EXHIBIT 13

AFG INVESTMENT TRUST

AFG INVESTMENT TRUST B

ANNUAL REPORT TO THE PARTICIPANTS, DECEMBER 31, 2001

AFG Investment Trust B

INDEX TO ANNUAL REPORT TO THE PARTICIPANTS

Page
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SELECTED FINANCIAL DATA. . . . . . . . . . . . . . . . . . . . . . . . . . . 21

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . . . . . . 22

FINANCIAL STATEMENTS:

Report of Independent Certified Public Accountants.. . . . . . . . . . . . . 33

Statement of Financial Position
at December 31, 2001 (Restated) and 2000 (Restated). . . . . . . . . . . . . 34

Statement of Operations
for the years ended December 31, 2001 (Restated), 2000 (Restated) and 1999 . 35

Statement of Changes in Participants' Capital
for the years ended December 31, 2001 (Restated), 2000 (Restated) and 1999.. 36

Statement of Cash Flows
for the years ended December 31, 2001 (Restated), 2000 (Restated) and 1999.. 37

Notes to the Financial Statements. . . . . . . . . . . . . . . . . . . . . . 38

ADDITIONAL FINANCIAL INFORMATION:

Schedule of Excess (Deficiency) of Total Cash
Generated to Cost of Equipment Disposed. . . . . . . . . . . . . . . . . . . 58

Statement of Cash and Distributable Cash
From Operations, Sales and Refinancings (Restated) . . . . . . . . . . . . . 59

Schedule of Costs Reimbursed to the Managing Trustee
and its Affiliates as Required by Section 10.4 of the
Second Amended and Restated Declaration of Trust . . . . . . . . . . . . . . 60

Schedule of Reimbursable Operating Expenses Due to Third Parties . . . . . . 61

Schedule of Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

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 each of the five years in the period ended December 31, 2001:

Summary of Operations 2001 2000 1999 1998 1997
- ------------------------------- ------------- ------------- ----------- ----------- -----------

Restated (1) Restated (1)
Lease revenue $ 518,671 $ 1,036,919 $ 1,325,194 $ 2,646,205 $ 5,400,331

Total income $ 706,012 $ 1,562,804 $ 2,634,958 $ 3,719,953 $ 5,741,393

Net income $ 311,982 $ 498,917 $ 1,470,149 $ 993,932 $ 1,174,206

Per Beneficiary Interest:
Net income
Class A Interests $ 0.50 $ (0.12) $ 0.98 $ 1.04 $ 1.05
Class B Interests $ 0.01 $ 0.32 $ 0.57 $ 0.23 $ 0.05

Cash distributions declared
Class A Interests $ - $ - $ 4.73 $ 1.64 $ 3.11
Class B Interests $ - $ - $ 3.76 $ 2.06 $ 0.30

Financial Position
- -------------------------------

Total assets $ 8,439,956 $ 8,226,549 $13,052,016 $14,037,315 $17,214,157

Total long-term obligations $ 420,027 $ 553,729 $ 656,454 $ 818,841 $ 2,038,628

Participants' capital $ 7,787,939 $ 7,475,957 $ 6,982,082 $12,635,661 $14,816,135

(1) See Note 1 to the financial statements, regarding the restatement of
the Trust's 2001 and 2000 financial statements.

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

Year ended December 31, 2001 compared to the year
ended December 31, 2000 and the year ended December 31, 2000
compared to the year ended December 31, 1999

Subsequent to the issuance of the financial statements of AFG Investment Trust B
(the "Trust") as of and for the year ended December 31, 2001, the Trust restated
the amount recorded as its share of loss on its interest in EFG Kirkwood LLC
("EFG Kirkwood") under the equity method of accounting for the years ended
December 31, 2001 and 2000. As a result, the financial statements as of and for
the years ended December 31, 2001 and 2000 have been restated from amounts
previously reported. The effects of the restatements are presented in Note 1 to
the accompanying financial statements and have been reflected herein. The
following should be read in conjunction with the restated 2001 and 2000
Financial Statements, including notes thereto. The following discussion
compares the restated December 31, 2001 financial condition and results of
operations to the restated December 31, 2000 financial condition and results of
operations and the restated December 31, 2000 results of operations to the
results of operations for the year ended December 31, 1999.

Certain statements in this annual report of the Trust that are not historical
fact constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and are subject to a variety of risks
and uncertainties. There are a number of important factors that could cause
actual results to differ materially from those expressed in any forward-looking
statements made herein. These factors include, but are not limited to, the
collection of the Trust's contracted rents, the realization of residual proceeds
for the Trust's equipment, the performance of the Trust's non-equipment assets,
and future economic conditions.

Overview
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The Trust was organized in 1992 for the purpose of acquiring and leasing to
third parties a diversified portfolio of capital equipment. In 1998, the Trust
Agreement was modified to permit the Trust to invest in assets other than
equipment. Subsequently, the Trust has made certain non-equipment acquisitions.
During 2001, the Trust and three affiliated trusts (collectively, the "Trusts"),
through a jointly owned entity, acquired 83% of the outstanding common stock of
PLM International, Inc. ("PLM"). PLM is an equipment management company
specializing in the leasing of transportation equipment. See further discussion
of PLM and other acquisitions below. Pursuant to the Trust Agreement, the Trust
is scheduled to be dissolved by December 31, 2003.

The Investment Company Act of 1940 (the "Act") places restrictions on the
capital structure and business activities of companies registered thereunder.
The Trust has active business operations in the financial services industry,
primarily equipment leasing, and in the real estate industry through its
interest in EFG Kirkwood. The Trust does not intend to engage in investment
activities in a manner or to an extent that would require the Trust to register
as an investment company under the Act. However, it is possible that the Trust
unintentionally may have engaged, or may engage in an activity or other
activities that may be construed to fall within the scope of the Act. If the
Trust were determined to be an investment company, its business would be
adversely affected. The Managing Trustee has been engaged in discussions with
the staff of the Securities and Exchange Commission regarding whether or not the
Trust may be an inadvertent investment company by virtue of its recent
acquisition activities. The staff has informed the Trust that it believes that
it may be an unregistered investment company within the meaning of the Act.
Although the Trust, after consulting with counsel, does not believe that it is
an unregistered investment company, the Trust has agreed to liquidate its assets
in order to resolve the matter with the staff. Accordingly, as of December 6,
2001, the Managing Trustee of the Trust resolved to cause the Trust to dispose
of its assets prior to December 31, 2003. Upon consummation of the sale of its
assets, the Trust will be dissolved and the proceeds thereof will be applied and
distributed in accordance with the terms of the Trust Agreement.

The events of September 11, 2001 and the slowing U.S. economy could have an
adverse effect on market values for the Trust's assets and the Trust's ability
to negotiate future lease agreements. Notwithstanding the foregoing, it
currently is not possible for the Managing Trustee to determine the long-term
effects, if any, that these events may have on the economic performance of the
Trust's equipment portfolio. Approximately 40% of the Trust's equipment
portfolio consists of commercial jet aircraft. The events of September 11, 2001
adversely affected market demand for both new and used commercial aircraft and
weakened the financial position of most airlines. No direct damage occurred to
any of the Trust's assets as a result of these events and while it is currently
not possible for the Managing Trustee to determine the ultimate long-term
economic consequences of these events to the Trust, the Managing Trustee expects
that the resulting decline in air travel will suppress market prices for used
aircraft in the short term and could inhibit the viability of the airline
industry. In the event of a default by an aircraft lessee, the Trust could
suffer material losses. At December 31, 2001, the Trust has collected
substantially all rents owed from aircraft lessees. The Managing Trustee is
monitoring the situation and will continue to evaluate potential implications to
the Trust's financial position and future liquidity.

Critical Accounting Policies and Estimates
- ----------------------------------------------

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires the Managing Trustee to make
estimates and assumptions that affect the amounts reported in the financial
statements. On a regular basis, the Managing Trustee reviews these estimates and
assumptions including those related to revenue recognition, asset lives and
depreciation, impairment of long-lived assets and contingencies. These
estimates are based on the Managing Trustee's historical experience and on
various other assumptions believed to be reasonable under the circumstances.
Actual results may differ from these estimates under different assumptions or
conditions. The Managing Trustee believes, however, that the estimates,
including those for the above-listed items, are reasonable.

The Managing Trustee believes the following critical accounting policies, among
others, are subject to significant judgments and estimates used in the
preparation of these financial statements:

Revenue Recognition: Rents are payable to the Trust monthly or quarterly and no
- --------------------
significant amounts are calculated on factors other than the passage of time.
The majority of the Trust's leases are accounted for as operating leases and are
noncancellable. Rents received prior to their due dates are deferred.

Asset lives and depreciation method: The Trust's primary business involves the
- --------------------------------------
purchase and subsequent lease of long-lived equipment. The Trust's depreciation
policy is intended to allocate the cost of equipment over the period during
which it produces economic benefit. The principal period of economic benefit is
considered to correspond to each asset's primary lease term, which generally
represents the period of greatest revenue potential for each asset.
Accordingly, to the extent that an asset is held on primary lease term, the
Trust depreciates the difference between (i) the cost of the asset and (ii) the
estimated residual value of the asset on a straight-line basis over such term.
For purposes of this policy, estimated residual values represent estimates of
equipment values at the date of the primary lease expiration. To the extent
that an asset is held beyond its primary lease term, the Trust continues to
depreciate the remaining net book value of the asset on a straight-line basis
over the asset's remaining economic life.

Impairment of long-lived assets: On a regular basis, the Managing Trustee
- -----------------------------------
reviews the net carrying value of equipment and equity investments to determine
- -----
whether it can be recovered from undiscounted future cash flows. Adjustments to
reduce the net carrying value of long-lived assets are recorded in those
instances where estimated net realizable value is considered to be less than net
carrying value.

Contingencies and litigation: The Trust is subject to legal proceedings
- -------------------------------
involving ordinary and routine claims related to its business when quantifiable,
- -------
estimates for losses from litigation are made after consultation with outside
counsel. If estimates of potential losses increase or the related facts and
circumstances change in the future, the Trust may be required to adjust amounts
recorded in its financial statements.

The Investment Company Act of 1940 (the "Act") places restrictions on the
capital structure and business activities of companies registered thereunder.
The Trust has active business operations in the financial services industry,
primarily equipment leasing, and in the real estate industry through its
interest in EFG Kirkwood. The Trust does not intend to engage in investment
activities in a manner or to an extent that would require the Trust to register
as an investment company under the Act. However, it is possible that the Trust
unintentionally may have engaged, or may engage in an activity or activities
that may be construed to fall within the scope of the Act. If the Trust was
determined to be an investment company, its business would be adversely
affected. The Managing Trustee has been engaged in discussions with the staff of
the Securities and Exchange Commission regarding whether or not the Trust may be
an inadvertent investment company by virtue of its recent acquisition
activities. The staff has informed the Trust that it believes that it may be an
unregistered investment company within the meaning of the Act. Although the
Trust, after consulting with counsel, does not believe that it is an
unregistered investment company, the Trust has agreed to liquidate its assets in
order to resolve the matter with the staff. Accordingly, as of December 6,
2001, the Managing Trustee of the Trust resolved to cause the Trust to dispose
of its assets prior to December 31, 2003. Upon consummation of the sale of its
assets, the Trust will be dissolved and the proceeds thereof will be applied and
distributed in accordance with the terms of the Trust Agreement.

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

The Trust has two principal operating segments: 1) Equipment Leasing and 2) Real
Estate Ownership, Development & Management. The Equipment Leasing segment
includes the management of the Trust's equipment lease portfolio and the Trust's
interest in MILPI Holdings, LLC ("MILPI"). MILPI owns MILPI Acquisition Corp.,
which owns the majority interest in PLM, an equipment leasing and asset
management company. The Real Estate segment includes the ownership, management
and development of commercial properties, recreational properties, condominiums,
interval ownership units, townhomes, single family homes and land sales through
its ownership interests in EFG Kirkwood. There are no material intersegment
sales or transfers.

Segment information for the years ended December 31, 2001, 2000 and 1999 is
summarized below.

2001 2000 1999
------------- ------------- -----------

Restated (1) Restated (1)

Total Income: (2)
Equipment leasing $ 706,012 $ 1,562,804 $ 2,634,958
Real estate - - -
------------- ------------- -----------
Total $ 706,012 $ 1,562,804 $ 2,634,958
============= ============= ===========

Operating Expenses, Management Fees
and Other Expenses:
Equipment leasing $ 796,159 $ 403,284 $ 462,077
Real estate 21,117 17,293 7,220
------------- ------------- -----------
Total $ 817,276 $ 420,577 $ 469,297
============= ============= ===========

Interest Expense:
Equipment leasing $ 23,292 $ 57,223 $ 50,389
Real estate - - -
------------- ------------- -----------
Total $ 23,292 $ 57,223 $ 50,389
============= ============= ===========

Depreciation and Amortization Expense:
Equipment leasing $ 86,898 $ 135,931 $ 645,123
Real estate - - -
------------- ------------- -----------
Total $ 86,898 $ 135,931 $ 645,123
============= ============= ===========

Equity Interests:
Equipment leasing $ 578,988 $ - $ -
Real estate (45,552) (450,156) -
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Total $ 533,436 $ (450,156) $ -
============= ============= ===========

Net Income: $ 311,982 $ 498,917 $ 1,470,149
============= ============= ===========

Capital Expenditures:
Equipment leasing $ 4,197,644 $ 391,098 $ 103,132
Real estate - 643,676 1,353,400
------------- ------------- -----------
Total $ 4,197,644 $ 1,034,774 $ 1,456,532
============= ============= ===========

Assets:
Equipment leasing $ 6,938,588 $ 6,679,629 $11,150,040
Real estate 1,501,368 1,546,920 1,901,976
------------- ------------- -----------
Total $ 8,439,956 $ 8,226,549 $13,052,016
============= ============= ===========

(1) See Note 1 to the accompanying financial statements, regarding the
restatement of the Trust's 2001 and 2000 financial statements.

(2) Includes equipment leasing revenue of $518,671, $1,036,919 and
$1,325,194 for the years ended December 31, 2001, 2000 and 1999, respectively.

Results of Operations
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Equipment Leasing
- ------------------

For the year ended December 31, 2001, the Trust recognized lease revenue of
$518,671 compared to $1,036,919 and $1,325,194 for the years ended December 31,
2000 and 1999, respectively. The decrease in lease revenue resulted from lease
term expirations and the sale of equipment.

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 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.

In June 2001, the Trust and certain affiliated investment programs
(collectively, the "Reno Programs") executed an agreement with the existing
lessee to early terminate the lease with Reno Air, Inc. of a McDonnell Douglas
MD-87 aircraft that had been scheduled to expire in January 2003. The Reno
Programs received an early termination fee of $840,000 and a payment of $400,000
for certain maintenance required under the existing lease agreement. The
Trust's share of the early termination fee was $74,424, which was recognized as
lease revenue during the year ended December 31, 2001 and its share of the
maintenance payment was $35,440, which is accrued as a maintenance obligation at
December 31, 2001. Coincident with the termination of the Reno lease, the
aircraft was re-leased to Aerovias de Mexico, S.A. de C.V. for a term of four
years. The Reno Programs are to receive rents of $6,240,000 over the lease
term, of which the Trust's share is $552,864. During the years ended December
31, 2001, 2000 and 1999, the Trust recognized lease revenue including the early
termination fee discussed above of $219,210, $159,904 and $153,980,
respectively, related to its interest in this aircraft.

Interest income for the year ended December 31, 2001 was $71,832 compared to
$363,963 and $540,106 for the years ended December 31, 2000 and 1999,
respectively. Generally, interest income is generated from the temporary
investment of rental receipts and equipment sale proceeds in short-term
instruments. The amount of future interest income is expected to fluctuate as a
result of changing interest rates and the amount of cash available for
investment, among other factors. The Trust distributed $5,300,000 in January
2000, which resulted in a reduction of cash available for investment.

On March 8, 2000, the Trust and three affiliated trusts entered into a guarantee
agreement whereby the trusts, jointly and severally, guaranteed the payment
obligations under a master lease agreement between Echelon Commercial LLC, as
lessee, and Heller Affordable Housing of Florida, Inc., and two other entities,
as lessor ("Heller"). During the year ended December 31, 2001, the requirements
of the guarantee agreements were met and the Trust received payment for all
outstanding amounts totaling $74,112, including $29,571 of income related to the
guarantee agreement recognized during the year ended December 31, 2001. During
the year ended December 31, 2000, the Trust received an upfront cash fee of
$57,900 and recognized a total of $99,493 in income related to this guarantee
fee. The guarantee fee is reflected as Other Income in the accompanying
Statement of Operations. The Trust has no further obligations under the
guarantee agreement.

The Trust received $261,116 in 1999 as a breakage fee from a third-party seller
in connection with a transaction for new investments that was canceled by the
seller in the first quarter of 1999. This amount is reflected as Other Income
on the accompanying Statement of Operations for the year ended December 31,
1999.

During the year ended December 31, 2000, the Trust sold investment securities
having a book value of $105,128, resulting in a gain, for financial reporting
purposes of $17,524.

During the year December 31, 2001, the Trust sold equipment having a net book
value of $68,022 to existing lessees and third parties. These sales resulted in
a net gain, for financial statement purposes of $82,360. During the years
December 31, 2000 and 1999, the Trust sold equipment having a net book value of
$91,451 and $4,237,791, respectively, to existing lessees and third parties.
These sales resulted in net gains, for financial statement purposes of $44,905
and $508,542, respectively.

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 expense was $81,194, $135,931 and $645,123 for the years ended
December 31, 2001, 2000 and 1999, respectively. For financial reporting
purposes, to the extent that an asset is held on primary lease term, the Trust
depreciates the difference between (i) the cost of the asset and (ii) the
estimated residual value of the asset on a straight-line basis over such term.
For purposes of this policy, estimated residual values represent estimates of
equipment values at the date of primary lease expiration. To the extent that an
asset is held beyond its primary lease term, the Trust continues to depreciate
the remaining net book value of the asset on a straight-line basis over the
asset's remaining economic life.

Interest expense was $23,292, $57,223 and $50,389 for the year ended December
31, 2001, 2000 and 1999, respectively. Interest expense will continue to
decrease in the future as the principal balance of notes payable is reduced
through the application of rent receipts to outstanding debt.

Management fees related to equipment leasing were $64,713, $50,386 and $64,800
during the years ended December 31, 2001, 2000 and 1999, respectively.
Management fees are based on 5% of gross lease revenue generated by operating
leases and 2% of gross lease revenue generated by full payout leases, subject to
certain limitations.

Operating expenses - affiliate were $731,446, $302,388 and $397,277 during the
years ended December 31, 2001, 2000 and 1999, respectively. Operating expenses
- - affiliate in 2001 included approximately $151,000 of remarketing costs related
to the re-lease of an aircraft in June 2001 and $114,000 for ongoing legal costs
associated with the Trust's ongoing discussions with the Securities and Exchange
Commission regarding its investment company status. Operating expenses -
affiliate also included approximately $66,000 of costs reimbursed to EFG as a
result of the successful acquisition of the PLM common stock. In conjunction
with the acquisition of the PLM common stock, EFG became entitled to recover
certain out of pocket expenses which it had previously incurred. Operating
expenses consist principally of administrative charges, professional service
costs, such as audit and legal fees, as well as printing, distribution and
remarketing expenses. The amount of future operating expenses cannot be
predicted with certainty; however, such expenses are usually higher during the
acquisition and liquidation phases of a trust. Other fluctuations typically
occur in relation to the volume and timing of remarketing activities. In
addition, the Trust wrote-down other investments $50,510 during the year ended
December 31, 2000.

For the year ended December 31, 2001, the Trust recorded income of $578,988 and
amortization expense of $5,704, in connection with its ownership interest in
MILPI. This income represents the Trust's share of the net income of MILPI
recorded under the equity method of accounting. The Trust's income from MILPI
results from MILPI's indirect ownership of PLM common stock acquired in February
2001.

MILPI
- -----

During the period February 7, 2001 (date of inception) through December 31,
2001, MILPI recognized operating revenues of approximately $10,376,000,
consisting primarily of $5,217,000 of management fees, $2,032,000 of
acquisition and lease negotiation fees, $1,716,000 of equity income in
partnership interests and $472,000 of operating lease income. In addition,
MILPI recognized other income of approximately $467,000, consisting primarily of
interest income earned on investments.

During the same period, MILPI incurred total operating expenses of $5,856,000,
consisting primarily of $3,290,000 of general and administrative expenses,
$1,255,000 of depreciation and amortization, $511,000 from impairment of its
investment in managed programs and $800,000 of operations support expenses,
which include salary and office-related expenses for operational activities. In
addition, MILPI also incurred income tax expense of $1,611,000 and recorded
minority interest expense of $429,000.

Real Estate
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Management fees for non-equipment assets were $21,117, $17,293 and $7,220 for
the years ended December 31, 2001, 2000 and 1999, respectively. The management
fees on non-equipment assets, excluding cash, were based on 1% of such assets
under management.

The Trust owns 20% of the Class A membership interests of EFG Kirkwood, a joint
venture between the Trust, certain affiliated trusts, and Semele. AFG ASIT
Corporation, the Managing Trustee of the Trust and a subsidiary of Semele, also
is the manager of EFG Kirkwood.

EFG Kirkwood owns membership interests in:

Mountain Resort Holdings LLC ("Mountain Resort") and
Mountain Springs Resort LLC ("Mountain Springs").

Mountain Resort, through four wholly owned subsidiaries, owns and operates the
Kirkwood Mountain Resort, a ski resort located in northern California, a public
utility that services the local community, and land that is held for residential
and commercial development.

Mountain Springs, through a wholly owned subsidiary, owns a controlling interest
in DSC/Purgatory LLC ("Purgatory") in Durango, Colorado. Purgatory is a ski and
mountain recreation resort covering 2,500 acres, situated on 40 miles of terrain
with 75 ski trails. Purgatory receives the majority of its revenues from winter
ski operations, primarily ski, lodging, retail, and food and beverage services,
with the remainder of its revenues generated from summer outdoor activities,
such as alpine sliding and mountain biking.

For the year ended December 31, 2001, the Trust recorded a loss of $45,552 on
its ownership interest in EFG Kirkwood, compared to a loss of $450,156 for the
year ended December 31, 2000. The loss in 2000 was caused principally by losses
reported by Purgatory for the period May 1, 2000 to December 31, 2000. Mountain
Springs, through a wholly owned subsidiary, became an equity participant in
Purgatory on May 1, 2000. Consequently, Mountain Springs did not participate in
the operating results of Purgatory for the period from January 1, 2000 to April
30, 2000, generally the period of Purgatory's peak income activity.
Accordingly, the losses incurred in 2000 do not reflect a full year's operating
activities for Purgatory. See Note 5 to the accompanying financial statements.

Through its ownership of 20% of the Class A membership interests in EFG
Kirkwood, the Trust indirectly owns interests in two ski resort operating
companies, Purgatory and Mountain Resort. EFG Kirkwood owns 50% of the
membership interests in Mountain Springs which, through a wholly-owned
subsidiary, owns 80% of the common member interests and 100% of the Class B
preferred member interests of Purgatory. EFG Kirkwood also owns approximately
38% of the membership interests in Mountain Resort which, through four
wholly-owned subsidiaries, owns Kirkwood Mountain Resort. The Trust accounts
for its ownership interests using the equity method of accounting.

Mountain Resort
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Mountain Resort is primarily a ski and mountain recreation resort with more than
2,000 acres of terrain, located approximately 32 miles south of Lake Tahoe. The
resort receives approximately 70% of its revenues from winter ski operations,
primarily ski, lodging, retail and food and beverage services with the remainder
of the revenues generated from summer outdoor activities, including mountain
biking, hiking and other activities. Other operations include a real estate
development division, which has developed and is managing a 40-unit condominium
residential and commercial building, an electric and gas utility company, which
operates as a regulated utility company and provides electric and gas services
to the Kirkwood community, and a real estate brokerage company.

During the year ended December 31, 2001, Mountain Resort recorded total revenues
of approximately $29,597,000 compared to approximately $27,741,000 for the same
period in 2000. The increase in total revenues from 2000 to 2001 of $1,856,000
is primarily the result of an increase in ski-related revenues offset by a
decrease in residential-related revenues.

Ski-related revenues increased approximately $4,078,000 for the year ended
December 31, 2001 compared to 2000. The increase in ski-related revenues
resulted from improved weather conditions during the winter season, which
attracted more skiers. Improved weather conditions resulted in the resort
supporting approximately 336,000 skiers for the year ended December 31, 2001 as
compared to approximately 291,000 skiers in 2000.

Residential-related revenues and other operations revenues decreased
approximately $2,222,000 for the year ended December 31, 2001 as compared to
2000. The decrease primarily reflects the completion of a 40-unit condominium
residential and commercial building in December 1999 resulting in a significant
number of condominium sales closing in January 2000.

During the year ended December 31, 2001, Mountain Resort recorded total expenses
of approximately $30,117,000 compared to approximately $27,464,000 in 2000. The
increase in total expenses of $2,653,000 from 2000 to 2001 is the result of
increases in ski-related expenses and residential-related and other operations
expenses.

Ski-related expenses in 2001 increased approximately $2,425,000 compared to 2000
as a result of an increase in ski-related revenue, as discussed above.

Residential-related expenses and other operations expenses increased
approximately $228,000 in the year end December 31, 2001 compared to 2000, as a
result of an increase in other operations expenses largely offset by a decrease
in cost of sales from condominium units sold during the year ended December 31,
2001 compared to 2000, as discussed above.

Mountain Springs
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Purgatory is a ski and mountain recreation resort covering 2,500 acres, situated
on 40 miles of terrain with 75 ski trails located near Durango, Colorado.
Purgatory receives the majority of its revenues from winter ski operations,
primarily ski, lodging, retail and food and beverage services, with the
remainder of revenues generated from summer outdoor activities, such as alpine
sliding and mountain biking.

Mountain Springs became an equity participant in Purgatory on May 1, 2000 and
therefore did not have an interest in Purgatory during the three months ended
March 31, 2000. For comparative purposes, the following discussion of
Purgatory's operating results includes the operating results for the three
months ended March 31, 2000.

During the year ended December 31, 2001, Purgatory recorded total revenues of
approximately $15,250,000 compared to approximately $13,507,000 for the same
period of 2000. The increase in total revenues from 2000 to 2001 of
approximately $1,743,000 is the result of improved weather conditions during the
winter season, which attracted more skiers. Improved weather conditions
resulted in the resort supporting approximately 306,000 skiers for the year
ended December 31, 2001 compared to 286,000 skiers in the same period of 2000.

Total expenses were approximately $15,648,000 for the year ended December 31,
2001 compared to approximately $16,163,000 for the same period in 2000. The
decrease in total expenses for the year ended December 31, 2001 compared to the
same period in 2000 of approximately $515,000 is a result of decreases in
operating expenses of approximately $75,000, non-operating costs of
approximately $100,000 and financing costs of approximately $340,000.

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

The Trust by its nature is a limited life entity. The Trust's principal
operating activities have been derived from asset rental transactions.
Accordingly, the Trust's principal source of cash from operations is provided by
the collection of periodic rents. These cash inflows are used to satisfy debt
service obligations associated with leveraged leases, and to pay management fees
and operating costs. Operating activities generated net cash outflows of
$47,713 for the year ended December 31, 2001 and net cash inflows of $1,112,007,
and $1,576,475 for the years ended December 31, 2000 and 1999, respectively.
Future renewal, re-lease and equipment sale activities will continue to cause a
decline in the Trust's lease revenue and corresponding sources of operating
cash. Expenses associated with rental activities, such as management fees, will
also decline as the Trust experiences a higher frequency of remarketing events.
The amount of future interest income is expected to fluctuate as a result of
changing interest rates and the level of cash available for investment, among
other factors.

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

At December 31, 2001, the Trust was due aggregate future minimum lease payments
of $477,388 from contractual lease agreements, a portion of which will be used
to amortize the principal balance of notes payable of $420,027. Additional cash
inflows will be realized from future remarketing activities, such as lease
renewals and equipment sales, the timing and extent of which cannot be predicted
with certainty. This is because the timing and extent of equipment sales is
often dependent upon the needs and interests of the existing lessees. Some
lessees may choose to renew their lease contracts, while others may elect to
return the equipment. In the latter instances, the equipment could be re-leased
to another lessee or sold to a third party. Accordingly, the cash flows of the
Trust will become less predictable as the Trust remarkets its equipment.

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

In December 2000, the Trusts formed MILPI, which formed MILPI Acquisition Corp.
("MILPI Acquisition"), a wholly owned subsidiary of MILPI. The Trusts
collectively paid $1.2 million for their membership interest in MILPI ($240,000
for the Trust) and MILPI purchased the shares of MILPI Acquisition for an
aggregate purchase price of $1.2 million at December 31, 2000. MILPI
Acquisition entered into a definitive agreement (the "Agreement") with PLM
International, Inc. ("PLM"), an equipment leasing and asset management company,
for the purpose of acquiring up to 100% of the outstanding common stock of PLM,
for an approximate purchase price of up to $27 million. In connection with the
acquisition, on December 29, 2000, MILPI Acquisition commenced a tender offer to
purchase any and all of PLM's outstanding common stock.

Pursuant to the cash tender offer, MILPI Acquisition acquired approximately 83%
of PLM's outstanding common stock in February 2001 for a total purchase price of
approximately $21.8 million. Under the terms of the Agreement, with the approval
of the holders of 50.1% of the outstanding common stock of PLM, MILPI
Acquisition would merge into PLM, with PLM being the surviving entity. The
merger was completed when MILPI obtained approval of the merger from PLM's
shareholders pursuant to a special shareholders' meeting on February 6, 2002.
Since the Trust and another of the Trusts have determined to liquidate their
assets, the two other trusts provided the funds necessary to acquire the
remaining 17% of PLM's outstanding common stock.

At December 31, 2001, the Trust has a 20% membership interest in MILPI having an
original cost of $4,437,644. The cost of the Trust's interest in MILPI reflects
MILPI Acquisition's cost of acquiring the common stock of PLM, including the
amount paid for the shares tendered of $4,355,145, capitalized transaction costs
of $38,948 and a 1% acquisition fee paid to a wholly-owned subsidiary of Semele
of $43,551. The acquisition fees were capitalized by the Trust and are being
amortized over a period of 7 years beginning March 1, 2001. The Trust's
ownership interest in MILPI subsequent to the merger was decreased from 20% to
16.66%.

During 2000 and 1999, the Trust expended $643,676 and $1,353,400, respectively,
to acquire its ownership interest in EFG Kirkwood. In addition, in 2000 and
1999, the Trust expended $151,098 and $103,132, respectively, to acquire certain
investments and investment securities.

During 2001, 2000 and 1999, the Trust realized net cash proceeds from equipment
disposals of $150,382, $136,356 and $4,746,333, respectively. Sales proceeds in
1999 included $4,619,262 related to the Trust's interest in a McDonnell Douglas
MD-82 aircraft, which was sold in January 1999. The Trust also realized
proceeds from the disposition of investment securities of $122,652 during the
year ended December 31, 2000.

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 risks generally associated with real estate include, without limitation, the
existence of senior financing or other liens on the properties, general or local
economic conditions, property values, the sale of properties, interest rates,
real estate taxes, other operating expenses, the supply and demand for
properties involved, zoning and environmental laws and regulations, and other
governmental rules.

The Trust's involvement in real estate development also introduces financials
risks, including the potential need to borrow funds to develop the real estate
projects. While the Trust's management presently does not foresee any unusual
risks in this regard, it is possible that factors beyond the control of the
Trust, its affiliates and joint venture partners, such as a tightening credit
environment, could limit or reduce its ability to secure adequate credit
facilities at a time when they might be needed in the future. Alternatively,
the Trust could establish joint ventures with other parties to share
participation in its development projects.

Ski resorts are subject to a number of risks, including weather-related risks.
The ski resort business is seasonal in nature and insufficient snow during the
winter season can adversely affect the profitability of a given resort. Many
operators of ski resorts have greater resources and experience in the industry
than the Trust, its affiliates and its joint venture partners.

In accordance with Statement of Financial Accounting Standards No. 115,
Accounting for Certain Investments in Debt and Equity Securities, investment
securities classified as available-for-sale are required to be carried at fair
value. During the year ended December 31, 1999, the Trust recorded an
unrealized gain on available-for-sale securities of $5,042. This gain was
recorded as a component of comprehensive income included in the Statement of
Changes in Participants' capital. These available-for-sale securities were sold
in 2000 resulting in a realized gain of $17,524.

The Trust obtained long-term financing in connection with certain equipment
leases. The repayments of principal related to such indebtedness are reported
as a component of financing activities in the accompanying Statement of Cash
Flows. At December 31, 2001, the Trust had only one debt obligation outstanding
pertaining to its ownership interest in an aircraft leased to Aerovias de
Mexico, S.A. de C.V. The Note is recourse only to the Trust's interest in the
aircraft and to the minimum rental payments to be received during the debt
amortization period. The Trust makes monthly debt and interest payments and the
debt will be fully amortized at the expiration of the related lease term in June
2005.

In July 1997, the Trust issued 1,000,961 Class B Interests at $5.00 per
interest. Class A Beneficiaries purchased 3,588 Class B Interests, generating
$17,940 of such aggregate capital contributions, and EFG, as Special
Beneficiary, purchased 997,373 Class B Interests. Subsequently, EFG transferred
its Class B Interests to a special-purpose company, Equis II Corporation. EFG
also transferred its ownership of AFG ASIT Corporation, the Managing Trustee of
the Trust, to Equis II Corporation. In December 1999, an affiliate of the
Trust, Semele, purchased 85% of the common stock of Equis II Corporation,
subject to certain voting restrictions with respect to the Class B Interests of
the Trust owned by Equis II Corporation. In May 2000, Semele acquired the
remaining 15% of the common stock of Equis II Corporation and, in November 2000,
the voting restrictions with respect to the Class B Interests were terminated.
As a result, Semele has voting control over the Trust. The former majority
stockholders of Equis II Corporation, Gary D. Engle and James A. Coyne, are both
members of the Board of Directors of, and collectively own a majority of the
stock in, Semele. Mr. Engle is Semele's Chairman and Chief Executive Officer and
Mr. Coyne is Semele's President and Chief Operating Officer.

The proceeds from the Class B offering were intended to be used principally to
repurchase a portion of the Trust's Class A Beneficiary Interests and to pay a
one-time special cash distribution of $979,449 ($1.47 per Class A Interest) to
the Trust's Class A Beneficiaries. That distribution was paid on August 15,
1997. The remainder of the offering proceeds was classified as restricted cash
pending its use for the repurchase of Class A Interests or its return to the
Class B Interest holders. On August 7, 1997, the Trust commenced an offer to
purchase up to 45% of the outstanding Class A Beneficiary Interests of the
Trust. On October 10, 1997, the Trust used $785,295 of the net proceeds realized
from the issuance of the Class B Interests to purchase 82,837 of the Class A
Interests tendered as a result of the offer. On December 1, 1997, the Trust
purchased 640 additional Class A Interests at a cost of $6,080. On July 6, 1998,
the Trust used $1,500,539 of the Class B offering proceeds to pay a capital
distribution to the Class B Beneficiaries. In July 1999, in connection with the
settlement of the Class Action Lawsuit described in Note 8 to the accompanying
financial statements, the Trust distributed $500,709, including legal fees of
$26,913 paid to Plaintiffs' counsel, as a special cash distribution ($0.81 per
unit, net of legal fees). In addition, Equis II Corporation agreed to commit
$1,126,595 of the Class B Capital Contributions (the remaining balance of the
restricted cash) to the Trust for the Trust's investment purposes.

After the amendment of the Trust Agreement in 1998, the Managing Trustee
evaluated and pursued a number of potential new investments, several of which
the Managing Trustee concluded had market returns that it believed were less
than adequate given the potential risks. Most transactions involved the
equipment leasing, business finance and real estate development industries.
Although the Managing Trustee intended to continue to evaluate additional new
investments, it anticipated that the Trust would be able to fund these new
investments with cash on hand or from other sources, such as the proceeds from
future asset sales or refinancings and new indebtedness. As a result, in 1999,
the Trust declared a special cash distribution to the Trust Beneficiaries
totaling $5,300,000, which was paid in January 2000.

After the special distribution in January 2000, the Trust adopted a new
distribution policy and suspended the payment of regular cash distributions.
The Managing Trustee periodically will review and consider other one-time
distributions. Historically, cash distributions to the Managing Trustee, the
Special Beneficiary and the Beneficiaries had been declared and generally paid
within 45 days following the end of each calendar month. The Managing Trustee
expects that the Trust will retain cash from operations to pay down debt and for
the continued maintenance of the Trust's assets. The Managing Trustee believes
that this change in policy is in the best interests of the Trust over the long
term.

The payment of such distributions is presented as a component of financing
activities on the accompanying Statement of Cash Flows. No cash distributions
were declared during the years ended December 31, 2001 or 2000. In any given
year, it is possible that Beneficiaries will be allocated taxable income in
excess of distributed cash. This discrepancy between tax obligations and cash
distributions may or may not continue in the future, and cash may or may not be
available for distribution to the Beneficiaries adequate to cover any tax
obligation. The Trust Agreement requires that sufficient distributions be made
to enable the Beneficiaries to pay any state and federal income taxes arising
from any sale or refinancing transactions, subject to certain limitations.

Cash distributions 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, the residual value realized for each asset at its disposal date,
and the performance of the Trust's non-equipment assets. Future market
conditions, technological changes, the ability of EFG to manage and remarket the
equipment, and many other events and circumstances, could enhance or detract
from individual yields and the collective performance of the Trust's equipment
portfolio. The ability of the Managing Trustee and its affiliates to develop and
profitably manage its non-equipment assets and the return from its interest in
MILPI will impact the Trust's overall performance.

In the future, the nature of the Trust's operations and principal cash flows
will continue to shift from rental receipts to equipment sale proceeds. As this
occurs, the Trust's cash flows resulting from equipment investments may become
more volatile in that certain of the Trust's equipment leases will be renewed
and certain of its assets will be sold. In some cases, the Trust may be required
to expend funds to refurbish or otherwise improve the equipment being remarketed
in order to make it more desirable to a potential lessee or purchaser. The
Trust's Advisor, EFG, and the Managing Trustee will attempt to monitor and
manage these events in order to maximize the residual value of the Trust's
equipment and will consider these factors, in addition to the collection of
contractual rents, the retirement of scheduled indebtedness, and the Trust's
future working capital requirements, in establishing the amount and timing of
future cash distributions.

In accordance with the Trust Agreement, upon the dissolution of the Trust, the
Managing Trustee will be required to contribute to the Trust an amount equal to
any negative balance, which may exist in the Managing Trustee's tax capital
account. At December 31, 2001, the Managing Trustee had a positive capital tax
account balance. No such requirement exists with respect to the Special
Beneficiary.

New Accounting Pronouncements
- -------------------------------

Statement of Financial Accounting Standards No. 141, "Business Combinations"
("SFAS No. 141"), requires the purchase method of accounting for business
combinations initiated after June 30, 2001 and eliminates the
pooling-of-interests method. The Trust believes the adoption of SFAS No. 141
has not had a material impact on its financial statements.

Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" ("SFAS No. 142"), was issued in July 2001 and is effective
January 1, 2002. SFAS No. 142 requires, among other things, the discontinuance
of goodwill amortization. SFAS No. 142 also includes provisions for the
reclassification of certain existing recognized intangibles as goodwill,
reassessment of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported goodwill, and
the identification of reporting units for purposes of assessing potential future
impairments of goodwill. SFAS No. 142 requires the Trust to complete a
transitional goodwill impairment test six months from the date of adoption. The
Trust believes the adoption of SFAS No. 142 will not have a material impact on
its financial statements.

Statement of Financial Accounting Standards No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"), was issued in
October 2001 and replaces Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of". The accounting model for long-lived assets to be disposed of
by sale applies to all long-lived assets, including discontinued operations, and
replaces the provisions of Accounting Principles Bulletin Opinion No. 30,
"Reporting Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business", for the disposal of segments of a business. SFAS No.
144 requires that those long-lived assets be measured at the lower of the
carrying amount or fair value less cost to sell, whether reported in continuing
operations or in discontinued operations. Therefore, discontinued operations
will no longer be measured at net realizable value or include amounts for
operating losses that have not yet occurred. SFAS No. 144 also broadens the
reporting of discontinued operations to include all components of an entity with
operations that can be distinguished from the rest of the entity and that will
be eliminated from the ongoing operations of the entity in a disposal
transaction. The provisions of SFAS No. 144 are effective for financial
statements issued for fiscal years beginning after December 15, 2001 and,
generally, are to be applied prospectively. The Trust believes that the adoption
of SFAS No. 144 will not have a material impact on its financial statements.

Report of Independent Certified Public Accountants

We have audited the accompanying statements of financial position of AFG
Investment Trust B as of December 31, 2001 and 2000, and the related statements
of operations, changes in participants' capital, and cash flows for each of the
three years in the period ended December 31, 2001. 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. The
consolidated financial statements of MILPI Holdings, LLC, and subsidiary for
2001 and the financial statements of EFG Kirkwood, LLC for 2000, limited
liability companies in which the Trust has a 20% and 18.6% interest,
respectively, have been audited by other auditors whose reports have been
furnished to us; insofar as our opinion on the financial statements relates to
data included for MILPI Holdings, LLC, and subsidiary for 2001 and EFG Kirkwood,
LLC for 2000, it is based solely on their reports.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 and the reports of other
auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of AFG Investment Trust B at December 31, 2001 and 2000,
and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Additional Financial Information
identified in the Index to the Annual Report is presented for purposes of
additional analysis and is not a required part of the basic financial
statements. Such information has been subjected to the auditing procedures
applied in our audits of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.

The accompanying financial statements for the year ended December 31, 2001 and
2000 have been restated as discussed in Note 1.

/S/ ERNST & YOUNG LLP

Tampa, Florida
May 10, 2002

AFG INVESTMENT TRUST B

STATEMENT OF FINANCIAL POSITION

DECEMBER 31, 2001 AND 2000

2001 2000
ASSETS Restated Restated
------------- -------------

(See Note 1) (See Note 1)

Cash and cash equivalents $ 899,569 $ 5,126,793
Rents receivable - 621
Accounts receivable - affiliate 23,936 113,837
Guarantee fee receivable - 41,593
Interest receivable 510 2,948
Interest in EFG Kirkwood LLC 1,501,368 1,546,920
Interest in MILPI Holdings, LLC 5,010,928 240,000
Investments - other 99,135 100,588
Other assets 857 380
Equipment at cost, net of accumulated depreciation
of $2,175,686 and $5,817,286 at December 31, 2001
and 2000, respectively 903,653 1,052,869
------------- -------------

Total assets $ 8,439,956 $ 8,226,549
============= =============

LIABILITIES AND PARTICIPANTS' CAPITAL

Notes payable $ 420,027 $ 553,729
Accrued interest 460 1,836
Accrued liabilities 105,869 168,432
Accrued liabilities - affiliates 117,348 20,040
Deferred rental income 8,313 6,555
------------- -------------
Total liabilities 652,017 750,592
------------- -------------

Participants' capital (deficit):
Managing Trustee 735 (631)
Special Beneficiary 6,066 1,412
Class A Beneficiary Interests (582,017 Interests;
initial purchase price of $25 each) 8,556,689 8,263,223
Class B Beneficiary Interests (1,000,961 Interests;
initial purchase price of $5 each) 15,824 3,328
Treasury Interests (83,477 Class A Interests at Cost) (791,375) (791,375)
------------- -------------
Total participants' capital 7,787,939 7,475,957
------------- -------------

Total liabilities and participants' capital $ 8,439,956 $ 8,226,549
============= =============

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

AFG INVESTMENT TRUST B

STATEMENT OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

2001 2000 1999
---------- ----------- -----------

Restated Restated

INCOME

Lease revenue $ 518,671 $1,036,919 $1,325,194
Interest income 71,832 363,963 540,106
Gain on sale of equipment 82,360 44,905 508,542
Gain on sale of investment securities - 17,524 -
Other income 33,149 99,493 261,116
---------- ----------- ----------
Total income 706,012 1,562,804 2,634,958
---------- ----------- ----------

EXPENSES

Depreciation and amortization 86,898 135,931 645,123
Interest expense 23,292 57,223 50,389
Management fees - affiliates 85,830 67,679 72,020
Operating expenses - affiliate 731,446 302,388 397,277
Write-down of other investment - 50,510 -
---------- ----------- ----------
Total expenses 927,466 613,731 1,164,809
---------- ----------- ----------

EQUITY INTERESTS

Equity in net loss of EFG Kirkwood LLC (45,552) (450,156) -
Equity in net income of MILPI Holdings, LLC 578,988 - -
---------- ----------- ----------
Total income (loss) from equity interests 533,436 (450,156) -
---------- ----------- ----------

Net income $ 311,982 $ 498,917 $1,470,149
========== =========== ==========

Net income (loss)
per Class A Beneficiary Interest $ 0.50 $ (0.12) $ 0.98
========== =========== ==========
per Class B Beneficiary Interest $ 0.01 $ 0.32 $ 0.57
========== =========== ==========
Cash distributions declared
per Class A Beneficiary Interest $ - $ - $ 4.73
========== =========== ==========
per Class B Beneficiary Interest $ - $ - $ 3.76
========== =========== ==========

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

AFG INVESTMENT TRUST B

STATEMENT OF CHANGES IN PARTICIPANTS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

Managing Special
Trustee Beneficiary Class A Beneficiaries - Class B Beneficiaries
Amount Amount Interests Amount Interests
--------- ------------- --------------------- ----------- ---------------------

Balance at December 31, 1998 $ 3,652 $ 30,133 582,017 $10,514,496 1,000,961

Net income - 1999 35,859 295,841 - 569,851 -
Unrealized gain on investment
securities 50 416 - 3,689 -
---------- ------------- --------------------- ------------ ---------------------
Comprehensive income 35,909 296,257 - 573,540 -
---------- ------------- --------------------- ------------ ---------------------
Cash distributions declared (66,549) (549,037) - (2,751,224) -
---------- ------------- --------------------- ------------ ---------------------

Balance at December 31, 1999 (26,988) (222,647) 582,017 8,336,812 1,000,961

Net income (loss)- 2000 (Restated) 26,407 224,475 - (69,900) -
Less: Reclassification adjustment
for unrealized gain on investment
securities (50) (416) - (3,689) -
---------- ------------- --------------------- ------------ ---------------------
Comprehensive income (loss) (Restated) 26,357 224,059 - (73,589) -
---------- ------------- --------------------- ------------ ---------------------

Balance at December 31, 2000 (Restated) (631) 1,412 582,017 8,263,223 1,000,961

Net income - 2001 (Restated) 1,366 4,654 - 293,466 -
---------- ------------- --------------------- ------------ ---------------------

Balance at December 31, 2001 (Restated) $ 735 $ 6,066 582,017 $ 8,556,689 1,000,961
========== ============= ===================== ============ =====================

- Treasury
Amount Interests Total
----------- ----------- -----------

Balance at December 31, 1998 $ 2,878,755 $ (791,375) $12,635,661

Net income - 1999 568,598 - 1,470,149
Unrealized gain on investment
securities 887 - 5,042
------------ ----------- ------------
Comprehensive income 569,485 - 1,475,191
------------ ----------- ------------
Cash distributions declared (3,761,960) - (7,128,770)
------------ ----------- ------------

Balance at December 31, 1999 (313,720) (791,375) 6,982,082

Net income (loss)- 2000 (Restated) 317,935 - 498,917
Less: Reclassification adjustment
for unrealized gain on investment
securities (887) - (5,042)
------------ ----------- ------------
Comprehensive income (loss) (Restated) 317,048 - 493,875
------------ ----------- ------------

Balance at December 31, 2000 (Restated) 3,328 (791,375) 7,475,957

Net income - 2001 (Restated) 12,496 - 311,982
------------ ----------- ------------

Balance at December 31, 2001 (Restated) $ 15,824 $ (791,375) $ 7,787,939
============ =========== ============

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

AFG INVESTMENT TRUST B

STATEMENT OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

2001 2000 1999
------------ ------------ -----------

Restated Restated

CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES

Net income $ 311,982 $ 498,917 $ 1,470,149
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 86,898 135,931 645,123
Accretion of bond discount - (1,626) (370)
(Gain) loss on sale of equipment (82,360) (44,905) (508,542)
Gain on sale of investment securities - (17,524) -
(Income) loss from equity interests (533,436) 450,156 -
Write-down of other investment - 50,510 -
Changes in assets and liabilities:
Rents receivable 621 14 234,139
Accounts receivable - affiliate 89,901 (1,609) (9,691)
Guarantee fee receivable 41,593 (41,593) -
Interest receivable 2,438 733 (3,681)
Other assets (477) (380) -
Accrued interest (1,376) (550) (210)
Accrued liabilities (62,563) 114,824 (79,892)
Accrued liabilities - affiliates 97,308 4,604 (592)
Other liabilities - - (197,950)
Deferred rental income 1,758 (35,495) 27,992
------------ ------------ ------------
Net cash provided by (used in) operating activities (47,713) 1,112,007 1,576,475
------------ ------------ ------------

CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES

Proceeds from equipment sales 150,382 136,356 4,746,333
Proceeds from sale of investment securities - 122,652 -
Investments - other 1,453 (151,098) -
Interest in EFG Kirkwood LLC - (643,676) (1,353,400)
Interest in MILPI Holdings, LLC (4,197,644) (240,000) -
Purchase of investment securities - - (103,132)
------------ ------------ ------------
Net cash provided by (used in) investing activities (4,045,809) (775,766) 3,289,801
------------ ------------ ------------

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES

Restricted cash - - 1,627,304
Proceeds from notes payable 471,038 - -
Principal payments - notes payable (604,740) (102,725) (162,387)
Distributions paid - (5,300,000) (2,047,451)
------------ ------------ ------------
Net cash used in financing activities (133,702) (5,402,725) (582,534)
------------ ------------ ------------

Net increase (decrease) in cash and cash equivalents (4,227,224) (5,066,484) 4,283,742
Cash and cash equivalents at beginning of year 5,126,793 10,193,277 5,909,535
------------ ------------ ------------
Cash and cash equivalents at end of year $ 899,569 $ 5,126,793 $10,193,277
============ ============ ============

SUPPLEMENTAL INFORMATION

Cash paid during the year for interest $ 24,668 $ 57,773 $ 50,599
============ ============ ============

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

AFG INVESTMENT TRUST B

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2001

NOTE 1 - RESTATEMENT OF FINANCIAL STATEMENTS
- --------------------------------------------------

After AFG Investment Trust B (the "Trust") filed its Annual Report on Form 10-K
for the year ended December 31, 2001 with the United States Securities and
Exchange Commission, the Trust determined that the amounts recorded as its share
of income (loss) on its interest in EFG Kirkwood LLC ("EFG Kirkwood") for the
years ended December 31, 2001 and 2000 in its financial statements contained
therein required revision. The Trust had previously recorded income of $3,413
and a loss of $363,079 from its interest in EFG Kirkwood for the years ended
December 31, 2001 and 2000, respectively. The Trust determined that it should
have recorded losses from its interest in EFG Kirkwood LLC of $45,552 and
$450,156 for the years ended December 31, 2001 and 2000, respectively.
Accordingly, for the year ended December 31, 2001, the Trust recorded an
additional loss on its interest in EFG Kirkwood of $48,965, resulting in a
decrease in the net income for the year ended December 31, 2001 of $48,965, or
$(0.07) per Class A Beneficiary Interest and $(0.01) per Class B Beneficiary
Interest, respectively. For the year ended December 31, 2000, the Trust
recorded an additional loss on its interest in EFG Kirkwood of $87,077,
resulting in a decrease in the net income for the year ended December 31, 2000
of $87,077, or $(0.14) per Class A Beneficiary Interest and $0.00 per Class B
Beneficiary Interest, respectively. As a result, the accompanying financial
statements for the years ended December 31, 2001 and 2000 have been restated
from the amounts previously reported.

NOTE 2 - ORGANIZATION AND TRUST MATTERS
- ---------------------------------------------

The Trust was organized as a Delaware business trust in May 1992. 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 known as American Finance Group),
a Massachusetts limited partnership, ("EFG" or the "Advisor") and $100 from the
Initial Beneficiary, AFG Assignor Corporation, a wholly-owned affiliate of EFG.
The Trust issued an aggregate of 665,494 Beneficiary Interests (hereinafter
referred to as Class A Interests) at a subscription price of $25.00 each
($16,637,350 in total) in September 1992. In July 1997, the Trust issued
1,000,961 Class B Interests at $5.00 each ($5,004,805 in total), of which (i)
997,373 interests are held by Equis II Corporation, an affiliate of EFG, and a
wholly owned subsidiary of Semele Group Inc. ("Semele"), and (ii) 3,588
interests are held by 5 other Class A investors. The Trust repurchased 82,837
Class A Interests in October 1997 at a cost of $785,295. In December 1997, the
Trust repurchased 640 additional Class A Interests at a cost of $6,080.
Accordingly, there are 582,017 Class A Interests currently outstanding. The
Class A and Class B Interest holders are collectively referred to as the
"Beneficiaries".

The Trust has one Managing Trustee, AFG ASIT Corporation, a Massachusetts
corporation, and one Special Beneficiary, Semele. Semele purchased the Special
Beneficiary Interests from EFG during the fourth quarter of 1999. EFG continues
to act as Advisor to the Trust and provides services in connection with the
acquisition and remarketing of the Trust's equipment assets. The Managing
Trustee is responsible for the general management and business affairs of the
Trust. AFG ASIT Corporation is a wholly owned subsidiary of Equis II Corporation
and an affiliate of EFG. Except with respect to "interested transactions", Class
A Interests and Class B Interests have identical voting rights and, therefore,
Equis II Corporation generally has control over the Trust on all matters on
which the Beneficiaries may vote. With respect to interested transactions,
holders of those Class B Interests that are the Managing Trustee or any of its
affiliates must vote their interests as a majority of the Class A Interests have
been voted. The Managing Trustee and the Special Beneficiary are not required to
make any additional capital contributions except as may be required under the
Second Amended and Restated Declaration of Trust, as amended (the "Trust
Agreement").

Significant operations commenced in September 1992 when the Trust made its
initial equipment purchase. Pursuant to the Trust Agreement, each distribution
is made 90.75% to the Beneficiaries, 8.25% to the Special Beneficiary and 1% to
the Managing Trustee.

Under the terms of the advisory agreement between the Trust and EFG, management
services are provided by EFG to the Trust for fees, as stated in the agreement.

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, Chief Executive Officer and sole Director. Equis
Corporation also owns a controlling 1% general partner interest in EFG's 99%
limited partner, GDE Acquisition Limited Partnership ("GDE LP"). 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. AFG changed its name to Equis Financial
Group Limited Partnership after the sale was concluded. Pursuant to terms of the
sale agreements, EFG specifically reserved the rights to continue using the name
American Finance Group and its acronym in connection with the Trust and certain
Other Investment Programs and to continue managing all assets owned by the Trust
and the Other Investment Programs.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------------------------

Cash Equivalents and Investment Securities
- ----------------------------------------------

The Trust classifies any amounts on deposits in banks and all highly liquid
investments purchased with an original maturity of three months or less as cash
and cash equivalents.

Revenue Recognition
- --------------------

Effective January 1, 2000, the Trust adopted the provisions of Securities
Exchange Commission Staff Accounting Bulletin No. 101, "Revenue Recognition in
Financial Statements" ("SAB No. 101"). SAB No. 101 provides guidance for the
recognition, presentation and disclosure of revenue in financial statements. The
adoption of SAB No. 101 had no impact on the Trust's financial statements.

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 $477,388 are due as follows:

For the year ending December 31, 2002 $ 143,366
2003 138,216
2004 138,216
2005 57,590
--------------

... Total $ 477,388
==============

In June 2001, the Trust and certain affiliated investment programs
(collectively, the "Reno Programs") executed an agreement with the existing
lessee, Reno Air, Inc. ("Reno"), to early terminate the lease of a McDonnell
Douglas MD-87 aircraft that had been scheduled to expire in January 2003. The
Reno Programs received an early termination fee of $840,000 and a payment of
$400,000 for certain maintenance required under the existing lease agreement.
The Trust's share of the early termination fee was $74,424, which was recognized
as lease revenue during the year ended December 31, 2001 and its share of the
maintenance payment was $35,440, which was accrued as a maintenance obligation
at December 31, 2001. Coincident with the termination of the Reno lease, the
aircraft was re-leased to Aerovias de Mexico, S.A. de C.V. for a term of four
years. The Reno Programs are to receive rents of $6,240,000 over the lease
term, of which the Trust's share is $552,864.

Revenue from major individual lessees, which accounted for 10% or more of lease
revenue during the years ended December 31, 2001, 2000 and 1999 is as follows:

2001 2000 1999
-------- -------- --------

General Motors Corporation . . . $189,803 $235,354 $276,429
Reno Air, Inc. . . . . . . . . . $146,647 $159,904 $153,980
Aerovias De Mexico, S.A. de C.V. $ 72,563 $ -- $ --
Montgomery Ward and Company, Inc $ -- $378,684 $378,684

Use of Estimates
- ------------------

The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States 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 means the actual cost paid by the Trust to acquire the
equipment, including acquisition fees. Where equipment was acquired from EFG or
an Affiliate, Equipment Cost reflects the actual price paid for the equipment by
EFG or the Affiliate plus all actual costs incurred by EFG or the Affiliate
while carrying the equipment, including all liens and encumbrances, less the
amount of all primary term rents earned by EFG or the Affiliate prior to selling
the equipment. Where the seller of the equipment was a third party, Equipment
Cost reflects the seller's invoice price.

Depreciation
- ---------------

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 undiscounted future cash flows. 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,
individually. All other assets are evaluated collectively by equipment type
unless the Managing Trustee learns of specific circumstances, such as a lessee
default, technological obsolescence, or other market developments, which could
affect the net realizable value of particular assets. Adjustments to reduce the
net carrying value of equipment are recorded in those instances where estimated
net realizable value is considered to be less than discounted future cash flows.

Impairment of Long-Lived Assets
- ----------------------------------

The carrying values of long-lived assets are reviewed for impairment whenever
events or changes in circumstances indicate that the recorded value may not be
recoverable. If this review results in an impairment, as determined based on
the estimated undiscounted cash flow, the carrying value of the related
long-lived asset is adjusted to fair value.

Accrued Liabilities - Affiliates
- -----------------------------------

Unpaid fees and operating expenses paid by EFG on behalf of the Trust and
accrued but unpaid administrative charges and management fees are reported as
Accrued Liabilities - Affiliates.

Contingencies
- -------------

The Trust's policy is to recognize a liability for goods and services during the
period when the goods or services are received. To the extent that the Trust
has a contingent liability, meaning generally a liability the payment of which
is subject to the outcome of a future event, the Trust recognizes a liability in
accordance with Statement of Financial Accounting Standards No. 5 "Accounting
for Contingencies" ("SFAS No. 5"). SFAS No. 5 requires the recognition of
contingent liabilities when the amount of liability can be reasonably estimated
and the liability is probable.

The Investment Company Act of 1940 (the "Act") places restrictions on the
capital structure and business activities of companies registered thereunder.
The Trust has active business operations in the financial services industry,
primarily equipment leasing, and in the real estate industry through its
interest in EFG Kirkwood. The Trust does not intend to engage in investment
activities in a manner or to an extent that would require the Trust to register
as an investment company under the Act. However, it is possible that the Trust
unintentionally may have engaged, or may engage in an activity or activities
that may be construed to fall within the scope of the Act. If the Trust was
determined to be an investment company, its business would be adversely
affected. The Managing Trustee has been engaged in discussions with the staff of
the Securities and Exchange Commission regarding whether or not the Trust may be
an inadvertent investment company by virtue of its recent acquisition
activities. The staff has informed the Trust that it believes that it may be an
unregistered investment company within the meaning of the Act. Although the
Trust, after consulting with counsel, does not believe that it is an
unregistered investment company, the Trust has agreed to liquidate its assets in
order to resolve the matter with the staff. Accordingly, as of December 6,
2001, the Managing Trustee of the Trust resolved to cause the Trust to dispose
of its assets prior to December 31, 2003. Upon consummation of the sale of its
assets, the Trust will be dissolved and the proceeds thereof will be applied and
distributed in accordance with the terms of the Trust Agreement.

Allocation of Net Income or Loss
- -------------------------------------

Net income is allocated quarterly first, to eliminate any Participant's negative
capital account balance and second, 1% to the Managing Trustee, 8.25% to the
Special Beneficiary and 90.75% collectively to the Class A and Class B
Beneficiaries. The latter is allocated proportionately between the Class A and
Class B Beneficiaries based upon the ratio of cash distributions declared and
allocated to the Class A and Class B Beneficiaries during the period (excluding
$473,796 Class A special cash distributions paid in 1999). Net losses are
allocated quarterly first, to eliminate any positive capital account balance of
the Managing Trustee, the Special Beneficiary and the Class B Beneficiaries;
second, to eliminate any positive capital account balances of the Class A
Beneficiaries; and third, any remainder to the Managing Trustee.

The allocation of net income or loss pursuant to the Trust Agreement for income
tax purposes differs from the foregoing and is based upon government rules and
regulations for federal income tax reporting purposes and assumes, for each
income tax reporting period, the liquidation of all of the Trust's assets and
the subsequent distribution of all available cash to the Participants. For
income tax purposes, the Trust adjusts its allocations of income and loss to the
Participants so as to cause their tax capital account balances at the end of the
reporting period to be equal to the amount that would be distributed to them in
the event of a liquidation and dissolution of the Trust. This methodology does
not consider the costs attendant to liquidation or whether the Trust intends to
have future business operations.

The unaudited table below includes detail of the allocation of income (loss) in
each of the quarters for the years ended December 31, 2001, 2000 and 1999.

Managing Special Class A Class B
Trustee Beneficiary Beneficiaries Beneficiaries Treasury
Amount Amount Amount Amount Interests Total
---------- ------------- --------------- --------------- ----------- ------------

December 31, 1998 $ 3,652 $ 30,133 $ 10,514,496 $ 2,878,755 $ (791,375) $12,635,661

Distributions (3,934) (32,457) (238,335) (118,688) - (393,414)
Net income 2,625 21,650 141,913 70,671 - 236,859
---------- ------------- --------------- --------------- ----------- ------------
March 31, 1999 2,343 19,326 10,418,074 2,830,738 (791,375) 12,479,106

Special distribution - Class A - - (473,796) - - (473,796)
Distributions (3,934) (32,457) (238,335) (118,688) - (393,414)
Net income 6,303 52,002 285,438 142,145 - 485,888
Unrealized gain 32 262 1,923 958 - 3,175
---------- ------------- --------------- --------------- ----------- ------------
June 30, 1999 4,744 39,133 9,993,304 2,855,153 (791,375) 12,100,959

Distributions (3,934) (32,457) (238,335) (118,688) - (393,414)
Net income 2,352 19,406 142,500 70,964 - 235,222
Unrealized gain 38 317 2,331 1,161 - 3,847
---------- ------------- --------------- --------------- ----------- ------------
September 30, 1999 3,200 26,399 9,899,800 2,808,590 (791,375) 11,946,614

Distributions (54,747) (451,666) (1,562,423) (3,405,896) - (5,474,732)
Net income 24,579 202,783 - 284,818 - 512,180
Unrealized gain (loss), net (20) (163) (565) (1,232) - (1,980)
---------- ------------- --------------- --------------- ----------- ------------
December 31, 1999 (26,988) (222,647) 8,336,812 (313,720) (791,375) 6,982,082

Net income (Restated) 22,564 186,151 - 262,295 - 471,010
Unrealized losses (Restated) (71) (343) (6,362) (340) - (7,116)
---------- ------------- --------------- --------------- ----------- ------------
March 31, 2000 (Restated) (4,495) (36,839) 8,330,450 (51,765) (791,375) 7,445,976

Net income (Restated) 5,037 41,313 37,544 63,436 - 147,330
Unrealized gain (Restated) 16 131 1,099 341 - 1,587
---------- ------------- --------------- --------------- ----------- ------------
June 30, 2000 (Restated) 558 4,605 8,369,093 12,012 (791,375) 7,594,893

Net loss (Restated) (1,390) (4,605) (121,004) (12,012) - (139,011)
Unrealized gain (Restated) 10 82 686 213 - 991
---------- ------------- --------------- --------------- ----------- ------------
September 30, 2000 (Restated) (822) 82 8,248,775 213 (791,375) 7,456,873

Net income (Restated) 196 1,616 13,560 4,216 - 19,588
Unrealized gain (loss) (Restated) (5) (286) 888 (1,101) - (504)
---------- ------------- --------------- --------------- ----------- ------------
December 31, 2000 (Restated) (631) 1,412 8,263,223 3,328 (791,375) 7,475,957

Net income (Restated) 8,214 62,561 524,979 163,198 - 758,952
---------- ------------- --------------- --------------- ----------- ------------
March 31, 2001 (Restated) 7,583 63,973 8,788,202 166,526 (791,375) 8,234,909

Net loss (Restated) (7,583) (63,973) (76,490) (166,526) - (314,572)
---------- ------------- --------------- --------------- ----------- ------------
June 30, 2001 (Restated) - - 8,711,712 - (791,375) 7,920,337

Net loss (Restated) (2,080) - (205,926) - - (208,006)
---------- ------------- --------------- --------------- ----------- ------------
September 30, 2001 (Restated) (2,080) - 8,505,786 - (791,375) 7,712,331

Net income (Restated) 2,815 6,066 50,903 15,824 - 75,608
---------- ------------- --------------- --------------- ----------- ------------
December 31, 2001 (Restated) $ 735 $ 6,066 $ 8,556,689 $ 15,824 $ (791,375) $ 7,787,939
========== ============= =============== =============== =========== ============

Reclassification
- -----------------

Certain amounts previously reported have been reclassified to conform to the
December 31, 2001 presentation.

Accumulated Other Comprehensive Income
- -----------------------------------------

Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income", effective in 1998, requires the disclosure of comprehensive income
(loss) to reflect changes in participants' capital that result from transactions
and economic events from non-owner sources. Accumulated other comprehensive
income (loss) for the years ended December 31, 2001, 2000 and 1999 represents
the Trust's unrealized gains (losses) on investment securities:

2001 2000 1999
----- -------- ------

Beginning balance. . . . . . . . . . . . . . . . $ -- $ 5,042 $ --
Adjustments related to unrealized gains (losses)
on investment securities . . . . . . . . . . . . -- (5,042) 5,042
----- -------- ------
Ending balance . . . . . . . . . . . . . . . . . $ -- $ -- $5,042
===== ======== ======

Net Income and Cash Distributions Per Beneficiary Interest
- -----------------------------------------------------------------

Net income and cash distributions per Class A Beneficiary Interest are based on
582,017 Class A Interests outstanding during the years ended December 31, 2001,
2000 and 1999, respectively. Net income and cash distributions per Class B
Interest are based on 1,000,961 Class B Interests outstanding during the years
ended December 31, 2001, 2000 and 1999. Net income and cash distributions per
Beneficiary Interest are computed after allocation of the Managing Trustee's and
Special Beneficiary's shares of net income and cash distributions.

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 separate tax returns.

New Accounting Pronouncements
- -------------------------------

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

The following is a summary of equipment owned by the Trust at December 31, 2001.
Remaining Lease Term (Months), as used below, represents the number of months
remaining from December 31, 2001 under contracted lease terms and is presented
as a range when more than one lease agreement is contained in the stated
equipment category. A Remaining Lease Term equal to zero reflects equipment
either held for sale or re-lease or being leased on a month-to-month basis.

Remaining
Lease Term Equipment
Equipment Type (Months) at Cost Location
- --------------------------------------------- ----------- ------------ --------------------------

Aircraft 42 $ 1,239,741 Foreign
Computer and peripherals 0 1,026,842 NY/OH/MI
Materials handling 0-12 714,086 AR/IA/IL/IN/MI/NC/NY/PA/WV
Trailers/intermodal containers 0 56,976 VA/WV
Manufacturing 0 41,694 IL
------------
Total equipment cost - 3,079,339
Accumulated depreciation - (2,175,686)
------------
Equipment, net of accumulated depreciation - $ 903,653
============

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, 2001, the Trust's equipment portfolio included
equipment having a proportionate original cost of $2,120,359, representing
approximately 69% 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 $1,240,000 and a
net book value of approximately $901,000 at December 31, 2001. See Note 8 -
Notes Payable.

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
recognizes 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. The summary above includes fully depreciated equipment held
for sale or re-lease with an original cost of approximately $859,000 at December
31, 2001. The Managing Trustee is actively seeking the sale or re-lease of all
equipment not on lease. In addition, the summary above includes equipment being
leased on a month-to-month basis.

NOTE 5 - INTEREST IN EFG KIRKWOOD LLC
- --------------------------------------------

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

On April 30, 2000, KAI's ownership interests in certain assets and substantially
all of its liabilities were transferred to Mountain Resort Holdings LLC
("Mountain Resort"). On May 1, 2000, EFG Kirkwood exchanged its interest in
KAI's common and preferred stock for corresponding pro-rata membership interests
in Mountain Resort. EFG Kirkwood holds approximately 38% of the membership
interests in Mountain Resort. Mountain Resort, through four wholly owned
subsidiaries, owns and operates the Kirkwood Mountain Resort, a ski resort
located in northern California, a public utility that services the local
community, and land that is held for residential and commercial development. The
Trust holds 10% of EFG Kirkwood's Class A membership interests.

On May 1, 2000, EFG Kirkwood acquired 50% of the membership interests in
Mountain Springs Resort LLC ("Mountain Springs"). Mountain Springs, through a
wholly owned subsidiary, owns 80% of the common membership interests and 100% of
the Class B Preferred membership interests in an entity that owns the Purgatory
Ski Resort ("Purgatory") in Durango, Colorado.

The Trust's ownership interest in EFG Kirkwood had an original cost of
$1,997,076; including a 1% acquisition fee of $19,773 paid to EFG. The Trust's
ownership interest in EFG Kirkwood is accounted for on the equity method and the
Trust recorded a loss of $45,552 and $450,156 for the years ended December 31,
2001 and 2000, respectively, representing its pro-rata share of the net loss of
EFG Kirkwood.

The following table summarizes the selected financial data pertaining to the
Trust's membership interests in EFG Kirkwood LLC and the summarized results of
the operations of the ski resorts.

Mountain Resort has a April 30th fiscal year end and the operating results shown
below have been conformed to the twelve months ended December 31, 2001 and 2000,
respectively.

Purgatory has a May 31st fiscal year end. The operating results shown below
have been conformed to the twelve months ended December 31, 2001. The Trust
purchased their interest in Purgatory on May 1, 2000 and as such the operating
results below have been conformed to reflect the eight months ended December 31,
2000.

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

(Restated) (Restated)
EFG Kirkwood LLC
- ------------------------------------------------

Total assets (primarily real estate and plant) $ 7,424,797 $ 7,851,180
Total liabilities (primarily borrowings) -- 206,263
------------ ------------

Net equity of EFG Kirkwood LLC $ 7,424,797 $ 7,644,917
============ ============

Net equity of EFG Kirkwood LLC $ 7,424,797 $ 7,644,917
Unamortized capitalized acquisition fees (2) 82,043 89,675
------------ ------------

Aggregate net equity and fees $ 7,506,840 $ 7,734,592
============ ============

Trust's share of net equity and fees $ 1,501,368 $ 1,546,920
============ ============

2001 2000 1999 (1)
------------ ------------ ----------
(Restated) (Restated)
Equity in loss $ (215,838) $(2,764,141) $(218,890)
Total expenses (4,282) (8,567) --
------------ ------------ ----------

Net loss of EFG Kirkwood LLC $ (220,120) $(2,772,708) $(218,890)
============ ============ ==========

Net loss of EFG Kirkwood LLC $ (220,120) $(2,772,708) $(218,890)
Amortization of capitalized acquisition fees (2) (7,632) (6,626) (2,564)
------------ ------------ ----------

Aggregate net loss $ (227,752) $(2,779,334) $(221,454)
============ ============ ----------

Trust's share of net loss $ (45,552) $ (450,156) $ --
============ ============ ==========

Summarized Operating Results - Ski Resorts:
- ------------------------------------------------

Revenues
Mountain Resort $29,597,000 $27,741,000
============ ============
Purgatory $15,250,000 $ 5,008,000
============ ============

Expenses
Mountain Resort $30,117,000 $27,464,000
============ ============
Purgatory $15,648,000 $ 9,725,000
============ ============

(1) EFG Kirkwood LLC commenced operations on June 10, 1999; therefore,
amounts in this column correspond to the period June 10, 1999 to December 31,
1999.

(2) Unamortized capitalized acquisition fees represent expenses incurred by
the four Trusts in the acquisition of the membership interests in EFG Kirkwood
LLC.

EFG Kirkwood is a guarantor of a note payable to a bank of DSC/Purgatory LLC,
the entity which owns Purgatory. The guarantee is for $3,500,000, the original
principal balance of the note. The balance of the note is $1,075,000 at
December 31, 2001. The note is also guaranteed in the same amount by another
investor of DSC/Purgatory LLC.

NOTE 6 -INTEREST IN MILPI HOLDINGS, LLC
- ---------------------------------------------

At December 31, 2001, the Trust has a 20% membership interest in MILPI having an
original cost of $4,437,644. The cost of the Trust's interest in MILPI reflects
MILPI Acquisition's cost of acquiring the common stock of PLM, including the
amount paid for the shares tendered of $4,355,145, capitalized transaction costs
of $38,948 and a 1% acquisition fee paid to a wholly-owned subsidiary of Semele
of $43,551. The acquisition fees were capitalized by the Trust and are being
amortized over a period of 7 years beginning March 1, 2001. The amount
amortized is included in amortization expense and was $5,704 during the year
ended December 31, 2001.

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

The Trust's ownership interest in MILPI is accounted for on the equity method
and the Trust recorded income of $578,988 during the year ended December 31,
2001, representing its pro-rata share of the net income of MILPI.

The table below provides summarized consolidated balance sheet data as of
December 31, 2001 and income statement data for MILPI for the period February 7,
2001 (date of inception) through December 31, 2001.

Total assets $43,399,000
Total liabilities $15,453,000
Minority interest $ 3,029,000
Total equity $24,917,000

Total revenues $10,376,000
Total operating expenses, minority interest
and other income and expenses $ 5,818,000
Provision for income taxes $ 1,611,000
Net income $ 2,947,000

See discussion of the completion of the PLM acquisition included in Note 14 -
Subsequent Events.

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

All operating expenses incurred by the Trust are paid by EFG on behalf of the
Trust and EFG is reimbursed at its actual cost for such expenditures. Fees and
other costs incurred during the years ended December 31, 2001, 2000 and 1999,
which were paid or accrued by the Trust to EFG or its Affiliates, are as
follows:

2001 2000 1999
-------- -------- --------

Acquisition fees . . . . . . . . . . . . . . . . . . . $ 43,551 $ 7,869 $ 14,450
Management fees. . . . . . . . . . . . . . . . . . . . 85,830 67,679 72,020
Administrative charges . . . . . . . . . . . . . . . . 130,592 127,891 127,120
Reimbursable operating expenses
Due to third parties. . . . . . . . . . . . . . . . . 600,854 174,497 270,157
-------- -------- --------

Total . $860,827 $377,936 $483,747
======== ======== ========

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 was compensated
by an amount equal to .28% of Asset Base Price paid by the Trust for each asset
acquired for the Trust's initial asset portfolio. For acquisition services
during the initial reinvestment period, which expired on September 8, 1996, EFG
was compensated by an amount equal to 3% of Asset Base Price paid by the Trust.
In connection with a Solicitation Statement and consent of Beneficiaries in
1998, the Trust's reinvestment provisions were reinstated through December 31,
2001 and the Trust was permitted to invest in assets other than equipment.
Acquisition fees paid to EFG in connection with such equipment reinvestment
assets are equal to 1% of Asset Base Price paid by the Trust. For management
services, EFG is compensated by an amount equal to (i) 5% of gross operating
lease rental revenue and 2% of gross full payout lease rental revenue received
by the Trust with respect to equipment acquired on or prior to March 31, 1998.
For management services earned in connection with equipment acquired on or after
April 1, 1998, EFG is compensated by an amount equal to 2% of gross lease rental
revenue received by the Trust. For non-equipment assets other than cash, the
Managing Trustee receives an annualized management fee of 1% of such assets
under management. 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
this fee and the other fees described above are 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 at actual cost.

All equipment was purchased from EFG, one of its Affiliates or from third-party
sellers. The Trust's Purchase Price is determined by the method described in
Note 3, Equipment on Lease.

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 December
31, 2001, the Trust was owed $23,936 by EFG for such funds and the interest
thereon. These funds were remitted to the Trust in January 2002.

Old North Capital Limited Partnership ("ONC"), a Massachusetts limited
partnership formed in 1995 and an affiliate of EFG, owns 839 Class A Interests
or less than 1% of the total outstanding Class A Interests of the Trust. The
general partner of ONC is controlled by Gary D. Engle. In addition, the limited
partnership interests of ONC are owned by Semele. Gary D. Engle is Chairman and
Chief Executive Officer of Semele.

In 1997, the Trust issued 1,000,961 Class B Interests at $5.00 per interest,
thereby generating $5,004,805 in aggregate Class B capital contributions. Class
A Beneficiaries purchased 3,588 Class B Interests, generating $17,940 of such
aggregate capital contributions, and then Special Beneficiary, EFG, purchased
997,373 of such Class B Interests, generating $4,986,865 of such aggregate
capital contributions.

Subsequently, EFG transferred its Class B Interests to a special-purpose
company, Equis II Corporation, a Delaware corporation. EFG also transferred its
ownership of AFG ASIT Corporation, the Managing Trustee of the Trust, to Equis
II Corporation. As a result, Equis II Corporation has voting control of the
Trust through its ownership of the majority of the Trust's outstanding voting
interests, as well as its ownership of AFG ASIT Corporation. See Item 1 (a) of
this report regarding certain voting restrictions related to the Class B
Interests. Equis II Corporation is owned by Semele. Gary D. Engle is Chairman
and Chief Executive Officer of Semele. James A. Coyne is Semele's President and
Chief Operating Officer. Mr. Engle and Mr. Coyne are both members of the Board
of Directors of, and own significant stock in, Semele.

See the acquisition of the outstanding stock of PLM and subsequent merger by the
Trusts included in Note 6 - Interest in MILPI Holdings, LLC.

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

Notes payable at December 31, 2001 consisted of a 7.03% fixed interest rate
installment note of $420,027 payable to an institutional lender. The
installment note is non-recourse and is collateralized by the Trust's interest
in an aircraft leased to Aerovias de Mexico, S.A. de C.V. and the assignment of
the related lease payments, as discussed below. The Trust makes monthly debt
and interest payments and the debt will be fully amortized at the expiration of
the related lease term in June 2005.

In June 2001, the Trust and certain affiliated investment programs
(collectively, the "Reno Programs") executed an agreement with the existing
lessee, Reno Air, Inc. ("Reno"), to early terminate the lease of a McDonnell
Douglas MD-87 aircraft that had been scheduled to expire in January 2003.
Coincident with the termination of the Reno lease, the aircraft was re-leased to
Aerovias de Mexico, S.A. de C.V. for a term of four years. The Reno Programs
executed a debt agreement with a new lender collateralized by the aircraft and
assignment of the Aerovias de Mexico, S.A. de C.V. lease payments. The Reno
Programs received debt proceeds of $5,316,482, of which the Trust's share was
$471,038. The Trust used the new debt proceeds and a portion of certain other
receipts from Reno to repay the outstanding balance of the existing indebtedness
related to the aircraft of $493,137 and accrued interest and fees of $7,347.

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

The annual maturities of the note payable are as follows:

For the year ending December 31, 2002 $111,998
2003 120,189
2004 128,949
2005 58,891
--------
Total $420,027
========

NOTE 9 - 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 quarterly
first, to eliminate any Participant's negative capital account balance and
second, 1% to the Managing Trustee, 8.25% to the Special Beneficiary and 90.75%
collectively to the Class A and Class B Beneficiaries. The latter is allocated
proportionately between the Class A and Class B Beneficiaries based upon the
ratio of cash distributions declared and allocated to the Class A and Class B
Beneficiaries during the period (excluding $473,796 Class A special cash
distributions paid in 1999). Net losses are allocated quarterly first, to
eliminate any positive capital account balance of the Managing Trustee, the
Special Beneficiary and the Class B Beneficiaries; second, to eliminate any
positive capital account balances of the Class A Beneficiaries; and third, any
remainder 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. For income tax purposes, the Trust allocates
net income or net loss in accordance with the provisions of such agreement.
Pursuant to 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, 2001, the Managing Trustee had a positive tax capital account
balance.

The following is a reconciliation between net income reported for financial
statement and federal income tax reporting purposes for the years ended December
31, 2001, 2000 and 1999:

2001 2000 1999
----------- ----------- ----------

(Restated) (Restated)
Net income $ 311,982 $ 498,917 $1,470,149
Financial statement depreciation (less
than) in excess of tax depreciation (127,956) (161,727) 132,483
Recognize pass through income (309,409) 355,056 -
Reverse income from corporate investment (578,988) - -
Tax gain in excess of book gain on sale - 91,452 2,979,533
Deferred rental income 1,758 (35,495) 27,992
Other 567,979 55,874 13,000
----------- ----------- ----------
Net income (loss) for federal income tax
reporting purposes $ (134,634) $ 804,077 $4,623,157
=========== =========== ==========

The following is a reconciliation between participants' capital reported for
financial statement and federal income tax reporting purposes for the years
ended December 31, 2001 and 2000:

2001 2000
(Restated) (Restated)
------------ ------------
Participants' capital $ 7,787,939 $ 7,475,957
Add back selling commissions and organization
and offering costs 1,625,692 1,625,692
Deduct deferred step-down of capital basis (68,201) (68,201)
Cumulative difference between federal income tax
and financial statement income (loss) (1,486,173) (1,039,557)
------------ ------------

Participants' capital for federal income tax reporting purposes $ 7,859,257 $ 7,993,891
============ ============

The cumulative difference between federal income tax and financial statement
income (loss) represents temporary differences.

NOTE 10 - GUARANTEE AGREEMENT
- ---------------------------------

On March 8, 2000, the Trusts entered into a guarantee agreement whereby the
Trusts, jointly and severally, guaranteed the payment obligations under a master
lease agreement between Echelon Commercial LLC, a newly-formed Delaware company
that is controlled by Gary D. Engle, President and Chief Executive Officer of
EFG, as lessee, and Heller Affordable Housing of Florida, Inc., and two other
entities, as lessor ("Heller"). The lease payments of Echelon Commercial LLC to
Heller are supported by lease payments to Echelon Commercial LLC from various
sub-lessees who are parties to commercial and residential lease agreements under
the master lease agreement. The guarantee of lease payments by the Trusts was
capped at a maximum of $34,500,000, excluding expenses that could result in the
event that Echelon Commercial LLC defaulted under the terms of the master lease
agreement.

As a result of principal reductions on the average guarantee amount, an amended
and restated agreement was entered into in December 2000, that reduced the
guaranteed amount among the Trusts. During the year ended December 31, 2001,
the requirements of the guarantee agreements were met and the Trust received
payment for all outstanding amounts totaling $74,112, including $29,571 of
income related to the guarantee agreement recognized during the year ended
December 31, 2001. During the year ended December 31, 2000, the Trust received
an upfront cash fee of $57,900 and recognized a total of $99,493 in income
related to this guarantee fee. The guarantee fee is reflected as Other Income on
the accompanying Statement of Operations. The Trust has no further obligations
under the guarantee agreement.

NOTE 11 - LEGAL PROCEEDINGS
- -------------------------------

On or about January 15, 1998, certain plaintiffs (the "Plaintiffs") filed a
class and derivative action, captioned Leonard Rosenblum, et al. v. Equis
------------------------------------
Financial Group Limited Partnership, et al., in the United States District Court
------------------------------------
for the Southern District of Florida (the "Court") on behalf of a proposed class
of investors in 28 equipment leasing programs sponsored by EFG, including the
Trust (collectively, the "Nominal Defendants"), against EFG and a number of its
affiliates, including the Managing Trustee, as defendants (collectively, the
"Defendants"). Certain of the Plaintiffs, on or about June 24, 1997, had filed
an earlier derivative action, captioned Leonard Rosenblum, et al. v. Equis
-----------------------------------
Financial Group Limited Partnership, et al., in the Superior Court of the
------------------------------------------
Commonwealth of Massachusetts on behalf of the Nominal Defendants against the
-
Defendants. Both actions are referred to herein collectively as the "Class
Action Lawsuit."

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

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

On March 15, 1999, counsel for the Plaintiffs and the Defendants entered into an
amended Stipulation of Settlement (the "Amended Stipulation") which was filed
with the Court on March 15, 1999. The Amended Stipulation was preliminarily
approved by the Court by its "Modified Order Preliminarily Approving Settlement,
Conditionally Certifying Settlement Class and Providing For Notice of, and
Hearing On, the Proposed Settlement" dated March 22, 1999. The Amended
Stipulation, among other things, divided the Class Action Lawsuit into two
separate sub-classes that could be settled individually. The second sub-class,
which does not include the Trust, remains pending.

On April 5, 1999, the Trust mailed a notice to all Class A and Class B
Beneficiaries describing, among other things, the Class Action Lawsuit and the
proposed settlement terms for the Trust. In addition, the notice advised the
Beneficiaries that the Court would conduct a fairness hearing on May 21, 1999
and described the rights of the Beneficiaries and the procedures they should
follow if they wished to object to the settlement.

On May 26, 1999, the Court issued its Order and Final Judgment approving
settlement of the Class Action Lawsuit with respect to claims asserted by the
Plaintiffs on behalf of the sub-class that included the Trust. As a result of
the settlement, the Trust declared a special cash distribution of $500,709,
including legal fees for Plaintiffs' counsel of $26,913, that was paid in July
1999 ($0.81 per Class A Interest, net of legal fees). In addition, the parent
company of the Managing Trustee, Equis II Corporation, agreed to commit
$1,126,595 of its Class B Capital Contributions (paid in connection with its
purchase of Class B Interests in July 1997) to the Trust for the Trust's
operating and investment purposes. In the absence of this commitment, Equis II
Corporation would have been entitled to receive a Class B Capital Distribution
for this amount pursuant to the Trust Agreement because the proceeds from the
offering of the Class B Interests were intended to be used for approximately a
two-year period to re-purchase outstanding Class A Interests for the benefit of
each Trust. Subsequently, any Class B capital not so expended was required to
be returned to the Class B Interest holders. The settlement required that Equis
II Corporation forego this Class B Capital Distribution. The settlement
effectively caused Equis II Corporation to remain at risk as a long-term
investor in the Trust.

NOTE 12 - QUARTERLY RESULTS OF OPERATIONS (Unaudited)
- ------------------------------------------------------------

The following is a summary of the quarterly results of operations for the years
ended December 31, 2001 and 2000:

Three Months Ended
--------------------

March 31, June 30, September 30, December 31, Total
---------- ---------- --------------- ------------- -----------

2001 (as restated)
- ---------------------------------

Lease revenue . . . . . . . . . . $ 108,001 $ 175,772 $ 123,472 $ 111,426 $ 518,671
Net income (loss) . . . . . . . . $ 758,952 $(314,572) $ (208,006) $ 75,608 $ 311,982
Net income (loss) per
Beneficiary Interest:
Class A Interests $ 0.90 $ (0.13) $ (0.35) $ 0.09 $ 0.50
Class B Interests $ 0.16 $ (0.17) $ -- $ 0.02 $ 0.01

2001 (as previously reported)
- ---------------------------------

Lease revenue . . . . . . . . . . $ 108,001 $ 175,772 $ 123,472 $ 111,426 $ 518,671
Net income (loss) . . . . . . . . $ 654,920 $(291,770) $ (113,659) $ 111,456 $ 360,947
Net income (loss) per
Beneficiary Interest:
Class A Interests $ 0.78 $ (0.14) $ (0.19) $ 0.13 $ 0.57
Class B Interests $ 0.14 $ (0.15) $ -- $ 0.02 $ 0.02

2000 (as restated)
- ---------------------------------

Lease revenue . . . . . . . . . . $ 278,630 $ 284,778 $ 238,160 $ 235,351 $1,036,919
Net income (loss) . . . . . . . . $ 471,010 $ 147,330 $ (139,011) $ 19,588 $ 498,917
Net income (loss) per
Beneficiary Interest:
Class A Interests $ -- $ 0.06 $ (0.21) $ 0.02 $ (0.12)
Class B Interests $ 0.26 $ 0.06 $ (0.01) $ -- $ 0.32

2000 (as previously reported)
- ---------------------------------

Lease revenue . . . . . . . . . . $ 278,630 $ 284,778 $ 238,160 $ 235,351 $1,036,919
Net income (loss) . . . . . . . . $ 461,162 $ 150,567 $ (55,887) $ 30,152 $ 585,994
Net income (loss) per
Beneficiary Interest:
Class A Interests $ -- $ 0.06 $ (0.07) $ 0.04 $ 0.02
Class B Interests $ 0.26 $ 0.07 $ (0.01) $ 0.01 $ 0.32

NOTE 13 - SEGMENT REPORTING
- -------------------------------

Segment information for the years ended December 31, 2001, 2000 and 1999 is
summarized below.

2001 2000 1999
------------- ------------- -----------

Restated (1) Restated (1)

Interest Expense:
Equipment leasing $ 23,292 $ 57,223 $ 50,389
Real estate - - -
------------- ------------- -----------
Total $ 23,292 $ 57,223 $ 50,389
============= ============= ===========

Equity Interests:
Equipment leasing $ 578,988 $ - $ -
Real estate (45,552) (450,156) -
------------- ------------- -----------
Total $ 533,436 $ (450,156) $ -
============= ============= ===========

Net Income: $ 311,982 $ 498,917 $ 1,470,149
============= ============= ===========

(1) See Note 1 to the accompanying financial statements, regarding the
restatement of the Trust's 2001 and 2000 financial statements.

(2) Includes equipment leasing revenue of $518,671, $1,036,919 and
$1,325,194 for the years ended December 31, 2001, 2000 and 1999, respectively.

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

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

During the year ended December 31, 2000, the Trust sold investment securities
having a book value of $105,128, resulting in a gain, for financial reporting
purposes of $17,524.

MILPI
- -----

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

EFG Kirkwood owns membership interests in:

Mountain Resort Holdings LLC ("Mountain Resort") and
Mountain Springs Resort LLC ("Mountain Springs").

Mountain Resort
- ----------------

Ski-related expenses in 2001 increased approximately $2,425,000 compared to 2000
as a result of an increase in ski-related revenue, as discussed above.

Mountain Springs
- -----------------

NOTE 14 - SUBSEQUENT EVENT
- ------------------------------

On February 6, 2002, MILPI completed its acquisition of PLM through the
acquisition of the remaining 17% of the outstanding PLM common shares by
effecting a merger of PLM into MILPI Acquisition Corp. The merger was completed
when MILPI obtained approval of the merger from PLM's shareholders pursuant to a
special shareholders' meeting. The Trust did not purchase any of the remaining
17% of the outstanding PLM common shares and the Trust's ownership interest in
MILPI subsequent to the merger was decreased from 20% to 16.66%.

On March 12, 2002, PLM declared and paid a cash dividend of approximately $2.7
million, of which the Trust's share was $444,310.

ADDITIONAL FINANCIAL INFORMATION

AFG INVESTMENT TRUST B

SCHEDULE OF EXCESS (DEFICIENCY) OF TOTAL CASH GENERATED TO COST
OF EQUIPMENT DISPOSED

FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

The Trust classifies all rents from leasing equipment as lease revenue. Upon
expiration of the primary lease terms, equipment may be sold, rented on a
month-to-month basis or re-leased for a defined period under a new or extended
lease agreement. The proceeds generated from selling or re-leasing the
equipment, in addition to any month-to-month revenues, represent the total
residual value realized for each item of equipment. Therefore, the financial
statement gain or loss, which reflects 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, may not reflect the aggregate residual proceeds
realized by the Trust for such equipment. Expenses, such as management fees, and
interest earned on cash generated are not included below.

The following is a summary of cash excess associated with equipment dispositions
occurring in the years ended December 31, 2001, 2000 and 1999.

2001 2000 1999
---------- ---------- -----------

Rents earned prior to disposal of
equipment, net of interest charges $4,798,328 $1,272,857 $ 6,729,842

Sale proceeds realized upon
disposition of equipment 150,382 136,356 4,746,333
---------- ---------- -----------

Total cash generated from rents
and equipment sale proceeds 4,948,710 1,409,213 11,476,175

Original acquisition cost of equipment disposed 3,790,816 1,096,932 8,909,602
---------- ---------- -----------

Excess of total cash generated to cost
of equipment disposed $1,157,894 $ 312,281 $ 2,566,573
========== ========== ===========

AFG INVESTMENT TRUST B

STATEMENT OF CASH AND DISTRIBUTABLE CASH FROM OPERATIONS,
SALES AND REFINANCINGS

FOR THE YEAR ENDED DECEMBER 31, 2001
(RESTATED)

Sales and
Operations Refinancings Total
------------ -------------- ------------

Net income $ 229,622 $ 82,360 $ 311,982

Add:
Depreciation 86,898 - 86,898
Management fees 85,830 - 85,830
Income from equity interests (533,436) - (533,436)
Book value of disposed equipment - 68,022 68,022
Less:
Principal reduction of notes payable (604,740) - (604,740)
------------ -------------- ------------

Cash from operations, sales and refinancings (735,826) 150,382 (585,444)

Less:
Management fees (85,830) - (85,830)
------------ -------------- ------------

Distributable cash from operations,
sales and refinancings (821,656) 150,382 (671,274)

Other sources and uses of cash:
Cash and cash equivalents at beginning of year 3,019,685 2,107,108 5,126,793
Investments - other - 1,453 1,453
Interest in MILPI Holdings, LLC (1) (1,467,663) (2,729,981) (4,197,644)
Net proceeds from note payable refinancing - 471,038 471,038
Net change in receivables and accruals 169,203 - 169,203
------------ -------------- ------------

Cash and cash equivalents at end of year $ 899,569 $ - $ 899,569
============ ============== ============

(1) To the extent available, cash generated from sales and refinancings is used
for reinvestment, in
accordance with the Trust Agreement.

AFG INVESTMENT TRUST B

SCHEDULE OF COSTS REIMBURSED TO THE
MANAGING TRUSTEE AND ITS AFFILIATES AS
REQUIRED BY SECTION 10.4 OF THE SECOND AMENDED AND
RESTATED DECLARATION OF TRUST

FOR THE YEAR ENDED DECEMBER 31, 2001

For the year ended December 31, 2001, the Trust reimbursed the Managing Trustee
and its Affiliates for the following costs:

Operating expenses $696,701

AFG INVESTMENT TRUST B

SCHEDULE OF REIMBURSABLE OPERATING EXPENSES DUE TO THIRD PARTIES

FOR THE YEAR ENDED DECEMBER 31, 2001

Operating expenses for the year ended December 31, 2001 consisted of the
following:

Legal $250,402
Selling & Remarketing 158,930
Accounting and Tax 105,728
Printing & Document Services 27,253
Investor Services 20,281
Travel & Entertainment 14,932
Insurance 9,282
Bank Charges 8,955
Office 4,847
Equipment Maintenance 244
--------
Total $600,854
========

AFG INVESTMENT TRUST B

SCHEDULE OF EQUIPMENT

AS OF DECEMBER 31, 2001

Lease
Rental Expiration Net Book
Lessee Schedule Date Cost Value Debt
- ---------------------------------- -------- ---------- ---------- --------- --------

Amoco Corporation A-O-20 - $ 20,748 $ - $ -
Aerovias De Mexico, S.A. de C.V. N753RA 6/21/05 1,239,741 900,959 420,027
International Paper A-24-122 - 19,891 - -
International Paper B-24-64 - 12,879 - -
GATX Logistics, Inc. E-2 - 41,694 - -
GATX Logistics, Inc. E-3 - 68,861 - -
General Motors Corporation A-28RN1 - 410,497 - -
Owens-Corning Fiberglass Corp. A-42 - 572 - -
Temple-Inland Forest Product Group A-1RN2 12/31/02 21,486 2,694 -
USS/Kobe Steel Company A-1 - 122,886 - -
USS/Kobe Steel Company A-2 - 44,254 - -
Walker Manufacturing Company A-9RN1 - 56,975 - -
Xerox Corporation BB57-RN3 - 110,738 - -
Xerox Corporation BB61-RN3 - 25,487 - -
Xerox Corporation BB-68RN2 - 23,499 - -
Warehouse - 859,131 - -
---------- --------- --------

Total - $3,079,339 $ 903,653 $420,027
========== ========= ========