<PAGE>

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

                                    FORM 10-Q


(Mark One)

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

For the quarterly period ended  September 30, 1998
                               -----------------------------------------------

                                       OR

/  / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from                       to
                               --------------------      -----------------------


For Quarter Ended September 30, 1998               Commission File No. 0-21390


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

Delaware                                                      04-3157230
-----------------------------------------                  -------------------
(State or other jurisdiction of                              (IRS Employer
 incorporation or organization)                            Identification No.)

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

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

--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No______

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

     Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes_____ No______


<PAGE>


                             AFG Investment Trust B

                                    FORM 10-Q

                                      INDEX

<TABLE>
<CAPTION>

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

    Item 1 Financial Statements

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

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

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

      Notes to the Financial Statements                                       6-12


    Item 2 Management's Discussion and Analysis of Financial
           Condition and Results of Operations                               13-18


PART II.  OTHER INFORMATION:

    Items 1 - 6                                                               19

</TABLE>


                                       2

<PAGE>


                             AFG Investment Trust B

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

                                   (Unaudited)

<TABLE>
<CAPTION>

                                                           September 30,    December 31,
                                                               1998             1997
                                                           ------------    -------------
<S>                                                        <C>             <C>         
ASSETS

Cash and cash equivalents                                  $  5,831,261    $  3,893,242

Restricted cash                                               1,621,224       3,121,763

Rents receivable                                                 52,382         675,629

Accounts receivable - affiliate                                 123,358         350,009

Equipment at cost, net of accumulated depreciation
 of $11,942,792 and $14,796,020 at September 30, 1998
 and December 31, 1997, respectively                          6,898,687       9,173,514
                                                           ------------    -------------

        Total assets                                       $ 14,526,912    $ 17,214,157
                                                           ------------    -------------
                                                           ------------    -------------

LIABILITIES AND PARTICIPANTS' CAPITAL

Notes payable                                              $    938,379    $  2,038,628
Accrued interest                                                  3,061          27,395
Accrued liabilities                                             212,283          11,550
Accrued liabilities - affiliate                                  30,510          49,597
Deferred rental income                                           30,687          35,275
Cash distributions payable to participants                      218,681         235,577
                                                           ------------    -------------

  Total liabilities                                           1,433,601       2,398,022
                                                           ------------    -------------

Participants' capital:
     Managing Trustee                                             7,667           3,535
     Special Beneficiary                                         63,254          29,162
     Class A Beneficiary Interests (582,017 Interests;
       initial purchase price of $25 each)                   10,377,626      10,864,150
     Class B Beneficiary Interests (1,000,961 Interests;
       initial purchase price of $5 each)                     3,436,139       4,710,663
     Treasury Interests (83,477 Interests at Cost)             (791,375)       (791,375)
                                                           ------------    -------------

        Total participants' capital                          13,093,311      14,816,135
                                                           ------------    -------------

        Total liabilities and participants' capital        $ 14,526,912    $ 17,214,157
                                                           ------------    -------------
                                                           ------------    -------------

</TABLE>


                  The accompanying notes are an integral part
                         of these financial statements


                                       3

<PAGE>


                             AFG Investment Trust B

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

                                   (Unaudited)

<TABLE>
<CAPTION>

                                            Three Months              Nine Months
                                         Ended September 30,       Ended September 30,
                                          1998        1997         1998         1997
                                      ----------   ----------   ----------   ----------
<S>                                   <C>          <C>          <C>          <C>       
Income:

    Lease revenue                     $  618,551   $1,281,262   $2,182,005   $3,991,832

    Interest income                       95,990       88,279      293,432      166,353

    Gain on sale of equipment            800,517      118,513      890,550      124,976
                                      ----------   ----------   ----------   ----------

         Total income                  1,515,058    1,488,054    3,365,987    4,283,161
                                      ----------   ----------   ----------   ----------


Expenses:

    Depreciation and amortization        470,031      956,700    1,716,061    2,987,813

    Interest expense                      17,635       43,933       61,082      159,719

    Equipment management fees
      - affiliate                         29,582       56,211      106,309      170,714

    Operating expenses - affiliate       177,658      117,848      424,367      214,427
                                      ----------   ----------   ----------   ----------

         Total expenses                  694,906    1,174,692    2,307,819    3,532,673
                                      ----------   ----------   ----------   ----------


Net income                            $  820,152   $  313,362   $1,058,168   $  750,488
                                      ----------   ----------   ----------   ----------
                                      ----------   ----------   ----------   ----------


Net income
   per Class A Beneficiary Interest   $     0.15   $     --     $     0.39   $     0.60
                                      ----------   ----------   ----------   ----------
                                      ----------   ----------   ----------   ----------

   per Class B Beneficiary Interest   $     0.61   $     --     $     0.67   $     --
                                      ----------   ----------   ----------   ----------
                                      ----------   ----------   ----------   ----------

Cash distributions declared
   per Class A Beneficiary Interest   $     0.41   $     1.71   $     1.23   $     2.53
                                      ----------   ----------   ----------   ----------
                                      ----------   ----------   ----------   ----------

   per Class B Beneficiary Interest   $     1.62   $     0.13   $     1.95   $     0.13
                                      ----------   ----------   ----------   ----------
                                      ----------   ----------   ----------   ----------

</TABLE>


                  The accompanying notes are an integral part
                         of these financial statements


                                       4

<PAGE>


                             AFG Investment Trust B

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

                                   (Unaudited)


<TABLE>
<CAPTION>

                                                        1998           1997
                                                    -----------    ------------
<S>                                                 <C>            <C>        
Cash flows from (used in) operating activities:
Net income                                          $ 1,058,168    $   750,488

Adjustments to reconcile net income to net
 cash from operating activities:
  Depreciation and amortization                       1,716,061      2,987,813
  Gain on sale of equipment                            (890,550)      (124,976)

Changes in assets and liabilities
 Decrease (increase) in:
  rents receivable                                      623,247        (37,021)
  accounts receivable - affiliate                       226,651        (85,480)
 Increase (decrease) in:
  accrued interest                                      (24,334)        (9,760)
  accrued liabilities                                   200,733           (750)
  accrued liabilities - affiliate                       (19,087)         5,946
  deferred rental income                                 (4,588)        46,351
                                                    -----------    ------------

     Net cash from operating activities               2,886,301      3,532,611
                                                    -----------    ------------

Cash flows from investing activities:
 Proceeds from equipment sales                        1,449,316        264,503
                                                    -----------    ------------

     Net cash from investing activities               1,449,316        264,503
                                                    -----------    ------------

Cash flows from (used in) financing activities:
 Proceeds from capital contributions                       --        5,004,805
 Payment of offering costs                                 --          (50,048)
 Restricted cash                                      1,500,539           --
 Principal payments - notes payable                  (1,100,249)    (1,784,875)
 Distributions paid                                  (2,797,888)    (1,967,866)
                                                    -----------    ------------

     Net cash from (used in) financing activities    (2,397,598)     1,202,016
                                                    -----------    ------------

Net increase in cash and cash equivalents             1,938,019      4,999,130

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

Cash and cash equivalents at end of period          $ 5,831,261    $ 7,828,223
                                                    -----------    ------------
                                                    -----------    ------------

Supplemental disclosure of cash flow information:
  Cash paid during the period for interest          $    85,416    $   169,479
                                                    -----------    ------------
                                                    -----------    ------------

</TABLE>


                  The accompanying notes are an integral part
                         of these financial statements


                                       5

<PAGE>


                             AFG Investment Trust B

                        Notes to the Financial Statements
                               September 30, 1998

                                   (Unaudited)


NOTE 1 - BASIS OF PRESENTATION

    The financial statements presented herein are prepared in conformity with
generally accepted accounting principles and the instructions for preparing Form
10-Q under Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission and are unaudited. As such, these financial statements do not include
all information and footnote disclosures required under generally accepted
accounting principles for complete financial statements and, accordingly, the
accompanying financial statements should be read in conjunction with the
footnotes presented in the 1997 Annual Report. Except as disclosed herein, there
has been no material change to the information presented in the footnotes to the
1997 Annual Report.

    In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary to present fairly the financial
position at September 30, 1998 and December 31, 1997 and results of operations
for the three and nine month periods ended September 30, 1998 and 1997 have been
made and are reflected.


NOTE 2 - CASH

    At September 30, 1998, the Trust had $7,341,970 invested in federal agency
discount notes and reverse repurchase agreements secured by U.S. Treasury Bills
or interests in U.S. Government securities. Such cash includes $1,621,224 which
is classified as Restricted Cash and represents the remaining net proceeds
realized from the offering of the Class B Interests less ( i ) the portion
thereof used to pay a special distribution to the Class A Beneficiaries and to
redeem Class A Interests (see Notes 8 and 9) and ( ii ) the portion thereof used
to pay a capital distribution to the Class B Beneficiaries (see Note 11). The
remainder is expected to be used according to terms negotiated in conjunction
with settling the Class Action Lawsuit described in Note 7.


NOTE 3 - REVENUE RECOGNITION

    Rents are payable to the Trust monthly, quarterly or semi-annually and no
significant amounts are calculated on factors other than the passage of time.
The leases are accounted for as operating leases and are noncancellable. Rents
received prior to their due dates are deferred. In certain instances , the Trust
may enter primary-term, renewal or re-lease agreements which expire beyond the
Trust's anticipated dissolution date. This circumstance is not expected to
prevent the orderly wind-up of the Trust's business activities as the Managing
Trustee and the Advisor would seek to sell the then-remaining equipment assets
either to the lessee or to a third party, taking into consideration the amount
of future non-cancelable rental payments associated with the attendant lease
agreements. Future minimum rents of $1,289,830 are due as follows:

<TABLE>

<S>                                             <C>
      For the year ending September 30, 1999     $   616,830
                                        2000         288,954
                                        2001         184,696
                                        2002         159,480
                                        2003          39,870
                                                 ------------
                                        Total    $ 1,289,830
                                                 ------------
                                                 ------------

</TABLE>


                                       6

<PAGE>


                             AFG Investment Trust B

                        Notes to the Financial Statements

                                   (Continued)


NOTE 4 - EQUIPMENT

    The following is a summary of equipment owned by the Trust at September 30,
1998. Remaining Lease Term (Months), as used below, represents the number of
months remaining from September 30, 1998 under contracted lease terms and is
presented as a range when more than one lease agreement is contained in the
stated equipment category. A Remaining Lease Term equal to zero reflects
equipment either held for sale or re-lease or being leased on a month-to-month
basis. In the opinion of Equis Financial Group Limited Partnership ("EFG"), the
acquisition cost of the equipment did not exceed its fair market value.

<TABLE>
<CAPTION>

                                                                               Remaining
                                                                               Lease Term   Equipment
   Equipment Type                                                               (Months)     at Cost
---------------------------------                                              ----------  -----------
<S>                                                                               <C>      <C>        
Aircraft                                                                          0-51     $ 8,018,106
Computers and peripherals                                                          0-3       3,968,812
Materials handling                                                                0-24       3,312,659
Communications                                                                     0-3       2,908,262
Tractors and heavy duty trucks                                                    0-12         233,847
Construction and mining                                                           0-27         219,162
Trailers/intermodal containers                                                       0         128,443
Manufacturing                                                                        0          41,694
Retail store fixtures                                                                0          10,494
                                                                                           -----------

                                                   Total equipment cost                     18,841,479

                                               Accumulated depreciation                    (11,942,792)
                                                                                           -----------
                             Equipment, net of accumulated depreciation                    $ 6,898,687
                                                                                           -----------
                                                                                           -----------

</TABLE>


    At September 30, 1998, the Trust's equipment portfolio included equipment
having a proportionate original cost of $12,511,715, representing approximately
66% of total equipment cost.

    At September 30, 1998, the cost and net book value of equipment held for
sale or re-lease was approximately $8,249,000 and $4,404,000, respectively. This
equipment includes the Trust's proportionate interest in a McDonnell Douglas
MD-82 aircraft formerly leased to Alaska Airlines, Inc. with a cost and net book
value of $6,778,365 and $4,243,617, respectively. The Managing Trustee is
currently holding discussions with a potential lessee regarding the re-lease of
this aircraft. Certain costs may be required to prepare this aircraft for
re-lease, a portion of which may be the obligation of the former lessee. The
remainder of such costs would be incurred by the Trust and other affiliated
equipment leasing programs in proportion to their ownership interests in the
aircraft. The Managing Trustee is actively seeking the sale or re-lease of all
equipment not on lease. In addition, the summary above includes equipment being
leased on a month-to-month basis.


NOTE 5 - RELATED PARTY TRANSACTIONS

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


                                       7

<PAGE>

                             AFG Investment Trust B

                        Notes to the Financial Statements

                                   (Continued)


<TABLE>
<CAPTION>

                                          1998      1997
                                       --------   --------
<S>                                    <C>        <C>     
Reimbursement of offering costs        $   --     $ 50,048
Equipment management fees               106,309    170,714
Administrative charges                   52,893     48,285
Reimbursable operating expenses
    due to third parties                371,474    166,142
                                       --------   --------

                               Total   $530,676   $435,189
                                       --------   --------
                                       --------   --------


</TABLE>


    All rents and proceeds from the sale of equipment are paid directly to
either EFG or to a lender. EFG temporarily deposits collected funds in a
separate interest-bearing escrow account prior to remittance to the Trust. At
September 30, 1998, the Trust was owed $123,358 by EFG for such funds and the
interest thereon. These funds were remitted to the Trust in October 1998.

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


NOTE 6 - NOTES PAYABLE

    Notes payable at September 30, 1998 consisted of installment notes of
$938,379 payable to banks and institutional lenders. The notes bear interest
rate of 5.69%, except for one note which bears a fluctuating interest rate based
on LIBOR (5.59% at September 30, 1998) plus a margin. All of the installment
notes are non-recourse and are collateralized by the equipment and assignment of
the related lease payments. Generally, the installment notes will be fully
amortized by noncancellable rents. However, the Trust has a balloon payment
obligation of $282,421 at the expiration of the primary lease term related to
its interest in an aircraft leased to Reno Air, Inc. The carrying amount of
notes payable approximates fair value at September 30, 1998.

    The annual maturities of the notes payable are as follows:

<TABLE>

<S>                                             <C>
      For the year ending September 30, 1999     $   261,019
                                        2000         116,162
                                        2001         125,623
                                        2002         135,855
                                        2003         299,720
                                                 -----------
                                        Total    $   938,379
                                                 -----------
                                                 -----------

</TABLE>

NOTE 7 - LEGAL PROCEEDINGS

    On or about January 15, 1998, certain plaintiffs (the "Plaintiffs") filed a
class and derivative action, captioned Leonard Rosenblum, et al. v. Equis
Financial Group Limited Partnership, et al., in the United States District Court
for the Southern District of Florida (the "Court") on behalf of a proposed class
of investors in 28 equipment leasing programs sponsored by EFG, including the
Trust (collectively, the "Nominal Defendants"), against EFG and a


                                       8

<PAGE>


                             AFG Investment Trust B

                        Notes to the Financial Statements

                                   (Continued)


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

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

    On July 16, 1998, counsel for the Defendants and the Plaintiffs executed a
Stipulation of Settlement setting forth the terms pursuant to which a settlement
of the Class Action Lawsuit is intended to be achieved and which, among other
things, is expected to reduce the burdens and expenses attendant to continuing
litigation. The Stipulation of Settlement was based upon and supersedes a
Memorandum of Understanding between the parties dated March 9, 1998 which
outlined the terms of a possible settlement. The Stipulation of Settlement was
filed with the Court on July 23, 1998. On August 20, 1998, the Court issued its
"Order Preliminarily Approving Settlement, Conditionally Certifying Settlement
Class and Providing for Notice of, and Hearing on, the Proposed Settlement".

    The Stipulation of Settlement prescribes certain conditions necessary to
effecting the settlement and contemplates various changes that, if effected,
would alter the future operations of the Nominal Defendants (see Note 10). The
Stipulation of Settlement is subject to change pending a final ruling by the
Court that will be preceded by a hearing open to all interested parties. The
Court has scheduled a hearing date for December 11, 1998. Currently, it is
anticipated that a request for extension will be filed with the Court to permit,
among other things, sufficient time to complete certain regulatory review
requirements. Class members will be notified of the final hearing date in
advance. To the extent that the Court issues a final order with respect to the
Stipulation of Settlement, the complete terms thereof will be communicated to
all of the beneficiaries (or partners) of the Nominal Defendants.

    There can be no assurance that the Court will issue a final order approving
the Stipulation of Settlement. However, the Managing Trustee and its affiliates,
in consultation with counsel, concur that there is a reasonable basis to believe
that a final settlement will be achieved. However, in the absence of a final
settlement approved by the Court, the Defendants intend to defend vigorously
against the claims asserted in the Class Action Lawsuit. The Managing Trustee
and its affiliates cannot predict with any degree of certainty the ultimate
outcome of such litigation.

    On July 27, 1995, EFG, on behalf of the Trust and other EFG-sponsored
investment programs, filed an action in the Commonwealth of Massachusetts
Superior Court Department of the Trial Court in and for the County of Suffolk,
for damages and declaratory relief against a lessee of the Trust, National Steel
Corporation ("National Steel"), under a certain Master Lease Agreement ("MLA")
for the lease of certain equipment. EFG is seeking the reimbursement by National
Steel of certain sales and/or use taxes paid to the State of Illinois and other
remedies provided by the MLA. On August 30, 1995, National Steel filed a Notice
of Removal which removed the case to the United States District Court, District
of Massachusetts. On September 7, 1995, National Steel filed its Answer to EFG's
Complaint along with Affirmative Defenses and Counterclaims, seeking declaratory
relief and alleging breach of contract, implied covenant of good faith and fair
dealing and specific performance. EFG filed its Answer to these counterclaims on
September 29, 1995. Though the parties discussed settlement with respect to this
matter for some time, the negotiations were unsuccessful. Notwithstanding these
discussions, EFG filed an Amended and Supplemental Complaint alleging further
default under the MLA and EFG filed a motion for Summary Judgment on all claims
and counterclaims. The Court held a hearing on EFG's motion in December


                                       9

<PAGE>


                             AFG Investment Trust B

                        Notes to the Financial Statements

                                   (Continued)


1997 and the Court recently entered a decision dismissing certain of National
Steel's counterclaims and finding in favor of EFG on certain issues and in favor
of National Steel on other issues. The parties have since resumed settlement
discussions. The Trust does not anticipate that it will experience any material
losses as a result of this action.


NOTE 8 - ISSUANCE OF CLASS B INTERESTS

    On October 26, 1996, the Trust filed a Solicitation Statement with the
United States Securities and Exchange Commission (the "SEC") which subsequently
was sent to the Beneficiaries pursuant to Regulation 14A of Section 14 of the
Securities Exchange Act. The Solicitation Statement sought the consent of the
Beneficiaries to a proposed amendment (the "Amendment") to the Amended and
Restated Declaration of Trust (the "Trust Agreement") which would (i) amend the
provisions of the Trust Agreement governing the redemption of Beneficiary
Interests to permit the Trust to offer to redeem outstanding Beneficiary
Interests at such times, in such amounts, in such manner and at such prices as
the Managing Trustee might determine from time to time, in accordance with
applicable law; and (ii) add a provision to the Trust Agreement that would
permit the Trust to issue, at the discretion of the Managing Trustee and without
further consent or approval of the Beneficiaries, an additional class of
security with such designations, preferences and relative, participating,
optional or other special rights, powers and duties as the Managing Trustee
might affix. The funds obtained through the issuance of such a security were
intended to be used by the Trust to (a) expand redemption opportunities for
Beneficiaries without using Trust funds which might otherwise be available for
cash distributions; and (b) make a special one-time cash distribution to the
Class A Beneficiaries.

    Pursuant to the Trust Agreement, the adoption of the Amendment required the
consent of the Beneficiaries holding more than 50% in the aggregate of the Class
A Interests held by all Class A Beneficiaries. A majority of Class A Interests,
representing 369,960 Interests or 55.6% of all Class A Interests, voted in favor
of the Amendment; 69,792 Interests or 10.5% of all Class A Interests voted
against the Amendment; and 24,444 Interests or 3.7% of all Class A Interests
abstained. Approximately 69.8% of all Class A Interests participated in the
vote. Accordingly, the Amendment was adopted.

    On February 12, 1997, the Trust filed a Registration Statement on Form S-1
with the SEC, which became effective June 10, 1997. The Registration Statement
covered the issuance and sale of a new class of beneficiary interests in the
Trust (the "Class B Interests"). The characteristics of the Class B Interests,
associated risk factors and other matters of importance to the Beneficiaries and
purchasers of the Class B Interests were set forth in a Prospectus sent to the
Beneficiaries. On July 17, 1997, the offering closed and on July 18, 1997 the
Trust issued 1,000,961 Class B Interests at $5.00 per interest, thereby
generating $5,004,805 in aggregate Class B capital contributions. Class A
Beneficiaries purchased 3,588 Class B Interests, generating $17,940 of such
aggregate capital contributions, and the Special Beneficiary, EFG, purchased
997,373 Class B Interests, generating $4,986,865 of such aggregate capital
contributions. The Trust incurred offering costs in the amount of $50,048 and
professional service costs of $62,170 in connection with this offering.

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


                                       10

<PAGE>


                             AFG Investment Trust B

                        Notes to the Financial Statements

                                   (Continued)


    As described in the Prospectus for the offering of the Class B Interests,
the Managing Trustee used a portion of the net cash proceeds realized from the
offering of the Class B Interests to pay a one-time special cash distribution of
approximately $1.47 per Class A Interest to the Class A Beneficiaries of the
Trust. The Managing Trustee declared and paid this special cash distribution,
aggregating $979,449, to Class A Beneficiaries on August 15, 1997. See Note 9
regarding the redemption of Class A Interests.


NOTE 9 - REDEMPTION OF CLASS A INTERESTS

    On August 7, 1997, the Trust commenced an offer to purchase up to 45% of the
outstanding Class A Beneficiary Interests of the Trust by filing a Form 13E-4,
Issuer Tender Offer Statement, with the SEC and distributing to the Class A
Beneficiaries information (the "Tender Documents") concerning the offer. On
October 10, 1997, the Trust used $785,295 of the net proceeds realized from the
issuance of the Class B Interests to purchase 82,837 of the Class A Interests
tendered as a result of the offer. The Tender Documents described, among other
things, the terms of the offer and the purchase price per Class A Interest being
offered by the Trust. On December 1, 1997, the Trust used an additional $6,080
of such proceeds to purchase 640 additional Class A Interests.


NOTE 10 - SOLICITATION STATEMENT

    On May 5, 1998, the Trust filed a definitive Solicitation Statement with the
United States Securities and Exchange Commission in connection with the
solicitation by the Trust of the consent of the Beneficiaries to a proposed
amendment (the "Amendment") to the Second Amended and Restated Declaration of
Trust (the "Trust Agreement"). The Solicitation Statement and Consent of
Beneficiary were mailed to all of the Beneficiaries of the Trust on May 6, 1998.
The Beneficiaries were requested to use the Consent of Beneficiary to vote on
seven proposals and return their votes on or before June 5, 1998. Equis II
Corporation, which has voting control of the Trust, agreed to vote all of its
Class B Interests in the same manner in which the majority of the Class A
Interests were actually voted. Accordingly, the Amendment would be adopted or
rejected based upon the voting results of the majority of Class A Interests that
were actually voted (including 839 Class A Interests owned by affiliates of
EFG), regardless of how few Class A Interests were actually voted.

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

    In addition, subject to attaining a settlement in the Class Action Lawsuit
described in Note 7 herein, the Trust Agreement will be modified in the
following principal respects: (i) the Trust will pay a Special Cash Distribution
to the Class A Beneficiaries of record as of September 1, 1997, or to their
successors or assigns, totaling $500,709 (or approximately $0.75 per Class A
Beneficiary Interest) using a portion of the Class B capital contributions that
otherwise would be distributed as a Class B Capital Distribution to Equis II
Corporation, the parent company of the Managing Trustee and an affiliate of EFG;
(ii) Equis II Corporation will be required to reduce its prospective Class B
Capital Distributions by $1,126,596 and treat such amount as a long-term equity
investment in the Trust; (iii) certain voting restrictions will be placed upon
the Class B Interests owned by Equis II Corporation; (iv) the Trust's
reinvestment period, which originally expired on September 8, 1996, will be
reinstated until December 31, 2001; and (v) acquisition fees paid to EFG in
connection with reinvestment assets acquired after the Amendment date will be
reduced from a maximum of 3% to 1% and management fees earned in connection with
such assets will be reduced from a maximum of 5% to 2%.


                                       11

<PAGE>


                             AFG Investment Trust B

                        Notes to the Financial Statements

                                   (Continued)


NOTE 11 - CLASS B CAPITAL DISTRIBUTION

    The Managing Trustee and certain of its affiliates were named as defendants
in the Class Action Lawsuit discussed in Note 7 herein. In connection with this
litigation and subject to a settlement being effected, the Managing Trustee has
agreed to adopt certain modifications to the Trust Agreement as described in the
Solicitation Statement referred to in Note 10 herein. One aspect of the proposed
settlement would result in using of a portion of Equis II Corporation's Class B
Capital Contribution to the Trust to (i) pay a second special cash distribution
to Class A Beneficiaries totaling $500,709, approximately $.75 per Class A
Interest, and (ii) invest $1,126,596 in the Trust's long-term business
activities. The remainder of the Class B Capital Contributions (not otherwise
used to repurchase Class A Interests in the Tender Offer closed on October 10,
1997 or to pay for offering and related costs associated with the Class B
Interests or to pay the first special cash distribution), $1,500,539 in total,
was returned to Equis II Corporation and the other third-party Class B capital
contributors on July 6, 1998.


                                       12

<PAGE>


                             AFG Investment Trust B

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION


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

    Certain statements in this quarterly report of AFG Investment Trust B (the
"Trust") that are not historical fact constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 and
are subject to a variety of risks and uncertainties. There are a number of
important factors that could cause actual results to differ materially from
those expressed in any forward-looking statements made herein. These factors
include, but are not limited to, the outcome of the Class Action Lawsuit
described in Note 7 to the accompanying financial statements, and the ability of
Equis Financial Group Limited Partnership (formerly American Finance Group)
("EFG") to collect all rents due under the attendant lease agreements and to
successfully remarket the Trust's equipment, upon the expiration of such leases.


Year 2000 Issue

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

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

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


                                       13


<PAGE>


                             AFG Investment Trust B

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION


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

Overview

    As an equipment leasing trust, the Trust was organized to acquire a
diversified portfolio of capital equipment subject to lease agreements with
third parties. The Trust was designed to progress through three principal
phases: acquisitions, operations, and liquidation. During the operations phase,
a period of approximately six years, all equipment in the Trust's portfolio will
progress through various stages. Initially, all equipment will generate rental
revenues under primary term lease agreements. During the life of the Trust,
these agreements will expire on an intermittent basis and equipment held
pursuant to the related leases will be renewed, re-leased or sold, depending on
prevailing market conditions and the assessment of such conditions by EFG to
obtain the most advantageous economic benefit. Over time, a greater portion of
the Trust's original equipment portfolio will become available for remarketing
and cash generated from operations and from sales or refinancings will
fluctuate. Presently, the Trust is a Nominal Defendant in a Class Action
Lawsuit. The outcome of the Class Action Lawsuit could alter the future business
operations of the Trust. See Note 7 to the accompanying financial statements.
The Trust's operations commenced in 1992.


Results of Operations

    For the three and nine months ended September 30, 1998, the Trust recognized
lease revenue of $618,551 and $2,182,005, respectively, compared to $1,281,262
and $3,991,832 for the same periods in 1997. The decrease in lease revenue from
1997 to 1998 is due to primary lease term expirations and the sale of equipment.
The level of lease revenue to be recognized by the Trust in the future is
expected to be impacted by the Amendment to the Trust Agreement described in
Note 8 to the accompanying financial statements; however, the extent of such
impact cannot be determined at this time.

    The Trust's equipment portfolio includes certain assets in which the Trust
holds a proportionate ownership interest. In such cases, the remaining interests
are owned by EFG or an affiliated equipment leasing program sponsored by EFG.
Proportionate equipment ownership enables the Trust to further diversify its
equipment portfolio by participating in the ownership of selected assets,
thereby reducing the general levels of risk which could result from a
concentration in any single equipment type, industry or lessee. The Trust and
each affiliate individually report, in proportion to their respective ownership
interests, their respective shares of assets, liabilities, revenues, and
expenses associated with the equipment.

    Interest income for the three and nine months ended September 30, 1998 was
$95,990 and $293,432, respectively, compared to $88,279 and $166,353 for the
same periods in 1997. Generally, interest income is generated from the temporary
investment of rental receipts and equipment sale proceeds in short-term
instruments. Interest income in 1998 includes interest earned on unexpended
proceeds resulting from the issuance of Class B Interests (see below). Future
interest income will fluctuate in relation to prevailing interest rates, the
collection of lease revenue and the proceeds from equipment sales.

    During the three and nine months ended September 30, 1998, the Trust sold
equipment having a net book value of $106,456 and $558,766, respectively, to
existing lessees and third parties. These sales resulted in a net gain, for
financial statement purposes of $800,517 and $890,550, respectively, compared to
a net gain for the same periods in 1997 of $118,513 and $124,976 on equipment
having a net book value of $119,606 and $139,527, respectively.


                                       14

<PAGE>


                             AFG Investment Trust B

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION

    It cannot be determined whether future sales of equipment will result in a
net gain or a net loss to the Trust, as such transactions will be dependent upon
the condition and type of equipment being sold and its marketability at the time
of sale. In addition, the amount of gain or loss reported for financial
statement purposes is partly a function of the amount of accumulated
depreciation associated with the equipment being sold.

    The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including EFG's ability to sell and re-lease
equipment. Changing market conditions, industry trends, technological advances,
and many other events can converge to enhance or detract from asset values at
any given time. EFG attempts to monitor these changes in order to identify
opportunities which may be advantageous to the Trust and which will maximize
total cash returns for each asset.

    The total economic value realized upon final disposition of each asset is
comprised of all primary lease term revenue generated from that asset, together
with its residual value. The latter consists of cash proceeds realized upon the
asset's sale in addition to all other cash receipts obtained from renting the
asset on a re-lease, renewal or month-to-month basis. The Trust classifies such
residual rental payments as lease revenue. Consequently, the amount of gain or
loss reported in the financial statements is not necessarily indicative of the
total residual value the Trust achieved from leasing the equipment.

    Depreciation and amortization expense for the three and nine months ended
September 30, 1998 was $470,031 and $1,716,061, respectively, compared to
$956,700 and $2,987,813 for the same periods in 1997. For financial reporting
purposes, to the extent that an asset is held on primary lease term, the Trust
depreciates the difference between (i) the cost of the asset and (ii) the
estimated residual value of the asset on a straight-line basis over such term.
For purposes of this policy, estimated residual values represent estimates of
equipment values at the date of primary lease expiration. To the extent that an
asset is held beyond its primary lease term, the Trust continues to depreciate
the remaining net book value of the asset on a straight-line basis over the
asset's remaining economic life.

    Interest expense was $17,635 and $61,082 or 2.9% and 2.8% of lease revenue
for the three and nine months ended September 30, 1998, respectively, compared
to $43,933 and $159,719 or 3.4% and 4% of lease revenue for the same periods in
1997. In the future, interest expense is expected to decline in amount and as a
percentage of lease revenue as the principal balance of notes payable is reduced
through the application of rent receipts to outstanding debt.

    Management fees were approximately 4.8% and 4.9% of lease revenue for the
three and nine month periods ended September 30, 1998, respectively, compared to
4.4% and 4.3% for the same periods in 1997. Management fees are based on 5% of
gross lease revenue generated by operating leases and 2% of gross lease revenue
generated by full payout leases.

    Operating expenses consist principally of administrative charges,
professional service costs, such as audit and legal fees, as well as printing,
distribution and remarketing expenses. Operating expenses were $177,658 and
$424,367 for the three and nine months ended September 30, 1998, respectively,
compared to $117,848 and $214,427 for the same periods in 1997. During the nine
months ended September 30, 1998, the Trust accrued $108,000 for certain legal
expenses related to the Class Action Lawsuit described in Note 7 to the
financial statements. Additionally, operating expenses increased from 1997 to
1998 due to professional service costs incurred in connection with the
Solicitation Statement described in Note 10 to the accompanying financial
statements. The amount of future operating expenses cannot be predicted with
certainty; however, such expenses are usually higher during the acquisition and
liquidation phases of a trust. Other fluctuations typically occur in relation to
the volume and timing of remarketing activities.


                                       15

<PAGE>


                             AFG Investment 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 $2,886,301 and $3,532,611 for the nine months ended September 30,
1998 and 1997, respectively. Future renewal, re-lease and equipment sale
activities will cause a decline in the Trust's primary-term lease revenue and
corresponding sources of operating cash. Overall, expenses associated with
rental activities, such as management fees, and net cash flow from operating
activities will also decline as the Trust experiences a higher frequency of
remarketing events.

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

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

    Cash realized from asset disposal transactions is reported under investing
activities on the accompanying Statement of Cash Flows. During the nine months
ended September 30, 1998, the Trust realized equipment sale proceeds of
$1,449,316 compared to $264,503 during the same period in 1997. Future inflows
of cash from asset disposals will vary in timing and amount and will be
influenced by many factors including, but not limited to, the frequency and
timing of lease expirations, the type of equipment being sold, its condition and
age, and future market conditions.

    The Trust obtained long-term financing in connection with certain equipment
leases. The repayments of principal related to such indebtedness are reported as
components of financing activities. Each note payable is recourse only to the
specific equipment financed and to the minimum rental payments contracted to be
received during the debt amortization period (which period generally coincides
with the lease rental term). As rental payments are collected, a portion or all
of the rental payment is used to repay the associated indebtedness. In future
periods, the amount of cash used to repay debt obligations will decline as the
principal balance of notes payable is reduced through the collection and
application of rents. However, the Trust has a balloon payment obligation of
$282,421 at the expiration of the primary lease term related to its interest in
an aircraft leased to Reno Air, Inc.

    In accordance with the Trust Agreement, upon the dissolution of the Trust,
the Managing Trustee will be required to contribute to the Trust an amount equal
to any negative balance which may exist in the Managing Trustee's tax capital
account. At December 31, 1997, the Managing Trustee had a positive tax capital
account balance. No such requirement exists with respect to the Special
Beneficiary.


                                       16

<PAGE>


                             AFG Investment Trust B

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION


    At September 30, 1998, the Trust had aggregate future minimum lease payments
of $1,289,830 from contractual lease agreements (see Note 3 to the financial
statements), a portion of which will be used to amortize the principal balance
of notes payable of $938,379 (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 becomes available for
remarketing, the cash flows of the Trust will become less predictable. In
addition, the Trust will have cash outflows to satisfy interest on indebtedness
and to pay management fees and operating expenses. Ultimately, the Trust is
expected to meet its future disbursement obligations and to distribute any
excess of cash inflows over cash outflows to the Participants in accordance with
the Trust Agreement. However, several factors, including month-to-month lease
extensions, lessee defaults, equipment casualty events, and early lease
terminations could alter the Trust's anticipated cash flows as described herein
and in the accompanying financial statements and result in fluctuations to the
Trust's periodic cash distribution payments.

    On July 18, 1997, the Trust issued 1,000,961 Class B Interests at $5.00 per
interest, thereby generating $5,004,805 in aggregate Class B capital
contributions. Class A Beneficiaries purchased 3,588 Class B Interests,
generating $17,940 of such aggregate capital contributions, and the Special
Beneficiary, EFG, purchased 997,373 Class B Interests, generating $4,986,865 of
such aggregate capital contributions. The Trust incurred offering costs in the
amount of $50,048 and professional service costs of $62,170 in connection with
this offering. Subsequently, EFG transferred its Class B Interests to a
special-purpose company, Equis II Corporation, a Delaware corporation. EFG also
transferred its ownership of AFG ASIT Corporation, the Managing Trustee of the
Trust, to Equis II Corporation. As a result, Equis II Corporation has voting
control of the Trust through its ownership of the majority of the Trust's
outstanding voting interests, as well as its ownership of AFG ASIT Corporation.
Equis II Corporation is controlled by EFG's President and Chief Executive
Officer, Gary D. Engle. Accordingly, control of the Managing Trustee did not
change as a result of the foregoing transactions (see also Note 8 to the
accompanying financial statements).

    As described in the Prospectus for the offering of the Class B Interests,
the Managing Trustee used a portion of the net cash proceeds realized from the
offering of the Class B Interests to pay a one-time special cash distribution of
approximately $1.47 per Class A Interest to the Class A Beneficiaries of the
Trust. The Managing Trustee declared and paid this special cash distribution,
aggregating $979,449, to Class A Beneficiaries on August 15, 1997.

    On August 7, 1997, the Trust commenced an offer to purchase up to 45% of the
outstanding Class A Beneficiary Interests of the Trust. On October 10, 1997, the
Trust used $785,295 of the net proceeds realized from the issuance of the Class
B Interests to purchase 82,837 of the Class A Interests tendered as a result of
the offer. On December 1, 1997, the Trust used an additional $6,080 of such
proceeds to purchase 640 additional Class A Interests. On July 6, 1998, the
Trust used $1,500,539 of such proceeds to pay a capital distribution to the
Class B Beneficiaries. The remaining net proceeds from the Class B offering of
$1,621,224 will be used according to terms negotiated in connection with
settling the Class Action Lawsuit described in Note 7 (see also Notes 9, 10 and
11 to the accompanying financial statements).

    Cash distributions paid to the Participants consist of both a return of and
a return on capital. Cash distributions do not represent and are not indicative
of yield on investment. Actual yield on investment cannot be determined with any
certainty until conclusion of the Trust and will be dependent upon the
collection of all future contracted rents, the generation of renewal and/or
re-lease rents, and the residual value realized for each asset at its disposal
date. Future market conditions, technological changes, the ability of EFG to
manage and remarket


                                       17

<PAGE>


                             AFG Investment Trust B

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION


the assets, and many other events and circumstances, could enhance or detract
from individual asset yields and the collective performance of the Trust's
equipment portfolio.

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

    Cash distributions to the Managing Trustee, the Special Beneficiary and the
Beneficiaries are declared and generally paid within 45 days following the end
of each calendar month. The payment of such distributions is presented as a
component of financing activities. For the nine months ended September 30, 1998,
the Trust declared total cash distributions of $2,780,992. The Beneficiaries
were allocated $2,662,550 ($715,008 for Class A Beneficiaries and $1,947,542 for
Class B Beneficiaries); the Special Beneficiary was allocated $105,637; and the
Managing Trustee was allocated $12,805.

    The nature of the Trust's principal cash flows gradually will shift from
rental receipts to equipment sale proceeds as the Trust matures. As this occurs,
the Trust's cash flows will become more volatile in that certain of the Trust's
equipment leases will be renewed and certain of its assets will be sold. In some
cases, the Trust may be required to expend funds to refurbish or otherwise
improve the equipment being remarketed in order to make it more desirable to a
potential lessee or purchaser. The Trust's Advisor, EFG, and the Managing
Trustee will attempt to monitor and manage these events to maximize the residual
value of the Trust's equipment and will consider these factors, in addition to
the collection of contractual rents, the retirement of scheduled indebtedness,
and the Trust's future working capital and equipment requirements, in
establishing future cash distribution rates. Ultimately, the Beneficiaries
should expect that cash distribution rates will fluctuate over the long term as
a result of future remarketing activities.


                                       18

<PAGE>


                             AFG Investment Trust B

                                    FORM 10-Q

                           PART II. OTHER INFORMATION


    Item 1.        Legal Proceedings Response:

                   Refer to Note 7 to the financial statements herein.

    Item 2.        Changes in Securities
                   Response: None

    Item 3.        Defaults upon Senior Securities
                   Response: None

    Item 4.        Submission of Matters to a Vote of Security Holders
                   Response:  None

    Item 5.        Other Information
                   Response:  None

    Item 6(a).     Exhibits
                   Response:  None

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


                                       19


<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 of AFG ASIT Corporation
                                 (Duly Authorized Officer and
                                 Principal Accounting Officer)


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


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


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


                                       20