<PAGE>
AFL-CIO HOUSING INVESTMENT TRUST
- - - --------------------------------
February 28, 1996
MEMORANDUM
- - - ----------
TO: Participants, AFL-CIO Housing Investment Trust
FROM: Michael M. Arnold, Director of Investor Relations
SUBJECT: 1995 Audited Financial Statements
- - - ------------------------------------------------------------------------------
I am pleased to enclose a copy of the Audited Financial Statements and
Independent Auditors' Report covering the operations of the AFL-CIO Housing
Investment Trust for the year ended December 31, 1995.
1995, the 30th anniversary of the AFL-CIO Investment Program, was a landmark
year for the Housing Investment Trust, with assets topping $1 billion for the
first time and investments in single and multi-family housing at record
levels. As of December 31, there were $1.17 billion in total net assets and
387 participants in the Trust. The Trust placed over $400 million in housing
projects last year and issued $258 million in new financing commitments.
The Trust's 1995 Annual Report is being finalized and will be ready for
distribution in March. In the meantime, if you have any questions or need
additional information, please do not hesitate to contact me.
MMA/spt
opeiu #3,afl-cio
Enclosure
- - - --------------------
1717 K Street NW, Suite 707, Washington D.C. 20006
202/331-8055 Fax 202/331-8190
<PAGE>
- - - -----------------------------------------
AMERICAN FEDERATION OF LABOR AND
CONGRESS OF INDUSTRIAL ORGANIZATIONS
HOUSING INVESTMENT TRUST
FINANCIAL STATEMENTS
DECEMBER 31, 1995
(With Independent Auditors' Report Thereon)
<PAGE>
AMERICAN FEDERATION of LABOR and CONGRESS of INDUSTRIAL
ORGANIZATIONS HOUSING INVESTMENT TRUST
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
[CAPTION]
<TABLE>
ASSETS
- - - ------------------------------------------------------------------------------
<S> <C>
Investments, at value (amortized cost $1,112,194,484) $1,159,401,686
Cash 743,284
Accrued interest receivable 8,758,909
Accounts receivable (note 2) 1,157,536
Prepaid expenses and other assets 965,131
- - - ------------------------------------------------------------------------------
TOTAL ASSETS $1,171,026,546
- - - ------------------------------------------------------------------------------
LIABILITIES
- - - ------------------------------------------------------------------------------
Accounts payable and accrued expenses 579,941
Redemptions payable -
Refundable deposits 434,647
Income distribution payable,
net of dividends reinvested of $17,140,760 3,118,487
- - - ------------------------------------------------------------------------------
TOTAL LIABILITIES 4,133,075
- - - ------------------------------------------------------------------------------
Net assets applicable to participants' equity (certificates
of participation - authorized unlimited; outstanding
1,062,234 units) (note 5) 1,166,893,471
- - - ------------------------------------------------------------------------------
Net asset value per unit of participation $1,098.53
- - - ------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
AMERICAN FEDERATION of LABOR and CONGRESS of INDUSTRIAL
ORGANIZATIONS HOUSING INVESTMENT TRUST
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
[CAPTION]
<TABLE>
FHA MORTGAGES (35.1%)
- - - ------------------------------------------------------------------------------
Interest Rate Maturity Face Amount Amortized Cost Value
- - - ------------------------------------------------------------------------------
SINGLE FAMILY
<C> <C> <C> <C> <C>
5.39% Dec-1995 - Nov-1996 $13,843 13,843 13,797
7.75 Jul-2021 - Aug-2021 2,924,958 2,924,958 2,992,320
8.00 Jul-2021 2,550,387 2,563,502 2,643,764
10.31 Feb-2016 80,625 79,834 87,863
11.00 Dec-2017 120,251 120,251 119,049
11.31 Mar-2016 91,561 91,561 101,166
- - - ------------------------------------------------------------------------------
5,781,625 5,793,949 5,957,959
- - - ------------------------------------------------------------------------------
MULTI-FAMILY
7.25% Dec-2028 - Feb-2029 34,288,849 34,895,251 34,324,259
7.40 May-2035 4,979,556 4,798,853 5,011,846
7.43 May-2023 18,383,132 18,803,141 18,660,358
7.50 Nov-2022 7,811,097 8,026,708 7,942,909
7.55 Aug-2012 1,020,826 743,396 1,020,826
7.60 Nov-2030 11,416,100 11,480,288 11,750,816
7.65 Dec-2030 2,252,012 2,252,012 2,237,618
7.70 Jan-2028 8,929,712 8,951,817 9,266,096
7.75 Apr-2029 23,492,660 23,492,660 24,438,488
7.80 Nov-2035 4,443,100 4,454,115 4,642,760
7.85 Jun-2024 11,223,700 11,338,480 11,448,174
7.93 Jul-2035 19,824,330 19,834,220 20,717,675
8.00 May-2029 - Aug-2030 12,126,538 12,110,483 12,860,126
8.13 Oct-2032 2,102,679 2,113,019 2,241,922
8.25 Jun-2034 - Sept-2035 18,345,289 18,354,134 18,953,520
8.30 Sep-2033 4,714,386 4,717,039 5,044,393
8.38 Jan-2027 - Nov-2034 39,741,071 39,760,321 42,403,015
8.40 Apr-2012 - Jan-2028 15,039,881 14,645,420 16,006,315
8.50 Apr-2012 - Feb-2035 13,388,432 13,219,242 14,053,561
8.60 Jan-2028 2,083,996 2,087,494 2,229,876
8.63 Dec-2029 4,303,846 4,307,681 4,605,115
8.64 Sep-2028 4,345,665 4,216,273 4,410,850
8.65 Jul-2022 1,458,915 1,459,799 1,561,039
8.70 Jan-2027 - Feb-2033 13,446,545 13,584,890 13,866,026
8.80 Oct-2032 5,701,444 5,704,935 5,815,473
(continued)
</TABLE>
<PAGE>
AMERICAN FEDERATION of LABOR and CONGRESS of INDUSTRIAL
ORGANIZATIONS HOUSING INVESTMENT TRUST
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
[CAPTION]
<TABLE>
FHA MORTGAGES (35.1%)(CONTINUED)
- - - ------------------------------------------------------------------------------
Interest Rate Maturity Face Amount Amortized Cost Value
- - - ------------------------------------------------------------------------------
MULTI-FAMILY
<C> <C> <C> <C> <C>
8.88% Sep-2029 - Jun-2034 $20,741,252 20,750,609 22,190,849
9.00 Mar-2029 - Jun-2034 15,442,982 15,315,266 16,478,104
9.13 Jul-2031 - May-2035 16,560,691 16,525,301 17,554,770
9.25 Jun-1998 - Jun-2034 17,114,169 17,210,594 17,723,400
9.31 Dec-2032 188,091 184,615 201,257
9.38 Jun-2032 - Jun-2034 6,862,657 6,952,871 7,343,043
9.50 Jul-2027 384,518 395,765 411,434
9.73 Jan-2035 6,469,783 6,471,620 6,793,272
9.75 Apr-2017 - Jan-2033 6,773,388 6,746,432 7,228,423
10.00 Mar-2031 5,900,965 5,900,965 6,018,985
10.15 Mar-2034 1,979,573 1,979,573 2,098,347
10.45 Jan-2030 1,230,156 1,231,649 1,303,966
11.39 Sep-2028 377,142 372,053 382,800
- - - ------------------------------------------------------------------------------
384,889,128 358,388,984 401,331,706
- - - ------------------------------------------------------------------------------
TOTAL FHA MORTGAGES $390,670,753 391,182,933 407,289,665
- - - ------------------------------------------------------------------------------
(continued)
</TABLE>
<PAGE>
AMERICAN FEDERATION of LABOR and CONGRESS of INDUSTRIAL
ORGANIZATIONS HOUSING INVESTMENT TRUST
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
FHA CONSTRUCTION LOANS (17.9%)
- - - --------------------------------------------------------------------------------
- - - ----------
Interest Rates
Construction Permanent Maturity* Commitment Face Amount Amortized Cost
Value
- - - --------------------------------------------------------------------------------
- - - ----------
<C> <C> <C> <C> <C> <C>
<C>
6.50% 6.50% Aug-2004 $22,086,600 21,136,561 21,136,561
20,410,052
7.75 7.75 Oct-2037 22,250,000 - -
725,012
7.88 7.88 Apr-2035 11,977,000 11,470,765 11,477,224
11,599,290
7.88 7.88 Feb-2037 13,714,100 9,186,571 9,392,283
9,388,239
7.88 7.88 Mar-2037 4,275,000 440,441 440,441
502,619
7.90 7.25 Sep-2035 12,395,200 9,258,170 8,864,919
9,128,269
8.13 8.13 Aug-2037 15,013,200 1,179,873 1,179,873
1,510,974
8.13 8.13 Jul-2029 14,037,000 11,191,167 11,128,143
11,481,433
8.13 8.13 Aug-2037 12,081,700 - -
279,021
8.13 7.90 Feb-2038 41,836,000 2,992,569 2,785,442
3,610,008
8.25 8.25 Nov-2036 3,645,000 55,140 55,140
177,087
8.30 8.30 Jun-2036 2,702,300 1,596,326 1,596,326
1,650,372
8.50 8.25 Feb-2037 5,265,000 336,340 337,420
533,189
8.50 8.13 Jul-2034 4,075,300 3,872,595 3,875,618
4,066,211
8.65 8.18 Nov-2036 10,079,100 6,632,945 6,506,181
6,881,928
8.65 8.18 Nov-2036 26,999,500 17,675,835 17,278,139
18,342,800
8.65 8.18 Feb-2036 4,247,200 3,219,881 3,157,441
3,324,607
8.75 8.75 Dec-2025 28,902,700 27,442,151 27,448,084
29,465,340
8.75 8.75 May-2036 3,861,700 2,036,446 2,052,165
2,306,765
8.80 8.75 Mar-2037 29,095,200 6,723,596 6,730,005
8,891,096
8.88 8.75 Jan-2036 8,562,900 7,163,120 7,044,816
7,805,338
8.88 8.88 Jun-2036 2,512,100 1,648,665 1,593,621
1,824,512
8.88 8.88 Sep-2035 9,194,900 6,921,606 6,927,682
7,540,490
8.90 7.95 Apr-2036 7,254,600 5,556,795 5,500,740
5,745,807
9.00 9.00 Nov-2035 7,306,500 6,967,289 6,867,291
7,483,539
9.25 9.25 May-2036 20,599,900 14,363,167 14,369,212
15,805,160
9.25 9.20 Nov-2032 3,527,800 1,020,561 981,436
1,010,356
9.25 9.25 Sep-1996 10,106,000 7,093,261 7,104,034
7,218,129
9.40 9.40 Jan-2036 9,706,400 5,647,957 5,653,580
6,555,086
10.00 9.90 Oct-2032 2,261,500 2,185,853 2,185,895
2,322,180
- - - --------------------------------------------------------------------------------
- - - ----------
TOTAL FHA CONSTRUCTION LOANS $195,015,646 193,669,712
207,584,909
- - - --------------------------------------------------------------------------------
- - - ----------
*Permanent mortgage maturity date
(continued)
</TABLE>
<PAGE>
AMERICAN FEDERATION of LABOR and CONGRESS of INDUSTRIAL
ORGANIZATIONS HOUSING INVESTMENT TRUST
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
[CAPTION]
<TABLE>
GNMA SECURITIES (29.8%)
- - - ------------------------------------------------------------------------------
Interest Rate Maturity Face Amount Amortized Cost Value
- - - ------------------------------------------------------------------------------
SINGLE FAMILY
<C> <C> <C> <C> <C>
8.00% Mar-2017 - Nov-2025 $62,517,654 63,757,314 64,674,275
8.50 Jul-2021 - Jun-2022 15,140,205 15,763,293 15,939,026
8.75 Mar-2025 4,091,852 4,264,828 4,317,543
9.00 May-2016 - Jun-2025 9,958,733 10,162,843 10,486,149
9.25 May-2016 - Jan-2025 2,911,270 3,064,723 3,105,506
9.50 Aug-2016 - Jun-2025 9,825,912 10,399,525 10,570,264
10.00 Jun-2019 62,238 62,238 67,742
11.00 Jul-2015 - Sep-2016 256,715 256,384 286,403
11.25 Oct-2015 91,504 91,015 103,342
12.00 Jun-2015 - Aug-2015 73,496 73,339 84,179
12.25 Apr-2015 17,023 17,023 19,369
13.00 Jul-2014 7,196 7,196 8,194
13.25 Dec-2014 8,311 8,311 9,436
13.50 Aug-2014 8,779 8,779 9,937
- - - ------------------------------------------------------------------------------
104,970,888 107,936,811 109,681,365
- - - ------------------------------------------------------------------------------
MULTI-FAMILY
6.75% Nov-2028 13,318,210 13,359,852 13,075,882
6.88 Jan-2029 22,716,427 22,800,934 22,865,138
7.50 Apr-2029 3,861,646 3,863,209 4,051,358
7.75 Aug-2030 12,018,776 11,975,319 12,199,058
7.88 Sep-2029 - Oct-2030 27,034,441 26,981,418 27,735,989
8.00 Jun-2030 21,593,939 21,593,985 22,266,904
8.13 Jun-2024 - May-2029 11,936,185 11,860,773 12,174,908
8.25 May-2032 4,660,999 4,742,655 4,736,236
8.50 Jan-2027 - Jul-2029 13,512,621 13,636,849 14,402,740
8.75 Dec-2026 4,452,225 4,413,279 4,592,470
9.00 Jun-2030 - May-2031 12,808,391 12,151,234 13,652,382
9.25 Dec-2030 10,909,797 10,846,060 11,127,993
9.50 Nov-2027 4,647,071 4,647,071 4,845,269
9.63 Feb-2029 17,014,555 17,014,942 17,014,555
9.75 Oct-2032 9,739,197 9,740,180 10,420,940
9.80 Mar-2028 - Oct-2031 11,976,441 11,978,929 12,652,937
9.88 Jul-2031 4,775,444 4,733,288 5,109,725
10.05 May-2026 1,273,104 1,273,104 1,311,297
10.25 Nov-2025 3,922,284 3,856,803 4,025,244
12.55 Jun-2025 6,164,273 6,054,836 6,395,436
- - - ------------------------------------------------------------------------------
218,336,026 217,524,720 224,656,461
- - - ------------------------------------------------------------------------------
(continued)
</TABLE>
<PAGE>
AMERICAN FEDERATION of LABOR and CONGRESS of INDUSTRIAL
ORGANIZATIONS HOUSING INVESTMENT TRUST
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
[CAPTION]
<TABLE>
GNMA SECURITIES (29.8%)(CONTINUED)
- - - --------------------------------------------------------------------------------
- - - ----------
Interest Rates
Construction Permanent Maturity* Commitment Face Amount Amortized Cost
Value
- - - --------------------------------------------------------------------------------
- - - ----------
CONSTRUCTION LOANS
<C> <C> <C> <C> <C> <C>
<C>
6.75% 6.75% Jan-2034 $3,733,300 1,531,729 990,614
1,584,961
7.70 7.85 Mar-2037 9,041,900 1,881,606 1,890,977
1,803,861
7.75 8.90 Nov-2034 7,984,400 5,491,338 5,180,495
5,579,594
8.25 8.25 Sep-2036 3,272,600 1,746,385 1,746,386
1,939,239
- - - --------------------------------------------------------------------------------
- - - ----------
10,651,058 9,808,472
10,907,655
- - - --------------------------------------------------------------------------------
- - - ----------
TOTAL GNMA SECURITIES $333,957,972 335,270,003
345,245,481
- - - --------------------------------------------------------------------------------
- - - ----------
*Permanent mortgage maturity date
FNMA SECURITIES (8.3%)
- - - --------------------------------------------------------------------------------
- - - ----------
Interest Rate Maturity Commitment Face Amount Amortized
Cost Value
- - - --------------------------------------------------------------------------------
- - - ----------
SINGLE FAMILY
7.50% Jul-2024 - Dec-2025 $9,515,625 9,653,473
9,750,542
8.00 May-2015 - Aug-2025 48,107,185 48,310,734
49,836,037
8.25 Oct-2021 335,170 330,902
348,524
8.50 Oct-2021 - Apr-2023 1,120,863 1,118,164
1,169,900
- - - --------------------------------------------------------------------------------
- - - ----------
59,078,843 59,413,273
61,105,003
- - - --------------------------------------------------------------------------------
- - - ----------
MULTI-FAMILY
8.00 Nov-2019 - May-2020 7,401,752 7,348,133
7,851,657
8.13 May-2020 8,564,863 8,494,504
9,163,887
8.25 Jun-2008 - Mar-2014 4,153,528 - -
147,827
8.50 Aug-2006 - May-2012 2,850,541 - -
162,510
8.63 Feb-2006 790,000 - -
43,436
8.75 Sep-2025 10,471,368 - -
314,341
9.00 Aug-2021 1,138,553 - -
56,546
9.13 Jul-2012 - Feb-2026 13,210,225 13,167,978
14,704,953
9.25 May-2018 5,514,000 - -
329,291
9.75 Feb-2023 2,008,592 1,982,154
2,209,452
- - - --------------------------------------------------------------------------------
- - - ----------
31,185,432 30,992,769
34,983,900
- - - --------------------------------------------------------------------------------
- - - ----------
TOTAL FNMA SECURITIES $90,264,275 90,406,042
96,088,903
- - - --------------------------------------------------------------------------------
- - - ----------
(continued)
</TABLE>
<PAGE>
AMERICAN FEDERATION of LABOR and CONGRESS of INDUSTRIAL
ORGANIZATIONS HOUSING INVESTMENT TRUST
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
[CAPTION]
<TABLE>
FHLMC SECURITIES (3.4%)
- - - --------------------------------------------------------------------------------
- - - ----------
Interest Rate Maturity Face Amount Amortized Cost
Value
- - - --------------------------------------------------------------------------------
- - - ----------
SINGLE FAMILY
<C> <C> <C> <C>
<C>
7.50% Aug-2024 - Dec-2025 $4,730,610 4,778,098
4,850,354
8.00 Jun-2024 - Nov-2025 8,794,184 8,894,504
9,115,721
8.25 Dec-2022 674,366 669,470
701,551
8.50 Jul-2024 - Jun-2025 11,729,947 11,837,203
12,246,797
9.00 Mar-2025 2,744,504 2,794,147
2,887,734
- - - --------------------------------------------------------------------------------
- - - ----------
28,673,611 28,973,422
29,802,157
- - - --------------------------------------------------------------------------------
- - - ----------
MULTIFAMILY
8.00% Feb-2009 9,068,091 8,996,617
9,249,452
- - - --------------------------------------------------------------------------------
- - - ----------
TOTAL FHLMC SECURITIES $37,741,702 37,970,039
39,051,609
- - - --------------------------------------------------------------------------------
- - - ----------
</TABLE>
[CAPTION]
<TABLE>
LOCAL INITIATIVES (1.1%)
- - - --------------------------------------------------------------------------------
- - - ----------
Interest Rate Maturity* Commitment Face Amount Amortized Cost
Value
- - - --------------------------------------------------------------------------------
- - - ----------
CONSTRUCTION LOANS
<C> <C> <C> <C> <C>
<C>
8.38% Feb-2007 $995,894 995,894 995,894
$1,010,364
9.50 Dec-1995 1,000,000 366,093 369,943
376,552
PERMANENT LOANS
8.00% Dec-2023 998,013 993,483
1,030,616
8.00 May-2025 5,016,300 4,998,289
5,180,478
8.50 Jan-2005 1,016,160 - -
43,548
8.63 Jun-2025 1,464,712 1,464,712
1,460,464
9.13 May-2017 721,823 728,346
757,914
9.50 Apr-2024 753,978 762,337
791,677
9.50 Dec-2011 912,198 920,137
957,808
9.50 Aug-2012 1,492,221 1,498,380
1,566,833
- - - --------------------------------------------------------------------------------
- - - ----------
TOTAL LOCAL INITIATIVES $12,721,232 12,731,521
13,176,254
- - - --------------------------------------------------------------------------------
- - - ----------
*Permanent mortgage loan maturity date.
(continued)
</TABLE>
<PAGE>
AMERICAN FEDERATION of LABOR and CONGRESS of INDUSTRIAL
ORGANIZATIONS HOUSING INVESTMENT TRUST
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
[CAPTION]
<TABLE>
SHORT-TERM INVESTMENTS (4.4%)
- - - --------------------------------------------------------------------------------
- - - ----------
Description Interest Rate Face Amount Amortized Cost
Value
- - - --------------------------------------------------------------------------------
- - - ----------
<S> <C> <C> <C>
<C>
Repurchase Agreement
NationsBank, due 1/2/96 5.75% $6,155,000 6,155,000
6,155,000
- - - --------------------------------------------------------------------------------
- - - ----------
- - - --------------------------------------------------------------------------------
- - - ----------
Commercial Paper
Merrill Lynch & Co., due 1/10/96 5.76 5,000,000 4,992,800
4,992,800
Bear, Stearns & Co., Inc., due 1/16/96 5.77 5,000,000 4,987,979
4,987,979
GW University, due 1/19/96 5.80 5,000,000 5,000,000
5,000,000
BI Funding, Inc., due 1/24/96 5.70 5,000,000 4,981,792
4,981,792
Clipper Receivables Corp., due 1/30/96 5.87 5,000,000 4,976,357
4,976,357
American General Corp., due 2/9/96 5.65 5,000,000 4,969,396
4,969,396
McKenna Triangle National, due 2/13/96 5.66 5,000,000 4,966,197
4,966,197
Falcon Asset Security Corp., due 2/14/96 5.75 5,000,000 4,964,861
4,964,861
American Express Credit, due 3/8/96 5.65 5,000,000 4,947,424
4,948,055
- - - --------------------------------------------------------------------------------
- - - ----------
45,000,000 44,786,806
44,787,437
- - - --------------------------------------------------------------------------------
- - - ----------
Money Market Account
NationsBank 3.41 22,428 22,428
22,428
- - - --------------------------------------------------------------------------------
- - - ----------
TOTAL SHORT-TERM INVESTMENTS 51,177,428 50,964,234
50,964,865
- - - --------------------------------------------------------------------------------
- - - ----------
TOTAL INVESTMENTS $1,111,549,008 1,112,194,484
1,159,401,686
- - - --------------------------------------------------------------------------------
- - - ----------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
AMERICAN FEDERATION of LABOR and CONGRESS of INDUSTRIAL
ORGANIZATIONS HOUSING INVESTMENT TRUST
STATEMENT OF OPERATIONS
DECEMBER 31, 1995
[CAPTION]
<TABLE>
INVESTMENT INCOME:
- - - --------------------------------------------------------------------------------
- - - ----------
<S>
<C>
INTEREST:
FHA Mortgages
$28,829,497
FHA Construction Loans
11,858,135
GNMA Securities
27,150,162
FNMA Securities
8,123,388
FHLMC Securities
3,692,242
Local Initiatives
927,185
Short-term investments
5,608,826
Discount amortization and other income
106,890
- - - --------------------------------------------------------------------------------
- - - ----------
TOTAL INCOME
86,296,325
- - - --------------------------------------------------------------------------------
- - - ----------
EXPENSES:
Salaries and fringe benefits
3,118,496
Legal
212,781
Consultant Fees
114,198
Auditing and tax accounting fees
74,725
Insurance
142,054
Marketing and sales promotion
465,765
Program development
97,333
Trustee expenses
37,309
General expenses
1,100,924
- - - --------------------------------------------------------------------------------
- - - ----------
TOTAL EXPENSES
5,363,285
- - - --------------------------------------------------------------------------------
- - - ----------
Investment Income - net
80,933,040
- - - --------------------------------------------------------------------------------
- - - ----------
Net realized gain on sale of investments
269,303
Change in unrealized appreciation on investments for the year (note 4)
105,054,153
- - - --------------------------------------------------------------------------------
- - - ----------
Net gain on investments
105,323,456
- - - --------------------------------------------------------------------------------
- - - ----------
Net increase in net assets resulting from operations
$186,256,496
- - - --------------------------------------------------------------------------------
- - - ----------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
AMERICAN FEDERATION of LABOR and CONGRESS of INDUSTRIAL
ORGANIZATIONS HOUSING INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
DECEMBER 31, 1995
YEARS ENDED DECEMBER 31, 1995 AND 1994
[CAPTION]
<TABLE>
1995
1994
- - - --------------------------------------------------------------------------------
- - - ----------
<S> <C>
<C>
Increase in net assets from operations:
Investment income - net $80,933,040
69,311,819
Net realized gain (loss) on sale of investments 269,303
(1,035,485)
Change in unrealized appreciation (depreciation) 105,054,153
(91,731,825)
- - - --------------------------------------------------------------------------------
- - - ----------
Net increase (decrease) in net assets resulting from
operations $186,256,496
(23,455,491)
- - - --------------------------------------------------------------------------------
- - - ----------
Distributions paid to participants or reinvested from:
Investment income - net (80,582,576)
(69,311,869)
Increase in net assets from share transactions:
Proceeds from the sale of 57,062 and 125,467 units of
participation in 1995 and 1994, respectively 59,904,702
130,567,310
Dividend reinvestment of 64,132 and 61,387 units of
participation in 1995 and 1994, respectively 68,442,605
62,555,266
Payments for redemption of 2,337 and 10,578 units of
participation in 1995 and 1994, respectively (2,391,945)
(10,884,619)
- - - --------------------------------------------------------------------------------
- - - ----------
Net increase from share transactions 125,955,362
182,237,957
- - - --------------------------------------------------------------------------------
- - - ----------
Total increase 231,629,282
89,470,597
- - - --------------------------------------------------------------------------------
- - - ----------
Net assets at beginning of year 935,264,189
845,793,592
- - - --------------------------------------------------------------------------------
- - - ---------
Net assets at end of year $1,166,893,471
935,264,189
- - - --------------------------------------------------------------------------------
- - - ---------
See accompanying notes to financial statements.
</TABLE?
<PAGE>
AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL
ORGANIZATIONS HOUSING INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENT
DECEMBER 31, 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- - - ------------------------------------------------------------------------------
The American Federation of Labor and Congress of Industrial Organizations
(AFL-CIO) Housing Investment Trust (the Trust) is a common law trust created
under the laws of the District of Columbia and is registered under the
Investment Company Act of 1940 as a no-load, open-end investment company. The
Trust has obtained certain exemptions from the requirements of the Investment
Company Act of 1940 which are described in the Trust's prospectus.
Participation in the Trust is limited to labor organizations and eligible
pension, welfare, and retirement plans which have beneficiaries who are
represented by labor organizations.
The following is a summary of significant accounting policies followed by
the Trust in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles.
INVESTMENT VALUATION
Investments are presented at value. Value determinations are summarized
by specific category of investment as follows:
Long-term investments consisting of permanent mortgages, mortgage-backed
securities, construction loans and participation certificates are valued using
published prices or dealer bids, supported by the present value of the
projected cash flows discounted using market based discount and prepayment
rates, developed individually for each security. The market-based discount
rate is composed of the sum of a risk-free yield (i.e., a U.S. Treasury Note
with a weighted average life comparable to the security being valued) and
adjusted for an appropriate risk premium. The risk premium reflects actual
premiums in the marketplace over the yield on U.S. Treasury securities of a
comparable risk and maturity to the security being valued. On loans for which
the Trust finances the construction and permanent mortgage, value is
determined based upon the total amount of the commitment for the term of the
construction loan plus the permanent mortgage loan. For construction only
loans, the outstanding principal balance of the loan is used to approximate
value, assuming no decline in credit quality.
Short-term investments consisting of repurchase agreements, commercial
paper and money market accounts which mature less than 60 days from the
balance sheet date are valued at amortized cost, which approximates value.
Short-term investments which mature more than 60 days from the balance sheet
date are valued at the last reported sales price on the last business day of
the month or the mean between the reported bid and ask price if there was no
<PAGE>
sale. Short-term investments maturing more than 60 days from the balance sheet
date for which there are no quoted market prices are valued to reflect current
market yields for securities with comparable terms and interest rates.
Additional information relative to investment terms and credit risk are
described more fully in the Trust's prospectus.
FEDERAL INCOME TAXES
The Trust's policy is to comply with the requirements of the Internal
Revenue Code that are applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Therefore, no
federal income tax provision is required.
The total cost of the portfolio of investments for federal income tax
purposes, approximates the cost of all investments for financial statement
purposes.
DISTRIBUTIONS TO PARTICIPANTS
At the end of each calendar quarter (March 31, June 30, September 30, and
December 31), net investment income earned in the preceding three months is
distributed to existing participants based on a pro rata basis. Net realized
gains are distributed to existing participants at year end on a pro rata
basis. Amounts distributable, but not disbursed, as of the balance sheet date
are classified as income distribution payable.
Participants redeeming their certificates are paid their pro rata share
of undistributed net income accrued to the month-end of redemption.
The Trust offers an income reinvestment plan which allows current
participants to automatically reinvest their income distribution into the
Trust's units of participation. Total reinvestment of distributable income
quarterly approximated 85 percent for the year ended December 31, 1995.
INVESTMENT INCOME
Interest income is recognized on an accrual basis. Commitment fees, points
and other discounts or premiums resulting from the funding or acquisition of
mortgage loans or mortgage-backed securities are accounted for as an
adjustment to the cost of the investment and amortized over the estimated life
of the mortgage loan or mortgage-backed security, using an amortization method
which approximates the effective interest method. Realized gains and losses
from investment transactions are recorded on the trade date using an
identified cost basis.
(2) TRANSACTIONS WITH AFFILIATES
- - - ------------------------------------------------------------------------------
During the year ended December 31, 1995, certain members of the Trust's
management provided services to the AFL-CIO Building Investment Trust, a
Maryland Group Trust managed by a Maryland state bank insured by the federal
Deposit Insurance Corporation. The AFL-CIO has granted permission to use its
name. The total cost of these services to the Trust and related expenses,
<PAGE>
during fiscal year 1995, amounted to $937,365. The Trust was reimbursed for
$606,068 of these costs with the remaining amount of $331,297 included in the
accompanying financial statements as accounts receivable.
(3) COMMITMENTS
- - - ------------------------------------------------------------------------------
The assets of the Trust are invested in short-term investments until they are
required to fund commitments for construction loans, mortgage-backed
securities, participation certificates or permanent mortgages. At December
31, 1995, the Trust had remaining unfunded commitments of approximately
$283,166,000 to fund construction and permanent mortgages and other
investments. The Trust is required to maintain a segregated account of
securities in an amount no less than the total unfunded commitments less
short-term investments.
<PAGE>
AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL
ORGANIZATIONS HOUSING INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENT
DECEMBER 31, 1995
(4) INVESTMENT TRANSACTIONS
- - - ----------------------------------------------------------------------------
A summary of long-term investment transactions, at amortized cost for the
separate instruments included in the Trust's investment portfolio, at
amortized cost, for the year ended December 31, 1995, follows:
<CAPTION>
</TABLE>
<TABLE> FHA
FHA Construction GNMA
FNMA FHLMC Local
Mortgages Loans Securities
Securities Securities Initiatives
- - - --------------------------------------------------------------------------------
- - - --------------------------------
<S> <C> <C> <C> <C>
<C> <C>
Balance,
January 1, 1995 314,284,670 125,749,219 300,858,660
138,316,083 66,168,222 10,355,237
Purchases and construction loan
advances, net of discounts 73,816,822 144,868,289 131,478,621
36,193,945 18,381,348 2,440,734
Amortization of discounts (premiums) 1,524,539 87,870 218,591
(69,203) (90,388) 27,065
Transfers Principal reductions 71,054,840 (71,054,840) -
- - -
(69,497,938) (5,980,826) (97,285,869)
(84,034,783)(46,489,143) (91,515)
- - - --------------------------------------------------------------------------------
- - - --------------------------------
Balance,
December 31, 1995 $391,182,933 193,669,712 335,270,003
90,406,042 37,970,039 12,731,521
- - - --------------------------------------------------------------------------------
- - - --------------------------------
</TABLE>
[CAPTION]
<TABLE>
For the year ended December 31, 1995, the changes in gross unrealized
appreciation and depreciation in the value of investments were:
<S> <C>
Unrealized appreciation $113,725,515
Unrealized depreciation (8,671,362)
- - - ------------------------------------------------------------------------------
NET UNREALIZED APPRECIATION CHANGE $105,054,153
- - - -----------------------------------------------------------------------------
</TABLE>
As of December 31, 1995, the accumulated unrealized appreciation of securities
was $47,207,204; accumulated undistributed net realized loss on investment
transactions totaled ($844,004).
<PAGE>
AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL
ORGANIZATIONS HOUSING INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENT
DECEMBER 31, 1995
(5) PARTICIPANTS' EQUITY
- - - ------------------------------------------------------------------------------
[CAPTION]
<TABLE>
Participants' equity consisted of the following at December 31, 1995
<S> <C>
Amount invested and reinvested by current participants $1,120,231,281
Excess of redemption over issue price for units of participation
(51,474)
Accumulated unrealized appreciation in the value of investments 47,207,204
Accumulated undistributed net realized loss on investments
(844,004)
Accumulated undistributed investment income - net 350,464
- - - ------------------------------------------------------------------------------
$1,166,893,471
- - - ------------------------------------------------------------------------------
</TABLE>
(6) RETIREMENT AND DEFERRED COMPENSATION PLANS
- - - -------------------------------------------------------------------------------
The Trust participates in the AFL-CIO Staff Retirement Plan, which is a
multi-employer defined benefit pension plan, covering substantially all
employees. This plan was funded by employer contributions, at rates
approximating 17.7 percent of employees' salaries during 1995. The total
Trust
pension expense for 1995 was approximately $437,000.
The Trust also participates in a deferred compensation plan, referred to as a
401(k) plan, covering substantially all employees. This plan permits an
employee to defer the lesser of 10 percent of their annual salary or the
applicable IRS limit. The Trust matches dollar-for-dollar the first $1,050 of
employee contributions. The Trust's 401(k) matching contribution expense for
1995 was approximately $42,000.
<PAGE>
AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL
ORGANIZATIONS HOUSING INVESTMENT TRUST
SUPPLEMENTARY INFORMATION - SELECTED PER SHARE DATA AND RATIOS
DECEMBER 31, 1995
[CAPTION]
<TABLE>
YEARS ENDED DECEMBER 31, 1995, 1994, 1993, 1992, AND 1991
- - - --------------------------------------------------------------------------------
- - - -----------
1995 1994 1993
1992 1991
- - - --------------------------------------------------------------------------------
- - - -----------
<S> <C> <C> <C> <C>
<C>
Per share data
Investment income $86.50 87.13 91.83
87.28 98.43
Expenses (5.38) (5.47) (5.90)
(5.74) (6.44)
- - - --------------------------------------------------------------------------------
- - - ----------
Investment income - net 81.12 81.66 85.93
81.54 91.99
Distributions from investment income - net (80.77) (81.66) (83.64)
(81.54) (91.99)
Distributions from realized gains on investments - - (2.29)
- - - - -
- - - --------------------------------------------------------------------------------
- - - ------------
Net asset value:
Beginning of period 991.40 1,102.58 1,086.40
1,106.90 1,054.91
Net realized and unrealized gain (loss)
on investments. Net increase (decrease)
in net asset value 107.13 (111.18) 16.18
(20.50) 51.99
- - - --------------------------------------------------------------------------------
- - - ------------
END OF PERIOD $1,098.53 991.40 1,102.58
1,086.40 1,106.90
- - - --------------------------------------------------------------------------------
- - - ----------
</TABLE>
Ratios
Ratio of expenses to average net
assets .5% .5% .5% .5% .6%
- - - -----------------------------------------------------------------------------
Ratio of net investment income to
average net assets 7.6% 7.8% 7.5% 7.4% 8.4%
- - - -----------------------------------------------------------------------------
Portfolio turnover rate 31.2% 27.5% 24.2% 22.1% 9.5%
- - - -----------------------------------------------------------------------------
Number of units outstanding
at end of period 1,062,234 943,378 767,101 609,295 477,668
- - - ------------------------------------------------------------------------------
<PAGE>
INDEPENDENT AUDITORS' REPORT
- - - ------------------------------------------------------------------------------
TO THE PARTICIPANTS AND TRUSTEES OF THE AMERICAN FEDERATION
OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS HOUSING
INVESTMENT TRUST:
We have audited the accompanying statement of assets and liabilities of the
American Federation of Labor and Congress of Industrial Organizations Housing
Investment Trust, including the schedule of portfolio investments, as of
December 31, 1995, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in
the
period then ended, and the selected per share data and ratios for each of the
five years in the period then ended. These financial statements and per
share
data and ratios are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and per
share data and ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller
General
of the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
and per share data and ratios are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
verification
by examination, or confirmation by correspondence with the custodians, of
investments owned at December 31, 1995. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and selected per share data and
ratios referred to above present fairly, in all material respects, the
financial position of the American Federation of Labor and Congress of
Industrial Organizations Housing Investment Trust as of December 31, 1995,
and
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 the selected
per share data and ratios for each of the five years in the period then
ended,
in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
JANUARY 26, 1996
