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

FORM 10- K

(Mark One)

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

For the fiscal year ended DECEMBER 31, 2002
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from ___to
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Commission file number 0-21444
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AFG INVESTMENT TRUST C
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(Exact name of registrant as specified in its charter)

Delaware 04-3157232
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

1050 Waltham Street, Suite 310, Lexington, MA 02421
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (781) 676-0009
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Securities registered pursuant to Section 12(b) of the Act NONE
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Title of each class Name of each exchange on which
registered

Securities registered pursuant to Section 12(g) of the Act:

2,011,014 Trust Class A Beneficiary Interests
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(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained herein, to
the best of registrant's knowledge, in definite proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes____ No X___
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State the aggregate market value of the voting stock held by nonaffiliates of
the registrant. Not applicable. Securities are nonvoting for this purpose.
Refer to Item 12 for further information.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to security holders for
the year ended December 31, 2002 (Part I and II)

AFG INVESTMENT TRUST C

FORM 10-K

TABLE OF CONTENTS

Page

PART I

Item 1. Business 3

Item 2. Properties 7

Item 3. Legal Proceedings 7

Item 4. Submission of Matters to a Vote of Security Holders 8

PART II

Item 5. Market for the Trust's Securities and Related Security Holder Matters 8

Item 6. Selected Financial Data 9

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 9

Item 7a. Quantitative and Qualitative Disclosures about Market Risks 9

Item 8. Financial Statements and Supplementary Data 9

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 9

PART III

Item 10. Directors and Executive Officers of the Trust 9

Item 11. Executive Compensation 11

Item 12. Security Ownership of Certain Beneficial Owners and Management 11

Item 13. Certain Relationships and Related Transactions 12

Item 14. Controls and Procedures 14

PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K 14

Annual Report to Participants 21

PART I

Item 1. Business.
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(a) General Development of Business

AFG Investment Trust C (the "Trust") was organized as a Delaware business trust
in August 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 ("AFG")), 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 2,011,014
Beneficiary Interests ("Class A Interests") at a subscription price of $25.00
each ($50.3 million in total) through 9 serial closings commencing December 1992
and ending September 1993. In July 1997, the Trust issued 3,024,740 Class B
Interests ("Class B Interests") at $5.00 each ($15.1 million in total), of which
(i) 3,019,220 interests are held by Equis II Corporation, an affiliate of EFG,
and a wholly owned subsidiary of Semele Group Inc. ("Semele", an affiliate of
EFG), and (ii) 5,520 interests are held by 10 other Class A investors. The
Trust repurchased 218,661 Class A Interests in October 1997 at a cost of $2.3
million. In April 1998, the Trust repurchased 5,200 additional Class A
Interests at a cost of $47,000. Accordingly, there are 1,787,153 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 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, which
is a wholly owned subsidiary of Semele. 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 Class B Interests which 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 other capital contributions except as may be required
under the Second Amended and Restated Declaration of Trust, as amended (the
"Trust 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
"EFG") 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"). EFG 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 EFG 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.

(b) Financial Information About Industry Segments

The Trust is engaged in three industry segments: equipment leasing, equipment
management and real estate ownership, development and management. Historically,
the Trust has acquired capital equipment and leased the equipment to
creditworthy lessees on a full-payout or operating lease basis. Full-payout
leases are those in which aggregate undiscounted, noncancellable rents equal or
exceed the purchase price of the leased equipment. Operating leases are those
in which the aggregate undiscounted, noncancellable rental payments are less
than the purchase price of the leased equipment. With the consent of the
Beneficiaries in 1998, the Trust Agreement was modified to permit the Trust to
invest in assets other than equipment. In 1999, the Company purchased a
minority interest in EFG/Kettle Valley Development LLC "Kettle Valley" and EFG
Kirkwood LLC ("EFG Kirkwood"). Kettle Valley is a real estate development
located in Canada. The Trusts and an affiliated corporation, Semele, formed a
joint venture, EFG Kirkwood, which then acquired a minority interest in two ski
resorts: Mountain Resort Holdings LLC and Mountain Springs Resort LLC. During
2001, the Trust and three affiliated trust's (collectively, the "Trusts"),
through a jointly owned entity MILPI Holdings, LLC ("MILPI"), acquired 83% of
the outstanding common stock of PLM International, Inc. ("PLM"), an equipment
management company specializing in the leasing of transportation and related
equipment. The Trust originally owned 34% of the entity that purchased PLM.
During 2002, the Trust and AFG Investment Trust D ("Trust D") collectively
provided approximately $4.4 million to acquire the remaining 17% of PLM's
outstanding common stock. Subsequent to the merger, the Trust's ownership
interest increased from 34% to 38%.

See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" incorporated herein by reference to the 2002 Annual Report.

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 1999 and 2000, the Company purchased a minority interest in Kettle Valley
and EFG Kirkwood. During 2001 and 2002, the Trusts acquired PLM. Pursuant to
the Trust Agreement, the Trust is scheduled to be dissolved by December 31,
2004.

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 directors and officers 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.

The Trust has no employees; however, it entered into an Advisory Agreement with
EFG. EFG's role, among other things, is to (i) evaluate, select, negotiate, and
consummate the acquisition of equipment, (ii) manage the leasing, re-leasing,
financing, and refinancing of equipment, and (iii) arrange the resale of
equipment. The Advisor is compensated for such services as described in the
Trust Agreement. In addition, the Managing Trustee is compensated for services
provided related to the Trust's non-equipment investment other than cash. See
Item 13 herein.

The Trust's investment in equipment is, and will continue to be, subject to
various risks, including physical deterioration, technological obsolescence, and
credit quality of and defaults by lessees. A principal business risk of owning
and leasing equipment is the possibility that aggregate lease revenues and
equipment sale proceeds will be insufficient to provide an acceptable rate of
return on invested capital after payment of all debt service costs and operating
expenses. Another risk is that the credit quality of the lease may deteriorate
after a lease is made. In addition, the leasing industry is very competitive.
The Trust is subject to considerable competition when equipment is re-leased or
sold at the expiration of primary lease terms. The Trust must compete with
lease programs offered directly by manufacturers and other equipment leasing
companies, many of which have greater resources, including business trusts and
limited partnerships organized and managed similarly to the Trust and including
other EFG-sponsored trusts, which may seek to re-lease or sell equipment within
their own portfolios to the same customers as the Trust. In addition, default
by a lessee under a lease agreement may cause equipment to be returned to the
Trust at a time when the Managing Trustee or the Advisor is unable to arrange
the sale or re-lease of such equipment. This could result in the loss of a
portion of potential lease revenues and weaken the Trust's ability to repay
related indebtedness. In addition, a significant portion of the Trust's
equipment portfolio consists of used passenger jet aircraft. Aircraft
condition, age, passenger capacity, distance capability, fuel efficiency, and
other factors influence market demand and market values for passenger jet
aircraft. The events of September 11, 2001 have caused a significant
deterioration in the value of the Trust's aircraft resulting in write-downs
totaling approximately $5.6 and $0.5 million for the years ended December 2001
and 2002, respectively. The Advisor does not anticipate aircraft values
returning to their pre- September 11, 2002 values.

The Trust has an interest in two aircrafts, which, based on original equipment
cost, account for approximately 71% of the Trust's equipment portfolio at
December 31, 2002. These aircraft currently operate in international markets
and are stage three compliant. All rents due under the aircrafts' leases are
denominated in U.S. dollars. However, the operation of these aircraft in
international markets exposes the Trust to certain political, credit and
economic risks. Regulatory requirements of other countries governing aircraft
registration, maintenance, liability of lessors and other matters may apply.
Political instability, changes in national policy, competitive pressures, fuel
shortages, recessions and other political and economic events adversely
affecting world or regional trading markets or a particular foreign lessee could
also create the risk that a foreign lessee would be unable to perform its
obligations to the Trust. The recognition in foreign courts of judgments
obtained in United States courts may be difficult or impossible to obtain and
foreign procedural rules may otherwise delay such recognition. It may be
difficult for the Trust to obtain possession of an aircraft used outside the
United States in the event or default by the lessee or to enforce its rights
under the related lease. Moreover, foreign jurisdictions may confiscate or
expropriate aircraft without paying adequate compensation.

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,
political stability 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.

On March 1, 1999, the Trust and an affiliated trust (collectively, the "Buyers")
formed EFG/Kettle Development LLC, a Delaware limited liability company, for the
purpose of acquiring a 49.9% indirect ownership interest (the "Interest") in a
real estate development in Kelowna, British Columbia in Canada called Kettle
Valley. EFG/Kettle Development LLC, upon receiving the Buyers' contributions
for their membership interests, purchased the Interest from a special purpose
company ("SPC") whose subsidiaries owned a 99.9% limited partnership interest in
Kettle Valley Development Limited Partnership ("KVD LP"). The SPC and its
subsidiaries were established by the seller, in part, for income tax purposes
and have no business interests other than the development of Kettle Valley. The
seller is an unaffiliated third-party company and has retained the remaining
50.1% ownership interest in the SPC. KVD LP is a Canadian Partnership that owns
the property, consisting of approximately 280-acres of land. The project is
zoned for 1,120 residential units in addition to commercial space. To date, 154
residential units have been constructed and sold and 13 additional units are
under construction. A newly organized Canadian affiliate of EFG replaced the
original general partner of KVD LP on March 1, 1999.

On May 1, 1999, the Trusts and an affiliated corporation, Semele, formed a joint
venture, EFG Kirkwood for the purpose of acquiring a minority interest in two
ski resorts: Mountain Resort Holdings LLC and Mountain Springs Resort LLC. 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 any
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 EFG Kirkwood, which gives equal voting rights to Class A
and Class B membership interests. The Trust holds 40% of EFG Kirkwood's Class A
membership interests. The Managing Trustee is the manager of EFG Kirkwood.

On April 30, 2000, Kirkwood Associates Inc.'s ("KAI") 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 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.

On May 1, 2000, EFG Kirkwood acquired 50% of the membership interests in
Mountain Springs Resorts LLC ("Mountain Springs"). Mountain Springs, through a
wholly owned subsidiary, owns 80% of the common membership interests and 100% of
the Class B Preferred membership interests in an entity that owns the Purgatory
Ski Resort ("Purgatory") in Durango, Colorado. In October 2002, an existing
owner and an unrelated third party contributed approximately $2.5 million to
Mountain Springs. As a result of the capital contribution, EFG Kirkwood's
membership interest in Mountain Springs decreased from 50% to 33%. Mountain
Springs used the proceeds from the additional capital contribution to exercise
an option to purchase 51% of Durango Mountain Land Company, LLC, a real estate
development company owning land in Durango, Colorado.

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

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

Because the investments in Mountain Resorts and Mountain Springs include real
estate development companies, the risks and uncertainties associated with the
tourism industry can adversely affect the value of the real estate development
companies associated with these investments. Decrease in tourism,
weather-related conditions or other risks discussed above can permanently
decrease the value of the investment and future operations.

Revenue from major individual lessees which accounted for 10% or more of lease
revenue during the years ended December 31, 2002, 2001 and 2000 is incorporated
herein by reference to Note 2 to the financial statements included in Item 15.
Refer to Item 15(a)(3) for lease agreements filed with the Securities and
Exchange Commission.

The Trust Agreement originally provided for the reinvestment of "Cash From Sales
or Refinancings", as defined in the Trust Agreement, in additional equipment
until February 1999. In the 1998 amendment to the Trust Agreement, the Trust's
reinvestment provisions were reinstated until December 31, 2002 and the Trust
was permitted to invest in assets other than equipment. Upon the expiration of
each lease term, the Managing Trustee will determine whether to sell or re-lease
the Trust's equipment, depending on the economic advantages of each alternative.
As the Trust nears its scheduled dissolution date of December 31, 2004, the
Trust will begin to liquidate its portfolio of equipment. Similarly, any
non-equipment investments will be liquidated as the Trust nears its scheduled
dissolution date.

In December 2000, the Trusts formed MILPI for the purpose of acquiring PLM
through its wholly-owned subsidiary MILPI Acquisition Corporation ("MAC"). The
Trusts collectively paid $1.2 million of which AFG Investment Trust C
contributed $0.4 million. AFG Investment Trust C's capital contribution gave
the Trust a 34% interest in MILPI. In February 2001, the Trusts through MAC
acquired 83% of PLM's common stock for a total purchase price of $21.8 million
at $3.46 per share and contributed the shares to MILPI. AFG Investment Trust
C's portion of the acquisition was $7.1 million, which included acquisition fees
paid to a wholly-owned subsidiary of Semele of $0.1 million. The purchase price
was determined based on competitive bids and a valuation model using the
expected future cash flows of PLM. MILPI also hired an investment banking firm
to issue a fairness opinion on the purchase price. The assets of PLM included
cash and cash equivalents of approximately $4.4 million. The 83% acquisition
resulted in goodwill of approximately $5.8 million.

On February 6, 2002, the Trusts through MAC, completed its acquisition of PLM by
purchasing the remaining 17% of the outstanding PLM common stock and by
effecting a merger of MAC into PLM, with PLM as the surviving entity. The
merger was completed when MAC obtained approval of the merger from PLM's
shareholders pursuant to a special shareholder's meeting. The remaining
interest was purchased for $4.4 million at the $3.46 per common share price
established in the tender offer, which was financed by AFG Investment Trust C
and D. An investment banking firm issued a fairness opinion on the purchase
price of this transaction. The Trust's portion of the purchase price was $2.4
million, which included transaction costs of $24,000 and a 1% acquisition fee
paid to a wholly-owned subsidiary of Semele. The 17% acquisition resulted in
additional goodwill of approximately $3.5 million. No goodwill is expected to
be deducted for tax purposes. Concurrent with the completion of the merger, PLM
ceased to be publicly traded. Concurrent to the February 6, 2002 acquisition,
the Trust's ownership interest in MILPI increased from 34% to 38%.

In March 2002, the Trust and AFG Investment Trust D ("Trust D") formed C & D IT
LLC, a Delaware limited liability company, as a 50%/50% owned joint venture that
is co-managed by the Trust and Trust D (the "C & D Joint Venture") to which each
Trust contributed $1.0 million. The C & D Joint Venture was formed for the
purpose of making a conditional contribution of $2.0 million to BMLF/BSLF II
Rancho Malibu Limited Partnership ("Rancho Malibu Limited Partnership") in
exchange for 25% of the interests in Rancho Malibu Limited Partnership (the "C &
D Joint Venture Contribution"). The C & D Joint Venture was admitted to Rancho
Malibu Limited Partnership as a co-managing general partner pursuant to the
terms of an amendment to Rancho Malibu Limited Partnership Agreement. The other
partners in Rancho Malibu Limited Partnership are Semele and its wholly-owned
subsidiary, Rancho Malibu Corp., the other co-managing general partner.

Rancho Malibu Limited Partnership owns a 274-acre parcel of land near Malibu,
California which is being developed as a single-family luxury residential
subdivision. The conditional C & D Joint Venture Contribution was made to assure
participation in the future development of the parcel. The conditional
contribution was made subject to the future solicitation of the consent of the
beneficiaries of each of the Trust and Trust D. The C & D Joint Venture
Contribution is conditioned upon the consummation of a transaction pursuant to
which Semele and Rancho Malibu Corp. will contribute all of the partnership
interests that they hold in Rancho Malibu Limited Partnership along with 100% of
the membership interests Semele holds in RM Financing LLC to RMLP, Inc., a newly
formed subsidiary of PLM, in exchange for $5.5 million in cash, a $2.5 million
promissory note and 182 shares of common stock of RMLP, Inc., approximately 15%
interest in RMLP Inc.

The C & D Joint Venture possesses the right to withdraw the C & D Joint Venture
Contribution from Rancho Malibu Limited Partnership if the transactions have not
taken place within ninety days of the receipt by Rancho Malibu Limited
Partnership of notice from the C & D Joint Venture that the requisite consents
of the beneficiaries of the Trust and Trust D have been received. This right of
the C & D Joint Venture is secured by a pledge of 50% of the capital stock of
Rancho Malibu Corp. and 50% of the interests in Rancho Malibu Limited
Partnership held by Semele and Rancho Malibu Corp.

On February 12, 2003, the Trust filed a proxy statement with the SEC, pursuant
to which the Trust solicited the approval of the Beneficiaries to the following
proposals, which were subsequently approved by the Trust's shareholders. On
March 14, 2003, the Beneficiaries approved the following proposals:

1. To allow PLM, its parent, MILPI, and subsidiaries and affiliates that
they control, to continue to operate their ongoing business making investments
after December 31, 2002, notwithstanding the end of the reinvestment period for
the Trust.
2. To approve a transaction whereby a new formed subsidiary of PLM, RMLP,
Inc., will receive a contribution from Semele Group, Inc., of partnership
interests in Rancho Malibu, a partnership that owns and is developing
approximately 274 acres of land in Malibu, California, in exchange for $5.5
million in cash, a $2.5 million promissory note and 182 shares (15 %) of the
common stock of RMLP, Inc.
3. To amend Section 7.5 of the Trust Agreement to approve grants and
exercises of rights of first refusal in connection with joint ventures between
the Trust and its affiliates.
4. To approve the purchase by MILPI of the membership interests in MILPI
held by AFG Investment Trust A and AFG Investment Trust B, for $5.9 million
which gives the Trust, together with AFG Investment Trust D, shared 100%
ownership of MILPI. After this purchase the Trust will owns 50% of MILPI.
5. To allow the Trust, in its operation of PLM, to enter into business
arrangements with affiliates of the Trust in the ordinary course of business on
terms no less favorable than those that they would receive if such arrangements
were being entered into with independent third parties.

In March 2003, RMLP, Inc. purchased Semele Group, Inc.'s ownership interest in
Rancho Malibu as indicated in the proposal above.

d) Financial Information About Foreign and Domestic Operations and Export Sales

Incorporated herein by reference to the financial statements and supplementary
data included in the 2002 Annual Report.

Item 2. Properties.
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None.

Item 3. Legal Proceedings.
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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
interests in C&D IT LLC, EFG Kirkwood and Kettle Valley. 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 were determined to be an investment company, its business
would be adversely affected. The Managing Trustee, AFG ASIT Corporation, has
engaged in discussions with the staff of the Securities and Exchange Commission
regarding whether or not the Trust may be an inadvertent investment company by
virtue of its recent acquisition activities. The Managing Trustee has consulted
counsel and believes that the Trust is not an investment company. The Act,
among other things, prohibits an unregistered investment company from offering
securities for sale or engaging in any business or interstate commerce. If
necessary, the Trust intends to avoid being deemed an investment company by
disposing of or acquiring certain assets that it might not otherwise dispose of
or acquire.

The Trust is subject to various claims and proceeding in the normal course of
business. Management believes that the disposition of such matters is not
expected to have a material adverse effect on the financial position of the
Trust or its results of operations.

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

PART II

Item 5. Market for the Trust's Securities and Related Security Holder Matters.
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(a) Market Information

There is no public market for the resale of the Interests and it is not
anticipated that a public market for resale of the Interests will develop.

There are several secondary markets in which limited partnership units trade.
Secondary markets are characterized as having few buyers for limited partnership
interests and therefore are viewed as being inefficient vehicles for the sale of
limited partnership units. Presently, there is no public market for the limited
partnership units and none is likely to develop.

(b) Approximate Number of Security Holders

At December 31, 2002, there were 1,945 record holders (1,935 of Class A
Interests and 10 of Class B Interests) in the Trust.

Prior to 1998, cash distributions were declared and paid within 45 days after
the completion of each calendar month and described in a statement sent to the
Beneficiaries. Distributions prior to Class B Payout (defined below) were
allocated to the Class A and Class B Beneficiaries as follows: first, 100% to
the Class A Beneficiaries up to $0.41 per Class A Interest; second, 100% to the
Class B Beneficiaries up to $0.164 per Class B Interest, reduced by the Class B
Distribution Reduction Factor (defined below); third, 100% to the Class A
Beneficiaries up to an additional $0.215 per Class A Interest; and fourth, until
Class B Payout was attained, 80% to the Class B Beneficiaries and 20% to the
Class A Beneficiaries.

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 $15.2 million, 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 did not reinstate cash distributions through the expiration
of the Trust's reinvestment period in December 2002. In addition to maintaining
sale proceeds for reinvestment, the Managing Trustee determined that the Trust
would retain cash from operations to pay down debt and for the continued
maintenance of the Trust's assets. The Managing Trustee believed that this
decision was in the best interests of the Trust over the long term.

Class A Payout means the first time when the aggregate amount of all
distributions actually made to the Class A Beneficiaries equals $25 per Class A
Interest (minus all uninvested capital contributions returned to the Class A
Beneficiaries) plus a cumulative annual distribution of 10% compounded quarterly
and calculated beginning with the last day of the month of the Trust's initial
Class A Closing.

Class B Payout means the first time when the aggregate amount of all
distributions actually made to the Class B Beneficiaries equals $5 per Class B
Interest plus a cumulative annual return of 8% per annum compounded quarterly
with respect to capital contributions returned to them as a Class B Capital
Distribution and 10% per annum, compounded quarterly, with respect to the
balance of their capital contributions calculated beginning August 1, 1997, the
first day of the month following the Class B Closing. Class B Payout occurred
in January 2000 in conjunction with the special cash distribution paid on that
date. As Class B Payout has been attained, all further distributions will be
made to the Class A Beneficiaries and the Class B Beneficiaries in amounts so
that each Class A Beneficiary receives, with respect to each Class A Interest,
an amount equal to 400%, divided by the difference between 100% and the Class B
Distribution Reduction Factor, of the amount so distributed with respect to each
Class B Interest. The Class B Distribution Reduction Factor means the
percentage determined as a fraction, the numerator of which is the aggregate
amount of any cash distributions paid to the Class B Beneficiaries as a return
of their original capital contributions (on a per Class B Interest basis),
discounted at 8% per annum (commencing August 1, 1997, the first day of the
month following the Class B Closing) and the denominator of which is $5.00.

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.

There were no distributions declared in 2002, 2001 or 2000. Distributions of
$15.2 million declared in December 1999 were paid in January 2000.

Item 6. Selected Financial Data.
- ------------------------------------

Incorporated herein by reference to the section entitled "Selected Financial
Data" in the 2002 Annual Report.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations.
- ---------------

Incorporated herein by reference to the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
2002 Annual Report.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk
- ---------------------------------------------------------------------------

The Trust's primary market risk exposure is that of interest rate and currency
devaluation risk.

During the year ended December 31, 2002, 63% of the Trust's total lease revenues
from wholly-owned and jointly-owned equipment was earned from lessees domiciled
outside the United States. If these lessees' currency devalues against the US
dollar, these lessees could potentially encounter difficulty in making the US
dollar-denominated lease payments.

Item 8. Financial Statements and Supplementary Data.
- ----------------------------------------------------------

Incorporated herein by reference to the financial statements and supplementary
data included in the 2002 Annual Report.

Item 9. Changes in and Disagreements with Accountants on Accounting and
- --------------------------------------------------------------------------------
Financial Disclosure.
- ----------------------

None.

PART III

Item 10. Directors and Executive Officers of the Trust.
- ---------------------------------------------------------------

(a-b) Identification of Directors and Executive Officers

The Trust has no Directors or Officers. As indicated in Item 1, AFG ASIT
Corporation is the Managing Trustee of the Trust. Under the Trust Agreement, the
Managing Trustee is solely responsible for the operation of the Trust's
properties and the Beneficiaries have no right to participate in the control of
such operations. The names, titles and ages of the Directors and Executive
Officers of the Managing Trustee as of March 31, 2003 are as follows:

DIRECTORS AND EXECUTIVE OFFICERS OF THE MANAGING TRUSTEE (See Item 13)
- --------------------------------------------------------------------------------

Name Title Age Term
- --------------- ----------------------------------------- --- ----------------

Gary D. Engle President and Chief Executive Until a
Officer of the general partner of EFG and successor is
President and Director of Managing duly elected and
Trustee 54 qualified

James A. Coyne Executive Vice President of the
general partner of EFG and Senior Vice
President of the Managing Trustee 43

Richard K Brock Chief Financial Officer and Treasurer of
AFG ASIT Corporation 40

Gail D. Ofgant Senior Vice President, Lease Operations
of the general partner of EFG
and Senior Vice President of the
Managing Trustee 37

None.

(d) Family Relationship

No family relationship exists among any of the foregoing Directors or Executive
Officers.

(e) Business Experience

Mr. Engle, age 54, is Director and President of the Managing Trustee and sole
shareholder, Director, President and Chief Executive Officer of Equis
Corporation, EFG's general partner. Mr. Engle is also Chairman and Chief
Executive Officer of Semele Group Inc. ("Semele") and is President and a
Director of Equis II Corporation. Mr. Engle controls the general partners of
Atlantic Acquisition Limited Partnership ("AALP") and Old North Capital Limited
Partnership ("ONC"). Mr. Engle is also a member of the Board of Managers of
Echelon Development Holdings LLC. Mr. Engle joined EFG in 1990 and acquired
control of EFG and its subsidiaries in December 1994. Mr. Engle co-founded Cobb
Partners Development, Inc., a real estate and mortgage banking company, where he
was a principal from 1987 to 1989. From 1980 to 1987, Mr. Engle was Senior Vice
President and Chief Financial Officer of Arvida Disney Company, a large-scale
community development organization owned by Walt Disney Company. Prior to 1980,
Mr. Engle served in various management consulting and institutional brokerage
capacities. Mr. Engle has an M.B.A. degree from Harvard University and a B.S.
degree from the University of Massachusetts (Amherst).

Mr. Coyne, age 43, became Vice President of the Managing Trustee in 1997 and has
been Senior Vice President of the Managing Trustee since 1998. Mr. Coyne is
Executive Vice President of Equis Corporation, the general partner of EFG, and
President and Chief Operating Officer of Semele. He is also a Director and
President of Equis II Corporation. Mr. Coyne joined EFG in 1989 and remained
with the company until May 1993 when he resigned to join the Raymond Company, a
private investment firm, where he was responsible for financing corporate and
real estate acquisitions. Mr. Coyne remained with the Raymond Company until
November 1994 when he re-joined EFG. From 1985 to 1989, Mr. Coyne was employed
by Ernst & Whinney (now known as Ernst & Young LLP). Mr. Coyne holds a Masters
degree in accounting from Case Western Reserve University and a B.S. in Business
Administration from John Carroll University and is a Certified Public
Accountant.

Mr. Brock, age 40, became Chief Financial Officer and Treasurer of AFG ASIT
Corp. in 2002. Mr. Brock is also the Chief Financial Officer of PLM
International, Inc. Mr. Brock has been associated with PLM for over twelve
years holding positions including Chief Financial Officer and Corporate
Controller.

Ms. Ofgant, age 37, has served as Senior Vice President, Lease Operations of
Managing Trustee since 1998. Ms. Ofgant joined EFG in July 1989 and held
various positions in the organization before becoming Senior Vice President of
the general partner of EFG in 1998. From 1987 to 1989, Ms. Ofgant was employed
by Security Pacific National Trust Company. Ms. Ofgant holds a B.S. degree from
Providence College.

(f) Involvement in Certain Legal Proceedings

None.

(g) Promoters and Control Persons

Not applicable.

Item 11. Executive Compensation.
- -----------------------------------

(a) Cash Compensation

Currently, the Trust has no employees. However, under the terms of the Trust
Agreement, the Trust is obligated to pay all costs of personnel employed full or
part-time by the Trust, including officers or employees of the Managing Trustee
or its Affiliates. There is no plan at the present time to make any officers or
employees of the Managing Trustee or its Affiliates employees of the Trust. The
Trust has not paid and does not propose to pay any options, warrants or rights
to the officers or employees of the Managing Trustee or its Affiliates.

(b) Compensation Pursuant to Plans

None.

Although the Trust has no employees, as discussed in Item 11(a), pursuant to
section 10.4(c) of the Trust Agreement, the Trust incurs a monthly charge for
personnel costs of the Advisor for persons engaged in providing administrative
services to the Trust. A description of the remuneration paid by the Trust to
the Managing Trustee and its Affiliates for such services is included in Item
13, herein and in Note 8 to the audited financial statements included in Item
15, herein.

(d) Stock Options and Stock Appreciation Rights.

Not applicable.

(e) Long-Term Incentive Plan Awards Table.

Not applicable.

(f) Defined Benefit or Actuarial Plan Disclosure.

Not applicable.

(g) Compensation of Directors

None.

(h) Termination of Employment and Change of Control Arrangement

There exists no remuneration plan or arrangement with the Managing Trustee or
its Affiliates, which results or may result from their resignation, retirement
or any other termination.

Item 12. Security Ownership of Certain Beneficial Owners and Management.
- --------------------------------------------------------------------------------

By virtue of its organization as a trust, the Trust has no outstanding
securities possessing traditional voting rights. However, as provided in Section
11.2(a) of the Trust Agreement (subject to Section 11.2(b)), a majority interest
of the Beneficiaries have voting rights with respect to:

1. Amendment of the Trust Agreement;

2. Termination of the Trust;

3. Removal of the Managing Trustee; and

4. Approval or disapproval of the sale of all, or substantially all, of
the assets of the Trust (except in the orderly liquidation of the Trust upon its
termination and dissolution).

As of March 31, 2003, the following person or group owns beneficially more than
5% of the Trust's outstanding Beneficiary interests:

Title Name and Amount of Percent
of Address of Beneficial of
Class Beneficial Owner Ownership Class
- --------------------- -------------------- ------------------- --------

Class B Equis II Corporation
Beneficiary Interests 200 Nyala Farms 3,019,220 Interests 99.82%
Westport, CT 06880

Equis II Corporation is a wholly owned subsidiary of Semele. Gary D. Engle is
Chairman and Chief Executive Officer of Semele and President, Chief Executive
Officer, sole shareholder and Director of EFG's general partner. James A. Coyne,
Executive Vice President of the general partner of EFG, 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.

No person or group is known by the Managing Trustee to own beneficially more
than 5% of the Trust's 1,787,153 outstanding Class A Interests as of March 31,
2003.

The ownership and organization of EFG is described in Item 1 of this report.

Item 13. Certain Relationships and Related Transactions.
- --------------------------------------------------------------

The Managing Trustee of the Trust is AFG ASIT Corporation, an affiliate of EFG.

(a) Transactions with Management and Others

Various operating expenses incurred by the Trust are paid by Equis Financial
Group, LP ("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, 2002, 2001 and 2000, which were paid or accrued by the Trust
to EFG or its affiliates, are as follows (in thousands of dollars):

2002 2001 2000
----- ------ ------
Acquisition fees $ 24 $ 74 $ 15
Management fees 434 433 431
Administrative charges 201 178 198
Reimbursable operating costs
due to third parties - 966 397
----- ------ ------
Total $ 659 $1,651 $1,041
===== ====== ======

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 equipment acquisition services, EFG was
compensated by an amount equal to 0.28% of Asset Base Price paid by the Trust
for each asset acquired for the Trust's initial asset portfolio. For
reinvestment equipment acquisitions completed prior to September 2, 1997, 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, which were scheduled to expire on
September 2, 1997, were extended through December 31, 2002 and the Trust was
permitted to invest in assets other than equipment. Acquisition fees paid to
EFG in connection with equipment reinvestment assets acquired after September 2,
1997 are equal to 1% of Asset Base Price paid by the Trust. The Trust does not
anticipate, nor have there been, any equipment acquisitions subsequent to
September 1997. Acquisition fees associated with non-equipment acquisitions are
negotiated at the date of each acquisition. Historically fees associated with
non-equipment acquisitions have been approximately 1% of the Asset Base Price.
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
September 2, 1997. 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 disposition 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. Prior to June 2002, an affiliated company
supported the administrative function. Subsequently, the administrative
functions were outsourced to an unrelated third party with the exception of some
administrative functions which will continue to be supported by EFG.

During 2001 and 2000, EFG paid the majority of operating costs on behalf of the
Trust. Costs incurred by EFG were subsequently reimbursed by the Trust on a
monthly basis. During 2002, the Trust paid all of its direct costs. Therefore,
there were no reimbursable direct operating costs paid to an affiliate during
the year.

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

On December 31, 2002, the Trust had a receivable from affiliate of $0.1 million.
The receivable consists of approximately $0.1 million of revenues and other
proceeds received by EFG. All rents and proceeds from the sale of equipment are
paid by the lessee directly to either EFG or a lender. EFG temporarily deposits
collected funds in a separate interest-bearing escrow account prior to
remittance to the Trust. The Trust's cash proceeds received by EFG are
reimbursed to the Trust on a monthly basis. The remaining balance of the
receivable, approximately $0.1 million, relates to costs incurred by the Trust
associated with the sale of an aircraft on behalf of EFG.

Old North Capital Limited Partnership ("ONC"), a Massachusetts limited
partnership formed in 1995 and an affiliate of EFG, owns 9,210 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 3,024,740 Class B Interests at $5.00 per interest,
thereby generating approximately $15.1 million in aggregate Class B capital
contributions. Class A Beneficiaries purchased 5,520 Class B Interests,
generating $28,000 of such aggregate capital contributions, and then the Special
Beneficiary, EFG, purchased 3,019,220 of such Class B Interests, generating
approximately $15.1 million 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.

During the first quarter of 2002, the Trust borrowed $0.7 million from MILPI
Holdings, LLC. The note issued had an interest rate LIBOR plus 200 basis points
and was scheduled to mature on January 6, 2003. In December 2002, the note was
paid in full plus accrued interest. The interest paid to MILPI under this note
during the year ended December 31, 2002 was $28,000.

See discussion of the MILPI acquisition of PLM included in Item 1.

See discussion of the C & D IT LLC joint venture entity included in Item 1.

(b) Certain Business Relationships

None.

(d) Transactions with Promoters

Not applicable.

Item 14. Controls and Procedures
- ------------------------------------

Based on their evaluation as of a date within 90 days of the filing of this Form
10-K, the Managing Trustee's Principal Executive Officer and Chief Financial
Officer have concluded that the Trust's disclosure controls and procedures are
effective to ensure that information required to be disclosed in the reports
that the Trust files or submits under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms. There have been no
significant changes in the Trust's internal controls or in other factors that
could significantly affect those controls subsequent to the date of their
evaluation.

PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
- --------------------------------------------------------------------------------

(a) Documents filed as part of this report:

(1) Financial Statements:

Report of Independent Certified Public Accountants. *

Report of Deloitte & Touche LLP, Independent Auditors. *

Statements of Financial Position
at December 31, 2002 and 2001 *

Statements of Operations
for the years ended December 31, 2002, 2001 and 2000 *

Statements of Changes in Participants' Capital
for the years ended December 31, 2002 , 2001 and 2000. *

Statements of Cash Flows
for the years ended December 31, 2002, 2001 and 2000. *

Notes to the Financial Statements *

* Incorporated herein by reference to the appropriate portion of the 2002
Annual Report to security holders for the year ended December 31, 2002 (see Part
II).

(2) Financial Statement Schedules:

None required.

(3) Exhibits:

Except as set forth below, all Exhibits to Form 10-K, as set forth in Item 601
of Regulation S-K, are not applicable.

Exhibit
Number
------

2 Agreement and Plan of Merger, dated as of December 22,2000, between MILPI
Acquisition Corp. and PLM International, Inc. was filed in the Registrant's Form
8-K dated December 28, 2000 as Exhibit 2.1 and is incorporated by reference.

4 Second Amended and Restated Declaration of Trust was filed in the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1998 as
Exhibit 4 and is incorporated herein by reference.

4.1 Amendment No. 2 to Second Amended and Restated Declaration of Trust is
filed in the Registrant's Annual Report on Form 10-K for the year ended December
31, 2000 as Exhibit 4.1 and is incorporated herein by reference.

13 The 2002 Annual Report to security holders, a copy of which is furnished
for the information of the Securities and Exchange Commission. Such Report,
except for those portions thereof which are incorporated herein by reference, is
not deemed "filed" with the Commission.

23 Consent of Independent Certified Public Accountants.

99(a) Lease agreement with Hyundai Electronics America, Inc. was filed in
the Registrant's Annual Report on Form 10-K for the year ended December 31, 1999
as Exhibit 99 (a) and is incorporated herein by reference.

99(b) Lease agreement with Scandinavian Airlines System was filed in the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1998 as
Exhibit 99 (a) and is incorporated herein by reference.

99(c) Lease agreement with Scandinavian Airlines System Amendment No. 3 is
filed in the Registrant's Annual Report on Form 10-K for the year ended December
31, 2000 as Exhibit 99 (c) and is incorporated herein by reference.

99(d) Operating Agreement of MILPI Holdings, LLC dated as of December 13,
2000 by and among the persons identified on Schedule A thereto was filed in the
Registrant's Amendment No. 1 as Schedule TO dated January 29, 2001 ("Schedule
TO/A No. 1") as Exhibit (b)(1) and is incorporated herein by reference.

99(e) Subscription Agreement dated as of December 15, 2000 by and among
MILPI Holdings, LLC and MILPI Acquisition Corp. was filed in the Registrant's
Schedule TO/A No. 1 as Exhibit (b)(2) and is incorporated herein by reference.

99(f) Promissory Note, dated as of January 7, 2002, between AFG Investment
Trust C and PLM International, Inc. was filed on Form 8-K as Exhibit 99.1 and is
incorporated herein by reference.

99(g) C&T IT LLC Operating Agreement, dated March 1, 2002 between AFG
Investment Trust C and AFG Investment Trust D was filed on Form 10-K for the
year ended December 31, 2001 and is incorporated herein by reference.

99(h) Operating Agreement of EFG Kirkwood LLC, dated May 1, 1999

99(i) Amended and Restated Operating Agreement of Mountain Springs, LLC
dated October 24, 2002

99.1 Certificate of the Chief Executive Officer pursuant to Section 906 of
Sarbanes - Oxley

99.2 Certificate of the Chief Executive Officer pursuant to Section 906 of
Sarbanes - Oxley

(b) Reports on Form 8-K

None

(d) Financial Statement Schedules

(i) Consolidated Financial Statements for MILPI Holdings, LLC and Subsidiaries
as of December 31, 2002 and 2001 and for the year ended December 31, 2002 and
for the period February 7, 2001 through December 31, 2001 and Independent
Auditors' Report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below, by the following persons, on behalf of the registrant and
in the capacities and on the dates indicated.

AFG Investment Trust C

By: AFG ASIT Corporation, a Massachusetts corporation and the Managing Trustee
of the Registrant.

By: /s/ Gary D. Engle
----------------------
Gary D. Engle
President and Chief Executive
Officer of the general partner of EFG and
President and a Director
of the Managing Trustee
(Principal Executive Officer)
Date:March 31, 2003
-----------------

By: /s/ Richard K Brock
----------------------
Richard K Brock
Chief Financial Officer and Treasurer of AFG ASIT Corp.,
the Managing Trustee of the Trust
(Principal Financial and Accounting Officer)
Date:March 31, 2003
----------------

CERTIFICATION:

I, Gary D. Engle, certify that:

1. I have reviewed this annual report on Form 10-K of AFG Investment Trust
C;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
functions):

d) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

e) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

/s/ Gary D. Engle
----------------------
Gary D. Engle
President of AFG ASIT Corporation,
the Managing Trustee of the Trust
(Principal Executive Officer)
March 31, 2003

- ------

CERTIFICATION:

I, Richard K Brock, certify that:

1. I have reviewed this annual report on Form 10-K of AFG Investment Trust
C;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

e) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

/s/ Richard K Brock
- -----------------------
Richard K Brock
Chief Financial Officer and Treasurer of AFG ASIT Corp.,
the Managing Trustee of the Trust
(Principal Financial and Accounting Officer)
March 31, 2003

Exhibit
Number
- ------

13 The 2002 Annual Report

23 Consent of Independent Certified Public Accountants

99(h) Operating Agreement of EFG Kirkwood LLC

99(i) Amended and Restated Operating Agreement of Mountain Springs, LLC

99.1 Certificate of Chief Executive Officer pursuant to Section 906 of
Sarbanes - Oxley Act

99.2 Certificate of Chief Financial Officer pursuant to Section 906 of
Sarbanes - Oxley Act

Schedule 14 D (i)

MILPI HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Description Page
- ---------------------------------------------------------------------------------------------- ----

Independent Auditors' Report 3

Consolidated Balance Sheets as of December 31, 2002 and December 31, 2001 4
Consolidated Statements of Income for the year ended
December 31, 2002 and for the period from February 7, 2001 through December 31, 2001 5

Consolidated Statements of Shareholders' Equity for the year
ended December 31, 2002 and for for the period from February 7, 2001 through December 31, 2001 6
Consolidated Statements of Cash Flows for the year ended
December 31, 2002 and for the period from February 7, 2001 through December 31, 2001 7

Notes to Consolidated Financial Statements 8

INDEPENDENT AUDITORS' REPORT
The Board of Directors and Members
MILPI Holdings, LLC:

We have audited the accompanying consolidated balance sheets of MILPI Holdings,
LLC, a Delaware limited liability company, and subsidiaries (the "Company") as
of December 31, 2002 and 2001 and the related statements of income,
shareholders' equity and cash flows for the year ended December 31, 2002 and for
the period from February 7, 2001 through December 31, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2002
and 2001, and the results of its operations and its cash flows for the year
ended December 31, 2002 and for the period from February 7, 2001 through
December 31, 2001 in conformity with accounting principles generally accepted in
the United States of America.

As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for goodwill and other intangible assets with
the adoption in fiscal 2002 of Statement of Financial Accounting Standards No.
142, "Goodwill and Other Intangible Assets."

/s/ Deloitte & Touche LLP
Certified Public Accountants

Tampa, Florida
March 28, 2003

MILPI HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31,
(in thousands of dollars, except share amounts)

2002 2001
------- -------

ASSETS
Cash and cash equivalents $ 6,622 $14,037
Receivables, net of allowance for doubtful accounts of $136 at
December 31, 2002 and $45 at December 31, 2001 305 39
Receivables from affiliates 670 951
Equity interest in affiliates 19,361 20,948
Restricted cash and cash equivalents 60 75
Assets held for sale 6,227 -
Goodwill, net of accumulated amortization of $765 as of
December 31, 2002 and 2001 8,134 4,590
Other assets, net 3,021 2,759
------- -------
Total assets $44,400 $43,399
======= =======

LIABILITIES
Payables and other liabilities $ 5,899 $ 5,702
Deferred income taxes 12,541 9,751
------- -------
Total liabilities 18,440 15,453
------- -------
MINORITY INTERESTS - 3,029
------- -------
Commitments and contingencies

SHAREHOLDERS' EQUITY
Common stock ($0.01 par value, 20 shares authorized and outstanding) - -
Paid-in capital, in excess of par 21,676 21,970
Retained earnings 4,284 2,947
------- -------
Total shareholders' equity 25,960 24,917
------- -------

Total liabilities, minority interests and stockholders' equity $44,400 $43,399
======= =======

See accompanying notes to these consolidated financial statements.

MILPI HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands of dollars)

For the Period
For the Year From February 7,
Ended 2001 through
December 31, December 31,
2002 2001
--------- ---------------

REVENUES

Management fees $4,494 $5,217
Operating lease income 122 472
Acquisition and lease negotiation fees - 2,032
Gain (loss) on disposition of assets 24 (91)
Other 588 1,030
------ ------
Total revenues 5,228 8,660
------ ------
EXPENSES

Depreciation and amortization 177 1,255
Impairment of investment in managed programs 501 511
General and administrative 2,800 4,090
------ ------
Total expenses 3,478 5,856
------ ------
Operating income 1,750 2,804

Equity income in managed programs 133 1,716

Interest income, net 323 378
Other (expense) income, net (55) 89
------ ------
Income before income taxes and minority interest 2,151 4,987

Provision for income taxes 774 1,611
Minority interest 40 429

Net income $1,337 $2,947
====== ======
Net income per weighted-average
common share outstanding $ 67 $ 147
====== ======

See accompanying notes to these consolidated financial statements.

MILPI HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED DECEBMER 31, 2002 AND FOR
THE PERIOD FROM FEBRUARY 7, 2001 THROUGH DECEMBER 31, 2001
(in thousands of dollars, except shares)

Common Additional Retained
Shares Stock Paid in Capital Earnings Total
------- ------ ------------------ --------- -------

Balance at February 7, 2001 20 $ - $ 21,776 $ - $21,776

Capital contribution - - 194 - 194
Net income - - - 2,947 2,947
------- ------ ------------------ --------- -------
Balance at December 31, 2001 20 - 21,970 2,947 24,917

Capital contribution - - 4,363 - 4,363
Dividends paid - - (4,657) - (4,657)
Net income - - - 1,337 1,337
------- ------ ------------------ --------- -------
Balance at December 31, 2002 20 $ - $ 21,676 $ 4,284 $25,960
------- ------ ------------------ --------- -------

See accompanying notes to these consolidated financial statements.

MILPI HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)

For the Period from
For the Year February 7, 2001
Ended through
December 31, December 31,
2002 2001
--------------------- ------------------
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES

Net income $ 1,337 $ 2,947
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization expense 177 1,255
Compensation expense related to variable stock options -- 315
(Gain) loss on disposition of assets (24) 91
Equity income in managed programs (133) (1,716)
Minority interest 40 429
Impairment of equity Investments 501 511
Deferred income tax provision 561 867
Changes in assets and liabilities: (14)-- --
Receivables and receivables from affiliates 15 1,576
Other assets, net (406) (176)
Payables and other liabilities (250) (9,484)
--------------------- ------------------
Net cash provided by (used in) operating activities 1,818 (3,385)
--------------------- ------------------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES

Cash distributions from managed programs 1,645 1,591
Loans made to shareholders (1,345) (5,500)
Repayment of loans made to shareholders 1,345 5,500
Purchase of property, plant and equipment (67) (71)
Proceeds of sale of equipment for lease 58 313
Proceeds from the sale of assets held for sale -- 10,250
Purchase of the assets held for sale (6,227) --
Purchase of PLM International, Inc. minority interest (4,363) --
Decrease in restricted cash -- 1,673
--------------------- ------------------
Net cash (used in) provided by investing activities (8,954) 13,756
--------------------- ------------------
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES

Restricted cash 15 --
Capital contribution 4,363 194
Dividends paid (4,657) --
Redemption of stock options -- (919)
--------------------- ------------------
Net cash used in financing activities (279) (725)
--------------------- ------------------

Net (decrease) increase in cash and cash equivalents (7,415) 9,646
Cash and cash equivalents at beginning of period 14,037 4,391
--------------------- ------------------
Cash and cash equivalents at end of period $ 6,622 $ 14,037
===================== ==================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for taxes $ 243 $ 6,216
===================== ==================
Cash paid during the period for interest $ 1 $ 6
===================== ==================

See accompanying notes to these consolidated financial statements.

1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

BACKGROUND

MILPI Holdings, LLC and subsidiaries ("MILPI" or the "Company") was formed on
December 12, 2000, under the laws of the state of Delaware and is governed by
its Operating Agreement, dated December 13, 2000. MILPI had no activities from
December 12, 2000 through February 7, 2001. MILPI was created by four separate
trusts (AFG Investment Trust A, AFG Investment Trust B, AFG Investment Trust C
and AFG Investment Trust D, collectively the "Trusts") for the purpose of
acquiring the entire interest in PLM International, Inc. and subsidiaries
("PLM"). PLM is an equipment management company and operates in one business
segment, the leasing of transportation equipment.

On February 7, 2001, MILPI Acquisition Corp. ("MAC"), a wholly-owned subsidiary
of MILPI, closed on its tender offer to purchase any and all of PLM's
outstanding common stock for a purchase price of $3.46 per share. The purchase
price was determined based on competitive bids and a valuation model using the
expected future cash flows of the Company. The Company also hired an investment
banking firm to issue a fairness opinion on the purchase price. Pursuant to the
cash tender offer, the Trusts through MAC acquired approximately 83% of PLM's
common stock in February 2001 for a total purchase price of $21.8 million and
contributed the shares to MILPI. Approximately $2.0 million of total costs
estimated for severance of PLM employees and relocation costs in accordance with
management's formal plan to involuntarily terminate employees, which plan was
developed in conjunction with the acquisition, were accrued as acquisition
costs. The assets of PLM included cash and cash equivalents of approximately
$4.4 million. The acquisition resulted in goodwill of approximately $5.8
million. Goodwill was reduced by approximately $0.5 million later in 2001 due to
a revision in the estimates of severance and relocation costs originally
recorded as acquisition costs. Amounts paid in 2001 related to the severance of
employees and for relocation costs were approximately $1.5 million.

The Company's consolidated balance sheet, reflecting the above business
combination, as of February 7, 2001 was as follows (in thousands of dollars):

ASSETS
Cash and cash equivalents $ 4,391
Restricted cash and cash equivalents 1,748
Receivables 1,222
Receivables from affiliates 1,344
Equity interest in affiliates 21,334
Assets held for sale 10,250
Other assets 3,406
Goodwill 5,840
-------
Total assets $49,535
=======

LIABILITIES
Payables and other liabilities $16,275
Deferred income taxes 8,884
-------
Total liabilities 25,159

Minority interest 2,600

SHAREHOLDERS' EQUITY
Common stock ($0.01 par value, 20 shares authorized and outstanding) -
Paid-in capital, in excess of par 21,776
-------
Total liabilities, minority interest and shareholders' equity $49,535
=======

On February 6, 2002, the Trusts through MAC, completed their acquisition of PLM
by purchasing the remaining 17% of the outstanding PLM common stock and by
effecting a merger of MAC into PLM, with PLM as the surviving entity. The
merger was completed when MAC obtained approval of the merger from PLM's
shareholders pursuant to a special shareholder's meeting on February 6, 2002.
The remaining interest was purchased for $4.4 million at the $3.46 per common
share price established in the tender offer. Approximately
1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

$0.4 million of total costs estimated for severance of PLM employees and
property abandonment in accordance with management's formal plan to involuntary
terminate employees, which plan was developed in conjunction with this
acquisition, were accrued as acquisition costs. Amounts paid related to the
severance of employees and for property abandonment in 2002 were approximately
$0.1 million.

The allocation of the February 6, 2002 purchase price is as follows (in
thousands of dollars):

Equity Interest in Affiliates $ 426
Goodwill 3,544
Payables and Other Liabilities (446)
Deferred Income Tax Liability (2,230)
Minority Interest 3,069
-------
Total $ 4,363
=======

The acquisition of the stock of PLM was accounted for using the purchase method
of accounting in accordance with Statement of Financial Accounting Standards
("SFAS") No. 141, "Business Combinations" ("SFAS No. 141"). In accordance with
SFAS No. 141, the Company allocates the total purchase price to the assets
acquired and liabilities assumed based on the respective fair market values at
the date of acquisition. There are no contingencies or other matters that could
materially affect the allocation of the purchase cost.

The results of operations of PLM since February 7, 2001 have been included in
the consolidated financial statements. Concurrent with the February 7, 2001,
acquisition, PLM ceased to be publicly traded.

On October 10, 2002, the Company formed a limited liability company under the
Delaware Limited Liability Company Act, MILPI Equipment Management, LLC (MILPI
EM). MILPI EM is expected to begin earning revenues in connection with the
management of limited partnerships and other managed programs sometime in 2003.

The Company's fiscal year end is December 31.

PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of MILPI
Holdings, LLC and its wholly-owned subsidiaries. In addition, investments for
which the Company acts as manager or general partner, and therefore has
significant influence but does not control, are accounted for using the equity
method. All significant intercompany balances and transactions among the
consolidated group have been eliminated.

The Company recognized a minority interest in the Company's consolidated
financial statements, until February 6, 2002, the date the Company acquired the
minority interest, to reflect PLM's common shares not owned by the Company as of
that date.

ESTIMATES

These consolidated financial statements have been prepared on the accrual basis
of accounting in accordance with accounting principles generally accepted in the
United States of America. This requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosures of contingent assets and liabilities at the date of the consolidated
financial statements, and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INVESTMENT IN, AND MANAGEMENT OF, EQUIPMENT GROWTH FUNDS, OTHER LIMITED
PARTNERSHIPS, PRIVATE PLACEMENT PROGRAMS AND LIMITED LIABILITY COMPANY

The Company earns revenues in connection with the management of limited
partnerships and other managed programs. Equipment acquisition and lease
negotiation fees are earned through the purchase and initial lease of equipment,
and are recognized as revenue when the Company completes all of the services
required to earn the fees, typically when binding commitment agreements are
signed.

Management fees are earned for managing the equipment portfolios and
administering investor programs as provided for in various agreements, and are
recognized as revenue over time as they are earned.

As compensation for organizing a partnership investment program, the Company was
granted an interest (between 1% and 5%) in the earnings and cash distributions
of the program, in which PLM Financial Services, Inc. ("FSI"), a wholly owned
subsidiary of PLM, is the General Partner. The Company recognizes as
partnership interests its equity interest in the earnings of the partnerships,
after adjusting such earnings to reflect the effect of special allocations of
the programs' gross income allowed under the respective partnership agreements.

From May 1995 through May 1996, Professional Lease Management Income Fund I, LLC
("Fund I"), a limited liability company with a no front-end fee structure, was
offered as an investor program. FSI serves as the manager for the program. No
compensation was paid to PLM for the organization and syndication of interests,
the acquisition of equipment, the negotiation of leases for equipment, or the
placement of debt. PLM funded the costs of organization, syndication, and
offering through the use of operating cash. PLM has an equity interest of 15%
for its contribution to the program. In return for its investment, PLM is
entitled to a 15% interest in the cash distributions and earnings of Fund I,
subject to certain allocation provisions. PLM's interest in the cash
distributions and earnings of Fund I will increase to 25% after the investors
have received distributions equal to their invested capital.

The Company is entitled to reimbursement from the investment programs for
providing certain administrative services at the lesser of cost or market rates.

In accordance with the Financial Accounting Standards Board (FASB) Statement of
Financial Accounting Standards) No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS No. 144"), the Company evaluates
long-lived assets for impairment whenever events or circumstances indicate that
the carrying values of such assets may not be recoverable. Losses for
impairment are recognized when the undiscounted cash flows estimated to be
realized from a long-lived asset are determined to be less than the carrying
value of the asset and the carrying amount of long-lived assets exceed its fair
value. The determination of fair value for a given investment requires several
considerations, including but not limited to, income expected to be earned from
the asset, estimated sales proceeds, and holding costs excluding interest.

OPERATING LEASE INCOME

Operating lease income consists of rental revenue generated from assets held for
operating leases and assets held for sale that are on lease, which is recognized
equally on a straight-line basis over the lease term.

RESTRICTED CASH AND CASH EQUIVALENTS

The Company considers highly liquid investments readily convertible into known
amounts of cash with original maturities of 90 days or less as cash equivalents.

Restricted cash consists of bank accounts and short-term investments that are
subject to withdrawal restrictions per loan agreements.

1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

GOODWILL

Goodwill represents the excess of the aggregate purchase price of PLM over the
fair market value of the identifiable net assets acquired in accordance with
SFAS No. 141. The Company allocates the total purchase price to the assets
acquired and liabilities assumed based on the relative fair market values at the
date of acquisition.

The Company adopted Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" ("SFAS. No. 142") on January 1, 2002. As
a result, the discontinuance of goodwill amortization was effective upon
adoption of SFAS No. 142. 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. The amount of the impairment is the difference between
the carrying amount and the fair value of the asset. Fair value of the asset is
calculated using several valuation models which utilize the expected future cash
flows of the Company. In accordance with SFAS No. 142, the Company performed an
evaluation of the fair value of goodwill as of January 1, 2002 and found no
indication that goodwill was impaired.

Based on an analysis performed as of December 31, 2002, and consideration of
events that have occurred and circumstances that have changed since the most
recent fair value determination, including the minority interest acquisition,
the likelihood that a current fair value determination would be less than the
carrying amount of the reporting unit is remote as of December 31, 2002.

Goodwill of approximately $5.4 million was recorded in conjunction with the
acquisition of 83% of the common stock of PLM. The Company recorded goodwill of
approximately $3.5 million in conjunction with the acquisition of the remaining
17% of the outstanding common stock of PLM in February 2002.

The comparison of the net income for the year ended December 31, 2002 and the
pro forma net income for the period from February 7, 2001 through December 31,
2001, assuming no goodwill amortization, are summarized as follows (in thousands
of dollars):

For the
For the Period From
Year February 7, 2001
Ended Through
December 31, 2002 December 31, 2001
------------------ ------------------

Reported net income $ 1,337 $ 2,947
Add back: goodwill amortization - 765
------------------ ------------------
Pro forma net income $ 1,337 $ 3,712
================== ==================
Net earnings per share:
Reported net income $ 67 $ 147
Add back: Goodwill amortization - 38
------------------ ------------------
Pro forma net income $ 67 $ 185
================== ==================

1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The changes in the carrying amount of goodwill for the year ended December 31,
2002 are as follows (in thousands of dollars):

Balance as of December 31, 2001 $4,590

Add: Goodwill acquired during the year 3,544
------
Balance at December 31, 2002 $8,134
======

INCOME TAXES

MILPI is a partnership and as such is not taxed on its operations. PLM is a C
corporation, which recognizes income tax expense using the asset and liability
method. Deferred income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax rates applicable to
future years to differences between the financial statement carrying amounts and
the tax bases of existing assets and liabilities.

Deferred income taxes arise primarily because of differences in the timing of
reporting equipment depreciation, partnership income, and certain accruals for
financial statement and income tax reporting purposes.

NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("Statement") No. 143, "Accounting for Asset
Retirement Obligations". Statement No. 143 establishes accounting standards for
the recognition and measurement of legal obligations associated with the
retirement of tangible long-lived assets and requires the recognition of a
liability for an asset retirement obligation in the period in which it is
incurred. The Company adopted Statement No. 143 at the beginning of fiscal 2003
and such adoption had no effect on the Company's financial position and results
of operations.

In April 2002 the FASB issued SFAS No.145, "Rescission of FASB Statements No.4,
44 and 64, Amendment of FASB Statement No.13, and Technical Corrections." As a
result of the rescission of SFAS No.4, a gain or loss on extinguishment of debt
will no longer be presented as an extraordinary item upon the adoption of SFAS
No.145. The Company adopted SFAS No. 145 in the second quarter of fiscal 2002.

In July 2002 the FASB issued SFAS No.146, "Accounting for Costs Associated with
Exit or Disposal Activities." SFAS No.146 is based on the general principle that
a liability for a cost associated with an exit or disposal activity should be
recorded when it is incurred and initially measured at fair value. SFAS No.146
applies to costs associated with (1) an exit activity that does not involve an
entity newly acquired in a business combination, or (2) a disposal activity
within the scope of SFAS No.144. These costs include certain termination
benefits, costs to terminate a contract that is not a capital lease, and other
associated costs to consolidate facilities or relocate employees. Because the
provisions of this statement are to be applied prospectively to exit or disposal
activities initiated after December 31, 2002, the effect of adopting this
statement cannot be determined.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others" ("FIN 45"). The interpretation elaborates on the
disclosures to be made by a guarantor in its financial statements. The
disclosure requirements of FIN 45 are effective for the Company as of December
31, 2002. It also requires the guarantor to recognize a liability for the fair
value of guarantees entered into after December 31, 2002 at the inception of the
guarantee. This interpretation had no effect on the financial position and
results of operations of the Company.

In January 2003, FASB issued Interpretation No. 46, "Consolidation of Variable
Interest Entities ("FIN 46"). This interpretation clarifies existing accounting
principles related to the preparation of consolidated financial statements
1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

when the equity investors in an entity do no have the characteristics of a
controlling financial interest or when the equity at risk is not sufficient for
the entity to finance its activities without additional subordinated financial
support from other parties. FIN 46 requires a company to evaluate all existing
arrangements to identify situations where a
company has a "variable interest," commonly evidenced by a guarantee arrangement
or other commitment to provide financial support, in a "variable interest
entity," commonly a thinly capitalized entity, and further determine when such
variable interest requires a company to consolidate the variable interest
entities financial statement with its own. The Company is required to perform
this assessment by September 30, 2003 and consolidate any variable interest
entities for which the Company will absorb a majority of the entities' expected
losses or receive a majority of the expected residual gains. The Company has
determined that it is not reasonably possible that they have any variable
interests.

RECLASSIFICATIONS

Certain prior year balances have been reclassified to conform with current year
presentation and do not change the results of the prior period financial
statements.

2. ASSETS HELD FOR SALE

In conjunction with the acquisition of PLM in February 2001, the Company
acquired $10.3 million in marine containers that were classified as assets held
for sale. The Company sold the marine containers to affiliated programs at
cost, which approximated fair value in the first quarter of 2001.

The Company has arranged for the lease or purchase of a total of 1,050
pressurized tank railcars by (i) partnerships and managed programs in which FSI
serves as the general partner or manager and holds an ownership interest
(Program Affiliates) or (ii) managed programs in which FSI provides management
services but does not hold an ownership interest (Non-Program Affiliates).
These railcars will be delivered over the next three years. A leasing company
affiliated with the manufacturer will acquire approximately 70% of the railcars
and lease them to a Non-Program Affiliate. The remaining 30% will either be
purchased by other third parties to be managed by the Company or by the Program
Affiliates. The Company will manage the leased and purchased railcars. The
Company will not be liable for these railcars. The Company estimates that the
total value of purchased railcars will not exceed $26.0 million with
approximately one third of the railcars being purchased in each of 2002, 2003
and 2004. As of December 31, 2002, the Company had purchased $6.2 million of
these railcars. The Company sold these railcars to a Program Affiliate in the
first quarter of 2003 (See Note 16).

3. EQUITY INTEREST IN AFFILIATES

FSI is the General Partner or manager of ten investment programs. Distributions
of the programs are allocated as follows: 99% to the limited partners and 1% to
the General Partner in PLM Equipment Growth Fund (EGF) I and PLM Passive Income
Investors 1988-II; 95% to the limited partners and 5% to the General Partner in
EGFs II, III, IV, V, VI, and PLM Equipment Growth & Income Fund VII (EGF VII);
and 85% to the members and 15% to the manager in Fund I. PLM's interest in the
cash distributions of Fund I will increase to 25% after the investors have
received distributions equal to their invested capital. Net income is allocated
to the General Partner subject to certain allocation provisions.

In accordance with SFAS No. 144, the Partnership evaluates long-lived assets for
impairment whenever events or circumstances indicate that the carrying bases of
such assets may not be recoverable. Whenever circumstances indicate that an
impairment may exist, the Company evaluates future cash flows of the asset and
compares this amount to the carrying value. If projected undiscounted future
cash flows are lower than the carrying value of the asset, a loss is recorded.
The loss recorded is equal to the difference between the carrying amount and the
fair value of the asset. The fair value of the asset is determined based on a
valuation model which includes expected future cash flows of the asset, current
market prices and management's market knowledge. On December 31, 2002, one
of the PLM managed programs in which MILPI has an equity investment adopted a
formal plan of liquidation and transferred the remaining assets of this
managed program to a liquidating trust. MILPI is actively marketing the
equipment in this managed program and is in the process of finalizing the
estimated costs of liquidation.

3. EQUITY INTEREST IN AFFILIATES (CONTINUED)

Based on a revised liquidation analysis as of December 31, 2002, completed for
this managed program on February 7, 2003, MILPI believes its equity investment
in this program is impaired. Therefore, for the year ended December 31, 2002,
MILPI recorded an impairment loss of $0.5 million on its equity investment in
this affiliate.

In accordance with the Financial Accounting Standards Board ("FASB") Statement
of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
("SFAS No. 121"), in 2001 the Company reviewed the carrying value of its
investments whenever circumstances indicated that the carrying value may not be
recoverable. If projected undiscounted future cash flows were lower than the
carrying value of its equity interest in affiliates, an impairment was recorded.
During the period from February 7, 2001 through December 31, 2001, the Company
recorded an impairment of $0.5 million on its equity interest in affiliates due
to a change in market conditions, primarily in the airline industry, after the
events of September 11, 2001.

Most of the investment program agreements contain provisions for special
allocations of the programs' gross income.

While none of the partners or members, including the General Partner and
manager, are liable for program borrowings, and while the General Partner or
manager maintains insurance against liability for bodily injury, death, and
property damage for which an investment program may be liable, the General
Partner or manager may be contingently liable for nondebt claims against the
program that exceed asset values.

The summarized combined financial data for FSI's affiliates as of and for the
year ended December 31, 2002, and as of and for the period from February 7, 2001
through December 31, 2001 is as follows (in thousands of dollars):

2002 2001
-------- --------

Total assets $201,683 $229,358
Total liabilities 53,617 67,579
Partners' equity 148,065 161,779

Total revenues $72,078 $91,085
Total expenses 68,286 70,688
Net income 3,792 20,397

4. OTHER ASSETS, NET

Other assets, net, consists of the following as of December 31, 2002, and 2001,
respectively (in thousands of dollars):

2002 2001
------ -----
Cash surrender value of officers' life insurance policies $2,721 2,343
Prepaid expenses, deposits and other 169 153
Furniture, fixtures, and equipment, net 102 85
Commercial and industrial equipment, net 29 178
------ -----
Total other assets, net $3,021 2,759
------ -----

5. WAREHOUSE CREDIT FACILITY

The Company is a participant in a $10.0 million warehouse facility. In July
2002, the Company reached an agreement with the lenders of the $10.0 million
warehouse facility to extend the expiration date of the facility to June 30,
2003. The warehouse facility is shared by the Company, PLM Equipment Growth
Fund V, PLM Equipment Growth Fund VI, PLM Equipment Growth and Income Fund VII
and Fund I. The facility provides for financing up to 100% of the cost of
equipment. Outstanding borrowings by one borrower reduce the amount available
to each of the other borrowers under the facility. Individual borrowings may be
outstanding for no more than 270 days, with all advances due no later than June
30, 2003. Interest accrues either at the prime rate or
LIBOR plus 2.0% at the borrower's option and is set at the time of an advance of
funds. All borrowings are guaranteed by PLM. As of December 31, 2002, there
were no outstanding borrowings on this facility by any of the eligible
borrowers.

6. INCOME TAXES

The provision for income taxes attributable to income from operations consists
of the following (in thousands of dollars):

2002 2001
---------------------------- --------------------------
Federal State Total Federal State Total

Current $ 64 $ 149 $ 213 $ 551 $ 193 $ 744
Deferred 395 166 561 705 162 867
------ ------- ------ ------- ----- ------
Total $ 459 $ 315 $ 774 $ 1,256 $ 355 $1,611
====== ======= ====== ======= ===== ======

Amounts for the current year are based upon estimates and assumptions as of the
date of this report and could vary significantly from amounts shown on the tax
returns ultimately filed.

The difference between the effective rate and the expected federal statutory
rate is reconciled below:

Year Ended Period from February 7,
December 31, 2001 through
2002 December 31, 2001
------------- ------------------------

Federal statutory tax expense rate 34% 34%
State income tax rate 5 5
Other (3) (7)
------------- ------------------------
Effective tax expense rate 36% 32%
============= ========================

There are no net operating loss carryforwards for federal income tax purposes or
alternative minimum tax credit carryforwards as of December 31, 2002.

The tax effects of temporary differences that give rise to significant portions
of the deferred tax liabilities as of December 31 are presented below (in
thousands of dollars):

Year Ended Period from February
December 31, 7, 2001 through
2002 December 31, 2001
----------------- ----------------------

Deferred tax assets from continuing operations:
Partnership Organization and Syndication costs $ 8,300 $ 8,300
Federal benefit of state taxes 905 735
Other 126 329
----------------- ----------------------
Total gross deferred tax assets 9,331 9,364
Less valuation allowance (8,300) (8,594)
----------------- ----------------------
Net deferred tax assets 1,031 770
----------------- ----------------------

Deferred tax liabilities:
Partnership interests 12,685 10,520
Other 887 1
----------------- ----------------------
Total deferred tax liabilities 13,572 10,521
----------------- ----------------------
Total net deferred tax liabilities $ 12,541 $ 9,751
================= ======================

6. INCOME TAXES (CONTINUED)

Management has reviewed all established interpretations of items reflected in
its consolidated tax returns and believes that these interpretations require
valuation allowances as described in SFAS No. 109, "Accounting for
Income Taxes". The valuation allowance contained in the 2002 deferred tax
account includes items that may result in future capital losses.
7. TRANSACTIONS WITH AFFILIATES

In addition to various fees payable to the Company or its subsidiaries, the
affiliated programs reimburse the Company for certain expenses, as allowed in
the program agreements. Reimbursed expenses totaled $1.3 million and $1.8
million for the year ended December 31, 2002 and the period from February 7,
2001 through December 31, 2001, respectively. Outstanding amounts are paid
under normal business terms.

On February 11, 2002, the Company loaned $1.3 million to two of the trusts that
own MILPI Holdings, LLC. The notes bear interest at LIBOR plus 200 basis points
and matured on January 6, 2003. The interest rate charged on the loan is
consistent with third party rates. This loan was prepaid in full plus all
outstanding interest in December 2002.

As of December 31, 2002, the Company had receivables from affiliates of
approximately $0.7 million, which represented unpaid management fees.

8. SHAREHOLDERS' EQUITY

In February 2002 the four Trusts that own MILPI contributed $4.4 million to the
Company. These funds were used to purchase the remaining outstanding stock of
PLM.

In March and December 2002, the Company declared and paid cash dividends of
approximately $2.7 million and $2.0 million, respectively, to the Trusts.

9. MINORITY INTEREST

Minority interest is related to the portion of PLM's stock not owned by MILPI
Holdings, LLC. The decrease in minority interest is attributable to the
Company's purchase of the remaining 17% minority interest in the first quarter
of 2002. Because all of the remaining minority interest shares were purchased
in the first quarter of 2002, minority interest has been eliminated as of
December 31, 2002.

10. RISK MANAGEMENT

Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of temporary cash investments and receivables
from affiliated entities.

The Company places its temporary cash investments with financial institutions
and other creditworthy issuers and limits the amount of credit exposure to any
one party. The Company's involvement with the management of the receivables
from affiliated entities limits the credit exposure from affiliated entities.

In 2002, Professional Lease Management Income Fund 1, LLC, PLM Equipment Growth
Fund VI, and PLM Equipment Growth and Income Fund VII accounted for 17%, 17% and
17% of total revenues, respectively. No other customer accounted for over 10% of
revenue in 2002.

In 2001, Professional Lease Management Income Fund 1, LLC, PLM Equipment Growth
Fund VI and PLM Equipment Growth and Income Fund VII, accounted for 26%, 20% and
13% of total revenues, respectively. No other customer accounted for over 10% of
revenue in 2001.

10. RISK MANAGEMENT (CONTINUED)

As of December 31, 2002, management believes the Company had no other
significant concentrations of credit risk that could have a material adverse
effect on the Company's business, financial condition, or results of operations.

11. GEOGRAPHIC INFORMATION

All of the Company's revenues for the year ended December 31, 2002, and for the
period from February 7, 2001 through December 31, 2001 were recognized from
entities domiciled in the United States and all of the Company's long-lived
assets are located in the United States.

12. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value of amounts reported in the consolidated financial
statements has been determined by using available market information and
appropriate valuation methodologies. The carrying value of all current assets
and current liabilities approximates fair value because of their short-term
nature.

13. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the quarterly results of operations of the Company
for the year ended December 31, 2002 (in thousands of dollars, except per share
amounts):

2002
-----------------------------------------------

March June September December
31, 30, 30, 31, Total
------ ------ ---------- ---------- ------
Revenue $1,509 $1,334 $ 1,011 $ 1,374 $5,228

Net income $ 553 $ 807 $ 104 $ (127) $1,337

Net income per weighted-average common share outstanding: $ 28 $ 40 $ 5 $ (6) $ 67

During the third quarter ended September 30, 2002, the Company had a decrease in
operating lease revenue, management and other fees totaling approximately $0.3
million compared to the quarter ended June 30, 2002. The Company's equity
interests in the growth funds decreased approximately $0.4 million. Both
decreases contributed to a decline in net income at September 30, 2002, compared
to the period ended June 30, 2002.

During the quarter ended December 31, 2002, the Company had increased management
fee revenue related to forklifts that had not been on lease during the quarter
ended September 30, 2002. In addition, management fee revenue was recognized for
the payment of receivables that had previously been written off. The Company's
equity interests in the growth funds decreased approximately $0.2 million as a
result of railcar impairments. Additionally, the Company recorded a $0.5 million
impairment loss in conjunction with a managed program that adopted a formal plan
of liquidation.

The following is a summary of the quarterly results of operations of the Company
for the period February 7, 2001 through December 31, 2001 (in thousands of
dollars, except per share amounts):

2001
---------------------------------------------

March June September December
31, 30, 30, 31, Total
------ ---------- --------- ------ ------
Revenue $1,648 $ 2,005 $ 3,157 $1,850 $8,660

Net income $ 776 $ 568 $ 1,293 $ 310 $2,947

Net income per weighted-average common share outstanding: $ 39 $ 28 $ 65 $ 16 $ 147

13. QUARTERLY RESULTS OF OPERATIONS (CONTINUED)

In the third quarter of 2001, PLM earned acquisition and lease negotiation fees
of $1.8 million, which resulted in after-tax net income of $1.1 million.

14. COMMITMENTS AND CONTINGENCIES

INTERNAL REVENUE SERVICE AUDIT

In March 2001, the Internal Revenue Service ("IRS") notified PLM that it would
conduct an audit of certain Forms 1042, "Annual Withholding Tax Return for U.S.
Source Income of Foreign Persons." The audit related to payments to unrelated
foreign entities made by two partnerships in which PLM formerly held interests
as the 100% direct and indirect owner. One partnership's audit related to Forms
1042 for the years 1997, 1998 and 1999, while the other partnership's audit
related to Forms 1042 for the years 1998 and 1999. In September 2002, the IRS
notified PLM that they had completed their examination of the related tax
returns and that they had assessed no changes to the reported taxes.

LEASE AGREEMENTS

PLM and its subsidiaries have entered into operating leases for office space.
PLM's total net rent expense was
$0.2 million and $0.4 million for the year ended December 31, 2002 , and for the
period from February 7, 2001 through December 31, 2001, respectively.

Future payments under lease agreements are $0.3 million in 2003, $0.2 million in
2004, $0.1 million in 2005, $0 in 2006, 2007, and thereafter, respectively.

Future receipts under a noncancelable sublease extending through 2004 are $0.1
million as of December 31, 2002.

CORPORATE GUARANTEE

As of December 31, 2002, PLM had guaranteed certain obligations up to $0.4
million of a Canadian railcar repair facility, in which PLM had a 10% ownership
interest. This obligation was accrued at December 31, 2002.

EMPLOYMENT AGREEMENTS

PLM entered into a severance agreement with an individual that will require PLM
to pay severance in the event the employee is terminated after a change in
control as defined in the employment agreement. In addition, PLM is under
agreement to pay the health benefits of one individual through September 2003.
As of December 31, 2002, the total future contingent liability for these
payments was $0.2 million.

WAREHOUSE CREDIT FACILITY

See Note 5 for discussion of PLM's credit warehouse facility.

OTHER

PLM life insurance policies on certain current and former employees, which had a
$2.7 million cash surrender value as of December 31, 2002, are included in other
assets.

COMMITMENT TO PURCHASE RAILCARS

years. A leasing company affiliated with the manufacturer will acquire
approximately 70% of the railcars and lease them to a Non-Program Affiliate.
The remaining 30% will either be purchased by other third parties to be
managed by the Company or by the Program Affiliates. The Company will manage
the leased and purchased railcars. The Company will not be liable for these
railcars. The Company estimates that the total value of purchased railcars will
not exceed $26.0 million with one third of the railcars being purchased in each
of 2002, 2003 and 2004. As of December 31, 2002, the Company had purchased $6.2
million of these railcars. The
Company sold these railcars to Program Affiliates in the first quarter of 2003
(See Note 16).

Commitments and contingencies as of December 31, 2002 are as follows (in
thousands of dollars):

Less than 1-3 4-5 After 5
Current Obligations Total 1 year Years Years Years
------- ------- -------- ------ --------

Commitment to purchase railcars $ 19,742 $11,300 $ 8,442 $ - $ -
Line of credit - - - - -
------- ------- -------- ------ --------
$19,742 $11,300 $ 8,442 $ - $ -
------- ------- -------- ------ --------

LITIGATION

PLM is involved as a plaintiff or defendant in various other legal actions
incidental to its business. Management does not believe that any of these
actions will be material to the financial condition or results of operations of
the Company.

15. PROFIT SHARING, 401(K) PLAN AND STOCK OPTION PLANS

The 401(k) Plan (the "Plan") provides for deferred compensation as described in
Section 401(k) of the Internal Revenue Code. The Plan is a contributory plan
available to essentially all full-time employees of PLM in the United States.
In 2002, PLM employees who participated in the Plan could elect to defer and
contribute to the trust established under the Plan wages up to $11,000. PLM
matched up to a maximum of $4,000 of PLM employees' 401(k) contributions in 2001
to vest in four equal installments over a four-year period. The Company's total
401(k) contributions, net of forfeitures, were $0.1 million for 2002. The Profit
Sharing and Stock Option Plans were terminated upon completion of the merger in
2002.

16. SUBSEQUENT EVENTS

In the first quarter of 2003, the Company sold its portfolio of railcars to a
Program Affiliate for its cost of $6.2 million, which approximated fair market
value. This sale resulted in a gain on disposition to the Company of $0.1
million.

On February 12, 2003, AFG Investment Trust C and AFG Investment Trust D filed a
proxy statement, which was subsequently approved. In March 2003, the
shareholders approved the following articles:

1. To allow PLM, its parent, MILPI, and subsidiaries and affiliates that
they control, to continue to operate their ongoing business making investments
after December 31, 2002, notwithstanding the end of the reinvestment period for
AFG Investment Trust C and AFG Investment Trust D.
2. To approve a transaction whereby a newly formed subsidiary of PLM, RMLP,
Inc., will receive a contribution from Semele Group, Inc., of partnership
interests in Rancho Malibu, a partnership that owns and is developing 274 acres
of land in Malibu, California, in exchange for $5.5 million in cash, a $2.5
million promissory note and 182 shares (15%) of the common stock of RMLP, Inc.
3. To amend Section 7.5 of the Trust Agreements of AFG Investment Trust C
and AFG Investment Trust D to approve grants and exercises of rights of first
refusal in connection with joint ventures between AFG Investment Trust C and AFG
Investment Trust D and its affiliates.
4. To approve the purchase by MILPI of the membership interests in MILPI
held by AFG Investment Trust A Liquidating Trust and AFG Investment Trust B
Liquidating Trust, which gave AFG Investment Trust C and AFG Investment Trust D
shared 100% ownership of MILPI.
5. To allow AFG Investment Trust C and AFG Investment Trust D, in the
operation of PLM, to enter into business arrangements with affiliates of AFG
Investment Trust C and AFG Investment Trust D in the ordinary course of business
on terms no less favorable than those that they would receive if such
arrangements were being entered into with independent third parties.

In March 2003, RMLP, Inc. purchased Semele Group, Inc.'s ownership interest in
Rancho Malibu as indicated in the proposal above.