SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)


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


For the quarterly period ended June 30, 2003


                                       OR


____  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  SECURITIES
EXCHANGE ACT OF 1934


                         Commission File Number 1-13237


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                  ---------------------------------------------
         (Exact name of Registrant as specified in its Trust Agreement)



          Delaware                                              13-3949418
-------------------------------                              -----------------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)



625 Madison Avenue, New York, New York                                  10022
--------------------------------------                               -----------
(Address of principal executive offices)                              (Zip Code)


Registrant's telephone number, including area code (212) 421-5333


       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 whether the registrant is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2).  Yes    X     No
                                           ------      -------


<PAGE>


                               PART I - FINANCIAL

Item 1.  Financial Statements

<TABLE>
<CAPTION>

                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)

                                                         ============= ==============
                                                             June 30,   December 31,
                                                               2003        2002
                                                         ------------- --------------
                                                           (Unaudited)
<S>                                                         <C>          <C>

ASSETS
Revenue bonds-at fair value                                 $1,677,287   $1,579,590
Other investments                                               39,963       44,096
Mortgage servicing rights                                       34,220       35,595
Cash and cash equivalents                                      108,459       55,227
Cash and cash equivalents-restricted                             5,603        5,257
Interest receivable - net                                        9,486        9,020
Promissory notes and mortgages receivable                       12,449       53,278
Deferred costs - net of amortization of $10,588 and $8,451      52,494       48,693
Goodwill                                                         4,857        4,793
Other intangible assets - net of amortization of
   $1,985 and $1,750                                            11,080       11,316
Other assets                                                     3,930        6,003
                                                             ---------    ---------

Total assets                                                $1,959,828   $1,852,868
                                                             =========    =========

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
   Financing arrangements                                   $  780,489  $   671,659
   Notes payable                                                63,108       68,556
   Interest rate hedges                                          4,493        5,504
   Accounts payable, accrued expenses and other liabilities     15,016       32,378
   Deferred income                                              10,600        8,998
   Due to Manager and affiliates                                 3,520        4,126
   Deferred tax liability                                        8,770       10,790
   Distributions payable                                        19,391       19,020
                                                             ---------    ---------

Total liabilities                                              905,387      821,031
                                                             ---------    ---------

Preferred shares of subsidiary (subject to mandatory
   repurchase)                                                 273,500      273,500
                                                             ---------    ---------

Minority interest in consolidated subsidiary                     5,459        4,822
                                                             ---------    ---------

Commitments and contingencies

Shareholders' equity:
   Beneficial owners' equity - convertible CRA share-
     holders (3,835,002 shares, issued and
     outstanding in 2003 and 2002, respectively)                58,510       58,174
   Beneficial owner's equity-manager                             1,128        1,126
   Beneficial owners' equity-other common shareholders
     (100,000,000 shares authorized; 41,303,661 issued
     and 41,295,261 outstanding and 41,168,618
     shares issued and 41,160,218 outstanding in
     2003 and 2002, respectively)                              609,643      604,496
   Treasury shares of beneficial interest (8,400 shares)          (103)        (103)
   Accumulated other comprehensive income                      106,304       89,822
                                                             ---------    ---------
Total shareholders' equity                                     775,482      753,515
                                                             ---------    ---------

Total liabilities and shareholders' equity                  $1,959,828   $1,852,868
                                                             =========    =========
</TABLE>


          See accompanying notes to consolidated financial statements.
                                       2
<PAGE>

<TABLE>
<CAPTION>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                 (Dollars in thousands except per share amounts)
                                   (Unaudited)


                                                        =====================================      =================================
                                                                 Three Months Ended                        Six Months Ended
                                                                      June 30,                                 June 30,
                                                        -------------------------------------      ---------------------------------
                                                             2003                   2002                  2003            2002
                                                        -------------------------------------      ---------------------------------
<S>                                                     <C>                  <C>                   <C>               <C>

Revenues:
     Interest income:
       Revenue bonds                                    $      26,925        $     22,025          $     53,175      $     44,945
     Other interest income                                        819               1,423                 1,656             3,048
       Promissory notes                                           100                 160                   281               323
     Mortgage banking fees                                      1,233               1,394                 2,174             3,862
     Mortgage servicing fees                                    2,240               2,009                 4,366             3,050
     Other income                                               1,891               1,049                 3,477             1,635
                                                         ------------         -----------           -----------       -----------

     Total revenues                                            33,208              28,060                65,129            56,863
                                                         ------------         -----------           -----------       -----------

Expenses:
     Interest expense                                           4,887               3,014                 8,703             7,005
     Recurring fees - securitizations                           1,019                 751                 1,982             1,478
     Bond servicing                                             1,047                 878                 2,062             1,644
     General and administrative                                 4,888               5,953                10,927            11,552
     Depreciation and amortization                              2,915               1,760                 4,602             4,000
                                                         ------------         -----------           -----------       -----------

         Total expenses                                        14,756              12,356                28,276            25,679
                                                         ------------         -----------           -----------       -----------

Income before gain on repayment of revenue
     bonds, sale of loans and equity in earnings
     of ARCap                                                  18,452              15,704                36,853            31,184

Equity in earnings of ARCap                                       555                 563                 1,110             1,110

Gain on sales of loans                                            411               3,119                 2,550             6,406

Gain on repayment of revenue bonds                              2,652                 222                 2,240             3,979
                                                         ------------         -----------           -----------       -----------

Income before allocation to preferred
     shareholders of subsidiary and minority
     interest                                                  22,070              19,608                42,753            42,679

     Income allocated to preferred shareholders
     of subsidiary                                             (4,725)             (4,053)               (9,449)           (7,817)

     Income (loss) allocated to minority interest                  67                  49                    39              (253)
                                                         ------------         -----------           -----------       -----------

Income before benefit (provision) for income
     taxes                                                     17,412              15,604                33,343            34,609

     Benefit (provision) for income taxes                         788              (1,457)                2,764            (1,638)
                                                         ------------         -----------           -----------       -----------

Net income                                              $      18,200        $     14,147          $     36,107      $     32,971
                                                         ===========          ===========           ===========       ===========

Allocation of net income to:
     Special distribution to Manager                    $       1,459        $      1,240          $      2,870      $      2,328
                                                         ============         ===========           ===========       ===========
     Manager                                            $           1        $        129          $          3      $        306
                                                         ============         ===========           ===========       ===========
     Common shareholders                                $      15,316        $     12,234          $     30,405      $     28,941
     Convertible CRA shareholders                               1,424                 544                 2,829             1,396
                                                         ------------         -----------           -----------       -----------
         Total for shareholders                         $      16,740        $     12,778          $     33,234      $     30,337
                                                         ============         ===========           ===========       ===========

Net income per share
     Basic and diluted                                  $        0.37        $       0.30          $       0.74      $       0.74
                                                         ============         ===========           ===========       ============

Weighted average shares
outstanding:

     Basic                                                 45,090,477          43,035,102            45,054,096        40,920,033
                                                           ==========          ==========            ==========        ==========
     Diluted                                               45,130,042          43,107,175            45,090,323        40,988,572
                                                           ==========          ==========            ==========        ==========
</TABLE>


          See accompanying notes to consolidated financial statements.
                                       3
<PAGE>


<TABLE>
<CAPTION>


                 CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CHANGES IN
                              SHAREHOLDERS' EQUITY
                             (Dollars in thousands)
                                   (Unaudited)


                                             Beneficial                Beneficial
                                              Owners'                    Owner's    Treasury                Accumulated
                                              Equity      Beneficial    Equity -    Shares                    Other
                                          - Convertible    Owner's       Other         of         Com-         Com-
                                                CRA        Equity-       Common    Beneficial  prehensive   prehensive
                                            Shareholders   Manager    Shareholders  Interest     Income       Income      Total
                                            ------------   -------    ------------  --------     ------       ------      -----
<S>                <C>                        <C>         <C>         <C>          <C>         <C>           <C>        <C>

Balance at January 1, 2003                    $ 58,174    $  1,126    $ 604,496    $   (103)                 $ 89,822   $753,515
Comprehensive income:
   Net income                                    2,829       2,873       30,405                $ 36,107                   36,107
                                                                                               --------
   Other comprehensive gain (loss):
     Net unrealized gain on interest rate
       derivatives                                                                                1,040
     Net unrealized loss on revenue bonds:
     Unrealized holding gain arising during
       the period                                                                                17,682
     Less: Reclassification adjustment for
       net gain included in net income                                                           (2,240)
                                                                                               --------
   Total other comprehensive income                                                              16,482        16,482     16,482
                                                                                               --------
   Total comprehensive income                                                                  $ 52,589
                                                                                               ========
Options exercised and issuance of
   common shares                                                          1,560                                            1,560
Distributions                                   (2,493)     (2,871)     (26,818)                                         (32,182)
                                              --------    --------    ---------    --------                  --------   --------

Balance at June 30, 2003                      $ 58,510    $  1,128    $ 609,643    $   (103)                 $106,304   $775,482
                                              ========    ========    =========    ========                  ========   ========
</TABLE>


          See accompanying notes to consolidated financial statements.
                                       4
<PAGE>


<TABLE>
<CAPTION>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)


                                                          ========================
                                                             Six Months Ended
                                                                 June 30,
                                                          ------------------------
                                                             2003         2002
                                                          ------------------------
<S>                                                       <C>         <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                             $    36,107 $    32,971
   Adjustments to reconcile net income to net cash
     provided by operating activities:
   Gain on repayment of revenue bonds                          (2,240)     (3,979)
   Other amortization                                           1,220         472
   Amortization of other intangible assets                        236         237
   Amortization of bond selection costs                         1,222       1,845
   Amortization of mortgage servicing rights                    3,112       3,437
   Income allocated to preferred shareholders
     of subsidiary                                              9,449       7,817
   Equity in earnings of ARCap, in excess of
     distributions received                                        --        (105)
   Increase in mortgage servicing rights                       (1,737)     (5,437)
   Income allocated to minority interest                          (39)        253
   Issuance of shares of subsidiary - compensation expense        676         498
   Decrease in mortgages receivable                            33,916          --
   Changes in operating assets and liabilities:
     Interest receivable                                         (517)     (1,506)
     Goodwill                                                     (64)         --
     Other assets                                               2,073         (61)
     Guaranteed investment contracts                           14,354      (5,006)
     Deferred income                                            1,621          --
     Accounts payable, accrued expenses and
       other liabilities                                      (17,364)        782
     Deferred tax liability                                    (2,020)      1,165
     Due to Manager and affiliates                               (785)        380
     Fair value of interest rate cap                               28        (216)
                                                           ----------  ----------
Net cash provided by operating activities                      79,248      33,547
                                                           ----------  ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from repayments of revenue bonds                   57,276      86,130
   Periodic principal payments of revenue bonds                 9,002       3,392
   Proceeds from repayment of note                                 --       6,600
   Purchase/advances to revenue bonds                        (146,036)   (199,013)
   Purchase of other investments                              (10,221)         --
   Increase in deferred bond selection costs                   (3,321)     (5,397)
   Increase in promissory notes                                    --      (1,409)
   Increase in cash and cash equivalents - restricted            (346)       (167)
   Increase in notes receivable                                    --      (8,287)
   Loans made to properties                                    (1,879)         --
   Principal payments received from loans
     made to properties                                         8,793       1,643
                                                           ----------  ----------
Net cash used in investing activities                         (86,732)   (116,508)
</TABLE>


          See accompanying notes to consolidated financial statements.
                                       5
<PAGE>


<TABLE>
<CAPTION>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)


                                                          ========================
                                                             Six Months Ended
                                                                 June 30,
                                                          ------------------------
                                                             2003         2002
                                                          ------------------------
<S>                                                       <C>         <C>

CASH FLOWS FROM FINANCING ACTIVITIES:
   Distributions paid to the Manager and Common
     shareholders                                            (29,229)    (25,321)
   Distributions paid to preferred shareholders
     of subsidiary                                            (9,449)     (7,457)
   Distributions paid to Convertible CRA
     shareholders                                             (2,371)     (1,148)
   Proceeds from financing arrangements                      109,421      54,500
   Principal repayments of financing arrangements               (591)    (67,261)
   (Decrease) increase in notes payable                       (5,447)      8,287
   Increase in deferred costs relating to the
     Private Label Tender Option Program                        (334)       (298)
   Issuance of common shares                                      --      92,539
   Options exercised                                           1,530          --
   Issuance of preferred stock of subsidiary                      --      55,000
   Increase in deferred costs relating to the
     preferred shares offering                                    --      (1,922)
   Increase in other deferred costs                           (2,814)       (423)
                                                           ---------   ---------
Net cash provided by financing activities                     60,716     106,496
                                                           ---------   ---------

Net increase in cash and cash equivalents                     53,232      23,535
Cash and cash equivalents at the
   beginning of the period                                    55,227     105,364
                                                           ---------   ---------
Cash and cash equivalents at the
   end of the period                                      $  108,459  $  128,899
                                                           =========   =========

SUPPLEMENTAL INFORMATION:
   Interest paid                                          $    8,394  $    4,372
                                                           =========   =========
   Taxes paid                                             $      135  $       --
                                                           =========   =========
</TABLE>


          See accompanying notes to consolidated financial statements.
                                       6
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)


NOTE 1 - General

Charter Municipal  Mortgage  Acceptance Company  ("CharterMac"),  along with its
consolidated  subsidiaries  (the  "Company"),  is  a  Delaware  statutory  trust
principally engaged in the acquisition and ownership (directly or indirectly) of
tax-exempt  multi-family  housing  revenue  bonds  ("Revenue  Bonds")  and other
investments  that produce  tax-exempt  income,  issued by various state or local
governments,  agencies, or authorities. The Company is also engaged in providing
credit  enhancements  and certain other  guarantees,  and  originates  loans for
multi-family  housing  through its subsidiary PW Funding Inc.  ("PWF").  Revenue
Bonds  are  primarily  secured  by  participating  and  non-participating  first
mortgage loans on underlying properties ("Underlying Properties"). In some cases
the Company also acquires  smaller taxable loans in conjunction with acquiring a
Revenue Bond.

The Company is governed by a board of trustees  comprised  of three  independent
managing  trustees and five managing  trustees who are  affiliated  with Related
Capital  Company  ("Related"),  a  nationwide,   fully  integrated  real  estate
financial  services  firm.  CharterMac,   through  CharterMac  Corporation  ("CM
Corp."),  a  wholly-owned  subsidiary,  has engaged  Related  Charter L.P.  (the
"Manager"),   an  affiliate  of  Related,  to  manage  its  day-to-day  affairs.
CharterMac  has  also  directly  engaged  the  Manager  to  provide   additional
management services.

On December 18, 2002, the Company  announced it had entered into an agreement to
acquire  100%  of  the  ownership  interests  in  and  substantially  all of the
businesses  operated by Related (other than specific  excluded  interests  which
will be retained by the principals of Related).  The acquisition will enable the
Company to terminate its outside  management  agreement  with the Manager and to
become an internally-managed company.

The  consolidated  financial  statements  include the accounts of CharterMac and
four subsidiary statutory trusts which it controls: CM Holding Trust, CharterMac
Equity Issuer Trust,  CharterMac  Origination Trust I and CharterMac Owner Trust
I, and one wholly-owned corporation, CM Corp. CM Corp. owns approximately 81% of
the  economics  of PW  Funding  Inc.  ("PWF"),  which  is also  included  in the
consolidated  financial  statements.  All intercompany accounts and transactions
have  been  eliminated  in  consolidation.   Unless  otherwise  indicated,   the
"Company",  as hereinafter used, refers to Charter Municipal Mortgage Acceptance
Company and its consolidated subsidiaries.

The accompanying  interim financial statements have been prepared without audit.
In the opinion of management,  the financial  statements contain all adjustments
(consisting of only normal  recurring  adjustments)  necessary to present fairly
the financial statements of the interim periods.  However, the operating results
for the interim periods may not be indicative of the results for the full year.

Certain  information  and  footnote  disclosures  normally  included  in  annual
financial statements prepared in accordance with accounting principles generally
accepted  in the  United  States of  America  ("GAAP")  have been  condensed  or
omitted.  It is  suggested  that these  financial  statements  should be read in
conjunction  with the financial  statements  and notes  thereto  included in the
Company's Form 10-K for the year ended December 31, 2002.

The  consolidated  financial  statements  of the Company are prepared  using the
accrual method of accounting in conformity with GAAP, which requires the Manager
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent  assets and liabilities at the date
of the  financial  statements  as well as the  reported  amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.  Significant  estimates  in  the  financial  statements  include  the
valuation of the Company's  investments  in Revenue  Bonds,  mortgage  servicing
rights ("MSRs") and interest rate derivatives.

Certain  amounts in the 2002  financial  statements  have been  reclassified  to
conform to the 2003 presentation.


                                       7
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)


Significant Accounting Policies
-------------------------------

Investment in Revenue Bonds

The Company accounts for its investments in Revenue Bonds as  available-for-sale
debt  securities  under the  provisions  of Statement  of  Financial  Accounting
Standards  No.  115,  "Accounting  for  Certain  Investments  in Debt and Equity
Securities"  ("SFAS 115").  Accordingly,  the Revenue Bonds are carried at their
estimated  fair  values,  with  unrealized  gains and losses  reported  in other
comprehensive income.

In most  cases,  the Company  has a right to require  redemption  of the Revenue
Bonds prior to their maturity,  although it can and may elect to hold them up to
their maturity dates unless otherwise  modified.  As such, SFAS 115 requires the
Company to classify  these  investments  as  "available-for-sale."  Accordingly,
investments in Revenue Bonds are carried at their  estimated  fair values,  with
unrealized gains and losses reported in other comprehensive  income.  Unrealized
gains or losses do not affect the cash flow generated from property  operations,
distributions to shareholders,  the  characterization  of the tax-exempt  income
stream or the financial obligations under the Revenue Bonds.

If, in the judgment of the Manager,  it is determined  probable that the Company
will not receive  all  contractual  payments  required,  when they are due,  the
Revenue Bond is deemed  impaired and is written down to its then  estimated fair
value, with the amount of the write-down accounted for as a realized loss.

Because  Revenue Bonds have a limited market,  the Company  estimates fair value
for each bond as the present  value of its expected  cash flows using a discount
rate  for  comparable  tax-exempt  investments.   This  process  is  based  upon
projections of future economic events affecting the real estate  collateralizing
the bonds,  such as property  occupancy  rates,  rental  rates,  operating  cost
inflation,  market  capitalization  rates  and an  appropriate  market  rate  of
interest,  all of  which  are  based on good  faith  estimates  and  assumptions
developed by the Manager.  Changes in market  conditions and  circumstances  may
occur which would cause these  estimates and  assumptions to change;  therefore,
actual results may vary from the estimates and the variance may be material.

Other Investments

Other investments include the following items:

   Investment  in ARCap - The  Company's  preferred  equity  investment in ARCap
   Investors,  L.L.C. ("ARCap") is accounted for using the equity method because
   the  Company  has the  ability to  exercise  significant  influence,  but not
   control, over ARCap's operating and financial policies.

   Guaranteed Investment Contracts - The Company,  through PWF, is participating
   in the Fannie Mae "Guaranteed  Investment Agreement Rate Lock Loan Financing"
   program  for  properties  which are in the  construction  phase.  Under  this
   program,  Fannie Mae commits to a fixed  interest  rate on a permanent  loan,
   which  will be  closed at the  completion  of the  construction  phase of the
   project. The rate lock forward commitment provided by Fannie Mae exists for a
   maximum period of twenty-four months. Fannie Mae loans the Company the amount
   of the  future  permanent  loan,  which  is  required  to be  deposited  in a
   guaranteed investment contract during the construction phase. In exchange for
   such loan, the Company issues Fannie Mae a promissory  note whose interest is
   paid from the interest on the guaranteed investment contract and the negative
   arbitrage  paid by the borrower.  The interest rate on the note is equivalent
   to the fixed rate  committed to on the  permanent  loan.  At the close of the
   construction phase, the Company unwinds the guaranteed investment contract to
   repay the note to Fannie Mae. The Company  originates  the permanent  loan to
   the borrower at the rate locked amount, which is subsequently  purchased from
   the Company by Fannie Mae. The Company has commitments  from Fannie Mae under
   this program of approximately $5.3 million as of June 30, 2003.


                                       8
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)


   Temporary  Investments  -  Temporary  investments  may  consist  of  puttable
   floating option tax-exempt receipts,  short-term senior securities which bear
   interest  at a  floating  rate  that is reset  weekly  and  other  short-term
   investments  that generate  tax-exempt  and taxable  interest  income.  These
   investments are recorded at cost, which is equal to market value.

Cash and Cash Equivalents

Cash and cash  equivalents  includes cash in banks and investments in short-term
instruments with an original  maturity of three months or less.  Certain amounts
of cash and cash  equivalents are restricted and serve as additional  collateral
for borrowings under securitizations.

Mortgage Banking Activities

PWF is an approved  seller/servicer  of  multifamily  mortgage loans for Federal
National  Mortgage  Association  ("Fannie  Mae"),  Federal  Home  Loan  Mortgage
Corporation  ("Freddie Mac") and the Government  National  Mortgage  Association
("Ginnie Mae"). For Fannie Mae, PWF is approved under the Delegated Underwriting
and  Servicing  ("DUS")  program.  Under DUS, upon  obtaining a commitment  from
Fannie Mae with regard to a particular  loan,  Fannie Mae commits to acquire the
mortgage loan based upon PWF's  underwriting and PWF agrees to bear a portion of
the risk of potential  losses in the event of a default.  Fannie Mae commitments
may be made to acquire the mortgage  loan for cash or in exchange for a mortgage
backed  security  backed by the  mortgage  loan.  As a Program  Plus  lender for
Freddie Mac, Freddie Mac agrees to acquire for cash from PWF loans for which PWF
has issued  commitments.  Ginnie Mae agrees to  exchange  FHA-insured  mortgages
originated by PWF for Ginnie Mae securities.

Mortgage loans  originated for Fannie Mae,  Freddie Mac or Ginnie Mae are closed
in the name of PWF and PWF uses  corporate  cash  obtained by  borrowing  from a
warehouse  lender to fund the loans.  Approximately  a week to a month following
closing of a loan,  loan  documentation  and an assignment are delivered  Fannie
Mae, Freddie Mac or Ginnie Mae, or a document  custodian on its behalf,  and the
cash  purchase  price or mortgage  backed  security is delivered to PWF. Cash is
used to repay warehouse  loans and mortgage backed  securities are sold pursuant
to prior  agreements for cash which is used to repay warehouse  loans.  PWF also
underwrites and originates  multifamily  and commercial  mortgages for insurance
companies and banks.

PWF  receives  a fee  ranging  from  50bps to 100bps  for its  underwriting  and
origination  services,  included in mortgage  servicing fees in the Consolidated
Statements of Income. Neither the Company nor PWF retains any interest in any of
the  mortgage  loans,   except  for  MSRs  and  certain  liabilities  under  the
loss-sharing arrangement with Fannie Mae.

Mortgage Servicing Rights

The  Company  recognizes  as assets  the rights to  service  mortgage  loans for
others,  whether the MSRs are  acquired  through a separate  purchase or through
loan  origination,  by allocating  total costs incurred between the loan and the
MSRs  retained  based on their  relative  fair value.  MSRs are being carried at
their  adjusted cost basis.  MSRs are  amortized in proportion  to, and over the
period of, estimated net servicing income.

The Company has two areas of loss  exposure  related to its lending  activities.
First,  while a loan is  recorded  on the  balance  sheet,  there is exposure to
potential loss if a loan becomes impaired and defaults.  Second, the Company has
exposure  to loss due to its  retention  of a portion of credit  risk within its
servicing contact under the Fannie Mae DUS program.

When a loan is owned by PWF and recorded on the balance  sheet,  PWF  identifies
loans that are impaired and  evaluates the allowance for loss on a specific loan
basis for losses believed to currently exist in the recorded loan portfolio.  An
impaired loan is defined, as noted within accounting guidance,  when contractual
payments are not made. PWF's primary tool for determining which loans are likely
to currently  have a loss  associated  with them is to evaluate the debt service
coverage ratio based on PWF's  historical  experience of similar  properties and
the


                                       9
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)


frequency  of such losses.  Loans that are impaired and specific  loans that are
not impaired but have debt service coverage ratios below a certain  threshold as
having a high  likelihood of future  foreclosure  and currently have an existing
loss,  are  evaluated.  The estimate of currently  existing  loss,  includes the
estimated severity of the loss which would include any advances made or existing
property loss. Property maintenance costs (when foreclosure occurs) are expensed
when incurred and not included in the loss estimate.  However, as most loans are
sold very quickly after origination, there typically is not a significant amount
of loan loss allowance recorded.

The Company has  exposure  to loss due to its  retention  of a portion of credit
risk within PWF's servicing contract under the Fannie Mae DUS program. For loans
which have been sold as  commercial  mortgage  backed  securities  for which PWF
retains the  servicing  under Fannie  Mae's DUS program,  PWF's share of loss is
associated  with the servicing  contract and  determined in accordance  with the
loss  sharing   provisions   under  the  program.   Prior  to  the  issuance  of
Interpretation No. 45, "Guarantors'  Accounting and Disclosure  Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"),
because  the loss  sharing  on these  serviced  loans  was  associated  with the
servicing  contract,  they  are  valued  within  the  servicing  right  and  the
anticipated cash flows that are associated with such servicing  activities.  The
Company has determined  that these  potential  losses are  guarantees  under the
definition of FIN 45 and therefore,  for loans originated on January 1, 2003 and
thereafter, the Company will record an asset and a corresponding liability based
on the Company's  estimate of the portion of the servicing  cash flows deemed to
represent  compensation  to the Company for its guarantee.  On an ongoing basis,
the Company  will  account for the asset by  offsetting  cash  received  for the
guarantee  against  the asset and  crediting  interest  income for the change in
asset due to the passage of time. The portion of the liability  representing  an
accrual for probable  losses under SFAS No. 5,  "Accounting  for  Contingencies"
("FAS 5") will be adjusted as loss estimates  change;  the portion  representing
the Company's  willingness  to stand by as guarantor  will be amortized over the
expected life of the guarantee.

The components of the change in MSRs are as follows:

              Servicing Assets                                (in millions)
              ---------------------------------              ----------------

              Balance at December 31, 2002                          $35.5
              MSR's capitalized during the six
                 months ended June 30, 2003                           3.3
              Amortization                                           (3.1)
              Increase in reserves                                   (1.5)
                                                                     ----
              Balance at June 30, 2003                              $34.2
                                                                     ====

              Reserve for loan loss reserves of
              Servicing Assets
              ---------------------------------

              Balance at December 31, 2002                         $  4.3
              Additions                                               1.5
              Deletions                                                -
                                                                    -----
              Balance at June 30, 2003                             $  5.8
                                                                    =====

The estimated fair values of the MSRs were $37.6 million and $36.7  million,  at
June 30, 2003 and December 31, 2002, respectively.


                                       10
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)


The significant  assumptions  used in estimating the fair value of the servicing
assets at June 30, 2003 were as follows:

                                             Fannie                   Freddie
                                              Mae         FHA           Mac
                                           -----------  ----------   ----------

      Weighted average discount rate          17.01%      15.89%        17.00%
      Weighted average pre-pay speed          15.05%      16.10%        15.30%
      Weighted average lock out period       68 months  39 months     81 months
      Cost to service loans                   $2,404      $1,250        $1,906
      Acquisition cost (per loan)             $1,500      $  500        $1,500

Revenue Recognition

The Company  derives its revenues from a variety of investments  and guarantees,
summarized as follows:

    Interest  Income from Revenue  Bonds - Interest  income is recognized at the
    stated  rate as it  accrues  and when  collectibility  of future  amounts is
    reasonably  assured.  Participating  interest is recognized  when  received.
    Interest  income  from  Revenue  Bonds  with  modified  terms or  where  the
    collectibility  of future  amounts is  uncertain  is  recognized  based upon
    expected cash receipts.  Certain  construction  Revenue Bonds carry a higher
    interest rate during the construction period, which declines to a lower rate
    for the balance of the term.  In these  cases,  the Company  calculates  the
    effective yield on the Revenue Bond and uses that rate to recognize interest
    over the life of the bond.

    Interest Income from Promissory Notes and Mortgages Receivable - Interest on
    mortgage loans and notes receivable is recognized on the accrual basis as it
    becomes due. Deferred loan origination costs and fees are amortized over the
    life of the applicable loan as an adjustment to interest  income,  using the
    interest  method.  Interest  which was accrued is reversed  out of income if
    deemed to be uncollectible.

    Other Interest Income - Interest income from temporary investments,  such as
    cash in banks and short-term instruments, is recognized on the accrual basis
    as it becomes due.

    Equity in Earnings of ARCap - The Company's  equity in the earnings of ARCap
    Investors, LLC ("ARCap") is accrued at the preferred dividend rate of 12% on
    the  preferred  shares  held by the  Company,  unless  ARCap  does  not have
    earnings and cash flows adequate to meet this dividend requirement.

    Construction  Service Fees - The Company  receives  fees,  in advance,  from
    borrowers for servicing Revenue Bonds during the construction  period. These
    fees are  deferred  and  amortized  into other  income over the  anticipated
    construction period.

    Credit  Enhancement  and  Guarantee  Fees - The  Company  receives  fees for
    providing  credit  enhancement  and for  backing  up a  primary  guarantor's
    obligation  to  guarantee  an  agreed  upon  internal  rate of return to the
    investor  in a  program  sponsored  by  Related  (see  Note 5).  The  credit
    enhancement  fees are received  monthly and  recognized in other income when
    received.  The guarantee fees are deferred and recognized in other income on
    a prorata basis over the guarantee period.

    Mortgage  Banking Fees - PWF fees earned for arranging  financings under the
    FNMA DUS product line as well as Freddie Mac, insurance and banking or other
    programs are recorded at the point the  financing  commitment is accepted by
    the mortgagor and the interest rate of the mortgage loan is fixed.


                                       11
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)


    Mortgage  Servicing  Fees - PWF receives fees for servicing the loans it has
    originated. This income is recognized on an accrual basis.

Deferred Costs

Fees paid to the Manager (see Note 5) for its activities  performed to originate
Revenue Bonds, including their evaluation and selection, negotiation of mortgage
loan terms,  coordination of property  developers and government  agencies,  and
other direct  expenditures  of acquiring  or  investing  in Revenue  Bonds,  are
capitalized  and  amortized as a reduction to interest  income over the terms of
the Revenue Bonds.  Direct costs relating to unsuccessful  acquisitions  and all
indirect costs relating to the Revenue Bonds are charged to operations.

Costs  incurred in  connection  with the  Company's  Private Label Tender Option
Program  ("TOP"),  such as legal,  accounting,  documentation  and other  direct
costs,  have been  capitalized and are being  amortized using the  straight-line
method over 10 years,  which approximates the average remaining term to maturity
of the Revenue Bonds in this program.

Costs incurred in connection with the issuance of cumulative preferred shares of
the Equity Issuer Trust subsidiary, such as legal, accounting, documentation and
other direct costs,  have been  capitalized  and are being  amortized  using the
straight  line method over the period to the  mandatory  repurchase  date of the
shares,  approximately 50 years.  Costs incurred in connection with the issuance
of Convertible CRA Shares,  such as legal,  accounting,  documentation and other
direct costs, have been accounted for as an offset to beneficial  owners' equity
of such shares.

Financial Risk Management and Derivatives

The Company has entered into two interest  rate swaps,  an interest rate cap and
two forward  commitments,  all of which are accounted for under the Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging Activities", as amended and interpreted.  The Company designated the
two interest rate swaps as cash flow hedges on the variable interest payments in
the floating rate financing.  Accordingly,  the interest rate swaps are recorded
at their  respective fair market value each accounting  period,  with changes in
market  value  being  recorded in other  comprehensive  income to the extent the
hedges are effective in achieving  offsetting cash flows. These hedges have been
highly effective, so there has been no ineffectiveness included in earnings. The
interest  rate cap,  although  designed to mitigate  the  Company's  exposure to
rising interest rates,  was not designated as a hedging  derivative;  therefore,
any change in fair market value flows  through the  Consolidated  Statements  of
Income,  where it is included in interest  income.  The two forward  commitments
(see Note 7) create  derivative  instruments under SFAS No. 133, which have been
designated as a cash flow hedge of the anticipated funding of the Revenue Bonds,
and will be recorded at fair value, with changes in fair value recorded in other
comprehensive income until the Revenue Bonds are funded.

Fair Value of Financial Instruments

As described above, the Company's investments in Revenue Bonds, its MSRs and its
liability  under the interest  rate  derivatives  are carried at estimated  fair
values.  The  Company  has  determined  that  the fair  value  of its  remaining
financial  instruments,  including  its  temporary  investments,  cash  and cash
equivalents,   promissory  notes  receivable,   mortgage  notes  receivable  and
borrowings  approximate  their carrying values at June 30, 2003 and December 31,
2002.

Income Taxes

Effective  July 1, 2001,  the Company  began  operation  of a new  wholly-owned,
taxable  subsidiary -- CM Corp.,  which on December 31, 2001,  purchased PWF. CM
Corp.  will  conduct  most of the  Company's  taxable  business,  including  any
fee-generating activities in which the Company may engage and provide management
services to  CharterMac  and its other  subsidiaries.  The Company  provides for
income taxes in accordance with Statement of Financial  Accounting Standards No.
109, "Accounting for Income Taxes" ("FAS 109"). FAS 109 requires the recognition
of deferred tax assets


                                       12
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)


and  liabilities   for  the  expected  future  tax   consequences  of  temporary
differences  between the financial  statement carrying amounts and the tax basis
of assets and liabilities.

New Pronouncements

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".
SFAS No. 145,  among other  things,  rescinds SFAS No. 4,  "Reporting  Gains and
Losses from Extinguishment of Debt", and accordingly,  the reporting of gains or
losses from the early  extinguishments of debt as extraordinary  items will only
be required if they meet the specific  criteria of extraordinary  items included
in  Accounting  Principles  Board  Opinion  No. 30,  "Reporting  the  Results of
Operations".  The  revision of SFAS No. 4 became  effective  January  2003.  The
implementation  of SFAS No. 145 did not have a material  impact on the Company's
consolidated financial statements.

In July 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated with
Exit  or  Disposal  Activities".   SFAS  No.  146  replaces  current  accounting
literature  and  requires  the  recognition  of costs  associated  with  exit or
disposal  activities  when  they  are  incurred  rather  than  at the  date of a
commitment to an exit or disposal plan. SFAS No. 146 became effective January 1,
2003. The  implementation  of SFAS No. 146 did not have a material impact on the
Company's consolidated financial statements.

In November 2002, the FASB issued Interpretation No. 45, "Guarantors' Accounting
and Disclosure  Requirements for Guarantees,  Including  Indirect  Guarantees of
Indebtedness of Others." The Interpretation  elaborates on the disclosures to be
made by a guarantor in its  financial  statements  about its  obligations  under
certain  guarantees  that it has issued.  It also  clarifies that a guarantor is
required to recognize, at the inception of a guarantee, a liability for the fair
value of the obligation undertaken in issuing the guarantee. This Interpretation
does  not  prescribe  a  specific   approach  for  subsequently   measuring  the
guarantor's  recognized  liability over the term of the related  guarantee.  The
initial  recognition and initial  measurement  provisions of this Interpretation
are  applicable on a prospective  basis to guarantees  issued or modified  after
December  31,  2002.  The  Company  has  entered  into  one  credit  enhancement
transaction  and two  yield  guarantee  transactions.  The  fee  for the  credit
enhancement  transaction is received  monthly and recognized as income when due.
The fees  for the  yield  guarantee  transactions,  received  in  advance,  were
deferred and amortized over the guarantee periods. The Company believes that the
fees  received  approximate  the fair  value of the  obligations  undertaken  in
issuing the guarantees;  therefore,  for any such similar  transactions  entered
into after  December 31, 2002,  the Company will record the fair market value of
the guarantee, when entered into.

In  December  2002,  the FASB issued SFAS No. 148  "Accounting  for  Stock-Based
Compensation-Transition and Disclosure," an amendment of FASB statement No. 123.
This statement amends SFAS No. 123, "Accounting for Stock-Based Compensation" to
provide  alternative  methods of transition  for a voluntary  change to the fair
value based method of accounting for stock-based employer compensation.  Because
the  Company  currently  accounts  for its share  options  using the fair  value
method, implementation of this statement did not have an impact on the Company's
consolidated  financial  statements.  The Company has adopted the  provisions of
SFAS No. 123,  "Accounting for Stock-Based  Compensation"  for its share options
issued to non-employees.  Accordingly, compensation cost is accrued based on the
estimated  fair value of the  options  issued,  and  amortized  over the vesting
period.  Because  vesting  of the  options  is  contingent  upon  the  recipient
continuing  to provide  services to the  Company  until the  vesting  date,  the
Company estimates the fair value of the non-employee  options at each period-end
up to the vesting date, and adjusts expensed amounts accordingly. The fair value
of each option grant is estimated using the Black-Scholes option-pricing model.

In January  2003,  the FASB  issued  Interpretation  No. 46,  "Consolidation  of
Variable  Interest  Entities"  ("FIN 46").  This  Interpretation  clarifies  the
application of existing  accounting  pronouncements to certain entities in which
equity  investors do not have the  characteristics  of a  controlling  financial
interest or do not have sufficient  equity at risk for the entity to finance its
activities without additional subordinated financial support from other parties.
The provision of FIN 46 will be


                                       13
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)


immediately  effective for all variable  interests in variable interest entities
created  after  January  31,  2003,  and the  Company  will  need to  apply  its
provisions to any existing  variable  interests in variable interest entities by
no later  than  July 1,  2003.  The  Company  does not  believe  that it has any
variable interests in variable interest entities requiring consolidation.

In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  Instruments and Hedging  Activities."  SFAS 149 amends and clarifies
the  accounting  for  derivative   instruments,   including  certain  derivative
instruments  embedded in other contracts,  and for hedging activities under SFAS
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS 149 is
generally  effective for contracts  entered into or modified after June 30, 2003
and for hedging  relationships  designated  after June 30, 2003. The adoption of
SFAS No.  149 on July 1,  2003,  as  required,  had no impact  on the  Company's
consolidated financial statements.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with Characteristics of Both Liabilities and Equity." This statement
requires that certain  financial  instruments that have the  characteristics  of
debt and equity be classified  as debt.  SFAS No. 150 is effective for financial
instruments  entered  into or modified  after May 31,  2003,  and  otherwise  is
effective at the beginning of the first interim period  beginning after June 15,
2003.  Pursuant to SFAS No. 150, the Company will be required to reclassify  the
$273.5 million currently shown in the consolidated  balance sheets as "preferred
shares of subsidiary  subject to mandatory  redemption"  into  liabilities as of
July 1, 2003, and the dividends paid on such shares  (approximately $9.4 million
for the six months  ended June 30,  2003) will be recorded  as interest  expense
from that date forward.

NOTE 2 - Revenue Bonds

Total interest income from Revenue Bonds, including  participating interest, was
approximately  $53,175,000  and  $44,945,000,  for the six months ended June 30,
2003 and 2002, which represents an average annual yield of 7.32% and 7.71% based
on  weighted   average  face  amounts  of   approximately   $1,452,087,000   and
$1,165,370,000, respectively.

The amortized cost basis of the Company's portfolio of Revenue Bonds at June 30,
2003 and December 31, 2002 was $1,566,457,536 and $1,484,202,610,  respectively.
The net unrealized  gain on Revenue Bonds in the amount of  $110,829,464 at June
30, 2003  consisted of gross  unrealized  gains and losses of  $119,133,351  and
$8,303,887,   respectively.   The  net  unrealized  gain  on  Revenue  Bonds  of
$95,387,390 at December 31, 2002 consisted of gross  unrealized gains and losses
of $100,964,090 and $5,576,700, respectively.

The following is a table reflecting the maturity dates of the Company's  Revenue
Bonds.

                                  Outstanding                Weighted Average
    (Dollars in thousands)        Bond Amount    Fair Value    Interest Rate
--------------------------------------------------------------------------------
Due in less than one year        $     3,118    $     4,313         9.22%
Due between one and five years        30,682         27,967         6.78%
Due after five years               1,542,130      1,645,007         7.12%
--------------------------------------------------------------------------------
             Total                $1,575,930     $1,677,287         7.12%
--------------------------------------------------------------------------------

All of the Company's Revenue Bonds have fixed interest rates.


                                       14
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)


2003 Transactions

The following table  summarizes the Company's  acquisition  activity for the six
months ended June 30, 2003.

<TABLE>
<CAPTION>

                                                           Weighted     Weighted
                                                           Average       Average    Number
                                               Aggregate Construction  Permanent      of
(Dollars in Thousands)                         Purchase   Interest      Interest   Revenue
                                 Face Amount    Price        Rate         Rate      Bonds
----------------------------------------------------------------------------------------------
<S>                              <C>            <C>          <C>         <C>           <C>
Non-participating Revenue Bonds
Construction/rehabilitation
  properties                     $137,086       $139,943     6.47%       6.70%         21
</TABLE>

During the six months ended June 30, 2003 the Company advanced  additional funds
of approximately $8,950,000 to Revenue Bonds which were previously acquired.

During the six months ended June 30, 2003, eight Revenue Bonds were repaid.  The
Company  received net proceeds of approximately  $57.3 million.  The bonds had a
net  carrying  value of  approximately  $55.1  million,  resulting  in a gain of
approximately $2.2 million.

During the second quarter of 2001,  the borrowers of Lexington  Trails failed to
make the regular interest payments. As a result, the Company determined the bond
was  impaired,  and  wrote  down  the  bond  to  its  estimated  fair  value  of
approximately $5.5 million and took a loss on impairment of $400,000. During the
fourth quarter of 2001,  the Company caused the trustee,  for the benefit of the
Company, to foreclose on the underlying  property.  During the fourth quarter of
2002,  the Company began  marketing the  underlying  property for sale,  and the
Company  wrote  this  bond  down to its  estimated  fair  value of $4.5  million
resulting  in a recorded  loss of  $932,000.  The Company  continues to actively
market this property.

NOTE 3 - Deferred Costs

The components of deferred costs are as follows:


<TABLE>
<CAPTION>


                                                              (Dollars in Thousands)
                                                           June 30,       December 31,
                                                              2003            2002
                                                         ------------    --------------
<S>                                                        <C>              <C>

Deferred bond selection costs (1)                          $  37,600        $  34,810
Deferred financing costs                                       8,364            8,030
Deferred costs relating to the issuance of preferred
   shares of subsidiary                                       10,445           10,445
Deferred costs relating to acquisition of Related              3,762            2,483
Other deferred costs                                           2,911            1,376
                                                            --------         --------
                                                              63,082           57,144

Less: Accumulated amortization                               (10,588)          (8,451)
                                                            --------         --------

                                                           $  52,494        $  48,693
                                                            ========         ========
</TABLE>

(1) This primarily represents the 2% bond selection fee paid to the Manager (see
Note 5).

NOTE 4 - Goodwill and Intangible Assets

The Company  adopted  SFAS 141 on July 1, 2001 and SFAS 142, on January 1, 2002.
The Company has determined that the amounts  previously  capitalized as goodwill
relating to the initial  formation  of the Company and to the merger of American
Tax  Exempt  Bond  Trust,  meet  the  criteria  in SFAS 141 for  recognition  as
intangible  assets apart from  goodwill,  and  accordingly  will  continue to be
amortized over their remaining useful lives, subject to impairment testing.


                                       15
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)


During the quarter ended June 30, 2002, PWF engaged a third party valuation firm
to evaluate PWF's  licenses with Fannie Mae,  Freddie Mac, FHA, GNMA and various
private  investors.  As a result of this process  approximately $8.6 million has
been reclassified from goodwill to intangible assets, representing the estimated
market value of PWF's licenses. These licenses have an indefinite life and, as a
result, are not being amortized.

During 2002 and the six months ended June 30, 2003, the Company, pursuant to the
original  acquisition  agreement,  paid  approximately $3.7 million in "true-up"
payments  representing  payments due to the original PWF stockholders  which was
recorded as additional  goodwill during the fourth quarter of 2002 and the first
six months of 2003.  These true-up payments were based on i) the increase in the
value of MSRs due to certain loans  closing,  ii) positive  changes  between the
audited  balance  sheet  used for the  initial  purchase  price and the  audited
balance sheet at December 31, 2001, iii) payments of certain servicing fees, and
iv) forward conversions of loans previously committed. The acquisition agreement
stipulates  additional  true-up payments to be made periodically for a period of
up to three years from the acquisition date.

The  following  table  provides  further  information  regarding  the  Company's
intangible assets:


                                              (Dollars in Thousands)
                                  Identifiable Other      PWF
                                  Intangible Assets     Licenses       Total
                                 -----------------------------------------------

Balance at June 30, 2003                $  4,426        $  8,639       $13,065
Accumulated Amortization                  (1,985)              -        (1,985)
                                         -------         -------        ------
Net balance at June 30, 2003            $  2,441        $  8,639       $11,080
                                         =======         =======        ======
Amortization Expense for the six
months ended June 30, 2003
                                        $    237        $      -       $   237
                                         =======         =======        ======
Estimated amortization expense
per year for next five years
                                        $    474        $      -       $   474
                                         =======         =======        ======

The amortization is included as a reduction to Revenue Bond interest income.

The amount  indicated  as goodwill in the  accompanying  consolidated  financial
statements  as of June 30, 2003 is related to the  acquisition,  on December 31,
2001 of PWF. This amount represents  goodwill under SFAS 142, and therefore,  is
not being  amortized.  In  accordance  with SFAS 142,  the  Company  tested this
goodwill for impairment  during the fourth quarter of 2002 and determined  there
was no impairment.

NOTE 5 - Related Party Transactions

The Manager is entitled to  subcontract  its  obligations  under the  Management
Agreements to an affiliate.  In accordance  with the foregoing,  the Manager has
assigned its rights and obligations to Related.

Pursuant to the terms of the Management  Agreements,  the Manager is entitled to
receive the fees and other compensation set forth below:

Fees/Compensation*                       Amount
------------------                       ------

Bond Selection Fee                       2.00% of the face  amount of each asset
                                         invested in or  acquired by  CharterMac
                                         or its subsidiaries.
Special Distributions/Investment         0.375% per annum of the total  invested
Management Fee                           assets    of    CharterMac    or    its
                                         subsidiaries.
Loan Servicing Fee                       0.25% per annum based on the
                                         outstanding  face amount of revenue
                                         bonds  and other  investments  owned by
                                         CharterMac or its subsidiaries.


                                       16
<PAGE>


Operating Expense Reimbursement          For direct expenses incurred by the
                                         Manager in a amount not to exceed
                                         $996,064 per annum (subject to
                                         increase    based   on   increases   in
                                         CharterMac's   and  its   subsidiaries'
                                         assets  and to annual  increases  based
                                         upon  increases in the  Consumer  Price
                                         Index).
Incentive Share Options                  The  Manager  may  receive  options  to
                                         acquire    additional   Common   Shares
                                         pursuant to the Share  Option Plan only
                                         if  CharterMac's  distributions  in any
                                         year exceed  $0.9517  per Common  Share
                                         and the  Compensation  Committee of the
                                         Board of Trustees  determines  to grant
                                         such options.
Liquidation Fee                          1.50% of the gross  sales  price of the
                                         assets sold by CharterMac in connection
                                         with a liquidation of CharterMac assets
                                         supervised by the Manager.

* The Manager is also  permitted to earn  miscellaneous  compensation  which may
include,  without  limitation,  construction  fees,  escrow  interest,  property
management fees, leasing  commissions and insurance  brokerage fees. The payment
of any such  compensation is generally  limited to the competitive  rate for the
services  being  performed.  A bond  placement  fee of 1.0% to 1.5% of the  face
amount of each asset  invested in or acquired by CharterMac or its  subsidiaries
is  payable  to the  Manager  by the  borrower,  and  not by  CharterMac  or its
subsidiaries.

The  terms of each of the  management  agreements  is one year.  The  management
agreements  may be renewed,  subject to  evaluation  of the  performance  of the
Manager by CharterMac's Board of Trustees. Both agreements may be terminated (i)
without  cause by the Manager;  or (ii) for cause by a majority of  CharterMac's
Board of  Trustees,  in each case  without  penalty  and each upon 60 days prior
written notice to the non-terminating party.

The costs,  expenses and the special  distributions  incurred to the Manager and
its affiliates for the three and six months ended June 30, 2003 and 2002 were as
follows:


                                   Three Months Ended        Six Months Ended
                                          June 30,                June 30,
                                  ----------------------  ----------------------
                                  (Dollars in thousands)  (Dollars in thousands)
                                  ----------------------  ----------------------

                                      2003      2002        2003        2002
                                    -------   -------     ---------- ----------

Bond selection fees                $  2,604   $  3,412     $   2,604  $   3,980
Special distribution/Investment
   Management fee                     1,539      1,240         3,022      2,328
Bond Servicing                        1,047        878         2,062      1,644
Expense reimbursement                   246        122           479        431
                                    -------    -------      --------   --------
                                   $  5,436   $  5,652     $   8,167  $   8,383
                                    =======    =======      ========   ========

Certain  of the  Revenue  Bonds held by the  Company  are  supported  by various
guarantees including,  but not limited to, construction and operating guarantees
from affiliates of the Manager.

During the quarter  ended  September 30, 2002,  the Company  agreed to back up a
primary  guarantor's  obligation  to guarantee an  agreed-upon  internal rate of
return to the investor in Related Capital Guaranteed Corporate Partners II, L.P.
("RCGCP").  RCGCP is a fund  sponsored by Related,  which is an affiliate of the
Manager. The Company is the beneficiary of a guarantee against losses associated
with  construction  and operating  stabilization  for each of the  properties in
RCGCP,  which is capped at $15 million.  The  guarantee has been provided by The
Related  Companies,  L.P.  ("TRCLP"),  an affiliate  of Related.  TRCLP has also
agreed, if needed, after construction completion and property stabilization,  to
fund up to the first  $2.5  million  of  operating  deficits  of the  underlying
properties or any amounts required to pay the guaranteed IRR to the investor. If
the Company's  acquisition of Related is completed,  then this guarantee will no
longer be in force.

In connection with the  refinancing of River Run, the general  partners of which
are  affiliates  of the Manager,  the Company  entered  into an agreement  which
allows  the  Revenue  Bond to be put to the  Company  should  the  owner  of the
underlying  property  default on the bond.  The Company,  in


                                       17
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)


turn,  entered  into  agreements  which allow the Company to put the bond to the
general partners.  The Company's put right is secured by collateral  assignments
of the general partners'  partnership interests in the limited partnership which
owns the underlying property.

The Company has entered into a credit enhancement transaction with Merrill Lynch
Capital  Services  ("MLCS").  TRCLP has  provided  the Company with an indemnity
covering 50% of any losses incurred by the Company.

Effective  April 1, 2003,  PWF took on the day-to-day  responsibility  of a $598
million portfolio of loans subserviced by CreditRe Mortgage  Servicing  Company,
L.L.C. ("CMC"), an affiliate of The Related Companies L.P.

NOTE 6 - Earnings Per Share

Net income per share is computed in accordance with SFAS No. 128,  "Earnings Per
Share".  Basic income per share is  calculated by dividing  income  allocated to
Common and Convertible CRA Shareholders ("Shareholders") by the weighted average
number of Common and Convertible CRA Shares  outstanding  during the period. The
Convertible CRA Shares are included in the calculation of shares  outstanding as
they share the same economic benefits as Common Shares, including payment of the
same  dividends  per  share  as  Common  Shares.  Diluted  income  per  share is
calculated  using the weighted average number of shares  outstanding  during the
period plus the  additional  dilutive  effect of common share  equivalents.  The
dilutive  effect of outstanding  share options is calculated  using the treasury
stock method.

Pursuant to the Company's Trust Agreement and the Management Agreements with the
Manager, the Manager is entitled,  in its capacity as the general partner of the
Company,  to a special  distribution  equal to .375% per annum of the  Company's
total  invested  assets  (which  equals the face amount of the Revenue Bonds and
other investments),  payable quarterly. Income is allocated first to the Manager
in an amount equal to the special  distribution.  The net  remaining  profits or
losses, after a special allocation of .01% to the Manager, are then allocated to
shareholders in accordance with their percentage interests.

During the quarter ended  September 30, 2002,  the Company issued 40,000 options
at a strike price of $17.56. These options vest equally, in thirds, in September
2003,  2004 and 2005 and  expire  in 10  years.  The  dilutive  effect  of these
outstanding share options is calculated using the treasury stock method.

During  the six months  ended June 30,  2003,  127,943  of the  Company's  stock
options were exercised.


                                       18
<PAGE>


<TABLE>
<CAPTION>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)


                                              (Dollars in thousands)                  (Dollars in thousands)
                                         Three Months Ended June 30, 2003          Six Months Ended June 30, 2003
                                       -------------------------------------  -----------------------------------------
                                          Income       Shares     Per Share     Income        Shares        Per Share
                                        Numerator    Denominator   Amount      Numerator    Denominator       Amount
                                       -----------   -----------  ---------    ---------    -----------     -----------
<S>                                      <C>           <C>            <C>         <C>           <C>            <C>

Net income allocable to share-
     holders (Basic EPS)                 $  16,740     45,090,477     $   .37     $  33,234     45,054,096     $   .74
                                                                       ======                                   ======
     Effect of dilutive securities
         135,566 share options                  --         39,565                        --         36,227
                                          --------    -----------                  --------    -----------
     shareholders (Diluted EPS)          $  16,740     45,130,042     $   .37     $  33,234     45,090,323     $   .74
                                          ========    ===========      ======      ========    ===========      ======


<CAPTION>

                                              (Dollars in thousands)                  (Dollars in thousands)
                                         Three Months Ended June 30, 2002          Six Months Ended June 30, 2002
                                       -------------------------------------  -----------------------------------------
                                          Income       Shares     Per Share     Income        Shares        Per Share
                                        Numerator    Denominator   Amount      Numerator    Denominator       Amount
                                       -----------   -----------  ---------    ---------    -----------     -----------
<S>                                      <C>           <C>            <C>         <C>           <C>            <C>

Net income allocable to share-
     holders (Basic EPS)                 $  12,778     43,035,102     $   .30     $  30,337     40,920,033     $   .74
                                                                       ======                                   ======
     Effect of dilutive securities
       228,262 stock options                    --         72,073                        --         68,539
                                          --------    -----------                  --------    -----------
Diluted net income allocable to
     shareholders (Diluted EPS)          $  12,778     43,107,175     $   .30     $  30,337     40,988,572     $   .74
                                          ========    ===========      ======      ========    ===========      ======
</TABLE>


*    Includes Common and Convertible CRA Shares.


                                       19
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)


NOTE 7 - Commitments and Contingencies

Litigation

The  Company is subject to routine  litigation  and  administrative  proceedings
arising in the  ordinary  course of business.  Management  does not believe that
such matters will have a materially  adverse  impact on the Company's  financial
position, results of operations or cash flows.

Mortgage Banking Activities

Through PWF, the Company originates and services  multifamily mortgage loans for
Fannie Mae,  Freddie Mac and FHA. PWF's mortgage  lending business is subject to
various governmental and quasi-governmental  regulation.  PWF, collectively,  is
licensed or approved to service  and/or  originate  and sell loans under  Fannie
Mae,  Freddie Mac, Ginnie Mae and FHA programs.  FHA and Ginnie Mae are agencies
of the Federal government and Fannie Mae and Freddie Mac are federally-chartered
investor-owned corporations.  These agencies require PWF and its subsidiaries to
meet  minimum  net worth and  capital  requirements  and to  comply  with  other
requirements. Mortgage loans made under these programs are also required to meet
the requirements of these programs. In addition, under Fannie Mae's DUS program,
PWF has the  authority to originate  loans  without a prior review by Fannie Mae
and is required to share in the losses on loans originated under this program.

The DUS program is Fannie Mae's principal loan program. Under the Fannie Mae DUS
Product Line, the Company,  through PWF,  originates,  underwrites  and services
mortgage loans on multifamily residential properties and sells the project loans
directly to Fannie Mae. The Company assumes  responsibility for a portion of any
loss that may  result  from  borrower  defaults,  based on the  Fannie  Mae loss
sharing  formulas,  Levels I, II or III. At June 30, 2003,  all of the Company's
loans consisted of Level I loans. For such loans, the Company is responsible for
the first 5% of the unpaid  principal  balance  and a portion of any  additional
losses to a maximum of 20% of the original principal balance. Level II and Level
III loans carry a higher loss sharing percentage. Fannie Mae bears any remaining
loss.

Under the terms of the Master Loss Sharing  Agreement between Fannie Mae and the
Company,  the Company is responsible  for funding 100% of mortgagor  delinquency
(principal and interest) and servicing (taxes,  insurance and foreclosure costs)
advances until the amounts advanced exceed 5% of the unpaid principal balance at
the date of  default.  Thereafter,  for Level I loans,  the  Company may request
interim  loss  sharing  adjustments  which allow the Company to fund 25% of such
advances  until final  settlement  under the Master Loss Sharing  Agreement.  No
interim loss sharing adjustments are available for Level II and Level III loans.

The Company  maintains an accrued  liability for probable losses under FAS 5 for
loans  originated  under the Fannie Mae DUS  product  line at a level  that,  in
management's  judgment, is adequate to provide for estimated losses. At June 30,
2003, that liability was approximately $5.8 million,  which the Company believes
represents  its maximum  liability  at this time.  Unlike loans  originated  for
Fannie Mae, The Company does not share the risk of loss for loans PWF originates
for Freddie Mac or FHA.

In connection  with the PWF warehouse  line,  both  CharterMac and CM Corp. have
entered  into  guarantees  for the  benefit  of  Fleet,  guaranteeing  the total
advances drawn under the line, up to the maximum of $100 million,  together with
interest, fees, costs, and charges related to the PWF warehouse line.

PWF maintains, as of June 30, 2003, treasury notes of approximately $5.0 million
and a money  market  account of  approximately  $606,000,  which is  included in
restricted cash and securities in the consolidated balance sheet, to satisfy the
Fannie Mae collateral requirements of $5.6 million.

                                       20
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)


Due to the  nature of PWF's  mortgage  banking  activities,  PWF is  subject  to
supervision by certain regulatory  agencies.  Among other things, these agencies
require PWF to meet certain minimum net worth requirements,  as defined. PWF met
these requirements for all agencies, as applicable, as of June 30, 2003.

At June 30,  2003,  PWF had  commitments  of  approximately  $28 million to four
borrowers.

Credit Enhancement Transaction

In December 2001, the Company  completed a credit  enhancement  transaction with
Merrill Lynch Capital Services,  Inc. ("MLCS"),  as described above. Pursuant to
the terms of the transaction,  CM Corp.  assumed MLCS's $46.9 million first loss
position on a $351.9 million pool of tax-exempt weekly variable rate multifamily
mortgage  loans.  The Related  Companies,  L.P.  has  provided CM Corp.  with an
indemnity  covering 50% of any losses that are  incurred by CM Corp.  as part of
this transaction. As the loans mature or prepay, the first loss exposure and the
fees paid to CM Corp. will both be reduced. The latest maturity date on any loan
in the portfolio occurs in 2009. The remainder of the real estate exposure after
the $46.9 million first loss position has been assumed by Fannie Mae and Freddie
Mac.  In  connection  with  the  transaction,   CharterMac  has  guaranteed  the
obligations of CM Corp.,  and has met its obligation to post  collateral,  in an
amount equal to 40% of the first loss amount.  The  Company's  maximum  exposure
under the terms of this transaction is approximately $23.5 million.

CM Corp.  performed  due  diligence on each  property in the pool,  including an
examination  of  loan-to-value  and debt service  coverage both on a current and
"stressed"  basis.  CM Corp.  analyzed the  portfolio  on a "stressed"  basis by
increasing capitalization rates and assuming an increase in the low floater bond
rate. As of June 30, 2003, the credit enhanced pool of properties are performing
according to their  contractual  obligations and the Company does not anticipate
any losses to be incurred on its guaranty. Should the Company's analysis of risk
of loss change in the future,  a provision  for probable loss might be required;
such provision could be material.

Fees related to the credit enhancement  transaction for the three and six months
ended June 30, 2003,  included in other income,  was approximately  $311,905 and
$623,810, respectively. Income is recognized monthly as the fees are received.

Yield Guarantee Transaction

On July 18, 2002,  the Company  entered into two  agreements  with Merrill Lynch
(the "Primary  Guarantor") to guarantee an  agreed-upon  internal rate of return
("IRR") for a pool of 11 multi-family properties owned by RCGCP.

The total  potential  liability to the Company  pursuant to these  guarantees is
approximately $44 million.  The Company has analyzed the expected  operations of
the  underlying  properties  and believes there is no risk of loss at this time.
Should the Company's  analysis of risk of loss change in the future, a provision
for probable losses might be required; such provision could be material.

In connection with the transaction,  the Company posted $18.2 million of Revenue
Bonds as  collateral  to the  Primary  Guarantor,  which will be reduced to $1.4
million  over a  period  of up to 20  years  as  the  properties  reach  certain
operating benchmarks. In addition, the Company agreed to subordinate 25% of each
of the bonds it acquired that are secured by the  properties  and to not use the
subordinated  portion  of such  bonds  as  collateral  in  connection  with  any
borrowings.

To mitigate risk, the Company is the  beneficiary of a guarantee  against losses
associated  with  construction  and  operating  stabilization  for  each  of the
properties  in RCGCP,  which is capped at $15 million.  The  guarantee  has been
provided by TRCLP.  If the Company's  acquisition of Related is completed,  then
this guarantee will no longer be in force. As of December 31, 2002,  TRCLP had a
GAAP  net  worth  of   approximately   $175.0  million  with  liquid  assets  of
approximately  $70.1  million.  In  addition,  the  developers  of  each  of the
properties  have also been required to give recourse  completion,  stabilization
and  operating  deficit  guarantees.  TRCLP has also  agreed,  if needed,  after


                                       21
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)


construction completion and property stabilization, to fund up to the first $2.5
million of  operating  deficits  of the  underlying  properties  or any  amounts
required to pay the guaranteed IRR to the investor.

Bond Forward Transactions

During December 2002, the Company entered into two  transactions  related to two
properties,  Coventry Place and Canyon  Springs.  Pursuant to the terms of these
transactions, the Company will provide credit support to the construction lender
for project  completion  and Fannie Mae permanent  loan  conversion  and acquire
subordinated  bonds to the extent  the  construction  period  bonds do not fully
convert.  Up until the point of  completion,  the  Company  will  reimburse  the
construction  lender for any draw on its construction letter of credit up to 40%
of the stated amount of the letter of credit. Following completion, up until the
project loan converts to permanent  loan status,  the Company  will,  should the
need  arise,  reimburse  the full  amount of the letter of credit.  The  Company
closely monitors these two properties,  and believes there is no need currently,
to provide for any potential loss. Should the Company's analysis of risk of loss
change in the future,  a provision  for loss might be required;  such  provision
could be material.  The  developer  has also issued  several  guarantees  to the
construction  lender,  each of which would be called  upon before the  Company's
guarantees,  and each of which  would be  assigned  to the  Company  should  its
guarantees be called.  Once the  construction  loans convert to permanent loans,
the Company is obligated to acquire  subordinated  loans for the amount by which
each  construction  loan exceeds the  corresponding  permanent loan, if any. The
subordinated bonds will bear interest at 10%. Under FNMA guidelines, the size of
the subordinated  bonds will be limited to a 1.0x debt service coverage based on
75% of the cash flow after the senior debt.

The Company's maximum exposure, related to these two transactions, is 40% of the
stated amount of the letter of credit of approximately $27 million.

Also, during December 2002, the Company entered into two transactions related to
properties  known as Auburn Glenn and  Cottonwood.  Pursuant to the terms of the
transactions,  a  third  party,  unrelated  lender  will  advance  funds  to the
developers,  as needed,  at a floating rate. At the completion of  construction,
the  Company  is  obligated  to  acquire  the  permanent   Revenue  Bonds  at  a
predetermined  price and  interest  rate.  The two  forward  commitments  create
derivative  instruments under SFAS No. 133, which have been designated as a cash
flow hedge of the anticipated  funding of the Revenue Bonds, and are recorded at
fair value,  with changes in fair value recorded in other  comprehensive  income
until the Revenue  Bonds are funded.  The Revenue Bonds are expected to be $18.8
million  for Auburn  Glenn and $12.4  million  for  Cottonwood,  which  combined
represents the Company's maximum liability.

NOTE 8 - Financial Risk Management and Derivatives

The Company's  Revenue  Bonds  generally  bear fixed rates of interest,  but the
P-FLOATS and TOP financing  programs  incur  interest  expense at variable rates
re-set  weekly.  The Company is also  exposed to interest  rate risks due to its
borrowings  under the Facility (see Note 11). Various  financial  vehicles exist
which allow the  Company's  management  to hedge  against the impact of interest
rate fluctuations on the Company's cash flows and earnings.

The  Company  has entered  into two  interest  rate swaps in order to reduce the
Company's  exposure to increases in the  floating  interest  rate on its TOP and
P-FLOATS  programs.  Under such  interest rate swap  agreements,  the Company is
required to pay MLCS (the  "Counterparty")  a fixed rate on a notional amount of
debt.  In  return,  the  Counterparty  will  pay the  Company  a  floating  rate
equivalent  to The BMA  Municipal  Swap  Index,  an index of  weekly  tax-exempt
variable rate issues on which the Company's variable rate financing programs are
based.  On January 5, 2001, the Company  entered into a five-year  interest rate
swap that fixes the BMA index to 3.98% on a notional  amount of $50 million.  On
February 5, 2001, the Company entered into a three-year  interest rate swap that
fixes the BMA index to 3.64% on an additional notional amount of $100 million.

The  average  BMA rates for the six months  ended June 30,  2003 and 2002,  were
1.11% and 1.36%,  respectively.  Net swap payments  received by the Company,  if
any, will be taxable income to the Company and, accordingly, to shareholders.  A
possible risk of such swap agreements is the


                                       22
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)


possible

inability  of the  Counterparty  to meet  the  terms of the  contracts  with the
Company; however, there is no current indication of such an inability.

At June 30,  2003,  these two interest  rate swaps were  recorded as a liability
with a combined fair market value of  approximately  $4.5  million,  included in
interest  rate  hedges on the  Consolidated  Balance  Sheets.  Interest  paid or
payable under the terms of the swaps, of approximately  $1,979,000,  is included
in interest expense.

During  January  2002,  the Company  entered into an interest rate cap agreement
with Fleet Bank, with a cap of 8% on a notional amount of $30 million.  Although
this  transaction  is  designed  to mitigate  the  Company's  exposure to rising
interest  rates,  the Company has not  designated  this  interest  rate cap as a
hedging derivative.  At June 30, 2003, this interest rate cap was recorded as an
asset with a fair market value of $32,421  included in interest rate derivatives
in the Consolidated Balance Sheets.  Because the Company has not designated this
derivative  as a hedge,  the  change in fair  market  value  flows  through  the
Consolidated  Statements of Income,  where it is included in interest income, in
the amount of ($28,633) for the six months ended June 30, 2003.

NOTE 9 - Dividends and Restricted Assets

CharterMac may not receive any distributions from its subsidiary, Equity Issuer,
until Equity Issuer has either paid all accrued but unpaid distributions related
to its  preferred  shares,  or in the  case of the next  following  distribution
payment date, set aside funds sufficient for payment. The distributions  related
to the  preferred  shares are payable only from Equity  Issuer's  quarterly  net
income,  defined as the  tax-exempt  income (net of expenses) for the particular
calendar  quarter.  Equity Issuer is required,  under the terms of its preferred
share  issuance,  to  meet  certain  leverage  ratios  calculated  as its  total
obligations divided by the gross fair value of investments. This could limit the
ability of Equity Issuer to  distribute  cash or Revenue Bonds to the Company or
to make loans or advances to the Company.

Equity  Issuer and its  subsidiaries  hold Revenue Bonds which at June 30, 2003,
had an aggregate  carrying amount of  approximately  $1.31 billion that serve as
collateral for securitized borrowings or are securitized.  The total securitized
borrowings at June 30, 2003 were approximately $780 million. Equity Issuer's net
assets at June 30, 2003 were approximately $826 million.

NOTE 10 - Business Segments

As a result  of the  December  2001  acquisition  of PWF,  the  Company  has two
reportable business segments: an investing segment and an operating segment.

The investing  segment consists of subsidiaries  holding  investments in Revenue
Bonds producing primarily tax-exempt interest income.

The  operating  segment  generates  taxable  interest  and fee  income.  Taxable
interest  income is generated  through the ownership of taxable  bonds,  certain
taxable  loans  and  other   investments.   Taxable  fee  income  includes  loan
origination  and loan  servicing  fees  (through  PWF) on  portfolios  for third
parties,  fees earned and  associated  with the  acquisition  or  origination of
Revenue Bonds, and fees for credit enhancement and guaranty services.

Segment results include all direct and contractual revenues and expenses of each
segment and  allocations of indirect  expenses based on specific  methodologies.
The reportable  segments are strategic  business  units that primarily  generate
revenue  streams  that  are  distinctly  different  and  are  generally  managed
separately.  Segment  reporting is applicable  beginning with the acquisition of
PWF on December 31,  2001;  prior to December  31,  2001,  all of the  Company's
operations were attributable to the investing  segment.  Of the total assets for
the Company at June 30, 2003 and December 31, 2002,  approximately $1.88 billion
and $1.73 billion,  respectively,  are attributable to the investing segment and
approximately  $75 million and $124 million,  respectively,  are attributable to
the operating segment.


                                       23
<PAGE>


<TABLE>
<CAPTION>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)


The following tables provide more information regarding the Company's segments:

                                            Three Months Ended June 30, 2003        Three Months Ended June 30, 2002
                                            ---------------------------------     --------------------------------
(Dollars in thousands)                      Investing   Operating    Total         Investing     Operating  Total
                                            ---------   ---------    -----         ---------     ---------  -----
<S>                                         <C>         <C>        <C>              <C>         <C>        <C>

Revenues                                    $ 28,641    $ 4,567    $ 33,208         $ 23,560    $ 4,500    $ 28,060
Interest Revenues                             27,236        608      27,844           23,042        566      23,608
Interest Expense                               4,680        207       4,887            3,517       (503)      3,014
Depreciation and Amortization expense          1,098      1,817       2,915              255      1,505       1,760
Equity in the income of investees
  accounted for under the equity method          (67)      --           (67)             (49)      --           (49)
Income tax expense or (benefit)                 (370)      (418)       (788)            --        1,457       1,457
Net income                                    18,552       (352)     18,200           14,091         56      14,147

<CAPTION>

                                             Six Months Ended June 30, 2003        Six Months Ended June 30, 2002
                                            ---------------------------------     --------------------------------
(Dollars in thousands)                      Investing   Operating    Total         Investing     Operating  Total
                                            ---------   ---------    -----         ---------     ---------  -----
<S>                                         <C>         <C>        <C>               <C>        <C>        <C>

Revenues                                    $ 56,525    $ 8,604    $ 65,129          $47,503     $9,360     $56,863
Interest Revenues                             53,786      1,326      55,112           46,399      1,917      48,316
Interest Expense                               8,242        461       8,703            7,005          0       7,005
Depreciation and Amortization expense          1,414      3,188       4,602              495      3,505       4,000
Equity in the income of investees
  accounted for under the equity method          (39)      --           (39)             253       --           253
Income tax expense or (benefit)               (2,243)      (521)     (2,764)            --        1,638       1,638
Net income                                    36,321       (214)     36,107           31,705      1,266      32,971
</TABLE>


                                       24
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)


NOTE 11 - Warehouse Facility

On March 31,  2003,  the Company  entered into a $75 million  secured  revolving
tax-exempt  bond  warehouse  line of credit  with  Fleet  Securities,  Inc.  and
Wachovia  Securities,  Inc.  (the  "Facility").  The  Facility  has a  built  in
accordion  feature  allowing  up to a $25 million  increase  for a total of $100
million  and a term of two years,  plus a one year  extension  at the  Company's
option.  The Facility  bears  interest at either 31, 60, 90, or 180-day  reserve
adjusted  LIBOR plus 1.5%,  or prime plus .25%,  at the  Company's  option.  The
outstanding  balance of this Facility at June 30, 2003 was approximate-ly  $29.2
million.

NOTE 12 - PWF Acquisition

As part of the PWF acquisition,  the purchase agreement provided that CharterMac
has the right to  purchase  the  remaining  19% of the  economics  of PWF shares
within  the 37  months  following  the  close  of the  acquisition,  (the  "Call
Option").  The  agreement  also gives the owners of the remaining PWF shares the
right to put those shares to CharterMac (the "Put Option"), within the 34 months
following the close of the acquisition.  The Company considers these two options
to be a single  unit (a  forward  contract),  due to the fact the Put Option and
Call Option were entered into at the same time,  have the same counter  parties,
have the same risk, and could have been  accomplished  in a single  transaction.
The price at which the  shares of stock are to be  repurchased  is based on many
factors,  determined in the future  including the  performance of the underlying
revenues of PWF, the value of PWF's servicing  portfolio and other factors which
are not currently  determinable.  The Company  determined  the forward  contract
should not be recorded until the contract is settled and the  associated  shares
transferred  to the  Company.  During the period of the  forward  contract,  the
Company will allocate  subsidiary  income or loss to the minority  interest on a
pro-rata basis, determined by its ownership percentage.

NOTE 13 - Financing Arrangements

In addition to other Company borrowings, on April 1, 2003, the Company closed on
its sale of Tax-Exempt Multi-Family Housing Trust Certificates Series 2003A (the
"Trust").  Pursuant  to the  terms of the  Trust,  the  Company  contributed  19
fixed-rate,  tax-exempt  multifamily  housing and senior  housing  Revenue Bonds
collateralized by 16 different properties totaling  approximately $196.8 million
in aggregate  principal into a trust out of which was sold $100 million in Class
A Certificates  to various  institutional  investors.  A  wholly-owned  indirect
subsidiary of CharterMac retained the subordinated Class B Certificates totaling
approximately $96.8 million. CharterMac has agreed that it will hold the Class B
Certificates until the Trust is terminated. The Class A Certificates will accrue
interest  at the fixed rate of 3.25% per annum for two years.  Distributions  to
the Class A Certificate  holders are expected to be made on the 15th day of each
month,  commencing on May 15, 2003. The Class A Certificates  will be subject to
mandatory  tender for purchase at a price equal to the  outstanding  Certificate
Balance thereof plus accrued  interest  thereon on March 15, 2005. If CharterMac
does not exercise its option to terminate the Trust on March 15, 2005, the Class
A Certificates will be subject to remarketing.  The Class A Certificates will be
subject  to  mandatory  tender  for  purchase  and  cancellation  on  the  Final
Distribution  Date from  proceeds of the  liquidation  of the bonds on March 15,
2007. This financing arrangement will be accounted for as a secured borrowing.

NOTE 14 - Subsequent Events

Subsequent to June 30, 2003,  CharterMac has acquired seven Revenue Bonds with a
total  aggregate face amount of  approximately  $74.7 million,  secured by 1,952
multifamily  units.  The Company has also advanced  additional  funds to Revenue
Bonds which were previously acquired totaling approximately $2.4 million.

The Company has filed a preliminary  Prospectus  Supplement  dated July 24, 2003
for the offer of  2,000,000  Series A  Convertible  Community  Reinvestment  Act
Preferred Shares. The offering is anticipated to close in August 2003.


                                       25
<PAGE>


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

General
-------

Charter Municipal  Mortgage  Acceptance Company  ("CharterMac"),  along with its
consolidated  subsidiaries  (the  "Company"),  is  a  Delaware  statutory  trust
principally engaged in the acquisition and ownership (directly or indirectly) of
tax-exempt  multi-family  housing  revenue  bonds  ("Revenue  Bonds")  and other
investments  that produce  tax-exempt  income,  issued by various state or local
governments,  agencies,  or authorities.  Revenue Bonds are primarily secured by
participating   and   non-participating   first  mortgage  loans  on  underlying
properties ("Underlying Properties").

The  Company  believes  that it can earn above  market  rates of interest on its
Revenue  Bond  acquisitions  by focusing  its efforts  primarily  on  affordable
housing.  The  Manager  estimates  that  nearly  30%  of  all  new  multi-family
development contains an affordable component which produces tax credits pursuant
to Section 42 of the Internal Revenue Code. The traditional methods of financing
affordable housing with tax-exempt Revenue Bonds are complex and time consuming,
and involve the participation of many  intermediaries.  Through the Manager, the
process has been streamlined with the "Direct Purchase  Program".  The Company's
Direct Purchase Program removes all  intermediaries  from the financing  process
(except the governmental  issuer of the Revenue Bond) and enables  developers to
deal directly with one source.  Because the Company  purchases its Revenue Bonds
directly  from the  governmental  issuer,  the need for  underwriters  and their
counsel,  rating agencies and costly  documentation is eliminated.  This reduces
the financing  life cycle,  often by several  months,  and also reduces the bond
issuance  costs,  usually by 30% or more. In dealing  directly with the Company,
developers feel more certain about the terms and timing of their financing.  The
Company  believes  the savings in time and up-front  costs and the  certainty of
execution  that the Direct  Purchase  Program  offers to  developers  allows the
Company to receive  above-market  rates of  interest  on the  Company's  Revenue
Bonds.

The Company  believes that it is well  positioned to market its Direct  Purchase
Program as a result of the Manager's  affiliation  with Related  Capital Company
("Related"), a nationwide, fully integrated real estate financial services firm,
because the Manager is able to utilize Related's  resources and relationships in
the  multi-family  affordable  housing  finance  industry  to  source  potential
borrowers  of  Revenue  Bonds.  Related  and  its  predecessor   companies  have
specialized  in offering  debt and equity  products to  mid-market  multi-family
owners and  developers  for over 30 years.  According to the 2001 National Multi
Housing Council survey, Related is the second largest owner of apartments in the
United States.

The Company,  through its wholly-owned  subsidiary  CharterMac  Corporation ("CM
Corp."),  owns  approximately  84% of the outstanding  capital stock (81% of the
economics)  of PW  Funding,  Inc.  ("PWF"),  a national  mortgage  banking  firm
specializing in multi-family  housing. CM Corp. expects to acquire the remaining
outstanding  capital  stock of PWF over the next 6 to 18 months.  As a result of
the  acquisition of PWF, the Company has diversified the range of its investment
products and is able to offer  developers fixed and floating rate tax-exempt and
taxable  financing  through  Fannie Mae,  Freddie Mac and FHA for affordable and
market rate  multi-family  properties.  Combining  this with the Company's  core
business of investing in Revenue Bonds and its  affiliation  with  Related,  the
Company is able to provide  developers  with  financing for all aspects of their
property's capital structure.

On December 18, 2002, the Company  announced it had entered into an agreement to
acquire  100%  of  the  ownership  interests  in  and  substantially  all of the
businesses  operated by Related (other than specific  excluded  interests  which
will be retained by the principals of Related).  The acquisition will enable the
Company to terminate its outside  management  agreement  with the Manager and to
become an internally-managed company.

The  potential  acquisition  is intended to be  structured so that the ownership
interests  held by the  principals  of  Related  in both  Related  and the other
entities  which control other aspects of Related's  business will be contributed
into a newly-formed, wholly-owned subsidiary of CM Corp. (the "CharterMac Sub").


                                       26
<PAGE>


The Company  anticipates paying total consideration to the principals of Related
of up to $338 million, as follows:

    o    The Initial Payment--$210 million consisting of $160 million in special
         common  units of the  CharterMac  Sub and $50 million in cash (with the
         cash portion being paid only to TRCLP). These special common units will
         be issued at $17.78 per unit,  which was the average  closing  price of
         the  Company's  common  shares  for the 30  calendar  days prior to the
         announcement of the acquisition (the "Initial Payment SCUs");

    o    The Contingent Payment--up to $128 million of additional special common
         units  (the  "Contingent  Payment  SCUs"),  which  is  based  on  7.73x
         Related's   adjusted   audited   earnings   before   interest,   taxes,
         depreciation and  amortization,  as well as certain other  adjustments,
         for the year ended December 31, 2002.  The Contingent  Payment SCUs are
         expected  to be issued at the same price as the Initial  Payment  SCUs,
         subject to a 17.5% symmetrical collar.

In  connection  with the  proposed  acquisition,  the  Company  also  intends to
establish a  restricted  share award plan which will permit the Company to grant
restricted  common  shares to the  employees  of  Related.  At the option of the
principals of Related, on or prior to the closing of the acquisition, the amount
of restricted  common shares may be increased to up to $20.2  million,  in which
event the amount of the contingent  payment payable to the principals of Related
will be reduced by the amount by which the value of the restricted common shares
issued exceeds $15 million.

Following the completion of the proposed  acquisition,  the economic interest in
the Company of (i) TRCLP will equal  approximately  17.7% and (ii) the Company's
management  and  the  principals  of  Related  (other  than  TRCLP)  will  equal
approximately 8.7%.

The  affirmative  vote of the holders of a majority of the Company's  issued and
outstanding  common shares  entitled to vote is required to approve the issuance
of the  Company's  securities  in  connection  with  the  proposed  acquisition.
Accordingly,  the  Company  filed a  preliminary  proxy  statement  with the SEC
regarding the proposed  acquisition  (and the other matters  discussed below) on
February  28,  2003,  a revised  preliminary  proxy  statement on May 8, 2003, a
second revised  preliminary  proxy statement on July 2, 2003 and a third revised
preliminary  proxy statement on August 7, 2003, in each instance after receiving
comments from the SEC.

In addition to asking the holders of the Company's  common shares to approve the
issuance of securities in connection with the proposed acquisition,  the Company
is also asking for their approval of the following proposals:

         (a) Amending and restating the Company's trust agreement to (i) reflect
         the terms of the proposed  acquisition,  (ii) accommodate the Company's
         internalized  management  structure  and  expansion  of  the  Company's
         business  resulting from the proposed  acquisition  and (iii) bring the
         Company's    organizational    structure    in    line    with    other
         internally-managed, public companies;

         (b)  Expanding the Company's  existing  incentive  share option plan to
         enable  the  Company  to  continue  to  attract  and  retain  qualified
         individuals  to serve as the  Company's  officers  and  trustees and to
         provide incentives to and more closely align the financial interests of
         the  Company's  management  team with the  interests  of the  Company's
         shareholders;

         (c) Electing two trustees to the Company's board of trustees,  each for
         a term of three years; and

         (d)  Amending  the  Company's  trust  agreement  to clarify that future
         issuances  by us or the  Company's  subsidiaries  of  securities  which
         contain   mandatory   redemption   features  would  not  be  considered
         "financing  or  leverage"  under  the  terms  of  the  Company's  trust
         agreement.


                                       27
<PAGE>


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

Interest income from Revenue Bonds increased approximately $4.9 million and $8.2
million  for the three and six months  ended June 30,  2003 as compared to 2002.
This  increase  was  primarily  due  to  an  increase  in  interest   income  of
approximately  $14.5  million from new Revenue  Bonds  acquired  during 2002 and
2003,  partially  off-set by a decrease  in  interest  income due to the sale or
repayment  of Revenue  Bonds of  approximately  $4.9  million  and a decrease in
contingent interest of approximately $1.8 million.

Other  income for the three and six months  ended June 30,  2003,  increased  by
approximately  $1.2 million and $2.2 million as compared to 2002.  This increase
was primarily due to the Yield Guarantee Transaction completed in July 2002.

Total  revenues for the three and six months  ended June 30, 2003,  increased by
approximately  $5.1 million and $8.2 million including the increases in interest
income from Revenue Bonds noted above,  increases in mortgage servicing fees and
other income offset by a decrease of approximately  $876,000 in mortgage banking
fees due to lower origination volume.

General and  administrative  expenses  decreased  approximately  $1,065,000  and
$625,000  for the three and six months  ended June 30,  2003 as compared to 2002
primarily  due to  decreases  in  employee  compensation  resulting  from  lower
originations at PW Funding.

Amortization increased approximately $953,000 and $602,000 for the three and six
months ended June 30, 2003 primarily due to the increase of  amortization  of PW
Funding  acquisition  expense and deferred finance cost for LIHTC guarantee deal
and PW Funding acquisition and warehouse loans.

Income  allocated to preferred  shareholders of subsidiary for the three and six
months ended June 30, 2003 increased  approximately  $672,000 and $1,632,000 due
to the preferred offerings consummated on June 4, 2002.

During the three and six months  ended June 30,  2003,  the  Company  recorded a
benefit for income taxes of  approximately  $788,000 and  $2,764,000,  due to CM
Corp having a consolidated  tax loss when  calculated in accordance with FAS 109
(see Note 1, Income Taxes).

During the three and six months  ended June 30, 2003,  the Company  recognized a
net gain on repayments of Revenue Bonds of  approximately  $2.7 million and $2.2
million, versus approximately $0.2 million and $4.0 million for 2002, due to the
number and size of Revenue Bonds repaid or sold. Additionally,  during the three
and six months ended June 30,  2003,  the Company  recognized  gains on sales of
loans of approximately  $0.4 million and $2.6 million versus  approximately $3.3
million and $6.9 million for 2002, relating to PWF's origination activities.

Liquidity and Capital Resources
-------------------------------

The Company has  primarily  used three sources of capital:  collateralized  debt
securitization,  various types of equity offerings and a Credit Facility to fund
its investments and facilitate growth.

On March 31,  2003,  the Company  entered into a $75 million  secured  revolving
tax-exempt  bond  warehouse  line of credit  with  Fleet  Securities,  Inc.  and
Wachovia  Securities,  Inc.  (the  "Facility").  The  Facility  has a built-  in
accordion  feature  allowing  up to a $25 million  increase  for a total of $100
million and a term of two years,  plus a one- year  extension  at the  Company's
option.  The Facility  bears  interest at either 31, 60, 90, or 180-day  reserve
adjusted LIBOR plus 1.5%, or prime plus .25%, at the Company's option.

On April 1, 2003,  the  Company  closed on its sale of  Tax-Exempt  Multi-Family
Housing Trust Certificates Series 2003A (the "Trust").  Pursuant to the terms of
the Trust, the Company contributed 19 fixed-rate, tax-exempt multifamily housing
and senior  housing  revenue  bonds  collateralized  by 16 different  properties
totaling approximately $196.8 million in aggregate principal into a trust out of
which was sold $100  million in Class A  Certificates  to various  institutional
investors.  A  wholly-owned  indirect  subsidiary  of  CharterMac  retained  the
subordinated  Class  B  Certificates   totaling   approximately  $96.8  million.
CharterMac has agreed that it will hold the Class B Certificates until the Trust
is terminated.  The Class A Certificates  will accrue interest at the fixed rate
of 3.25% per  annum  for two  years.  Distributions  to the Class A  Certificate
holders are expected to be made on


                                       28
<PAGE>


the 15th day of each month, commencing on May 15, 2003. The Class A Certificates
will be  subject  to  mandatory  tender  for  purchase  at a price  equal to the
outstanding  Certificate  Balance thereof plus accrued interest thereon on March
15, 2005. If  CharterMac  does not exercise its option to terminate the Trust on
March 15, 2005, the Class A  Certificates  will be subject to  remarketing.  The
Class A  Certificates  will be subject to  mandatory  tender  for  purchase  and
cancellation on the Final  Distribution Date from proceeds of the liquidation of
the bonds on March 15, 2007.

During  the six  months  ended June 30,  2003 cash and cash  equivalents  of the
Company and its consolidated subsidiaries increased approximately $53.2 million.
The increase was  primarily  due to cash  provided by  operating  activities  of
approximately $79.2 million,  proceeds from the repayment of eight Revenue Bonds
of  approximately  $57.3  million,   principal  payments  on  Revenue  Bonds  of
approximately  $9.0  million,  principal  payments  received  from loans made to
properties of approximately $8.8 million,  proceeds from financing  arrangements
of  approximately  $109.4 million and proceeds from exercise of stock options of
approximately  $1.5  million,  partially  offset  by  distribution  payments  of
approximately  $41.0  million,  advances made to Revenue Bonds of  approximately
$146.0 million,  purchases of other investments of approximately  $10.2 million,
loans made to properties of  approximately  $1.9 million and a decrease in notes
payable of approximately $5.4 million.

In July  2003,  distributions  declared  in June  2003  were  paid to  Preferred
Shareholders as shown in the table below:


<TABLE>
<CAPTION>

                                                                                    Liquidation
                                                                                       Value
Series      Dividend Rate    Distribution per Share        Total Distribution        per share
------      -------------    ----------------------        ------------------        ---------
<S>            <C>                   <C>                       <C>                  <C>

A              6.625%                $33,125                   $1,490,625           $2,000,000
A-1            7.100%                  8,875                      426,000              500,000
A-2            6.300%                  7,875                      488,250              500,000
A-3            6.800%                  8,500                      510,000              500,000
B              7.600%                  9,500                    1,045,000              500,000
B-1            6.800%                  8,500                      314,500              500,000
B-2            7.200%                  9,000                      450,000              500,000
</TABLE>

Also paid, during August 2003, were  distributions of approximately  $14,667,000
($.325 per share) to holders of common and  convertible  CRA shares,  which were
declared in June 2003.

Management is not aware of any trends or events,  commitments or  uncertainties,
which  have not  otherwise  been  disclosed  that  will or are  likely to impact
liquidity in a material way.

Critical Accounting Policies
----------------------------

The Company's  critical  accounting  policies are described in its Form 10-K for
the  year  ended  December  31,  2002  and in  Note 1 of  the  footnotes  of the
accompanying  financial statements.  These critical accounting policies have not
changed during 2003 except for the Company's  accounting  treatment of MSRs (see
Note  1,  Mortgage  Banking  Activities  and  Mortgage  Servicing  Rights  for a
description of the current accounting policies).

Acquisitions
------------

During the period January 1, 2003 through June 30, 2003, the Company acquired 18
tax-exempt  Revenue Bonds and three taxable Revenue Bonds with an aggregate face
amount of  approximately  $137.1 million,  not including bond selection fees and
expenses of  approximately  $2.9 million.  The Company also advanced  additional
funds to Revenue Bonds which were  previously  acquired  totaling  approximately
$9.0 million.

Forward-Looking Statements
--------------------------

Certain   statements  made  in  this  report  may  constitute   "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities


                                       29
<PAGE>


Exchange  Act of 1934,  as  amended.  Such  forward-looking  statements  include
statements  regarding the intent,  belief or current expectations of the Company
and its management and involve known and unknown risks,  uncertainties and other
factors which may cause the actual  results,  performance or achievements of the
Company to be  materially  different  from any future  results,  performance  or
achievements  expressed  or implied  by such  forward-looking  statements.  Such
factors  include,  among other  things,  the  following:  general  economic  and
business conditions, which will, among other things, affect the availability and
creditworthiness  of  prospective  tenants,   lease  rents  and  the  terms  and
availability of financing for properties  financed by Revenue Bonds owned by the
Company;  adverse  changes in the real  estate  markets  including,  among other
things,  competition with other companies;  risks of real estate development and
acquisition;   governmental  actions  and  initiatives;  and  environment/safety
requirements.  Readers  are  cautioned  not to  place  undue  reliance  on these
forward-looking statements, which speak only as of the date hereof.

Inflation
---------

Inflation  did not have a  material  effect  on the  Company's  results  for the
periods presented.

Related Parties
---------------

The Company's  day-to-day  affairs are handled under the terms of the Management
Agreements with the Manager.

The Company has  invested  in, and may in the future  invest in,  Revenue  Bonds
secured by properties  in which either direct or indirect  affiliates of Related
own equity interests in the borrower.  The Company's trust agreement  contains a
limitation,  equal to 15% of total  market  value,  on the  aggregate  amount of
Revenue Bonds the Company may hold where the borrowers  under such Revenue Bonds
are either direct or indirect  affiliates of Related and Related generally has a
controlling economic interest.

In some cases,  Related or its affiliates may own a partnership or joint venture
interest merely to facilitate an equity  financing on behalf of one of Related's
investment  funds.   These  instances  are  not  considered  in  the  above  15%
limitation.  This  type of  transaction  with an  affiliated  borrower  would be
structured as a limited partnership as follows:  the general partner would be an
unaffiliated  third  party with a 1% general  partnership  interest  and the 99%
limited  partner would itself be a limited  partnership in which an affiliate of
Related would own a 1% general partnership  interest and one or more Fortune 500
companies would own a 99% limited partnership interest.

Affiliates of the Manager may provide certain financial guarantees to facilitate
leveraging  by  CharterMac,  for which they could be paid market  rate fees.  In
addition,  affiliates of the Manager may provide certain financial guarantees to
the owner (or  partners of the  owners) of the  underlying  properties  securing
CharterMac's revenue bonds, for which they could be paid market rate fees.

Certain  of the  Revenue  Bonds held by the  Company  are  supported  by various
guarantees including,  but not limited to, construction and operating guarantees
from affiliates of the Manager.

During the quarter  ended  September 30, 2002,  the Company  agreed to back up a
primary  guarantor's  obligation  to guarantee an  agreed-upon  internal rate of
return to the investor in Related Capital Guaranteed Corporate Partners II, L.P.
("RCGCP").  RCGCP is a fund  sponsored  by Related,  who is an  affiliate of the
Manager. The Company is the beneficiary of a guarantee against losses associated
with  construction  and operating  stabilization  for each of the  properties in
RCGCP,  which is capped at $15 million.  The  guarantee has been provided by The
Related Companies,  L.P.  ("TRCLP"),  an affiliate of Related.  If the Company's
acquisition  of Related is completed,  then this  guarantee will no longer be in
force.

In connection  with the  refinancing  of River Run, the Company  entered into an
agreement  which  allows the Revenue  Bond to be put to the  Company  should the
owner of the  underlying  property  default on the bond.  The Company,  in turn,
entered into  agreements  which allow the Company to put the bond to the general
partners of the owner who are affiliates of the Manager. The Company's put right
is  secured by  collateral  assignments  of the  general  partners'  partnership
interests in the limited partnership which owns the underlying property.


                                       30
<PAGE>


The Company has entered into a credit enhancement transaction with Merrill Lynch
Capital Services.  TRCLP has provided the Company with an indemnity covering 50%
of any losses incurred by the Company.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

The  nature  of the  Company's  investments  and the  instruments  used to raise
capital  for their  acquisition  expose  the  Company to gains and losses due to
fluctuations  in  market  interest  rates.  Market  interest  rates  are  highly
sensitive  to  many  factors,  including  governmental  policies,  domestic  and
international  political  considerations and other factors beyond the control of
the Company.

Revenue Bonds generally bear interest at fixed rates, or pay interest  according
to the cash flows of the  Underlying  Properties,  which do not  fluctuate  with
changes in market interest rates. In contrast,  payments  required under the TOP
program and on the secured  borrowings  under the P-FLOATS program vary based on
market  interest  rates  based on the Bond  Market  Association  ("BMA") and are
re-set weekly.

Various  financial  vehicles  exist  which  would allow  Company  management  to
mitigate the impact of interest rate  fluctuations  on the Company's  cash flows
and earnings.  Beginning in 2001, and upon management's analysis of the interest
rate environment and the costs and risks of such strategies, the Company entered
into two interest rate swaps in order to hedge against increases in the floating
interest  rate on its TOP and P-FLOATS  programs.  Under such interest rate swap
agreements,  the Company is required to pay Merrill Lynch Capital  Services (the
"Counterparty")  a fixed  rate on a  notional  amount of debt.  In  return,  the
Counterparty  will  pay  the  Company  a  floating  rate  equivalent  to the BMA
Municipal  Swap Index,  an index of weekly  tax-exempt  variable  rate issues on
which the Company's  variable rate financing  programs are based.  On January 5,
2001, the Company entered into a five-year interest rate swap that fixes the BMA
index to 3.98% on a notional  amount of $50  million.  On February 5, 2001,  the
Company entered into a three-year interest rate swap that fixes the BMA index to
3.64% on a notional amount of an additional $100 million. This effectively fixes
$50 million and $100 million of the  Company's  secured  borrowings at 3.98% and
3.64%, respectively,  protecting the Company in the event the BMA Municipal Swap
Index rises.  For the quarter ended June 30, 2003,  the Company's cost to borrow
funds  through  the  TOP  and  P-FLOATS   programs  averaged  2.16%  and  2.29%,
respectively,  which  does not  include  the  effect  of the  Company's  hedging
activities.

With respect to the portion of the Company's  floating rate  financing  programs
which are not  hedged,  a change in the BMA rate would  result in  increased  or
decreased  payments  under these  financing  programs,  without a  corresponding
change in cash flows from the investments in Revenue Bonds.  For example,  based
on the unhedged  floating rate $530 million  outstanding  under these  financing
programs at June 30, 2003, the Company estimates that an increase of 1.0% in the
BMA rate would  increase  interest  expense and  therefore  decrease  annual net
income by approximately $5.3 million.  Conversely, a decrease in market interest
rates would generally benefit the Company in the same amount described above, as
a result of decreased  allocations to the minority interest and interest expense
without corresponding decreases in interest received on the Revenue Bonds.

Changes in market  interest  rates would also impact the estimated fair value of
the Company's  portfolio of Revenue Bonds. The Company  estimates the fair value
for each Revenue Bond as the present value of its expected  cash flows,  using a
discount rate for comparable tax-exempt and taxable investments.  Therefore,  as
market  interest  rates for  tax-exempt and taxable  investments  increase,  the
estimated fair value of the Company's Revenue Bonds will generally decline,  and
a decline in interest  rates would be expected to result in an increase in their
estimated  fair  values.  For  example,  the  Company  projects,  using the same
methodology  used to estimate the  portfolio's  fair market value under FAS 115,
that a 1% increase in market rates for tax-exempt and taxable  investments would
decrease the  estimated  fair value of its  portfolio of Revenue  Bonds from its
June 30, 2003 value of  $1,677,287,000  to  approximately  $1,487,299,000.  A 1%
decline  in  interest  rates  would  increase  the  value of the  June 30,  2003
portfolio to approximately  $1,933,934,000.  Changes in the estimated fair value
of the Revenue Bonds do not impact the Company's  reported net income,  earnings
per share,  distributions or cash flows, but are reported as components of other
comprehensive income and affect reported shareholders' equity.


                                       31
<PAGE>


The  assumptions  related to the  foregoing  discussion  of market risk  involve
judgments   involving  future  economic  market  conditions,   future  corporate
decisions and other interrelating  factors, many of which are beyond the control
of the Company and all of which are  difficult  or  impossible  to predict  with
accuracy.  Although the Company  believes that the  assumptions  underlying  the
forward-looking  information  are reasonable,  any of the  assumptions  could be
inaccurate and,  therefore,  there can be no assurance that the  forward-looking
information  included  herein will prove to be accurate.  Due to the significant
uncertainties  inherent in  forward-looking  information,  the inclusion of such
information  should not be regarded as a representation  of the Company that the
objectives and plans of the Company would be achieved.

Item 4.  Controls and Procedures

(a)  Evaluation  of Disclosure  Controls and  Procedures.  The  Company's  Chief
Executive  Officer and Chief Financial  Officer have evaluated the effectiveness
of the Company's  disclosure controls and procedures (as such term is defined in
Rules  13a-15(e) and  15d-15(e)  under the  Securities  Exchange Act of 1934, as
amended  (the  "Exchange  Act"))  as of the end of the  period  covered  by this
report.  Based on such evaluation,  such officers have concluded that, as of the
end of such  period,  the  Company's  disclosure  controls  and  procedures  are
effective .

(b)  Internal  Control  over  Financial  Reporting.  There  have  not  been  any
significant  changes in the Company's internal control over financial  reporting
during the fiscal  quarter to which this  report  relates  that have  materially
affected,  or are reasonably likely to materially affect, the Company's internal
control over financial reporting.


                                       32
<PAGE>


                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

         Shareholders Action - Related
         On or about  December 24, 2002, an alleged  shareholder  of the Company
         commenced a shareholder's action ostensibly on behalf of the Company in
         the Supreme court of the State of New York,  County of Nassau,  against
         each  member  of  the   Company's   board  of  trustees   and  Related.
         Subsequently,  the  plaintiff  amended his  complaint  to add a direct,
         putative class action claim. The case is entitled Dulitz v. Hirmes,  et
         al., Index No.  02-020389,  and we are named as a nominal  defendant in
         the  action.  The  plaintiff  alleges  that each of the  members of the
         Company's  board of trustees  and  Related  breached  fiduciary  duties
         and/or  aided and  abetted  breaches  of  fiduciary  duties owed to the
         Company and the  Company's  shareholders  in  approving  the  Company's
         proposed acquisition of Related.  The amended complaint alleges,  among
         other things,  that the purchase  price for Related is  excessive,  the
         transaction  has been pursued and structured  solely for the benefit of
         the trustees  that are  affiliated  with Related and the members of the
         special  committee  are not  independent  because  they are  supposedly
         "dominated  or  controlled"  by the trustees that are  affiliated  with
         Related.   Additionally,   the  amended   complaint  alleges  that  the
         defendants also breached  fiduciary  duties owed to a putative class of
         all of the Company's  shareholders  (excluding the defendants and their
         affiliates)  due to alleged  dilution of the voting  power and economic
         interests of the Company's  shareholders  by the proposed  transaction.
         The amended complaint further alleges that shareholder  ratification of
         the  proposed  transaction  supposedly  will not be  effective  and the
         trustees  allegedly  will not  "disclose the true nature and purpose of
         the proposed  transaction." The amended complaint seeks declaratory and
         injunctive relief, including enjoining the consummation of the proposed
         transaction,  and unspecified amounts of compensatory  damages,  costs,
         disbursements and attorneys' fees.

         Although the  defendants  in the Dulitz  action do not believe that the
         plaintiff's  allegations  have merit,  the  defendants  have engaged in
         settlement negotiations with the plaintiff's counsel solely in order to
         avoid unnecessary expenses, burdens,  uncertainties and distractions of
         continued  litigation.  In April and May 2003,  counsel for the parties
         met to discuss the issues in the case and  counsel  for the  defendants
         provided  counsel for the  plaintiff  with certain  documents and other
         information. In June 2003, counsel for the parties drafted a memorandum
         of understanding setting forth the terms of a settlement in principle.

         In June 2003, the Company's board of trustees and the special committee
         approved the  memorandum of  understanding  and authorized and directed
         the Company's counsel to enter into the memorandum of understanding and
         a settlement  agreement on terms  substantially  in accordance with the
         memorandum of  understanding.  Also in June 2003,  plaintiff  conducted
         limited   confirmatory   discovery   pursuant  to  the   memorandum  of
         understanding.

         In July 2003, the parties to the litigation  entered into a stipulation
         of  compromise  and  settlement.  The  stipulation  of  compromise  and
         settlement  requires defendants to make certain changes to the proposed
         transaction and the related agreements.

         On August 7,  2003,  the  Company  entered a  hearing  order  that,  in
         pertinent part:

                o       conditionally   certifies  the  class  for  purposes  of
                        settlement;

                o       schedules  for October 24, 2003 a settlement  hearing at
                        which the Company will  consider  whether to approve the
                        settlement embodied in the stipulation of compromise and
                        settlement;

                o       requires   defendants  to  distribute   with  the  proxy
                        statement,  and to file with the Securities and Exchange
                        Commission  as an exhibit to a Form 8-K, a notice to the
                        class  members of the action,  the  settlement,  and the
                        settlement hearing; and


                                       33
<PAGE>


                o       establishes  procedures and deadlines for members of the
                        class to file objections to the settlement or to opt out
                        of the class.

         The individual defendants and Related have informed us that if the case
         is not settled,  they intend to defend against the  plaintiff's  claims
         vigorously.

Item 2.  Changes in Securities and Use of Proceeds - None.

Item 3.  Defaults Upon Senior Securities - None

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

Item 5.  Other Information - None

Item 6.  Exhibits and Reports on Form 8-K

         Exhibits:

         10.1   Acquisition Loan Agreement, dated as of December 24, 2001, among
                Charter Mac  Corporation,  as Borrower,  Fleet National Bank, as
                Agent, and the Lenders.

         10.2   Mortgage Warehousing Credit and Security Agreement,  dated as of
                December 24, 2001, among PW Funding Inc.,  Cambridge  Healthcare
                Funding Inc. and Larson Financial Resources, Inc., as Borrowers,
                Fleet National Bank, as Agent, and the Lenders.

         10.3   Amended and Restated Reimbursement Agreement,  dated as of March
                31, 2003, among Charter Mac Equity Issuer Trust,  Fleet National
                Bank, as Agent,  Fleet  National  Bank, as Issuing Bank, and the
                Participants.

         10.4   Tax-Exempt Bond Line of Credit and Security Agreement,  dated as
                of March 26, 2003, among Charter Mac Equity Issuer Trust,  Fleet
                National  Bank,  Wachovia  Bank,  National  Association,   Fleet
                Securities Inc. and Wachovia Securities, Inc., and the Lenders.

         31.1   Chief Executive Officer certification pursuant to Rule 13a-14 or
                15d-14

         31.2   Chief Financial Officer certification pursuant to Rule 13a-14 or
                15d-14

         32.1   Chief  Executive  Officer  certification  pursuant  to 18 U.S.C.
                Section  1350,  as  adopted  pursuant  to  Section  906  of  the
                Sarbanes-Oxley Act of 2002.

         32.2   Chief  Financial  Officer  certification  pursuant  to 18 U.S.C.
                Section  1350,  as  adopted  pursuant  to  Section  906  of  the
                Sarbanes-Oxley Act of 2002.

         (b)  Reports on Form 8-K

              The following 8-K reports were filed or furnished, as noted in the
              applicable Form 8-K, for the quarter ended June 30, 2003.

              Current  report  on  Form  8-K  relating  to  the  Company  making
              available unaudited supplemental data regarding its operations for
              the quarter ended March 31, 2003, dated May 14, 2003.

              Current  report on Form 8-K relating to a press release  issued by
              the Company  reporting its financial results for the first quarter
              ended March 31, 2003, dated May 14, 2003.

              Current  report on Form 8-K  relating to filing  exhibits  for the
              five-year 3.98% fixed interest rate swap transaction dated January
              5, 2001,  on a notional  amount of $50 million and the  three-year
              3.64% fixed interest rate swap transaction dated February 5, 2001,
              on a notional amount of $100 million, dated June 30, 2003.


                                       34
<PAGE>


                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                  (Registrant)


Date:  August 14, 2003              By: /s/ Stuart J. Boesky
                                        --------------------
                                        Stuart J. Boesky
                                        Managing Trustee, President
                                        and Chief Executive Officer


Date:  August 14, 2003              By: /s/Stuart A. Rothstein
                                        ----------------------
                                        Stuart A. Rothstein
                                        Chief Financial Officer and Chief
                                        Accounting Officer


                                       36