-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OSXSy+lMs4FMdlTRQ5tfvxZtloLDoeDMhHFmJAH/Gi4aTkDxQcKz5b/EIZvRCv0N z8z0wl5G7DXlwRxAFkMGqA== 0001026777-97-000042.txt : 19970818 0001026777-97-000042.hdr.sgml : 19970818 ACCESSION NUMBER: 0001026777-97-000042 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970815 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AFL CIO HOUSING INVESTMENT TRUST CENTRAL INDEX KEY: 0000225030 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 526220193 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-03493 FILM NUMBER: 97664922 BUSINESS ADDRESS: STREET 1: 1717 K STREET NW STREET 2: STE 707 CITY: WASHINGTON STATE: DC ZIP: 20006 BUSINESS PHONE: 2023318055 MAIL ADDRESS: STREET 1: 1717 K ST NW SUITE 707 CITY: WASHINGTON STATE: DC ZIP: 20006 N-30D 1 SEMI-ANNUAL REPORT AFL-CIO Housing Investment Trust JUNE 30, 1997 [AFL-CIO HOUSING INVESTMENT TRUST LOGO HERE] PERFORMANCE HIGHLIGHTS FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1997 JUNE 30, 1996 - ---------------------------------------------------------------------------- Net Assets $1.48 billion $1.26 billion Participants investment $49 million $112 million Reinvestment of income $45 million $37 million Investment commitment $209 million $234 million Investment fundings $187 million $212 million Number of participants 394 393 Units of participation 1,368,793 1,193,829 Total gross rate of return, 1-year 10.25% 6.80% REPORT TO PARTICIPANTS The AFL-CIO Housing Investment Trust completed an exceptionally productive six-month period on June 30, 1997, which we are pleased to detail in this semi-annual report. During the period, the Trust showed impressive growth and extensive investment activity with rates of return that continued to surpass industry benchmarks. The strong overall performance during the six-month period is a further reflection of the prudent management strategies that guide the Trust. Additionally, new financing products recently approved by participants are expected to enhance the Trust's ability to meet borrower needs in today's competitive markets. With its high degree of investment security and established record of competitive returns, the Trust at mid-1997 continues to stand out as an attractive investment option for pension plans. PERFORMANCE OF THE TRUST The total net assets of the Trust reached an historic high of $1.48 billion at June 30, marking a seven percent increase during these six months. A total of $49 million in new investments were made in the Trust, and 5 new investors brought the total number of participants to 394 at mid-year. More than $45 million in earned income was reinvested by participants during the first six months of the year. Despite considerable interest rate volatility during the first two quarters, both the Trust's short- and long-term returns at mid-year remained highly competitive to standard industry indices. The accompanying graph compares the one, three, five, and ten year total gross rates of return of the Trust with those of the Salomon Brothers Mortgage Index and the Lehman Brothers Aggregate Bond Index. [GRAPHIC REPRESENTING 1, 3, 5 AND 10-YEAR PERFORMANCE OF THE TRUST AS COMPARED TO STANDARD INDUSTRY INDICES] 1-year 3-year 5-year 10-year AFL-CIO Housing Investment Trust 10.3% 10.1% 8.2% 9.6% Salomon Brothers Mortgage Index 8.7% 8.8% 6.9% 9.1% Lehman Brothers Aggregate Bond Index 8.2% 8.5% 7.1% 8.8% The net value per unit of participation grew from $1,072.98 at the end of 1996 to $1,079.33 as of June 30. The number of units of participation increased from 1,289,082 to 1,368,793. LOAN PRODUCTION Vigorous loan production activity generated financing commitments of $209 million during the first two quarters of 1997. This included $184 million in commitments for 9 multifamily housing projects, plus another $25 million for single-family homes. The commitments during the first half of 1997 will provide more than 1,900 units of affordable housing in communities from New Jersey to California. Also during this period, the Trust funded more than $187 million, compared to $212 million for the same period of 1996. PORTFOLIO MANAGEMENT Mortgage-backed securities continued to comprise the largest component of the Trust's long-term portfolio, with 39.8 percent at June 30. FHA mortgages were next, at 35.8 percent, followed by FHA construction loans, 18.2 percent, and local initiatives, 0.8 percent. The remaining 5.4 percent of the portfolio was invested in short-term securities. [GRAPHIC OF PIE CHART REPRESENTING PORTFOLIO ALLOCATION AS OF JUNE 30, 1997] Mortgage-Backed Securities 39.8% FHA mortgages 35.8% FHA construction loans 18.2% Local initiatives 0.8% Short-term 5.4% Ninety-nine percent of HIT's long-term investments were insured or guaranteed by the U.S. government or government-sponsored enterprises such as Fannie Mae or Freddie Mac. Contributing significantly to HIT's impressive performance in the first two quarters was the active portfolio management strategy that guides Trust investments. This strategy, through continual monitoring and adjustment of portfolio duration, has enabled the Trust to realize gains and mitigate losses during changing financial markets, thereby maintaining consistently competitive returns for participants. At the May meeting of Trust participants, HIT gained authorization for two new financing programs which will further diversify and balance the portfolio. Under the first program, HIT will offer secured bridge loans, filling a critical short-term financing need that many project sponsors face in the period before the equity payments from tax credit investors are due. Under the second, HIT is authorized to place a portion of funds into intermediate- term investments that will enhance yield while enabling the Trust to maintain a low cash position. The diversification gained through these new programs positions the Trust to compete more effectively with other lenders in the housing finance marketplace. The Trust's performance continues to benefit from one of the most effective fund management structures in the industry. A combination of experienced personnel and sophisticated systems is in place to guide strategic decisions on Trust investments. As a result, administrative expenses for the Trust continue to be among the lowest in the industry. The annualized ratio of expenses to average net assets was .46 percent at June 30. COMMUNITY PARTNERSHIPS As a respected leader in the U.S. housing finance industry, the Trust continues to build relationships with other organizations concerned with affordable housing and community development. These relationships contributed significantly to HIT's success in structuring the wide variety of financing agreements negotiated during the first half of the year. State and local housing agencies, community organizations, and developers look to the Trust not only for its lending but for the technical expertise it can contribute. That expertise is critical in bringing complex financing plans to fruition. With the recent authorization to offer secured bridge loans, the Trust will be able to offer an even broader array of financing options to help its investment partners see their projects through to completion. The Trust's successful partnerships gave rise to a variety of innovative housing initiatives in the first half of 1997. In a recent transaction, the HIT and the AFL-CIO Building Investment Trust, were both investors in a mixed- income high-rise on San Francisco Bay. Also during this period, families moved into two particularly notable HIT-financed apartment developments: one creating decent housing alternatives on the Texas-Mexican border at Laredo; and the other bringing new housing with on-site social services for families in South Central Los Angeles. THE PERIOD AHEAD The substantial growth and robust performance of the Trust during the first two quarters provide a foundation for further accomplishments in the second half of the year. As officers of the Trust, we will build on that foundation as well as pursue opportunities for new initiatives with housing partners that include HUD, Fannie Mae, Freddie Mac, and a growing number of state and local housing authorities that share the Trust's interest in affordable housing. We will continue to monitor actively the management of the Trust portfolio, and respond appropriately to changing market conditions in an ongoing effort to avoid risk and increase value. All of this gives us every reason to anticipate continuing success for the Trust and its participants during the remainder of 1997 and the years ahead. [signature of Stephen Coyle] [signature of Helen R. Kanovsky] Stephen Coyle Helen R. Kanovsky Chief Executive Officer General Counsel [signature of Michael M. Arnold] [signature of James Campbell] Michael M. Arnold James Campbell Director of Investor Relations Chief Investment Officer 1997 PARTICIPANTS MEETING The 1997 Annual Meting of Participants was held in Washington, D.C. on May 13, 1997. The following matters were put to a vote of Participants, through the solicitation of proxies, at the meeting: - - Richard Ravitch was re-elected to chair the Board of Trustees by a vote of 998,487.0872 for, 652.0795 against, 4,098.6218 abstentions, and 318,752.2297 votes not cast. - - The following table details votes pertaining to Trustees who were elected at the Annual Meeting: Votes Votes Votes Votes Trustee For Against Abstained Not Cast Robert A. Georgine 917,257.9391 15,034.5425 70,945.3069 318,752.2297 John T. Joyce 930,607.6892 1,684.7924 70,945.3069 318,752.2297 Alfred J. Fleischer 931,963.3662 0 71,274.4223 318,752.2297 Marlyn J. Spear 899,481.6149 0 103,756.1736 318,752.2297 - - Trustees Arthur A. Coia, Terrence R. Duvernay, Frank Hanley, Frank Hurt, Walter Kardy, George Latimer, H.D. LaVere, A.L. Monroe, Tony Stanley, John J. Sweeney, Linda Chavez-Thompson, Richard L. Trumka and Patricia F. Wiegert were not up for election in 1997. Their terms continued after the date of the Annual Meeting. - - Arthur Andersen LLP was ratified as the Trust's Public Accountant by a vote of 999,165.4771 for, 150.1577 against, 3,922.1537 abstentions, and 318,752.2297 votes not cast. - - Amendments to the Trust's Charter were ratified to authorize investment in (A) construction or permanent loans issued or guaranteed by state housing finance agencies rated "A" or better by Standard & Poor's Inc., securities backed by such loans and interests in such loans or securities and (B) secured bridge loans by a vote of 997,183.2011 for, 10.0000 against, 6,044.5874 abstentions, and 318,752.2297 votes not cast. - - Wellington Management Company LLP was ratified as the Trust's Investment Advisor for short-term assets by a vote of 974,814.9057 for, 20,483.2273 against, 7,939.6555 abstentions, and 318,752.2297 votes not cast. AFL-CIO HOUSING INVESTMENT TRUST SEMI-ANNUAL FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDING JUNE 30, 1997 Statement of Assets and Liabilities June 30, 1997 (Unaudited) - ----------------------------------------------------------------------------- ASSETS Investments, at value (amortized cost $1,437,733,195) $1,467,565,047 Cash 381,981 Accrued interest receivable 10,354,382 Accounts receivable 350,284 Prepaid expenses and other assets 886,084 - ---------------------------------------------------------------------------- Total Assets 1,479,537,778 - ---------------------------------------------------------------------------- LIABILITIES Accounts payable and accrued expenses 530,570 Redemptions payable 250,000 Refundable deposits 332,349 Income distribution payable, net of dividends reinvested of $7,711,780 1,049,257 - ---------------------------------------------------------------------------- Total Liabilities 2,162,176 - ---------------------------------------------------------------------------- Net assets applicable to participants' equity - certificates of participation; authorized unlimited; outstanding 1,368,793 units (note 5) $1,477,375,602 - ----------------------------------------------------------------------------- Net asset value per unit of participation $1,079.33 - ----------------------------------------------------------------------------- See accompanying notes to financial statements.
Schedule of Portfolio Investments June 30, 1997 (Unaudited) - ------------------------------------------------------------------------------ FHA MORTGAGES (35.8%) Face Amortized Interest Rate Maturity Date Amount Cost Value - ----------------------------------------------------------------------------- Single-family 7.75% Jul-2021 - Aug-2021 $2,128,082 2,128,082 2,126,035 8.00% Jul-2021 2,091,894 2,101,031 2,120,338 10.31% Feb-2016 78,493 78,493 85,223 11.31% Mar-2016 89,745 89,745 99,454 -------------------------------------- 4,388,214 4,397,351 4,431,049 -------------------------------------- Multifamily 6.50% Aug-2004 19,038,196 19,038,196 18,391,033 7.25% Dec-2028 - Feb-2029 33,911,585 34,467,251 33,046,602 7.43% May-2023 18,063,175 18,448,021 17,756,050 7.50% Nov-2022 7,660,925 7,858,072 7,588,265 7.55% Aug-2012 972,919 721,139 962,899 7.63% Apr-2031 33,186,824 33,194,542 33,199,136 7.75% Apr-2029 23,346,526 23,353,410 23,840,218 7.88% Mar-2034 12,410,687 12,607,635 12,594,250 7.93% Jul-2035 19,713,067 19,722,201 20,242,142 7.95% Apr-2029 1,740,500 1,740,500 1,762,551 8.00% Sep-2031 - Sep-2034 15,707,040 15,663,319 16,082,108 8.13% Aug-2029 13,106,440 13,047,398 13,473,283 8.18% Feb-2036 - Nov-2036 41,236,204 40,689,785 42,617,124 8.25% Feb-2026 - Sep-2035 36,644,254 36,672,057 37,600,079 8.30% Nov-2027 - Aug-2033 8,579,479 8,525,394 8,917,238 8.38% Jan-2027 - Nov-2034 39,380,213 39,401,455 40,824,474 8.40% Apr-2012 - Jan-2028 14,801,904 14,443,364 15,179,306 8.50% Apr-2012 - Feb-2035 13,262,239 13,108,792 13,937,684 8.60% Jan-2028 2,064,460 2,067,649 2,177,034 8.63% Dec-2029 4,270,112 4,273,634 4,525,626 8.64% Sep-2028 4,308,595 4,308,595 4,394,767 8.65% Jul-2022 1,436,658 1,437,466 1,504,731 8.70% Jan-2027 - Feb-2033 13,324,149 13,546,735 13,701,257 8.75% May-2036 - Sep-2036 12,340,233 12,222,890 13,011,189 8.80% Oct-2032 5,670,097 5,673,309 5,953,602 8.88% Sep-2029 - Jun-2036 32,320,008 32,233,968 34,322,762 9.00% Mar-2029 - Nov-2035 22,748,330 22,569,450 24,112,430 9.13% Apr-2031 - May-2035 16,474,731 16,479,500 17,340,433 9.25% Jun-2098 - Jun-2034 9,829,910 9,830,761 10,225,053 9.31% Dec-2032 182,950 179,770 192,097 9.38% Jun-2032 - Jun-2034 6,829,899 6,912,018 7,212,995 9.50% Jul-2027 381,731 391,900 408,453 9.73% Jan-2035 6,442,390 6,444,081 6,571,237 9.75% Apr-2017 - Jan-2033 6,730,873 6,706,621 7,164,481 10.00% May-2002 - Mar-2031 5,900,589 5,900,589 6,018,041 10.15% Mar-2034 1,970,648 1,970,648 2,108,594 10.45% Jan-2030 1,223,971 1,225,292 1,248,450 11.39% Sep-2028 375,439 370,919 375,439 -------------------------------------- 507,587,951 507,448,327 520,583,113 ------------------------------------- TOTAL FHA MORTGAGES 511,976,165 511,845,679 525,014,162 -------------------------------------
Schedule of Portfolio Investments June 30, 1997 (Unaudited) - ----------------------------------------------------------------------------- FHA CONSTRUCTION LOANS (18.2%) Interest Rates Commitment Face Amortized Perm Const Maturity Date* Amount Amount Cost Value - ------------------------------------------------------------------------------------------------- Multifamily 6.75% 6.75% Mar-2021 $1,141,200 0 0 43,396 6.75% 6.75% Mar-2038 3,123,100 0 0 118,587 7.50% 7.50% May-2037 10,145,100 7,805,626 7,805,626 7,552,730 7.55% 7.55% Nov-2037 9,225,000 5,890,900 5,903,374 5,698,890 7.63% 7.63% Dec-2027 33,989,100 20,887,960 20,767,808 20,380,917 7.63% 7.63% Jun-2037 12,105,000 9,183,766 9,188,963 9,037,663 7.70% 7.95% Apr-2038 85,621,900 74,206,422 72,330,473 73,330,367 7.75% 7.75% Oct-2037 3,050,000 3,050,000 3,045,992 3,028,795 7.75% 7.75% Jan-2038 7,218,200 3,374,365 3,374,365 3,377,787 7.80% 7.80% Feb-2038 21,801,000 2,418,743 2,418,743 2,121,482 7.85% 7.85% Sep-2037 2,621,100 1,957,834 1,957,834 1,958,900 7.88% 7.88% Mar-2037 4,275,000 3,885,487 3,889,286 3,909,149 7.88% 7.88% Nov-2038 5,281,900 0 0 35,575 7.90% 8.13% Feb-2038 41,836,000 22,294,202 22,095,556 22,484,345 7.91% 7.91% Aug-2029 27,431,600 3,702,146 3,702,146 3,598,127 7.97% 7.97% Jul-2038 4,134,400 472,189 461,723 554,877 8.00% 8.00% Jul-2038 7,600,000 7,359,848 7,213,360 7,437,799 8.13% 8.13% Apr-2028 5,007,205 5,007,205 5,007,205 5,199,763 8.13% 8.13% Aug-2037 15,013,200 12,672,929 12,681,166 12,913,843 8.13% 8.50% Aug-2038 3,992,400 1,057,652 1,057,652 1,228,106 8.25% 8.25% Nov-2036 3,645,000 3,276,031 3,279,068 3,438,196 8.25% 8.50% Feb-2037 5,265,000 4,745,981 4,750,702 4,988,925 8.30% 8.30% Jun-2036 2,702,300 2,600,137 2,600,356 2,675,802 8.31% 8.31% Mar-2038 22,998,400 11,729,907 11,394,363 12,189,875 8.75% 8.80% Mar-2037 29,095,200 26,475,708 26,481,726 27,711,379 9.25% 9.25% May-2036 20,599,900 19,564,293 19,569,905 21,006,286 9.40% 9.40% Jan-2036 9,706,400 7,509,840 7,515,360 8,196,324 9.90% 10.00% Oct-2032 2,261,500 2,175,521 2,178,493 2,333,826 ----------------------------------------- Total FHA Construction Loans 263,304,692 260,671,245 266,551,710 ----------------------------------------- * Permanent mortgage maturity date.
Schedule of Portfolio Investments June 30, 1997 (Unaudited) - ----------------------------------------------------------------------------- GNMA SECURITIES (21.4%) Face Amortized Interest Rate Maturity Date Amount Cost Value - ------------------------------------------------------------------------------ Single-family 7.00% Apr-2026 $9,637,489 9,525,742 9,468,833 7.50% Nov-2025 - Dec-2025 8,801,550 8,986,094 8,815,303 8.00% Mar-2017 - May-2027 88,987,207 90,727,425 90,954,591 8.50% Jul-2021 - Aug-2025 69,791,710 72,344,286 73,023,340 9.00% May-2016 - Jun-2025 23,985,626 25,044,557 25,451,859 9.50% Aug-2016 - Sep-2021 6,844,359 7,109,568 7,412,277 10.00% Jun-2019 43,743 43,743 47,338 11.00% Jul-2015 - Sep-2016 239,789 239,789 271,640 11.25% Oct-2015 89,544 89,544 102,932 12.00% Apr-2015 - Jun-2015 67,407 67,407 79,512 12.25% Apr-2015 10,189 10,189 11,997 13.00% Jul-2014 5,494 5,494 6,646 13.25% Dec-2014 8,138 8,138 9,916 13.50% Aug-2014 5,072 5,072 6,237 --------------------------------------- 208,517,319 214,207,049 215,662,418 --------------------------------------- Multifamily 6.75% Nov-2028 13,157,430 13,195,654 12,756,224 6.875% Jan-2029 22,447,196 22,524,660 21,704,073 7.625% Jul-2039 0 0 300,000 8.25% May-2032 4,630,723 4,705,575 4,723,338 8.50% Jan-2027-Jul-2029 13,395,762 13,509,080 13,932,904 8.75% Dec-2026 4,409,814 4,409,814 4,548,723 9.00% Jun-2030-May-2031 12,728,497 12,140,368 13,619,491 9.50% Nov-2027 4,612,671 4,612,671 4,843,305 9.75% Oct-2032 9,700,242 9,702,091 10,379,259 9.80% Mar-2028 4,218,221 4,218,221 4,336,858 10.05% May-2026 1,263,724 1,263,724 1,296,896 12.55% Jun-2025 6,133,106 6,040,361 6,305,599 ------------------------------------- 96,697,386 96,322,219 98,746,670 ------------------------------------- Total GNMA Securities 305,214,704 310,529,268 314,409,089 -------------------------------------- /TABLE
Schedule of Portfolio Investments June 30, 1997 (Unaudited) - ------------------------------------------------------------------------------ GNMA CONSTRUCTION LOANS (2.5%) Interest Rates Maturity Commitment Face Amortized Perm Const Date *Amount Amount Cost Value - ------------------------------------------------------------------------------ Multifamily 6.75% 6.75% Jan-2034 $3,733,300 3,091,384 2,590,646 2,899,419 7.50% 7.50% May-2038 5,440,000 5,039,660 5,042,280 5,007,000 7.63% 7.63% Oct-2037 7,615,000 4,845,711 4,774,525 4,711,815 7.63% 7.80% May-2039 15,284,700 0 0 59,556 7.70% 7.85% Apr-2037 9,041,900 7,974,638 8,014,902 7,883,084 7.80% 8.00% Jan-2039 54,238,100 6,844,719 6,848,944 7,082,716 8.04% 7.88% May-2039 20,958,350 0 0 317,575 8.25% 8.25% Sep-2036 3,272,600 2,941,137 2,941,137 3,066,796 8.25% 8.25% Sep-2037 9,934,800 5,442,455 5,446,178 5,831,557 ------------------------------------ TOTAL GNMA CONSTRUCTION LOANS 36,179,704 35,658,611 36,859,519 ------------------------------------- * Permanent mortgage maturity date. /TABLE
Schedule of Portfolio Investments June 30, 1997 (Unaudited) - ---------------------------------------------------------------------------- FNMA SECURITIES (12.5%) Interest Maturity Commitment Face Amortized Rate Date* Amount Amount Cost Value - ---------------------------------------------------------------------------- Single-family 7.00% Jan-2004-Sep-2026 $5,927,043 5,973,696 5,814,059 7.50% Jul-2024-Jun-2027 23,486,621 23,862,771 23,567,356 8.00% Jun-2025-Jun-2027 39,705,383 39,886,681 40,623,570 8.25% Oct-2021 249,996 247,436 257,652 8.50% Aug-2021-Oct-2026 21,172,616 21,590,021 21,979,822 9.00% Jan-2024-May-2025 1,703,116 1,780,314 1,795,191 ----------------------------------- 92,244,775 93,340,921 94,037,649 ----------------------------------- Multifamily 7.63% Apr-2012 $1,488,900 0 0 12,644 7.75% Apr-2012 1,110,800 0 0 33,351 7.88% Feb-2013-Apr-2027 4,222,900 0 0 49,770 8.00% Nov-2019-May-2020 7,268,860 7,221,265 7,595,958 8.13% May-2020 8,421,916 8,358,484 8,762,516 8.25% Jun-2008 1,183,000 1,162,878 1,230,320 8.25% Mar-2014 3,634,000 0 0 181,573 8.50% Jan-2007 504,881 500,000 515,244 8.50% May-2012 2,332,389 0 0 81,611 8.63% Sep-2006 753,380 744,472 790,905 8.75% Sep-2025 10,939,000 10,939,000 11,420,316 8.88% Sep-2025 8,460,481 8,467,894 8,946,959 9.00% Jan-2022 1,134,238 1,123,256 1,157,009 9.13% Jul-2012-Sep-2015 13,024,669 12,987,042 13,933,089 9.13% May-2022 551,375 0 0 19,347 9.25% Jun-2018-Sep-2026 6,986,370 6,938,414 7,634,530 9.75% Feb-2023 1,988,193 1,964,078 2,185,473 ---------------------------------- 60,664,987 60,406,782 64,550,615 ---------------------------------- Other 6.18% May-99 5,000,000 4,990,100 5,000,750 6.24% May-99 10,000,000 9,986,353 10,011,600 6.27% May-99 10,000,000 9,991,900 10,017,200 ---------------------------------- 25,000,000 24,968,353 25,029,550 ---------------------------------- TOTAL FNMA SECURITIES 177,909,762 178,716,056 183,617,814 ----------------------------------- /TABLE
Schedule of Portfolio Investments June 30, 1997 (Unaudited) - ----------------------------------------------------------------------------- FHLMC SECURITIES (3.4%) Face Amortized Interest Rate Maturity Date Amount Cost Value - ----------------------------------------------------------------------------- Single-family 7.00% May-2004-Feb-2027 $3,517,507 3,532,139 3,480,596 7.50% Nov-2003-May-2027 10,057,546 10,159,853 10,157,299 8.00% Jun-2024-May-2027 14,438,675 14,631,563 14,762,805 8.25% Dec-2022 661,892 657,740 683,094 8.50% Jul-2024-Jun-2025 9,739,392 9,814,604 10,125,924 9.00% Mar-2025 2,196,283 2,230,984 2,321,883 ------------------------------------ 40,611,295 41,026,884 41,531,601 ------------------------------------ Multifamily 8.00% Feb-2009 8,517,771 8,530,604 8,688,127 ------------------------------------ TOTAL FHLMC SECURITIES 49,129,066 49,557,488 50,219,728 ------------------------------------ - --------------------------------------------------------------------------- Local Initiatives (0.8%) Interest Commitment Face Amortized Rate Maturity Date Amount Amount Cost Value - --------------------------------------------------------------------------- Multifamily 8.00% Dec-2023-May-2025 5,938,013 5,917,210 5,896,134 8.38% Feb-2007 995,894 1,021,400 1,015,812 8.50% Jan-2005 $1,016,160 0 0 35,735 8.63% Jan-2008-Sep-2012 1,254,849 0 0 5,457 8.63% Jun-2025 1,446,920 1,446,920 1,450,726 9.13% May-2017 706,294 712,023 733,058 9.50% Aug-2012-Apr-2024 2,212,261 2,224,065 2,322,874 --------------------------------- TOTAL LOCAL INITIATIVES 11,299,382 11,321,619 11,459,796 ----------------------------------
Schedule of Portfolio Investments June 30, 1997 (Unaudited) - ------------------------------------------------------------------------------ SHORT-TERM INVESTMENTS (5.4%) Maturity Face Amortized Description Date Rate Amount Cost Value - ------------------------------------------------------------------------------ Repurchase Agreement NationsBank 01-Jul-97 5.70% 6,000,000 6,000,000 6,000,000 -------------------------------------- 6,000,000 6,000,000 6,000,000 Commercial Paper Corporate Receivable 01-Jul-97 6.30% 5,000,000 5,000,000 5,000,000 PREFCO 02-Jul-97 5.57% 5,000,000 4,999,226 4,999,226 Riverwoods Funding 07-Jul-97 5.55% 5,000,000 4,995,375 4,995,375 Merrill Lynch & Co. 08-Jul-97 5.53% 5,250,000 5,244,355 5,244,355 Prudential Funding Corp. 10-Jul-97 5.56% 5,000,000 4,993,050 4,993,050 General Electric Capital Corp. 10-Jul-97 5.55% 5,300,000 5,292,646 5,292,646 Goldman Sachs Group LP 11-Jul-97 5.55% 5,000,000 4,992,292 4,992,292 Centric Funding Corp. 16-Jul-97 5.59% 5,000,000 4,988,354 4,988,354 Fleet Funding Corp. 21-Jul-97 5.57% 5,000,000 4,984,528 4,984,528 Bear Stearns Cos, Inc. 21-Jul-97 5.58% 5,000,000 4,984,500 4,984,500 Morgan Stanley Group 21-Jul-97 5.58% 5,000,000 4,984,500 4,984,500 Falcon Asset Securities 25-Jul-97 5.55% 5,035,000 5,016,371 5,016,371 Ranger Funding 30-Jul-97 5.65% 5,000,000 4,977,243 4,977,243 National Rural Utilities 14-Aug-97 5.55% 3,045,000 3,024,345 3,024,345 Associates Corp., NA 26-Aug-97 5.60% 5,000,000 4,956,444 4,956,444 ------------------------------------------ 73,630,000 73,433,229 73,433,229 ------------------------------------------ Total Short-Term Investments 79,630,000 79,433,229 79,433,229 ------------------------------------------ Total Investments $1,434,446,704 1,437,733,195 1,467,565,047 ------------------------------------------ /TABLE
Statement of Operations June 30, 1997 (Unaudited) - ------------------------------------------------------------------------------ Investment Income Interest: FHA mortgages $20,206,306 FHA construction loans 9,860,580 GNMA securities 13,226,603 GNMA construction loans 991,310 FNMA securities 6,271,306 FHLMC securities 1,875,620 Local Initiatives 572,775 Short-term Investments 2,526,963 Premium amortization and other income (765,057) - ----------------------------------------------------------------------------- Total Income 54,766,406 - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- Expenses Salaries and fringe benefits 1,925,840 Administrative and general expenses 609,609 Legal fees 92,712 Program development 124,480 Consultant fees 95,504 Auditing and tax accounting fees 38,000 Insurance 87,455 Marketing and sales promotion 265,716 Trustee expenses 23,175 - ---------------------------------------------------------------------------- Total Expenses 3,262,491 - ---------------------------------------------------------------------------- Investment Income - net 51,503,915 - ---------------------------------------------------------------------------- Realized and unrealized gain (loss) on investments: Net realized gain on sale of investments 379,546 Change in unrealized appreciation on investments (Note 4) 8,615,665 - ----------------------------------------------------------------------------- Net gain on investments 8,995,211 - ----------------------------------------------------------------------------- Net increase in net assets resulting from operations $60,499,126 - ----------------------------------------------------------------------------- See accompanying notes to financial statements. /TABLE
Statement of Changes in Net Assets June 30, 1997 (Unaudited) - ------------------------------------------------------------------------------ INCREASE IN NET ASSETS FROM OPERATIONS Investment income - net $51,503,915 Net realized and unrealized gain on investments 8,995,211 - ---------------------------------------------------------------------------- Net increase in net assets resulting from operations 60,499,126 - ---------------------------------------------------------------------------- Distribution paid to participants or reinvested from: Investment Income - net (51,503,915) - ---------------------------------------------------------------------------- INCREASE IN NET ASSETS FROM SHARE TRANSACTIONS Proceeds from the sale of 45,965 units of participation 49,159,998 Dividend reinvestment of 41,850 units of participation 44,716,128 Payments for redemption of 8,105 units of participation (8,658,901) - ----------------------------------------------------------------------------- Net increase from share transactions 85,217,225 - ----------------------------------------------------------------------------- Total Increase 94,212,436 Net Assets at the beginning of period 1,383,163,166 - ---------------------------------------------------------------------------- Net Assets at end of period $1,477,375,602 - ---------------------------------------------------------------------------- See accompanying notes to financial statements. /TABLE
Supplemental Information - Selected Per Share Data and Ratios For the Six Months Ended June 30, 1997, and the Years Ended December 31, 1996, 1995, 1994 and 1993 (Unaudited) Six Months Ended December 31, June 30, 1997 1996 1995 1994 1993 - ----------------------------------------------------------------------------- PER SHARE DATA Investment Income $41.57 $84.10 86.50 87.13 91.83 Expenses (2.48) (4.99) (5.38) (5.47) (5.90) - ------------------------------------------------------------------------------ Investment Income - net 39.09 79.11 81.12 81.66 85.93 Distribution from investment income - net (39.09) (78.76) (80.77) (81.66) (83.64) Distribution from realized gain on investments 0.00 0.00 0.00 0.00 (2.29) - ------------------------------------------------------------------------------ Net asset value Beginning of period 1,072.98 1,098.53 991.40 1,102.58 1,086.40 Net realized and unrealized gains (losses) on investments. Net increase (decrease) in net asset value 6.35 (25.55) 107.13 (111.18) 16.18 - ------------------------------------------------------------------------------ End of period $1,079.33 $1,072.98 1,098.53 991.40 1,102.58 - ------------------------------------------------------------------------------ Ratios Ratio of expenses to average net assets 0.5%(1) 0.5% 0.5% 0.5% 0.5% Ratio of net investment income to net assets 7.3%(1) 7.3% 7.6% 7.8% 7.5% Portfolio turnover rate 12.8%(1) 20.3% 31.2% 27.5% 24.2% - ------------------------------------------------------------------------------ Number of outstanding units at end of period 1,368,793 1,289,082 1,062,234 943,378 767,101 - ------------------------------------------------------------------------------ (1) Percents are annualized. See accompanying notes to financial statements. /TABLE Notes to Financial Statements June 30, 1997 (Unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) Housing Investment Trust (the Trust) is a common law trust created under the laws of the District of Columbia and is registered under the Investment Company Act of 1940 as a no-load, open-end investment company. The Trust has obtained certain exemptions from the requirements of the Investment Company Act of 1940 which are described in the Trust's prospectus. Participation in the Trust is limited to labor organizations and eligible pension, welfare and retirement plans which have beneficiaries who are represented by labor organizations. The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATION Investments are presented at value. Value determinations are summarized by specific category of investment as follows: Long-term investments, consisting of permanent mortgages, mortgage-backed securities, construction loans and participation certificates, are valued using published prices or dealer bids, supported by the present value of the projected cash flows, discounted using market-based discount and prepayment rates, developed individually for each security. The market-based discount rate is composed of a risk-free yield (i.e., a U.S. Treasury Note with a weighted average life comparable to the security being valued) adjusted for an appropriate risk premium. The risk premium reflects actual premiums in the marketplace over the yield on U.S. Treasury securities of a comparable maturity to the security being valued. On loans for which the Trust finances the construction and permanent mortgage, value is determined by the total amount of the commitment for the term of the construction loan plus the permanent mortgage loan. For construction-only loans, the outstanding principal balance of the loan is used to approximate value, assuming no decline in credit quality. Short-term investments, consisting of repurchase agreements, commercial paper and money market accounts that mature less than sixty days from the balance sheet date are valued at amortized cost, which approximates value. Short-term investments that mature more than sixty days from the balance sheet date are valued at the last reported sales price on the last business day of the month or the mean between the reported bid and ask price if there was no sale. Short-term investments maturing more than sixty days from the balance sheet date for which there are no quoted market prices are valued to reflect current market yields for securities with comparable terms and interest rates. Additional information relative to investment terms and credit risks are described more fully in the Trust's prospectus. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ------------------------------------------ FEDERAL INCOME TAXES The Trust's policy is to comply with the requirements of the Internal Revenue Code that are applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. The total cost of the portfolio of investments for federal income tax purposes approximates the cost of all investments for financial statement purposes. DISTRIBUTIONS TO PARTICIPANTS At the end of each calendar month, pro rata distribution is made to participants of the net investment income earned during the preceding month. Amounts distributable but not disbursed as of the balance sheet date are classified as income distribution payable. The Trust offers an income reinvestment plan that allows current participants to automatically reinvest their income distribution into Trust units of participation. Total reinvestment approximated 87 percent of distributable income for the six months ended June 30, 1997. INVESTMENT INCOME Interest income is recognized on an accrual basis. Commitment fees, points and other discounts or premiums resulting from the funding or acquisition of mortgage loans or mortgage-backed securities are accounted for as an adjustment to the cost of the investment and amortized over the estimated life of the mortgage loan or mortgage-backed security. Realized gains and losses from investment transactions are recorded on the trade date using an identified cost basis. 2. TRANSACTIONS WITH AFFILIATES ---------------------------- During the six months ended June 30, 1997, certain members of the Trust's staff provided services to the AFL-CIO Building Investment Trust, a Maryland group trust. The total cost for these services and related expenses for the six months ended June 30, 1997, amounted to $702,834. The Trust was reimbursed for $472,730 of these costs, with the remaining amount of $230,104 included in the accompanying financial statements as accounts receivable. 3. COMMITMENTS ----------- The assets of the Trust are invested in short-term investments until they are required to fund commitments for construction loans, mortgage-backed securities or permanent mortgages. At June 30, 1997, the Trust had remaining unfunded commitments of approximately $265,000,000 to fund construction and permanent mortgages, and other investments. The Trust is required to maintain a segregated account of securities in an amount no less than the total unfunded commitments less short-term investments. 4. INVESTMENT TRANSACTIONS ----------------------- A summary of investment transactions for the separate instruments included in the Trust's investment portfolio, at amortized cost, for the six months ended June 30, 1997, follows:
FHA GNMA FHA Construction GNMA Construction FNMA FHLMC Local Mortgages Loans Securities Loans Securities Securities Initiatives ------------------------------------------------------------------------------------------ Balance, January 1, 1997 $467,114,866 $226,935,648 $350,327,284 $15,051,454 $151,306,696 $46,593,197 $12,285,761 Purchases and construction loan advances, net of discounts 1,740,500 106,722,216 15,092,733 20,599,185 36,213,684 6,625,446 0 Change in discount and premiums (264,198) 262,917 (159,692) (26,478) (120,287) 15,834 (9,294) Transfers 79,698,228 (64,966,403) (14,731,825) 0 0 0 0 Principal reductions (36,443,717) (8,283,133) (39,999,232) (18,506) (8,684,037) (3,676,989) (954,848) ------------- ----------- ------------- --------- ----------- ----------- --------- Balance, June 30, 1997 $511,845,679 260,671,245 310,529,268 35,658,611 178,716,056 49,557,488 11,321,619 ----------- ---------- ---------- --------- ---------- --------- --------- ----------- ---------- ---------- --------- ---------- --------- ---------
For the six months ended June 30, 1997, changes in gross unrealized appreciation and depreciation in value of investments were: Unrealized appreciation $30,621,035 Unrealized depreciation (22,005,370) ------------ Net unrealized appreciation change $ 8,615,665 ----------- ----------- As of June 30, 1997, the accumulated unrealized appreciation in the value of investments of securities was $29,831,853; accumulated undistributed net realized gain on investment transactions totaled $361,633. 5. PARTICIPANTS' EQUITY -------------------- Participants' equity consisted of the following at June 30, 1997: Amount invested and reinvested by current participants $1,446,637,790 Excess of redemption over issue price for units of participation (248,176) Accumulated unrealized appreciation in the value of investments 29,831,853 Accumulated undistributed net realized gain on investments 361,633 Accumulated undistributed investment income - net 792,502 -------------- $1,477,375,602 -------------- -------------- 6. RETIREMENT AND DEFERRED COMPENSATION PLANS ------------------------------------------ The Trust participates in the AFL-CIO Staff Retirement Plan, which is a multi-employer defined benefit pension plan, covering substantially all employees. This plan was funded by employer contributions, at rates approximating 16.9 percent of employees' salaries during the six months ended June 30, 1997. The total Trust pension expense for the six months ended June 30, 1997, was approximately $261,000. The Trust also participates in a deferred compensation plan, referred to as a 401(k) plan, covering substantially all employees. This plan permits an employee to defer the lesser of 15 percent of the employee's annual salary or the applicable IRS limit. The Trust matches dollar-for-dollar the first $1,250 of an employee contributions. The Trust's 401(k) contribution for the six months ended June 30, 1997, was approximately $44,000. [AFL-CIO HOUSING INVESTMENT TRUST LOGO} AFL-CIO HOUSING INVESTMENT TRUST 1717 K STREET, N.W. SUITE 707 WASHINGTON, DC 20006 (202) 331-8055 -----END PRIVACY-ENHANCED MESSAGE-----