AFL-CIO HOUSING INVESTMENT TRUST
SEMI-ANNUAL REPORT
JUNE 30, 2000
REPORT TO PARTICIPANTS
THE AFL-CIO HOUSING INVESTMENT TRUST COMPLETED THE FIRST SIX MONTHS OF 2000 WITH
A RECORD OF CONTINUED GROWTH AND COMPETITIVE PERFORMANCE. IN A PERIOD WHEN
INTEREST RATE VOLATILITY CONTINUED TO AFFECT FIXED-INCOME FUNDS, THE TRUST
SUCCESSFULLY MANAGED ITS PORTFOLIO TO MINIMIZE INTEREST RATE RISK AND OUTPERFORM
INDUSTRY BENCHMARKS. AT THE SAME TIME, THE TRUST WORKED TO STIMULATE JOBS AND
IMPROVE THE NATION'S HOUSING STOCK THROUGH ITS INVESTMENTS IN INSURED OR
GUARANTEED MULTI-FAMILY AND SINGLE-FAMILY LOANS. THE OUTSTANDING FIRST TWO
QUARTERS AND THE FAVORABLE OUTLOOK FOR THE HOUSING MORTGAGE MARKET CREATE
EXCELLENT CONDITIONS FOR CONTINUED INVESTMENT SUCCESS IN THE PERIOD AHEAD.
<PAGE>
<PAGE>01
<TABLE><CAPTION>
PERFORMANCE
Total Gross Rate of Return*
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Housing Investment Trust 4.98% 6.48% 7.29% 8.47%
Lehman Aggregate Bond Index 4.56% 6.04% 6.25% 7.82%
Note: Returns for periods exceeding one year are annualized.
* Total returns of the Trust, used here for comparative purposes, do not reflect
the deduction of fund administrative expenses. The Trust's net rates of return
for the one-, three-, five-, and ten-year periods ending June 30 were 4.56
percent, 6.06 percent, 6.84 percent, and 7.97 percent, respectively.
</TABLE>
GROWTH AND PERFORMANCE
The Trust maintained steady growth in the first two quarters of 2000 with total
net assets reaching $2.26 billion, a 5 percent increase since the close of 1999.
Investors showed continued strong confidence in the Trust with $75.2 million in
new investments during the period, including $48.5 million in investments from
four new participants. Current participants reinvested earnings at a steady
rate of 90 percent.
Total rates of return at June 30 compared favorably with the Lehman Aggregate
Bond Index, reflecting the success of the Trust's overall portfolio management
strategy. Despite a 100 basis point rise in short-term interest rates resulting
from Federal Reserve actions to tighten the monetary supply, and volatility
created by the U.S. Treasury buy-back program, agency-backed mortgage securities
produced outstanding returns relative to other fixed-income investments. In
particular, the Trust's significant holdings in long-term construction-related
mortgage securities continued to boost overall returns for Trust investors.
Throughout the period, the Trust focused on portfolio diversity and structure,
while producing high current income and avoiding excess interest rate risk
relative to the market benchmark. At June 30, the Trust's total rate of return
exceeded the index by 62 basis points for the six-month period. Over the longer
term, the Trust's one-year and five-year total returns were 4.98 percent and
7.29 percent and continued to outperform the benchmark by 42 and 104 basis
points, respectively.
The net asset value of $1,044.27 at June 30 reflected a gain of $8.55 per unit
since December 31. The Trust's 411 participants increased their units of
participation held to 2,163,577 at June 30.
The Trust remains one of the most cost-efficient organizations in the
institutional fund management industry. Its ratio of expenses to average net
assets was 40 basis points (0.40 percent) for the six months ended June 30.
<PAGE>
<PAGE>02
[PIE CHART INDICATING PORTFOLIO COMPOSITION]
MORTGAGE-BACKED SECURITIES 57.3%
FHA MORTGAGES 21.4%
CONSTRUCTION-RELATED MORTGAGES AND MBS 14.0%
HOUSING BONDS AND LOCAL INITIATIVE MORTGAGES 2.3%
FHLB SECURITY 0.2%
SHORT-TERM 4.8%
LOAN PRODUCTION
The Trust issued $93.1 million in new single-family and multi-family financing
commitments for 1,032 units during the first two quarters of 2000. Based upon
the current pipeline and increased activity in Fannie Mae origination, the Trust
anticipates a substantial increase in financing commitments by December 2000.
In order to reach this higher commitment level by year-end and lay the
foundation for loan production in the next year, the Trust has enhanced its
relationships with HUD, Fannie Mae, state housing finance agencies, and
community development groups.
To expand homeownership opportunities for union members and develop quality
investments for the portfolio, the Trust is exploring new investment
partnerships that will build on the success of the Homeownership Opportunity
Initiative and serve union homebuyers across the nation.
PORTFOLIO MANAGEMENT
The Trust's portfolio was closely monitored as to yield, duration, and convexity
to maximize participant value as interest rates fluctuated during the period.
Investment activity was strong, and short-term investments were just 4.8 percent
of the portfolio at mid-year, keeping the majority of assets productively
invested in mortgages and mortgage-backed securities.
Investors continued to benefit from the security afforded by having 98 percent
of the Trust's long-term investments insured or guaranteed by the U.S.
government or government-sponsored enterprises such as Fannie Mae and Freddie
Mac.
<PAGE>
<PAGE>03
INVESTMENT INITIATIVES
Pension funds invested in the Trust are helping to meet some of this country's
most pressing needs for decent housing and good jobs while earning competitive
risk-adjusted returns. In the first half of 2000, the Trust helped establish
partnerships between unions, community organizations, and state and local
governments to build strong communities through dozens of projects like the ones
described here.
* Representatives of New York unions joined AFL-CIO President John Sweeney
to launch the $52 million renovation of Workmen's Circle MultiCare Center. The
Bronx nursing facility was founded half a century ago, originally to serve
members of the needle trades. The Trust's $52 million FHA-insured loan is its
largest investment to date for a nursing home facility.
* Low-income families in Chicago will find apartments they can afford at
North Town Village, a $23 million project just getting underway. Two-thirds of
the project's 116 rental units will be affordable, and some will serve families
displaced from public housing projects that are being redeveloped, like the
nearby Cabrini-Green. HIT is providing $2.6 million toward the financing of
this project through an FHA-insured loan serviced by the state housing finance
agency.
* A single mother buying her first home became the proud owner of the first
property restored by "At Home in New Orleans," the Trust's unique partnership
with the city of New Orleans and Freddie Mac. Mayor Marc Morial and area labor
officials congratulated the new homeowner at a special ceremony at the house.
* Seattle Mayor Paul Schell and a group of new homeowners helped AFL-CIO
President Sweeney announce the $25 million expansion of the Trust's
Homeownership Opportunity Initiative in Seattle and King County. The innovative
mortgage program, which serves union members and public employees, has become an
important part of Seattle's efforts to foster homeownership.
OUTLOOK FOR THE FUTURE
At mid-year, the Trust has distinguished itself with competitive performance and
can look forward to further investment success in the period ahead. With its
experienced staff, state-of-the-art systems, and strong relationships within the
industry, the Trust is well prepared to monitor the markets and manage the
program to maintain value through changing economic conditions. Its active
network of community partnerships and recognized technical expertise create the
prospect of exciting new investment opportunities. Those expanding investments
are expected to grow the portfolio and enhance returns - making the Trust even
more attractive to pension investors who seek competitive returns and a high
degree of security, while also furthering labor's goals for housing, community
development, and jobs.
Stephen Coyle
Chief Executive Officer
Michael M. Arnold
Executive Vice President
Helen R. Kanovsky
Executive Vice President
<PAGE>
<PAGE>04
2000 PARTICIPANTS MEETING
The 2000 Annual Meeting of Participants was held in Washington, D.C., on May 18,
2000. The following matters were put to a vote of Participants at the meeting
through the solicitation of proxies.
Richard Ravitch was reelected to chair the Board of Trustees by a vote of
1,320,870.8393 for, 0.000 against, 20,761.4807 abstentions, and 781,586.7490
votes not cast.
The table above details votes pertaining to Trustees who were elected at the
Annual Meeting.
The following Trustees were not up for election because their terms continued
after the date of the Annual Meeting: Linda Chavez-Thompson, Terrence R.
Duvernay, Frank Hanley, Frank Hurt, Walter M. Kardy, George Latimer, Michael E.
Monroe, Tony Stanley, John J. Sweeney, Richard Trumka, Patricia F. Wiegert, and
Andrew L. Stern.
Participants considered an amendment to the Trust's Charter to modify certain of
the eligibility criteria applicable to the nomination and election of Management
Trustees and approved the amendment by a vote of 1,319,688.0417 for, 150.8392
against, 21,793.4391 abstentions, and 781,586.7490 votes not cast.
Arthur Andersen LLP was ratified as the Trust's Public Accountants by a vote of
1,321,385.1742 for, 0.000 against, 20,247.1458 abstentions, and 781,586.7490
votes not cast.
<TABLE><CAPTION>
Trustee Votes Votes Votes Votes
For Against Abstaining Not Cast
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jack E. Cullerton 1,337,776.5507 2,981.9682 873.8011 781,586.7490
Alfred J. Fleischer 1,377,776.5507 2,981.9682 873.8011 781,586.7490
John J. Flynn 1,330,734.6205 1,559.2576 9,338.4419 781,586.7490
Edwin D. Hill 1,331,806.2557 830.5097 8,995.5546 781,586.7490
Martin J. Maddaloni 1,330,164.3308 2,472.4346 8,995.5546 781,586.7490
Terrence M. O'Sullivan 1,332,293.8781 0.0000 9,338.4419 781,586.7490
Marlyn Spear 1,289,451.3804 1,559.2576 50,621.6820 781,586.7490
Edward C. Sullivan 1,331,463.3684 803.5097 9,338.4419 781,586.7490
</TABLE>
<PAGE>
<PAGE>05
FINANCIAL STATEMENTS
JUNE 30, 2000
--------------------------------------------------------------
American Federation of Labor and Congress of Industrial
Organizations Housing Investment Trust
<PAGE>
<PAGE>06
Statement of Assets and Liabilities
June 30, 2000 (Dollars in thousands unless noted; unaudited)
ASSETS
--------------------------------------------------------------------------------
Investments, at value (amortized cost $2,301,641) $2,254,240
Cash 28,640
Accrued interest receivable 14,468
Accounts receivable 2,471
Prepaid expenses and other assets 2,329
--------------------------------------------------------------------------------
Total Assets 2,302,148
LIABILITIES
--------------------------------------------------------------------------------
Accounts payable and accrued expenses 868
Redemptions payable 38,994
Refundable deposits 1,607
Income distribution payable, net dividends
reinvested of $11,663 1,315
Total Liabilities 42,784
-------------------------------------------------------------------------------
Net assets applicable to participants' equity -
certificates of participation - authorized unlimited;
outstanding 2,163,577 units (note 5) $2,259,364
=======
Net asset value per unit of participation (in dollars) $1,044.2725
===========
<PAGE>
<PAGE>07
Schedule of Portfolio Investments
June 30, 2000 (Dollars in Thousands)
<TABLE>
<CAPTION>
FHA Mortgages (21.4% of total portfolio)
INTEREST FACE AMORTIZED
RATE MATURITY DATE AMOUNT COST VALUE
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Single-family:
7.75% Jul-2021 - Aug-2021 $ 707 $ 707 $ 707
8.00% Jul-2021 677 677 677
10.31% Feb-2016 73 73 73
------------------------------------------------------------------------------
TOTAL SINGLE-FAMILY 1,457 1,457 1,457
Multi-family:
6.50% Aug-2004 - Mar-2040 19,839 19,759 18,640
6.66% Apr-2040 5,997 6,009 5,518
6.75% Nov-2037 - Jul-2040 10,351 9,942 9,571
7.00% Jun-2039 6,272 6,365 5,932
7.13% Mar-2040 8,191 8,208 7,722
7.20% Aug-2039 - Sep-2039 11,621 11,639 11,167
7.25% Oct-2039 30,824 30,824 29,045
7.50% Nov-2022 7,323 7,382 7,186
7.55% Aug-2012 - Nov-2037 9,993 10,006 9,835
7.63% Dec-2027 - Jun-2037 77,684 77,497 76,767
7.70% Oct-2039 12,505 12,402 12,380
7.75% Jan-2038 - Oct-2038 11,626 11,656 11,552
7.80% Dec-2038 21,684 21,694 21,604
7.85% Sep-2037 2,598 2,598 2,596
7.88% Mar-2037 - Jul-2038 9,406 9,418 9,411
7.93% Jul-2035 19,446 19,453 19,493
8.00% Sep-2031 - Jun-2038 23,032 22,883 23,123
8.13% Apr-2028 - Aug-2037 18,981 18,996 19,245
8.18% Nov-2036 36,586 36,214 37,158
8.25% Feb-2026 - Oct-2036 31,503 31,525 32,025
8.30% Nov-2027 - Aug-2033 4,242 4,195 4,325
8.38% Jan-2027 15,997 16,002 16,225
8.40% Apr-2012 1,194 1,194 1,195
8.50% Apr-2012 - Feb-2035 12,963 12,948 13,221
8.60% Jan-2028 2,017 2,017 2,041
8.63% Dec-2029 4,188 4,188 4,295
8.75% May-2036 - Sep-2036 12,220 12,130 12,702
8.80% Oct-2032 5,593 5,593 5,700
8.88% Sep-2029 - Jun-2036 10,289 10,216 10,678
9.13% May-2035 2,438 2,438 2,521
9.25% Feb-2029 - Jun-2036 24,967 24,973 25,874
9.38% Jun-2034 1,857 1,882 1,912
9.50% Jul-2027 375 382 411
9.75% Apr-2031 3,571 3,553 3,624
10.00% May-2002 - Mar-2031 5,811 5,811 5,841
10.45% Jan-2030 1,209 1,209 1,252
--------------------------------------------------------------------------------
TOTAL MULTI-FAMILY 484,393 483,201 481,787
--------------------------------------------------------------------------------
Total FHA Mortgages $ 485,850 $ 484,658 $ 483,244
</TABLE>
<PAGE>
<PAGE>08
Schedule of Portfolio Investments
June 30, 2000 (Dollars in Thousands)
<TABLE><CAPTION>
FHA Insured Construction Loans (6.8% of total portfolio)
INTEREST RATES COMMITMENT FACE AMORTIZED
PERM CONST MATURITY DATE* AMOUNT AMOUNT COST VALUE
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Multi-family
N/A 6.50% May-2000 $ 5,700 $ 3,460 $ 3,475 $ 3,452
6.45% 7.80% Jun-2041 17,604 11,354 10,238 9,616
6.80% 6.95% Sep-2040 8,900 7,451 7,451 6,737
6.81% 6.81% Jul-2040 35,503 30,854 30,860 28,022
6.88% 7.13% Apr-2030 29,546 24,188 24,193 22,093
6.88% 6.88% Jul-2040 23,426 21,121 21,129 19,363
6.93% 7.25% May-2041 28,104 20,800 20,805 18,729
7.17% 7.17% Feb-2040 4,905 4,762 4,768 4,509
7.50% 7.50% Nov-2037 10,145 9,043 9,083 8,866
7.93% 7.93% Feb-2042 2,952 0 0 (58)
8.27% 8.27% May-2042 2,575 2,575 2,570 2,591
8.40% 9.50% Dec-2041 8,723 0 0 290
8.75% 8.80% Mar-2027 29,095 26,571 26,577 27,684
-----------------------------------------------------------------------------------------
Total FHA Construction Loans $ 207,178 $ 162,179 $ 161,149 $ 151,894
*Permanent mortgage maturity date
</TABLE>
<PAGE>
<PAGE>09
Schedule of Portfolio Investments
June 30, 2000 (Dollars in Thousands)
<TABLE><CAPTION>
Ginnie Mae Securities (16.4% of total portfolio)
INTEREST FACE AMORTIZED
RATE MATURITY DATE AMOUNT COST VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Single-family 6.50% Jul-2028 - Dec-2028 $1,873 $1,873 $1,778
7.00% Apr-2026 - Sep-2028 53,687 54,571 52,174
7.50% Apr-2013 - Jun-2028 103,926 106,450 103,624
8.00% Nov-2009 - Mar-2030 75,153 77,095 75,990
8.50% Nov-2009 - Dec-2024 30,588 31,378 31,351
9.00% May-2016 - Jun-2025 7,877 8,137 8,169
9.50% May-2019 - Sep-2021 2,146 2,181 2,257
10.00% Jun-2019 15 15 16
11.00% Sep-2016 23 23 25
11.25% Oct-2015 85 85 89
12.00% Apr-2015 - Jun-2015 50 50 55
13.00% Jul-2014 2 2 2
13.25% Dec-2014 5 5 5
13.50% Aug-2014 1 1 1
-------------------------------------------------------------------------------------------
TOTAL SINGLE-FAMILY 275,431 281,866 275,536
Multi-family
6.50% Dec-2039 3,591 3,591 3,344
6.75% Nov-2038 15,184 14,990 14,453
7.50% Apr-2038 24,811 24,400 24,708
7.80% Jul-2039 19,147 19,160 19,409
8.00% Nov-2036 898 898 911
8.25% May-2032 4,557 4,557 4,561
8.50% Jul-2029 7,180 7,180 7,417
8.75% Dec-2026 4,306 4,306 4,343
9.00% Jun-2030 7,891 7,453 7,908
10.05% May-2026 1,240 1,240 1,245
12.55% Jun-2025 6,049 5,985 6,187
---------------------------------------------------------------------------------------------
TOTAL MULTI-FAMILY 94,854 93,760 94,486
---------------------------------------------------------------------------------------------
Total Ginnie Mae Securities $ 370,285 $ 375,626 $ 370,022
</TABLE>
<PAGE>
<PAGE>10
Schedule of Portfolio Investments
June 30, 2000 (Dollars in Thousands)
<TABLE>
<CAPTION>
Ginnie Mae Construction MBS (7.2% of total portfolio)
INTEREST RATES COMMITMENT FACE AMORTIZED
PERM CONST MATURITY DATE* AMOUNT AMOUNT COST VALUE
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Multi-family
6.24% 6.24% May-2040 $26,500 $26,143 $25,511 $23,633
6.50% 6.50% Sep-2040 6,063 5,572 5,496 5,078
6.62% 6.62% Jan-2040 10,010 5,699 5,702 4,981
6.75% 6.75% Oct-2040 20,647 15,298 14,923 13,941
6.76% 6.63% Nov-2040 5,632 5,458 5,446 5,132
6.98% 6.98% Jan-2041 47,090 27,343 27,346 24,831
7.10% 7.10% Jul-2039 42,137 41,328 41,092 39,754
7.23% 8.40% Sep-2041 8,100 0 (304) (256)
7.33% 7.76% Jan-2030 27,554 24,583 24,599 23,982
7.50% 7.63% Apr-2041 19,440 7,329 7,337 7,012
7.70% 7.70% Mar-2042 50,584 4,399 3,570 3,740
7.75% 7.25% Feb-2031 51,076 8,950 8,695 8,836
7.75% 7.75% Jul-2042 30,808 2,329 1,715 2,015
--------------------------------------------------------------------------------------------
Total Ginnie Mae Construction MBS $ 345,641 $ 174,431 $171,128 $ 162,679
*Permanent mortgage maturity date
</TABLE>
<PAGE>
<PAGE>11
Schedule of Portfolio Investments
June 30, 2000 (Dollars in Thousands)
<TABLE>
<CAPTION>
Fannie Mae Securities (27.9% of total portfolio)
INTEREST COMMITMENT FACE AMORTIZED
RATE MATURITY DATE AMOUNT AMOUNT COST VALUE
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Single-family
5.50% Sep-2029 $236 $228 $209
6.00% Jun-2005 - Aug-2029 91,696 90,990 84,380
6.44% Apr-2030 3,330 3,334 3,403
6.50% Oct-2005 - May-2030 78,567 79,374 74,280
7.00% Jan-2004 - Dec-2029 36,812 36,982 35,558
7.27% Jun-2028 4,342 4,452 4,414
7.50% Jul-2004 - Jun-2030 70,915 70,614 69,948
8.00% Jan-2007 - Apr-2030 20,290 20,565 20,369
8.50% Nov-2009 - Oct-2029 7,690 7,907 7,818
9.00% Jul-2009 - May-2025 9,732 10,056 9,994
9.50% Aug-2004 2,985 3,046 3,060
---------------------------------------------------------------------------------------------
TOTAL SINGLE-FAMILY 326,595 327,548 313,433
Multi-family
6.06% Sep-2011 5,574 5,506 5,504
6.25% Dec-2013 2,674 2,768 2,479
6.38% Nov-2008 30,312 30,316 8,797
6.50% Nov-2015 7,400 2,857 2,863 2,320
6.52% Dec-2001 10,302 10,192 10,180
6.66% Aug-2010 16,500 0 0 (593)
6.80% Apr-2016 5,250 416 416 39
6.97% Jun-2007 47,490 47,514 46,959
7.11% Mar-2012 60,000 0 0 (590)
7.20% Apr-2010 - Aug-2029 10,866 10,439 10,588
7.25% Nov-2011 - Jul-2012 9,938 9,938 9,936
7.29% Jul-2003 1,724 1,748 1,724
7.30% Aug-2006 31,543 31,840 31,464
7.35% Dec-2009 28,335 28,458 28,264
7.38% Jun-2014 - Oct-2015 6,448 6,037 6,060 6,025
7.41% Dec-2003 1,200 1,215 1,205
7.48% Oct-2006 39,351 39,426 39,449
7.50% Dec-2014 2,644 2,655 2,633
7.75% May-2012 - Dec-2024 5,378 5,378 5,446
8.00% Nov-2019 - May-2020 6,941 6,907 7,134
8.13% Sep-2012 - May-2020 11,441 11,393 11,820
8.18% Apr-2001 1,374 1,395 1,377
8.40% May-2022 588 599 625
8.50% Jan-2007 393 393 408
8.63% Sep-2006 - Sep-2028 7,856 7,860 8,469
9.00% Jan-2022 1,097 1,097 1,157
9.13% Sep-2015 3,950 3,922 4,241
9.25% Jun-2018 - Sep-2026 6,694 6,673 7,245
--------------------------------------------------------------------------------------------
TOTAL MULTI-FAMILY 95,598 276,975 276,971 274,305
Intermediate Notes
5.65% Jun-2001 - Sep-2001 16,529 16,421 16,301
6.53% Nov-2001 25,000 25,013 24,813
---------------------------------------------------------------------------------------------
TOTAL INTERMEDIATE NOTES 41,529 41,434 41,113
----------------------------------------------------------------------------------------------
Total Fannie Mae Securities $ 95,598 $ 645,099 $ 645,953 $ 628,851
</TABLE>
<PAGE>
<PAGE>12
Schedule of Portfolio Investments
June 30, 2000 (Dollars in Thousands)
<TABLE><CAPTION>
Freddie Mac Securities (13.0% of total portfolio)
INTEREST FACE AMORTIZED
RATE MATURITY DATE AMOUNT COST VALUE
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Single-family
5.56% Aug-2029 $4,056 $4,056 $4,061
5.63% Oct-2029 3,010 2,989 3,011
5.78% Oct-2029 6,347 6,325 6,396
6.00% Mar-2005 - Apr-2029 3,062 3,075 2,833
6.50% Dec-2006 - Dec-2029 44,222 44,483 42,622
6.62% Jul-2029 7,467 7,471 7,496
7.00% Apr-1930 - Jun-2030 71,545 71,092 69,882
7.48% Apr-2023 3,632 3,723 3,710
7.50% Nov-2003 - Jun-2030 75,348 75,261 74,765
8.00% May-2008 - Feb-2030 29,198 29,597 29,401
8.25% Dec-2022 143 143 146
8.50% Jun-2010 - Jun-2025 17,129 17,547 17,484
9.00% Sep-2010 - Mar-2025 3,695 3,830 3,800
------------------------------------------------------------------------------------
TOTAL SINGLE-FAMILY 268,854 269,592 265,607
Multi-family
8.00% Feb-2009 7,174 7,182 7,181
------------------------------------------------------------------------------------
TOTAL MULTI-FAMILY 7,174 7,182 7,181
Intermediate Notes
5.59% Mar-2001 15,000 14,934 14,871
5.69% Mar-2002 5,450 5,373 5,336
-----------------------------------------------------------------------------------
TOTAL INTERMEDIATE NOTES 20,450 20,307 20,207
-----------------------------------------------------------------------------------
Total Freddie Mac Securities $296,478 $297,081 $292,995
</TABLE>
<PAGE>
<PAGE>13
Schedule of Portfolio Investments
June 30, 2000 (Dollars in Thousands)
<TABLE>
<CAPTION>
Housing Bonds and Local Initiative Mortgages (2.3% of total portfolio)
INTEREST FACE AMORTIZED
RATE MATURITY DATE AMOUNT COST VALUE
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Multi-family
7.63% Jan-2008 813 813 787
7.70% Jun-2006 - Jun-2029 40,231 40,234 38,788
8.00% May-2025 4,805 4,792 4,709
8.13% Jan-2005 737 725 732
8.25% Sep-2012 465 470 455
8.38% Feb-2007 840 880 839
8.63% Jun-2025 1,405 1,406 1,410
9.39% Dec-2023 954 950 995
9.50% Aug-2012 - Apr-2024 2,128 2,135 2,229
----------------------------------------------------------------------------------
Total Housing Bonds &
Local Initiative Mortgages $52,378 $52,405 $50,944
Federal Home Loan Bank Securities (.2% of total portfolio)
INTEREST FACE AMORTIZED
RATE MATURITY DATE AMOUNT COST VALUE
------------------------------------------------------------------------------------
Intermediate Notes
7.25% Mar-2003 $4,900 $4,900 $4,870
-------------------------------------------------------------------------------------
TOTAL FEDERAL HOME LOAN BANK $4,900 $4,900 $4,870
</TABLE>
<PAGE>
<PAGE>14
Schedule of Portfolio Investments
June 30, 2000 (Dollars in Thousands)
<TABLE><CAPTION>
Short-Term Investments (4.8% of total portfolio)
INTEREST FACE AMORTIZED
DESCRIPTION MATURITY DATE RATE AMOUNT COST VALUE
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Repurchase Agreements
Amalgamated Bank Jul-2000 6.10% $2,000 $2,000 $2,000
---------------------------------------------------------------------------------------------------
TOTAL REPURCHSE AGREEMENTS 2,000 2,000 2,000
Commercial Paper
Riverwoods Funding Jul-2000 6.53% 5,000 4,995 4,995
Goldman Sachs Jul-2000 6.54% 5,045 5,037 5,037
Ford Motor Cr Co Jul-2000 6.55% 5,000 4,995 4,995
Corporate Asset Jul-2000 6.57% 5,000 4,995 4,995
Morgan Stanley Jul-2000 6.58% 10,265 10,248 10,248
Salomon Smith Barney Jul-2000 6.60% 5,000 4,998 4,998
EFG Funding Jul-2000 6.60% 10,500 10,490 10,490
US West Comm Jul-2000 6.63% 15,000 14,975 14,975
FPL Group Cap Jul-2000 6.63% 7,000 6,988 6,988
Merck Jul-2000 6.85% 10,000 9,989 9,989
Gillette Jul-2000 6.90% 10,000 9,992 9,992
Hubbell Inc. Jul-2000 6.98% 5,050 5,048 5,048
SLMA Holdings Jul-2000 7.00% 12,000 11,991 11,991
---------------------------------------------------------------------------------------------------
TOTAL COMMERICAL PAPER 104,860 104,741 104,741
Certificates of Deposit
Shorebank Sep-2000 5.50% 2,000 2,000 2,000
----------------------------------------------------------------------------------------------------
TOTAL CERTIFICATE OF DEPOSITS 2,000 2,000 2,000
----------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS 108,860 108,741 108,741
-----------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS $2,300,460 $2,301,641 $2,254,240
======================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<PAGE>15
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Dollars in thousands; unaudited)
<TABLE>
<CAPTION>
INVESTMENT INCOME
--------------------------------------------------------------------------------
<S> <C>
INTEREST:
FHA mortgages $19,014
FHA construction loans 5,980
GNMA securities 17,268
GNMA construction loans 5,299
FNMA securities 21,853
FHLMC securities 8,259
Local Initiatives 2,100
FHLB security 106
Short-term investments 2,318
Discount and (premium) amortization and other income - net (1,566)
--------------------------------------------------------------------------------
TOTAL INCOME 80,631
EXPENSES
--------------------------------------------------------------------------------
Salaries and fringe benefits $2,628
Legal fees 116
Consulting fees 203
Auditing and tax accounting fees 48
Insurance 58
Marketing and sales promotion 311
Investment management 129
Trustee expenses 9
General expenses 890
--------------------------------------------------------------------------------
TOTAL EXPENSES 4,392
--------------------------------------------------------------------------------
Investment Income - net 76,239
--------------------------------------------------------------------------------
Realized and unrealized gain on investments 18,865
--------------------------------------------------------------------------------
Net iecrease in net assets resulting from operations $ 95,104
================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<PAGE>16
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended June 30, 2000 (Dollars in thousands; unaudited)
<TABLE>
<CAPTION>
INCREASE IN NET ASSETS FROM OPERATIONS
<S> <C>
Investment income - net $76,239
Net realized and unrealized gain on investments 18,865
--------------------------------------------------------------------------------
Net increase in net assets resulting from operations 95,104
Distribution paid to participants or reinvested from:
Investment income - net (76,239)
INCREASE IN NET ASSETS FROM UNIT TRANSACTIONS
Proceeds from the sale of 72,537.3798 units of participation 105,381
Dividend reinvestment of 66,214.5550 units of participation 68,411
Payments for redemption of (50,371.9643) units of participation (9,757)
--------------------------------------------------------------------------------
Net increase from share transactions 91,172
--------------------------------------------------------------------------------
Total increase in net assets 110,037
--------------------------------------------------------------------------------
Net assets at beginning of period 2,149,327
-------------------------------------------------------------------------------
Net assets at end of period $ 2,259,364
================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<PAGE>17
Notes to Financial Statements
JUNE 30, 2000
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 that are described in the Trust's prospectus.
Participation in the Trust is limited to labor organizations and eligible
pension; welfare and retirement plans that 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, insured construction loans and participation certificates, are
valued using published prices, dealer bids or cash flow models discounted using
market-based discount and prepayment rates, developed for each investment
category. The market-based discount rate is composed of a risk-free yield
(i.e., a U.S. Treasury Note) adjusted for an appropriate risk premium. The risk
premium reflects actual premiums in the marketplace over the yield on U.S.
Treasury securities of comparable risk and maturity to the security being valued
as adjusted for other market considerations. On investments for which the Trust
finances the construction and permanent loans, value is determined based upon
the total amount of the commitment for the term of the construction loan plus
the permanent loan. For insured 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, certificates of
deposit and commercial paper that mature less than sixty days from the balance
sheet date are valued at amortized cost, which approximates value. Short-term
investments maturing 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.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles 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 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.
<PAGE>
<PAGE>18
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.
Participants redeeming their investments are paid their pro rata share of
undistributed net income accrued through the month-end of redemption.
The Trust offers an income reinvestment plan that allows current participants
automatically to reinvest their income distribution into Trust units of
participation. Total reinvestment approximated 90 percent of distributable
income for the months ended June 30, 2000.
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 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 six months ended June 30, 2000, the Trust provided certain services
to the Building Investment Trust Corporation, a D.C. nonprofit corporation. The
total cost for these services and related expenses for the six months ended June
30, 2000, amounted to approximately $888,000. During the first six months of
2000, the Trust was reimbursed for approximately $879,000 of these costs. The
outstanding amount of approximately $1.2 million is included within the accounts
receivable in the accompanying financial statements.
3. Commitments
The assets of the Trust are invested in short-term investments until they are
required to fund commitments for insured construction loans, mortgage-backed
securities, or permanent mortgages. At June 30, 2000, the Trust had remaining
unfunded commitments of approximately $300 million to fund insured 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. As of June 30, 2000, this
segregated account held securities with a value of approximately $ 1.4 billion.
The commitment amounts disclosed on the Schedule of Portfolio Investments
represent the original commitment amount, which includes both funded and
unfunded commitments.
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, 2000, follows:
<PAGE>
<PAGE>19
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
<TABLE><CAPTION>
Investment Transactions (Dollars in thousands)
Federal
FHA Ginnie Mae Fannie Freddie Home
FHA Construction Ginnie Mae Construction Mae Mac Local Loan Bank
Mortgages Loans Securities Loans Securities Securities Initiatives Securities
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance,
January 1,
2000 $433,206 $159,246 $469,495 $130,827 $629,437 $234,340 $ - $52,224
Purchases and
construction
loan advances,
net of discounts 31,819 32,156 22,313 54,990 117,772 91,462 4,900 530
Change in
discounts and
(premiums) 78 115 (2,647) (903) (2,045) 469 5 -
Transfers 35,509 (28,034) 4,491 (11,965) - - - -
Principal
reductions (15,954) (2,334) (118,026) (1,821) (99,211) (29,190) (354) -
------------------------------------------------------------------------------------------------------------------------
Balance,
June 30,
2000 $484,658 $161,149 $375,626 $171,128 $645,953 $297,081 $4,900 $52,405
===========================================================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
5. Participants' Equity (dollars in thousands)
Participants' equity consisted of the following at June 30, 2000:
Amount invested and reinvested by current participants $2,306,324
Accumulated unrealized appreciation in the value of investments (47,401)
Accumulated undistributed investment income - net 441
--------------
$2,259,364
==========
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 13.3 percent of employees' salaries for the six months ended June
30, 2000. The total Trust pension expense for the six months ended June 30,
2000 was approximately $281,000.
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 up to the lesser of 15 percent of their annual salary or the
applicable IRS limit. The Trust matches dollar for dollar the first $1,500 of
employee contributions. The Trust's 401(k) contribution for the six months
ended June 30, 2000 was approximately $69,000.
7. Bank Loans
The Trust has a secured $12.5 million bank line of credit. Borrowings under
this agreement bear interest at LIBOR plus one-half percent. One
mortgage-backed security with a value of approximately $21 million has been
pledged as collateral for the line of credit. In addition, the Trust has a
$12.5 million uncommitted and unsecured line of credit facility. As of June 30,
2000 the Trust had no outstanding balance on either of these facilities. No
compensating balances are required.
<PAGE>
<PAGE>20
<TABLE>
<CAPTION>
SUPPLEMENTAL INFORMATION
Six Months Ended June 30, 2000 and the Years Ended December 31, 1999, 1998, 1997, and 1996
Six Months
Ended
June 30, 2000 1999 1998 1997 1996
--------------------------------------------------------------------------------
<S> <C <C> <C> <C> <C>
PER SHARE DATA
Investment Income $ 38.18 $ 75.86 $ 81.89 $ 83.77 $ 84.10
Expenses (2.08) (4.21) (4.41) (4.71) (4.99)
---------------------------------------------------------------------------------
Investment Income - net 36.10 71.65 77.48 79.06 79.11
Distribution from
investment income
- net (36.09) (71.74) (77.55) (79.10) (78.76)
Distribution from
realized gain on
investments 0.00 (0.31) (1.30) (0.48) 0.00
NET ASSET VALUE
Beginning of period 1,035.72 1,114.08 1,104.30 1,072.98 1,098.53
Net realized and
unrealized gains
(losses) on
investments
Net increase
(decrease)
in net asset value 8.55 (78.36) 9.78 31.32 (25.55)
------------------------------------------------------------------------------------
END OF PERIOD 1,044.27 1,035.72 1,114.08 1,104.30 1,072.98
RATIOS
Ratio of expenses to
average net assets 0.40%(1) 0.39% 0.39% 0.43% 0.46%
Ratio of net investment
income to average net
assets 7.0%(1) 6.7% 6.8% 7.2% 7.3%
Portfolio turnover rate 25.4%(1) 31.7% 39.5% 15.3% 20.3%
NUMBER OF OUTSTANDING
UNITS AT END OF PERIOD 2,163,577 2,075,197 1,816,185 1,513,856 1,289,082
See accompanying notes to financial statements.
(1) Percents are annualized.
</TABLE>
