<PAGE>

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

                                    FORM 10-Q


(Mark One)

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

     For the quarterly period ended March 31, 2001

                                       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 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.
Yes_____ No______
<PAGE>

                             AFG Investment Trust B

                                    FORM 10-Q

                                      INDEX




                                                                            Page
                                                                            ----

PART I.  FINANCIAL INFORMATION:

    Item 1.   Financial Statements

              Statement of Financial Position
              at March 31, 2001 and December 31, 2000                          3

              Statement of Operations
              for the three months ended March 31, 2001 and 2000               4

              Statement of Changes in Participants' Capital
              for the three months ended March 31, 2001                        5

              Statement of Cash Flows
              for the three months ended March 31, 2001 and 2000               6

              Notes to the Financial Statements                             7-14

    Item 2.   Management's Discussion and Analysis of Financial
              Condition and Results of Operations                          15-21


PART II.  OTHER INFORMATION:

              Items 1 - 6                                                     22


                                       2
<PAGE>

                             AFG Investment Trust B

                         STATEMENT OF FINANCIAL POSITION

                      March 31, 2001 and December 31, 2000

                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                      March 31,                 December 31,
                                                                        2001                       2000
                                                                    ------------                -----------
Assets

<S>                                                                 <C>                         <C>
Cash and cash equivalents                                           $    973,188                $ 5,126,793
Rents receivable                                                           7,869                        621
Accounts receivable - affiliate                                           23,473                    113,837
Guarantee fee receivable                                                  51,512                     41,593
Interest receivable                                                        5,307                      2,948
Interest in EFG Kirkwood                                               2,583,618                  1,901,976
Interest in MILPI                                                      4,569,645                    240,000
Investments - other                                                      100,588                    100,588
Other assets                                                               8,370                        380
Equipment at cost, net of accumulated depreciation
 of $2,894,542 and $5,817,286 at March 31, 2001
 and December 31, 2000, respectively                                     989,171                  1,052,869
                                                                    ------------                -----------

     Total assets                                                   $  9,312,741                $ 8,581,605
                                                                    ============                ===========


Liabilities and participants' capital

Notes payable                                                       $    531,040                $   553,729
Accrued interest                                                           8,003                      1,836
Accrued liabilities                                                       83,159                    168,432
Accrued liabilities - affiliates                                         202,356                     20,040
Deferred rental income                                                       250                      6,555
Other liabilities                                                          2,000                          -
                                                                    ------------                -----------
     Total liabilities                                                   826,808                    750,592
                                                                    ------------                -----------
Participants' capital:
   Managing Trustee                                                        9,469                      2,920
   Special Beneficiary                                                    77,871                     23,840
   Class A Beneficiary Interests (582,017 Interests;
     initial purchase price of $25 each)                               8,987,188                  8,533,793
   Class B Beneficiary Interests (1,000,961 Interests;
     initial purchase price of $5 each)                                  202,780                     61,835
   Treasury Interests (83,477 Class A Interests at Cost)                (791,375)                  (791,375)
                                                                    ------------                -----------
     Total participants' capital                                       8,485,933                  7,831,013
                                                                    ------------                -----------

     Total liabilities and participants' capital                    $  9,312,741                $ 8,581,605
                                                                    ============                ===========
</TABLE>


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

                                        3
<PAGE>

                             AFG Investment Trust B

                             STATEMENT OF OPERATIONS

               For the three months ended March 31, 2001 and 2000

                                   (Unaudited)

<TABLE>
<CAPTION>

                                                          2001                    2000
                                                      -----------              ----------
<S>                                                   <C>                      <C>
Income

Lease revenue                                         $   108,001              $  278,630
Interest income                                            38,139                  93,535
Gain (loss) on sale of equipment                           69,862                  (4,140)
Gain on sale of investment securities                           -                  21,520
Other income                                                9,919                  68,110
                                                      -----------              ----------
       Total income                                       225,921                 457,655
                                                      -----------              ----------
Expenses

Depreciation and amortization                              32,662                  39,152
Interest expense                                           10,022                  11,958
Management fees - affiliates                               16,836                  17,165
Operating expenses - affiliate                            215,699                  57,816
                                                      -----------              ----------
       Total expenses                                     275,219                 126,091
                                                      -----------              ----------
Equity Interests

Equity income from EFG Kirkwood                           681,642                       -
Equity income from MILPI                                   22,576                       -
                                                      -----------              ----------
       Total income from equity interests                 704,218                       -
                                                      -----------              ----------

Net income                                            $   654,920              $  331,564
                                                      ===========              ==========
Net income
   per Class A Beneficiary Interest                   $      0.78              $       --
                                                      ===========              ==========
   per Class B Beneficiary Interest                   $      0.14              $     0.18
                                                      ===========              ==========
Cash distributions declared
   per Class A Beneficiary Interest                   $        --              $       --
                                                      ===========              ==========
   per Class B Beneficiary Interest                   $        --              $       --
                                                      ===========              ==========
</TABLE>

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

                                        4
<PAGE>

                             AFG Investment Trust B

                  STATEMENT OF CHANGES IN PARTICIPANTS' CAPITAL

                    For the three months ended March 31, 2001

                                   (Unaudited)

<TABLE>
<CAPTION>

                                 Managing     Special      Class A Beneficiaries   Class B Beneficiaries
                                                          ------------------------------------------------
                                  Trustee    Beneficiary                                                    Treasury
                                  Amount       Amount     Interests     Amount     Interests    Amount      Interests       Total
                                ----------  ------------- ---------   ----------- -----------  -----------  -----------  -----------
<S>                             <C>         <C>            <C>        <C>          <C>          <C>          <C>          <C>
 Balance at December 31, 2000   $  2,920    $ 23,840       582,017    $8,533,793   1,000,961    $  61,835    $(791,375)   $7,831,013
      Net income                   6,549      54,031             -       453,395           -      140,945            -       654,920
                                --------    --------       -------    ----------   ---------    ---------    ---------    ----------
 Balance at March 31, 2001      $  9,469    $ 77,871       582,017    $8,987,188   1,000,961    $ 202,780    $(791,375)   $8,485,933
                                ========    ========       =======    ==========   =========    =========    =========    ==========
</TABLE>

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

                                        5
<PAGE>

                             AFG Investment Trust B

                             STATEMENT OF CASH FLOWS

               For the three months ended March 31, 2001 and 2000

                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                              2001                        2000
                                                                          -----------                  -----------
<S>                                                                       <C>                          <C>
Cash flows provided by (used in) operating activities
Net income                                                                $   654,920                  $   331,564
Adjustments to reconcile net income to net
 cash provided by (used in) operating activities:
  Depreciation and amortization                                                32,662                       39,152
  Accretion of bond discount                                                        -                         (624)
  (Gain) loss on sale of equipment                                            (69,862)                       4,140
  Gain on sale of investment securities                                             -                      (21,520)
  Income from equity interests                                               (704,218)                           -
Changes in assets and liabilities:
  Rents receivable                                                             (7,248)                     (19,551)
  Accounts receivable - affiliate                                              90,364                       (5,775)
  Accounts receivable - other                                                       -                      (63,904)
  Guarantee fee receivable                                                     (9,919)                           -
  Interest receivable                                                          (2,359)                       3,125
  Other assets                                                                 (7,990)                           -
  Accrued interest                                                              6,167                         (256)
  Accrued liabilities                                                         (85,273)                     (23,783)
  Accrued liabilities - affiliates                                             32,316                        7,787
  Deferred rental income                                                       (6,305)                         103
  Other liabilities                                                             2,000                            -
                                                                          -----------                  -----------
      Net cash provided by (used in) operating activities                     (74,745)                     250,458
                                                                          -----------                  -----------
Cash flows provided by (used in) investing activities
Proceeds from equipment sales                                                 102,525                       39,000
Interest in EFG Kirkwood                                                            -                     (128,576)
Interest in MILPI                                                          (4,158,696)                           -
Proceeds from sale of investment securities                                         -                       53,652
                                                                          -----------                  -----------
      Net cash used in investing activities                                (4,056,171)                     (35,924)
                                                                          -----------                  -----------
Cash flows provided by (used in) financing activities
Principal payments - notes payable                                            (22,689)                     (27,503)
Distributions paid                                                                  -                   (5,300,000)
                                                                          -----------                  -----------
      Net cash used in financing activities                                   (22,689)                  (5,327,503)
                                                                          -----------                  -----------
Net decrease in cash and cash equivalents                                  (4,153,605)                  (5,112,969)
Cash and cash equivalents at beginning of period                            5,126,793                   10,193,277
                                                                          -----------                  -----------
Cash and cash equivalents at end of period                                $   973,188                  $ 5,080,308
                                                                          ===========                  ===========

Supplemental information
Cash paid during the period for interest                                  $     3,855                  $    12,214
                                                                          ===========                  ===========
</TABLE>

See Note 6 to the financial statements regarding the Trust's acquisition of
interests in MILPI during the three months ended March 31, 2001.

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

                                       6
<PAGE>

                             AFG Investment Trust B

                        Notes to the Financial Statements

                                 March 31, 2001

                                   (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 2000 Annual Report. Except as disclosed herein, there
has been no material change to the information presented in the footnotes to the
2000 Annual Report.

In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary to present fairly the financial
position at March 31, 2001 and December 31, 2000 and results of operations for
the three months ended March 31, 2001 and 2000 have been made and are reflected.

Certain amounts previously reported in the December 31, 2000 financial
statements have been reclassified to conform to the March 31, 2001 presentation.

NOTE 2 - CASH EQUIVALENTS AND INVESTMENT SECURITIES
---------------------------------------------------

The Trust considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents. Investment securities consisted of
equity securities and debt securities that were classified as
available-for-sale. Available-for-sale securities were carried at fair value,
with unrealized gains and losses reported as a separate component of
participants' capital. The amortized cost of debt securities was adjusted for
amortization of premiums and accretion of discounts to maturity. Such
amortization and accretion are included in interest income on the accompanying
Statement of Operations.

At March 31, 2001, the Trust had $883,262 invested in federal agency discount
notes, repurchase agreements secured by U.S. Treasury Bills or interests in U.S.
Government securities, or other highly liquid overnight investments.

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 noncancellable rental payments associated with the attendant lease
agreements. Future minimum rents of $288,219 are due as follows:

                   For the year ending March 31, 2002           $      166,359
                                                 2003                  121,860
                                                                --------------

                                                 Total          $      288,219
                                                                ==============

                                       7
<PAGE>

                             AFG Investment Trust B

                 Notes to the Financial Statements - (continued)

                                 March 31, 2001

                                   (Unaudited)



NOTE 4 - EQUIPMENT
------------------

The following is a summary of equipment owned by the Trust at March 31, 2001.
Remaining Lease Term (Months), as used below, represents the number of months
remaining from March 31, 2001 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 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>
Materials handling                                                 0-21             $    1,493,867
Aircraft                                                             21                  1,239,741
Computers and peripherals                                           0-4                  1,051,435
Trailers/intermodal containers                                        0                     56,976
Manufacturing                                                         0                     41,694
                                                                                    --------------
          Total equipment cost                                                           3,883,713
          Accumulated depreciation                                                      (2,894,542)
                                                                                    --------------
          Equipment, net of accumulated depreciation                                $      989,171
                                                                                    ==============
</TABLE>

At March 31, 2001, the Trust's equipment portfolio included equipment having a
proportionate original cost of $2,541,577, representing approximately 65% of
total equipment cost.

Certain of the equipment and related lease payment streams were used to secure
the Trust's loan with a third party lender. The preceding summary of equipment
includes leveraged equipment having an original cost of $1,239,741 and a net
book value of $944,516 at March 31, 2001 (see Note 8).

At March 31, 2001, the cost of fully depreciated equipment held for sale or
re-lease was $884,619. The AFG ASIT Corporation, the managing trustee of the
Trust ("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 - INTEREST IN EFG KIRKWOOD
---------------------------------

On May 1, 1999, the Trust and three affiliated trusts (collectively the
"Trusts") and Semele Group Inc. ("Semele") formed a joint venture, EFG Kirkwood
LLC ("EFG Kirkwood"), for the purpose of acquiring preferred and common stock
interests in Kirkwood Associates Inc. ("KAI"). The Trusts purchased Class A
membership interests in EFG Kirkwood and Semele purchased Class B membership
interests in EFG Kirkwood. Generally, the Class A interest holders are entitled
to certain preferred returns prior to distribution payments to the Class B
interest holder. The Trusts collectively own 100% of the Class A membership
interests in EFG Kirkwood and Semele owns 100% of the Class B membership
interests. The Trusts' interests in EFG Kirkwood constitute 50% of the voting
securities of that entity under the operating agreement for the LLC, which gives
equal voting rights to Class A and Class B membership interests. The Managing
Trustee is the manager of EFG Kirkwood.

On April 30, 2000, KAI's ownership interests in certain assets and substantially
all of its liabilities were transferred to Mountain Resort Holdings LLC
("Mountain Resort"). On May 1, 2000, EFG Kirkwood exchanged its interest in
KAI's common and preferred stock for corresponding pro-rata membership interests
in Mountain Resort. EFG Kirkwood holds approximately 37.9% of the membership
interests in Mountain Resort. 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

                                       8
<PAGE>

                             AFG Investment Trust B

                 Notes to the Financial Statements - (continued)

                                 March 31, 2001

                                   (Unaudited)


development. The Trust holds a 18.6% membership interest in EFG Kirkwood and
correspondingly holds 20% of EFG Kirkwood's Class A voting rights.

Subsequent to making its ownership interest in Mountain Resort, EFG Kirkwood
acquired 50% of the membership interests in Mountain Springs Resorts LLC
("Mountain Springs"). Mountain Springs, through a wholly owned subsidiary, owns
80% of the common stock and 100% of the Class B Preferred stock in an entity
that owns the Purgatory Ski resort in Durango, Colorado.

The Trust's ownership interest in EFG Kirkwood had an original cost of
$1,997,076; including a 1% acquisition fee ($19,773) paid to EFG. The Trust's
ownership interest in EFG Kirkwood is accounted for on the equity method and the
Trust recorded income of $681,642 for the quarter ended March 31, 2001,
representing its pro-rata share of the net income of EFG Kirkwood.

NOTE 6 - INTEREST IN MILPI
--------------------------

In December 2000, the Trust and three affiliated Trusts (collectively, the
"Trusts") formed MILPI Holdings, LLC ("MILPI"), which formed MILPI Acquisition
Corp. ("MILPI Acquisition"), a wholly owned subsidiary of MILPI. The Trusts
collectively paid $1.2 million for their membership interest in MILPI and MILPI
purchased the shares of MILPI Acquisition for an aggregate purchase price of
$1.2 million at December 31, 2000. MILPI Acquisition entered into a definitive
agreement (the "Agreement") with PLM International, Inc. ("PLM"), an equipment
leasing and asset management company, for the purpose of acquiring up to 100% of
the outstanding common stock of PLM, for an approximate purchase price of up to
$27 million. In connection with the acquisition, on December 29, 2000, MILPI
Acquisition commenced a tender offer to purchase any and all of PLM's
outstanding common stock.

Pursuant to the cash tender offer, MILPI Acquisition acquired 83% of the PLM
common stock in February 2001 for a total purchase price of approximately $21.7
million. Under the terms of the Agreement, with the approval of the holders of
50.1% of the outstanding common stock of PLM, MILPI Acquisition will merge into
PLM, with PLM being the surviving entity. PLM filed a proxy statement with the
Securities and Exchange Commission (the "SEC") on February 9, 2001 for a special
meeting of its shareholders to vote on the merger proposal. Because MILPI
Acquisition owns 83% of the PLM common stock, its vote alone would be sufficient
to assure the approval of the merger proposal at the special meeting and MILPI
has agreed to vote all of its shares in favor of the merger proposal. Once the
merger is approved, the Trusts would then jointly own 100% of the outstanding
common stock of PLM through their 100% interest in MILPI. However, completion of
the SEC staff's review of the proxy statement for approval of the merger is
dependent in part on the satisfactory resolution of the Trust's discussions with
the staff regarding its possible status as an inadvertent investment company. If
the merger is approved, the Trusts may be required to provide an additional $4.7
million to acquire the remaining 17% of PLM's outstanding common stock.

The Trust has a 20% membership interest in MILPI having an original cost of
$4,548,696. The cost of the Trust's interest in MILPI reflects MILPI
Acquisition's cost of acquiring the common stock of PLM, including the amount
paid for the shares tendered of $4,355,145, a 1% acquisition fee paid to a
wholly-owned subsidiary of Semele of $43,551 and capitalized transaction costs
of $150,000. The capitalized transaction costs will be reimbursed by the Trust
to MILPI and are included in Accrued Liabilities - Affiliates on the
accompanying Statement of Financial Position at March 31, 2001. The Trust's cost
basis in its interest in MILPI was approximately $137,000 greater than its
equity interest in the underlying net assets of MILPI at February 9, 2001 based
on the estimated fair value of the assets and liabilities of PLM. The Trusts are
obtaining additional information to refine the estimate of fair values. This
additional information may result in revisions to the estimated fair values.
This difference is being amortized over a period of 7 years beginning March 1,
2001. The amount amortized is included as an offset to Interest in MILPI and was
$1,627 for the quarter ended March 31, 2001.

Equis II Corporation has voting control of the Trusts and owns the Managing
Trustee of the Trusts. Semele owns Equis II Corporation. Mr. Engle and Mr. Coyne
who are a director and an officer of the Trust, respectively, are also officers

                                       9
<PAGE>

                             AFG Investment Trust B

                 Notes to the Financial Statements - (continued)

                                 March 31, 2001

                                   (Unaudited)


and directors of, and own significant stock in, Semele. Mr. Engle and Mr. Coyne
are officers and directors of MILPI Acquisition.

The Trust's ownership interest in MILPI is accounted for on the equity method
and the Trust recorded income of $22,576 for the three months ended March 31,
2001, representing its pro-rata share of the income of MILPI.

NOTE 7 - RELATED PARTY TRANSACTIONS
-----------------------------------

All operating expenses incurred by the Trust are paid by EFG on behalf of the
Trust and EFG is reimbursed at its actual cost for such expenditures. Fees and
other costs incurred during the three month periods ended March 31, 2001 and
2000, which were paid or accrued by the Trust to EFG or its Affiliates, are as
follows:

<TABLE>
<CAPTION>

                                                              2001                 2000
                                                        ---------------      ---------------

     <S>                                                <C>                  <C>
     Acquisition fees                                   $        43,551      $            --
     Management fees                                             16,836               17,165
     Administrative charges                                      26,040               29,947
     Reimbursable operating expenses
         due to third parties                                   189,659               27,869
                                                        ---------------      ---------------

                                     Total              $       276,086      $        74,981
                                                        ===============      ===============
</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 March 31,
2001, the Trust was owed $23,473 by EFG for such funds and the interest thereon.
These funds were remitted to the Trust in April 2001.

NOTE 8 - NOTES PAYABLE
----------------------

Notes payable at March 31, 2001 consisted of an installment note of $531,040
payable to an institutional lender. The note bears a fluctuating interest rate
based on LIBOR (approximately 5.19% at March 31, 2001) plus a margin. The
installment note is non-recourse and is collateralized by the Trust's interest
in an aircraft leased to Reno Air, Inc. and the assignment of the related lease
payments. The Trust has a balloon payment obligation of $282,421 at the
expiration of the related lease term in January 2003.

Management believes that the carrying amount of the note payable approximates
fair value at March 31, 2001 based on its experience and understanding of the
market for instruments with similar terms.

The annual maturities of the note are as follows:

For the year ending March 31,                2002         $   138,913
                                             2003             392,127
                                                          -----------

                                             Total        $   531,040
                                                          ===========

NOTE 9 - GUARANTEE AGREEMENT
----------------------------

On March 8, 2000, the Trust and three affiliated trusts (collectively, the
"Trusts") entered into a guarantee agreement whereby the Trusts, jointly and
severally, have guaranteed the payment obligations under a master lease
agreement between Echelon Commercial LLC, a newly-formed Delaware company that
is controlled by

                                      10
<PAGE>

                             AFG Investment Trust B

                 Notes to the Financial Statements - (continued)

                                 March 31, 2001

                                   (Unaudited)

Gary D. Engle, President and Chief Executive Officer of EFG, as lessee, and
Heller Affordable Housing of Florida, Inc., and two other entities, as lessor
("Heller"). The lease payments of Echelon Commercial LLC to Heller are supported
by lease payments to Echelon Commercial LLC from various sub-lessees who are
parties to commercial and residential lease agreements under the master lease
agreement. The guarantee of lease payments by the Trusts was capped at a maximum
of $34,500,000, excluding expenses that could result in the event that Echelon
Commercial LLC experiences a default under the terms of the master lease
agreement.

As a result of principal reductions on the average guarantee amount, an amended
and restated agreement was entered into in December 2000, that reduced the
guaranteed amount among the Trusts. At March 31, 2001, the Trust was responsible
for 11.58% of the current guaranteed amount of $7,000,000, or $810,600. In
consideration for its guarantee, the Trust will receive an annualized fee equal
to 4% of the average guarantee amount outstanding during each quarterly period.
Accrued but unpaid fees will accrue and compound interest quarterly at an
annualized interest rate of 7.5% until paid. The Trust will receive minimum
aggregate fees for its guarantee of not less than $115,800, excluding interest.
During the quarter ended March 31, 2001, the Trust recognized income of $9,919
related to the guarantee fee. During the quarter ended March 31, 2000, the Trust
received an upfront cash fee of $57,900 and recognized total income of $68,110
from such fee. The guarantee fee is reflected as Other Income on the
accompanying Statement of Operations.

NOTE 10- CONTINGENCIES
----------------------

The Investment Company Act of 1940 (the "Act") places restrictions on the
capital structure and business activities of companies registered thereunder.
The Trust has active business operations in the financial services industry,
primarily equipment leasing, and in the real estate industry through its
interest in EFG Kirkwood. The Trust does not intend to engage in investment
activities in a manner or to an extent that would require the Trust to register
as an investment company under the Act. However, it is possible that the Trust
may unintentionally engage in an activity or activities that may be construed to
fall within the scope of the Act. The Managing Trustee is engaged in discussions
with the staff of the Securities and Exchange Commission regarding whether or
not the Trust may be an inadvertent investment company by virtue of its recent
acquisition activities. The Managing Trustee has consulted counsel and believes
that the Trust is not an investment company. If the Trust was determined to be
an investment company, its business would be adversely affected. The Act, among
other things, prohibits an unregistered investment company from offering
securities for sale or engaging in any business or interstate commerce. If
necessary, the Trust intends to avoid being deemed an investment company by
disposing of or acquiring certain assets that it might not otherwise dispose of
or acquire.

NOTE 11- OPERATING SEGMENTS
---------------------------

Segment Reporting
-----------------

The Trust has two principal operating segments: 1) Equipment Leasing and 2) Real
Estate Ownership, Development & Management. The Equipment Leasing segment
includes the management of the Trust's equipment lease portfolio and the Trust's
interest in MILPI Holdings LLC ("MILPI"). MILPI owns MILPI Acquisition Corp.,
("MILPI Acquisition") which owns the majority interest in PLM International,
Inc., ("PLM") an equipment leasing and asset management company. 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 through the Trust's ownership
interests in EFG Kirkwood.

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 quarters ended March 31, 2001 and 2000 is summarized
below.

<TABLE>
<CAPTION>

                                                             Quarters ended March 31,
                                                          ------------------------------
                                                             2001                 2000
                                                          ----------           ---------
<S>                                                       <C>                  <C>
Total Income:
         Equipment Leasing                                $  248,497           $ 457,655
         Real Estate                                         681,642                   -
                                                          ----------           ---------
                Total                                     $  930,139           $ 457,655
                                                          ==========           =========

Operating Expenses, Management Fees
   And Other Expenses:
         Equipment Leasing                                $  227,135           $  73,695
                                                          ----------           ---------
         Real Estate                                           5,400               1,286
                Total                                     $  232,535           $  74,981
                                                          ==========           =========
Interest Expense:
         Equipment Leasing                                $   10,022           $  11,958
         Real Estate                                               -                   -
                                                          ----------           ---------
                Total                                     $   10,022           $  11,958
                                                          ==========           =========
Depreciation and Amortization Expense:
         Equipment Leasing                                $   32,662           $  39,152
         Real Estate                                               -                   -
                                                          ----------           ---------
                Total                                     $   32,662           $  39,152
                                                          ==========           =========

 Net Income                                               $  654,920           $ 331,564
                                                          ==========           =========
</TABLE>


Three months ended March 31, 2001 compared to the three months ended March 31,
------------------------------------------------------------------------------
2000:
-----

Results of Operations
---------------------

Equipment Leasing
-----------------

For the three months ended March 31, 2001, the Trust recognized lease revenue of
$108,001 compared to $278,630 for same period in 2000. The decrease in lease
revenue from 2000 to 2001 resulted primarily from lease term expirations and the
sale of equipment. The level of lease revenue to be recognized by the Trust in
the future may be impacted by future reinvestment; however, the extent of such
impact cannot be determined at this time. Future lease term expirations and
equipment sales will result in a reduction in the lease revenue recognized.

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 Equis Financial Group Limited Partnership, a Massachusetts limited
partnership, ("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 months ended March 31, 2001 was $38,139 compared
to $93,535 for the same period in 2000. Generally interest income is generated
from the temporary investment of rental receipts and equipment sales proceeds in
short-term instruments. The amount of future interest income is expected to
fluctuate as a result of changing interest rates and the amount of cash
available for investment, among other factors.

During the three months ended March 31, 2000, the Trust sold equipment having a
net book value of $32,663 to existing lessees and third parties. These sales
resulted in a net gain, for financial statement purposes, of $69,862 compared to
a net loss of $4,140 on equipment having a net book value of $43,140 during the
same period in 2000.

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.

During the quarter ended March 31, 2000, the Trust sold investment securities
having a book value of $32,132, resulting in a gain, for financial statement
purposes, of $21,520.

On March 8, 2000, the Trust and three affiliated trusts entered into a guarantee
agreement whereby the trusts, jointly and severally, guaranteed the payment
obligations under a master lease agreement between Echelon Commercial LLC, as
lessee, and Heller Affordable Housing of Florida, Inc., and two other entities,
as lessor ("Heller"). (See Note 9 to the financial statements.) In consideration
for its guarantee, the Trust will receive an annualized fee equal to 4% of the
average guarantee amount outstanding during each quarterly period. Accrued but
unpaid fees will accrue and compound interest quarterly at an annualized
interest rate of 7.5% until paid. During the quarter ended March 31, 2001, the
Trust recognized income of $9,919 related to the guarantee fee. During the
quarter ended March 31, 2000, the Trust received an upfront cash fee of $57,900
and recognized total income of $68,110 from such fee. The guarantee fee is
reflected as Other Income on the accompanying Statement of Operations.

Depreciation expense was $31,035 and $39,152 for the three months ended March
31, 2001 and 2000, respectively. For financial reporting purposes, to the extent
that an asset is held on primary lease term, the Trust depreciates the
difference between (i) the cost of the asset and (ii) the estimated residual
value of the asset on a straight-line basis over such term. For purposes of this
policy, estimated residual values represent estimates of equipment values at the
date of primary lease expiration. To the extent that an asset is held beyond its
primary lease term, the Trust continues to depreciate the remaining net book
value of the asset on a straight-line basis over the asset's remaining economic
life.

Interest expense was $10,022 and $11,958 for the three months ended March 31,
2001 and 2000, respectively. Interest expense will continue to decrease in the
future as the principal balance of notes payable is reduced through the
application of rent receipts to outstanding debt.

Management fees related to equipment leasing were $11,436 and $15,879 for the
three months ended March 31, 2001 and 2000, 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 were $215,699 and $57,816 during the three months ended March
31, 2001 and 2000, respectively. In 2001, operating expenses included
approximately $40,000 for ongoing legal matters. Operating expenses also
included approximately $66,000 of costs reimbursed to EFG as a result of the
successful acquisition of the PLM common stock by MILPI Acquisition, as
discussed below. In conjunction with the acquisition of the PLM common stock,
EFG became entitled to recover certain out of pocket expenses which it had
previously incurred. Other operating expenses consist primarily of
administrative charges, professional service costs, such as audit and legal
fees, as well as printing, distribution 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.

During the quarter ended March 31, 2001, the Trust recorded income of $22,576
from its ownership interest in MILPI. This income represents the Trust's share
of the net income of MILPI recorded under the equity method of accounting. The
Trust recorded $1,627 of amortization expense for the three months ended March
31, 2001, which related to the goodwill recorded at the time of the acquisition
of the PLM common stock by MILPI Acquisition. (See Note 6 to the financial
statements.)

Real Estate
-----------

Management fees for non-equipment assets were $5,400 and $1,286 for the quarters
ended March 31, 2001 and 2000, respectively. Management fees for non-equipment
assets, excluding cash, are 1% of such assets under management.

For the quarter ended March 31, 2001, the Trust recorded income of $681,642 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 quarter ended March 31, 2001 may not be indicative of
future periods. (See Note 5 to the financial statements).

<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 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.

The Investment Company Act of 1940 (the "Act") places restrictions on the
capital structure and business activities of companies registered thereunder.
The Trust has active business operations in the financial services industry,
primarily equipment leasing, and in the real estate industry through its
interest in EFG Kirkwood LLC ("EFG Kirkwood"). The Trust does not intend to
engage in investment activities in a manner or to an extent that would require
the Trust to register as an investment company under the Act. However, it is
possible that the Trust may unintentionally engage in an activity or activities
that may be construed to fall within the scope of the Act. The Managing Trustee
is engaged in discussions with the staff of the Securities and Exchange
Commission regarding whether or not the Trust may be an inadvertent investment
company by virtue of its recent acquisition activities. The Managing Trustee has
consulted counsel and believes that the Trust is not an investment company. If
the Trust was determined to be an investment company, its business would be
adversely affected. The Act, among other things, prohibits an unregistered
investment company from offering securities for sale or engaging in any business
or interstate commerce. If necessary, the Trust intends to avoid being deemed an
investment company by disposing of or acquiring certain assets that it might not
otherwise dispose of or acquire.

Segment Reporting
-----------------

The Trust has two principal operating segments: 1) Equipment Leasing and 2) Real
Estate Ownership, Development & Management. The Equipment Leasing segment
includes the management of the Trust's equipment lease portfolio and the Trust's
interest in MILPI Holdings LLC ("MILPI"). MILPI owns MILPI Acquisition Corp.,
("MILPI Acquisition") which owns the majority interest in PLM International,
Inc., ("PLM") an equipment leasing and asset management company. 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 through the Trust's ownership
interests in EFG Kirkwood.

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 quarters ended March 31, 2001 and 2000 is summarized
below.

<TABLE>
<CAPTION>

                                                             Quarters ended March 31,
                                                          ------------------------------
                                                             2001                 2000
                                                          ----------           ---------
<S>                                                       <C>                  <C>
Total Income:
         Equipment Leasing                                $  248,497           $ 457,655
         Real Estate                                         681,642                   -
                                                          ----------           ---------
                Total                                     $  930,139           $ 457,655
                                                          ==========           =========
</TABLE>

                                      12
<PAGE>

<TABLE>
<S>                                                       <C>                  <C>
Operating Expenses, Management Fees
   And Other Expenses:
         Equipment Leasing                                $  227,135           $  73,695
                                                          ----------           ---------
         Real Estate                                           5,400               1,286
                Total                                     $  232,535           $  74,981
                                                          ==========           =========
Interest Expense:
         Equipment Leasing                                $   10,022           $  11,958
         Real Estate                                               -                   -
                                                          ----------           ---------
                Total                                     $   10,022           $  11,958
                                                          ==========           =========
Depreciation and Amortization Expense:
         Equipment Leasing                                $   32,662           $  39,152
         Real Estate                                               -                   -
                                                          ----------           ---------
                Total                                     $   32,662           $  39,152
                                                          ==========           =========

 Net Income                                               $  654,920           $ 331,564
                                                          ==========           =========
</TABLE>


Three months ended March 31, 2001 compared to the three months ended March 31,
------------------------------------------------------------------------------
2000:
-----

Results of Operations
---------------------

Equipment Leasing
-----------------

For the three months ended March 31, 2001, the Trust recognized lease revenue of
$108,001 compared to $278,630 for same period in 2000. The decrease in lease
revenue from 2000 to 2001 resulted primarily from lease term expirations and the
sale of equipment. The level of lease revenue to be recognized by the Trust in
the future may be impacted by future reinvestment; however, the extent of such
impact cannot be determined at this time. Future lease term expirations and
equipment sales will result in a reduction in the lease revenue recognized.

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 Equis Financial Group Limited Partnership, a Massachusetts limited
partnership, ("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 months ended March 31, 2001 was $38,139 compared
to $93,535 for the same period in 2000. Generally interest income is generated
from the temporary investment of rental receipts and equipment sales proceeds in
short-term instruments. The amount of future interest income is expected to
fluctuate as a result of changing interest rates and the amount of cash
available for investment, among other factors.

During the three months ended March 31, 2000, the Trust sold equipment having a
net book value of $32,663 to existing lessees and third parties. These sales
resulted in a net gain, for financial statement purposes, of $69,862 compared to
a net loss of $4,140 on equipment having a net book value of $43,140 during the
same period in 2000.

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

                                      13
<PAGE>

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.

During the quarter ended March 31, 2000, the Trust sold investment securities
having a book value of $32,132, resulting in a gain, for financial statement
purposes, of $21,520.

On March 8, 2000, the Trust and three affiliated trusts entered into a guarantee
agreement whereby the trusts, jointly and severally, guaranteed the payment
obligations under a master lease agreement between Echelon Commercial LLC, as
lessee, and Heller Affordable Housing of Florida, Inc., and two other entities,
as lessor ("Heller"). (See Note 9 to the financial statements.) In consideration
for its guarantee, the Trust will receive an annualized fee equal to 4% of the
average guarantee amount outstanding during each quarterly period. Accrued but
unpaid fees will accrue and compound interest quarterly at an annualized
interest rate of 7.5% until paid. During the quarter ended March 31, 2001, the
Trust recognized income of $9,919 related to the guarantee fee. During the
quarter ended March 31, 2000, the Trust received an upfront cash fee of $57,900
and recognized total income of $68,110 from such fee. The guarantee fee is
reflected as Other Income on the accompanying Statement of Operations.

Depreciation expense was $31,035 and $39,152 for the three months ended March
31, 2001 and 2000, respectively. For financial reporting purposes, to the extent
that an asset is held on primary lease term, the Trust depreciates the
difference between (i) the cost of the asset and (ii) the estimated residual
value of the asset on a straight-line basis over such term. For purposes of this
policy, estimated residual values represent estimates of equipment values at the
date of primary lease expiration. To the extent that an asset is held beyond its
primary lease term, the Trust continues to depreciate the remaining net book
value of the asset on a straight-line basis over the asset's remaining economic
life.

Interest expense was $10,022 and $11,958 for the three months ended March 31,
2001 and 2000, respectively. Interest expense will continue to decrease in the
future as the principal balance of notes payable is reduced through the
application of rent receipts to outstanding debt.

Management fees related to equipment leasing were $11,436 and $15,879 for the
three months ended March 31, 2001 and 2000, 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 were $215,699 and $57,816 during the three months ended March
31, 2001 and 2000, respectively. In 2001, operating expenses included
approximately $40,000 for ongoing legal matters. Operating expenses also
included approximately $66,000 of costs reimbursed to EFG as a result of the
successful acquisition of the PLM common stock by MILPI Acquisition, as
discussed below. In conjunction with the acquisition of the PLM common stock,
EFG became entitled to recover certain out of pocket expenses which it had
previously incurred. Other operating expenses consist primarily of
administrative charges, professional service costs, such as audit and legal
fees, as well as printing, distribution 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.

                                      14
<PAGE>

During the quarter ended March 31, 2001, the Trust recorded income of $22,576
from its ownership interest in MILPI. This income represents the Trust's share
of the net income of MILPI recorded under the equity method of accounting. The
Trust recorded $1,627 of amortization expense for the three months ended March
31, 2001, which related to the goodwill recorded at the time of the acquisition
of the PLM common stock by MILPI Acquisition. (See Note 6 to the financial
statements.)


Real Estate
-----------

Management fees for non-equipment assets were $5,400 and $1,286 for the quarters
ended March 31, 2001 and 2000, respectively. Management fees for non-equipment
assets, excluding cash, are 1% of such assets under management.

For the quarter ended March 31, 2001, the Trust recorded income of $681,642 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 quarter ended March 31, 2001 may not be indicative of
future periods. (See Note 5 to the financial statements).

Liquidity and Capital Resources and Discussion of Cash Flows
------------------------------------------------------------

The Trust by its nature is a limited life entity. 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 outflows of $74,745 and
net cash inflows of $250,458 for the three months ended March 31, 2001 and 2000,
respectively. Future renewal, re-lease and equipment sale activities will cause
a decline in the Trust's lease revenue and corresponding sources of operating
cash. Expenses associated with rental activities, such as management fees, also
will decline as the Trust experiences a higher frequency of remarketing events.
The amount of future interest income is expected to fluctuate as a result of
changing interest rates and the level of cash available for investment, among
other factors.

At lease inception, the Trust's equipment was 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 leases will be
maintained. The credit quality of an individual lease may deteriorate after the
lease is entered into. 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.

Cash expended for asset acquisitions and cash realized from asset disposal
transactions are reported under investing activities on the accompanying
Statement of Cash Flows.

In December 2000, the Trust and three affiliated Trusts (collectively, the
"Trusts") formed MILPI, which formed MILPI Acquisition, a wholly owned
subsidiary of MILPI. The Trusts collectively paid $1.2 million for their
membership interest in MILPI and MILPI purchased the shares of MILPI Acquisition
for an aggregate purchase price of $1.2 million at December 31, 2000. MILPI
Acquisition entered into a definitive agreement (the "Agreement") with PLM, an
equipment leasing and asset management company, for the purpose of acquiring up
to 100% of the outstanding common stock of PLM, for an approximate purchase
price of up to $27 million. In connection with the acquisition, on December 29,
2000, MILPI Acquisition commenced a tender offer to purchase any and all of
PLM's outstanding common stock.

Pursuant to the cash tender offer, MILPI Acquisition acquired 83% of the PLM
common stock in February 2001 for a total purchase price of approximately $21.7
million. Under the terms of the Agreement, with the approval of the holders of
50.1% of the outstanding common stock of PLM, MILPI Acquisition will merge into
PLM, with PLM

                                      15
<PAGE>

being the surviving entity. PLM filed a proxy statement with the Securities and
Exchange Commission (the "SEC") on February 9, 2001 for a special meeting of its
shareholders to vote on the merger proposal. Because MILPI Acquisition owns 83%
of the PLM common stock, its vote alone would be sufficient to assure the
approval of the merger proposal at the special meeting and MILPI has agreed to
vote all of its shares in favor of the merger proposal. Once the merger is
approved, the Trusts would then jointly own 100% of the outstanding common stock
of PLM through their 100% interest in MILPI. However, completion of the SEC
staff's review of the proxy statement for approval of the merger is dependent in
part on the satisfactory resolution of the Trust's discussions with the staff
regarding its possible status as an inadvertent investment company. If the
merger is approved, the Trusts may be required to provide an additional $4.7
million to acquire the remaining 17% of PLM's outstanding common stock.

The Trust has a 20% membership interest in MILPI having an original cost of
$4,548,696. The cost of the Trust's interest in MILPI reflects MILPI
Acquisition's cost of acquiring the common stock of PLM, including the amount
paid for the shares tendered of $4,355,145, a 1% acquisition fee paid to a
wholly-owned subsidiary of Semele of $43,551 and capitalized transaction costs
of $150,000. The capitalized transaction costs will be reimbursed by the Trust
to MILPI and are included in Accrued Liabilities - Affiliates on the
accompanying Statement of Financial Position at March 31, 2001. The Trust's cost
basis in its interest in MILPI was approximately $137,000 greater than its
equity interest in the underlying net assets of MILPI at February 9, 2001 based
on the estimated fair value of the assets and liabilities of PLM. The Trusts are
obtaining additional information to fefine the estimate of fair values.  This
additional information may result in revisions to the estimated fair values.
This difference is being amortized over a period of 7 years beginning March 1,
2001. The amount amortized is included as an offset to Interest in MILPI and was
$1,627 for the quarter ended March 31, 2001. The Trust's ownership interest in
MILPI is accounted for on the equity method, as discussed above.

Equis II Corporation has voting control of the Trusts and owns the Managing
Trustee of the Trusts. Semele owns Equis II Corporation. Mr. Engle and Mr.
Coyne, who are a director and an officer of the Trust, respectively, are also
officers and directors of, and own significant stock in, Semele. In addition,
Mr. Engle and Mr. Coyne are officers and directors of MILPI Acquisition.

During the three months ended March 31, 2000, the Trust expended $128,576 for
its interest in EFG Kirkwood (see Note 5 to the financial statements). During
the three months ended March 31, 2001 and 2000, the Trust realized net cash
proceeds from equipment disposals of $102,525 and $39,000, respectively. 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. The Trust also realized proceeds from the
sale of investment securities of $53,652 during the three months ended March 31,
2000.

At March 31, 2001, the Trust was due aggregate future minimum lease payments of
$288,219 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 $531,040 (see Note 8 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.

The Trust has an ownership interest in EFG Kirkwood. EFG Kirkwood is a joint
venture among the Trust, certain affiliated Trusts and Semele Group Inc. and is
managed by AFG ASIT Corporation. EFG Kirkwood is a member in two joint ventures,
Mountain Resort Holdings LLC ("Mountain Resort") and Mountain Springs Resort LLC
("Mountain Springs"). See Note 5 to the financial statements.

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 the Purgatory Ski resort in Durango, Colorado.

                                      16
<PAGE>

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 involvement in real estate development also introduces financial
risks, 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.

Ski 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 effect 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 obtained long-term financing in connection with certain equipment
leases. The repayments of principal related to such indebtedness are reported as
a component of financing activities on the accompanying Statement of Cash Flows.
At March 31, 2001, the Trust had one debt obligation outstanding pertaining to
its ownership interest in an aircraft leased to Reno Air, Inc. The note will be
partially amortized by the remaining contracted lease payments. Upon expiration
of the lease agreement in January 2003, the Trust will have a balloon payment
obligation of $282,421 to retire this indebtedness.

The Managing Trustee evaluated and pursued a number of potential new
acquisitions, several of which the Managing Trustee concluded had market returns
that it believed were less than adequate given the potential risks. Most
transactions involved the equipment leasing, business finance and real estate
development industries. Although the Managing Trustee intends to continue to
evaluate additional new investments, it anticipates that the Trust will be able
to fund these new investments with cash on hand or other sources, such as the
proceeds from future asset sales or refinancing and new indebtedness. As a
result, the Trust declared a special cash distribution during the fourth quarter
of 1999 to the Trust Beneficiaries totaling $5,300,000, which was paid on
January 19, 2000.

After the special distribution on January 19, 2000, the Trust adopted a new
distribution policy and suspended the payment of regular monthly cash
distributions. Looking forward, the Managing Trustee presently does not expect
to reinstate cash distributions until expiration of the Trust's reinvestment
period in December 2001; however, the Managing Trustee periodically will review
and consider other one-time distributions. In addition to maintaining sale
proceeds for reinvestment, the Managing Trustee expects that the Trust will
retain cash from operations to fully retire its balloon debt obligation and for
the continued maintenance of the Trust's assets. The Managing Trustee believes
that this change in policy is in the best interests of the Trust over the long
term.

Historically, cash distributions to the Managing Trustee, the Special
Beneficiary and the Beneficiaries had been 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 on the accompanying
Statement of Cash Flows. No cash distributions were declared for either of the
three month periods ended March 31, 2001 or 2000. In any given year, it is
possible that Beneficiaries will be allocated taxable income in excess of
distributed cash. This discrepancy between tax obligations and cash
distributions may or may not continue in the future, and cash may or may not be
available for distribution to the Beneficiaries adequate to cover any tax
obligation. The Trust Agreement requires that sufficient distributions be made
to enable the Beneficiaries to pay any state and federal income taxes arising
from any sale or refinancing transactions, subject to certain limitations.

Cash distributions when paid to the Participants generally 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, the residual value realized for each asset at its
disposal date, and the performance of the Trust's non-equipment assets. Future
market conditions, technological

                                      17
<PAGE>

changes, the ability of EFG to manage and remarket the equipment, and many other
events and circumstances, could enhance or detract from individual yields and
the collective performance of the Trust's equipment portfolio. The ability of
the Managing Trustee and its affiliates to develop and profitably manage its
real estate assets and its interest in MILPI will impact the Trust's overall
performance.

In the future, the nature of the Trust's operations and principal cash flows
will continue to shift from rental receipts to equipment sale proceeds. As this
occurs, the Trust's cash flows resulting from equipment investments may 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 in order to maximize the residual value of the Trust's
equipment and will consider these factors, in addition to new investment
activities, the collection of contractual rents, the retirement of scheduled
indebtedness, and the Trust's future working capital requirements, in
establishing the amount and timing of future cash distributions.

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, 2000, the Managing Trustee had a positive tax capital
account balance. No such requirement exists with respect to the Special
Beneficiary.

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<PAGE>

                             AFG Investment Trust B

                                    FORM 10-Q

                           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
                    Response:  None

Item 5.             Other Information
                    Response:  None

Item 6(a).          Exhibits
                    Response:  None

Item 6(b).          Reports on Form 8-K
                    Response:

                    Form 8-KA dated April 23, 2001 to include the pro forma
                    financial information required pursuant to Item 7 of Form 8-
                    K in connection with the acquisition of PLM International,
                    Inc. by MILPI Acquisition Corp., an indirect subsidiary of
                    the registrant.

                                      19
<PAGE>

                                 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 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 Financial and Accounting Officer)


                         Date:    May 15, 2001
                                  ----------------------------------------------

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