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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended August 31, 2004

Or

For the transition period from              to             

Commission File No. 817-00807

Access Capital Strategies Community Investment Fund, Inc.

(Exact name of registrant as specified in its charter)

124 Mt. Auburn Street, Suite 200N Cambridge, MA 02138

(Address of principal executive offices) (Zip Code)

617-576-5858

(Registrant’s telephone number, including area code)

N/A

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant has been 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 whether the registrant is an accelerated filer (as defined in Rule 126-2 of the Exchange Act):    Yes  x    No  ¨

The registrant had 116 shareholders and 37,087,261 shares of common stock outstanding as of August 31, 2004.

Access Capital Strategies Community Investment Fund, Inc.

August 31, 2004 Form 10-Q Quarterly Report

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Access Capital Strategies Community Investment Fund, Inc.

CONDENSED STATEMENTS OF ASSETS AND LIABILITIES

See Notes to Condensed Financial Statements.

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Access Capital Strategies Community Investment Fund, Inc.

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

See Notes to Condensed Financial Statements.

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Access Capital Strategies Community Investment Fund, Inc.

CONDENSED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

See Notes to Condensed Financial Statements.

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Access Capital Strategies Community Investment Fund, Inc.

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

See Notes to Condensed Financial Statements.

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Access Capital Strategies Community Investment Fund, Inc.

FINANCIAL HIGHLIGHTS

The following per share data and ratios have been derived from information provided in the financial statements.

See Notes to Condensed Financial Statements.

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Access Capital Strategies Community Investment Fund, Inc.

SCHEDULE OF INVESTMENTS

AUGUST 31, 2004 (UNAUDITED)

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See Notes to Condensed Financial Statements.

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Access Capital Strategies Community Investment Fund, Inc.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation

The accompanying unaudited condensed interim financial statements and financial highlights reflect the results of operations for Access Capital Strategies Community Investment Fund, Inc. (the “Fund”) and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. The results of operations and other data for the three months ended August 31, 2004 are not necessarily indicative of the results that may be expected for any other future interim period or the fiscal year ending May 31, 2005. The information in this report should be read in conjunction with the financial statements and accompanying notes included in the May 31, 2004 Annual Report on Form 10-K. The Fund has not changed its accounting and reporting policies from those disclosed in its May 31, 2004 financial statements.

In preparing the condensed interim financial statements and financial highlights, management is required to make estimates and assumptions that effect the reported amounts of assets and liabilities as of the date of the statement of assets and liabilities, and revenue and expenses for the period. Actual results could differ from those estimates; any such differences are expected to be immaterial to the net assets of the Fund.

This report covers the activity from June 1, 2004 to August 31, 2004.

2. Reclassification

Certain financial statement items have been reclassified in the preceding fiscal year’s condensed interim financial statements to conform with the current interim period’s presentation. These reclassifications had no effect on previously reported net investment income, net increase in net assets resulting from operations, net assets or net asset value.

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Item 2:

Management’s Discussion and Analysis of Financial Condition and

Results of Operations

This quarterly report contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. The Fund’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in interest rates, fluctuations in assets under management and other sources of fee income, and changes in assumptions used in making such forward-looking statements. The Fund’s investment objective is to invest in geographically specific private placement debt securities located in portions of the United States designated by Fund investors.

Overview

The Fund is a non-diversified, closed-end management investment company electing status as a business development company. The Fund’s investment objective is to invest in geographically specific private placement debt securities located in portions of the United States designated by Fund investors. The Fund invests primarily in private placement debt securities specifically designed to support underlying community development activities targeted to low- and moderate-income individuals such as affordable housing, education, small business lending, and job-creating activities in areas of the United States designated by Fund investors.

Investors in the Fund must designate a particular geographic area or region within the United States as part of their agreement to purchase Fund shares. The Fund invests only in areas where Fund shareholders have made targeted designations.

In addition to their geographic specificity, Fund investments must carry a AAA credit rating or carry credit enhancement from a AAA-rated credit enhancer or be issued or guaranteed by the U.S. Government, government agencies or government-sponsored enterprises. The Fund expects (but cannot guarantee) that all investments made by the Fund will be considered eligible for regulatory credit under the Community Reinvestment Act (“CRA”).

Compliance

To qualify as a Regulated Investment Company (“RIC”), the Fund must, among other things, satisfy a diversification standard under the Internal Revenue Code (the “Code”) such that, at the close of each quarter of the Fund’s taxable year, (i) not more than 25% of the value of its total assets is invested in the securities (other than government securities (including its agencies and instrumentalities) or securities of other RICs) of a single issuer, or two or more issuers which the Fund controls (under a 20% test) and which are engaged in the same or similar trades or business or related trades or businesses, and (ii) at least 50% of the market value of its total assets is represented by cash, cash items, government securities, securities of other RICs and other securities (with each investment in such other securities limited so that not more than 5% of the value of the Fund’s total assets is invested in the securities of a single issuer and the Fund does not own more than 10% of the outstanding voting securities of a single issuer).

Management believes the Fund was in compliance with the above requirements for the quarter ended August 31, 2004.

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Fund Operations

Investment Activity

Purchases

During the quarter ended August 31, 2004, the Fund purchased $56.9 million aggregate amount of new community development securities. During the quarter ended August 31, 2003, the Fund had purchased $67.9 million aggregate amount of new community development securities.

Sales

During the quarter ended August 31, 2004, the Fund sold $24.4 million aggregate amount of securities (including principal paydowns but excluding securities sold short in connection with hedging activities in respect of new investments in the Fund and sales of short-term securities). During the quarter ended August 31, 2003, the Fund had sold $45.7 million aggregate amount of securities (including principal paydowns but excluding securities sold short in connection with hedging activities in respect of new investments in the Fund and sales of short-term securities).

Borrowings

The Fund is permitted to use leverage in its investment program, subject to certain restrictions set forth in its Private Offering Memorandum and the Investment Company Act of 1940 (the “1940 Act”). For the quarter ended August 31, 2004, the Fund averaged approximately $55.0 million in borrowings at an average rate of approximately 1.4% compared to the quarter ended August 31, 2003 when the Fund averaged approximately $65.1 million in borrowings at an average rate of approximately 1.2%. In each of the above referenced periods, the total proceeds from borrowings were primarily used to support additional investments in the Fund’s Designated Target Regions.

Net Assets and Fund Holdings at August 31, 2004

As of August 31, 2004, the Fund’s Net Asset Value was $365.8 million, or $9.86 per share. At the end of the most recent fiscal year, May 31, 2004, the Fund’s Net Asset Value was $346.6 million, or $9.62 per share.

The $19.2 million, or 5.5%, quarter-to-quarter increase in Net Asset Value from $346.6 million to $365.8 million was primarily attributable to the sale of new shares in the Fund. The $97.6 million, or 36.4%, year-to-year increase in net assets was also primarily attributable to the sale of new shares in the Fund.

The Fund’s primary investments are listed on the Schedule of Investments included with this report.

Investment Income

The Fund had investment income net of all fees and expenses (as discussed below) of $4.4 million for the quarter ended August 31, 2004, an increase of approximately $0.8 million, or 22.2%, from net investment income of $3.6 million for the quarter ended August 31, 2003. The increase is largely due to an increase in the average net assets of the Fund.

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Management Fees & Expenses

Access Capital Strategies LLC (“Access”), the Fund’s Manager, is paid an annual management fee, paid monthly, of fifty basis points (0.50%) of the Fund’s average monthly gross assets less accrued liabilities, other than indebtedness for borrowing. Merrill Lynch Investment Managers, L.P. (“MLIM”) receives from Access an annual sub-management fee, paid monthly, of twenty-five basis points (0.25%) of the Fund’s average gross monthly assets less accrued liabilities, other than indebtedness for borrowings.

For the quarter ended August 31, 2004, the management fee paid by the Fund was $511,664. For fiscal quarter ended August 31, 2003, the management fee paid by the Fund was $399,810. The increases were primarily due to increases in the net assets of the Fund.

During the fiscal year ended May 31, 2003, the Fund was charged for custody and portfolio accounting services and operating expenses. To the extent such expenses exceeded six basis points (0.06%) of the Fund’s monthly average net assets, they were reimbursed by Access and MLIM. During the fiscal year ended May 31, 2003, the Fund also continued to be charged two basis points (0.02%) of the Fund’s total assets, including assets purchased with borrowed funds, to reimburse Access for unreimbursed expenses relating to the Fund paid by Access prior to March 2001.

Effective as of June 1, 2003, the six basis point and two basis point expense reimbursement caps referred to above were replaced with and superceded by a 25 basis point expense reimbursement cap. To the extent that the Fund’s operating expenses (exclusive of management fees and interest expense) in a given fiscal year are less than .25% of the Fund’s monthly average net assets, the Fund will repay Access and MLIM for operating expenses previously borne or reimbursed by Access and MLIM (provided that in no circumstance will the Fund pay or reimburse more than 25 basis points of the Fund’s monthly average assets for operating expenses and expense reimbursement collectively in any fiscal year). Total unreimbursed expenses as of August 31, 2004 amount to $151,573, compared to $658,057 a year ago at August 31, 2003. The replacement of the previous expense reimbursement cap and its retroactive impact resulted in a return of previously received expense reimbursements during the three months ended August 31, 2004.

Yield

At the quarter ended August 31, 2004, the SEC current yield was 4.90%, compared to 5.08% for the quarter ended August 31, 2003.

For the quarter ended August 31, 2004, the ratio of net investment income to average net assets was 4.28% compared to 5.70% for the year ago quarter ended August 31, 2003.

Despite rises in short term interest rates during the quarter ended August 31, 2004, rates continue to be generally low by historical standards. The yield curve, while it has begun to flatten, is still quite steep and intermediate rates remain substantially above short term rates. The Fund continues to experience a high level of current income due to the use of leverage.

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Realized Gain/Loss

For the quarter ended August 31, 2004, the realized loss was $1,749,241 compared to a realized loss of $1,425,325 for the year ago quarter ended August 31, 2003. The realized losses in the quarter ended August 31, 2004 were primarily due to the Fund’s hedging activities. The Fund experiences a realized gain or loss on its hedges when the positions are closed or when they are rolled from one expiration cycle to the next.

Dividends Paid

The Fund distributes to shareholders substantially all of its net investment income and net realized capital gains, if any, as determined for income tax purposes. Applicable law, including provisions of the 1940 Act, may limit the amount of dividends and other distributions payable by the Fund. Substantially all of the Fund’s net capital gain (the excess of net long-term capital gain over net short-term capital loss) and the excess of net short-term capital gain over net long-term capital loss, if any, are distributed annually with the Fund’s dividend distribution in December.

The Fund declares and distributes dividends on a monthly basis. The Fund paid total monthly dividend of $0.121087 during the quarter ended August 31, 2004. The dividends were paid as follows:

This compares to total monthly dividends of $0.141204 during the quarter ended August 31, 2003. The dividends were paid as follows:

While the Fund’s dividend was lower than in the year earlier period, it did not decline by nearly the amount of prevailing interest rates. The Fund’s use of leverage during a steep yield curve environment has supported the dividend.

Total Return

For the quarter ended August 31, 2004, the total return based on Net Asset Value was 3.77%, compared to a total return of -2.80% in the comparable period ended August 31, 2003.

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The increase in returns during the quarter are attributable to a strong rally during the quarter in intermediate and longer term fixed rate investments that lifted the value of the Fund’s holdings.

Fund Designated Target Regions at August 31, 2004

The Fund’s Designated Target Regions (“DTRs”) are provided by Fund shareholders at the time of investment. At August 31, 2004 DTRs were:

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Fund Impact per the Community Reinvestment Act

The Fund invests in securities that support community development economic activity as defined in the CRA.

At August 31, 2004, the Fund’s investments had outstanding loans to 5,071 homebuyers with incomes below 80% of median income from the following states in the following numbers.

Whole Loans