AFG INVESTMENT TRUST D, SC 13E4, 1997-08-07

AFG INVESTMENT TRUST D
SC 13E4, 1997-08-07
EQUIPMENT RENTAL & LEASING, NEC

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<PAGE>
_______________________

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________

SCHEDULE 13E-4
Issuer Tender Offer Statement (Pursuant to Section 13(e)(1)
of the Securities Exchange Act of 1934)
_______________________

AFG INVESTMENT TRUST D
(Name of Issuer and Name of Person Filing Statement)

CLASS A BENEFICIARY INTERESTS
(Title of Class of Securities)

NONE
(CUSIP Number of Class of Securities)
_____________________________________

Copy to:
James A. Coyne Thomas F. Gloster III, Esq.
c/o Equis Financial Group Limited Peabody & Brown
Partnership 101 Federal Street
98 North Washington Street Boston, Massachusetts 02110
Boston, Massachusetts 02114 (617) 345-1141
(617) 854-5800
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Person Filing Statement)
______________________________________

August 7, 1997
(Date Tender Offer First Published, Sent or Given to Securityholders)
_____________________________________

Calculation of Filing Fee
________________________________________________________________
Transaction Amount of
Valuation* Filing Fee
----------- ----------

$10,105,688 $2,021
________________________________________________________________

*For purposes of calculating the filing fee only. This amount assumes
the purchase of 940,064 Class A Beneficiary Interests (the "Class A
Interests") of the Issuer for $10.75 per Class A Interest in cash.

<PAGE>

/ / Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the form or schedule and date of its filing.

Amount Previously Paid: N.A.

Form or Registration Number: N.A.

Filing Party: N.A.

Date Filed: N.A.

<PAGE>

Item 1. Security and Issuer.

(a) The name of the issuer is AFG Investment Trust D, a Delaware
business trust (the "Trust"), which has its principal executive office at 98
North Washington Street, Boston, Massachusetts 02114.

(b) This Statement relates to the offer by the Trust to purchase up
to 940,064 of the outstanding Class A Beneficiary Interests (the "Class A
Interests") of the Trust at $10.75 per Class A Interest, net to the seller in
cash, without interest, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated August 7, 1997 (the "Offer to
Purchase"), and in the related Letter of Transmittal, copies of which are
attached hereto as Exhibits (a)(1) and (a)(2), respectively. The number of
Class A Interests outstanding is set forth under "INTRODUCTION" of the Offer
to Purchase and is incorporated herein by reference. The amount of Class A
Interests that may be purchased from any officer or director of AFG ASIT
Corporation, a Massachusetts corporation that is the Managing Trustee of the
Trust (the "Managing Trustee"), or from any affiliate of the Managing
Trustee, is set forth under "INTRODUCTION" of the Offer to Purchase and is
incorporated herein by reference.

(c) The information set forth under "THE TENDER OFFER -- Section 7.
Effects of the Offer" and "THE TENDER OFFER -- Section 12. Background of the
Offer" of the Offer to Purchase is incorporated herein by reference.

(d) Not applicable.

Item 2. Source and Amount of Funds or Other Consideration.

(a) The information set forth in "THE TENDER OFFER -- Section 11.
Source of Funds" of the Offer to Purchase is incorporated herein by reference.

(b) Not applicable.

Item 3. Purpose of the Tender Offer and Plans or
Proposals of the Issuer or Affiliate.

(a)-(j) The information set forth in "THE TENDER OFFER -- Section
8. Future Plans" and "THE TENDER OFFER -- Section 12. Background of the
Offer" of the Offer to Purchase is incorporated herein by reference.

Item 4. Interest in Securities of the Issuer.

Neither the Trust nor, to its knowledge, the Managing Trustee, any
executive officer or director of the Managing Trustee, any person controlling
the Managing Trustee or any associate of any such person has engaged in any
transaction involving the Class A Interests during the 40 business days
preceding the date hereof.

<PAGE>

Item 5. Contracts, Arrangements, Understandings or Relationships
With Respect to the Issuer's Securities.

None.

Item 6. Persons Retained, Employed or to be Compensated.

The information set forth in "THE TENDER OFFER -- Section 15.
Certain Fees and Expenses" of the Offer to Purchase is incorporated herein by
reference.

Item 7. Financial Information.

(a) The information set forth in "THE TENDER OFFER -- Section 9.
Certain Information Concerning the Trust -- Financial Information" of the
Offer to Purchase and the Financial Statements of the Trust set forth at the
end of the Offer to Purchase are incorporated herein by reference.

(b) Not applicable.

Item 8. Additional Information.

(a) None.

(b)-(d) The information set forth in "THE TENDER OFFER -- Section
14. Certain Legal Matters" of the Offer to Purchase is incorporated herein by
reference.

(e) None.

Item 9. Material to be Filed as Exhibits.

(a)(1) Offer to Purchase dated August 7, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Cover Letter dated August 7, 1997, from the Trust to
Beneficiaries.
(b) Not applicable.
(c) None.
(d) None.
(e)-(f) Not applicable.

<PAGE>

SIGNATURES

After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.

Dated: August 7, 1997

AFG INVESTMENT TRUST D
By: AFG ASIT Corporation,
its Managing Trustee

By: ______________________________
Name: James A. Coyne
Title: Vice President

<PAGE>
EXHIBIT INDEX

Exhibit Sequentially
No. Description Numbered Page
- ------- ----------- -------------

(a)(1) Offer to Purchase dated August 7, 1997.

(a)(2) Letter of Transmittal.

(a)(3) Cover Letter dated August 7, 1997,
from the Trust to Beneficiaries.

(b) Not applicable.

(d) None.

(e)-(f) Not applicable.

<PAGE>

Offer to Purchase for Cash
by
AFG INVESTMENT TRUST D
of
Up to 940,064 Class A Beneficiary Interests
at
$10.75 Per Class A Interest

THE OFFER, WITHDRAWAL RIGHTS AND THE PRORATION PERIOD WILL
EXPIRE AT 5:00 P.M., EASTERN TIME, ON SEPTEMBER 12, 1997,
UNLESS THE OFFER IS EXTENDED.

AFG Investment Trust D, a Delaware business trust (the "Trust"), hereby
offers to redeem up to 940,064 of its outstanding Class A Beneficiary Interests
(the "Class A Interests"), at a price of $10.75 per Class A Interest, net to the
seller in cash, without interest, upon the terms and subject to the conditions
set forth in this Offer to Purchase (the "Offer to Purchase") and in the related
Letter of Transmittal, as each may be supplemented or amended from time to time
(which together constitute the "Offer"). The Offer is made to Class A
Beneficiaries of record as of August 1, 1997. The 940,064 Class A Interests
sought pursuant to the Offer represent approximately 45% of the Class A
Interests outstanding as of August 1, 1997.

The Offer is not conditioned upon any minimum number of Class A Interests
being tendered. If more than 940,064 Class A Interests are validly tendered and
not withdrawn, the Trust will accept for purchase, on a pro rata basis,
940,064 Class A Interests, subject to the terms and conditions herein.

Each Class A Beneficiary should consider carefully the following factors:

- The Purchase Price of $10.75 per Class A Interest is less than what
the Managing Trustee believes the liquidation value of the Class A
Interests might be ($15.58 per Class A Interest) but in excess of the
recent prices at which the Class A Interests have traded in the
secondary market (after discounting such prices by the special
distribution being made to the Class A Beneficiaries by the Trust.)
(See "Section 12. Background of the Offer" for a discussion of the
Managing Trustee's determination of the Purchase Price and liquidation
value, and the related assumptions and other factors relating to such
determination.)

- This Offer to redeem Class A Interests is intended to be carried out
by the Trust at a price which will increase distributions with
respect to the Class A Interests not redeemed.

- A lawsuit has recently been filed, asserting, among other things, that
the recent offering by the Trust of its Class B Subordinated Interests
was intended by the Managing Trustee and its Affiliates to ensure that
they would obtain voting control of the Trust and that the offering
was conducted upon one-sided terms and conditions. (See "Section 14.
Certain Legal Matters" for a description of this lawsuit.)

- Class A Beneficiaries who tender Class A Interests will not be
entitled to any future distributions from the Trust (other than the
special distribution), including, without limitation, any
distributions to be made to Class A Beneficiaries upon liquidation of
the Trust. (Distributions to Class A Beneficiaries made by the Trust
after August 1, 1997 (excluding the special

<PAGE>

distribution) will either be assigned to the Trust or will
correspondingly reduce the Purchase Price.) Such future distributions
are expected by the Managing Trustee to exceed the Purchase Price
substantially.

- In deciding whether or not to tender their Class A Interests, Class A
Beneficiaries should consider the time (presently anticipated to be
December 31, 2006) until the Trust's assets are liquidated and the
Trust is terminated.

- Class A Beneficiaries who tender their Class A Interests will on
average have received $7.53 per Class A Interest in cash distributions
(including the special distribution) which when added to the Purchase
Price of $10.75 will result in total cash paid to the tendering
Class A Beneficiaries of $18.28 per Class A Interest. The original
cost was $25.00 per Class A Interest.

NEITHER THE TRUST NOR THE MANAGING TRUSTEE MAKES ANY RECOMMENDATION TO ANY
CLASS A BENEFICIARY WHETHER TO TENDER ALL OR ANY OF HIS CLASS A INTERESTS. EACH
CLASS A BENEFICIARY MUST MAKE HIS OWN DECISION WHETHER TO TENDER CLASS A
INTERESTS AND, IF SO, HOW MANY CLASS A INTERESTS TO TENDER.

NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
TRUST AS TO WHETHER CLASS A BENEFICIARIES SHOULD TENDER CLASS A INTERESTS
PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE
CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. ANY RECOMMENDATION,
INFORMATION OR REPRESENTATION SO GIVEN OR MADE MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE TRUST OR THE MANAGING TRUSTEE.

In order for his tender to be valid, a Class A Beneficiary must tender
either (i) all Class A Interests owned by such Class A Beneficiary or (ii) a
portion of his Class A Interests but not fewer than the minimum investment
amount of 200 Class A Interests (80 Class A Interests for IRAs or other
Qualified Plans).

The Trust expressly reserves the right, in its sole discretion, at any time
and from time to time, (i) to extend the period of time during which the Offer
is open and thereby delay acceptance for payment of, and the payment for, any
Class A Interests, (ii) to terminate the Offer and not accept for payment any
Class A Interests not theretofore accepted for payment or paid for, (iii) upon
the occurrence of any of the conditions specified in Section 14, to delay the
acceptance for payment of, or payment for, any Class A Interests not theretofore
accepted for payment or paid for, and (iv) to amend the Offer in any respect
(including, without limitation, by increasing or decreasing the consideration
offered, increasing or decreasing the number of Class A Interests being sought
or both). Notice of any such extension, termination or amendment will promptly
be disseminated to Class A Beneficiaries in a manner reasonably designed to
inform Class A Beneficiaries of such change in compliance with Rule 13e-4(e)(2)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In
the case of an extension of the Offer, such extension will be followed by a
press release or public announcement which will be issued no later than
9:00 a.m., Eastern time, on the next business day after the scheduled Expiration
Date, in accordance with Rule 14e-1(d) under the Exchange Act.

August 7, 1997

<PAGE>

TABLE OF CONTENTS

INTRODUCTION................................................................ 4

THE TENDER OFFER............................................................ 7
Section 1. Terms of the Offer....................................... 7
Section 2. Proration; Acceptance for Payment and Payment for
Class A Interests...................................... 7
Section 3. Procedures for Tendering Class A Interests............... 8
Section 4. Withdrawal Rights........................................ 9
Section 5. Extension of Tender Period; Termination; Amendment....... 10
Section 6. Certain Federal Income Tax Consequences.................. 11
Section 7. Effects of the Offer..................................... 13
Section 8. Future Plans............................................. 14
Section 9. Certain Information Concerning the Trust................. 14
Section 10. Conflicts of Interest.................................... 26
Section 11. Source of Funds.......................................... 26
Section 12. Background of the Offer.................................. 26
Section 13. Conditions of the Offer.................................. 28
Section 14. Certain Legal Matters.................................... 30
Section 15. Certain Fees and Expenses................................ 31
Section 16. Miscellaneous............................................ 31

<PAGE>

To the Class A Beneficiaries of
AFG Investment Trust D

INTRODUCTION

AFG Investment Trust D, a Delaware business trust (the "Trust"), hereby
offers to purchase up to 940,064 of its outstanding Class A Beneficiary
Interests (the "Class A Interests"), at a price of $10.75 per Class A Interest,
net to the seller in cash, without interest, upon the terms and subject to the
conditions set forth in this Offer to Purchase (the "Offer to Purchase") and in
the related Letter of Transmittal, as each may be supplemented or amended from
time to time (which together constitute the "Offer"). The Offer is made to
Class A Beneficiaries of record as of August 1, 1997. The 940,064 Class A
Interests sought pursuant to the Offer represent approximately 45% of the
Class A Interests outstanding as of August 1, 1997.

The Trust has obtained funds for the purchase of the Class A Interests
pursuant to this Offer from the offering of 3,142,083 Class B Subordinated
Interests in the Trust (the "Class B Offering") pursuant to the prospectus dated
June 10, 1997 as supplemented (as so supplemented, the "Prospectus"). (See
"Section 11. Source of Funds.")

Each Class A Beneficiary should consider carefully the following factors:

- The Purchase Price of $10.75 Class A Interest is less than what the
Managing Trustee believes the liquidation value of the Class A
Interests might be ($18.28 per Class A Interest) but in excess of the
recent prices at which the Class A Interests have traded in the
secondary market (after discounting such prices by the special
distribution being made to the Class A Beneficiaries by the Trust).
(See "Section 12. Background of the Offer" for a discussion of the
Managing Trustee's determination of the Purchase Price and liquidation
value, and the related assumptions and other factors relating to such
determination.)

- This Offer to redeem the Class A Interests is intended to be carried
out by the Trust at a price which will increase distributions with
respect to the Class A Interests not redeemed.

- A lawsuit was recently filed asserting, among other things, that the
recent offering by the Trust of its Class B Subordinated Interests was
intended by the Managing Trustee and its Affiliates to ensure that
they would obtain voting control of the Trust and that the offering
was conducted upon one-sided terms and conditions. (See "Section 14.
Certain Legal Matters" for a description of this lawsuit.)

- Class A Beneficiaries who tender Class A Interests will not be
entitled to any future distributions from the Trust, including,
without limitation, any distributions to be made to Class A
Beneficiaries upon liquidation of the Trust. (Distributions to
Class A Beneficiaries made by the Trust after August 1, 1997
(excluding the special distribution) will either be assigned to the
Trust or will correspondingly reduce the Purchase Price.) Such future
distributions are expected by the Managing Trustee to exceed the
Purchase Price substantially.

<PAGE>

- Class A Beneficiaries who tender their Class A Interests will, on
average, have received $7.53 per Class A Interest in cash
distributions (including the special distribution) from the Trust
which, when added to the Purchase Price of $10.75, will result in
total cash paid to the tendering Class A Beneficiaries of $18.28 per
Class A Interest. The original cost was $25.00 per Class A Interest.

The Offer will provide Class A Beneficiaries with an opportunity to
liquidate their investment without the usual transaction costs associated with
market sales. Class A Beneficiaries may no longer wish to continue their
investment in the Trust for a number of reasons, including:

- The absence of a formal trading market for Class A Interests, although
there are some limited resale mechanisms which were considered by the
Managing Trustee in establishing the Purchase Price and may be
available to Class A Beneficiaries wishing to sell their Class A
Interests

- General disenchantment with long-term investments in limited
partnerships or trusts

- The complexities and costs of preparing and filing personal federal,
state and local income tax returns resulting from an investment in the
Class A Interests, particularly for Class A Beneficiaries with a small
investment in the Trust

- For Class A Beneficiaries which are IRAs or other qualified pension,
profit-sharing or stock bonus plans (collectively, "Qualified Plans"),
the further complexity and costs of preparing income tax returns, and
the potential tax liability, resulting from the generation by the
Trust of "unrelated business taxable income"

- The opportunity to transfer Class A Interests without the commissions
and other costs normally associated with a transfer

- More immediate use for the cash tied up in an investment in the
Class A Interests

There are 2,089,030 Class A Interests issued and outstanding held of record
by Class A Beneficiaries as of August 1, 1997. As of the date of the Offer, the
Managing Trustee owns 40 Class A Interests and Affiliates of the Managing
Trustee own 44,124 Class A Interests. Neither the Managing Trustee nor such
Affiliates intend to tender any of their Class A Interests.

The Offer is not conditioned upon any minimum number of Class A Interests
being tendered. If more than 940,064 Class A Interests are validly tendered and
not withdrawn, the Trust will accept for purchase on a pro rata basis
940,064 Class A Interests, subject to the terms and conditions herein.

CLASS A BENEFICIARIES DESIRING TO TENDER ALL OR A PORTION OF THEIR CLASS A
INTERESTS, AS DESCRIBED ABOVE, SHOULD COMPLETE AND SIGN THE RELATED LETTER OF
TRANSMITTAL ENCLOSED HEREWITH AND FORWARD THE LETTER OF TRANSMITTAL TO THE
DEPOSITARY. INSTRUCTIONS

<PAGE>

FOR COMPLETING THE LETTER OF TRANSMITTAL ARE ATTACHED THERETO AND A
PREADDRESSED ENVELOPE TO THE DEPOSITARY IS ENCLOSED.

The Trust was organized as a business trust to acquire a diversified
portfolio of capital equipment subject to various full payout and operating
leases. (See "Section 9. Certain Information Concerning the Trust.") The
Managing Trustee of the Trust and three other Delaware business trusts
(collectively, the "AFG Investment Trusts" or the "Trusts") is AFG ASIT
Corporation, a Massachusetts corporation, which was organized on August 13, 1991
and is an affiliate of Equis Financial Group Limited Partnership (formerly,
American Finance Group), a Massachusetts limited partnership ("EFG" or the
"Advisor"). EFG is the Special Beneficiary of, and advisor to, the Trust.

Under the terms of the Trust Agreement, Class A Beneficiaries are permitted
to assign their Class A Interests and the Managing Trustee has indicated that it
will consent to any transfer made pursuant to the Offer.

No independent person has been retained to evaluate or render any opinion
with respect to the fairness of the Purchase Price. Accordingly, Class A
Beneficiaries are urged to consider carefully all of the information contained
herein before accepting the Offer. (See "Section 12. Background of the
Offer.")

The Trust made a cash distribution on July 15, 1997 to Class A
Beneficiaries of record as of July 1, 1997 in the amount of $0.14 per Class A
Interest and will make a special distribution to Class A Beneficiaries in the
amount of $1.47 per Class A Interest (the "Special Distribution") on or about
August 15, 1997. Any future distributions from the Trust with respect to
tendered Class A Interests accepted for payment by the Trust will be made to the
Trust or, to the extent such distributions are made to the tendering Class A
Beneficiaries, will reduce the Purchase Price for such Class A Interests.

Certain information contained in this Offer to Purchase which relates to
the Trust has been taken from the Trust's 1996 Annual Report on Form 10-K and
its Quarterly Reports on Form 10-Q for the first quarter of 1997. (See
"Section 9. Certain Information Concerning the Trust.")

CLASS A BENEFICIARIES ARE URGED TO READ THIS OFFER TO PURCHASE AND THE
ACCOMPANYING LETTER OF TRANSMITTAL CAREFULLY AND CONSULT WITH THEIR FINANCIAL
AND TAX ADVISORS BEFORE DECIDING WHETHER TO TENDER THEIR CLASS A INTERESTS.

THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF CLASS A INTERESTS
BEING TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN CONDITIONS. (See
"Section 13. Conditions of the Offer.") NEITHER THE TRUST NOR THE MANAGING
TRUSTEE MAKES ANY RECOMMENDATION TO ANY BENEFICIARY WHETHER TO TENDER ALL OR ANY
CLASS A INTERESTS. EACH CLASS A BENEFICIARY MUST MAKE HIS OWN DECISION WHETHER
TO TENDER SHARES AND, IF SO, HOW MANY CLASS A INTERESTS TO TENDER.

<PAGE>

THE TENDER OFFER

SECTION 1. TERMS OF THE OFFER. Upon the terms of the Offer, the Trust
will pay for Class A Interests validly tendered on or prior to the Expiration
Date and not withdrawn in accordance with Section 4 of this Offer to Purchase.
The term "Expiration Date" shall mean 5:00 p.m., Eastern time, on September 12,
1997, unless and until the Trust shall have extended the period of time for
which the Offer is open. In the event the Offer is extended, the term
"Expiration Date" shall mean the latest time and date on which the Offer, as
extended by the Trust, shall expire.

The Offer is conditioned on satisfaction of certain conditions. See
Section 13, which sets forth in full the conditions of the Offer. The Trust
reserves the right (but shall not be obligated), in its sole discretion, to
waive any or all of such conditions. If, on or prior to the Expiration Date,
any or all of such conditions have not been satisfied or waived, the Trust
reserves the right, by giving written notice thereof to the Depositary, to
(i) decline to purchase any of the Class A Interests tendered, terminate the
Offer and return all tendered Class A Interests to tendering Class A
Beneficiaries, (ii) waive all the unsatisfied conditions and, subject to
complying with applicable rules and regulations of the Securities and Exchange
Commission (the "Commission"), purchase all Class A Interests validly tendered,
(iii) extend the Offer and, subject to the right of Class A Beneficiaries to
withdraw Class A Interests until the Expiration Date, retain the Class A
Interests that have been tendered during the period or periods for which the
Offer is extended, or (iv) amend the Offer.

If, prior to the Expiration Date, the Trust shall increase the
consideration offered to Class A Beneficiaries pursuant to the Offer then, as
required by Exchange Act rules, such increased consideration shall be paid for
all Class A Interests accepted for payment pursuant to the Offer, whether or not
such Class A Interests were tendered prior to such increase.

This Offer to Purchase and the related Letter of Transmittal are being
mailed by the Trust to Class A Beneficiaries or beneficial owners of Class A
Interests (in the case of Qualified Plans) of record as of August 1, 1997.

In the event that proration is required because the number of Class A
Interests validly tendered on or prior to the Expiration Date and not withdrawn
exceeds 940,064, the Trust will announce the results of prorations promptly
after such results become available but in no event more than seven business
days following the Expiration Date.

SECTION 2. PRORATION; ACCEPTANCE FOR PAYMENT AND PAYMENT FOR CLASS A
INTERESTS. If the number of Class A Interests validly tendered on or prior to
the Expiration Date and not withdrawn is 940,064 or less, the Trust will accept
for payment, subject to the terms and conditions of the Offer, all Class A
Interests so tendered.

If the number of Class A Interests validly tendered on or prior to the
Expiration Date and not withdrawn exceeds 940,064, the Trust will accept for
payment, subject to the terms and conditions of the Offer, Class A Interests so
tendered on a pro rata basis (with appropriate adjustments to avoid purchase of
fractional Class A Interests). In the event that proration is required, because
of the difficulty of immediately determining the precise number of Class A
Interests to be accepted, the Trust does not expect to announce the final
results of prorations until at least ten business days following the Expiration
Date. The Trust will not pay for any Class A Interests tendered until after the
final proration factor has been determined. Notwithstanding any such delay in
payment, no interest will be paid on the Purchase Price.

<PAGE>

The Trust will pay for Class A Interests validly tendered and not withdrawn
in accordance with Section 4 as promptly as practicable following the Expiration
Date. In all cases, payment for Class A Interests purchased pursuant to the
Offer will be made only after timely receipt by the Depositary of a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and any
other documents required by the Letter of Transmittal. (See "Section 3.
Procedures for Tendering Class A Interests.") Under no circumstances will
interest be paid on the Purchase Price by reason of any delay in making such
payment.

If any tendered Class A Interests are not purchased for any reason, the
Letter of Transmittal with respect to such Class A Interests will be destroyed
by the Depositary. If for any reason acceptance for payment of, or payment for,
any Class A Interests tendered pursuant to the Offer is delayed or the Trust is
unable to accept for payment, purchase or pay for Class A Interests tendered
pursuant to the Offer, then, without prejudice to the Trust's rights under
Section 13, the Trust may retain tendered Class A Interests and such Class A
Interests may not be withdrawn except to the extent that the tendering Class A
Beneficiaries are entitled to withdrawal rights as described in Section 4;
provided, however, that the Trust is required, pursuant to Rule 14e-1(c) under
the Exchange Act, to pay Class A Beneficiaries the Purchase Price in respect of
Class A Interests tendered or return such Class A Interests promptly after
termination or withdrawal of the Offer.

SECTION 3. PROCEDURES FOR TENDERING CLASS A INTERESTS.

VALID TENDER. To tender Class A Interests validly, a properly completed
and duly executed Letter of Transmittal and any other documents required by the
Letter of Transmittal must be received by the Depositary on or prior to the
Expiration Date at the address or by means of facsimile transmission at the
facsimile number set forth on the back cover of this Offer to Purchase. In
order for his tender to be valid, a Class A Beneficiary must tender either
(i) all Class A Interests owned by such Class A Beneficiary or (ii) a portion of
his Class A Interests but not fewer than the minimum investment amount of 200
Class A Interests (80 Class A Interests for IRAs or other Qualified Plans).

ALTHOUGH THE TRUST HAS INCLUDED A PREADDRESSED ENVELOPE TO THE DEPOSITARY
WITH THIS OFFER FOR THE CONVENIENCE OF THE CLASS A BENEFICIARIES, THE METHOD OF
DELIVERY OF THE LETTER OF TRANSMITTAL IS AT THE OPTION AND SOLE RISK OF THE
TENDERING CLASS A BENEFICIARY AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL,
WITH RETURN RECEIPT REQUESTED, IS RECOMMENDED. iN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.

SIGNATURE ReQUIREMENTS. If the Letter of Transmittal is signed by the
registered holder of the Class A Interests and payment is to be made directly to
that holder, then no notarization or signature guarantee is required on the
Letter of Transmittal. Similarly, if the Class A Interests are tendered for the
account of a member firm of a registered national securities exchange, a member
of the National Association of Securities Dealers, Inc. or a commercial bank,
savings bank, credit union, savings and loan association or trust company having
an office, branch or agency in the United Stated (each, an "Eligible
Institution"), no notarization or signature guarantee is required on the Letter
of Transmittal. However, in all other cases, all signatures on the Letter of
Transmittal must either be notarized or guaranteed by an Eligible Institution.

In order for a tendering Class A Beneficiary to participate in the Offer,
Class A Interests must be validly tendered and not withdrawn on or prior to the
Expiration Date, which is 5:00 p.m., Eastern time, on September 12, 1997.

<PAGE>

OTHER REQUIREMENTS. By executing a Letter of Transmittal, a tendering
Class A Beneficiary irrevocably (i) appoints the Managing Trustee as such
Class A Beneficiary's agent, in the manner set forth in the Letter of
Transmittal, with full power of substitution, to the full extent of such Class A
Beneficiary's rights with respect to the Class A Interests tendered by such
Class A Beneficiary and accepted for payment by the Trust and (ii) assigns to
the Trust all future distributions (excluding the special distribution) from the
Trust with respect to such Class A Interests to the extent such distributions
are not paid to the tendering Class A Beneficiary. (To the extent such
distributions are paid to the tendering Class A Beneficiary, the Purchase Price
for such Class A Interests will be automatically reduced by a like amount.)
Such appointment and assignment will be effective when, and only to the extent
that, the Trust accepts such Class A Interests for payment. Upon such
acceptance for payment, all prior proxies, assignments and consents given by
such Class A Beneficiary with respect to such Class A Interests will, without
further action, be revoked, and no subsequent proxies, assignments or consents
may be given (and if given will not be effective). The designees of the Trustee
will, as to such Class A Interests, be empowered to exercise all voting and
other rights of such Class A Beneficiary as they in their sole discretion may
deem proper at any meeting of Class A Beneficiaries, by written consent or
otherwise.

DETERMINATION OF VALIDITY; REJECTION OF CLASS A INTERESTS; WAIVER OF
DEFECTS; NO OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the
validity, form, eligibility (including time of receipt) and acceptance for
payment of any tender of Class A Interests pursuant to the procedures described
above will be determined by the Managing Trustee, in its sole discretion, which
determination shall be final and binding. The Managing Trustee reserves the
absolute right to reject any or all tenders if not in proper form or if the
acceptance of, or payment for, the Class A Interests tendered may, in the
opinion of the Managing Trustee's counsel, be unlawful or in violation of the
Trust Agreement. The Managing Trustee also reserves the right to waive any
defect or irregularity in any tender with respect to any particular Class A
Interests of any particular Class A Beneficiary, and the Managing Trustee's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the Instructions thereto) will be final and binding. Neither
the Trust, the Managing Trustee, the Information Agent, the Depositary nor any
other person will be under any duty to give notification of any defects or
irregularities in the tender of any Class A Interests or will incur any
liability for failure to give any such notification.

A tender of Class A Interests pursuant to the procedures described above
will constitute a binding agreement between the tendering Class A Beneficiary
and the Trust on the terms set forth in the Offer.

SECTION 4. WITHDRAWAL RIGHTS. Except as otherwise provided in this
Section 4, all tenders of Class A Interests pursuant to the Offer are
irrevocable, provided that Class A Interests tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless already
accepted for payment as provided in this Offer to Purchase, may also be
withdrawn at any time after September 12, 1997.

For withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at the address or
facsimile number set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Class A Interests to be withdrawn and the number of Class A Interests to be
withdrawn and must be signed by the person(s) who signed the Letter of
Transmittal in the same manner as the Letter of Transmittal was signed.

<PAGE>

If purchase of, or payment for, Class A Interests is delayed for any reason
or if the Trust is unable to purchase or pay for Class A Interests for any
reason, then, without prejudice to the Trust's rights under the Offer, tendered
Class A Interests may be retained by the Depositary on behalf of the Trust and
may not be withdrawn except to the extent that tendering Class A Beneficiaries
are entitled to withdrawal rights as set forth in this Section 4; provided,
however, that the Trust is required, pursuant to Rule 14e-1(c) under the
Exchange Act, to pay Class A Beneficiaries the Purchase Price in respect of
Class A Interests tendered or return such Class A Interests promptly after
termination or withdrawal of the Offer.

Any Class A Interests properly withdrawn will be deemed not to be validly
tendered for purposes of the Offer. Withdrawn Class A Interests may be
re-tendered, however, by following the procedures described in Section 3 at any
time prior to the Expiration Date.

SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT. The Trust
expressly reserves the right, in its sole discretion, at any time and from time
to time, (i) to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any Class A
Interests, (ii) to terminate the Offer and not accept for payment any Class A
Interests not already accepted for payment or paid for, (iii) upon the
occurrence of any of the conditions specified in Section 13, to delay the
acceptance for payment of, or payment for, any Class A Interests not already
accepted for payment or paid for, and (iv) to amend the Offer in any respect
(including, without limitation, by increasing or decreasing the consideration
offered, increasing or decreasing the number of Class A Interests being sought,
or both). Notice of any such extension, termination or amendment will promptly
be disseminated to Class A Beneficiaries in a manner reasonably designed to
inform Class A Beneficiaries of such change in compliance with
Rule 13(e)-4(e)(2) under the Exchange Act. In the case of an extension of the
Offer, such extension will be followed by a press release or public announcement
which will be issued no later than 9:00 a.m., Eastern time, on the next business
day after the scheduled Expiration Date, in accordance with Rule 14e-1(d) under
the Exchange Act.

If the Trust extends the Offer, or if the Trust (whether before or after
its acceptance for payment of Class A Interests) is delayed in its payment for
Class A Interests or is unable to pay for Class A Interests pursuant to the
Offer for any reason, then, without prejudice to the Trust's rights under the
Offer, the Trust may retain tendered Class A Interests and such Class A
Interests may not be withdrawn except to the extent tendering Class A
Beneficiaries are entitled to withdrawal rights as described in Section 4;
provided, however, that the Trust is required, pursuant to Rule 14e-1(c) under
the Exchange Act, to pay Class A Beneficiaries the Purchase Price in respect of
Class A Interests tendered or return such Class A Interests promptly after
termination or withdrawal of the Offer.

If the Trust makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Trust will extend the Offer and disseminate additional tender offer
materials to the extent required by Rules 13e-4(e)(2) under the Exchange Act.
The minimum period during which an offer must remain open following a material
change in the terms of the offer or information concerning the offer will depend
upon the facts and circumstances, including the relative materiality of the
change in the terms or information. In the Commission's view, an offer should
remain open for a minimum of ten business days from the date the material change
is first published, sent or given to securityholders, and if material changes
are made with respect to information that approaches the significance of price
or the percentage of securities sought, a minimum of five business days may be
required to allow for adequate dissemination to securityholders and for investor
response. As used in this Offer to Purchase, "business day" means any day other
than Saturday, Sunday or a federal holiday, and consists of the time period from
12:01 a.m. through 12:00 midnight, Eastern time.

<PAGE>

The Trust intends to consummate the transactions contemplated by the Offer
if the conditions for closing, in the reasonable judgment of the Managing
Trustee, are satisfied.

SECTION 6. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following summary
is a general discussion of certain federal income tax consequences of a sale of
Class A Interests pursuant to the Offer. This summary is based on the Internal
Revenue Code of 1986, as amended (the "Code"), applicable Treasury regulations
thereunder, administrative rulings, practices and procedures and judicial
authority as of the date of the Offer. All of the foregoing are subject to
change, and any such change could affect the continuing accuracy of this
summary. This summary does not discuss all aspects of federal income taxation
that may be relevant to a particular Class A Beneficiary in light of such
Class A Beneficiary's specific circumstances or to certain types of Class A
Beneficiaries subject to special treatment under the federal income tax laws
(for example, foreign persons, dealers in securities, banks, insurance companies
and tax-exempt organizations), nor does it discuss any aspect of state, local,
foreign or other tax laws. Sales of Class A Interests pursuant to the Offer will
be taxable transactions for federal income tax purposes and may also be taxable
transactions under applicable state, local, foreign and other tax laws. EACH
CLASS A BENEFICIARY SHOULD CONSULT HIS TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES OF SELLING CLASS A INTERESTS PURSUANT TO THE OFFER.

The purchase of a partner's interest by the partnership is generally
treated as a redemption of the partner's interest which is taxable in accordance
with special rules which apply only to redemptions. The purchase of Class A
Interests by the Trust pursuant to the Offer to Purchase, however, differs from
a typical purchase in that (a) the Purchase Price will be paid from the proceeds
of the Class B Offering and (b) the admission of Class B Beneficiaries and the
corresponding purchase of Class A Interests will result in a reduction of the
interests of the Class A Beneficiaries in the Trust and an increase in the
interests of the Class B Beneficiaries in the Trust. It is likely that the
transaction will be treated as a sale of the Class A Interests to the Class B
Beneficiaries for federal income tax purposes. The following discussion assumes
that the transaction will be treated as a sale for federal income tax purposes
and that each Class A Beneficiary who tenders his Class A Interests disposes of
all his Class A Interests.

A taxable Class A Beneficiary will recognize gain or loss on a sale of
Class A Interests pursuant to the Offer equal to the difference between (i) the
Class A Beneficiary's "amount realized" on the sale and (ii) the Class A
Beneficiary's adjusted tax basis in the Class A Interests sold. The amount of a
Class A Beneficiary's adjusted tax basis in such Class A Interests will vary
depending upon such Class A Beneficiary's particular circumstances. The "amount
realized" with respect to a Class A Interest will be a sum equal to the amount
of cash received by the Class A Beneficiary for the Class A Interest pursuant to
the Offer plus the amount of Trust liabilities allocable to the Class A Interest
(as determined under Code Section 752) of which the Class A Beneficiary is
relieved.

As a general rule, the gain or loss recognized by a Class A Beneficiary on
a sale of a Class A Interest pursuant to the Offer should be treated as a
capital gain or loss if the Class A Interest was held by the Class A Beneficiary
as a capital asset. However, if any portion of the amount realized by a Class A
Beneficiary is attributable to "unrealized receivables" or "substantially
appreciated inventory" as defined in Code Section 751, then a portion of the
Class A Beneficiary's gain or loss will be ordinary rather than capital. The
term "unrealized receivables" includes all Trust assets subject to recapture of
cost recovery deductions determined as if a selling Class A Beneficiary's
proportionate share of all of the Trust's assets had been sold at that time.
Because the ordinary gain or loss from a Class A Beneficiary's share of
unrealized receivables and substantially appreciated inventory is

<PAGE>

computed separately from his gain or loss attributable to other Trust assets,
a Class A Beneficiary could have ordinary income and capital loss (which can
be used only to a limited extent to offset the ordinary income) on the sale
of his Class A Interests. Each Class A Beneficiary who has tendered his
Class A Interests has agreed that the Purchase Price be allocated first, to
cash, second, to the Trust assets and third, to goodwill and going concern
value. Based on the results of Trust operations through March 31, 1997, it
is estimated (based on computations utilizing averages for the Class A
Beneficiaries as a whole) that a Class A Beneficiary who tenders Class A
Interests will not recognize any ordinary income or ordinary loss, but will
recognize a capital loss of approximately $4.76 per Class A Interest for
federal income tax purposes.

Capital losses are deductible only to the extent of capital gains, except
that non-corporate taxpayers may deduct up to $3,000 of capital losses in excess
of the amount of their capital gains against ordinary income. Excess capital
losses generally may be carried forward to succeeding years (a corporation's
carryforward period is five years and a non-corporate taxpayer can carry forward
such losses indefinitely); in addition, corporations are allowed to carry back
excess capital losses to the three preceding taxable years. If a Class A
Beneficiary recognizes both ordinary income and capital loss as a result of the
sale of his Class A Interests, the limitations on the deductibility of capital
losses will restrict his ability to offset such ordinary income with such
capital loss. Long-term capital gains (gains from capital assets held for more
than one year) of individuals and other non-corporate taxpayers are taxed at a
maximum marginal federal income tax rate of 28%, whereas the maximum marginal
federal income tax rate for ordinary income of such persons is 39.6%. The
United States Senate and House of Representatives have passed the Taxpayer
Relief Act of 1997 (the "1997 Act") which was signed into law by President
Clinton on August 5, 1997. Class A Beneficiaries are urged to consult with
their tax advisors regarding the effect of the 1997 Act on the sale of their
Class A Interests.

Under Code Section 469, a non-corporate taxpayer or personal service
corporation can deduct passive activity losses in any year only to the extent of
such person's passive activity income for such year, and closely held
corporations may not offset such losses against so-called "portfolio" income.
The Trust constitutes a passive activity with respect to all Class A
Beneficiaries. Consequently, a loss recognized by a Class A Beneficiary upon a
sale of a Class A Interest pursuant to the Offer can be utilized to offset
(subject to other applicable limitations, e.g. the limitation on the deduction
of capital losses to not more than $3,000 of ordinary income, discussed above)
such Class A Beneficiary's allocable share of passive income from the Trust or
other passive activities for that year. Gain recognized by a Class A
Beneficiary upon such sale can be offset by such Class A Beneficiary's passive
activity losses (if any) from the Trust or other passive activities (subject to
other applicable limitations, e.g. the limitations on the deduction of capital
losses, discussed above). If a Class A Beneficiary disposes of all of his
Class A Interests pursuant to the Offer, such Class A Beneficiary generally will
be able to deduct his passive activity losses (if any) from the Trust that could
not previously be deducted due to the passive loss restrictions. However, such
suspended losses must be used first by such Class A Beneficiary against his gain
(if any) from the sale of his Class A Interests and his share of income or gain
of the Trust. Any excess suspended losses may be used to offset non-passive
income, ordinary or capital, subject to other applicable limitations, e.g. the
limitations on capital losses, discussed above.

The estimated capital loss of approximately $4.76 per Class A Interest is
based on the results of Trust operations through March 31, 1997. Final
computations of income and/or loss will be prepared by the Trust when it
prepares its federal income tax return for the year 1997. The Trust will
provide the Class A Beneficiaries with the information necessary to determine a
purchase price allocation. The estimated income and loss is calculated as if
the sale of Class A Interests occurred on March 31, 1997 and it does not take
into account

<PAGE>

Trust operations and cash distributions declared after March 31, both of
which will affect the actual amount and character (as capital gain or
ordinary income) of the income and/or loss realized as a result of a sale of
Class A Interests. Consequently, the actual amount of income and/or loss
realized by a Class A Beneficiary as a result of a sale of Class A Interests
may differ substantially from the estimated $4.76 of capital loss. This
estimate is based on computations utilizing averages for the Class A
Beneficiaries as a whole. The estimate does not consider any tax attributes,
such as passive losses or losses suspended due to basis or at risk
limitations, and it does not include alternative minimum tax or unrelated
business income tax implications. This estimate also does not address any
state tax consequences.

Gain realized by a foreign person on a sale of Class A Interests pursuant
to the Offer will be subject to federal income tax at the graduated rates
applicable to United States citizens or corporations under the regular tax or
alternative minimum tax. The treatment of gain as ordinary income or capital
gain and the application of Section 751 of the Code is the same for foreign
Class A Beneficiaries as for United States Class A Beneficiaries.

The income earned by a Qualified Plan or tax-exempt organization is
generally exempt from taxation. If, however, the Qualified Plan or tax-exempt
organization earns "unrelated business taxable income" ("UBTI"), this income is
subject to tax at trust or corporate income tax rates to the extent it exceeds
$1,000 during any fiscal year. The Internal Revenue Service (the "Service") may
assert that gain realized by a Class A Beneficiary that is a Qualified Plan or
tax-exempt organization on a sale of Class A Interests constitutes UBTI to the
extent of such Class A Beneficiary's allocable share of "unrealized receivables"
(including depreciation recapture) for purposes of Section 751 of the Code,
discussed above. In addition, all or a portion of any gain recognized on the
sale of Class A Interests will constitute UBTI if the Class A Interests
constitute debt-financed property, defined as property which is subject to
indebtedness incurred directly or indirectly in connection with the acquisition
or improvement of the property ("acquisition indebtedness"). Class A Interests
will constitute debt-financed property as a result of any indebtedness incurred
in connection with their acquisition. In addition, the Service may assert that
Class A Interests constitute debt-financed property as a result of a Class A
Beneficiary's allocable share of acquisition indebtedness of the Trust. Any
gain recognized by Qualified Plans or tax-exempt organizations as a result of a
sale of Class A Interests can be offset by such Class A Beneficiary's passive
activity losses (if any) from the Trust (subject to other applicable
limitations, e.g. the limitations on the deduction of capital losses, discussed
above). QUALIFIED PLANS AND TAX-EXEMPT ORGANIZATIONS ARE URGED TO CONSULT WITH
THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF SELLING CLASS A
INTERESTS PURSUANT TO THE OFFER.

SECTION 7. EFFECTS OF THE OFFER.

LIMITATIONS ON RESALES. Under the Trust Agreement, no Class A Interest may
be assigned or otherwise transferred to any person if, in the opinion of Trust
counsel, such transfer will result in the termination under the Code of the
Trust's taxable year (which termination may occur when more than 50% of the
Class A Interests are transferred in a twelve-month period) or its status as a
Trust unless the express written consent of the Managing Trustee is obtained.
Accordingly, sales of Class A Interests on the secondary market during the
twelve-month period following completion of the Offer may be limited. The Trust
will not process any request for a transfer of Class A Interests during such
twelve-month period which the Managing Trustee believes may cause a tax
termination.

CLASS A INTERESTS REGISTERED. The Class A Interests are registered under
the Exchange Act, which requires, among other things, that the Trust furnish
certain information to its Class A Beneficiaries and to the Commission and
comply with the Commission's proxy rules in connection with meetings of, and
solicitation of consents from,

<PAGE>

Class A Beneficiaries. The Trust does not expect or intend that consummation
of the Offer will result in the Class A Interests becoming eligible for
termination of registration under Section 12(g) of the Exchange Act. If the
Class A Interests were to be held of record by fewer than 300 persons, the
Trust could terminate the registration of the Class A Interests under the
Exchange Act. Because the Class A Interests are widely held and the Trust
will only acquire up to 45% of the Class A Interests outstanding, however,
the Trust expects that the Class A Interests will continue to be held of
record by substantially more than 300 persons.

EFFECT ON TRADING MARKET AND PRICE RANGE OF CLASS A INTERESTS. There is no
established public trading market for the Class A Interests. The Class A
Interests are not listed on any securities exchange and are not quoted on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ"). Therefore, a reduction in the number of Class A Beneficiaries
should not materially further restrict the Class A Beneficiaries' ability to
find purchasers for their Class A Interests.

Secondary sales activity for the Class A Interests have been limited and
sporadic. For a description of such activity, see "Section 12. Background of
the Offer."

SECTION 8. FUTURE PLANS. The Trust will pay for the Class A Interests
that it is seeking to acquire pursuant to the Offer with a portion of the net
proceeds of its recent Class B Offering. The Trust will seek to acquire
additional Class A Interests following the completion of the Offer with the
remaining net proceeds of the Class B Offering. Any such acquisition may be
made through private purchases, through one or more future tender offers or by
any other means deemed advisable. Any such acquisition may be at a price higher
or lower than the price to be paid for the Class A Interests purchased pursuant
to the Offer. Neither the Trust nor the Managing Trustee has any present plans
or intentions with respect to a liquidation, sale of assets or refinancing of
the Trust's equipment and other assets except in the ordinary course of business
and in order to effectuate the investment objectives of the Trust. (See
"Section 9. Certain Information Concerning the Trust.") However, the Managing
Trustee will continue to review any opportunities such as sale, re-lease or
refinancing of the Trust's equipment and will seek to maximize returns to the
Class A Beneficiaries in accordance with the investment objectives of the Trust.

SECTION 9. CERTAIN INFORMATION CONCERNING THE TRUST.

GENERAL INFORMATION. The Trust was created as a Delaware business trust in
accordance with the Delaware Business Trust Act on August 31, 1992 for the
purpose of acquiring and leasing to third parties a diversified portfolio of
capital equipment. Participants' capital initially consisted of contributions of
$1,000 from the Managing Trustee, $1,000 from the Special Beneficiary and $100
from the Initial Beneficiary. The Trust issued 204,355 Class A Interests to 260
investors for an aggregate purchase price of $5,108,875 on October 26, 1993, its
first interim closing. Sixteen subsequent interim closings in 1993, 1994 and
1995 resulted in the issuance by the Trust of an additional 1,884,675 Class A
Interests to 2,375 investors for an aggregate purchase price of $47,116,875.
Certain investors may have purchased Class A Interests in more than one closing.
The Trust's final closing for the Class A Interests occurred on February 6,
1995. In total, the Trust has issued 2,089,030 Class A Interests representing a
total purchase price of $52,225,750 to 2,635 investors. The Trust has one
Managing Trustee, AFG ASIT Corporation, an Affiliate of EFG, and one Special
Beneficiary, EFG. The Managing Trustee and the Special Beneficiary are not
required to make any other capital contributions.

The Trust issued 3,142,083 Class B Subordinated Interests on July 18, 1997
for $5 per interest for a total of $15,710,415, of which the designee of the
Special Beneficiary

<PAGE>

acquired $3,140,683 and the Class A Beneficiaries acquired $7,000 of the
Class B Subordinated Interests. (See "Section 11 - Source of Funds.")

FINANCIAL INFORMATION. Set forth below is certain selected financial
information relating to the Trust which has been excerpted or derived from the
financial statements contained in the Trust's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 (the "1996 Form 10-K") and its Quarterly
Report on Form 10-Q for the three months ended March 31, 1997 (the "March 1997
Form 10-Q") filed by the Trust with the Commission. The financial information
is qualified in its entirety by reference to such reports, including the
financial statements and related notes contained therein. Such reports and
other documents may be examined at and copies may be obtained from the offices
of the Commission at 450 Fifth Street, N.W., Washington, DC 20549, and
73 Tremont Street, Boston, Massachusetts 02108.

<PAGE>

SELECTED FINANCIAL DATA

The following data should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
financial statements.

For the years ended December 31, 1996, 1995, 1994 and for the period
October 26, 1993 (commencement of operations) to December 31, 1993:

Summary of Operations 1996 1995 1994 1993
- --------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Lease Revenue......................... $27,093,125 $17,068,315 $ 7,972,559 $133,330
Net income (loss)..................... $630,535 $3,629,331 $ 1,294,001 $(206,328)
Per Beneficiary Interest:
Net income (loss)................... $0.27 $1.59 $0.88 $(0.54)
Cash distributions.................. $1.39 $2.10 $2.40 $0.57

Financial Position
- -------------------
Total assets........................... $75,192,549 $87,519,870 $57,613,787 $25,565,922
Total long-term obligations............ $32,827,977 $42,655,805 $17,244,814 $11,234,064
Participants' capital.................. $40,884,836 $43,444,819 $39,294,051 $13,502,915
</TABLE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

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 begin to
fluctuate. Ultimately, all equipment will be sold and the Trust will be
dissolved. The Trust's operations commenced in 1993.

THREE MONTHS ENDED MARCH 31, 1997 COMPARED
TO THE THREE MONTHS ENDED MARCH 31, 1996

RESULTS OF OPERATIONS

For the three months ended March 31, 1997, the Trust recognized lease
revenue of $4,759,553 compared to $5,600,700 for the three months ended
March 31, 1996. The decrease in lease revenue from 1996 to 1997 was primarily
attributable to the Trust's sale of its interest in a vessel to the lessee in
December 1996. In the near-term, aggregate rental revenues are expected to
increase due to reinvestment of available proceeds in other equipment, including
proceeds resulting from the Trust's sale of its interest in the vessel discussed
above. Over time, the level of lease revenue will decline due to the expiration
of the Trust's primary lease term agreements.

<PAGE>

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

Interest income for the three months ended March 31, 1997 was $121,151,
compared to $13,821 for the same period in 1996. Interest income was generated
from temporary investment of available cash in short-term money market
instruments. Interest income was higher in the three months ended March 31, 1997
than in the same period in 1996 due to interest earned on sale proceeds
associated with the vessel discussed above. The amount of future interest income
is expected to fluctuate in relation to prevailing interest rates and the
collection of lease revenue and equipment sales proceeds.

For the three months ended March 31, 1997, the Trust sold equipment having
a net book value of $11,446 to existing lessees and third parties. These sales
resulted in a net loss for financial statement purposes, of $4,946 compared to a
net loss of $90,565 on equipment having a net book value of $357,510 for the
same period in 1996.

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

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

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

Depreciation and amortization expense was $3,142,119 and $3,541,915 for the
three months ended March 31, 1997 and 1996, respectively. For financial
reporting purposes, to the extent that an asset is held on primary lease term,
the Trust depreciates the difference between (i) the cost of the asset and
(ii) the estimated residual value of the asset on a straight-line basis over
such term. For purposes of this policy, estimated residual values represent
estimates of equipment values at the date of primary lease expiration. To the
extent that an asset is held beyond its primary lease term, the Trust continues
to depreciate the remaining net book value of the asset on a straight-line basis
over the asset's remaining economic life.

<PAGE>

Interest expense was $654,992 or 13.8% of lease revenue for the three
months ended March 31, 1997 and $892,672 or 15.9% of lease revenue for the same
period in 1996. Interest expense in the near-term is expected to increase due to
anticipated leveraging to be obtained to finance the acquisition of reinvestment
equipment, discussed above. Thereafter, interest expense will 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
indebtedness.

Management fees were 4.6% and 4.4% of lease revenue for the three months
ended March 31, 1997 and 1996, 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.

Operating expenses consist principally of administrative charges,
professional service costs, such as audit and legal fees, as well as printing,
distribution and remarketing expenses. Collectively, operating expenses
represented approximately 3% of lease revenue during the three months ended
March 31, 1997 and approximately 2.9% of lease revenue during the same period in
1996. The increase in operating expenses from 1996 to 1997 was due primarily to
professional service costs incurred in connection with the Solicitation and
Registration Statements described in Note 8 to the accompanying financial
statements. The amount of future operating expenses cannot be predicted with
certainty; however, such expenses are usually higher during the acquisition and
liquidation phases of a trust. Other fluctuations typically occur in relation to
the volume and timing of remarketing activities.

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. For the three months ended March 31, 1997,
operating activities generated net cash inflows of $4,315,994, after reductions
for equipment sale proceeds of approximately $1,618,000 received in connection
with the sale of the vessel and debt proceeds of $1,980,073 which relate to the
leveraging of certain rail equipment in the Trust's portfolio. These sale and
debt proceeds were due from EFG at December 31, 1996. For the three months ended
March 31, 1996, the Trust generated net cash inflows from operating activities
of $4,935,287. In the near-term, net cash inflows generated from operating
activities are expected to increase due to the acquisition of reinvestment
equipment as described below. Thereafter, renewal, re-lease and equipment sale
activities will cause the Trust's primary-term lease revenue and corresponding
sources of operating cash to decline. Overall, expenses associated with rental
activities, such as management fees, and net cash flow from operating activities
will decline as the Trust experiences a higher frequency of remarketing events.

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

<PAGE>

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

Cash expended for asset acquisitions and cash realized from asset disposal
transactions are reported under investing activities on the accompanying
Statement of Cash Flows. The Trust expended $1,239,741 to acquire equipment
during the three months ended March 31, 1996, pursuant to the reinvestment
provisions of the Trust's prospectus. The reinvestment equipment was financed
through a combination of leveraging and sale proceeds. During the three months
ended March 31, 1997, the Trust realized equipment sale proceeds of $6,500,
compared to $266,945 during the same period in 1996 Future inflows of cash from
asset disposals will vary in timing and amount and will be influenced by many
factors including, but not limited to the frequency and timing of lease
expirations, the type of equipment being sold, its condition and age, and future
market conditions.

The Trust obtained long-term financing in connection with certain equipment
leases. The origination of such indebtedness and the subsequent repayments of
principal are reported as components of financing activities. Cash inflows of
$997,888 in 1996 resulted from leveraging a portion of the Trust's equipment
portfolio with third-party lenders. Each note payable is recourse only to the
specific equipment financed and to the minimum rental payments contracted to be
received during the debt amortization period (which period generally coincides
with the lease rental term). As rental payments are collected, a portion or all
of the rental payment is used to repay the associated indebtedness. The amount
of cash used to repay debt during the three months ended March 31, 1997
increased as a result of leveraging obtained in 1996. In the near-term, the
amount of cash used to repay debt obligations will continue to increase as a
result of anticipated leveraging to be obtained in connection with the
acquisition of reinvestment equipment. Thereafter, the amount will decline as
the principal balance of notes payable is reduced through the collection and
application of rents. However, the Trust has balloon payment obligations of
$282,421 and $1,476,981 at the expiration of the primary lease terms related to
the Trust's proportionate ownership interest in an MD-87 jet aircraft leased by
Reno Air, Inc. and certain rail equipment, respectively.

Cash distributions to the Managing Trustee, the Special Beneficiary and the
Beneficiaries are declared and generally paid within fifteen days following the
end of each month. The payment of such distributions is presented as a component
of financing activities. For the three months ended March 31, 1997, the Trust
declared total cash distributions of Distributable Cash From Operations and
Distributable Cash From Sales and Refinancings of $942,653. In accordance with
the Trust Agreement, the Beneficiaries were allocated 90.75% of these
distributions, or $855,458; the Special Beneficiary was allocated 8.25% or
$77,769; and the Managing Trustee was allocated 1%, or $9,426.

For financial reporting purposes, the Managing Trustee and the Special
Beneficiary each has accumulated a capital deficit at March 31, 1997. This is
the result of aggregate cash distributions to these Participants being in excess
of their aggregate capital contributions ($1,000 each) and their respective
allocations of financial statement net income or loss. Ultimately, the existence
of a capital deficit for the Managing Trustee or the Special Beneficiary for
financial reporting purposes is not indicative of any further capital
obligations to the Trust by either the Managing Trustee or the Special
Beneficiary. However, for income tax purposes, the Trust Agreement requires that
income be allocated first to those Participants having negative tax capital
account balances so as to eliminate any such

<PAGE>

balances. In accordance with the Trust Agreement, upon the dissolution of the
Trust, the Managing Trustee will be required to contribute to the Trust an
amount equal to any negative balance which may exist in the Managing
Trustee's tax capital account. No such requirement exists with respect to the
Special Beneficiary. At December 31, 1996, the Managing Trustee had a
positive tax capital account balance.

At March 31, 1997, the Trust had aggregate future minimum lease payments of
$44,179,651 from contractual lease agreements (see Note 3 to the financial
statements), of which $29,594,007 will be used to amortize the principal balance
of notes payable (see Note 6 to the financial statements). Additional cash
inflows will be realized from future remarketing activities, such as lease
renewals and equipment sales, as well as from lease revenues generated by
equipment acquisitions from the Trust's anticipated reinvestment activities.
Presently, the Trust expects to acquire approximately $36,000,000 of
reinvestment equipment using cash of approximately $9,000,000 and additional
indebtedness, which will be amortized from the associated rental streams.
However, the extent of the Trust's total future reinvestment activities may
exceed this projection as a result of future equipment sales, the timing and
extent of which cannot be predicted with certainty. This is because the timing
and extent of equipment sales is often dependent upon the needs and interests of
the existing lessees. Some lessees may choose to renew their lease contracts,
while others may elect to return the equipment. In the latter instances, the
equipment could be re-leased to another lessee or sold to a third party.
Accordingly, as the Trust matures and a greater level of its equipment assets
become available for remarketing, the cash flows of the Trust will become less
predictable. In addition, the Trust will have cash outflows to satisfy interest
on indebtedness and to pay management fees and operating expenses. Ultimately,
the Trust is expected to meet its future disbursement obligations and to
distribute any excess of cash inflows over cash outflows to the Participants in
accordance with the Trust Agreement. However, several factors, including
month-to-month lease extensions, lessee defaults, equipment casualty events, and
early lease terminations could alter the Trust's anticipated cash flows as
described herein and in the accompanying financial statements and result in
fluctuations to the Trust's periodic cash distribution payments.

Cash distributions paid to the Participants consist of both a return of and
a return on capital. Cash distributions do not represent and are not indicative
of yield on investment. Actual yield on investment cannot be determined with any
certainty until conclusion of the Trust and will be dependent upon the
collection of all future contracted rents, the generation of renewal and/or
re-lease rents, and the residual value realized for each asset at its disposal
date. Future market conditions, technological changes, the ability of EFG to
manage and remarket the assets, and many other events and circumstances, could
enhance or detract from individual asset yields and the collective performance
of the Trust's equipment portfolio.

<PAGE>

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

YEAR ENDED DECEMBER 31, 1996
COMPARED TO THE YEAR ENDED DECEMBER 31, 1995 AND THE
YEAR ENDED DECEMBER 31, 1995
COMPARED TO THE YEAR ENDED DECEMBER 31, 1994

RESULTS OF OPERATIONS

For the year ended December 31, 1996, the Trust recognized lease revenue of
$27,093,125 compared to $17,068,315 and $7,972,559 for the years ended December
31, 1995 and 1994, respectively. Lease revenue increased from 1994 to 1996 due
to the acquisition of additional equipment throughout this period, including the
effects of reinvestment, and the recognition of early termination proceeds
received in 1996 in connection with the Trust's sale of its interest in a vessel
(see discussion below). The Trust's original equipment acquisition and
leveraging processes were completed in 1995. In the near-term, aggregate rental
revenues are expected to increase due to reinvestment of available proceeds in
other equipment, including proceeds resulting from the Trust's sale of its
interest in a vessel to the lessee. Over time, the level of lease revenue will
decline due to the expiration of the Trust's primary lease term agreements. The
Trust also earns interest income from temporary investments of rental receipts
and equipment sales proceeds in short-term instruments.

During the year ended December 31, 1996, the Trust sold equipment having a
net book value of $7,388,546 to existing lessees and third parties. These sales
resulted in a net loss, for financial statement purposes, of $5,149,874. The
equipment sales in 1996 include the Trust's interest in a vessel with an
original cost and net book value of $9,296,103 and $6,482,211, respectively,
which the Trust sold to an existing lessee in December 1996. In connection with
this sale, the Trust realized aggregate cash proceeds of $6,835,834, consisting
of early termination proceeds of $5,217,665 and sale proceeds of $1,618,169. For
financial statement purposes, the Trust recognized a net loss of $4,864,042,
excluding early termination proceeds recognized as lease revenue on the
accompanying Statement of Operations. The equipment was sold prior to the
expiration of the related lease term. The Trust intends to reinvest these
proceeds, net of associated debt, in other equipment in 1997.

During 1995, the Trust sold equipment having a net book value of $3,657,058
to existing lessees and third parties. These sales resulted in a net gain, for
financial statement purposes, of $1,466,398. The equipment sales included
certain railroad equipment with an

<PAGE>

original cost and net book value of $4,313,181 and $3,469,324, respectively,
which the Trust sold to a third party in December 1995. In connection with
this sale, the Trust realized sales proceeds of $2,658,456 and the purchaser
assumed related debt and interest of $2,170,369 and $95,675, respectively,
which resulted in a net gain, for financial statement purposes, of
$1,455,176. This equipment was sold prior to the expiration of the related
lease term. The majority of the Trust's sales proceeds were reinvested in
other equipment in 1995 with the balance having been reinvested in 1996.
There were no equipment sales during 1994.

Depreciation and amortization expense was $13,981,912, $11,013,576 and
$5,554,146 for the years ended December 31, 1996, 1995 and 1994, 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. (See Note 2 to the
financial statements herein) The increase in depreciation expense from 1994 to
1996 reflects the acquisition of equipment during 1994, 1995 and 1996 and the
corresponding length of ownership during the respective years.

The Trust recorded a write-down of the carrying value of its interest in a
Boeing 747 aircraft, representing an impairment, during the year ended December
31, 1996. The resulting charge, $2,400,000 ($1.04 per Beneficiary Interest) in
1996 was based on a comparison of the estimated net realizable value and
corresponding net carrying value for the Trust's interest in the aircraft. Net
realizable value was estimated based on (i) third-party appraisals of the
Trust's aircraft and (ii) EFG's assessment of prevailing market conditions for
similar aircraft. In recent years, market values for used commercial jet
aircraft have deteriorated, particularly with respect to certain older aircraft,
such as the Trust's Boeing 747, which may not meet noise regulation standards
set to commence in 2000. In addition, consistent price competition and other
pressures within the airline industry have inhibited sustained profitability for
many carriers. Most major airlines have had to re-evaluate their aircraft fleets
and operating strategies. Such issues complicate the determination of net
realizable value for specific aircraft, and particularly used aircraft, because
cost-benefit and market considerations may differ significantly between the
major airlines. Aircraft condition,

<PAGE>

age, passenger capacity, distance capability, fuel efficiency, and other
factors also influence market demand and market values for passenger jet
aircraft.

Interest expense was $3,480,122 or 12.8% of lease revenue in 1996,
$3,228,379 or 18.9% of lease revenue in 1995 and $939,055 or 11.8% of lease
revenue in 1994. Interest expense in the near-term is expected to increase due
to anticipated leveraging to be obtained to finance the acquisition of
reinvestment equipment, discussed above. Thereafter, interest expense will
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 indebtedness.

Management fees were 4%, 4.3% and 3.8% of lease revenue for the years ended
December 31, 1996, 1995 and 1994, 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.

Operating expenses consist principally of administrative charges,
professional service costs, such as audit and legal fees, as well as printing,
distribution and remarketing expenses. Collectively, operating expenses
represented 2.1% of lease revenue during both 1996 and 1995 and 2.4% of lease
revenue during 1994. Operating expenses were higher in 1996 than 1995 due to
remarketing fees incurred in connection with the sale of certain vessel
equipment and fees incurred in connection with the refinancing of the Trust's
interest in the vessel described below. In 1995, the Trust incurred legal costs
in connection with the equipment acquisition process. The amount of future
operating expenses cannot be predicted with certainty; however, such expenses
are usually higher during the acquisition and liquidation phases of a trust.
Other fluctuations typically occur in relation to the volume and timing of
remarketing activities.

LIQUIDITY AND CAPITAL RESOURCES AND DISCUSSION OF CASH FLOWS

The Trust by its nature is a limited life entity which was established for
specific purposes described in the preceding "Overview". As an equipment leasing
program, the Trust's principal operating activities derive from asset rental
transactions. Accordingly, the Trust's principal source of cash from operations
is provided by the collection of periodic rents. These cash inflows are used to
satisfy debt service obligations associated with leveraged leases, and to pay
management fees and operating costs. Operating activities generated net cash
inflows of $17,921,048, $12,432,491 and $6,098,294 for the years ended
December 31, 1996, 1995, and 1994, respectively. In the near-term, net cash
inflows generated from operating activities are expected to increase due to
additional reinvestment of the cash proceeds from the vessel transaction
previously discussed. Thereafter, renewal, re-lease and equipment sale
activities will cause the Trust's primary-term lease revenue and corresponding
sources of operating cash to decline. Overall, expenses associated with rental
activities, such as management fees, and net cash flow from operating activities
will decline as the Trust experiences a higher frequency of remarketing events.

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

<PAGE>

Cash expended for asset acquisitions and cash realized from asset disposal
transactions are reported under investing activities on the accompanying
Statement of Cash Flows. The Trust expended $1,243,539, $52,331,336 and
$27,166,357 to acquire equipment during the years ended December 31, 1996, 1995
and 1994, respectively, including new equipment acquired pursuant to the
reinvestment provisions of the Trust Agreement of approximately $1,200,000 and
$5,400,000 during the years ended December 31, 1996 and 1995, respectively. The
reinvestment equipment was financed through a combination of leveraging and sale
proceeds. During the year ended December 31, 1996, the Trust realized equipment
sale proceeds of $2,238,672, including $1,618,169 of proceeds from the vessel
transaction, compared to $2,857,412, including $2,658,456 of proceeds from the
rail transaction, during 1995. Future inflows of cash from asset disposals will
vary in timing and amount and will be influenced by many factors including, but
not limited to the frequency and timing of lease expirations, the type of
equipment being sold, its condition and age, and future market conditions.

The Trust obtained long-term financing in connection with certain equipment
leases. The origination of such indebtedness and the subsequent repayments of
principal are reported as components of financing activities. Cash inflows of
$9,862,477, $36,133,500 and $9,136,155 in 1996, 1995 and 1994, respectively,
resulted from leveraging a portion of the Trust's equipment portfolio with
third-party lenders. In September 1996, the Trust received $5,416,667 from the
refinancing of its interest in a vessel. The Trust repaid the existing debt
associated with the vessel of $1,912,591 plus accrued interest thereon.
(Subsequently, the indebtedness resulting from this refinancing was retired as a
result of the asset being sold to the lessee.) EFG also provided interim
financing of $5,275,161 to the Trust until third-party financing was finalized.

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 the near-term, the amount of
cash used to repay debt obligations will continue to increase as a result of
anticipated leveraging to be obtained in connection with the acquisition of
reinvestment equipment, discussed above. The amount of cash used to repay debt
in 1996 increased as a result of leveraging obtained in 1996 and 1995 and the
refinancing described above. Thereafter, the amount will decline as the
principal balance of notes payable is reduced through the collection and
application of rents. However, the Trust has balloon payment obligations of
$282,421 and $1,476,981 at the expiration of the primary lease terms related to
the Trust's proportionate ownership interest in an MD-87 jet aircraft leased by
Reno Air, Inc. and certain rail equipment, respectively.

Financing activities also included cash inflows from capital contributions
from the Beneficiaries (net of selling commissions and organization and offering
costs) of $5,324,047 and $28,020,904 in 1995 and 1994, respectively.
Substantially all of these funds were used to purchase equipment. The Trust's
Final Closing of capital contributions occurred on February 6, 1995.

<PAGE>

Cash distributions to the Managing Trustee, the Special Beneficiary and the
Beneficiaries are declared and generally paid within fifteen days following the
end of each month. The payment of such distributions is presented as a component
of financing activities. For the year ended December 31, 1996, the Trust
declared total cash distributions of Distributable Cash From Operations and
Distributable Cash From Sales and Refinancings of $3,190,518. In accordance with
the Trust Agreement, the Beneficiaries were allocated 90.75% of these
distributions, or $2,895,395; the Special Beneficiary was allocated 8.25%, or
$263,218; and the Managing Trustee was allocated 1%, or $31,905.

For financial reporting purposes, the Managing Trustee and the Special
Beneficiary each has accumulated a capital deficit at December 31, 1996. This is
the result of aggregate cash distributions to these Participants being in excess
of their aggregate capital contributions ($1,000 each) and their respective
allocations of financial statement net income or loss. (See Note 2 to the
financial statements-Allocation of Profits and Losses.) Ultimately, the
existence of a capital deficit for the Managing Trustee or the Special
Beneficiary for financial reporting purposes is not indicative of any further
capital obligations to the Trust by either the Managing Trustee or the Special
Beneficiary. However, for income tax purposes, the Trust Agreement requires that
income be allocated first to those Participants having negative tax capital
account balances so as to eliminate any such balances. In accordance with the
Trust Agreement, upon the dissolution of the Trust, the Managing Trustee will be
required to contribute to the Trust an amount equal to any negative balance
which may exist in the Managing Trustee's tax capital account. No such
requirement exists with respect to the Special Beneficiary. At December 31,
1996, the Managing Trustee has a positive tax capital account balance. (See Note
6 to the financial statements.)

At December 31, 1996, the Trust had aggregate future minimum lease payments
of $49,905,144 from contractual lease agreements (see Note 2 to the financial
statements), of which $32,827,977 will be used to amortize the principal balance
of notes payable (see Note 5 to the financial statements). Additional cash
inflows will be realized from future remarketing activities, such as lease
renewals and equipment sales, as well as from lease revenues generated by
equipment acquisitions from the Trust's anticipated reinvestment activities.
Presently, the Trust expects to acquire approximately $36,000,000 of
reinvestment equipment using working capital of approximately $9,000,000 and
additional indebtedness, which will be amortized from the associated rental
streams. However, the extent of the Trust's total future reinvestment activities
may exceed this projection as a result of future equipment sales, the timing and
extent of which cannot be predicted with certainty. This is because the timing
and extent of equipment sales is often dependent upon the needs and interests of
the existing lessees. Some lessees may choose to renew their lease contracts,
while others may elect to return the equipment. In the latter instances, the
equipment could be re-leased to another lessee or sold to a third party.
Accordingly, as the Trust matures and a greater level of its equipment assets
become available for remarketing, the cash flows of the Trust will become less
predictable. In addition, the Trust will have cash outflows to satisfy interest
on indebtedness and to pay management fees and operating expenses. Ultimately,
the Trust is expected to meet its future disbursement obligations and to
distribute any excess of cash inflows over cash outflows to the Participants in
accordance with the Trust Agreement. However, several factors, including
month-to-month lease extensions, lessee defaults, equipment casualty events, and
early lease terminations could alter the Trust's anticipated cash flows as
described herein and in the accompanying financial statements and result in
fluctuations to the Trust's periodic cash distribution payments.

<PAGE>

date. Future market conditions, technological changes, the ability of EFG to
manage and remarket the assets, and many other events and circumstances,
could enhance or detract from individual asset yields and the collective
performance of the Trust's equipment portfolio.

It is the intention of the Managing Trustee to maintain a cash distribution
level that is consistent with the operating cash flows of the Trust and to
optimize the long-term value of the Trust. A distribution level that is higher
than the Trust's operating cash flows could compromise the Trust's working
capital position, as well as its ability to refurbish or upgrade equipment in
response to lessee requirements or other market circumstances and, during its
reinvestment period, to purchase replacement equipment as original equipment is
remarketed. Accordingly, in order to better align monthly cash distributions
with the Trust's operating cash flows, the Managing Trustee reduced the level of
monthly cash distributions from an annualized rate of $2.52 per Beneficiary
Interest (the rate established and paid from the Trust's inception through
September 1995) to an annualized rate of $1.26 per Beneficiary Interest
commencing in October 1995. In October 1996, the Managing Trustee increased the
annualized distribution rate to $1.64 per Beneficiary Interest and expects that
the Trust will be able to sustain this distribution rate throughout 1997.
However, the nature of the Trust's principal cash flows gradually will shift
from rental receipts to equipment sale proceeds as the Trust matures. As this
occurs, the Trust's cash flows will become more volatile in that certain of the
Trust's equipment leases will be renewed and certain of its assets will be sold.
In some cases, the Trust may be required to expend funds to refurbish or
otherwise improve the equipment being remarketed in order to make it more
desirable to a potential lessee or purchaser. The Trust's Advisor, EFG, and the
Managing Trustee will attempt to monitor and manage these events to maximize the
residual value of the Trust's equipment and will consider these factors, in
addition to the collection of contractual rents, the retirement of scheduled
indebtedness and the Trust's future working capital and equipment requirements,
in establishing future cash distribution rates. Ultimately, the Participants
should expect that cash distribution rates will fluctuate over the long term as
a result of future remarketing activities.

SECTION 10. CONFLICTS OF INTEREST. The Managing Trustee and its
Affiliates own in the aggregate 44,164 Class A Interests and acquired 3,140,683
of the 3,142,083 Class B Subordinated Interests issued pursuant to the Class B
Offering. Accordingly, it is in the best interest of the Managing Trustee and
such Affiliates that a significant number of Class A Interests be tendered
pursuant to the Offer at a price which will enable the Trust to make
distributions in the future with respect to their Class A Interests and Class B
Interests in greater amounts than would otherwise be the case if such Class A
Interests were not tendered pursuant to the Offer.

SECTION 11. SOURCE OF FUNDS. The Trust issued 3,142,083 Class B
Subordinated Interests (the "Class B Interests") at the closing of the Class B
Offering on July 18, 1997 for which it received total proceeds of $15,710,415.
Of these proceeds approximately $331,326 is expected to be used to pay the
expenses of the Class B Offering, $3,075,818 will be used to make a special
distribution to the Class A Beneficiaries (the "Special Distribution") and the
approximate balance of $12,303,271 is now available to the Trust to redeem
Class A Interests pursuant to the Offer and in future transactions.

SECTION 12. BACKGROUND OF THE OFFER. In the fall of 1996, the Managing
Trustee began to give serious consideration to a tender offer to acquire Class A
Interests from Class A Beneficiaries who chose to participate in such an offer.
The Managing Trustee was aware of the then market for tender offers and the
desire for liquidity on the part of some investors, which made many such offers
successful for the buyers. The Managing Trustee then began to give serious
consideration to having the Trust itself make the offer, and to the possibility
of structuring a new securities offering by the Trust that would provide the
Trust with the funds necessary to implement a self-tender. The self-tender

<PAGE>

would permit the non-tendering Class A Beneficiaries to benefit from any
economic benefits realized from the redemption of Class A Interests. The
Trust's decision to proceed with this course of action was based on a number
of factors and in part on discussions with representatives of certain
securities firms that participated in the offering of the Class A Interests.
After considering the prices available to sellers of Class A Interests in the
Trust and other similar issuers, the Managing Trustee concluded that a
self-tender would afford the non-tendering Class A Beneficiaries an
opportunity to realize increased distributions in the future, a benefit to
the existing investors that would not be present in the case of a third-party
tender. Further, the Managing Trustee determined to structure the transaction
as an equity transaction so as to avoid the incurring of additional debt by
the Trust that could lead to reduced cash distributions. Any use by the Trust
in a self- tender of cash generated from asset sales or Trust operations
could similarly have reduced future distributions.

The following table sets forth the reported secondary market sale prices
for Class A Interests over the past two years:

Quarter Ended High Low Volume
- ------------- ------ ------- ------

6/30/95 NA NA NA
9/30/95 NA NA NA
12/31/95 $16.00 $14.05 9,406
3/31/96 $ 7.30 $ 7.30 200
6/30/96 $ 9.19 $ 8.20 5,400
9/30/96 NA NA NA
12/31/96 $ 9.45 $ 9.00 4,000
3/31/97 $11.00 $10.40 1,600
6/30/97 $12.20 $11.60 3,600

NA -- No Activity

At the time of the original offering of Class A Interests, the Managing
Trustee expected that liquidation of the Trust would occur within approximately
seven years of its formation. However, based upon the current portfolio of
equipment owned by the Trust, the Managing Trustee now believes that the
liquidation date of seven years will not be attained and the liquidation date
will now be approximately 13 years from organization (i.e., by 2006).

The Managing Trustee estimates that the current liquidation value of a
Class A Interest is approximately $15.58, after giving effect to the Special
Distribution. The net book value per Class A Interest at March 31, 1997 was
$19.76 (which does not take into account the 9.25% combined participation of the
Managing Trustee and Special Beneficiary in Trust distributions on the Special
Distribution). Average cumulative distributions since inception of the Trust
including the Special Distribution are $7.53 per Class A Interest.

The estimated fair market value of the Trust's Assets is based upon the
Managing Trustee's assessment of the net present value of the distributions that
a Class A Interest might realize (the "NPV"), assuming a discount rate of 10%
per annum and reducing such distributions by the Special Distribution.
(Assuming discount rates of 8% and 15%, the NPV would be $16.95 and $12.67,
respectively.) The Managing Trustee believes that the NPV is in excess of the
amount of cash consideration which an independent third party buyer would be
willing to pay for the Trust's assets, after taking into account lease
encumbrances and related indebtedness. In determining the NPV, the Managing
Trustee did not take into account reinvestment of sale proceeds, which could
increase or decrease

<PAGE>

the NPV. It is important to note that in many cases assets are re-leased by
lessees instead of being purchased at the end of the lease terms and it is
difficult to predict accurately the amount and time of receipt of any
residual proceeds. Further, the NPV will be affected by the number of Class
A Interests redeemed by the Trust from time to time and the price paid by the
Trust therefor.

Current net book value of the Trust's assets results in part from the
Trust's depreciation policy which is intended to allocate the cost of assets
over the period during which they produce economic benefit. The period of
greatest economic benefit is considered to correspond to each asset's primary
Lease term. Accordingly, the Trust depreciates the difference between the cost
of each asset and its estimated end-of-primary lease residual value over the
primary lease term. To the extent that an asset is leased beyond its primary
Lease term, the Trust continues to depreciate the then remaining net book value
over the asset's then remaining economic life. Using this methodology, the
Managing Trustee expects that the periodic reductions in net book value,
resulting from depreciation, will be consistent with corresponding reductions in
fair market value, resulting from normal wear and tear, age and obsolescence.
However, the Managing Trustee periodically evaluates the net carrying value of
the Trust's assets to determine whether it exceeds estimated net realizable
value. In accordance with FAS No. 121, adjustments to reduce the net carrying
value of assets to estimated fair market value are recorded in those instances
where estimated net realizable value is considered to be less than net carrying
value. In the judgment of the Managing Trustee, the current fair market value
of the Trust's assets is not representative of net realizable value, which is
greater than fair market value as it gives consideration to the aggregate
undiscounted future cash flows resulting from future contracted lease payments
plus the estimated residual value of the Trust's assets.

The Managing Trustee considered the foregoing factors, in particular the
reported secondary market sales prices of Class A Interests, and established a
Purchase Price of $10.75 per Class A Interest for the Offer. The Managing
Trustee believes that the Purchase Price is somewhat in excess of the price
available to Class A Beneficiaries in a secondary market and should enable the
Trust to accomplish the objectives of the Class B Offering in permitting the
Class A Beneficiaries desiring to do so to liquidate their investment in the
Trust while increasing future distributions to the Class A Beneficiaries who
determine not to tender their Class A Interests.

NO INDEPENDENT PERSON HAS BEEN RETAINED TO EVALUATE OR RENDER ANY OPINION
WITH RESPECT TO THE FAIRNESS OF THE PURCHASE PRICE AND NO REPRESENTATION IS MADE
BY THE TRUST OR ANY AFFILIATE OF THE TRUST AS TO SUCH FAIRNESS. THE TRUST DID
NOT ATTEMPT TO OBTAIN CURRENT INDEPENDENT VALUATIONS OR APPRAISALS OF THE
EQUIPMENT AND OTHER ASSETS OWNED BY THE TRUST. OTHER MEASURES OF THE VALUE OF
THE CLASS A INTERESTS MAY BE RELEVANT TO CLASS A BENEFICIARIES AND CLASS A
BENEFICIARIES SHOULD DETERMINE FOR THEMSELVES WHETHER THE METHOD EMPLOYED BY THE
TRUST, AND THE UNDERLYING ASSUMPTIONS, ARE REASONABLE. CLASS A BENEFICIARIES
ARE URGED TO CONSIDER CAREFULLY ALL OF THE INFORMATION CONTAINED HEREIN AND
CONSULT WITH THEIR OWN ADVISORS, TAX, FINANCIAL OR OTHERWISE, IN EVALUATING THE
TERMS OF THE OFFER BEFORE DECIDING WHETHER TO TENDER CLASS A INTERESTS.

SECTION 13. CONDITIONS OF THE OFFER. Notwithstanding any other term of
the Offer, the Trust shall not be required to accept for payment or to pay for
any Class A Interests tendered if all authorizations, consents, orders or
approvals of, or declarations or filings with, or expirations of waiting periods
imposed by, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign,

<PAGE>

necessary for the consummation of the transactions contemplated by the Offer
shall not have been filed, occurred or been obtained. Furthermore,
notwithstanding any other term of the Offer, the Trust shall not be required
to accept for payment or pay for any Class A Interests not theretofore
accepted for payment or paid for and may terminate or amend the Offer as to
such Class A Interests if, at any time on or after the date of the Offer and
before the acceptance of such Class A Interests for payment or the payment
therefor, any of the following conditions exists:

(a) a preliminary or permanent injunction or other order of any
federal or state court, government or governmental authority or agency
shall have been issued and shall remain in effect which (i) makes illegal,
delays or otherwise directly or indirectly restrains or prohibits the
making of the Offer or the acceptance for payment of or payment for any
Class A Interests by the Trust, (ii) causes any material diminution of the
benefits to be derived by the Trust as a result of the transactions
contemplated by the Offer, or (iii) might materially adversely affect the
business, properties, assets, liabilities, financial condition, operations,
results of operations or prospects of the Trust;

(b) there shall be any action taken, or any statute, rule, regulation
or order proposed, enacted, enforced, promulgated, issued or deemed
applicable to the Offer by any federal or state court, government or
governmental authority or agency, which might, directly or indirectly,
result in any of the consequences referred to in clauses (i) through (iii)
of paragraph (a) above;

(c) any change or development shall have occurred or been threatened
since the date hereof, in the business, properties, assets, liabilities,
financial condition, operations, results of operations or prospects of the
Trust, which, in the sole judgment of the Trust, is or may be materially
adverse to the Trust, including without limitation any adverse developments
with respect to any lease of Trust equipment, or the Trust shall have
become aware of any fact that, in the sole judgment of the Trust, does or
may have a material adverse effect on the value of the Class A Interests;

(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States; (iii) any limitation by any
governmental authority on, or other event which might affect, the extension
of credit by lending institutions or result in any imposition of currency
controls in the United States, (iv) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States, (v) a material change in United
States or other currency exchange rates or a suspension of a limitation on
the markets thereof, or (vi) in the case of any of the foregoing existing
at the time of the commencement of the Offer, a material acceleration or
worsening thereof;

(e) a tender or exchange offer for some or all of the Class A
Interests is made by another person; or

(f) it shall have been publicly disclosed or the Trust shall have
otherwise learned that (i) more than ten percent of the outstanding Class A
Interests have been or are proposed to be acquired by another person
(including a "group" within the meaning of Section 13(d)(3) of the Exchange
Act), or (ii) any person or group that prior to such date had filed a
Statement with the Commission pursuant to Section 13(d) or (g) of the
Exchange Act has increased or proposes to increase the

<PAGE>

number of Class A Interests beneficially owned by such person or group as
disclosed in such Statement by two percent or more of the outstanding
Class A Interests.

The foregoing conditions are for the sole benefit of the Trust and may be
asserted by the Trust regardless of the circumstances giving rise to such
conditions or may be waived by the Trust in whole or in part at any time and
from time to time in its sole discretion. Any determination by the Trust
concerning the events described above will be final and binding upon all
parties.

The Trust will purchase the Class A Interests tendered in accordance with
the Offer if, in the exercise of its reasonable judgment, it determines that
the conditions to the Offer have been satisfied.

SECTION 14. CERTAIN LEGAL MATTERS.

GENERAL. Except as set forth in this Section 14, the Trust is not aware of
any filings, approvals or other actions by any domestic or foreign governmental
or administrative agency that would be required prior to the acquisition of
Class A Interests by the Trust pursuant to the Offer. Should any such approval
or other action be required, it is the Trust's present intention that such
additional approval or action would be sought. While there is no present
intention to delay the purchase of Class A Interests tendered pursuant to the
Offer pending receipt of any such additional approval or the taking of any such
action, there can be no assurance that any such additional approval or action,
if needed, would be obtained without substantial conditions or that adverse
consequences might not result to the Trust's business, or that certain parts of
the Trust's business might not have to be disposed of or held separate or other
substantial conditions complied with in order to obtain such approval or action,
any of which could cause the Trust to elect to terminate the Offer without
purchasing Class A Interests thereunder. The Trust's obligation to purchase and
pay for Class A Interests is subject to certain conditions, including conditions
relating to the legal matters discussed in this Section 14.

PENDING LAWSUIT. On June 24, 1997, Leonard Rosenblum, J/B Investment
Partners, Small and Rebecca Barmack, Partners, and Barbara Hall (collectively,
the "Plaintiffs") commenced a derivative action in the Suffolk Superior Court of
the Commonwealth of Massachusetts against Equis Financial Group Limited
Partnership ("Equis" or "EFG") and a number of its Affiliates, including the
Managing Trustee of the Trust, Gary D. Engle and Geoffrey A. MacDonald as
defendants (the "Defendants") and a number of investment programs, including the
Trust, sponsored by Equis as nominal defendants (the "Nominal Defendants").

The Plaintiffs asserted claims on behalf of the Nominal Defendants for
common law fraud, breach of contract, breach of fiduciary duty and/or aiding or
abetting the breach of fiduciary duty owed to the Nominal Defendants against the
various managing general partners and the managing trustee of the investment
programs, including the Trust, and other entities and individuals (collectively,
the "Managing Defendants") that allegedly exercise control over the Nominal
Defendants.

The Plaintiffs allege, among other things, that the Managing Defendants
have exploited and are continuing to exploit the fiduciary positions through
which they control the Nominal Defendants for improper purposes by causing them
to enter into numerous transactions that are ultra vires and/or lack valid
business purposes which have resulted in the misappropriation and waste of the
Nominal Defendants' assets in order to further the Managing Defendants'
financial interests and to entrench them in their positions of control over the
Nominal Defendants. The Plaintiffs assert as an example of this conduct the
causing of the Trust to issue the Class B Interests and the efforts of the
Managing

<PAGE>

Defendants to sell the Class B Interests upon one-sided terms and conditions
that are designed to ensure that certain Managing Defendants are able to
acquire voting control over the Trust. Among other things, the Plaintiffs
requested that Managing Defendants be required to make restitution to the
Trust and the other Nominal Defendants.

The Managing Defendants believe that the lawsuit is without merit and
intend to defend vigorously against the lawsuit.

ANTITRUST. The Trust does not believe that the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of
Class A Interests contemplated by the Offer.

MARGIN REQUIREMENTS. The Class A Interests are not "margin securities"
under the regulations of the Board of Governors of the Federal Reserve System
and, accordingly, such regulations are not applicable to the Offer.

STATE TAKEOVER LAWS. Certain states, including the State of Delaware where
the Trust has been organized and the Commonwealth of Massachusetts where the
Trust is located, have adopted so-called "anti-takeover laws and regulations"
which purport, to varying degrees, to apply to attempts to acquire securities of
entities which are organized in such states or which have assets, security
holders, principal executive offices or a principal place of business therein.
The Trust believes that such anti-takeover laws do not apply to the Offer. If
any state anti-takeover statute is applicable to the Offer, the Trust might be
unable to accept for payment or purchase Class A Interests tendered pursuant to
the Offer or be delayed in continuing or consummating the Offer. In such case,
the Trust may not be obligated to accept for purchase or pay for any Class A
Interests tendered.

SECTION 15. CERTAIN FEES AND EXPENSES. Except as set forth in this
Section 15, the Trust will not pay any fees or commissions to any broker, dealer
or other person for soliciting tenders of Class A Interests pursuant to the
Offer. The Trust has retained Corporate Investor Communications, Inc. to act as
Information Agent and Trust Company of America to act as Depositary. The Trust
will pay the Information Agent and the Depositary reasonable and customary
compensation for their services in connection with the Offer, plus reimbursement
for reasonable out-of-pocket expenses, and will indemnify the Information Agent
against certain liabilities and expenses in connection therewith, including
liabilities under the federal securities laws. Further, the Trust reserves the
right to retain a broker/dealer registered to do business in various states to
the extent that the Trust determines that utilization of such broker/dealer
would be appropriate in connection with the Offer. In the event that any
broker/dealer is so retained, the Trust will pay all of its fees and expenses.
The Trust will also pay all costs and expenses of printing and mailing the
Offer.

SECTION 16. MISCELLANEOUS. The Trust is not aware of any jurisdiction in
which the making of the Offer is not in compliance with applicable law. If the
Trust becomes aware of any jurisdiction in which the making of the Offer would
not be in compliance with applicable law, the Trust will make a good faith
effort to comply with any such law. If, after such good faith effort, the Trust
cannot comply with any such law, the Offer will not be made to (nor will tenders
be accepted from or on behalf of) the holders of Class A Interests residing in
such jurisdiction.

No person has been authorized to give any information or to make any
representation on behalf of the Trust not contained herein or in the Letter of
Transmittal and, if given or made, such information or representation must not
be relied upon as having been authorized.

<PAGE>

The Trust has filed with the Commission a Schedule 13E-4 pursuant to
Rule 13e-4 under the Exchange Act, furnishing certain additional information
with respect to the Offer, and may file amendments thereto. The Schedule 13E-4
and any amendments thereto, including exhibits, may be inspected and copies may
be obtained at the same places and in the same manner as set forth in Section 9
hereof (except that they will not be available at the regional offices of the
Commission).

AFG Investment Trust D

August 7, 1997

<PAGE>

Facsimile copies of the Letters of Transmittal, properly completed and duly
executed will be accepted. The Letter of Transmittal and any other required
documents should be sent or delivered by each Class A Beneficiary or his broker,
dealer, commercial bank, trust company or other nominee to the Depositary at the
address set forth below:

The Depositary for this Offer is:

TRUST COMPANY OF AMERICA

By First Class Mail:

Trust Company of America
c/o Gemisys Corp.
7103 South Revere Parkway
Englewood, Colorado 80112

Attn: AFG Investment Trust D

By Facsimile: (800) 387-7365
Confirm by Telephone: (800) 387-7391

The Information Agent for this Offer is:

CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road
Carlstadt, NJ 07072-2586
Telephone: (800) 631-0988

Questions and requests for assistance may be directed to Corporate
Investor Communications, Inc. at the address and telephone number listed
above. Additional copies of this Offer to Purchase, the Letter of
Transmittal and other tender offer materials may also be obtained from
Corporate Investor Communications, Inc. as set forth above and will be
furnished promptly at the Trust's expense.

<PAGE>

FINANCIAL STATEMENTS

AFG INVESTMENT TRUST D

INDEX TO FINANCIAL STATEMENTS

PAGE
----

FINANCIAL STATEMENTS: F-1
Statement of Financial Position at March 31, 1997 and
December 31, 1996................................................... F-2
Statement of Operations for the three months ended
March 31, 1997 and 1996............................................. F-3
Statement of Cash Flows for the three months ended
March 31, 1997 and 1996............................................. F-4
Notes to the Financial Statements..................................... F-5
Report of Independent Auditors........................................ F-10
Statement of Financial Position at December 31, 1996 and 1995......... F-11
Statement of Operations for the years ended December 31, 1996,
1995 and 1994....................................................... F-12
Statement of Changes in Participants' Capital for the years
ended December 31, 1996, 1995 and 1994.............................. F-13
Statement of Cash Flows for the years ended December 31, 1996,
1995 and 1994....................................................... F-14
Notes to the Financial Statements..................................... F-15

F-1

<PAGE>

AFG INVESTMENT TRUST D

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

(Unaudited)

MARCH 31, DECEMBER 31,
ASSETS 1997 1996
- ------ --------- ------------
<S> <C> <C>
Cash and cash equivalents.............................. $10,384,291 $ 6,640,347
Rents receivable....................................... 2,605,296 3,347,306
Accounts receivable-affiliate.......................... 360,829 3,845,655
Equipment at cost, net of accumulated depreciation
of $32,228,269 and $29,093,445 at March 31, 1997
and December 31, 1996, respectively.................. 58,204,176 61,357,491
Organization costs, net of accumulated amortization
of $3,500 and $3,250 at March 31, 1997 and
December 31, 1996, respectively...................... 1,500 1,750
----------- -----------
Total assets....................................... $71,556,092 $75,192,549
----------- -----------

LIABILITIES AND PARTICIPANTS' CAPITAL
Notes payable.......................................... $29,594,007 $32,827,977
Accrued interest....................................... 491,729 727,187
Accrued liabilities.................................... 18,750 23,250
Accrued liabilities-affiliate.......................... 104,916 214,247
Deferred rental income................................. 371,927 200,836
Cash distributions payable to participants............. 314,216 314,216
----------- -----------
Total liabilities.................................. 30,895,545 34,307,713
----------- -----------
Participants' capital (deficit):
Managing Trustee..................................... (65,107) (62,865)
Special Beneficiary.................................. (544,388) (525,884)
Beneficiary Interests (2,089,030 Interests;
initial purchase price of $25 each)................ 41,270,042 41,473,585
----------- -----------
Total participants' capital........................ 40,660,547 40,884,836
----------- -----------
Total liabilities and participants' capital........ $71,556,092 $75,192,549
----------- -----------
</TABLE>

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

F-2
<PAGE>

AFG INVESTMENT TRUST D

STATEMENT OF OPERATIONS

for the three months ended March 31, 1997 and 1996
(Unaudited)

Income:
Lease revenue........................................ $4,759,553 $5,600,700
Interest income...................................... 121,151 13,821
Loss on sale of equipment............................ (4,946) (90,565)
---------- ----------
Total income....................................... 4,875,758 5,523,956
---------- ----------
Expenses:
Depreciation and amortization........................ 3,142,119 3,541,915
Interest expense..................................... 654,992 892,672
Equipment management fees-affiliate.................. 219,681 246,928
Operating expenses-affiliate......................... 140,602 163,595
---------- ----------
Total expenses..................................... 4,157,394 4,845,110
---------- ----------
Net income............................................. $ 718,364 $ 678,846
---------- ----------
Net income per Beneficiary Interest.................... $ 0.31 $ 0.29
---------- ----------
Cash distributions declared per Beneficiary
Interest............................................. $ 0.41 $ 0.31
---------- ----------
</TABLE>

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

F-3

<PAGE>

AFG INVESTMENT TRUST D

STATEMENT OF CASH FLOWS
for the three months ended March 31, 1997 and 1996
(Unaudited)

1997 1996
----------- -----------
<S> <C> <C>

Cash flows from (used in) operating activities:
Net income............................................ $ 718,364 $ 678,846
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization....................... 3,142,119 3,541,915
Loss on sale of equipment........................... 4,946 90,565
Changes in assets and liabilities
Decrease (increase) in:
rents receivable.................................. 742,010 397,646
accounts receivable-affiliate..................... 3,484,826 (652,951)
Increase (decrease) in:
accrued interest.................................. (235,458) (33,128)
accrued liabilities............................... (4,500) 3,636
accrued liabilities-affiliate..................... (109,331) 76,480
deferred rental income............................ 171,091 (182,045)
----------- -----------
Net cash from operating activities.............. 7,914,067 3,920,964
----------- -----------
Cash flows from (used in) investing activities:
Purchase of equipment............................... -- (1,239,741)
Proceeds from equipment sales....................... 6,500 266,945
----------- -----------
Net cash from (used in) investing activities.... 6,500 (972,796)
----------- -----------
Cash flows from (used in) financing activities:
Proceeds from notes payable......................... -- 997,888
Principal payments-notes payable.................... (3,233,970) (3,004,285)
Distributions paid.................................. (942,653) (725,117)
----------- -----------
Net cash used in financing activities........... (4,176,623) (2,731,514)
----------- -----------
Net increase in cash and cash equivalents............. 3,743,944 216,654
Cash and cash equivalents at beginning of period...... 6,640,347 669,998
----------- -----------
Cash and cash equivalents at end of period............ $10,384,291 $ 886,652
----------- -----------

Supplemental disclosure of cash flow information:
Cash paid during the period for interest............ $ 890,450 $ 925,800
----------- -----------
</TABLE>

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

F-4

<PAGE>

AFG INVESTMENT TRUST D

NOTES TO THE FINANCIAL STATEMENTS

MARCH 31, 1997
(UNAUDITED)

NOTE 1--BASIS OF PRESENTATION

The financial statements presented herein are prepared in conformity with
generally accepted accounting principles and the instructions for preparing
Form 10-Q under Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission and are unaudited. As such, these financial statements do not
include all information and footnote disclosures required under generally
accepted accounting principles for complete financial statements and,
accordingly, the accompanying financial statements should be read in
conjunction with the footnotes presented in the 1996 Annual Report. Except as
disclosed herein, there has been no material change to the information
presented in the footnotes to the 1996 Annual Report.

In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary to present fairly the financial
position at March 31, 1997 and December 31, 1996 and results of operations
for the three month periods ended March 31, 1997 and 1996 have been made and
are reflected.

NOTE 2--CASH

At March 31, 1997, the Trust had $10,265,000 invested in reverse
repurchase agreements secured by U.S. Treasury Bills or interests in U.S.
Government securities. Approximately, $9,000,000 of the Trust's cash is
expected to be used to acquire reinvestment equipment in 1997 and 1998.

NOTE 3--REVENUE RECOGNITION

Rents are payable to the Trust monthly, quarterly or semi-annually and no
significant amounts are calculated on factors other than the passage of time.
Rents from Reno Air, Inc. ("Reno Air"), as provided for in the lease
agreement, are adjusted monthly for changes in the London Inter-Bank Offered
Rate ("LIBOR"). Future rents from Reno Air, included below, reflect the most
recent LIBOR effected rental payment. The leases are accounted for as
operating leases and are noncancellable. Rents received prior to their due
dates are deferred. Future minimum rents of $44,179,651 are due as follows:

For the year ending March 31, 1998.................... $16,901,138
1999.................... 12,074,480
2000.................... 8,122,016
2001.................... 3,432,287
2002.................... 2,550,776
Thereafter.............. 1,098,954
------------
Total.................. $44,179,651
------------
------------

F-5

<PAGE>

NOTE 4--EQUIPMENT

The following is a summary of equipment owned by the Trust at March 31,
1997. In the opinion of Equis Financial Group ("EFG"), (formerly American
Finance Group), the acquisition cost of the equipment did not exceed its fair
market value.

<TABLE>
<CAPTION>
REMAINING
LEASE TERM EQUIPMENT
EQUIPMENT TYPE (MONTHS) AT COST
- -------------- ---------- ---------
<S> <C> <C>
Aircraft............................................... 9-71 $ 22,779,945
Locomotives............................................ 26-40 17,205,933
Vessels................................................ 67 13,875,360
Computers and peripherals.............................. 1-23 6,953,607
Construction and mining................................ 12-46 6,205,962
Materials handling..................................... 9-61 6,124,033
Retail store fixtures.................................. 3-34 4,930,049
Manufacturing.......................................... 14-21 3,849,128
Miscellaneous.......................................... 9-45 3,564,568
Communications......................................... 9-11 1,834,800
Tractors & heavy duty trucks........................... 1-22 1,255,967
Trailers/intermodal containers......................... 15-37 812,037
Research & test........................................ 1-37 664,901
Furniture & fixtures................................... 9-11 271,945
Photocopying........................................... -- 65,711
Motor vehicles......................................... 21 38,499
-----------
Total equipment cost............................................... 90,432,445
Accumulated depreciation........................................... (32,228,269)
-----------

Equipment, net of accumulated depreciation......................... $58,204,176
-----------
-----------

</TABLE>

At March 31, 1997, the Trust's equipment portfolio included equipment
having a proportionate original cost of $15,368,258, representing
approximately 17% of total equipment cost.

At March 31, 1997, the Trust was not holding any equipment not subject to
a lease and no equipment was held for sale or re-lease.

F-6

<PAGE>

NOTE 5--RELATED PARTY TRANSACTIONS

All operating expenses incurred by the Trust are paid by EFG on behalf of
the Trust and EFG is reimbursed at its actual cost for such expenditures.
Fees and other costs incurred during the three month periods ended March 31,
1997 and 1996, which were paid or accrued by the Trust to EFG or its
Affiliates, are as follows:

1997 1996
-------- --------
Equipment acquisition fees......................... -- $ 36,109
Equipment management fees.......................... $219,681 246,928
Administrative charges............................. 12,159 5,250
Reimbursable operating expenses due to
third parties.................................... 128,443 158,345
-------- --------
Total............................................ $360,283 $446,632
-------- --------
-------- --------

All rents and proceeds from the sale of equipment are paid directly to
either EFG or to a lender. EFG temporarily deposits collected funds in a
separate interest-bearing escrow account prior to remittance to the Trust. At
March 31, 1997, the Trust was owed $360,829 by EFG for such funds and the
interest thereon. These funds were remitted to the Trust in April 1997.

NOTE 6--NOTES PAYABLE

Notes payable at March 31, 1997 consisted of installment notes of
$29,594,007 payable to banks and institutional lenders. The notes bear
interest rates ranging between 5.1% and 13.75%, except for one note which
bears a fluctuating interest rate based on LIBOR plus a margin (5.7% at March
31, 1997). All of the installment notes are non-recourse, and are
collateralized by the equipment and assignment of the related lease payments.
Generally, the installment notes will be fully amortized by noncancellable
rents. However, the Trust has balloon payment obligations of $282,421 and
$1,476,981 at the expiration of the primary lease terms related to the Reno
Aircraft and certain rail equipment, respectively. The carrying value of
notes payable approximates fair value at March 31, 1997.

The annual maturities of the notes payable are as follows:

For the year ending March 31, 1998.................... $11,170,175
1999.................... 7,028,205
2000.................... 4,937,002
2001.................... 3,594,363
2002.................... 1,771,575
Thereafter.............. 1,092,687
-----------
Total................. $29,594,007
-----------
-----------

F-7

<PAGE>

NOTE 7--LEGAL PROCEEDINGS

On July 27, 1995, EFG, on behalf of the Trust and other EFG-sponsored
investment programs, filed an action in the Commonwealth of Massachusetts
Superior Court Department of the Trial Court in and for the County of
Suffolk, for damages and declaratory relief against a lessee of the Trust,
National Steel Corporation ("National Steel"), under a certain Master Lease
Agreement ("MLA") for the lease of certain equipment. EFG is seeking the
reimbursement by National Steel of certain sales and/or use taxes paid to the
State of Illinois and other remedies provided by the MLA. On August 30, 1995,
National Steel filed a Notice of Removal which removed the case to the United
States District Court, District of Massachusetts. On September 7, 1995,
National Steel filed its Answer to EFG's Complaint along with Affirmative
Defenses and Counterclaims, seeking declaratory relief and alleging breach of
contract, implied covenant of good faith and fair dealing and specific
performance. EFG filed its Answer to these counterclaims on September 29,
1995. Though the parties have been discussing settlement with respect to this
matter for some time, to date, the negotiations have been unsuccessful.
Notwithstanding these discussions, EFG recently filed an Amended and
Supplemental Complaint alleging a further default by National Steel under the
MLA and EFG recently filed a Summary Judgment on all claims and
counterclaims. The matter remains pending before the Court. The Trust has not
experienced any material losses as a result of this action.

NOTE 8--SOLICITATION AND REGISTRATION STATEMENTS

On October 26, 1996, the Managing Trustee, on behalf of the Trust, filed
a Solicitation Statement with the Securities and Exchange Commission which
was subsequently sent to the Beneficiaries pursuant to Regulation 14A of
Section 14 of the Securities Exchange Act. The Solicitation Statement sought
to solicit the consent of the Beneficiaries to a proposed amendment ("the
Amendment") to the Amended and Restated Declaration of Trust (the "Trust
Agreement").

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

Pursuant to the Trust Agreement, the adoption of the Amendment required
the consent of the Beneficiaries holding more than fifty percent in the
aggregate of the Interests held by all Beneficiaries. A majority of
Beneficiary Interests, representing 1,210,746 or 58% of all Beneficiary
Interests, voted in favor of the Amendment; 229,836 or 11% of all Beneficiary
Interests voted against the Amendment; and 39,233 or 2% of all Beneficiary
Interests abstained. Approximately 71% of all Beneficiary Interests
participated in the vote. Accordingly, the Amendment was adopted.

On February 12, 1997, the Trust filed a Registration Statement on Form
S-1 (which was amended on April 11, 1997 and May 9, 1997) with the Securities
and Exchange Commission which covers, among other things, the creation and
sale of a new class of beneficiary interests in the Trust (the "Class B
Interests"). A portion of the proceeds from the

F-8

<PAGE>

offering of the Class B Interests would be used to make a one-time special
cash distribution to existing Beneficiaries (the "Class A Beneficiaries") of
the Trust and to enable the Trust to redeem a portion of the existing
Beneficiary Interests (the "Class A Interests"). The characteristics of the
Class B Interests, associated risk factors, and other matters of importance
to the Beneficiaries and prospective purchasers of the Class B Interests are
contained in the Registration Statement.

F-9

<PAGE>
REPORT OF INDEPENDENT AUDITORS

To the Participants of AFG Investment Trust D:

We have audited the accompanying statement of financial position of AFG
Investment Trust D as of December 31, 1996 and 1995, and the related statements
of operations, changes in participants' capital, and cash flows for the years
ended December 31, 1996, 1995 and 1994. These financial statements are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of AFG Investment Trust D at
December 31, 1996 and 1995, and the results of its operations and its cash flows
for the years ended December 31, 1996, 1995 and 1994, in conformity with
generally accepted accounting principles.

ERNST & YOUNG LLP

Boston, Massachusetts
March 14, 1997

F-10

<PAGE>

AFG INVESTMENT TRUST D

STATEMENT OF FINANCIAL POSITION

December 31, 1996 and 1995

<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
ASSETS
Cash and cash equivalents.......................................................... $ 6,640,347 $ 669,998
Rents receivable................................................................... 3,347,306 2,854,161
Accounts receivable-affiliate...................................................... 3,845,655 109,551
Equipment at cost, net of accumulated depreciation of $29,093,445
and $15,958,176 at December 31, 1996 and 1995, respectively...................... 61,357,491 83,883,410
Organization costs, net of accumulated amortization of $3,250 and $2,250 at
December 31, 1996 and 1995, respectively......................................... 1,750 2,750
------------- -------------
Total assets................................................................... $ 75,192,549 $ 87,519,870
------------- -------------
------------- -------------

LIABILITIES AND PARTICIPANTS' CAPITAL
Notes payable...................................................................... $ 32,827,977 $ 42,655,805
Accrued interest................................................................... 727,187 677,345
Accrued liabilities................................................................ 23,250 43,851
Accrued liabilities-affiliate...................................................... 214,247 97,588
Deferred rental income............................................................. 200,836 358,760
Cash distributions payable to participants......................................... 314,216 241,702
------------- -------------
Total liabilities.............................................................. 34,307,713 44,075,051
------------- -------------
Participants' capital (deficit):
Managing Trustee................................................................. (62,865) (37,265)
Special Beneficiary.............................................................. (525,884) (314,685)
Beneficiary Interests (2,089,030 Interests; initial purchase price
of $25 each)................................................................... 41,473,585 43,796,769
------------- -------------
Total participants' capital.................................................... 40,884,836 43,444,819
------------- -------------
Total liabilities and participants' capital.................................... $ 75,192,549 $ 87,519,870
------------- -------------
------------- -------------
</TABLE>

The accompanying notes are an integral part of these financial statements

F-11

<PAGE>

AFG INVESTMENT TRUST D

STATEMENT OF OPERATIONS

for the years ended December 31, 1996, 1995 and 1994

<TABLE>
<CAPTION>
1996 1995 1994
------------- ------------- ------------
<S> <C> <C> <C>
Income:
Lease revenue........................................................ $ 27,093,125 $ 17,068,315 $ 7,972,559
Interest income...................................................... 197,035 423,700 308,028
Gain (loss) on sale of equipment..................................... (5,149,874) 1,466,398 --
------------- ------------- ------------
Total income..................................................... 22,140, 286 18,958,413 8,280,587
------------- ------------- ------------

Expenses:
Depreciation and amortization........................................ 13,981,912 11,013,576 5,554,146
Write-down of equipment.............................................. 2,400,000 -- --
Interest expense..................................................... 3,480,122 3,228,262 899,227
Interest expense--affiliate.......................................... -- 117 39,828
Equipment management fees--affiliate................................. 1,071,560 737,323 303,749
Operating expenses--affiliate........................................ 576,157 349,804 189,636
------------- ------------- ------------
Total expenses................................................... 21,509,751 15,329,082 6,986,586
------------- ------------- ------------
------------- ------------- ------------
Net income........................................................... $ 630,535 $ 3,629,331 $ 1,294,001
------------- ------------- ------------
Net income per Beneficiary Interest.................................. $ 0.27 $ 1.59 $ 0.88
------------- ------------- ------------
Cash distributions declared per Beneficiary Interest................. $ 1.39 $ 2.10 $ 2.40
------------- ------------- ------------
</TABLE>

The accompanying notes are an integral part of these financial statements

F-12

<PAGE>

AFG INVESTMENT TRUST D

STATEMENT OF CHANGES IN PARTICIPANTS' CAPITAL

for the years ended December 31, 1996, 1995 and 1994

<TABLE>
<CAPTION>
MANAGING SPECIAL BENEFICIARIES
TRUSTEE BENEFICIARY -------------------------
AMOUNT AMOUNT INTERESTS AMOUNT TOTAL
---------- ----------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1993................. $ (3,234) $ (33,934) 615,220 $ 13,540,083 $ 13,502,915
Participants' capital-contribution........... -- -- 1,238,493 30,962,325 30,962,325
Less:
Selling commissions........................ -- -- -- (2,167,363) (2,167,363)
Organization and offering costs............ -- -- -- (774,058) (774,058)
Net income--1994............................. 12,940 106,755 -- 1,174,306 1,294,001
Cash distributions declared.................. (35,238) (290,711) -- (3,197,820) (3,523,769)
---------- ----------- ---------- ------------- -------------
Balance at December 31, 1994................. (25,532) (217,890) 1,853,713 39,537,473 39,294,051
Participants' capital contribution........... -- -- 235,317 5,882,925 5,882,925
Less:
Selling commissions........................ -- -- -- (411,805) (411,805)
Organization and offering costs............ -- -- -- (147,073) (147,073)
Net income--1995............................. 36,293 299,420 -- 3,293,618 3,629,331
Cash distributions declared.................. (48,026) (396,215) -- (4,358,369) (4,802,610)
---------- ----------- ---------- ------------- -------------
Balance at December 31, 1995................. (37,265) (314,685) 2,089,030 43,796,769 43,444,819
Net income--1996............................. 6,305 52,019 -- 572,211 630,535
Cash distributions declared.................. (31,905) (263,218) -- (2,895,395) (3,190,518)
---------- ----------- ---------- ------------- -------------
Balance at December 31, 1996................. $ (62,865) $ (525,884) 2,089,030 $ 41,473,585 $ 40,884,836
---------- ----------- ---------- ------------- -------------
</TABLE>

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

F-13

<PAGE>
AFG INVESTMENT TRUST D

STATEMENT OF CASH FLOWS

for the years ended December 31, 1996, 1995 and 1994

<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from (used in) operating activities:
Net income............................................. $ 630,535 $ 3,629,331 $ 1,294,001
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation and amortization........................ 13,981,912 11,013,576 5,554,146
Write-down of equipment.............................. 2,400,000 -- --
(Gain) loss on sale of equipment..................... 5,149,874 (1,466,398) --
Changes in assets and liabilities:
Decrease (increase) in:
Rents receivable................................... (493,145) (1,832,104) (606,831)
Accounts receivable-affiliate...................... (3,736,104) 458,361 (452,105)
Increase (decrease) in:
Accounts payable................................... -- -- (59,556)
Accrued interest................................... 49,842 412,865 291,570
Accrued liabilities................................ (20,601) (18,284) 50,635
Accrued liabilities--affiliate..................... 116,659 49,350 23,148
Deferred rental income............................. (157,924) 185,794 3,286
------------ ------------ ------------
Net cash from operating activities............... 17,921,048 12,432,491 6,098,294
------------ ------------ ------------
Cash flows from (used in) investing activities:
Purchase of equipment................................ (1,243,539) (52,331,336) (27,166,357)
Proceeds from equipment sales........................ 2,238,672 2,857,412 --
------------ ------------ ------------
Net cash from (used in) investing activities..... 995,133 (49,473,924) (27,166,357)
------------ ------------ ------------
Cash flows from (used in) financing activities:
Proceeds from capital contributions.................. -- 5,882,925 30,962,325
Payment of selling commissions....................... -- (411,805) (2,167,363)
Payment of organization and offering costs........... -- (147,073) (774,058)
Proceeds from notes payable.......................... 9,862,477 36,133,500 9,136,155
Proceeds from notes payable-affiliate................ -- -- 5,275,161
Principal payments-notes payable..................... (19,690,305) (8,552,140) (3,125,405)
Principal payments-notes payable-affiliate........... -- -- (5,665,329)
Distributions paid................................... (3,118,004) (4,992,336) (3,196,705)
------------ ------------ ------------
Net cash from (used in) financing activities..... (12,945,832) 27,913,071 30,444,781
Net increase (decrease) in cash and cash equivalents... 5,970,349 (9,128,362) 9,376,718
Cash and cash equivalents at beginning of year......... 669,998 9,798,360 421,642
------------ ------------ ------------
Cash and cash equivalents at end of year............... $ 6,640,347 $ 669,998 $ 9,798,360
------------ ------------ ------------
Supplemental disclosure of cash flow information:
Cash paid during the year for interest............... $ 3,430,280 $ 2,818,802 $ 646,022
------------ ------------ ------------
</TABLE>

Supplemental schedule of non-cash investing and financing activities:

During 1995, the Trust sold equipment to a third party which assumed related
debt and interest of $2,170,369 and $95,675, respectively.

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

F-14

<PAGE>

AFG INVESTMENT TRUST D

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 1996

NOTE 1--ORGANIZATION AND TRUST MATTERS

The Trust was organized as a Delaware business trust in accordance with the
Delaware Business Trust Act on August 31, 1992 for the purpose of acquiring and
leasing to third parties a diversified portfolio of capital equipment.
Participants' capital initially consisted of contributions of $1,000 from the
Managing Trustee, AFG ASIT Corporation, $1,000 from the Special Beneficiary,
Equis Financial Group Limited Partnership (formerly American Finance Group), a
Massachusetts limited partnership ("EFG"), and $100 from the Initial
Beneficiary, AFG Assignor Corporation, a wholly-owned affiliate of EFG. The
Trust's first Interim Closing occurred on October 26, 1993 and resulted in the
issuance of 204,355 Beneficiary Interests to 260 investors, at an aggregate
purchase price of $5,108,875. As of December 31, 1995, the Trust had concluded
an additional sixteen Interim Closings which collectively resulted in the
issuance of 1,884,675 Beneficiary Interests to 2,375 investors, having an
aggregate subscription price of $47,116,875. The trust's final closing occurred
on February 6, 1995. In total, the trust has issued 2,089,030 Beneficiary
Interests representing a total purchase price of $52,225,750 to 2,635 investors.
The Trust's Managing Trustee, AFG ASIT Corporation, a Massachusetts corporation
and affiliate of EFG, is responsible for the general management and business
affairs of the Trust. EFG is the Special Beneficiary of the Trust and also acts
as Advisor to the Trust. As Advisor, EFG provides services in connection with
the acquisition and remarketing of the Trust's assets. The Managing Trustee and
the Special Beneficiary are not required to make any other capital contributions
except as may be required under the Amended and Restated Declaration of Trust
(the "Trust Agreement").

Significant operations commenced coincident with the Trust's initial
purchase of equipment and the associated lease commitments on October 26, 1993.
Pursuant to the Trust Agreement, each distribution of Distributable Cash From
Operations and Distributable Cash From Sales or Refinancings of the Trust shall
be made 90.75% to the Beneficiaries, 8.25% to the Special Beneficiary and 1% to
the Managing Trustee.

Under the terms of the Management Agreement between the Trust and EFG,
management services are provided by EFG to the Trust at fees which the Managing
Trustee believes to be competitive for similar services. (Also see Note 4.)

EFG is a Massachusetts limited partnership formerly known as American
Finance Group ("AFG"). AFG was established in 1988 as a Massachusetts general
partnership and succeeded American Finance Group, Inc., a Massachusetts
corporation organized in 1980. EFG and its subsidiaries (collectively, the
"Company") are engaged in various aspects of the equipment leasing business,
including EFG's role as Equipment Manager or Advisor to the Trust and several
other Direct-Participation equipment leasing programs sponsored or co-sponsored
by EFG (the "Other Investment Programs"). The Company arranges to broker or
originate equipment leases, acts as remarketing agent and asset manager, and
provides leasing support services, such as billing, collecting, and asset
tracking.

The general partner of EFG, with a 1% controlling interest, is Equis
Corporation, a Massachusetts corporation owned and controlled entirely by Gary
D. Engle, its President and Chief Executive Officer. Equis Corporation also owns
a controlling 1% general partner interest in EFG's 99% limited partner, GDE
Acquisition Limited Partnership ("GDE LP").

F-15

<PAGE>

Equis Corporation and GDE LP were established in December 1994 by Mr. Engle
for the sole purpose of acquiring the business of AFG.

In January 1996, the Company sold certain assets of AFG relating
primarily to the business of originating new leases, and the name "American
Finance Group," and its acronym to a third party (the "Buyer"). AFG changed
its name to Equis Financial Group Limited Partnership after the sale was
concluded. Pursuant to terms of the sale agreements, EFG agreed not to
compete with the Buyer's lease origination business for a period of five
years; however, EFG is permitted to originate certain equipment leases,
principally those involving non-investment grade lessees and ocean-going
vessels, which are not in competition with the Buyer. In addition, the sale
agreements specifically reserved to EFG the rights to continue using the name
American Finance Group and its acronym in connection with the Trust and the
Other Investment Programs and to continue managing all assets owned by the
Trust and the Other Investment Programs, including the right to satisfy all
required equipment acquisitions utilizing either brokers or the Buyer.
Geoffrey A. MacDonald, Chairman of Equis Corporation and Gary D. Engle agreed
not to compete with the sold business on terms and conditions similar to
those for the Company.

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

STATEMENT OF CASH FLOWS

The Trust considers liquid investment instruments purchased with a maturity
of three months or less to be cash equivalents. From time to time, the Trust
invests excess cash with large institutional banks in reverse repurchase
agreements with overnight maturities. Under the terms of the agreements, title
to the underlying securities passes to the Trust. The securities underlying the
agreements are book entry securities. Approximately $9,000,000 of the Trust's
working capital at December 31, 1996, including approximately $6,000,000 of
cash, is expected to be used to acquire reinvestment equipment in 1997 and 1998.

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 $49,905,144 are due as follows:

FOR THE YEAR ENDING DECEMBER 31,
--------------------------------
1997.................................................. $ 17,982,522
1998.................................................. 13,080,840
1999.................................................. 9,188,608
2000.................................................. 5,365,027
2001.................................................. 2,551,644
Thereafter............................................ 1,736,503
-------------
Total............................................. $ 49,905,144
-------------
-------------

F-16

<PAGE>

Revenue from major individual lessees which accounted for 10% or more of
lease revenue during the years ended December 31, 1996, 1995 and 1994:

<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Emery Worldwide......................................................... -- $ 2,402,532 --
Chantel Shipping Corporation............................................ -- $ 1,717,796 --
Stena Bulk AB........................................................... $ 6,959,077 $ 1,894,280 $ 1,894,283
British Airways Plc..................................................... -- -- $ 1,680,000
Diamond Shamrock Refining and Marketing Company......................... -- -- $ 1,159,454
</TABLE>

In 1996, the Trust realized early termination proceeds of $5,217,665 related
to the sale of the Stena vessel to the existing lessee. Refer to Note 3 to the
financial statements for further discussion of this transaction.

During March 1996, the Trust acquired an 8.86% proportionate ownership
interest in an MD-87 jet aircraft leased by Reno Air, Inc. (the "Reno Aircraft")
- --See Note 3 herein. The Trust will receive approximately $159,000 of rental
revenue in each of the years in the period ending December 31, 2002. Rents from
the Reno Aircraft, as provided for in the lease agreement, are adjusted monthly
for changes of the London Inter-Bank Offered Rate ("LIBOR"). Future rents from
the Reno Aircraft included above reflect the most recent LIBOR effected rental
payment.

USE OF ESTIMATES

The preparation of the financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.

EQUIPMENT ON LEASE

All equipment was acquired from EFG, one of its Affiliates or from
third-party sellers. Equipment cost represents Asset Base Price plus acquisition
fees and was determined in accordance with the Trust Agreement and certain
regulatory guidelines. Asset Base Price is affected by the relationship of the
seller to the Trust as summarized herein. Where the seller of the equipment was
EFG or an Affiliate, Asset Base Price was the lower of (i) the actual price paid
for the equipment by EFG or the Affiliate plus all actual costs accrued by EFG
or the Affiliate while carrying the equipment less the amount of all primary
term rents earned by EFG or the Affiliate prior to selling the equipment or (ii)
fair market value as determined by the Managing Trustee in its best judgment,
including all liens and encumbrances on the equipment and other actual expenses.
Where the seller of the equipment was a third party who did not manufacture the
equipment, Asset Base Price was the lower of (i) the price invoiced by the third
party or (ii) fair market value as determined by the Managing Trustee. Where the
seller of the equipment was a third party who also manufactured the equipment,
Asset Base Price was the manufacturer's invoice price, net of any manufacturer
rebates or incentives, which price was considered to be representative of fair
market value.

F-17

<PAGE>

DEPRECIATION AND AMORTIZATION

The Trust's depreciation policy is intended to allocate the cost of
equipment over the period during which it produces economic benefit. The
principal period of economic benefit is considered to correspond to each asset's
primary lease term, which term generally represents the period of greatest
revenue potential for each asset. Accordingly, to the extent that an asset is
held on primary lease term, the Trust depreciates the difference between (i) the
cost of the asset and (ii) the estimated residual value of the asset on a
straight-line basis over such term. For purposes of this policy, estimated
residual values represent estimates of equipment values at the date of 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.
Periodically, the Managing Trustee evaluates the net carrying value of equipment
to determine whether it exceeds estimated net realizable value. For purposes of
this comparison, "net carrying value" represents, at a given date, the net book
value (equipment cost less accumulated depreciation for financial reporting
purposes) of the Trust's equipment and "net realizable value" represents, at the
same date, the aggregate undiscounted cash flows resulting from future
contracted lease payments plus the estimated residual value of the Trust's
equipment. The Managing Trustee evaluates significant equipment assets, such as
aircraft and vessels, individually. All other assets are evaluated collectively
by equipment type unless the Managing Trustee learns of specific circumstances,
such as a lessee default, technological obsolescence, or other market
developments, which could affect the net realizable value of particular assets.
In accordance with FAS No. 121, adjustments to reduce the net carrying value of
equipment to estimated fair market value are recorded in those instances where
estimated net realizable value is considered to be less than net carrying value.
Such adjustments are reflected separately on the accompanying Statement of
Operations as Write-Down of Equipment.

Organization costs are amortized using the straight-line method over a
period of five years.

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES--AFFILIATE

The Trust reports the unpaid cost of equipment purchased from third-party
vendors as Accounts Payable. Unpaid operating expenses paid by EFG on behalf of
the Trust and accrued but unpaid administrative charges are reported as Accrued
Liabilities--Affiliate. (See Note 4.)

ALLOCATION OF PROFITS AND LOSSES

For financial statement purposes, net income or loss is allocated to each
Participant according to their respective ownership percentages (90.75% to the
Beneficiaries, 8.25% to the Special Beneficiary and 1% to the Managing Trustee).
See Note 6 concerning allocation of income or loss for income tax purposes.

F-18

<PAGE>

NET INCOME AND CASH DISTRIBUTIONS PER BENEFICIARY INTEREST

Net income and cash distributions per Beneficiary Interest are based on
2,089,030 Beneficiary Interests outstanding during the year ended December 31,
1996 and the weighted average number of Beneficiary Interests outstanding during
the years ended December 31, 1995 and 1994 after allocation of the Managing
Trustee's and Special Beneficiary's shares of net income and cash distributions.
The weighted average number of Beneficiary Interests outstanding during the
years ended December 31, 1995 and 1994 were 2,073,427, and 1,332,575,
respectively. The weighted average number of Beneficiary Interests was
calculated based on the total number of Beneficiary Interests outstanding and
the number of days each Beneficiary Interest was outstanding during the
respective periods.

PROVISION FOR INCOME TAXES

No provision or benefit from income taxes is included in the accompanying
financial statements. The Participants are responsible for reporting their
proportionate shares of the Trust's taxable income or loss and other tax
attributes on their tax returns.

F-19

<PAGE>

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In March 1995, the Financial Accounting Standards Board issued Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amounts. Statement 121 also addresses the
accounting for long-lived assets that are expected to be disposed of. The Trust
adopted Statement 121 in the first quarter of 1996. The adoption of Statement
121 did not have a material effect on the financial statements of the Trust.

NOTE 3--EQUIPMENT

The following is a summary of equipment owned by the Trust at December 31,
1996. Remaining Lease Term (Months), as used below, represents the number
of months remaining from December 31, 1996 under contracted lease terms and
is presented as a range when more than one lease agreement is contained in
the stated equipment category. 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 LOCATION
- -------------- ---------- ------------ --------------------------
<S> <C> <C> <C>
Aircraft................................ 12-74 $ 22,779,945 MA/NV/OH/Foreign
Locomotives............................. 29-43 17,205,933 IL/NE/PA
Vessels................................. 70 13,875,360 Foreign
Computers and peripherals............... 1-24 6,953,607 AL/CA/CO/FL/GA/IL/IN/KS/
MA/MD/MI/MN/NC/NE/NY/
OH/TN/TX/WI Foreign

Construction and mining................. 15-49 6,205,962 FL/IL/MI/PA/VA/Foreign
Materials handling...................... 12-64 6,124,033 AK/CA/CO/GA/IL/IN/MI/MN/
MS/NC/NJ/NY/OH/OR/TX/WV/WI
Retail store fixtures................... 6-37 4,930,049 CO/NM/OK/TX
Manufacturing........................... 17-24 3,849,128 CA/NJ
Miscellaneous........................... 12-48 3,564,568 FL/LA/NC/TX
Communications.......................... 12-14 1,834,800 CA/LA
Tractors and heavy duty trucks.......... 1-25 1,274,458 CA/CT/NJ/TN/TX/UT/IN/SC
Trailers/intermodal containers.......... 18-40 812,037 GA/KY/NC/OH
Research and test....................... 3-40 664,901 MI/NC/WI
Furniture and fixtures.................. 12-14 271,945 NC
Photocopying............................ 2-3 65,711 CT/WI
Motor vehicles.......................... 24 38,499 MI
------------
Total equipment cost................ 90,450,936
Accumulated depreciation............ (29,093,445)
------------
Equipment, net of accumulated
depreciation...................... $ 61,357,491
------------
</TABLE>

In December 1996, the Trust sold its ownership interest in a vessel with a
cost and net book value of $9,296,103 and $6,482,211, respectively. In
connection with this sale, the Trust realized early termination proceeds of
$5,217,665 and sale proceeds of $1,618,169 which resulted in a net loss, for
financial statement purposes, of $4,864,042. This equipment was

F-20

<PAGE>

sold prior to the expiration of the related lease term. The Trust intends to
reinvest these proceeds, net of associated debt, in other equipment in 1997.

In March 1996, the Trust acquired an 8.86% ownership interest in the Reno
Aircraft, pursuant to the reinvestment provisions of the Trust's prospectus, at
a cost of $1,239,741. To acquire its interest in the Reno Aircraft, the Trust
obtained leveraging of $997,888 from a third-party lender and utilized cash
proceeds of $241,853.

In certain cases, the cost of the Trust's equipment represents a
proportionate ownership interest. The remaining interests are owned by EFG or
an affiliated equipment leasing program sponsored by EFG. 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. 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. At December 31, 1996, the Trust's
equipment portfolio included equipment having a proportionate original cost
of $15,368,258, representing approximately 17% of total equipment cost.

Certain of the equipment and related lease payment streams were used to
secure term loans with third-party lenders. The preceding summary of equipment
includes leveraged equipment having an original cost of approximately
$79,483,000 and a net book value of approximately $54,628,000 at December 31,
1996. (See Note 5.)

Generally, the costs associated with maintaining, insuring and operating the
Trust's equipment are incurred by the respective lessees pursuant to terms
specified in their individual lease agreements with the Trust.

As equipment is sold to third parties, or otherwise disposed of, the Trust
will recognize a gain or loss equal to the difference between the net book value
of the equipment at the time of sale or disposition and the proceeds realized
upon sale or disposition. The ultimate realization of estimated residual value
in the equipment will be dependent upon, among other things, EFG's ability to
maximize proceeds from selling or re-leasing the equipment upon the expiration
of the primary lease terms. At December 31, 1996, the Trust was not holding any
equipment not subject to a lease and no equipment was held for sale or release.

The Trust recorded a write-down of the carrying value of its interest in an
aircraft, representing an impairment, during the year ended December 31, 1996.
The resulting charge, $2,400,000 ($1.04 per Beneficiary Interest) in 1996 was
based on a comparison of the estimated net realizable value and corresponding
carrying value for the Trust's interest in the aircraft.

NOTE 4--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 years ended December 31, 1996, 1995 and
1994, which were paid or accrued by the Trust to EFG or its Affiliates, are as
follows:

1996 1995 1994
---------- ---------- ----------
Reimbursements for selling
commissions........................... -- $ 411,805 $2,167,363
Reimbursements for organization and
offering costs........................ -- 147,073 774,058
Equipment acquisition fees.............. $ 36,120 210,276 75,846

F-21

<PAGE>

Equipment management fees............... 1,071,560 737,323 303,749
Administrative charges.................. 48,638 21,000 14,000
Reimbursable operating expenses due to
third parties......................... 527,519 328,804 175,636
Interest on notes payable-affiliate..... -- 117 39,828
---------- ---------- ----------
Total............................... $1,683,837 $1,856,398 $3,550,480
---------- ---------- ----------
---------- ---------- ----------

American Finance Group Securities Corp., an affiliate of EFG, was paid
the entire amount of selling commissions incurred at each of the Closings of
the Trust. Commissions of $2,579,168, relating to the Closings during 1994
and 1995, were then paid to the Soliciting Dealers responsible for the sales.
No Soliciting Dealer commissions were earned by American Finance Group
Securities Corp. for Interests sold to an unrelated party.

As provided under the terms of the Trust Agreement, EFG is compensated for
its services to the Trust. Such services include all aspects of acquisition,
management and sale of equipment. For acquisition services, EFG is compensated
by an amount equal to .28% of Asset Base Price paid by the Trust. For
acquisition services resulting from reinvestment, EFG is compensated by an
amount equal to 3% of Equipment Base Price paid by the Trust. For management
services, EFG is compensated by an amount equal to the lesser of (i) 5% of gross
operating lease rental revenue and 2% of gross full payout lease rental revenue
received by the Trust or (ii) fees which the Managing Trustee reasonably
believes to be competitive for similar services for similar equipment. Both of
these fees are subject to certain limitations defined in the Trust Agreement.
Compensation to EFG for services connected to the remarketing of equipment is
calculated as the lesser of (i) 3% of gross sale proceeds or (ii) one-half of
reasonable brokerage fees otherwise payable under arm's length circumstances.
Payment of the remarketing fee is subordinated to Payout and is subject to
certain limitations defined in the Trust Agreement.

Administrative charges represent amounts owed to EFG, pursuant to Section
10.4(c) of the Trust Agreement, for persons employed by EFG who are engaged in
providing administrative services to the Trust. Reimbursable operating expenses
due to third parties represent costs paid by EFG on behalf of the Trust which
are reimbursed to EFG.

All equipment was purchased from EFG, one of its Affiliates, or directly
from third-party sellers. The Trust's Purchase Price is determined by the method
described in Note 2, Equipment on Lease.

All rents and proceeds from the sale of equipment are paid by the lessee
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 December 31, 1996, the Trust was owed $1,865,582 by EFG for such funds and
the interest thereon. This balance includes equipment sale proceeds of
approximately $1,618,000 which relate to the sale of certain vessel equipment in
December 1996. Debt proceeds of $1,980,073, which relate to the leveraging of
certain rail equipment in the Trust's portfolio, were deposited into the escrow
account on December 31, 1996. These funds were remitted to the Trust in January
1997.

NOTE 5--NOTES PAYABLE

Notes payable at December 31, 1996 consisted of installment notes of
$32,827,977 payable to banks and institutional lenders. The notes bear interest
rates ranging between 5.1% and 13.75% except for one note which bears a
fluctuating interest rate based on LIBOR plus a margin (5.5% at December 31,
1996). 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

F-22

<PAGE>

balloon payment obligations of $282,421 and $1,476,981 at the expiration of
the primary lease terms related to the Reno Aircraft and certain rail
equipment, respectively. The carrying value of notes payable approximates
fair value at December 31, 1996.

The annual maturities of the installment notes payable are as follows:

For the year ending December 31,
--------------------------------

1997.................................................... $11,864,259
1998.................................................... 7,581,931
1999.................................................... 5,334,484
2000.................................................... 4,774,982
2001.................................................... 1,729,169
Thereafter.............................................. 1,543,152
-----------
Total............................................... $32,827,977
-----------
-----------

The weighted average interest rate on short-term borrowings from EFG for the
purchase of equipment was 11% and 9.1% during the years ended December 31, 1995
and 1994, respectively.

NOTE 6--INCOME TAXES

The Trust is not a taxable entity for federal income tax purposes.
Accordingly, no provision for income taxes has been recorded in the accounts of
the Trust.

For financial statement purposes, the Trust allocates net income or loss to
each class of participant according to their respective ownership percentages
(90.75% to the Beneficiaries, 8.25% to the Special Beneficiary and 1% to the
Managing Trustee). This convention differs from the income or loss allocation
requirements for income tax and Dissolution Event purposes as delineated in the
Trust Agreement. Pursuant to the Trust Agreement, for income tax purposes, the
Trust allocates net income, to the extent available, pro-rata to any Participant
with a negative capital account balance so as to eliminate any such balance. In
accordance with the Trust Agreement, upon 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, 1996, the Managing Trustee had a negative tax capital account
balance.

The following is a reconciliation between net income (loss) reported for
financial statement and federal income tax reporting purposes for the years
ended December 31, 1996, 1995 and 1994:

1996 1995 1994
----------- ----------- -----------
Net income............................. $ 630,535 $ 3,629,331 $ 1,294,001
Tax depreciation in excess of
financial statement depreciation... (5,450,339) (6,896,894) (3,178,196)
Write-down of equipment.............. 2,400,000 -- --
Tax gain (loss) in excess of book
gain (loss).......................... (720,447) 388,382 --
Prepaid rental income................ (157,924) 185,794 3,286
Other................................ 3,790 (42,786) 46,633
----------- ----------- -----------
Net loss for federal income tax
reporting purposes................... $(3,294,385) $(2,736,173) $(1,834,276)
----------- ----------- -----------

F-23

<PAGE>

The following is a reconciliation between participants' capital reported for
financial statement and federal income tax reporting purposes for the years
ended December 31, 1996 and 1995:

1996 1995
----------- -----------
Participants' capital................... $40,884,836 $43,444,819
Add back selling commissions and
organization and offering costs..... 4,956,447 4,956,447
Financial statement distributions in
excess of tax distributions......... 29,065 22,129
Cumulative difference between federal
income tax and financial statement
income (loss)....................... (13,293,561) (9,368,641)
----------- -----------
Participants' capital for federal income
tax reporting purposes................ $32,576,787 $39,054,754
----------- -----------

Financial statement distributions in excess of tax distributions and
cumulative difference between federal income tax and financial statement income
(loss) represent timing differences.

NOTE 7--LEGAL PROCEEDINGS

On July 27, 1995, EFG, on behalf of the Trust and other EFG-sponsored
investment programs, filed an action in the Commonwealth of Massachusetts
Superior Court Department of the Trial Court in and for the County of Suffolk,
for damages and declaratory relief against a lessee of the Trust, National Steel
Corporation ("National Steel"), under a certain Master Lease Agreement ("MLA")
for the lease of certain equipment. EFG is seeking the reimbursement by National
Steel of certain sales and/or use taxes paid to the State of Illinois and other
remedies provided by the MLA. On August 30, 1995, National Steel filed a Notice
of Removal which removed the case to the United States District Court, District
of Massachusetts. On September 7, 1995, National Steel filed its Answer to EFG's
Complaint along with Affirmative Defenses and Counterclaims, seeking declaratory
relief and alleging breach of contract, implied covenant of good faith and fair
dealing and specific performance. EFG filed its Answer to these counterclaims on
September 29, 1995. Though the parties have been discussing settlement with
respect to this matter for some time, to date, the negotiations have been
unsuccessful. Notwithstanding these discussions, EFG recently filed an Amended
and Supplemental Complaint alleging further default under the MLA and the matter
remains pending before the Court. The Trust has not experienced any material
losses as a result of this action.

NOTE 8--SOLICITATION STATEMENT

On October 26, 1996, the Managing Trustee, on behalf of the Trust, filed a
Solicitation Statement with the Securities and Exchange Commission which was
subsequently sent to the Beneficiaries pursuant to Regulation 14A of Section 14
of the Securities Exchange Act. The Solicitation Statement sought to solicit the
consent of the Beneficiaries to a proposed amendment ("the Amendment") to the
Trust Agreement.

The Amendment would (i) amend the provisions of the Trust Agreement
governing the redemption of Interests to permit the Trust to offer to redeem
outstanding interests at

F-24

<PAGE>

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

Pursuant to the Trust Agreement, the adoption of the Amendment required the
consent of the Beneficiaries holding more than fifty percent in the aggregate of
the Interests held by all Beneficiaries. A majority of Beneficiary Interests,
representing 1,210,746 or 58% of all Beneficiary Interests, voted in favor of
the Amendment; 229,836 or 11% of all Beneficiary Interests voted against the
Amendment; and 39,233 or 2% of all Beneficiary Interests abstained.
Approximately 71% of all Beneficiary Interests participated in the vote.
Accordingly, the Amendment was adopted.

NOTE 9--SUBSEQUENT EVENT

On February 12, 1997, the Trust filed a Registration Statement on Form S-1
with the United States Securities and Exchange Commission which covers, among
other things, the creation and sale of a new class of beneficiary interest in
the Trust (the "Class B Interests"). A portion of the proceeds from the offering
of the Class B Interests would be used to make a one-time special cash
distribution to existing Beneficiaries (the "Class A Beneficiaries") of the
Trust and to enable the Trust to redeem a portion of the existing Beneficiary
Interests (the "Class A Interests"). The characteristics of the Class B
Interests, associated risk factors, and other matters of importance to the
Beneficiaries and prospective purchasers of the Class B Interests are contained
in the Registration Statement.

F-25

<PAGE>

We agree to the inclusion in this tender offer of our report dated March 14,
1997, with respect to the 1996 financial statements of AFG Investment Trust D.

ERNST & YOUNG LLP

August 7, 1997

F-26

<PAGE>
AFG INVESTMENT TRUST A
AFG INVESTMENT TRUST B
AFG INVESTMENT TRUST C
AFG INVESTMENT TRUST D
LETTER OF TRANSMITTAL

THE OFFERS, WITHDRAWAL RIGHTS AND PRORATION PERIODS WILL EXPIRE AT 5:00
P.M., EASTERN TIME, ON SEPTEMBER 12, 1997 UNLESS EXTENDED (such date, as it may
be extended, the "Expiration Date").

To Depositary:
TRUST COMPANY OF AMERICA

By First Class Mail, Overnight Courier or Hand:

c/o Trust Company of America
7103 South Revere Parkway
Englewood, CO 80112
Attn: AFG Investment Trust

By Facsimile:

(800) 387-7365

Confirm Facsimile by Telephone:

(800) 387-7391

To participate in the Offers, a duly executed copy of this Letter of
Transmittal (or facsimile hereof) must be received by the Depositary on or prior
to the Expiration Date. Delivery of this Letter of Transmittal or any other
required documents to an address or facsimile number other than as set forth
above does not constitute valid delivery. The method of delivery of all
documents is at the election and risk of the tendering Class A Beneficiary.
ALTHOUGH A PRE-ADDRESSED POSTAGE-PAID ENVELOPE TO THE DEPOSITARY HAS BEEN
PROVIDED FOR THE CONVENIENCE OF TENDERING CLASS A BENEFICIARIES, THE METHOD OF
DELIVERY OF THIS LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS IS AT
THE OPTION AND SOLE RISK OF THE TENDERING CLASS A BENEFICIARY, AND DELIVERY WILL
BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL, WITH RETURN RECEIPT REQUESTED, IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.

This Letter of Transmittal is to be completed by Class A Beneficiaries of
record as of August 1, 1997, of AFG Investment Trusts A, B, C and D, each a
Delaware business trust (the "Trusts"), pursuant to the procedures set forth in
the respective Offer to Purchase (as defined below) of each Trust.

PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS

Gentlemen:

Upon the terms and subject to the conditions set forth in the applicable
Offer to Purchase dated August 7, 1997 (with respect to each Trust, the "Offer
to Purchase"), and this Letter of Transmittal (which together constitute the
"Offer" with respect to each Trust and collectively constitute the "Offers"),
the undersigned hereby tenders to the appropriate Trust(s) the
following-described Class A Interests at the respective prices per Class A
Interest, net to the seller in cash, set forth in the applicable Offer to
Purchase. Receipt of the Offer to Purchase of each Trust with respect to which
the undersigned is tendering Class A Interests is hereby acknowledged.
NUMBER OF CLASS A INTERESTS TENDERED

<TABLE>
<S> <C>
Name(s) and Address(es) of Registered Number of Class A Interests Tendered(1)
Holder(s) (Please fill in, if blank) (i) All / /
(Please check box if all
Class A Interests tendered)

OR
(ii) Number Tendered:
Trust A:
Trust B:
Trust C:
Trust D:
</TABLE>

<PAGE>
- ------------------------
(1) In order for the tender to be valid, a Class A Beneficiary must tender with
respect to any Trust either (i) all Class A Interests owned by such Class A
Beneficiary in such Trust OR (ii) a portion of the Class A Interests owned
by such Class A Beneficiary in such Trust but not fewer than 200 Class A
Interests (80 Class A Interests for IRAs or other Qualified Plans) (the
"Minimum Investment Amount"). If a Class A Beneficiary does not indicate the
number of Class A Interests tendered, the Trusts will assume that such Class
A Beneficiary has tendered all Class A Interests owned of record by him. If
a Class A Beneficiary who tenders only a portion of his Class A Interests
indicates a number of Class A Interests tendered that is less than the
Minimum Investment Amount, the applicable Trust will assume that such Class
A Beneficiary has tendered the Minimum Investment Amount.

Subject to and effective upon acceptance for payment of any of the Class A
Interests tendered hereby, the undersigned hereby sells, assigns and transfers
to, or upon the order of, each applicable Trust all right, title and interest in
and to such Class A Interests tendered hereby. The undersigned hereby
irrevocably (i) constitutes and appoints each applicable Trust as the true and
lawful agent and attorney-in-fact of the undersigned with respect to such Class
A Interests, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to the full extent
of such Class A Beneficiary's rights with respect to the Class A Interests
tendered by such Class A Beneficiary and accepted for payment by such Trust and
(ii) assigns to each applicable Trust all future distributions from such Trust
with respect to such Class A Interests (excluding the Special Distribution as
defined in the Offer) for periods ending after August 1, 1997, to the extent
such distributions are not paid to the undersigned (the undersigned recognizes
that future distributions with respect to such Class A Interests for periods
ending after August 1, 1997, that are paid to the undersigned will automatically
reduce the purchase price for such Class A Interests by a like amount), all in
accordance with the terms of the Offers. Upon the purchase of Class A Interests
pursuant to the Offers, all prior proxies, assignments and consents given by the
undersigned with respect to such Class A Interests will be revoked and no
subsequent proxies, assignments or consents may be given (and if given will not
be deemed effective).

The undersigned recognizes that, with respect to each Trust, if more than
the maximum number of Class A Interests that such Trust is offering to redeem
are validly tendered prior to or on the Expiration Date and not properly
withdrawn, such Trust will, upon the terms of the applicable Offer, accept for
payment from among those Class A Interests tendered prior to or on the
Expiration Date such maximum number of Class A Interests on a pro rata basis,
with adjustments to avoid purchases of certain fractional Class A Interests,
based upon the number of Class A Interests validly tendered prior to the
Expiration Date and not withdrawn. The undersigned further recognizes that if no
more than such maximum number of Class A Interests are validly tendered prior to
the Expiration Date and not withdrawn, such Trust will, upon the terms of the
applicable Offer, accept for payment all such Class A Interests.

ALLOCATION OF PURCHASE PRICE. The undersigned understands and agrees that
the purchase price to be paid by each applicable Trust for the Class A Interests
tendered hereby will be allocated for federal income tax purposes as follows:
first, to Trust cash, second, to Trust assets and, finally, to goodwill and
going concern value.

The undersigned hereby represents and warrants that the undersigned owns the
Class A Interests tendered hereby within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, and has full power and authority to
validly tender, sell, assign and transfer the Class A Interests tendered hereby,
and that when any such Class A Interests are accepted for payment by the
applicable Trust, such Trust will acquire good, marketable and unencumbered
title thereto, free and clear of all liens, restrictions, charges, encumbrances,
conditional sales agreements or other obligations relating to the sale or
transfer thereof, and such Class A Interests will not be subject to any adverse
claim. Upon request, the undersigned will execute and deliver any additional
documents deemed by the applicable Trust to be necessary or desirable to
complete the assignment, transfer and purchase of Class A Interests tendered
hereby.

The undersigned understands that a tender of Class A Interests to the
Trust(s) will constitute a binding agreement between the undersigned and the
applicable Trust(s) upon the terms and subject to the conditions of the
applicable Offer. The undersigned recognizes that in certain circumstances set
forth in the Offers to Purchase, the Trusts may not be required to accept for
payment any of the Class A Interests tendered hereby. In such event, the
undersigned understands that any Letter of Transmittal for Class A Interests not
accepted for payment will be destroyed by the Depositary. All authority herein
conferred or agreed to be conferred shall survive the death or incapacity of the
undersigned and any obligations of the undersigned shall be binding upon the
heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.

THERE ARE NO CERTIFICATES TO BE INCLUDED
WITH THIS LETTER OF TRANSMITTAL

2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED ON THE FOLLOWING PAGES, PLEASE READ THE
ACCOMPANYING INSTRUCTIONS CAREFULLY

The Class A Beneficiary hereby tenders Class A Interests pursuant to the
terms of the Offers. The Class A Beneficiary hereby certifies, under penalties
of perjury, that the information and representations provided herein, including
in Box A of this Letter of Transmittal, which has been duly completed by the
Class A Beneficiary, are true, complete and correct as of the date hereof.

SIGNATURE BOX (ALL OWNERS)
(Attach additional sheets, if necessary)
(See Instruction 1)

Please sign exactly as your name(s) appear(s) above on this Letter of
Transmittal. For joint owners, each joint owner must sign. General partners,
corporate officers or other persons acting in a fiduciary or representative
capacity, please complete this box and see Instruction 1.

X ____________________________________
(Signature of owner)

X ____________________________________
(Signature of joint owner)

Fiduciary: X ____________________________________

Print Name and Title (Fiduciaries only): ____________________________________

Address (Fiduciaries only): ________________________________________________

________________________________________________________________________

Date:_____________________________________________

Tel.: (Day) (__) ____________________________________

Tel.: (Eve) (__) ____________________________________

3
<PAGE>
BOX A

SUBSTITUTE FORM W-9
Department of the Treasury
Internal Revenue Service
(See Instruction 3)

The Class A Beneficiary submitting this Letter of Transmittal hereby certifies
the following under penalties of perjury:

Social Security Number or Employer Identification Number:
__________________________

(1) THE TAXPAYER IDENTIFICATION NUMBER ("TIN") SHOWN ABOVE IS THE CORRECT TIN OF
THE CLASS A BENEFICIARY WHO IS SUBMITTING THIS LETTER OF TRANSMITTAL; OR IF NO
TIN IS PROVIDED ABOVE AND THIS BOX / / IS CHECKED, THE CLASS A BENEFICIARY HAS
APPLIED FOR A TIN. If the Class A Beneficiary has applied for a TIN, a TIN has
not been issued to the Class A Beneficiary, and either (a) the Class A
Beneficiary has mailed or delivered an application to receive a TIN to the
appropriate IRS Center or Social Security Administration Office, or (b) the
Class A Beneficiary intends to mail or deliver an application in the near
future. The Class A Beneficiary understands that if such Class A Beneficiary
does not provide a TIN to the appropriate Trust within sixty (60) days, 31% of
all reportable payments made to the Class A Beneficiary thereafter will be
withheld until a TIN is provided to the Trust; and

(2) UNLESS THIS BOX / / IS CHECKED, SUCH CLASS A BENEFICIARY IS NOT SUBJECT TO
BACKUP WITHHOLDING EITHER BECAUSE SUCH CLASS A BENEFICIARY HAS NOT BEEN NOTIFIED
BY THE IRS THAT SUCH CLASS A BENEFICIARY IS SUBJECT TO BACKUP WITHHOLDING AS A
RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR BECAUSE THE IRS HAS
NOTIFIED SUCH CLASS A BENEFICIARY THAT SUCH CLASS A BENEFICIARY IS NO LONGER
SUBJECT TO BACKUP WITHHOLDING.

(NOTE: YOU MUST PLACE AN "X" IN THE BOX IN (2) ABOVE IF YOU HAVE BEEN NOTIFIED
BY THE IRS THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE YOU HAVE
FAILED TO REPORT ALL INTEREST AND DIVIDENDS ON YOUR TAX RETURN.)

Tendering Class A Beneficiaries who are "Foreign Persons," i.e., who are not
U.S. citizens or resident alien individuals, domestic corporations, domestic
partnerships, domestic trusts or domestic estates, must make a certification to
qualify as exempt from 31% backup withholding. If you are a Foreign Person,
please contact the Information Agent to obtain a copy of the certification.

4
<PAGE>
BOX B

NOTARIZATION OF SIGNATURE
(If required. See Instruction 1)

STATE OF _________________________________)
)

COUNTY OF _______________________________)

On this day of , 1997, before me came personally
to me known to be the person who executed the foregoing Letter of Transmittal.

--------------------------------------------------------------------------

Notary Public

GUARANTEE OF SIGNATURE
(If required. See Instruction 1)

Name of Firm: _______________________________________________________

5
<PAGE>
AFG Investment Trust
LETTER OF TRANSMITTAL INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer

1. TENDER, SIGNATURE REQUIREMENTS; DELIVERY. After carefully reading and duly
completing this Letter of Transmittal, to tender Class A Interests a Class A
Beneficiary must sign in the signature block on the front of this Letter of
Transmittal. If this Letter of Transmittal is signed by the registered Class A
Beneficiary(ies) of the Class A Interests as printed on the front of this Letter
of Transmittal without any change whatsoever, no notarization or signature
guarantee on this Letter of Transmittal is required. Similarly, if Class A
Interests are tendered for the account of a member firm of a registered national
security exchange, a member firm of the National Association of Securities
Dealers, Inc., or a commercial bank, savings bank, credit union, savings and
loan association or trust company having an office, branch or agency in the
United States (each, an "Eligible Institution"), no notarization or signature
guarantee is required on this Letter of Transmittal. In all other cases,
signatures on this Letter of Transmittal must either be notarized or guaranteed
by an Eligible Institution, by completing the Notarization or Guarantee of
Signature set forth in BOX B of this Letter of Transmittal. If any tendered
Class A Interests are registered in the names of two or more joint holders, all
such holders must sign this Letter of Transmittal. If this Letter of Transmittal
is signed by trustees, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and must submit proper evidence
satisfactory to the Trust of their authority to so act. For Class A Interests to
be validly tendered, a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any required notarizations or
signature guarantees in BOX B and any other documents required by this Letter of
Transmittal must be received by the Depositary prior to or on the Expiration
Date at its address or to its facsimile number set forth herein. No alternative,
conditional or contingent tenders will be accepted. All tendering Class A
Beneficiaries by execution of this Letter of Transmittal waive any right to
receive any notice of the acceptance of their tender.

2. TRANSFER TAXES. Each Trust will pay or cause to be paid all transfer taxes,
if any, payable on the transfer to it of Class A Interests pursuant to the
Offer.

3. SUBSTITUTE FORM W-9. In order to avoid 31% federal income tax backup
withholding on the payment of the purchase price for Class A Interests
purchased, the tendering Class A Beneficiary must provide to the Trust(s) the
Class A Beneficiary's correct Taxpayer Identification Number ("TIN") and
certify, under penalties of perjury, that such Class A Beneficiary is not
subject to such backup withholding by completing the Substitute Form W-9 set
forth in BOX A of this Letter of Transmittal. If a correct TIN is not provided,
penalties may be imposed by the Internal Revenue Service ("IRS") in addition to
the Class A Beneficiary being subject to backup withholding. Certain Class A
Beneficiaries (including, among others, all corporations) are not subject to
backup withholding. Backup withholding is not an additional tax. If withholding
results in an overpayment of taxes, a refund may be obtained from the IRS.

6
<PAGE>
The TIN that must be provided on the Substitute Form W-9 is that of the
registered Class A Beneficiary(ies) indicated on the front of this Letter of
Transmittal. If the tendering Class A Beneficiary has applied for but has not
been issued a TIN or intends to apply for a TIN in the near future and the
appropriate Trust is not provided with the Class A Beneficiary's TIN within 60
days, the Trust will withhold 31% of all subsequent payments, if any, of the
purchase price for the Class A Interests until such TIN is provided to the
Trust.

4. ADDITIONAL COPIES OF OFFER TO PURCHASE AND LETTER OF TRANSMITTAL. Requests
for assistance or additional copies of the Offer to Purchase and this Letter of
Transmittal may be obtained from the Information Agent at the address or
telephone number set forth below:

The Information Agent is:

Corporate Investor Communications, Inc.
111 Commerce Road
Carlstadt, NJ 07072-2586
(800) 631-0988

IMPORTANT: IN ORDER TO PARTICIPATE IN THE OFFER, THIS LETTER OF
TRANSMITTAL (OR FACSIMILE HEREOF) MUST BE RECEIVED BY THE
DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE.

<PAGE>

AFG INVESTMENT TRUST D
88 Broad Street
Boston, MA 02110

Dear Investor:

AFG Investment Trust D (the "Trust") is offering to purchase from its Class A
Beneficiaries up to 940,064 Class A Beneficiary Interests ("Class A
Interests"), which represents 45% of the outstanding Class A Interests, at a
purchase price of $10.75 per Class A Interest.

On July 18, 1997, the Trust completed its offering of Class B Subordinated
Interests. As previously communicated to you, the purpose of the Class B
offering was to provide funds to the Trust to make a special distribution to
the Class A Beneficiaries and purchase Class A Interests. The special
distribution will be paid prior to August 25, 1997 in the amount of $1.47 per
Class A Interest. When combined with other monthly distributions previously
made since inception of the Trust (through August 1, 1997), the average
cumulative distributions per Class A Interest will be $7.53. If you choose to
sell your Class A Interests pursuant to this offer, the purchase price
combined with the average cumulative distributions will have provided
investors a total amount of $18.28 per Class A Interest. The original
purchase price per Class A Interest was $25.00. Whether or not you sell your
Class A Interests, you will retain the special distribution.

The Managing Trustee set the purchase price at an amount which, when combined
with the special distribution, is in excess of the prices that Class A
Interests have been selling for in the secondary market and also at a price
which it believes will enable the Trust to make distributions to the
non-tendering Class A Beneficiaries in an amount greater than the Trust would
otherwise be able to make.

The offer will provide you the opportunity to sell your Class A Interests
without incurring brokerage commissions and other transfer fees normally
associated with the sale of Class A Interests. The offer is explained in
detail in the Offer to Purchase and related Letter of Transmittal. If you wish
to tender your Class A Interests, deliver (using the enclosed pre-addressed,
postage paid envelope) or telecopy a duly completed copy of the enclosed
Letter of Transmittal to the Depository, Trust Company of America. We
encourage you to review these materials with your financial and tax advisor.

Neither the Trust nor the Managing Trustee makes any recommendation to any
Class A Beneficiary whether to tender Class A Interests.

If you have questions regarding the offer or need assistance in tendering
your Class A Interests, please call the Information Agent, Corporate Investor
Communications, Inc. toll free at (800) 631-0988.

AFG INVESTMENT TRUST D