which are located at the resorts. The risks generally associated with real estate include, without limitation, the existence of senior financing or other liens on the properties, general or local economic conditions, property values, the sale of properties, interest rates, real estate taxes, other operating expenses, the supply and demand for properties involved, zoning and environmental laws and regulations, and other governmental rules.
 
 The Trust s investment in real estate development companies have experienced an increase in residential sales as a result of interest rates being at historical lows. There is a risk that residential sales could materially decline if interest rates increase.
 
 The Trust's involvement in real estate development also introduces financials risk, including the potential need to borrow funds to develop the real estate projects. While the Trust's management presently does not foresee any unusual risks in this regard, it is possible that factors beyond the control of the Trust, its affiliates and joint venture partners, such as a tightening credit environment, could limit or reduce its ability to secure adequate credit facilities at a time when they might be needed in the future. Alternatively, the Trust could establish joint ventures with other parties to share participation in its development projects.
 
 Because the investments in the ski resorts include real estate development companies, the risks and uncertainties associated with the tourism industry can adversely affect the value of the real estate development companies associated with these investments. Decrease in tourism, weather-related conditions or other risks discussed above can permanently decrease the value of the investment and future operations.
 
 The Trust does not anticipate receiving dividend distributions from the real estate investments in the near future due to the uncertainty of the current market conditions.
 
 As the Managing Trustee anticipates significant asset sales in 2004, some or all of the Trusts assets may be marketed for sale in 2004.
 
 Equipment Leasing and Equipment Management
 
 The Trusts equipment management activities consist of its ownership interest in MILPI Holdings, LLC. In the first quarter of 2004, the beneficial interest holders approved the sale of MILPI Holdings, LLC to an entity controlled by Gary Engle and Jim Coyne. This sale could be completed in 2004.
 
 The Trusts remaining equipment leasing assets consist primarily of aircraft and locomotives. The aircraft which is financed with non recourse debt, is on lease until 2005, at which time the balance of the debt financing the aircraft is due. The Managing Trustee anticipates this plane will either be re-leased and the related debt restructured or returned to the lender in accordance with the debt agreement. The locomotives are off-lease and in storage. The Managing Trustee anticipates these will remain off-lease until they are sold.
 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 capital account. At March 31, 2004, the Managing Trustee did not have a negative capital account balance. No such requirement exists with respect to the Special Beneficiary.
 Item 3. Controls and Procedures
 
 Limitations on the Effectiveness of Controls
 
 The Trustees management, including its President and Chief Financial Officer (CFO), does not expect that our internal controls or disclosure controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.
 
 Because of the inherent limitations in all control systems, no evaluation of control can provide absolute assurance that all control issues and instances of fraud, if any, within the Trust have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, collusion of two or more people, or by management override of the control. The design of any system of controls also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
 
 Notwithstanding the forgoing limitations, we believe that our internal controls and disclosure controls provide reasonable assurance that the objectives of our controls system are met.
 
 Quarterly Evaluation of the Partnerships Disclosure Controls and Internal Controls
 
 (1)  Within the 90-day period prior to the filing of this report, the Trustee carried out an evaluation, under the supervision and with the participation of the Trustees management, including its President and CFO, of the effectiveness of the design and operation of the Trusts disclosure controls and procedures pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 (the Exchange Act). Based upon that evaluation, the Chief Executive Officer and CFO concluded that the Trusts disclosure controls and procedures are effective in timely alerting them to material information relating to the Trusts required to be included in the Trusts exchange act filings.
 
 (2) There have been no significant changes in the Trusts internal controls or in other factors which could significantly affect internal controls subsequent to the date of the Trustee carried out its evaluations.
 
  
 AFG INVESTMENT TRUST D
 FORM 10-QSB
 PART II. OTHER INFORMATION
 
 Item 1.Legal Proceedings
 Response: None
 
 Item 2.Changes in Securities
 Response: None
 
 Item 3.Defaults upon Senior Securities
 Response: None
 
 Item 4.Submission of Matters to a Vote of Security Holders
 
 On February 17, 2004, the Trust filed a proxy statement soliciting the shareholders on several articles proposed by the Managing Trustee. On March 23, 2004, the shareholders voted in favor of each of the proposals as follows:
 
 Proposal
For
Against
Abstain1.To approve the liquidation and dissolution of the Trust under the terms and conditions of the Plan of Liquidation and Dissolution, pursuant to which Beneficiaries will receive cash distributions upon final dissolution.
3,956,921
58,967
13,9261.To amend Section 7.3 of the Trust Agreement to allow for the sale of assets by the Trust to its affiliates.
3,899,510
106,184
24,1102.To approve the sale of the Trusts membership interest in MILPI Holdings, LLC, which is owned jointly with an affiliate of the Trust to PLM MILPI Holdings LLC, a Delaware limited liability company owned by James A. Coyne and Gary D. Engle.
3,902,694
102,504
24,6063.To amend Section 8.1(b) of the Trust Agreement, which currently allows for distributions in-kind on a pro rata basis to all beneficiaries upon the liquidation and dissolution of the Trust, so that the Managing Trustee will have the discretion to make special distributions in-kind to affiliates of the Trust, together with coinciding cash payments to the other Beneficiaries, and to concurrently amend Section 7.7 of the Trust Agreement to allow for such distributions in-kind permitted by Section 8.1(b).
3,891,672
114,970
23,162 
 Item 5.Other Information
 Response: None
 
 Item 6.Exhibits and reports on Form 8-K
 
 a).Exhibits
 
 31.1
Certification of Chief Executive Officer Pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
Certification of Chief Executive Officer Pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 
 b). Reports on Form 8-K
 
 Response: None
  SIGNATURE PAGE
 
 
 
 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 AFG Investment Trust D
 
 
 By:  AFG ASIT Corporation, a Massachusetts
 corporation and the Managing Trustee of
 the Registrant.
 
 
 By:  /s/ Richard K Brock
 Richard K Brock
 Chief Financial Officer and Treasurer of AFG ASIT Corp.
 (Duly Authorized Officer and
 Principal Financial and Accounting Officer)
 
 
 Date:  May 14, 2004
 
 
 
  Exhibit Index
 
 31.1
Certification of Chief Executive Officer Pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
Certification of Chief Executive Officer Pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002