By any measure, we believe that 2017 was a banner year for the AFL-CIO Housing Investment Trust (HIT). The HIT put 19 projects under agreement, committing $422 million of investor capital to finance 6,243 housing units across the country. This represented the second largest year of housing production for the HIT since 2004, and the $1.46 billion in total development investment was the second largest in HIT’s history. The total estimated economic impact of these 19 projects plus three additional projects financed by the HIT’s subsidiary, Building America, was nearly $2 billion.

Investors continued to invest significant capital in the HIT. For the 6^th time in the last decade, the HIT raised well over $400 million in new capital and reinvested dividends. These additions helped increase HIT’s net assets to $6.2 billion by year-end, which is nearly double its net assets at the end of 2002. It is also nearly 12 times greater than net assets when I began my tenure in 1992.

Over the past decade, the HIT and Building America have created an estimated 27,300 on-site union construction jobs. As the HIT grows, so too does its ability to create good paying union jobs and expand affordable housing. In 2017, 74% of the housing units financed by the HIT were affordable to low- and moderate-income families, bringing the total to more than 66,600 affordable units and nearly 94,000 total units financed in the last 25 years.

The HIT continued to provide competitive risk-adjusted returns in 2017, demonstrating its ability to perform and adapt across changing markets and investment environments. The HIT will continue to endeavor to invest capital responsibly and with maximum beneficial impact for America’s working men and women, and their communities.

Pensions & Investments recognized the HIT as a Best Place to Work in Money Management in 2017. Our senior management team is among the most talented and committed the HIT has ever had, and among the most diverse in the financial management sector.

Taken together – the returns, the affordable housing financed, the jobs created on-site and in the community – the HIT epitomizes what responsible investing means. We are grateful for your continued support and thank you for your investment in our fund.

 

Steve Coyle

Chief Executive Officer

ANNUAL REPORT 2017     1

  MESSAGE FROM THE AFL-CIO President “The HIT continues to affirm the commitment it made decades ago to create family-supporting union jobs, finance quality affordable housing, and generate competitive returns for its investors.”

The HIT proved itself once again to be a champion of the labor movement’s values in 2017. Thousands of families will live in the more than 6,200 quality housing units financed by the HIT during the year. Members of the building and construction trades from coast to coast will receive paychecks with benefits from the 3,600 on-site construction jobs created on the projects financed by the HIT. Children will grow up in safe communities revitalized by HIT investments, and seniors, included union retirees, will have an affordable home in which to spend their golden years.

The HIT continues to affirm the commitment it made decades ago to create family-supporting union jobs, finance quality affordable housing, and generate competitive returns for its investors. This virtuous cycle helps keep our members employed and contributes to the health of our pension funds. I am particularly proud of the HIT’s recent commitment to the Midwest, at a time when this region of our country needs investment more than ever. The HIT’s investments created good paying union construction jobs across 10 Midwestern communities in 2017 alone, bringing much needed affordable housing and economic stimulus to the region. In less than two years, the MidWest@Work Initiative is a third of the way towards its goal—with 18 projects financed—demonstrating that when the HIT lays out a plan, it can deliver.

The HIT has a strong track record of putting money where labor’s values are – good union jobs, quality affordable housing, and responsible stewardship of retirement capital. An investment in the HIT is an investment in our values. Thank you for your support.

 

Richard L. Trumka

President, AFL-CIO

Trustee, AFL-CIO Housing Investment Trust

2     AFL - CIO HOUSING INVESTMENT TRUST

DISCUSSION OF FUND PERFORMANCE (unaudited)

PERFORMANCE & CONSISTENT STRATEGY

For 2017, the HIT returned 3.58% on a gross basis and 3.17% on a net basis versus 3.54% for its benchmark, the Bloomberg Barclays US Aggregate Bond Index (Barclays Aggregate or Benchmark). While lagging the Benchmark on a net basis for 2017, the HIT has outperformed on a gross basis for 24 of the past 25 calendar years, and on a net basis for 15 of those years. In 2017 the HIT also surpassed $6 billion in net assets. We believe HIT’s track record of competitive risk-adjusted returns stems from its consistent and patient execution of a strategy focused on high credit quality multifamily mortgage-backed securities (MBS). This strategy should continue to provide value to fixed-income investors over the long term.

HIT’s investment strategy is to construct and manage a portfolio with greater yield and higher credit quality than the Benchmark. It invests in government/agency quality multifamily MBS with prepayment protection, in lieu of corporate debt and most Treasury securities in the Benchmark. Multifamily MBS generally provide higher yields than securities of similar credit quality and interest rate risk. The HIT is therefore designed to produce competitive risk-adjusted returns versus

the Benchmark. Further, with superior credit quality and no corporate debt, the HIT can offer diversification.

HIT’s overweight in multifamily securities (68% at year-end) helped generate competitive returns despite a challenging environment where riskier fixed-income securities significantly outperformed Treasuries. Multifamily MBS spread tightening and HIT’s income advantage helped offset strong performance of corporate bonds and lower credit quality securities, which the HIT did not hold. HIT’s slightly short duration position also contributed positively as interest rates rose on the short to intermediate parts of the yield curve.

The HIT maintained its overweight to the highest credit quality assets despite many investors chasing yield. At year-end, 96.2% of the HIT's portfolio was Government/Agency/ AAA-rated compared to 71.2% in the AAA component of the Barclays Aggregate. A comparison of HIT's performance to the AAA component of the Benchmark shows the value of its consistent strategy, specifically its overweight to mutlifamily MBS. The AAA component of the Benchmark has comparable credit risk and interest rate risk to the HIT. However, for 2017 the HIT outperformed this component by 1.17% (gross) and 0.76% (net), as well as over longer periods, as set forth on page 6.

 

Past performance is no guarantee of future results. Economic and market conditions change, and both will cause investment return, principal value, and yield to fluctuate so that a participant’s units, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at www.aflcio-hit. com. Gross performance figures do not reflect the deduction of HIT expenses. Net performance figures reflect the deduction of HIT expenses and are the performance figures investors experience in the HIT. Information about HIT expenses can be found on page 1 of the HIT’s current prospectus. The Barclays Aggregate is an unmanaged index and is not available for direct investment, although certain funds attempt to replicate this index. Returns for the index would be lower if they reflected the actual trading costs or expenses associated with management of an actual portfolio.

ANNUAL REPORT 2017     3

DISCUSSION OF FUND PERFORMANCE (unaudited)

2017 MARKET ENVIRONMENT

Against a backdrop of steady global expansion, low volatility, and moderate inflation, U.S. GDP grew at an annual rate of 3.2% and 2.6% in the third and fourth quarters of 2017, respectively, with an average rate of 2.3% for the year. Job growth remained healthy and the unemployment rate fell to 4.1% in the fourth quarter the lowest rate since July 2000. Equities performed very well on fairly strong economic indicators, generally good corporate earnings, and the anticipation of the US. tax cuts, which were passed on December 22, 2017. Equity valuations continued to climb during 2017 (Dow Jones, S&P 500, and NASDAQ indices rose 25.1%, 19.4%, and 28.2%, respectively) and corporate credit spreads pushed tighter. With the economy close to full employment and the anticipated fiscal stimulus, the Federal Reserve continued on a path of gradually normalizing monetary policy and unwinding its balance sheet.

INTEREST RATES

Treasury rates rose for short and intermediate maturities as the markets priced in more Federal Reserve tightening. Ongoing low inflation expectations kept longer term rates steady as the

Treasury yield curve flattened significantly, with shorter-term rates rising and longer-term rates generally remaining within a range or slightly lower. The Federal Reserve hiked the fed funds rate three times – by 25 basis points in each of the meetings in March, June, and December – and continued to normalize monetary policy by starting to shrink its $4.5 trillion balance sheet in October. From year-end 2016 to year-end 2017, 2-, 3-, and 5-year Treasury yields rose by 70, 52, and 28 basis points, respectively, while 10- and 30-year yields fell by 4 and 33 basis points, respectively.

SPREADS

As investors chased higher yields, spreads to Treasuries for spread-based assets continued to contract. Corporate bond spreads had continued to tighten since February 2016 and ended 2017 near pre-financial crisis levels, as shown below.

Spreads on the high credit quality multifamily MBS that are HIT’s focus tightened, albeit not to the same extent. For FHA/ Ginnie Mae permanent and construction/permanent MBS, and Fannie Mae DUS 10/9.5 securities in HIT’s portfolio, spreads tightened by approximately 13, 33, and 19 basis points, respectively.

 

4     AFL - CIO HOUSING INVESTMENT TRUST

DIRECTLY SOURCED MULTIFAMILY INVESTMENTS

2017 was a successful year for HIT’s direct sourcing and capturing of multifamily investments. With nearly $422 million committed to 19 transactions, it was HIT’s largest volume since 2010. During the year, FHA financing was attractive to some developers and sponsors in some of HIT’s key markets. The availability of FHA investments was positive for the HIT, because FHA product can provide relative value for the portfolio and has represented nearly 60% of the total HIT multifamily volume in the past five years.

Construction-related securities help the HIT generate competitive risk-adjusted returns as the investments are funded over an 18-24 month construction period. Further, as the Ginnie Mae/FHA construction mortgage securities in HIT’s portfolio approach conversion to permanent securities, the spreads to Treasuries compress and values increase. In addition to these financial benefits, HIT-financed projects create union construction work, affordable and workforce

housing, and additional community benefits as the impacts of the construction ripple through local economies.

“The Lynn project is an example of how to invest pension money, get competitive returns, put our members to work, and recapture market share outside of our core areas.”

–Lou Antonellis, Business Manager, IBEW Local 103 at Gateway North worker appreciation lunch, Lynn, MA

HIT’s newest initiative, the MidWest@Work Investment Strategy, commenced in 2016 to spur economic development in the industrial Midwest as it invests in securities that are attractive to its portfolio. Since it was launched, the HIT has invested $357.8 million and Building America CDE, Inc. has provided $17.5 million in New Markets Tax Credits. Together these investments represents over one-third of the $1.1 billion MidWest@Work investment goal. To date, the HIT has financed 2,690 housing units, with 72% affordable housing.

  “I proudly support HIT’s success in investing workers’ pension capital to create well-paying union construction jobs, and positively impact working families and entire communities across the country.”   –Sean McGarvey, President, North America’s Building Trades Unions; Trustee, AFL-CIO Housing Investment Trust

2017 PROJECT IMPACTS*
22 projects (19 HIT and 3 Building America)	$421.7M HIT capital invested; $24.5M New Markets Tax Credits from Building America
$1.9B total economic benefit	$1.7B total development investment
4,530 union construction jobs; 9.1M hours of union construction work	$702M personal income generated
10,500 total jobs across industries	$307M union wages & benefits
6,243 housing units, with 74% affordable	$205M local, state & federal tax revenue

*Economic impacts such as jobs, personal income, and tax revenue estimates are derived from an IMPLAN model. See inside back cover for additional detail.

ANNUAL REPORT 2017     5

DISCUSSION OF FUND PERFORMANCE (unaudited)

With $6 billion in assets and growing, we believe that the HIT has achieved a critical mass in order to affect America’s communities, while also generating portfolio assets that allow it to execute its investment strategy.

LOOKING AHEAD

Because we believe that HIT’s concentration in government/agency quality multifamily MBS can provide very low credit risk, stable income, and higher yield than similar credit quality securities, we believe that the HIT can be considered as an option for investors who seek to diversify their portfolios. In the current unpredictable environment, we continue to see value in multifamily MBS and believe HIT’s portfolio will remain attractive on a relative basis.

As the $422 million of multifamily commitments made in 2017 continue to fund during their respective construction periods, the HIT should realize additional yield for its portfolio during 2018. The HIT continues to build a pipeline of additional multifamily investments for 2018 and beyond in an effort to

seek to add additional higher-yielding assets to the portfolio. With $6 billion in assets and growing, we believe that the HIT has achieved a critical mass in order to affect America’s communities, while also generating portfolio assets that allow it to execute its investment strategy.

Taking into account elevated geopolitical uncertainty as well as monetary policy normalization and historically low interest rates, the HIT plans to continue executing its long-standing strategy and managing its duration to be slightly shorter than the Barclays Aggregate. This duration position should help contribute to HIT’s performance relative to the Barclays Aggregate if interest rates rise, while keeping the duration long enough to aid in its efforts to seek to generate competitive absolute returns if interest rates fall. However, if HIT’s market expectations change, it may alter its duration strategy.

6     AFL - CIO HOUSING INVESTMENT TRUST

HIT NET ASSETS EXCEED $6 BILLION

1991 through 2017 in $ Billions

 

RISK COMPARISON

As of December 31, 2017

	HIT	Barclays
Credit Profile
U.S. Government/Agency/AAA/Cash	96.2%	71.2%
A & Below	0.1%	25.0%
Yield
Current Yield	3.20%	2.97%
Yield to worst	2.87%	2.66%
Interest Rate Risk
Effective Duration	5.45	5.80
Convexity	0.07	0.10
Call Risk
Call Protected	75%	72%
Not Call Protected	25%	28%

Source: Haver Analytics, Bloomberg L.P. and the HIT

The calculations of the HIT yield herein represent widely accepted portfolio characteristics information based on coupon rate, current price and, for yield to worst, certain prepayment assumptions, and are not current yield or other performance data as defined by the SEC in Rule 482.

ANNUAL REPORT 2017     7

2017 MULTIFAMILY INVESTMENT HIGHLIGHTS (unaudited)

	FOUNTAINS OF ELLISVILLE, Ellisville, MO • $17.5 million HIT purchase of Ginnie Mae MBS • $18 million expansion of 160-unit senior apartment community built in 2004 • Estimated 175,000 hours of union construction work “[The HIT can provide] solid returns for our pensioners while providing 100% union projects and work hours for active members who pay into the pension.” –Brandon Flinn, Business Manager/Secretary-Treasurer, LIUNA Local 42
PENN SOUTH COOPERATIVE, Manhattan, NY • $55 million HIT purchase of Ginnie Mae MBS • $191 million total development investment to maintain affordability and make capital improvements to 2,820-unit historic cooperative • Creating an estimated 474,000 hours of union construction work “We are very proud to be involved in this project that has a strong connection to labor history here in New York and is home to so many working families and retirees.” –Gary LaBarbera, President, Greater New York Building and Construction Trades Council (B.C.T.C.)
	UNION FLATS, Saint Paul, MN • $31 million HIT purchase of Ginnie Mae MBS • $68 million new construction of 217 affordable units • Estimated 616,000 hours of union construction work “We are pleased to be working on another HIT project that shows that investing union pension dollars can create good paying construction jobs with healthcare and retirement benefits.” –Don Mullin, Executive Secretary, Saint Paul B.C.T.C.
WEST TOWN HOUSING PRESERVATION, Chicago, IL • $60 million HIT purchase of Illinois Housing Development Authority Bonds • $121 million rehabilitation of 318 affordable units across 68 buildings • Creating an estimated 1.1 million hours of union construction work “We appreciate HIT’s commitment to and support of union construction at numerous projects that have put our members to work in the Chicago area for nearly 30 years and recognize the benefits this commitment has provided to the workers and the community.” –Michael Macellaio, Secretary-Treasurer, Chicago and Cook County B.C.T.C.

8     AFL - CIO HOUSING INVESTMENT TRUST

OTHER IMPORTANT INFORMATION (unaudited)

EXPENSE EXAMPLE

Participants in the HIT incur ongoing expenses related to the management and distribution activities of the HIT, as well as certain other expenses. The expense example in the table below is intended to help participants understand the ongoing costs (in dollars) of investing in the HIT and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period, July 1, 2017, and held for the entire period ended December 31, 2017.

Actual Expenses: The first line of the table below provides information about actual account values and actual expenses. Participants may use the information in this line, together with the amount they invested, to estimate the expenses that they paid over the period. Simply divide the account value by $1,000 (for example, an $800,000 account value divided by $1,000 = 800), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Six-Month Period Ended December 31, 2017” to estimate the expenses paid on a particular account during this period.

Hypothetical Expenses (for Comparison Purposes Only): The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the HIT’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the HIT’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses a participant paid for the period. Participants may use this information to compare the ongoing costs of investing in the HIT and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other mutual funds.

Please note that this example is useful in comparing funds’ ongoing costs only. It does not include any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. The HIT does not have such transactional costs, but many other funds do.

AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULES

In addition to disclosure in the Annual and Semi-Annual Reports to Participants, the HIT also files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The HIT’s reports on Form N-Q are made available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information relating to the hours and operation of the SEC’s Public Reference Room may be obtained by calling 800-SEC-0330. Participants may also obtain copies of the HIT’s Form N-Q reports, without charge, upon request, by calling the HIT collect at 202-331-8055.

PROXY VOTING

Except for its shares in its wholly owned subsidiary, HIT Advisers, LLC, and shares in mutual funds holding short-term or overnight cash, if applicable, the HIT invests exclusively in non-voting securities and has not deemed it necessary to adopt policies and procedures for the voting of portfolio securities. The HIT has reported information regarding how it voted in matters related to its subsidiary in its most recent filing with the SEC on Form N-PX. This filing is available on the SEC’s website at http://www.sec.gov. Participants may also obtain a copy of the HIT’s report on Form N-PX, without charge, upon request, by calling the HIT collect at 202-331-8055.

			Expenses Paid During
	Beginning Account Value	Ending Account Value	Six-Month Period Ended
	July 1, 2017	December 31, 2017	December 31, 2017*
Actual expenses	$ 1,000	$  1,010.10	$ 1.98
Hypothetical expenses (5% annual return before expenses)	$ 1,000	$ 1,023.24	$ 1.99

*Expenses are equal to the HIT’s annualized expense ratio of 0.39%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

ANNUAL REPORT 2017     9

OTHER IMPORTANT INFORMATION   (unaudited)

2017 HIT PARTICIPANTS MEETING

The 2017 Annual Meeting of Participants was held in Washington, D.C., on Wednesday, January 24, 2018. The following matters were put to a vote of the Participants at the meeting through the solicitation of proxies:

Helen R. Kanovsky was elected to chair the Board of Trustees by: votes for 3,472,267.479; no votes against; votes abstaining 158,859.996; votes not cast 1,878,308.075.

Ernst & Young LLP was ratified as the HIT’s Independent Registered Public Accounting Firm by: votes for 3,472,267.479; no votes against; votes abstaining 158,566.665; votes not cast 1,878,308.075.

The Participants voted their intentions regarding any other matter properly coming before the 2017 HIT Participants Meeting as follows: votes for 2,463,857.624; votes against 734,587.496; votes abstaining 432,682.355. In an exercise of their best judgment, the individuals appointed by Participants to vote Proxies voted for the award of the honorary title of Chairman Emeritus to Richard Ravitch, retired Chairman of the Board of Trustees.

The following Trustees were not up for reelection and their terms of office continued after the meeting: Vincent Alvarez, James Boland, Sean McGarvey, Elizabeth Shuler, Marlyn J. Spear, and Tony Stanley.

THE TABLE BELOW DETAILS VOTES PERTAINING TO TRUSTEES WHO WERE ELECTED AND REELECTED AT THE ANNUAL MEETING:

Trustee	Votes For	Votes Against		Votes Abstaining*
Kenneth W. Cooper	3,473,902.269		0	157,225.206
David B. Durkee	3,473,902.269		0	157,225.206
Richard L. Trumka	3,473,902.269		0	157,225.206
Bridget Gainer	3,470,419.834		0	160,707.641
Deidre L. Schmidt	3,470,419.834		0	160,707.641
William C. Thompson, Jr.	3,470,419.834		0	160,707.641
Kenneth E. Rigmaiden	3,473,902.269		0	157,225.206
Jack Quinn, Jr.	3,470,419.834		0	160,707.641
* Votes not cast: 1,878,308.075

10     AFL - CIO HOUSING INVESTMENT TRUST

 

Report of Independent Registered Public Accounting Firm

The Board of Trustees and Participants of American Federation of Labor and Congress of Industrial Organizations Housing Investment Trust:

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of American Federation of Labor and Congress of Industrial Organizations Housing Investment Trust (the Trust), including the schedule of portfolio investments, as of December 31, 2017, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Trust as of December 31, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Trust’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2017, by correspondence with the custodian, brokers, and counterparties. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

We have served as the Trust’s auditor since 2002.

Tysons, Virginia

February 22, 2018

12     AFL - CIO HOUSING INVESTMENT TRUST

Statement of Assets and Liabilities

December 31, 2017 (dollars in thousands, except per share data)

Assets
	Investments, at value (cost $6,241,473)	$	6,275,408
	Cash		574
	Accrued interest receivable		18,510
	Receivables for investments sold		181
	Other assets		2,024
	Total assets		6,296,697
Liabilities
	Payables for investments purchased		55,227
	Redemptions payable		33,517
	Income distribution and capital gains payable, net of dividends reinvested of $15,699		1,955
	Refundable deposits		118
	Accrued salaries and fringe benefits		5,153
	Other liabilities and accrued expenses		1,502
	Total liabilities		97,472
	Other commitments and contingencies (Note 4 of financial statements)		—
Net assets applicable to participants’ equity —
	Certificates of participation—authorized unlimited;
	Outstanding 5,548,292 units	$	6,199,225
Net asset value per unit of participation (in dollars)		$	1,117.32
Participants’ equity
	Participants’ equity consisted of the following:
	Amount invested and reinvested by current participants	$	6,167,352
	Net unrealized appreciation of investments		33,935
	Distribution in excess of net investment income		(2,062	)
	Total participants’ equity	$	6,199,225

See accompanying Notes to Financial Statements.

ANNUAL REPORT 2017     13

SCHEDULE OF PORTFOLIO INVESTMENTS  December 31, 2017 (dollars in thousands)

FHA Permanent Securities (2.6% of net assets)

	Interest Rate			Maturity Date	Face Amount			Amortized Cost			Value
Single Family		7.75	%	Jul-2021		$	5		$	5		$	5
Multifamily		3.65	%	Dec-2037			9,222			9,426			9,069
		3.75	%	Aug-2048			3,965			3,961			3,927
		4.00	%	Dec-2053			64,025			64,000			64,464
		4.79	%	May-2053			4,759			5,006			4,849
		5.17	%	Feb-2050			7,939			8,550			8,508
		5.35	%	Mar-2047			7,214			7,223			7,242
		5.55	%	Aug-2042			7,763			7,766			7,792
		5.60	%	Jun-2038			2,370			2,374			2,381
		5.80	%	Jan-2053			2,024			2,034			2,302
		5.87	%	May-2044			1,745			1,744			1,787
		5.89	%	Apr-2038			4,456			4,461			4,478
		6.02	%	Jun-2035			4,087			4,088			4,108
		6.20	%	Apr-2052			11,433			11,428			13,287
		6.40	%	Aug-2046			3,746			3,748			4,038
		6.48	%	Nov-2041			6,104			6,325			6,137
		6.60	%	Jan-2050			3,328			3,356			3,795
		6.75	%	Jul-2040			3,911			3,898			3,918
		7.20	%	Oct-2039			2,774			2,779			2,794
		7.50	%	Sep-2032			1,271			1,268			1,280
		7.70	%	Dec-2048			5,277			6,054			6,198
							157,413			159,489			162,354
Total FHA Permanent Securities						$	157,418		$	159,494		$	162,359

Ginnie Mae Securities (24.9% of net assets)

	Interest Rate			Maturity Date	Face Amount			Amortized Cost			Value
Single Family		4.00	%	Feb-2040 - Jun-2040		$	3,821		$	3,864		$	4,038
		4.50	%	Aug-2040			2,498			2,551			2,685
		5.50	%	Jan-2033 - Jun-2037			2,524			2,513			2,803
		6.00	%	Jan-2032 - Aug-2037			1,691			1,690			1,930
		6.50	%	Jul-2028			55			55			63
		7.00	%	Apr-2026 - Jan-2030			976			979			1,125
		7.50	%	Aug-2025 - Aug-2030			508			514			590
		8.00	%	Sep-2026 - Nov-2030			395			401			466
		8.50	%	Jun-2022 - Aug-2027			309			309			345
		9.00	%	Mar-2020 - Jun-2025			40			40			43
		9.50	%	Sep-2021 - Sep-2030			32			32			37
							12,849			12,948			14,125
Multifamily		1.73	%	May-2042			2,485			2,490			2,459
		2.15	%	May-2056			8,906			8,889			8,722
		2.18	%	May-2039			3,684			3,713			3,670
		2.20	%	Jun-2056			9,400			9,379			9,199
		2.25	%	Dec-2048			11,177			11,082			10,944
		2.30	%	Mar-2056 - May-2056			50,719			50,562			49,806
		2.30	%	Oct-2056			30,714			30,365			29,914
		2.31	%	Nov-2051			7,076			7,077			6,698
		2.35	%	Dec-2040 - Nov-2056			18,934			19,033			18,571
		2.40	%	Aug-2047			11,715			11,740			11,514
		2.43	%	Nov-2038			20,000			20,087			19,908
		2.50	%	Jul-2045 - Mar-2057			39,320			39,353			38,400
		2.50	%	Sep-2058			39,952			39,217			38,964
		2.53	%	Jul-2038 - Feb-2040			29,817			30,216			29,626
		2.60	%	Apr-2048 - Apr-2056			52,898			53,203			52,395

continued

14     AFL - CIO HOUSING INVESTMENT TRUST

Ginnie Mae Securities (24.9% of net assets) continued

Interest Rate			Maturity Date		Face Amount			Amortized Cost			Value
	2.65	%	Jan-2053			$	51,015		$	51,450		$	49,676
	2.70	%	May-2048				26,230			26,666			26,031
	2.70	%	Jul-2056				13,881			14,045			13,706
	2.72	%	Feb-2044				544			560			543
	2.79	%	Apr-2049				18,958			19,169			18,710
	2.80	%	Feb-2053				60,000			56,839			55,868
	2.82	%	Apr-2050				1,500			1,534			1,481
	2.87	%	Feb-2036 - Dec-2043				25,000			25,304			24,874
	2.89	%	Mar-2046				32,000			32,225			31,693
	3.00	%	Mar-2051				20,000			20,107			19,742
	3.05	%	May-2044				45,500			45,806			45,568
	3.05	%	May-2054				11,544			11,605			11,339
	3.10	%	Jan-2044				23,000			23,336			23,124
	3.11	%	Jan-2049				17,025			17,704			16,903
	3.13	%	Nov-2040				658			675			657
	3.20	%	Jul-2041 - Sep-2051				15,000			14,890			15,109
	3.25	%	Sep-2054				35,000			34,681			35,037
	3.26	%	Nov-2043				20,000			20,035			20,079
	3.30	%	May-2055				10,000			9,491			9,943
	3.30	%	Jul-2057				25,809			26,594			26,858
	3.33	%	Jun-2043				15,000			15,513			15,082
	3.35	%	Nov-2042 - Mar-2044				25,000			24,474			25,186
	3.37	%	Dec-2046				19,200			19,468			19,296
	3.39	%	Jul-2046				7,760			8,018			7,800
	3.49	%	Mar-2042				28,000			29,099			28,367
	3.49	%	Feb-2044				4,000			4,210			4,045
	3.50	%	Feb-2051 - Mar-2057				54,469			55,229			56,400
	3.50	%	Apr-2057				25,355			26,122			26,559
	3.52	%	Sep-2041 - May-2042				16,958			17,569			17,136
	3.55	%	Apr-2051				4,467			4,629			4,505
	3.55	%	Apr-2057				42,989			44,179			45,204
	3.57	%	Nov-2044				20,251			20,860			20,512
	3.60	%	Jun-2057				14,239			14,810			15,196
	3.62	%	Sep-2052				6,500			6,755			6,577
	3.62	%	Dec-2057				29,724			30,317			31,733
	3.67	%	Nov-2035				16,521			17,245			16,894
	3.68	%	Jun-2057				27,610			28,451			29,648
	3.68	%	Aug-2057				14,703			15,059			15,834
	3.69	%	Dec-2045				8,583			8,199			8,712
	3.70	%	Sep-2051				7,375			7,691			7,447
	3.81	%	Apr-2046				10,000			10,028			10,140
	3.82	%	Sep-2046				4,924			5,293			4,940
	3.85	%	Jan-2056				32,613			32,930			35,210
	3.86	%	Jun-2045 - Oct-2047				21,453			21,727			21,944
	3.91	%	May-2049				6,153			6,613			6,179
	3.92	%	Aug-2039				47,118			50,493			48,417
	4.09	%	Feb-2056				57,053			57,891			61,501
	4.10	%	May-2051				4,053			4,438			4,399
	4.25	%	Sep-2038				35,943			36,147			37,021
	4.29	%	Mar-2053				47,973			48,275			53,545
	4.45	%	Jun-2055				2,591			2,486			2,831
	4.50	%	May-2038				19,048			20,742			19,744
	4.63	%	Sep-2037	1			1,500			1,463			1,555

continued

ANNUAL REPORT 2017     15

SCHEDULE OF PORTFOLIO INVESTMENTS  December 31, 2017 (dollars in thousands)

Ginnie Mae Securities (24.9% of net assets) continued

	Interest Rate	Maturity Date		Face Amount		Amortized Cost		Value
	4.70%	Oct-2056		$	3,368	$	3,545	$	3,813
	4.90%	Mar-2044	1		1,000		991		1,043
	5.25%	Apr-2037			19,230		19,224		20,386
	5.34%	Jul-2040			6,758		6,669		6,947
	5.55%	May-2049	1		9,910		9,910		9,921
					1,508,853		1,525,884		1,529,400
Total Ginnie Mae Securities				$	1,521,702	$	1,538,832	$	1,543,525

FHA Construction Securities (0.1% of net assets)

	Interest Rates2			Unfunded
	Permanent	Construction	Maturity Date	Commitments3	Face Amount	Amortized Cost	Value
Multifamily	4.10%	2.50%	Oct-2060	$16,500	$5,500	$5,500	$5,090
Total FHA Construction Securities				$16,500	$5,500	$5,500	$5,090

Fannie Mae Securities (42.8% of net assets)

	Interest Rate			Maturity Date	Face Amount		Amortized Cost		Value
Single Family		1.80% 4	1M LIBOR+25	Mar-2037	$	310	$	306	$	309
		1.85% 4	1M LIBOR+30	Jul-2043		12,758		12,673		12,751
		1.87% 4	1M LIBOR+32	Jun-2037		1,676		1,676		1,678
		1.90%4	1M LIBOR+35	Mar-2043 - Nov-2044		31,286		31,262		31,350
		1.90% 4	1M LIBOR+35	Nov-2047		30,718		30,756		30,688
		1.93% 4	1M LIBOR+38	Nov-2042		6,456		6,459		6,480
		1.95% 4	1M LIBOR+40	Apr-2037 - Oct-2044		17,219		17,250		17,296
		2.01% 4	1M LIBOR+46	Oct-2042		5,803		5,829		5,846
		2.05% 4	1M LIBOR+50	Dec-2040 - Feb-2043		35,184		35,083		35,466
		2.07% 4	1M LIBOR+52	Jun-2042		4,022		4,043		4,055
		2.10% 4	1M LIBOR+55	Mar-2042		9,168		9,185		9,263
		2.14% 4	1M LIBOR+59	Mar-2041		6,227		6,276		6,288
		2.15% 4	1M LIBOR+60	Mar-2042 - Oct-2043		14,555		14,608		14,751
		2.25% 4	1M LIBOR+70	Dec-2040		2,880		2,889		2,916
		2.44% 4	1Y LIBOR+170	Oct-2042		13,850		14,185		14,083
		2.88% 4	1Y UST+211	May-2033		371		372		387
		2.98% 4	6M LIBOR+161	Aug-2033		152		152		157
		3.00%		Apr-2031 - Jun-2046		62,532		64,698		62,900
		3.05% 4	6M LIBOR+155	Nov-2033		2,131		2,132		2,192
		3.23% 4	1Y UST+219	Aug-2033		1,355		1,353		1,425
		3.27%4	1Y UST+222	Jul-2033		1,511		1,515		1,591
		3.29% 4	1Y LIBOR+155	Jul-2033		257		256		264
		3.34% 4	1Y UST+221	Aug-2033		648		648		683
		3.35% 4	1Y UST+222	Sep-2035		271		271		281
		3.38% 4	1Y LIBOR+163	Apr-2034 - Nov-2034		2,456		2,514		2,560
		3.50%		Oct-2026 - Jul-2047		229,700		236,463		236,432
		4.00%		Jun-2018 - Oct-2047		142,819		148,831		149,631
		4.50%		Mar-2018 - May-2044		54,006		56,194		57,761
		5.00%		Jan-2018 - Apr-2041		15,837		16,336		17,096
		5.50%		Jan-2018 - Jun-2038		8,195		8,232		9,040
		6.00%		Mar-2018 - Nov-2037		5,210		5,238		5,882
		6.50%		Sep-2028 - Jul-2036		871		890		972
		7.00%		Sep-2027 - May-2032		881		884		1,004
		7.50%		Jan-2027 - Sep-2031		325		326		366
		8.00%		Apr-2030 - May-2031		60		61		64

continued

16     AFL - CIO HOUSING INVESTMENT TRUST

Fannie Mae Securities (42.8% of net assets) continued

	Interest Rate			Maturity Date	Face Amount		Amortized Cost		Value
		8.50%		Dec-2021 - Apr-2031	$	19	$	19	$	19
						721,719		739,865		743,927
Multifamily		1.58% 4	1M LIBOR+34	Dec-2024		60,000		60,009		60,065
		1.63% 4	1M LIBOR+35	Dec-2027		13,950		13,954		13,970
		1.64% 4	1M LIBOR+40	Oct-2024		12,994		12,980		12,989
		1.64% 4	1M LIBOR+35	Dec-2027		18,100		18,103		18,126
		1.66% 4	1M LIBOR+42	Aug-2027		35,483		35,493		35,527
		1.68% 4	1M LIBOR+44	Nov-2022 - May-2027		39,655		39,664		39,688
		1.84% 4	1M LIBOR+60	Jan-2027		25,000		25,007		25,021
		2.09% 4	1M LIBOR+85	Jan-2023		19,733		19,724		19,930
		2.19% 4	1M LIBOR+95	Apr-2022		9,976		9,979		9,974
		2.21%		Dec-2022		30,442		30,455		30,206
		2.21%		Dec-2022		23,103		23,114		22,925
		2.24%		Dec-2022		30,573		30,587		30,376
		2.26%		Nov-2022		6,360		6,379		6,325
		2.34%		Sep-2026		28,500		28,685		27,698
		2.38%		Jul-2026		21,840		21,886		21,263
		2.44%		Aug-2026		22,400		22,400		21,926
		2.46%		Aug-2026		25,830		25,842		24,692
		2.48%		Oct-2028		24,990		25,106		24,056
		2.49%		Dec-2026		16,799		16,851		16,536
		2.50%		Jun-2026		60,000		60,000		58,884
		2.50%		Jul-2026		37,680		37,784		36,288
		2.57%		Sep-2028		40,100		40,756		38,844
		2.70%		Nov-2025		15,999		16,021		16,099
		2.72%		Jul-2028		36,400		36,893		35,674
		2.75%		Jul-2028		15,750		15,983		15,593
		2.80%		Mar-2018 - Apr-2025		19,978		20,220		19,890
		2.81%		Sep-2027		12,400		12,518		12,342
		2.84%		Mar-2022		3,526		3,537		3,587
		2.85%		Mar-2022		33,000		33,046		33,599
		2.85%		Dec-2027		23,590		23,671		23,741
		2.87%		Oct-2027		9,425		9,560		9,418
		2.91%		Jun-2031		25,000		25,240		24,923
		2.92%		Jan-2026 - Apr-2028		34,255		34,390		34,506
		2.92%		Jun-2027		71,659		71,813		72,757
		2.94%		Jul-2039		14,999		15,207		14,727
		2.94%		Jun-2027		29,000		29,066		29,226
		2.94%		Sep-2027		30,000		30,256		30,073
		2.97%		May-2026 - Nov-2032		37,987		38,743		38,098
		2.99%		Jun-2025		2,750		2,760		2,814
		3.00%		May-2027 - Mar-2028		16,010		16,051		16,080
		3.02%		Jun-2027 - Nov-2029		40,119		40,352		40,495
		3.04%		Apr-2030		25,100		25,221		25,392
		3.05%		Apr-2030		28,467		28,511		28,518
		3.08%		Jul-2029		12,813		12,870		12,846
		3.10%		Sep-2029		8,515		8,569		8,536
		3.12%		Jul-2029		25,350		25,573		25,581
		3.12%		Apr-2030		13,854		13,860		13,786
		3.14%		Apr-2029		7,889		7,918		8,027
		3.15%		Jan-2027		20,700		20,744		21,346
		3.17%		Sep-2029		13,862		13,937		13,940
		3.18%		Sep-2029 - May-2035		22,840		23,259		22,912

continued

ANNUAL REPORT 2017     17

SCHEDULE OF PORTFOLIO INVESTMENTS  December 31, 2017 (dollars in thousands)

Fannie Mae Securities (42.8% of net assets) continued

Interest Rate				Maturity Date	Face Amount		Amortized Cost		Value
	3.20	%		Oct-2027	$	10,641	$	10,722	$	10,966
	3.21	%		May-2030		7,170		7,320		7,315
	3.22	%		Sep-2026		28,335		28,382		29,278
	3.24	%		Aug-2027		9,500		9,684		9,711
	3.25	%		Nov-2027		10,638		10,720		10,983
	3.26	%		Jan-2027		7,668		7,702		7,910
	3.31	%		Oct-2027		16,282		16,501		16,873
	3.32	%		Apr-2029		20,080		20,216		20,405
	3.34	%		Dec-2029		12,150		12,400		12,274
	3.35	%		Feb-2029		20,000		20,360		20,657
	3.36	%		Dec-2023 - Oct-2029		19,814		19,856		20,554
	3.40	%		Oct-2026		3,037		3,058		3,172
	3.41	%		Sep-2023 - Apr-2029		56,607		57,251		58,547
	3.42	%		Apr-2035		5,498		5,602		5,680
	3.43	%		Oct-2026		7,473		7,524		7,816
	3.46	%		Dec-2023		3,500		3,512		3,648
	3.54	%		Oct-2021		7,091		7,106		7,362
	3.61	%		Sep-2023		6,496		6,545		6,793
	3.63	%		Jul-2035		21,987		22,025		23,470
	3.66	%		Oct-2023		4,769		4,812		4,998
	3.77	%		Dec-2033		10,500		10,748		11,434
	3.84	%		May-2018		7,140		7,140		7,183
	3.87	%		Sep-2023		2,506		2,553		2,638
	4.06	%		Oct-2025		23,925		24,001		25,616
	4.15	%		Jun-2021		8,958		8,963		9,381
	4.22	%		Jul-2018		319		319		321
	4.25	%		May-2021		4,067		4,067		4,263
	4.27	%		Nov-2019		5,690		5,689		5,851
	4.32	%		Nov-2019		2,810		2,810		2,891
	4.33	%		Nov-2019 - Mar-2021		21,479		21,479		22,215
	4.38	%		Apr-2020		9,651		9,654		10,002
	4.44	%		May-2020		5,726		5,727		5,950
	4.50	%		Feb-2020		4,025		4,025		3,979
	4.52	%		Nov-2019 - May-2021		6,849		6,862		7,165
	4.56	%		Jul-2019		6,967		6,968		7,160
	4.66	%		Jul-2021		1,219		1,222		1,222
	4.68	%		Jul-2019		12,435		12,432		12,798
	4.69	%		Jan-2020 - Jun-2035		13,317		13,341		13,840
	4.71	%		Mar-2021		5,604		5,621		5,929
	4.73	%		Feb-2021		1,474		1,478		1,558
	4.80	%		Jun-2019		2,029		2,028		2,088
	4.86	%		May-2019		1,355		1,354		1,393
	4.89	%		Nov-2019		848		849		881
	4.94	%		Apr-2019		3,335		3,334		3,427
	5.00	%		Jun-2019		1,774		1,774		1,830
	5.04	%		Jun-2019		1,756		1,757		1,813
	5.05	%		Jun-2019		1,237		1,237		1,277
	5.08	%4	10Y UST+17	Apr-2021		40,000		40,001		42,964
	5.12	%		Jul-2019		8,222		8,220		8,506
	5.13	%		Jul-2019		833		833		862
	5.15	%		Oct-2022		1,623		1,627		1,732
	5.25	%		Jan-2020		6,451		6,452		6,747
	5.29	%		May-2022		4,977		4,977		5,432

continued

18     AFL - CIO HOUSING INVESTMENT TRUST

Fannie Mae Securities (42.8% of net assets) continued

	Interest Rate				Maturity Date		Face Amount		Amortized Cost		Value
		5.30	%			Aug-2029	$	5,598	$	5,518	$	6,319
		5.45	%			May-2033		2,506		2,514		2,603
		5.47	%			Aug-2024		7,833		7,854		8,136
		5.60	%			Feb-2018 - Jan-2024		9,739		9,739		10,512
		5.69	%			Jun-2041		4,632		4,755		5,298
		5.75	%			Jun-2041		2,247		2,315		2,490
		5.91	%			Mar-2037		1,814		1,846		1,989
		5.96	%			Jan-2029		335		336		338
		6.06	%			Jul-2034		8,509		8,669		8,959
		6.15	%			Jan-2023		3,511		3,511		3,410
		6.23	%			Sep-2034		1,243		1,277		1,277
		6.28	%			Nov-2028		2,353		2,423		2,483
		6.35	%			Aug-2032		9,197		9,216		9,257
		6.38	%			Jul-2021		4,964		4,969		5,368
		6.39	%			Apr-2019		797		797		780
		6.52	%			May-2029		4,449		4,646		4,580
		7.20	%			Aug-2029		732		724		737
		7.75	%			Dec-2024		1,158		1,158		1,155
		8.40	%			Jul-2023		271		270		274
		8.50	%			Nov-2019		1,015		1,021		1,070
								1,835,485		1,844,945		1,855,630
When Issued5		1.88	%4	1M LIBOR+34		Jan-2028		22,425		22,432		22,387
		3.12	%			Mar-2025		12,675		12,875		12,898
		3.34	%			Jan-2030		17,200		17,555		17,648
								52,300		52,862		52,933
Total Fannie Mae Securities							$	2,609,504	$	2,637,672	$	2,652,490

Ginnie Mae Construction Securities (2.0% of net assets)

	Interest Rates2							Unfunded
	Permanent			Construction			Maturity Date	Commitments3		Face Amount		Amortized Cost		Value
Multifamily		3.25	%		3.25	%	Jun-2059	$	31,475	$	25	$	655	$	328
		3.30	%		3.30	%	Mar-2057		1,549		3,639		3,682		3,851
		3.30	%		4.30	%	Nov-2058		3,698		16,827		17,442		18,005
		3.34	%		3.34	%	Aug-2059		42,655		—		853		735
		3.35	%		3.35	%	Aug-2059		6,662		25		226		181
		3.38	%		3.38	%	Aug-2059		35,509		25		913		777
		3.38	%		3.38	%	Jan-2060		20,429		39,975		39,975		41,796
		3.38	%		3.38	%	Jun-2059		44,685		—		894		923
		3.39	%		3.39	%	Feb-2059		14,650		25		319		413
		3.48	%		3.48	%	May-2059		14,578		—		305		550
		3.49	%		3.49	%	Aug-2058		8,290		3,110		3,392		3,659
		3.53	%		3.53	%	Apr-2042		827		17,472		18,157		18,571
		3.65	%		3.65	%	Nov-2058		1,818		8,778		8,929		9,406
		3.66	%		3.66	%	Jul-2058		1,200		22,800		23,111		24,582
		4.15	%		4.15	%	Sep-2051		14,906		2,961		3,022		3,054
Total Ginnie Mae Construction Securities								$	242,931	$	115,662	$	121,875	$	126,831

ANNUAL REPORT 2017     19

SCHEDULE OF PORTFOLIO INVESTMENTS December 31, 2017 (dollars in thousands)

Freddie Mac Securities (14.5% of net assets)

	Interest Rate				Maturity Date	Face Amount		Amortized Cost		Value
Single Family		1.78	%4	1M LIBOR+30	Feb-2036	$	1,386	$	1,386	$	1,388
		1.81	%4	1M LIBOR+33	May-2037		110		110		110
		1.83	%4	1M LIBOR+35	Apr-2036 - Mar-2045		28,901		28,920		28,963
		1.88	%4	1M LIBOR+40	Aug-2043		5,419		5,416		5,444
		1.96	%4	1M LIBOR+48	Oct-2040		4,360		4,356		4,393
		1.98	%4	1M LIBOR+50	Oct-2040 - Jun-2044		39,451		39,469		39,787
		2.03	%4	1M LIBOR+55	Nov-2040		5,060		5,109		5,114
		2.15	%4	1M LIBOR+67	Aug-2037		4,442		4,497		4,504
		2.50	%		Jan-2043 - Aug-2046		18,334		18,617		17,743
		3.00	%		Aug-2042 - Sep-2046		77,431		79,306		77,829
		3.20	%4	1Y UST+222	Jun-2033		283		282		293
		3.47	%4	1Y UST+223	Oct-2033		788		782		823
		3.50	%		Jan-2026 - Oct-2046		173,465		178,234		178,740
		3.50	%		Jun-2046		25,398		26,090		26,097
		3.52	%4	1Y LIBOR+177	Jul-2035		124		124		130
		4.00	%		Aug-2020 - Aug-2047		184,592		192,925		193,304
		4.00	%		Sep-2045		38,339		40,173		40,141
		4.50	%		Aug-2018 - Dec-2044		58,027		60,858		62,206
		5.00	%		Jan-2019 - Mar-2041		8,864		8,932		9,473
		5.50	%		May-2020 - Jul-2038		4,003		3,988		4,425
		6.00	%		Jul-2021 - Feb-2038		5,224		5,283		5,908
		6.50	%		Apr-2028 - Nov-2037		705		712		808
		7.00	%		Apr-2028 - Mar-2030		59		55		68
		7.50	%		Aug-2029 - Apr-2031		56		53		64
		8.00	%		Dec-2029		1		1		1
		8.50	%		Jul-2024 - Jan-2025		72		72		81
		9.00	%		Mar-2025		34		34		39
							684,928		705,784		707,876
Multifamily		1.57	%4	1M LIBOR+33	Sep-2024		24,999		24,999		24,990
		1.79	%4	1M LIBOR+42	May-2027		19,364		19,364		19,368
		1.89	%4	1M LIBOR+65	Jan-2023		11,808		11,808		11,842
		1.94	%4	1M LIBOR+70	Sep-2022		23,685		23,661		23,528
		2.95	%		Jan-2018		300		300		300
		3.28	%		Dec-2029		17,007		17,412		17,260
		3.34	%		Dec-2029		9,959		10,251		10,176
		3.35	%		Oct-2033		18,500		18,863		18,790
		3.38	%		Apr-2030		14,698		15,182		15,032
		3.48	%		Jun-2030		19,176		19,988		19,740
		3.60	%		Apr-2030		26,291		27,698		27,335
							185,787		189,526		188,361
Total Freddie Mac Securities						$	870,715	$	895,310	$	896,237

20     AFL - CIO HOUSING INVESTMENT TRUST

State Housing Finance Agency Securities (4.2% of net assets)

		Interest Rates2								Unfunded
	Issuer	Permanent		Construction			Maturity Date			Commitments3		Face Amount		Amortized Cost			Value
Multifamily	City of Rocherster, MN		—		0.84%			Jun-2019		$	—	$	15,750	$	15,750		$	15,715
	City of Chicago		—		2.00%			May-2019			—		5,700		5,701			5,701
	Connecticut Housing Finance Auth		—		3.25%			Nov-2019	6		15,895		6,605		6,562			6,522
	NYC Housing Development Corp		2.95%		—			Nov-2045			—		5,000		5,000			5,126
	NYC Housing Development Corp		3.10%		—			Oct-2046			—		24,973		24,974			24,737
	Connecticut Housing Finance Auth		3.25%		—			May-2050			—		12,500		12,383			11,975
	NYC Housing Development Corp		3.75%		—			May-2035	6		—		4,405		4,405			4,532
	MassHousing		3.85%		—			Dec-2058			—		9,980		9,977			9,476
	NYC Housing Development Corp		4.00%		—			Dec-2028			—		5,000		5,103			5,346
	MassHousing		4.04%		—			Nov-2032			—		1,305		1,305			1,318
	MassHousing		4.13%		—			Dec-2036			—		5,000		5,000			5,233
	NYC Housing Development Corp		4.20%		—			Dec-2039			—		8,305		8,305			8,677
	NYC Housing Development Corp		4.25%		—			Nov-2025			—		1,150		1,150			1,194
	NYC Housing Development Corp		4.29%		—			Nov-2037			—		1,190		1,190			1,205
	NYC Housing Development Corp		4.40%		—			Nov-2024			—		4,120		4,120			4,244
	NYC Housing Development Corp		4.44%		—			Nov-2041			—		1,120		1,120			1,138
	NYC Housing Development Corp		4.49%		—			Nov-2044			—		455		455			463
	NYC Housing Development Corp		4.50%		—			Nov-2030			—		1,680		1,682			1,764
	MassHousing		4.50%		—			Jun-2056			—		45,000		45,000			47,017
	NYC Housing Development Corp		4.60%		—			Nov-2030			—		4,665		4,665			4,856
	NYC Housing Development Corp		4.70%		—			Nov-2035			—		1,685		1,685			1,776
	NYC Housing Development Corp		4.78%		—			Aug-2026			—		12,500		12,502			13,107
	NYC Housing Development Corp		4.80%		—			Nov-2040			—		2,860		2,862			3,019
	NYC Housing Development Corp		4.90%		—			Nov-2034 - Nov-2041			—		8,800		8,800			9,139
	NYC Housing Development Corp		4.95%		—			Nov-2039 - May-2047			—		13,680		13,682			14,172
	MassHousing		5.55%		—			Nov-2039			—		5,000		4,981			5,165
	MassHousing		5.69%		—			Nov-2018			—		845		845			861
	MassHousing		5.70%		—			Jun-2040			—		11,510		11,510			11,747
	MassHousing		6.42%		—			Nov-2039			—		22,000		22,000			23,121
	MassHousing		6.70%		—			Jun-2040			—		9,290		9,290			9,639
											15,895		252,073		252,004			257,985
Forward Commitments	MassHousing		—		3.00	%		Oct-2018	6		9,464		—		(97	)		(33	)
Total State Housing Finance Agency Securities										$	25,359	$	252,073	$	251,907		$	257,952

ANNUAL REPORT 2017     21

SCHEDULE OF PORTFOLIO INVESTMENTS December 31, 2017 (dollars in thousands)

Commercial Mortgage-Backed Securities (2.0% of net assets)

Issuer	Interest Rate	Maturity Date	Face Amount		Amortized Cost		Value
Nomura	2.77%	Dec-2045	$	10,000	$	10,160	$	9,991
Nomura	3.19%	Mar-2046		20,000		20,384		20,270
JP Morgan	3.48%	Jun-2045		10,000		10,454		10,289
Citigroup	3.62%	Jul-2047		8,000		8,207		8,322
Barclays/ JP Morgan	3.81%	Jul-2047		2,250		2,308		2,356
RBS/ Wells Fargo	3.82%	Aug-2050		5,000		5,132		5,242
Deutsche Bank/UBS	3.96%	Mar-2047		5,000		5,129		5,254
Barclays/ JP Morgan	4.00%	Apr-2047		5,000		5,130		5,289
Cantor/Deutsche Bank	4.01%	Apr-2047		20,000		20,516		21,130
Barclays/ JP Morgan	4.08%	Feb-2047		6,825		7,166		7,255
Cantor/Deutsche Bank	4.24%	Feb-2047		7,000		7,179		7,487
Deutsche Bank	5.00%	Nov-2046		18,990		19,434		20,026
Total Commercial Mortgage Backed Securities			$	118,065	$	121,199	$	122,911

Other Multifamily Investments (0.3% of net assets)

		Interest Rates2			Unfunded
	Issuer	Permanent	Construction	Maturity Date	Commitments3		Face Amount		Amortized Cost		Value
Direct Loans
	Harry Silver Housing Company, Inc.	—	4.20%	Jun-2018	$	—	$	5,197	$	5,201	$	5,208
	Harry Silver Housing Company, Inc.	—	4.20%	Jun-2018		—		207		208		207
	Detroit Home Repair Program	—	5.75%	Jun-2018		129		58		58		58
	Detroit Home Repair Program	—	5.75%	Apr-2018		250		147		147		147
						379		5,609		5,614		5,620
Privately Insured Construction/Permanent Mortgages7
	IL Housing Development Authority	5.40%	—	Mar-2047		—		8,073		8,076		8,051
	IL Housing Development Authority	6.20%	—	Dec-2047		—		3,063		3,073		3,063
	IL Housing Development Authority	6.40%	—	Nov-2048		—		927		938		916
						—		12,063		12,087		12,030
Total Other Multifamily Investments						$ 379	$	17,672	$	17,701	$	17,650

United States Treasury Securities (3.8% of net assets)

	Interest Rate	Maturity Date	Face Amount		Amortized Cost		Value
	1.63%	May-2026	$	10,000	$	10,081	$	9,420
	2.13%	May-2025		15,000		14,874		14,770
	2.25%	Nov-2024		65,000		66,698		64,670
	2.25%	Nov-2025		5,000		5,096		4,956
	2.38%	Aug-2024		70,000		70,458		70,227
	2.88%	Aug-2045		10,000		10,255		10,256
	3.13%	Aug-2044		55,000		56,721		59,108
Total United States Treasury Securities				$230,000		$234,183		$233,407
Total Fixed-Income Investments			$	5,898,311	$	5,983,673	$	6,018,452

22     AFL - CIO HOUSING INVESTMENT TRUST

Equity Investments (less than 0.01% of net assets)

Issuer	Face Amount (Cost)	Amount of Dividends or Interest	Value
HIT Advisers8	$ 1	$—	$ (843)
Total Equity Investment	$ 1	$—	$ (843)

Short-Term Investments (4.2% of net assets)

Issuer	Interest Rate		Maturity Date	Face Amount	Amortized Cost			Value
NYS Housing Finance Agency	1.70%	9	May-2049	$20,000	$	20,000	$	20,000
NYS Housing Finance Agency	1.95%	9	Nov-2049	20,000		20,000		20,000
NYS Housing Finance Agency	1.75%	9	May-2050	30,000		30,000		30,000
Blackrock Federal Funds	1.18%	10	Jan-2018	187,799		187,799		187,799
Total Short-Term Investments				$257,799	$	257,799	$	257,799
Total Investments				$ 6,156,111	$	6,241,473	$	6,275,408

Footnotes

1 Tax-exempt bonds collateralized by Ginnie Mae securities.

² Construction interest rates are the rates charged to the borrower during the construction phase of the project. The permanent interest rates are charged to the borrower during the amortization period of the loan, unless the U.S. Department of Housing and Urban Development requires that such rates be charged earlier.

³ The HIT may make commitments in securities or loans that fund over time on a draw basis or forward commitments that fund at a single point in time. The unfunded amount of these commitments totaled $285.2 million at period end. Generally, GNMA construction securities fund over a 12- to 24-month period. Funding periods for State Housing Finance Agency construction securities and Direct Loans vary by project, but generally fund over a one- to 48-month period. Forward commitments generally settle within 12 months of the original commitment date.

⁴ The interest rate shown on these floating or adjustable rate securities represents the rate at period end. Referenced rate and spread in basis points are also presented.

⁵ The HIT records when issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when issued basis are marked to market monthly and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

⁶ Securities exempt from registration under the Securities Act of 1933 and were privately placed directly by a state housing agency (a not-for-profit public agency) with the HIT. The securities are backed by mortgages and are general obligations of the state housing agency, and therefore secured by the full faith and credit of said agency. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. These securities are considered liquid, under procedures established by and under the general supervision of the HIT’s Board of Trustees.

⁷ Loans insured by Ambac Assurance Corporation, are additionally backed by a repurchase option from the mortgagee for the benefit of the HIT. The repurchase price is defined as the unpaid principal balance of the loan plus all accrued unpaid interest due through the remittance date. The repurchase option can be exercised by the HIT in the event of a payment failure by Ambac Assurance Corporation.

⁸ The HIT has a participation interest in HIT Advisers, a Delaware limited liability company. HIT Advisers is a New York based adviser currently exempt from investment adviser registration in New York. The investment in HIT Advisers is valued by the HIT’s valuation committee in accordance with the fair value procedures adopted by the HIT’s Board of Trustees, and approximates carrying value. The participation interest is not registered under the federal securities laws. Refer to Note 3 of the Finacial Statements - Transactions with Related Entities.

⁹ Variable rate bond with a weekly interest rate reset by a remarketing agent in accordance with the bond’s offering statement and can be redeemed at par, with accrued and unpaid interest, with a seven-day notice. The interest rate shown represents the rate at period end.

¹⁰ Rate indicated is the annualized 1-day yield as of December 31, 2017.

Key to Abbreviations

M	Month
Y	Year
LIBOR	London Interbank Offered Rate
UST	U.S. Treasury

See accompanying Notes to Financial Statements.

ANNUAL REPORT 2017     23

Statement of Operations

For the Year Ended December 31, 2017 (dollars in thousands)

Investment income		$ 170,370
Expenses
	Non-officer salaries and fringe benefits	10,219
	Officer salaries and fringe benefits	5,671
	Investment management	1,332
	Consulting fees	1,281
	Marketing and sales promotion (12b-1)	1,156
	Legal fees	734
	Auditing, tax and accounting fees	506
	Insurance	385
	Trustee expenses	41
	Rental expenses	1,229
	General expenses	1,530
	Total expenses	24,084
Net investment income		146,286
Net realized and unrealized gains (losses) on investments
	Net realized gains (losses) on investments	21,359
	Net change in unrealized appreciation (depreciation) on investments	17,333
	Net realized and unrealized gains (losses) on investments	38,692
Net increase (decrease) in net assets resulting from operations		$ 184,978

See accompanying Notes to Financial Statements.

24     AFL - CIO HOUSING INVESTMENT TRUST

Statements of Changes in Net Assets

For the Years Ended December 31, 2017 and 2016 (dollars in thousands)

Increase (decrease) in net assets from operations			2017			2016
	Net investment income	$	146,286		$	139,758
	Net realized gains (losses) on investments		21,359			19,547
	Net change in unrealized appreciation (depreciation) on investments		17,333			(55,674	)
	Net increase (decrease) in net assets resulting from operations		184,978			103,631
Decrease in net assets from distributions
	Distributions to participants or reinvested from:
	Net investment income		(161,677	)		(152,539	)
	Net realized gains on investments		(3,720	)		—
	Net decrease in net assets from distributions		(165,397	)		(152,539	)
Increase (decrease) in net assets from unit transactions
	Proceeds from the sale of units of participation		330,734			373,174
	Dividend reinvestment of units of participation		145,704			135,239
	Payments for redemption of units of participation		(87,547	)		(124,034	)
	Net increase from unit transactions		388,891			384,379
Total increase (decrease) in net assets			408,472			335,471
Net assets
	Beginning of period	$	5,790,753		$	5,455,282
	End of period	$	6,199,225		$	5,790,753
	Distribution in excess of net investment income	$	(2,062	)	$	(2,059	)
Unit information
	Units sold		294,942			327,020
	Distributions reinvested		130,001			118,390
	Units redeemed		(78,150	)		(109,790	)
	Increase in units outstanding		346,793			335,620

See accompanying Notes to Financial Statements.

ANNUAL REPORT 2017     25

NOTES TO FINANCIAL STATEMENTS

NOTE 1. Summary of Significant Accounting Policies

The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) Housing Investment Trust (HIT) 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 amended (the Investment Company Act), as a no-load, open-end investment company. The HIT has obtained certain exemptions from the requirements of the Investment Company Act that are described in the HIT’s Prospectus and Statement of Additional Information.

Participation in the HIT is limited to eligible pension plans and labor organizations, including health and welfare, general, voluntary employees’ benefit associations and other funds that have beneficiaries who are represented by labor organizations.

The following is a summary of significant accounting policies followed by the HIT in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles (GAAP) in the United States. The HIT follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investment Companies.

INVESTMENT VALUATION

Net asset value per share (NAV) is calculated as of the close of business of the major bond markets in New York City on the last business day of each month. The HIT’s Board of Trustees is responsible for the valuation process and has delegated the supervision of the valuation process to a Valuation Committee. The Valuation Committee, in accordance with the policies and procedures adopted by the HIT’s Board of Trustees, is responsible for evaluating the effectiveness of the HIT’s pricing policies, determining the reliability of third-party pricing information, and reporting to the Board of Trustees on valuation matters, including fair value determinations. Following is a description of the valuation methods and inputs applied to the HIT’s major categories of assets.

Portfolio securities for which market quotations are readily available are valued by using independent pricing services. For U.S. Treasury securities, independent pricing services generally base prices on actual transactions as well as dealer supplied market information. For state housing finance agency securities, independent pricing services generally base prices using models that utilize trading spreads, new issue scales, verified bid information, and credit ratings. For commercial mortgage-backed securities, independent pricing services generally base prices on cash flow models that take into consideration benchmark yields and utilize available trade information, dealer quotes, and market color.

For U.S. agency and government-sponsored enterprise securities, including single family and multifamily mortgage-backed securities, construction mortgage securities and loans, and collateralized mortgage obligations, independent pricing services generally base prices on an active TBA (“to-be-announced”) market for mortgage pools, discounted cash flow models or option-adjusted spread models. Independent pricing services examine reference data and use observable inputs such as issue name, issue size, ratings, maturity, call type, and spread/benchmark yields, as well as dealer-supplied market information. The discounted cash flow or option-adjusted spread models utilize inputs from matrix pricing, which consider observable market-based discount and prepayment rates, attributes of the collateral, and yield or price of bonds of comparable quality, coupon, maturity, and type.

Investments in registered open-end investment management companies are valued based upon the NAV of such investments.

When the HIT finances the construction and permanent securities or participation interests, value is determined based upon the total amount, funded and/or unfunded, of the commitment.

Portfolio investments for which market quotations are not readily available or deemed unreliable are valued at their fair value determined in good faith by the HIT’s Valuation Committee using consistently applied procedures adopted by the HIT’s Board of Trustees. In determining fair market value, the Valuation Committee will employ a valuation method that it believes reflects fair value for that asset, which may include the referral of the asset to an independent valuation consultant or the utilization of a discounted cash flow model based on broker and/or other market inputs. The frequency with which these fair value procedures may be used cannot be predicted. However, on December 31, 2017, the Valuation Committee fair valued less than 0.01% of the HIT’s net assets utilizing internally derived unobservable inputs.

Short-term investments acquired with a stated maturity of 60 days or less are generally valued at amortized cost, which approximates fair market value.

The HIT holds a 100% ownership interest, either directly or indirectly in HIT Advisers LLC (HIT Advisers). HIT Advisers is valued at its fair value determined in good faith under consistently applied procedures adopted by the HIT’s Board of Trustees, which approximates its respective carrying value.

GAAP establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. The HIT classifies its assets and liabilities into three levels based on the method used to value the assets or liabilities. Level 1 values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market inputs, such as quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and quoted prices in inactive markets. Level 3 values are based on significant unobservable inputs that reflect the HIT’s determination of assumptions that market participants might reasonably use in valuing the securities.

The following table presents the HIT’s valuation levels as of December 31, 2017:

Investment securities: ($ in thousands)

	Level 1		Level 2		Level 3			Total
FHA Permanent Securities	$	—	$	162,359	$	—		$	162,359
FHA Construction Securities		—		5,090		—			5,090
Ginnie Mae Securities		—		1,543,525		—			1,543,525
Ginnie Mae Construction Securities		—		126,831		—			126,831
Fannie Mae Securities		—		2,599,557		—			2,599,557
Freddie Mac Securities		—		896,237		—			896,237
Commercial Mortgage-Backed Securities		—		122,911		—			122,911
State Housing Finance Agency Securities		—		257,985		—			257,985
Other Multifamily Investments
Direct Loans		—		—		5,620			5,620
Privately Insured Construction/Permanent Mortgages		—		12,030		—			12,030
Total Other Multifamily Investments		—		12,030		5,620			17,650
United States Treasury Securities		—		233,407		—			233,407
Equity Investments		—		—		(843	)		(843	)
Short-Term Investments		257,799		—		—			257,799
Other Financial Instruments*		—		52,900		—			52,900
Total	$	257,799	$	6,012,832	$	4,777		$	6,275,408

*If held in the portfolio at report date, other financial instruments include forward commitments, TBA and when issued securities.

26     AFL - CIO HOUSING INVESTMENT TRUST

The following table reconciles the valuation of the HIT’s Level 3 investment securities and related transactions for the year ended December 31, 2017:

Investments in Securities ($ in thousands)

	Other Multifamly Investments	Equity Investment	Total
Beginning Balance, 12/31/2016	$  5,425	$ (478)	$  4,947
Paydown	(58)	—	(58)
Total Unrealized Gain (Loss)*	(9)	(364)	(373)
Cost of Purchases	262	—	263
Proceeds of Sales	—	(1)	(1)
Ending Balance, 12/31/2017	$  5,620	$ (843)	$  4,777

* Net change in unrealized gain (loss) attributable to Level 3 securities held at December 31, 2017 totaled $(276,000) and is included on the accompanying Statement of Operations.

Level 3 securities primarily consist of Direct Loans (Other Multifamily Investments) which were valued by an independent pricing service at December 31, 2017 utilizing a discounted cash flow model. Weighted average lives for the loans ranged from 0.16 to 1.09 years. Unobservable inputs include spreads to relevant U.S. Treasuries ranging from 99 to 379 basis points. A change in unobservable inputs may impact the value of the loans.

The HIT’s policy is to recognize transfers between levels at the beginning of the reporting period. For the year ended December 31, 2017, there were no transfers in levels.

USE OF ESTIMATES

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

FEDERAL INCOME TAXES

The HIT’s policy is to comply with the requirements of the Internal Revenue Code of 1986, as amended (the Internal Revenue Code), that are applicable to regulated investment companies, and to distribute all of its taxable income to its participants. Therefore, no federal income tax provision is required.

Tax positions taken or expected to be taken in the course of preparing the HIT’s tax returns are evaluated to determine whether the tax positions are “more-likely-than- not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Management has analyzed for all open years the HIT’s tax positions taken on federal income tax returns and has concluded that no provision for income tax is required in the HIT’s financial statements.

The HIT files U.S. federal, state, and local tax returns as required. The HIT’s tax returns are subject to examination by the relevant tax authorities until the expiration of the applicable statutes of limitations, which is generally three years after the filing of the tax return but could be longer in certain circumstances.

DISTRIBUTIONS TO PARTICIPANTS

At the end of each calendar month, a pro-rata distribution is made to participants of the net investment income earned during the month. This pro-rata distribution is based on the participant’s number of units held as of the immediately preceding month-end and excludes realized gains (losses) which are distributed at year-end.

Participants redeeming their investments are paid their pro-rata share of undistributed net income accrued through the month-end of the month in which they redeem.

The HIT offers a reinvestment plan that permits current participants to automatically reinvest their distributions of income and capital gains, if any, into the HIT’s units of participation. Total reinvestment was approximately 88% of distributed income and capital gains, if any, for the year ended December 31, 2017.

INVESTMENT TRANSACTIONS AND INCOME

For financial reporting purposes, security transactions are accounted for as of the trade date. Gains and losses on securities sold are determined on the basis of amortized cost. Realized gains (losses) on paydowns of mortgage- and asset-backed securities are classified as interest income. Interest income, which includes amortization of premium and accretion of discount on debt securities, is accrued as earned.

12b-1 PLAN OF DISTRIBUTION

The HIT’s Board of Trustees annually considers a Plan of Distribution under Rule 12b-1 under the Investment Company Act to pay for marketing and sales promotion expenses incurred in connection with the offer and sale of units and related distribution activities (12b-1 expenses). For the year ended December 31, 2017, the HIT was authorized to pay 12b-1 expenses in an annual amount up to $600,000 or 0.05% of its average monthly net assets, whichever was greater. During the year ended December 31, 2017, the HIT incurred approximately $1,155,500, or less than 0.02% of its average monthly net assets, in 12b-1 expenses.

NOTE 2. Investment Risks

INTEREST RATE RISK

As with any fixed-income investment, the market value of the HIT’s investments will generally fall at times when market interest rates rise. Rising interest rates may also reduce prepayment rates, causing the average life of the HIT’s investments to increase. This could in turn further reduce the value of the HIT’s portfolio.

PREPAYMENT AND EXTENSION RISK

The HIT invests in certain fixed-income securities whose value is derived from an underlying pool of mortgage loans that are subject to prepayment and extension risk.

Prepayment risk is the risk that a security will pay more quickly than its assumed payment rate, shortening its expected average life. In such an event, the HIT may be required to reinvest the proceeds of such prepayments in other investments bearing lower interest rates. The majority of the HIT’s securities backed by loans for multifamily projects include restrictions on prepayments for specified periods to mitigate this risk or include prepayment penalties to compensate the HIT. Prepayment penalties, when received, are included in realized gains.

Extension risk is the risk that a security will pay more slowly than its assumed payment rate, extending its expected average life. When this occurs, the HIT’s ability to reinvest principal repayments in higher returning investments may be limited.

These two risks may increase the sensitivity of the HIT’s portfolio to fluctuations in interest rates and negatively affect the value of the HIT’s portfolio.

ANNUAL REPORT 2017     27

NOTES TO FINANCIAL STATEMENTS

NOTE 3. Transactions with Related Entities

HIT ADVISERS

HIT Advisers, a Delaware limited liability company, was formed by the HIT to operate as an investment adviser and be registered, as appropriate under applicable federal or state law. It currently has no clients. HIT Advisers is owned by HIT directly (99.9%), and indirectly through HIT Advisers Managing Member (0.1%) which is also a wholly owned by HIT. This ownership structure is intended to insulate the HIT from any potential liabilities associated with the conduct of HIT Advisers business. The HIT receives no services from HIT Advisers and carries it as a portfolio investment that meets the definition of a controlled affiliate.

In accordance with a contract, in addition to its membership interest, the HIT provides HIT Advisers advances to assist with its operations and cash flow management as needed. Advances are expected to be repaid as cash becomes available. However, as with many start-up operations, there is no certainty that HIT Advisers will generate sufficient revenue to cover its operations and liabilities. Also in accordance with the contract, the HIT provides the time of certain personnel and allocates operational expenses to HIT Advisers on a cost-reimbursement basis. As of December 31, 2017, HIT Advisers had no clients or assets under management and did not earn income. A rollforward of advances to HIT Advisers by the HIT is included in the table below:

Advances to HIT Advisers by HIT	$ in Thousands
Beginning Balance, 12/31/2016	$    607
Advances in 2017	265
Repayment  by HIT Advisers LLC in 2017	—
Ending Balance, 12/31/2017	$    872

BUILDING AMERICA

Building America is a Community Development Entity, certified by the Community Development Financial Institutions Fund (CDFI Fund) of the U.S. Department of the Treasury. On April 7, 2017, the HIT transferred ownership of Building America to HIT Advisers for consideration.

In accordance with a contract, the HIT provides the time of certain personnel to Building America and allocates operational expenses on a cost-reimbursement basis. Also, in accordance with the contract, the HIT provides Building America advances to assist with its operations and cash flow management as needed. Advances are repaid as cash becomes available. A rollforward of advances to Building America by the HIT is included in the table below:

Advances to BACDE by HIT	$ in Thousands
Beginning Balance, 12/31/2016	$      75
Advances in 2017	1,056
Repayment by BACDE in 2017	(1,086)
Ending Balance, 12/31/2017	$      45

Summarized financial information on a historical cost basis for HIT Advisers and Building America are included in the table below:

$ in Thousands	HIT Advisers	Building America
As of December 31, 2017
Assets	$       35	$   582
Liabilities	$     878	$   292
Equity	$  (843)	$   290
For the year ended December 31, 2017
Income	$         —	$1,446
Expenses	(266)	(1,125)
Tax expenses	—	(153)
Net Income (Loss)	$ (266)	$   168

NOTE 4. Commitments

The HIT may make commitments in securities or loans that fund over time on a draw basis or forward commitments that fund at a single point in time. The HIT agrees to an interest rate and purchase price for these securities or loans when the commitment to purchase is originated.

Certain assets of the HIT are invested in liquid investments until they are required to fund these purchase commitments. As of December 31, 2017, the HIT had outstanding unfunded purchase commitments of approximately $285.2 million. The HIT maintains a sufficient level of liquid securities of no less than the total of the outstanding unfunded purchase commitments. As of December 31, 2017, the value of liquid securities, less short-term investments, maintained in a custodial trading account was approximately $5.9 billion.

NOTE 5. Investment Transactions

Purchases and sales of investments, excluding short-term securities and U.S. Treasury securities, for the year ended December 31, 2017, were $1.7 billion and $347.7 million, respectively.

NOTE 6. Income Taxes

No provision for federal income taxes is required since the HIT intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and distribute to shareholders all of its taxable income and gains. Federal income tax regulations differ from GAAP; therefore, distributions determined in accordance with tax regulations may differ in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records were adjusted for permanent book/tax differences to reflect tax character.

The tax character of distributions paid during 2017 and 2016 were as follows ($ in thousands):

	2017	2016
Ordinary investment income	$  161,677	$  152,539
Long-term capital gain on investments	3,720	—
Total distributions paid to participants or reinvested	$  165,397	$  152,539

28     AFL - CIO HOUSING INVESTMENT TRUST

As of December 31, 2017, the components of accumulated earnings on a tax basis were as follows ($ in thousands):

	2017
Unrealized appreciation	$	33,935
Undistributed ordinary income		3,140
Other temporary differences		(5,200	)
Total accumulated earnings	$	31,875

The differences between book basis and tax basis components of net assets are primarily attributable to tax treatment of deferred compensation plans, accrued expenses, and depreciation.

During 2017, the HIT utilized its entire accumulated capital loss carryforward from prior years of $2,598,000 to offset current capital gains.

For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. These reclassifications are primarily due to the different book and tax treatment of paydowns, distributions, meals and entertainment expense, and insurance premiums paid. Results of operations and net assets were not affected by these reclassifications.

For the year ended December 31, 2017, the HIT recorded the following permanent reclassifications ($ in thousands):

	2017
Accumulated net investment income	$	15,388
Accumulated net realized losses	$	(15,041	)
Amount invested and reinvested by current participants	$	(347	)

At December 31, 2017, the cost of investments for federal income tax purposes was $6,241,473,000 which approximated book cost at amortized cost. Net unrealized gain aggregated $33,935,000 at period-end, of which $84,215,000 related to appreciated investments and $50,280,000 related to depreciated investments.

NOTE 7. Retirement & Deferred Compensation Plans

The HIT participates in the AFL-CIO Staff Retirement Plan (Plan), which is a multiemployer defined benefit pension plan, under the terms of a collective-bargaining agreement. The Plan covers substantially all employees, including non-bargaining unit employees. The risks of participating in a multiemployer plan are different from a single-employer plan in the following aspects:

a. Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

b. If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers based on their level of contributions to the plan.

c. If the HIT chooses to stop participating in its multiemployer plan, the HIT may be required to pay the plan an amount based on the HIT’s share of the underfunded status of the plan, referred to as a withdrawal liability.

The HIT’s participation in the Plan for the period ended December 31, 2017, is outlined in the table below. The “EIN/Pension Plan Number” line provides the Employee Identification Number (EIN) and the three-digit plan number. The most recent Pension Protection Act (PPA) zone status available in 2017 is for the 2015 Plan year-ended at June 30, 2016. The zone status is based on information that the

HIT received from the Plan and is certified by the Plan’s actuary. Among other factors, plans in the red zone are generally less than 65% funded, plans in the yellow zone are less than 80% funded, and plans in the green zone are at least 80% funded. The “FIP/ RP Status Pending/Implemented” line indicates whether a financial improvement plan (FIP) or a rehabilitation plan (RP) is either pending or has been implemented.

Pension Fund: AFL-CIO Staff Retirement Plan
EIN/Pension Plan Number	53-0228172 / 001
2015 Plan Year PPA Zone Status	Green
FIP/RP Status Pending/ Implemented	No
2017 HIT’s Contributions	$2,257,466
2017 Contribution Rate	24%
Surcharge Imposed	no
Expiration Date of Collective Bargaining Agreement	03/31/2022

The HIT was listed in the Plan’s Form 5500 as providing more than 5% of the total contributions for the following plan year:

Pension Fund	Years Contributions to Plan Exceeded More Than 5 Percent of Total Contributions
AFL-CIO Staff Retirement Plan	20151

¹ The 2015 plan year ended at June 30, 2016.

At the date the HIT financial statements were issued, the Plan’s Form 5500 was not available for the plan year ended June 30, 2017.

The HIT also sponsors a deferred compensation plan, referred to as a 401(k) plan, covering substantially all employees. This plan permits employees to defer the lesser of 100% of their total compensation or the applicable Internal Revenue Service limit. During 2017, the HIT matched dollar for dollar the first $6,000 of each employee’s contributions. The HIT’s 401(k) contribution for the year ended December 31, 2017, was approximately $310,200.

NOTE 8. Loan Facility

The HIT has a $15 million uncommitted loan facility which expires on June 11, 2018. Under this facility, borrowings bear interest per annum equal to 1.25% plus the highest of (a) the Federal Funds Effective Rate, (b) the Overnight Eurodollar Rate, or (c) the one-month LIBOR. The HIT did not borrow against the facility during, and had no outstanding balance under the facility for, the year ended December 31, 2017. No compensating balances are required.

NOTE 9. Contract Obligations

In the ordinary course of business, the HIT enters into contracts that contain a variety of indemnifications. The HIT’s maximum exposure under these arrangements is unknown. However, the HIT has not had any prior claims or losses pursuant to these contracts and expects the risk of loss to be low.

NOTE 10. New Accounting Pronouncement

In February 2016, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) No. 2016-02, Leases, which intends to improve financial reporting about leasing transactions. The ASU affects all companies and other organizations that lease assets such as real estate and equipment. The new disclosure is effective for annual or interim periods beginning on or after December 15, 2019. Management is evaluating the impact of this update on its financial statements and disclosures.

ANNUAL REPORT 2017     29

Financial Highlights

Selected Per Share Data and Ratios for the Years Ended December 31

Per share data	2017			2016			2015			2014			2013
Net asset value, beginning of period	$	1,113.29		$	1,121.13		$	1,140.10		$	1,107.45		$	1,171.21
Income from investment operations:
Net investment income *		27.36			27.46			29.41			32.48			34.11
Net realized and unrealized gains (losses) on investments		7.58			(5.33	)		(16.43	)		34.38			(61.53	)
Total income (loss) from investment operations		34.94			22.13			12.98			66.86			(27.42	)
Less distributions from:
Net investment income		(30.23	)		(29.97	)		(31.95	)		(34.21	)		(36.33	)
Net realized gains on investments		(0.68	)		—			—			—			(0.01	)
Total distributions		(30.91	)		(29.97	)		(31.95	)		(34.21	)		(36.34	)
Net asset value, end of period	$	1,117.32		$	1,113.29		$	1,121.13		$	1,140.10		$	1,107.45
Ratios/supplemental data
Ratio of expenses to average net assets		0.40	%		0.41	%		0.43	%		0.43	%		0.43	%
Ratio of net investment income to average net assets		2.4	%		2.4	%		2.6	%		2.9	%		3.0	%
Portfolio turnover rate		24.6	%		20.3	%		18.9	%		18.3	%		29.5	%
Number of outstanding units at end of period		5,548,292			5,201,499			4,865,879			4,262,218			4,077,108
Net assets, end of period (in thousands)	$	6,199,225		$	5,790,753		$	5,455,282		$	4,859,337		$	4,515,201
Total return		3.17	%		1.94	%		1.13	%		6.10	%		(2.37	)%

*The average shares outstanding method has been applied for this per share information.

See accompanying Notes to Financial Statements.

30     AFL - CIO HOUSING INVESTMENT TRUST

BOARD OF TRUSTEES⁺

Overall responsibility for the management of the HIT, the establishment of policies, and the oversight of activities is vested in its Board of Trustees. The list below provides the following information for each of the Trustees: name, age, address, term of office, length of time served, principal occupations during at least the past five years and other directorships held.* The HIT’s Statement of Additional Information includes additional information about the Trustees and is available without charge, upon request, by placing a collect call to the HIT’s Investor Relations Office at (202) 331-8055, or by viewing the HIT’s website at www.aflcio-hit.com.

Correspondence intended for a trustee may be sent to the AFL-CIO Housing Investment Trust, 2401 Pennsylvania Avenue, NW, Suite 200, Washington, DC 20037.

Richard Ravitch,** age 84; Chairman; service commenced 1991, expires 2017; Manager, Waterside Plaza LLC; formerly Lieutenant Governor, State of New York; Co-Chair, Millennial Housing Commission; President and Chief Executive Officer, Player Relations Committee of Major League Baseball.

Richard L. Trumka,** age 68; Union Trustee; service commenced 1995, expires 2017; President, AFL- CIO; Chairman, AFL-CIO Staff Retirement Plan; formerly Secretary- Treasurer, AFL-CIO.

Liz Shuler, age 47; Union Trustee; service commenced 2009, expires 2018; Secretary- Treasurer, AFL-CIO; Trustee, AFL-CIO Staff Retirement Plan; formerly Executive Assistant to the President, IBEW.

Vincent Alvarez, age 49; Union Trustee; service commenced 2012; expires 2019; President, New York City Central Labor Council (NYCCLC); formerly Assistant Legislative Director, New York State AFL-CIO; formerly Chief of Staff, NYCCLC.

James Boland, age 67; Union Trustee; service commenced 2010, expires 2019; President, International Union of Bricklayers and Allied Craftworkers (BAC); Co-Chair, International Masonry Institute; Co-Chair, International Trowel Trades Pension Fund and BAC International Health Fund; Executive Member, BAC Staff Health Plan; Trustee, BAC Local Union Officers and Employees Pension Fund and BAC Salaried Employees Pension Fund; formerly Executive Vice President and Secretary Treasurer, BAC.

Sean McGarvey, age 55; Union Trustee; service commenced 2012, expires 2018; President, North America’s Building Trades Unions; formerly Secretary-Treasurer, Building and Construction Trades Department.

Jack Quinn, Jr., age 66; Management Trustee; service commenced 2005, expires 2017; President, Erie Community College; Director, Kaiser Aluminum Corporation; formerly President, Cassidy & Associates; Member of Congress, 27th District, New York.

Kenneth E. Rigmaiden, age 64; Union Trustee; service commenced 2011, expires 2017; General President, International Union of Painters and Allied Trades of the United States and Canada (IUPAT); Director, Coalition of Black Trade Unionists; Trustee, IUPAT International PensionFund; formerly Executive General Vice President, IUPAT; Assistant to the General President, IUPAT; National Project Coordinator, IUPAT Job Corps Program; Director, United Way.

Marlyn J. Spear,** CFA, age 63; Management Trustee; service commenced 1995, expires 2018; Director, Baird Funds, Inc.; formerly Chief Investment Officer, Building Trades United Pension Trust Fund (Milwaukee and Vicinity); Member, Greater Milwaukee Foundation Investment Committee.

Tony Stanley,** age 84; Management Trustee; service commenced 1983, expires 2019; Director, TransCon Builders, Inc.; formerly Executive Vice President, TransCon Builders, Inc. 

+As of December 31, 2017. Effective January 24, 2018, Kenneth W. Cooper, David B. Durkee, Bridget Gainer, Deidre L. Schmidt and William C. Thompson, Jr. were elected to the Board of Trustees. Richard Ravitch did not stand for re-election as Chairman of the Board of Trustees at the 2017 Annual Meeting of Participants. Effective January 24, 2018 Helen R. Kanovsky was elected as Chair of the Board of Trustees. Additional information relating to the election of these new Trustees is set forth on page 10.

* Includes any directorships in a corporation or trust having securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, or subject to the requirements of Section 15(d) of such Act, or a company registered as an investment company under the Investment Company Act of 1940, as amended.

** Executive Committee member.

ANNUAL REPORT 2017     31

LEADERSHIP

All officers of the HIT are located at 2401 Pennsylvania Avenue, NW, Suite 200, Washington, DC 20037 except Mr. Chandler who is located at 155 N. Lake Avenue, Suite 800, Pasadena, CA 91191 and Ms. Johnstone who is located at One Sansome Street, Suite 3500, San Francisco, California 94104.*

Stephen Coyle, age 72; Chief Executive Officer, AFL-CIO Housing Investment Trust since 1992. He has presided over the HIT’s growth from a $530 million fund in 1992 to $6.2 billion in total net assets at year-end 2017. During his time as CEO, he has overseen $6.7 billion in HIT investment in $12.9 billion in development ($8.5 billion and $15.7 billion in constant dollars, respectively), creating some 94,000 housing units and over 65,000 union construction jobs.**

Theodore S. Chandler, age 58; Chief Operating Officer, AFL-CIO Housing Investment Trust since 2009; formerly Vice President, Fannie Mae; Deputy Director, Chief Financial Officer and General Counsel, Massachusetts Industrial Finance Agency.

Erica Khatchadourian, age 50; Chief Financial Officer, AFL-CIO Housing Investment Trust since 2001; formerly Controller, Chief of Staff and Director of Operations, AFL-CIO Housing Investment Trust; Senior Consultant, Price Waterhouse.

Chang Suh, CFA, age 46; Senior Executive Vice President and Chief Portfolio Manager, AFL-CIO Housing Investment Trust since 2005; formerly Assistant Portfolio Manager, and Senior Portfolio Analyst, AFL-CIO Housing Investment Trust; Senior Auditor, Arthur Andersen.

Nicholas C. Milano, age 50, General Counsel, AFL-CIO Housing Investment Trust since 2013; formerly Of Counsel, Perkins Coie LLP; Deputy General Counsel and Chief Compliance Officer, Legg Mason Capital

Management; Deputy General Counsel and Chief Compliance Officer, AFL-CIO Housing Investment Trust; Senior Counsel, Division of Investment Management, Securities and Exchange Commission.

Debbie Cohen, age 67; Chief Development Officer, AFL-CIO Housing Investment Trust since 2009; formerly Chief Director of Marketing and Investor Relations, AFL-CIO Housing Investment Trust; Realtor, Coldwell Banker Realty and Weichert Realty; Senior Director of Planning and Research, Federal Home Loan Banks.

Emily Johnstone, age 44; Executive Vice President and Managing Director of Defined Contribution Marketing, AFL-CIO Housing Investment Trust since 2016; formerly Managing Director of Business Development and Regional Marketing Director, AFL-CIO Housing Investment Trust; Director of Investor Relations and Director of the West Regional Office, RBC Capital Markets.

Christopher Kaiser, age 53; Deputy General Counsel (since 2008) and Chief Compliance Officer (since 2007), AFL-CIO Housing Investment Trust; formerly Associate General Counsel, AFL-CIO Housing Investment Trust; Branch Chief, Division of Investment Management, U.S. Securities and Exchange Commission.

Thalia B. Lankin, age 39; Chief Business Development Officer, AFL-CIO Housing Investment Trust since 2016; Chief Operating Officer, Building America CDE, Inc.; formerly Director of Operations, Chief of

Staff and Special Counsel, AFL-CIO Housing Investment Trust.

Harpreet Singh Peleg, CFA, age 44; Controller, AFL-CIO Housing Investment Trust since 2005; Chief Financial Officer, Building America CDE, Inc.; formerly Chief Financial Officer, AFL-CIO Investment Trust Corporation; Financial Analyst, Goldman Sachs & Co.; Senior Associate, Pricewaterhouse Coopers.

Eric W. Price, age 56; Executive Vice President, AFL-CIO Housing Investment Trust since 2010; Chief Executive Officer, Building America CDE, Inc.; formerly Senior Vice President, Abdo Development; Senior Vice President, Local Initiative Support Corporation; Deputy Mayor for Planning and Economic Development, D.C.

Lesyllee White, age 55; Executive Vice President and Managing Director of Defined Benefit Marketing, AFL-CIO Housing Investment Trust since 2004; formerly Director of Marketing, Regional Marketing Director and Senior Marketing Associate, AFL- CIO Housing Investment Trust; Vice President, Northern Trust Company.

Stephanie H. Wiggins, age 52; Executive Vice President and Chief Investment Officer, AFL-CIO Housing Investment Trust since 2001; Director, Resource Capital Corp.; formerly Director of Fannie Mae Finance, AFL-CIO Housing Investment Trust; Director, Prudential Mortgage Capital Company; Vice President/Multifamily Transaction Manager, WMF Capital Corporation.

* Except for Ms. Wiggins, no officer of the HIT serves as a trustee or director in any corporation or trust having securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, or subject to the requirements of Section 15(d) of such Act, or any company registered as an investment company under the Investment Company Act of 1940, as amended. These officers are appointed annually, serving for a period of approximately one year or until their respective successors are duly appointed and qualified.

**Economic impacts such as jobs, personal income, and tax revenue estimates are derived from an IMPLAN model. See inside back cover for additional detail.

32     AFL - CIO HOUSING INVESTMENT TRUST

AFL-CIO Housing Investment Trust

National Office	Independent Registered Public Accounting Firm
2401 Pennsylvania Avenue, N.W.	Ernst & Young LLP
Suite 200	Tysons, Virginia
Washington, D.C. 20037
(202) 331-8055	Corporate Counsel
www.aflcio-hit.com	Katten Muchin Rosenman LLP
	Washington, D.C.
New York City Office
1270 Avenue of the Americas	Transfer Agent
Suite 210	BNY Mellon Investment Servicing (US) Inc.
New York, New York 10020	Wilmington, Delaware
(212) 554-2750
	Custodian
New England Regional Office	Bank of New York Mellon
Ten Post Office Square, Suite 800	New York, New York
Boston, Massachusetts 02109
(617) 850-9071
Western Regional Office
One Sansome Street, Suite 3500
San Francisco, California 94104
(415) 433-3044
Southern California Office
155 North Lake Avenue, Suite 800
Pasadena, California 91101
(626) 993-6676

Investors should consider the HIT’s investment objectives, risks, and expenses carefully before investing. A prospectus containing more complete information may be obtained from the HIT by calling the Marketing and Investor Relations Department collect at (202) 331-8055 or by viewing the HIT’s website at www.aflcio-hit.com. The prospectus should be read carefully before investing. The calculations of the HIT yield herein represent widely accepted portfolio characteristics information based on coupon rate, current price and, for yield to worst, certain prepayment assumptions, and are not current yield or other performance data as defined by the SEC in Rule 482.

Job and economic benefit figures in this report are provided by Pinnacle Economics, Inc. and HIT. Estimates are calculated using an IMPLAN input-output model based on HIT project data and secondary source materials and are shown in 2016 dollars.

This document contains forecasts, estimates, opinions, and/or other information that is subjective. Statements concerning economic, financial, or market trends are based on current conditions, which will fluctuate. There is no guarantee that such statements will be applicable under all market conditions, especially during periods of downturn. Actual outcomes and results may differ significantly from the views expressed. It should not be considered as investment advice or a recommendation of any kind.