November ____, 2003
TO PARTICIPANTS, AFL-CIO HOUSING INVESTMENT TRUST
Enclosed is the Notice of a Special Meeting of Participants and a Proxy
Statement describing proposed amendments to the Declaration of Trust and other
indicated matters that are expected to come up at the meeting.
Also enclosed is a proxy card for each Participant noting the number of Units
held by that Participant and the exact name in which those Units are
registered. A Participant that does not wish to send a representative to the
meeting should vote its Units by mail or facsimile, as described herein, as
soon as possible.
Sincerely,
Stephen Coyle
Chief Executive Officer
PLEASE VOTE WITHIN FIVE DAYS OF RECEIPT
SC/spt
opeiu #2, afl-cio
Enclosures
AFL-CIO HOUSING INVESTMENT TRUST
PROXY
Special Meeting of Participants
The undersigned hereby appoints Michael M. Arnold and Helen R. Kanovsky
and each of them with power to act without the other and with full power of
substitution, as proxies for and on behalf of the undersigned, to vote all
Units of Participation which the undersigned is entitled to vote at the
Special Meeting of Participants to be held December 19, 2003 and all
adjournments thereof, with all the powers that the undersigned would possess
if personally present and particularly (but without limiting the generality of
the foregoing) to vote and act as follows:
(I) To approve an amendment to Section 3.3(c) of the Declaration of
Trust, authorizing investment in securities that are secured by single family
or multifamily mortgage securities and/or single family or multifamily
mortgage loans and that are rated at the highest rating by Standard & Poor's,
Moody's Investor Service, Fitch Ratings, or a comparable nationally recognized
statistical rating agency.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(II) To approve an amendment to the Declaration of Trust to modify
Section 3.3(d)(ii) respecting direct loans for low income housing projects to
increase the permitted loan to value ratio from 75% to 80%, subject to
specified requirements, including a requirement to obtain mortgage insurance
or another form of guaranty that covers all losses down to a 60% loan to value
level, and to add a new Section 3.3(d)(iii) to permit the Trust to make direct
loans for market rate housing project, subject to specified requirements.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(III) To approve an amendment to Section 3.3(h) of the Declaration of
Trust to increase from 10% to 15% the percentage of Trust assets that may be
invested in U.S. Treasury and Government-Sponsored Enterprise securities and
eliminate the restriction requiring scheduled maturity dates of 10 years or
less.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(IV) And upon such other matters as may properly come before the
meeting.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
The Trustees recommend a vote FOR the above items. ANY PROXY NOT MARKED
OTHERWISE WILL BE TREATED AS A VOTE FOR THE ITEMS.
---
The Units of Participation represented hereby will be voted in
accordance with instructions contained in this Proxy.
The undersigned hereby ratifies and confirms all that said proxies or
their substitutes or any of them may lawfully do by virtue hereof. The
undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Participants dated November ___, 2003 and the Proxy Statement dated November
___, 2003.
Please sign your name and indicate your capacity as attorney, trustee or
official of a Participant.
Dated: , 2003
------------------
Participant ID:
Participant Name:
Number of Units:
By: --------------------------------------------------
(Signature)
---------------------------------------------------
(Name - please print)
Title: ---------------------------------------------------
(please print)
- ---------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST.
IMPORTANT: THIS PROXY MAY BE VOTED IN ANY OF TWO (2) WAYS:
BY MAIL: PLEASE SIGN, DATE AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
SELF-ADDRESSED, STAMPED ENVELOPE.
BY FACSIMILE: PLEASE SIGN, DATE AND PROMPTLY FAX THIS PROXY TO
(202) 331-8190.
AFL-CIO HOUSING INVESTMENT TRUST
NOTICE OF A SPECIAL MEETING OF PARTICIPANTS
To Participants, AFL-CIO Housing Investment Trust:
Notice is hereby given that a Special Meeting of Participants (the
"Meeting") of the American Federation of Labor and Congress of Industrial
Organizations Housing Investment Trust (the "Trust"), a District of Columbia
common law trust, will be held at the offices of the Trust, 1717 K Street,
N.W., Suite 707, Washington, D.C., 20036 on December 19, 2003 at 2:00 p.m. for
the following purposes:
1. To approve an amendment to Section 3.3(c) of the Declaration of Trust,
authorizing investment in securities that are secured by single family
or multifamily mortgage securities and/or single family or multifamily
mortgage loans and that are rated at the highest rating by Standard &
Poor's, Moody's Investor Service, Fitch Ratings, or a comparable
nationally recognized statistical rating agency;
2. To approve an amendment to the Declaration of Trust to modify Section
3.3(d)(ii) respecting direct loans for low income housing projects to
increase the permitted loan to value ratio from 75% to 80%, subject to
specified requirements, including a requirement to obtain mortgage
insurance or another form of guaranty that covers all losses down to a
60% loan to value level, and add a new Section 3.3(d)(iii) to permit the
Trust to make direct loans for market rate, as well as low income
housing projects, subject to specified requirements;
3. To approve an amendment to Section 3.3(h) of the Declaration of Trust to
increase from 10% to 15% the percentage of Trust assets that may be
invested in U.S. Treasury and Government-Sponsored Enterprise securities
and eliminate the restriction requiring scheduled maturity dates of 10
years or less; and
4. To transact such other business as may properly come before the Meeting
or any adjournment or adjournments thereof.
The close of business on November 18, 2003 has been fixed as the record
date for the determination of Participants entitled to notice of and to vote
at the Meeting and any adjournment(s) thereof. Accordingly, only Participants
of record as of the close of business on that date are entitled to notice of
and to vote at the Meeting or at any such adjournment.
By Order of the Board of Trustees
Stephen Coyle
Chief Executive Officer
Dated: November ___, 2003
AFL-CIO HOUSING INVESTMENT TRUST
PROXY STATEMENT
November ___, 2003
GENERAL MATTERS
This Proxy Statement is being sent on November ___, 2003 in connection
with the solicitation of proxies for use at a Special Meeting of Participants
(the "Meeting") of the American Federation of Labor and Congress of Industrial
Organizations Housing Investment Trust (the "Trust") to be held at the offices
of the Trust, 1717 K Street, N.W., Suite 707, Washington, D.C. 20036, on
December 19, 2003, beginning at 2:00 p.m. and at any adjournment(s) thereof.
The Trust is single, self-managed fund. Apart from a portion of its
short-term investment portfolio that is managed by Wellington Management
Company, LLP, the Trust has no investment adviser, principal underwriter or
Administrator. Wellington Management's principal offices are located at 75
State Street, Boston, Massachusetts 02109.
A copy of the Trust's annual report for the year ended December 31,
2002, together with financial statements for the fiscal year ended December
31, 2002, and the Trust's semi-annual report for the six months ended June 30,
2003, were previously mailed to each Participant entitled to vote at the
Meeting. The Trust will furnish, without charge, a copy of the annual report
for 2002 and the semi-annual report for the six months ended June 30, 2003 to
any Participant that requests one. Requests for reports should be made by
placing a collect call to Stephanie Turman, Investor Relations Coordinator,
AFL-CIO Housing Investment Trust at (202) 331-8055. Written requests may be
directed to Michael Arnold, Senior Executive Vice President - Marketing,
Investor and Labor Relations, AFL-CIO Housing Investment Trust, 1717 K Street,
N.W., Suite 707, Washington, D.C. 20036.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE SPECIAL MEETING?
At the Trust's Special Meeting, Participants will act upon the matters
outlined in the accompanying Notice of Meeting, including whether to: (a)
approve an amendment to the Declaration of Trust to permit the Trust to
purchase certain mortgage related securities that are rated at the highest
rating by a nationally recognized statistical rating agency such as Standard &
Poor's, Moody's Investor Service or Fitch Ratings; (b) approve an amendment to
the Declaration of Trust respecting direct loans for low income housing
projects, to increase the permitted loan to value ratio from 75% to 80%,
subject to specified requirements, and to add direct lending authority for
market rate housing projects, subject to specified requirements; (c) approve
an amendment to the Declaration of Trust to increase the percentage of Trust
assets which may be invested in U.S. Treasury and Government-Sponsored
Enterprise securities from 10% to 15%, and eliminate the restriction requiring
scheduled maturity dates of 10 years or less; and (d) transact such other
business as may properly come before the Meeting or any adjournment or
adjournments thereof. In addition, the Trust's management will respond to
questions from Participants.
WHO IS ENTITLED TO VOTE?
The close of business on November 18, 2003 is the record date for the
determination of Participants entitled to notice of and to vote at the Meeting
and any adjournment(s) thereof (the "Record Date"). As of the Record Date,
there were 3,141,422.5789 Units of Participation of the Trust outstanding,
each Unit being entitled to one vote. No shares of any other class of
securities were outstanding as of that date.
Only Participants of record as of the close of business on the Record
Date will be entitled to vote at the Meeting.
WHO CAN ATTEND THE MEETING?
All Participants as of the Record Date, or their duly appointed proxies,
may attend the Meeting.
WHAT CONSTITUTES A QUORUM?
A quorum for the Meeting is the presence in person or by proxy of
Participants holding a majority of Units outstanding at the close of business
on the Record Date. As of the Record Date 3,141,422.5789 Units of
Participation of the Trust were outstanding. Proxies received but marked as
abstentions will be included in the calculation of the number of Units
considered to be present at the Meeting.
HOW DO I VOTE?
By Mail: If the proxy card that is enclosed with this Proxy Statement
is properly executed and returned, the Units of Participation it represents
will be voted at the Meeting in accordance with the instructions noted
thereon. If no direction is indicated, the proxy card will be voted in
accordance with the Trustees' recommendations set forth thereon.
By Facsimile: If the proxy card that is enclosed with this Proxy
Statement is properly executed and returned via facsimile to (202) 331-8190,
the Units of Participation it represents will be voted at the Meeting in
accordance with the instructions noted thereon. If no direction is indicated,
the proxy card will be voted in accordance with the Trustees' recommendations
set forth thereon.
In Person: Attending the Meeting and voting your Units.
CAN I CHANGE MY VOTE AFTER GIVING A PROXY?
Yes. Any Participant giving a Proxy may revoke it at any time before it
is exercised by giving written notice to the Trust bearing a date later than
the date of the Proxy, by submission of a later dated Proxy, or by voting in
person at the Meeting, which any Participant may do whether or not such
Participant has previously given a Proxy.
WHAT ARE THE BOARD OF TRUSTEES' RECOMMENDATIONS?
Unless you give other instructions when you vote, the persons named as
proxy holders on the proxy card will vote in accordance with the
recommendations of the Board of Trustees. The Board's recommendation is set
forth together with the description of each item in this proxy statement. In
summary, the Board recommends a vote:
* To approve an amendment to Section 3.3(c) of the Declaration of
Trust, authorizing investment in securities that are secured by
single family or multifamily mortgage securities and/or single family
or multifamily mortgage loans and that are rated at the highest
rating by Standard & Poor's, Moody's Investor Service, Fitch Ratings,
or a comparable nationally recognized statistical rating agency (see
page 3);
* To approve an amendment the Declaration of Trust to modify Section
3.3(d)(ii) respecting direct loans for low income housing projects to
increase the permitted loan to value ratio from 75% to 80%, subject
to specified requirements, including a requirement to obtain mortgage
insurance or another form of guaranty that covers all losses down to
a 60% loan to value level, and add a new Section 3.3(d)(iii) to
permit the Trust to make direct loans for market rate housing
projects, subject to specified requirements (see pages 3-4); and
* To approve an amendment to Section 3.3(h) of the Declaration of Trust
that would increase from 10% to 15% the percentage of Trust assets
that may be invested in U.S. Treasury and Government-Sponsored
Enterprise securities and eliminate the restriction requiring
scheduled maturity dates of 10 years or less (see page 4-5).
With respect to any other matter that properly comes before the Meeting
or any adjournment or adjournments thereof, the proxy holders will vote as
recommended by the Board of Trustees or, if no recommendation is given, in
their own discretion.
2
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
As to Proposals I, II, and III, the vote required for approval will be
an affirmative vote of a majority of the Units represented in person or by
proxy at the Meeting. Each Unit is entitled to one vote. Abstentions will
not be included in the calculation of the number of Units voted affirmatively
for a proposal.
WHO IS MAKING THE SOLICITATION ON BEHALF OF THE TRUST?
The Proxy is being solicited by the Board of Trustees of the Trust
through the mail. The cost of solicitation will be paid by the Trust.
Further solicitation of proxies may be made by telephone or oral communication
with some Participants following the original solicitation. Any such further
solicitation will be made by Trustees or officers of the Trust who will not be
compensated therefor. The date on which proxy materials were first mailed to
Participants was November ___, 2003.
PROPOSED AMENDMENTS TO DECLARATION OF TRUST
PROPOSAL I: TO APPROVE AN AMENDMENT TO SECTION 3.3(C) OF THE DECLARATION
OF TRUST, AUTHORIZING INVESTMENT IN SECURITIES THAT ARE
SECURED BY SINGLE FAMILY OR MULTIFAMILY MORTGAGE SECURITIES
AND/OR SINGLE FAMILY OR MULTIFAMILY MORTGAGE LOANS AND THAT
ARE RATED AT THE HIGHEST RATING BY STANDARD & POOR'S, MOODY'S
INVESTOR SERVICE, FITCH RATINGS, OR A COMPARABLE NATIONALLY
RECOGNIZED STATISTICAL RATING AGENCY.
This amendment would modify Section 3.3(c) of the Declaration of Trust
to provide the Trust with the authority to invest in certain mortgage related
securities that are rated at the highest rating by a nationally recognized
statistical rating agency, such as Standard & Poor's, Moody's Investor Service
or Fitch Ratings. The underwriting standards and credit enhancement required
to obtain the specified rating for such securities will ensure that the Trust
receives a high level of security.
If a proxy in the enclosed form is received from a Participant, the
Units of Participation represented by such Proxy will be voted for Proposal I
set forth above (unless otherwise indicated on the Proxy).
THE BOARD OF TRUSTEES RECOMMENDS THAT PARTICIPANTS VOTE "FOR" THE APPROVAL OF
AN AMENDMENT TO THE DECLARATION OF TRUST TO PERMIT THE TRUST TO PURCHASE
CERTAIN MORTGAGE RELATED SECURITIES THAT ARE RATED AT THE HIGHEST RATING BY A
NATIONALLY RECOGNIZED STATISTICAL RATING AGENCY SUCH AS STANDARD & POOR'S,
MOODY'S INVESTOR SERVICE OR FITCH RATINGS.
PROPOSAL II: TO APPROVE AN AMENDMENT TO THE DECLARATION OF TRUST
RESPECTING DIRECT LOANS FOR LOW INCOME HOUSING PROJECTS TO
INCREASE THE PERMITTED LOAN TO VALUE RATIO FROM 75% TO 80%,
SUBJECT TO SPECIFIED REQUIREMENTS, AND TO PERMIT THE TRUST
TO MAKE DIRECT LOANS FOR MARKET RATE HOUSING PROJECTS,
SUBJECT TO SPECIFIED REQUIREMENTS.
This proposed amendment would modify Section 3.3(d)(ii) of the
Declaration of Trust respecting direct loans for low income housing projects
to increase slightly the permitted loan to value ratio, subject to specified
requirements, and add a new Section 3.3(d)(iii) to permit the Trust to make
direct loans for market rate housing projects, subject to specified
requirements.
This modification will increase the permitted loan to value ratio from
75% to 80% with respect to direct loans for low income housing projects. Such
an increase will permit the Trust to offer financing which is more attractive
to borrowers, who can obtain 80% loan to value loans from other lenders,
without increasing the risk to the Trust. All other requirements for these
direct loans will remain unchanged, including the requirement that mortgage
insurance or another form of guaranty that covers all losses down to a 60%
loan to value level is obtained from an entity rated A or better by Standard &
Poor's (or a comparable rating by another nationally recognized rating
agency).
3
The new Section 3.3(d)(iii) will permit the Trust to make direct loans
for market rate projects on terms consistent with Section 3.3(d)(ii), except
that a financial contribution from a state or local government would not be
required, the developer's demonstrated track record must be in market rate
projects rather than low income housing projects and the required underwritten
debt service coverage would be 1.25%, rather than 1.15%.
The modifications retain the current limitation on the permitted
percentage of direct loans (i.e., the total may not exceed 4% of the value of
Trust assets), whether the loans are made pursuant to 3.3(d)(ii) or the new
3.3(d)(iii).
If a proxy in the enclosed form is received from a Participant, the
Units of Participation represented by such Proxy will be voted for Proposal II
set forth above (unless otherwise indicated on the Proxy).
THE BOARD OF TRUSTEES RECOMMENDS THAT PARTICIPANTS VOTE "FOR" THE APPROVAL OF
AN AMENDMENT TO THE DECLARATION OF TRUST TO MODIFY THE TRUST'S DIRECT LENDING
AUTHORITY RESPECTING LOW INCOME HOUSING PROJECTS AND TO ADD DIRECT LENDING
AUTHORITY RESPECTING MARKET RATE HOUSING PROJECTS.
PROPOSAL III: TO APPROVE AN AMENDMENT TO THE DECLARATION OF TRUST TO
INCREASE THE PERCENTAGE OF TRUST ASSETS WHICH MAY BE
INVESTED IN U.S. TREASURY AND GOVERNMENT-SPONSORED
ENTERPRISE SECURITIES FROM 10% TO 15% AND ELIMINATE THE
RESTRICTION REQUIRING SCHEDULED MATURITY DATES OF 10 YEARS
OR LESS.
This proposed amendment would modify Section 3.3(h) of the Declaration
of Trust to increase the percentage of the Trust's assets which may be
invested in Treasury or Government-Sponsored Enterprise securities from 10% to
15% and eliminate the restriction requiring scheduled maturity dates of 10
years or less.
The market value of many of the Trust's assets is typically determined
by comparing the difference or "spread" between the yield on the 10-year
Treasury bond and the yield required by investors for each type of asset.
Treasury bonds are deemed to be credit-risk-free investments and have no
spread risk. The spread above the Treasury bond is primarily intended to
compensate investors for a perceived credit risk that is greater than the
Treasury bond. Under different market conditions, these spreads will narrow
or widen for different asset classes. When the spread for a type of asset
narrows, those assets are worth more and when the spread for a type of asset
widens, those assets are worth less. Spread risk is the risk that the value
of the Trust's assets may be adversely affected by changes in the spread for
those assets.
Under most interest rate conditions, the Trust does not anticipate
utilizing the full 15% authority to invest in Treasury and
Government-Sponsored Enterprise obligations. Over the past two years, the
average level of investments in this category has been less than 5%. Under
certain market conditions, however, such as those of the past six months, this
higher ceiling would facilitate a more flexible investment profile by reducing
the portion of the Trust's portfolio exposed to spread risk. Currently 95% of
the Trust's portfolio is exposed to spread risk, as compared to 78% for the
Trust's index, the Lehman Brothers Aggregate Bond Index. Investing in a
greater percentage of Government-Sponsored Enterprise debt obligations in
appropriate market conditions would also help the Trust more closely mirror
investments in the Lehman Brothers Aggregate Bond Index, which had 12% of its
assets in Government-Sponsored Enterprise debt obligations as of October 31,
2003.
The ability to invest in longer maturities would give the Trust greater
flexibility to manage more effectively, efficiently and cheaply its duration.
If a proxy in the enclosed form is received from a Participant, the
Units of Participation represented by such Proxy will be voted for Proposal
III set forth above (unless otherwise indicated on the Proxy).
THE BOARD OF TRUSTEES RECOMMENDS THAT PARTICIPANTS VOTE "FOR" THE APPROVAL OF
AN AMENDMENT TO THE DECLARATION OF TRUST TO INCREASE THE PERCENTAGE OF TRUST
ASSETS WHICH MAY BE INVESTED IN U.S. TREASURY AND GOVERNMENT-SPONSORED
ENTERPRISE SECURITIES FROM 10% TO 15% AND ELIMINATE THE RESTRICTION REQUIRING
SCHEDULED MATURITY DATES OF 10 YEARS OR LESS.
4
PROPOSALS FOR 2004 ANNUAL MEETING OF PARTICIPANTS
Participants who wish to make a proposal to be included in the Trust's
proxy statement and form of proxy for the Trust's 2004 annual meeting of
Participants (expected to be held in May 2004) must cause such proposal to be
received by the Trust at its principal office not later than December 15,
2003.
OTHER MATTERS
At the date of this Proxy Statement, the Trustees know of no other
matters that may come before the Meeting. If any other matter properly comes
before the Meeting, it is the intention of the persons named in the enclosed
form of Proxy to vote the Units represented by such Proxy in accordance with
their best judgment.
Participants who are unable to attend the Meeting in person are urged to
forward their Proxies without delay. A prompt response will be appreciated.
By Order of the Board of Trustees
STEPHEN COYLE
Chief Executive Officer
5