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