UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act File Number: 811-3493
American Federation of Labor -
Congress of Industrial Organizations
Housing Investment Trust
(Exact name of registrant as specified in charter)
1717 K Street, N.W., Suite 707, Washington, D.C. 20036
(Address of principal executive offices) (Zip code)
Kenneth G. Lore
Swidler Berlin LLP
3000 K Street, N.W., Suite 300, Washington, D.C., 20007
(Name and address of agent for service)
(202) 331-8055
(Registrant's telephone number, including area code)
Date of fiscal year end: December 31
Date of reporting period: January 1, 2004 - December 31, 2004
Item 1. Reports to Stockholders.
A copy of the 2004 Annual Report (the "Report") of the AFL-CIO Housing
Investment Trust (the "Trust") transmitted to Trust participants pursuant to
Rule 30e-1 under the Investment Company Act of 1940, as amended (17 CFR
270.30e-1) (the "Act"), is included herewith.
AFL-CIO HOUSING INVESTMENT TRUST
[LOGO]
[PHOTO]
2004
ANNUAL REPORT
[GRAPHIC]
The AFL-CIO Housing Investment Trust is a fixed-income investment fund providing
financing in multifamily and single family housing.
The Trust's investment objective is to provide current income while preserving
capital over time and obtaining returns competitive with industry benchmarks. It
also seeks through its investments to increase the supply of affordable housing
for working families, generate union jobs and strengthen communities across the
United States.
Front Cover: Family of Anthony Polite, Laborers' Local Union 1033, Providence,
Rhode Island, who purchased their home through HIT HOME.
| 1
[PHOTO] MESSAGE FROM THE
AFL-CIO PRESIDENT
John J. Sweeney
President, AFL-CIO
Following another successful year of operation by the AFL-CIO Housing Investment
Trust, it is fitting to reflect on the Trust's distinctive role within the union
movement and its record as a steward of union pension capital. As an investment
manager of, by and for the union movement, the Trust is doing the important work
of investing pension assets in America's communities to help union members
achieve the retirement security they deserve. Through those investments, the
Trust is creating union jobs and contributing to the vitality and stability of
neighborhoods where union members live and work.
Four decades ago, AFL-CIO President George Meany boldly put forth the idea of
unions investing together to promote jobs and housing. "The pooling of funds
will provide an effective medium to construct socially desirable housing
projects, and at the same time create additional and continuing employment for
the construction trades," President Meany predicted. This could be done, he
said, without sacrificing "a higher interest return, with maximum degree of
safety."
The goals envisioned by President Meany are being achieved today by the AFL-CIO
Housing Investment Trust. In the last ten years alone, the Trust's financing
commitments have generated more than $3.7 billion in housing development
activity, increasing the nation's housing stock by more than 40,000 units and
providing attractive and affordable homes for working families. The Trust has
enabled a growing number of union families to share in the significant economic
benefits of owning a home, with more than 12,000 households obtaining mortgage
loans through its homeownership initiatives in the last seven years. This "build
America" investment strategy has created good union jobs in construction and
related industries and has helped revitalize countless neighborhoods across the
country - a sharp contrast to investments in businesses that undercut American
workers' wages and living standards and send good jobs overseas.
This successful labor-sponsored investment vehicle, rooted in the union movement
and dedicated to achieving financial security for working people, well deserves
our continuing support.
/s/ John J. Sweeney
----------------------------------------
John J. Sweeney
2 |
MESSAGE FROM THE [PHOTO]
CHAIRMAN
Richard Ravitch
Chairman,
AFL-CIO Housing
Investment Trust
In 2004, when the fixed-income market was challenged by volatile interest rates
and slow economic growth, the AFL-CIO Housing Investment Trust once again
demonstrated the competitiveness of its investment strategy, with its focus on
multifamily mortgage-backed securities. Its specialization in this sector of the
fixed-income market enabled the Trust to perform competitively against its
industry benchmark, the Lehman Brothers Aggregate Bond Index, as this report
discusses in more detail in the pages that follow.
To enhance that strength, the Trust took steps in 2004 to expand its capacity to
originate multifamily investments by broadening its network and laying
groundwork for new programs that will help offset the decline in FHA financing
opportunities. An immediate consequence of these efforts was to boost the volume
of its new multifamily commitments to more than $300 million in 2004. These
investments not only benefited the portfolio but also enabled the Trust to
celebrate a historic milestone: the financing of its 75,000th unit of housing.
Each year the Trust has devoted considerable resources to upgrading the
capabilities of its staff and technological infrastructure, and 2004 was no
exception. As it has grown over the years, the Trust has developed a staff with
a notable depth of knowledge and expertise in fund management as well as a deep
commitment to the investment goals of union pension beneficiaries. During 2004,
the Trust also continued to review and update its systems to keep pace with the
growing complexity of the regulatory environment in which it operates, in order
to maintain its high standards of fiscal management.
With these steps, the Trust has created a platform for the future growth and
management of its investments to allow the Trust to continue to fulfill its
investors' expectations for competitive, risk-adjusted returns.
/s/ Richard Ravitch
----------------------------------------
Richard Ravitch
| 3
2004 IN
REVIEW
The Trust had $3.7 billion in total net assets under management for 417
participants at the close of 2004. During the year, participants invested $269.5
million in the Trust, including $94.4 million in new investments and $175.1
million in dividend earnings reinvested. Redemptions totaled $165.9 million,
primarily due to participants reallocating assets or redeeming funds to meet
cash needs. Three new participants entered the Trust in 2004.
Performance Overview
The Trust achieved a total net rate of return of 4.20% for the year ended
December 31, 2004. For the three-, five- and ten-year periods, the Trust's
average annual net returns were 6.48%, 7.97% and 8.20%, respectively. The
Trust's primary benchmark, the Lehman Brothers Aggregate Bond Index (the
"Aggregate"), recorded returns of 4.34%, 6.19%, 7.71% and 7.72%, respectively,
for the one-, three-, five- and ten-year periods. The Trust outperformed the
Aggregate for the three-, five- and ten-year periods, on a net basis.
In 2004, the Trust met its objective of generating competitive risk-adjusted
returns. The main positive contributors to the Trust's relative performance were
its yield curve positioning and its yield advantage over the benchmark. Factors
that dampened the Trust's returns relative to its primary benchmark included its
underweight in corporate bonds, which outperformed other fixed-income sectors in
the Aggregate. The Trust may not invest in corporate bonds under the terms of
its Declaration of Trust.
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Comparison of $50,000 Investment in the Trust and Lehman Aggregate
($ in Thousands)
Value Growth of $50,000 Invested
Lehman Hit net
December-94 50.00 50.00
December-95 59.24 59.78
December-96 61.39 62.84
December-97 67.31 69.59
December-98 73.16 75.36
December-99 72.56 74.93
December-00 81.00 84.15
December-01 87.84 91.05
December-02 96.84 101.65
December-03 100.82 105.50
December-04 105.19 109.93
- -----------------------------------------------------
HIT $109,929
Lehman $105,191
- -----------------------------------------------------
- -------------------------------------------------------------------------------
Average Annual Total Return (%)
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
AFL-CIO Housing Investment Lehman Brothers Aggregate
Trust Net Returns(1) Bond Index(2)
-------------------------- -------------------------
1 Year 4.20% 4.34%
3 Years 6.48% 6.19%
5 Years 7.97% 7.71%
10 Years 8.20% 7.72%
(1) Past performance is no guarantee of future results. Economic and market
conditions change, and both will cause investment return, principal value
and yield to fluctuate so that a participant's units when redeemed may be
worth more or less than their original cost. Current performance may be
lower or higher than the performance data quoted. Performance data current
to the most recent month-end is available at www.aflcio-hit.com.
(2) The Lehman Brothers Aggregate Bond Index is an unmanaged index. It is not
available for direct investment; therefore, its performance does not
reflect the expenses associated with active management of an actual
portfolio.
Investors should consider the Trust's investment objectives, risks and expenses
carefully before investing. A prospectus containing more complete information
may be obtained from the Trust by calling the Marketing and Investor Relations
Department collect at 202-331-8055. The prospectus should be read carefully
before investing.
4 |
2004 IN
REVIEW (continued)
2004 Market Environment
The U.S. economy continued to strengthen in 2004 despite concerns about high oil
prices, the war in Iraq, and terrorism threats both here and abroad. Economic
growth was supported by strong consumer spending. Oil prices finished 2004 up
34% compared to a year earlier and were even higher at times during the year. In
the past, higher oil prices have elevated inflation expectations and driven
longer-maturity interest rates higher. This was not the case in 2004, however,
as actual inflation and inflation expectations remained level and long-term
interest rates decreased.
The economy added an average of 181,000 new jobs per month in 2004. The
manufacturing sector, however, continued to lag behind other sectors by adding
an average of only 2,750 jobs per month to payrolls. The labor market grew more
slowly than in past expansions, which have typically added an average of 200,000
jobs per month.
In June, the Federal Reserve began increasing the Federal Funds target rate,
which is the rate at which banks borrow from each other. The Federal Funds rate
finished the year at 2.25%, up 125 basis points. This caused a rise in the short
end of the yield curve but did not result in a corresponding increase in
long-term interest rates.
The narrowing of the difference between the yields on two-year and ten-year
maturity securities - generally referred to as a "flattening" of the yield curve
- - was one of the major developments in the fixed-income market during 2004. The
two-year Treasury rate rose 125 basis points to 3.07%, while the ten-year
Treasury rate fell 3 basis points to 4.22%. The stability in the longer end of
the yield curve, representing securities with longer-term maturities, was
supported by a view that core inflation remained under control. The falling
dollar and continuing increases in the U.S. trade deficit
- --------------------------------------------------------------------------------
Portfolio Distribution*
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE GRAPH IN THE PRINTED MATERIAL.]
State Housing Finance Agency Securities 0.2%
Construction and Permanent Mortgages 2.6%
Multifamily Construction Mortgage-backed Securities 12.8%
Multifamily Permanent Mortgage-backed Securities 40.6%
Cash and Cash Equivalents 1.2%
Short-term Intermediate Securities 2.1%
U.S. Treasury and Government Sponsored Enterprise Notes 12.9%
Single Family Mortgage-backed Securities 27.6%
* Includes funded and unfunded commitments as of 12/31/2004.
| 5
did not have the expected effect of pushing long-term rates higher in 2004.
Foreign investors helped keep long-term rates in check by continuing to purchase
U.S. debt to support their exports despite risks of increasing currency losses
in their investments.
Portfolio Strategy
The Trust's ongoing portfolio strategy focuses on managing its portfolio with an
overweight in multifamily mortgage securities that are agency-insured or
guaranteed by government sponsored enterprises (GSEs). This strategy has
resulted in a portfolio that has superior credit quality and higher expected
yields than the Aggregate. Another ongoing component of the strategy is active
management of the portfolio duration to be effectively neutral versus the
Aggregate. The Trust specializes in construction related mortgage securities
that typically have agency or GSE credit quality and generate additional yield
while providing significant prepayment protection.
During 2004, the Trust also applied a barbell investment strategy to its
portfolio. In executing a barbell strategy, the Trust overweighted longer- and
shorter-maturity sectors of the market and underweighted medium-maturity sectors
with respect to the Aggregate. Barbell strategies tend to outperform in
flattening yield curve scenarios. As the yield curve flattened in 2004, the
Trust's barbell strategy contributed positively to its performance.
The Year Ahead
In the year ahead, the Trust expects to maintain its overweight in
agency-insured and GSE-guaranteed multifamily MBS, as this sector has a record
of providing higher yields than many other securities with similar credit
ratings. The Trust anticipates it will continue to manage the portfolio duration
neutral to the Aggregate. There are good reasons to expect higher interest
rates, but there are also significant risk factors that could keep rates stable
in 2005. The Trust plans to maintain its barbell strategy - at least in the
beginning of 2005 - because it expects the flattening of the yield curve to
continue in the near term.
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
2004 Yield Curve Movement
12/31/2003 12/31/2004
3 mo 0.896 2.222
6 mo 0.9908 2.5876
1 yr 1.188 2.7706
2 yr 1.827 3.0731
3 yr 2.3077 3.2231
4 yr 2.7596 3.4599
5 yr 3.2509 3.6109
6 yr 3.5223 3.8215
7 yr 3.7904 3.9552
8 yr 4.0018 4.0298
9 yr 4.1161 4.1687
10 yr 4.2495 4.2221
Source: Bloomberg
6 |
2004 IN
REVIEW (continued)
Meeting Multifamily Housing Needs
The Trust originated $301.7 million in multifamily financing commitments in
2004, representing more than $460 million in total development activity. This
success was the product of the Trust's work during the year with its network of
mortgage bankers, state housing finance agencies, and labor and community
organizations to identify multifamily projects meeting its investment criteria.
The financing commitments approved in 2004 will support the new construction or
rehabilitation of housing in 20 projects across the country. These investments
will generate union jobs and stimulate local economies, helping to enhance the
quality of life for community residents.
The 3,398 multifamily units financed in 2004 included 2,480 units of much-needed
affordable housing in urban areas such as Chicago, St. Louis and Minneapolis/St.
Paul. The following projects illustrate the range of housing developments
approved for financing in 2004.
- --------------------------------------------------------------------------------
The Sovereign Apartments: A $66 million commitment from the Trust will help
finance the construction of a $72.1 million, 260-unit apartment complex in The
Shipyard, a master planned development in Hoboken, New Jersey. The investment
brought the Trust's investments in the New Jersey waterfront to over $530
million since 1993.
The Parkways: $24.8 million in Trust financing will support a $51.5 million
project to rehabilitate an older housing complex in Chicago's South Shore
neighborhood. All of the project's 446 units will remain affordable to
lower-income families.
Soulard Market Apartments: $18.4 million in Trust financing will help fund the
$29.7 million conversion of an office building into 132 rental apartments in the
historic Soulard District of St. Louis.
University and Dale Apartments: The Trust approved $6.5 million in financing for
the $15 million construction of 98 rental apartments above a new public library
in St. Paul, Minnesota. With support from the mayor, the Trust obtained an
agreement that the library will also be built with union labor.
Roosevelt Towers I: A $7.2 million investment from the Trust will be used in the
construction of this $14.3 million, 126-unit project that will help meet the
demand for housing for lower-income seniors in Chicago.
Woodstock Commons: $10.8 million was committed for a $21.8 million project
creating 170 units of housing for mixed-income residents in Woodstock, Illinois.
- --------------------------------------------------------------------------------
The Sovereign Apartments Woodstock Commons
- --------------------------------------------------------------------------------
[PHOTO] [PHOTO]
- --------------------------------------------------------------------------------
| 7
[PHOTO]
Homeownership for Working Families
The HIT HOME homeownership initiative celebrated a significant milestone in 2004
when it surpassed $1 billion in mortgage financing for union members and
municipal employees nationwide. Since the Trust launched HIT HOME in 2000, in
cooperation with Countrywide Home Loans and Fannie Mae, the program has helped
more than 8,500 working families across the country to finance their homes, with
a cumulative loan volume of $1.2 billion.
During 2004, HIT HOME made more than 2,960 loans with a total volume of $460
million. The program reached out to groups that have traditionally been
underserved in the homeownership market, with special focus on minority families
and female-headed households.
HIT HOME was particularly active in New York City where, as part of the Trust's
New York City Community Investment Initiative, it has been working since early
2002 to increase homeownership opportunities for working families. More than 460
of HIT HOME's borrowers in 2004 were New York City union members or municipal
employees.
The Trust created HIT HOME with the goal of making homeownership easier and more
affordable for working families. The program offers savings on closing costs,
homebuyer education, including information for first-time homebuyers, and a wide
selection of competitively priced home loans.
"Owning your own place gives you a true sense of stability and a great feeling
of satisfaction."
--Luis Basurto, SEIU Local 535
Mr. Basurto and his wife Jannette, SEIU Local 660,
purchased their Los Angeles condominium through HIT HOME.
8 |
Expense Example
Participants of the Trust incur ongoing expenses related to the management and
distribution activities of the Trust, as well as certain other expenses. This
example is intended to help participants understand the ongoing costs (in
dollars) of investing in the Trust and to compare these costs with the ongoing
costs of investing in other mutual funds. The example is based on an investment
of $50,000 invested at the beginning of the period, July 1, 2004, and held for
the entire period ended December 31, 2004.
Actual Expenses: The first line of the table below provides information about
actual account values and actual expenses. Participants may use the information
in this line, together with the amount they invested, to estimate the expenses
that they paid over the period. Simply divide the account value by $50,000 (for
example, an $800,000 account value divided by $50,000 = 16), then multiply the
result by the number in the first line under the heading entitled "Expenses Paid
During the Period" to estimate the expenses paid on a particular account during
this period.
Hypothetical Expenses (for Comparison Purposes Only): The second line of the
table below provides information about hypothetical account values and
hypothetical expenses based on the Trust's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Trust's actual
return. The hypothetical account values and expenses may not be used to estimate
the actual ending account balance or expenses a participant paid for the period.
Participants may use this information to compare the ongoing costs of investing
in the Trust and other mutual funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other mutual funds.
Please note that the Trust charges no transactional costs, such as sales charges
(loads) or redemption fees.
Expense Example Table
Beginning Ending Expenses Paid
Account Value Account Value During the Period
July 1, 2004 December 31, 2004 Ended December 31, 2004(1)
- --------------------------------------------------------------------------------------------
Actual Expenses $50,000 $51,462.31 $94.37
Hypothetical Expenses
(5% return before expenses) $50,000 $51,163.83 $94.09
(1) Expenses are equal to the Trust's annualized expense ratio of 0.37%,
multiplied by the average account value over the period, multiplied by
184/366 (to reflect the one-half year period).
| 9
Availability of Quarterly Portfolio Schedule
In addition to disclosure in the Annual and Semiannual Reports to Participants,
the Trust also files its complete schedule of portfolio holdings with the
Securities and Exchange Commission ("SEC") for the first and third quarters of
each fiscal year on Form N-Q. The Trust's Forms N-Q are made available on the
SEC's website at http://www.sec.gov and may be reviewed and copied at the SEC's
Public Reference Room in Washington, DC (information relating to the hours and
operation of the SEC's Public Reference Room may be obtained by calling
1-800-SEC-0330). Participants may also obtain copies of the Trust's Forms N-Q,
without charge, upon request, by calling the Trust collect at 202-331-8055.
Proxy Voting Record
The Trust invests exclusively in non-voting securities and has not deemed it
necessary to adopt policies and procedures for the voting of portfolio
securities. During the most recent twelve-month period ended June 30, the Trust
held no voting securities in its portfolio and has reported this information in
its most recent filing with the SEC on Form N-PX. The Trust's proxy voting
report on Form N-PX for the twelve-month period ended June 30, 2004, is
available on the SEC's website at http://www.sec.gov. Participants may also
obtain a copy of the Trust's report on Form N-PX, without charge, upon request,
by calling the Trust collect at 202-331-8055.
[GRAPHIC]
10 |
[GRAPHIC]
| 11
FINANCIAL STATEMENTS
American Federation of Labor and
Congress of Industrial Organizations Housing Investment Trust
With Report of Independent Registered Public Accounting Firm
[GRAPHIC]
12 |
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Participants and Trustees
American Federation of Labor and Congress of Industrial Organizations Housing
Investment Trust:
We have audited the accompanying statement of assets and liabilities of the
American Federation of Labor and Congress of Industrial Organizations Housing
Investment Trust (the Trust), including the schedule of investments, as of
December 31, 2004, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the three years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Trust's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits. The financial highlights of the Trust for each of the two years in the
period ended December 31, 2001 were audited by other auditors who have ceased
operations and whose report dated January 8, 2002 expressed an unqualified
opinion on those statements.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Trust's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements and financial
highlights, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. Our procedures included confirmation of securities owned as of
December 31, 2004, by examination or correspondence with the custodian and
brokers. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Trust at December 31, 2004, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and its financial highlights for each of the three years in the
period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
January 11, 2005
| 13
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
December 31, 2004 (Dollars in thousands)
Assets
Investments, at fair value (amortized cost $3,463,973)* $3,542,866
Cash 22,013
Accrued interest receivable 18,900
Receivables for investments sold 125,426
Accounts receivable 130
Prepaid expenses and other assets 1,552
- --------------------------------------------------------------------------------
Total Assets 3,710,887
- --------------------------------------------------------------------------------
Liabilities
Accounts payable and accrued expenses 1,989
Payables for investments purchased 6,154
Redemptions payable 29,040
Refundable deposits 914
Income distribution payable, net of dividends reinvested
of $45,510 6,840
- --------------------------------------------------------------------------------
Total Liabilities 44,937
- --------------------------------------------------------------------------------
Net Assets Applicable to Participants' Equity --
Certificates of Participation -- Authorized Unlimited;
Outstanding 3,300,858 Units $3,665,950
================================================================================
================================================================================
Net Asset Value Per Unit of Participation (in dollars) $ 1,110.61
Participants' Equity
Participants' equity consisted of the following:
Amount invested and reinvested by current participants $3,586,703
Net unrealized appreciation of investments 78,893
Undistributed net investment income 421
Accumulated net realized losses (67)
================================================================================
Total Participants' Equity $3,665,950
================================================================================
* The cost for Federal tax purposes approximates book cost.
See accompanying notes to financial statements.
14 |
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
December 31, 2004 (Dollars in thousands)
FHA Permanent Securities (4.8% of net assets)
Interest Rate Maturity Dates Face Amount Amortized Cost Value
- ------------------------------------------------------------------------------------------------------------
Single Family 7.75% Jul-2021-Aug-2021 $ 90 $ 90 $ 90
8.00% Jul-2021 110 110 110
10.31% Feb-2016 61 61 61
- ------------------------------------------------------------------------------------------------------------
261 261 261
- ------------------------------------------------------------------------------------------------------------
Multifamily(1) 5.25% Mar-2024 5,457 5,496 5,510
5.60% Jun-2038 2,941 2,948 3,054
5.62% Jun-2014 871 872 898
5.65% Oct-2038 2,252 2,329 2,330
5.87% Jun-2044 1,995 1,996 2,114
6.66% May-2040 5,839 5,844 6,246
6.70% Dec-2042 6,085 6,089 6,681
6.75% Jul-2036-Jul-2040 9,987 9,804 10,683
6.88% Apr-2031 29,375 29,063 32,174
7.00% Jun-2039 6,119 6,167 6,638
7.05% Jul-2043 5,384 5,384 6,035
7.07% Sep-2039 8,158 8,158 8,537
7.13% Mar-2040 7,996 7,974 8,991
7.17% Feb-2040 4,805 4,807 5,060
7.20% Nov-2033-Oct-2039 10,263 10,274 11,599
7.50% Sep-2032 1,663 1,668 1,925
7.70% Oct-2039 12,247 12,195 13,500
7.75% Oct-2038 1,412 1,406 1,527
7.88% Nov-2036-Jul-2038 9,187 9,191 9,434
7.93% Apr-2042 2,921 2,921 3,452
8.25% Nov-2036 3,520 3,524 3,608
8.27% Jul-2042 2,553 2,553 2,991
8.38% Feb-2007 421 436 439
8.40% Apr-2012 871 871 876
8.75% Jul-2036-Aug-2036 11,970 11,932 12,391
8.80% Oct-2032 5,438 5,438 5,438
8.88% May-2036 2,429 2,397 2,471
- ------------------------------------------------------------------------------------------------------------
162,159 161,737 174,602
- ------------------------------------------------------------------------------------------------------------
Total FHA Permanent Securities $162,420 $161,998 $174,863
============================================================================================================
(1) Multifamily mortgage-backed securities are valued by the fair value
procedures adopted by the Trust's Board of Trustees. Refer to Note 1
of the financial statements for further information.
See accompanying notes to financial statements.
| 15
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
December 31, 2004 (Dollars in thousands)
FHA Construction Securities and Commitments (0.2% of net assets)
Interest Rates(1)
------------------------ Commitment
Permanent Construction Maturity Date(2) Amount Face Amount Amortized Cost Value
- -----------------------------------------------------------------------------------------------------------------------------
Multifamily(3) 6.02% 6.02% Jun-2035 $7,243 $7,243 $7,246 $7,633
- -----------------------------------------------------------------------------------------------------------------------------
Total FHA Construction
Securities and
Commitments $7,243 $7,243 $7,246 $7,633
=============================================================================================================================
(1) Construction interest rates are the rates charged to the borrower
during the construction phase of the project. The permanent interest
rates are charged to the borrower during the amortization period of
the loan, unless HUD requires that such rates be charged earlier.
(2) Permanent mortgage maturity date.
(3) Multifamily mortgage-backed securities are valued by the fair value
procedures adopted by the Trust's Board of Trustees. Refer to Note 1
of the financial statements for further information.
Ginnie Mae Securities and Commitments (23.2% of net assets)
Commitment
Interest Rate Maturity Dates Amount Face Amount Amortized Cost Value
- --------------------------------------------------------------------------------------------------------------
Single Family 3.00% Feb-2033 $ $ 8,719 $ 8,789 $ 8,687
3.50% Nov-2032-Oct-2033 29,268 29,572 29,644
3.75% Dec-2033 22,921 22,804 22,873
4.00% Aug-2033 11,300 11,392 11,457
5.50% Jan-2033-Aug-2033 17,847 18,067 18,236
6.00% Jan-2032-Jun-2033 9,767 10,134 10,115
6.50% Jul-2028-Jun-2032 8,941 9,266 9,458
7.00% Nov-2016-Jan-2030 15,596 16,001 16,668
7.50% Apr-2013-Aug-2030 15,559 15,978 16,740
8.00% Nov-2009-Dec-2030 7,930 8,145 8,575
8.50% Nov-2009-Aug-2027 5,579 5,711 6,090
9.00% May-2016-Jun-2025 1,478 1,519 1,645
9.50% Sep-2021-Sep-2030 605 621 674
10.00% Jun-2019 2 2 2
12.00% May-2015-Jun-2015 -- -- 2
13.00% Jul-2014 1 1 1
13.25% Dec-2014 1 1 1
- --------------------------------------------------------------------------------------------------------------
155,514 158,003 160,868
- --------------------------------------------------------------------------------------------------------------
continued on next page
See accompanying notes to financial statements.
16 |
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
December 31, 2004 (Dollars in thousands)
Ginnie Mae Securities and Commitments (23.2% of net assets), continued
Commitment
Interest Rate Maturity Dates Amount Face Amount Amortized Cost Value
- ----------------------------------------------------------------------------------------------------------------
Multifamily(1) 2.91% Aug-2020 $ $ 9,665 $ 9,660 $ 9,363
3.65% Sep-2017-Oct-2027 30,094 29,891 29,597
4.25% Feb-2031 6,000 5,968 5,967
4.43% Apr-2034-Jun-2034 63,100 62,657 60,489
4.59% May-2033 15,000 15,000 15,165
4.66% Dec-2030 8,617 8,698 8,623
4.71% May-2025 33,294 33,297 33,496
4.78% Apr-2034 34,414 36,118 35,041
4.88% Mar-2036 10,000 10,013 10,004
4.92% May-2034 40,000 40,062 39,724
5.00% Dec-2033 5,484 5,551 5,586
5.01% Dec-2025-Jun-2032 26,100 26,093 26,421
5.05% Nov-2028 32,000 32,128 32,801
5.13% Jul-2024 5,000 5,090 5,168
5.18% May-2028 30,000 29,899 30,914
5.25% Sept-2028 5,898 5,927 6,108
5.30% Apr-2039 55,000 54,069 56,488
5.32% Aug-2030 35,000 34,848 36,319
5.50% Jul-2033-Aug-2038 37,113 38,519 38,741
5.58% May-2031 85,582 89,479 89,424
5.68% Jul-2027 5,152 5,342 5,432
5.79% May-2005(2) 7,565 7,653 7,613
5.88% Oct-2023-Mar-2024 22,000 22,584 23,283
6.11% Nov-2021 970 970 1,025
6.15% Jan-2044 18,509 18,514 20,157
6.16% Jun-2021 5,000 5,000 5,329
6.26% Apr-2027 10,000 10,853 10,934
6.41% Aug-2023 3,464 3,464 3,799
7.00% Jun-2043 28,861 28,861 32,073
7.88% Nov-2036 877 876 898
8.75% Dec-2026 4,087 4,087 4,116
- ----------------------------------------------------------------------------------------------------------------
673,846 681,171 690,098
- ----------------------------------------------------------------------------------------------------------------
Forward Commitments
5.60% Nov-2036 4,403 -- -- 273
6.00% Jul-2038 5,130 -- -- 445
7.50% Apr-2044 23,300 -- 68 233
- ----------------------------------------------------------------------------------------------------------------
32,833 -- 68 951
- ----------------------------------------------------------------------------------------------------------------
Total Ginnie Mae Securities and Commitments $32,833 $829,360 $839,242 $851,917
================================================================================================================
(1) Multifamily mortgage-backed securities are valued by the fair value
procedures adopted by the Trust's Board of Trustees. Refer to Note 1
of the financial statements for further information.
(2) Date the Trust is required to sell securities to bond trustee.
See accompanying notes to financial statements.
| 17
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
December 31, 2004 (Dollars in thousands)
Ginnie Mae Construction Securities and Commitments (7.2% of net assets)
Interest Rates(1)
- ------------------------ Commitment
Permanent Construction Maturity Date(2) Amount Face Amount Amortized Cost Value
- -----------------------------------------------------------------------------------------------------
Multifamily(3)
4.65% 5.00% Oct-2045(4) $ 28,901 $ 16,129 $ 14,880 $ 16,160
4.88% 4.88% Jul-2046 35,000 19,790 19,970 19,963
4.95% 4.95% Jan-2045 11,200 10,525 10,730 10,657
5.10% 2.25% Sep-2045(5) 7,230 7,230 7,243 7,318
5.18% 5.18% Mar-2045 6,000 5,451 5,479 5,652
5.19% 5.19% Oct-2045 11,880 8,101 8,162 8,371
5.20% 3.45% Oct-2044(5) 21,139 21,139 21,215 21,957
5.21% 5.21% Jan-2045 5,842 5,390 5,393 5,575
5.25% 5.95% Feb-2031 42,100 18,653 18,551 18,933
5.34% 5.34% Mar-2046(5) 11,340 1,021 1,037 1,235
5.35% 5.35% Mar-2046 10,800 2,310 2,485 2,571
5.35% 5.35% Dec-2044(5) 8,800 8,800 8,809 9,191
5.55% 5.55% Mar-2045 9,279 6,662 6,665 7,159
5.62% 5.62% Nov-2046 8,200 711 734 1,045
5.71% 5.71% Jan-2045 7,530 6,947 6,949 7,472
5.75% 5.75% Jun-2006-Aug-2046 27,954 3,840 3,751 5,381
5.85% 5.85% Nov-2045 2,091 346 348 467
6.00% 6.00% Sep-2044-Jan-2046 29,184 23,688 23,329 26,171
6.22% 5.75% Aug-2035 14,599 6,591 6,592 7,993
6.60% 6.60% May-2043 17,793 16,295 15,888 18,342
7.75% 7.25% Aug-2033 51,779 51,778 51,535 61,414
- -----------------------------------------------------------------------------------------------------
368,641 241,397 239,745 263,027
- -----------------------------------------------------------------------------------------------------
Forward Commitments
4.82% 4.82% Jun-2046(5) 6,500 -- -- 47
4.89% 4.89% Dec-2044(5) 10,440 -- -- 181
5.10% 5.10% Nov-2046 24,300 -- -- 119
5.51% 5.51% Sep-2046 27,590 -- 643 1,622
- -----------------------------------------------------------------------------------------------------
68,830 -- 643 1,969
- -----------------------------------------------------------------------------------------------------
Total Ginnie Mae Construction Securities and
Commitments $437,471 $241,397 $240,388 $264,996
=====================================================================================================
(1) Construction interest rates are the rates charged to the borrower
during the construction phase of the project. The permanent interest
rates are charged to the borrower during the amortization period of
the loan, unless HUD requires that such rates be charged earlier.
(2) Permanent mortgage maturity date.
(3) Multifamily mortgage-backed securities are valued by the fair value
procedures adopted by the Trust's Board of Trustees. Refer to Note 1
of the financial statements for further information.
(4) Prior to December 20, 2005, this investment is a mortgage-backed
security guaranteed by the Government National Mortgage Association
("GNMA-MBS"). From and after December 20, 2005, the investment will be
a tax-exempt bond collateralized by the GNMA-MBS.
(5) Tax-exempt bonds collateralized by Ginnie Mae Securities.
See accompanying notes to financial statements.
18 |
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
December 31, 2004 (Dollars in thousands)
Fannie Mae Securities and Commitments (32.3% of net assets)
Interest Rate Maturity Dates Face Amount Amortized Cost Value
- ----------------------------------------------------------------------------------------------
Single Family 4.00% Jul-2033 $ 18,829 $ 18,980 $ 18,908
4.30% May-2033-Aug-2003 22,045 22,107 22,243
4.50% Jun-2018-Feb-2019 20,340 20,753 20,326
5.00% Sep-2018-Oct-2034 124,626 124,968 124,993
5.50% Jul-2017-Oct-2034 276,126 280,106 281,059
6.00% Jan-2006-Nov-2034 93,174 95,775 96,839
6.50% Nov-2016-Nov-2032 23,763 24,085 25,009
7.00% Nov-2013-Jun-2032 16,273 16,513 17,269
7.50% Nov-2016-Sep-2031 5,316 5,275 5,698
8.00% Jan-2007-May-2031 3,747 3,810 3,999
8.50% Nov-2009-Apr-2031 2,895 2,957 3,114
9.00% Jul-2009-May-2025 933 941 1,008
- ----------------------------------------------------------------------------------------------
608,067 616,270 620,465
- ----------------------------------------------------------------------------------------------
Multifamily(1) 3.81% Nov-2012 8,522 8,522 8,403
4.10% Jun-2027 2,498 2,498 2,433
4.55% Oct-2033 5,316 5,378 5,146
4.66% Jul-2021-Sep-2033 8,913 9,063 8,694
4.77% Apr-2012 4,522 4,667 4,624
4.78% Aug-2018 3,929 3,986 3,846
4.90% Jul-2033 5,152 5,262 4,966
4.99% Aug-2021 2,438 2,413 2,431
5.14% Dec-2011-Jan-2018 21,376 21,855 21,978
5.15% Sep-2017-Oct-2022 23,589 23,713 23,994
5.23% Mar-2018-Apr-2021 4,930 5,101 5,046
5.24% Dec-2012-Jul-2034 5,344 5,205 5,406
5.30% Oct-2014 898 930 945
5.34% Apr-2012 310 322 326
5.35% Dec-2012 5,926 5,946 6,215
5.43% May-2021 3,537 3,642 3,685
5.44% Sep-2013 2,116 2,151 2,248
5.45% May-2033 3,361 3,412 3,397
5.58% Jan-2021 3,858 3,915 4,043
5.63% Nov-2033 19,926 19,990 20,442
5.70% Mar-2009-May-2011 7,965 8,488 8,457
5.77% Nov-2021 16,781 17,005 17,641
5.78% Dec-2008 1,485 1,577 1,579
5.80% Jan-2009-Jan-2033 38,818 39,579 40,689
5.83% Aug-2014 1,196 1,270 1,279
5.84% Aug-2010 3,453 3,639 3,591
5.85% Oct-2008 966 1,021 1,001
5.88% Nov-2027 3,507 3,587 3,697
5.91% Dec-2008 1,020 1,084 1,089
5.96% Jan-2029 508 520 537
6.03% Jun-2017 1,964 2,146 2,158
6.06% Jul-2034 10,951 11,372 11,682
6.11% Jul-2008 917 973 978
6.13% Dec-2016 3,810 4,200 4,143
6.15% Oct-2032 3,822 3,940 4,111
6.16% Aug-2013 12,668 13,772 13,511
6.22% Aug-2032-Jul-2034 11,413 12,290 12,321
6.23% Sep-2034 1,596 1,708 1,725
6.25% Dec-2013 2,049 2,107 2,233
6.27% Jan-2012 2,188 2,234 2,421
6.28% Oct-2008-Nov-2028 5,909 6,396 6,379
6.33% Apr-2011 2,390 2,620 2,630
6.35% Mar-2010(2) 11,750 11,757 12,771
6.35% Jun-2020-Aug-2032 29,240 30,817 31,814
See accompanying notes to financial statements.
continued on next page
| 19
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
December 31, 2004 (Dollars in thousands)
Fannie Mae Securities and Commitments (32.3% of net assets), continued
Interest Rate Maturity Dates Face Amount Amortized Cost Value
- ------------------------------------------------------------------------------------------------------------
Multifamily(1) 6.39% Apr-2019 $ 1,064 $ 1,160 $ 1,175
6.41% Aug-2013 2,030 2,190 2,156
6.42% Apr-2011-Aug-2013 7,325 7,946 7,801
6.44% Dec-2018(3) 41,595 41,594 46,583
6.44% Apr-2014 7,015 7,750 7,840
6.50% Jun-2016 3,200 3,204 3,560
6.52% Jul-2008-May-2029 8,369 9,137 9,127
6.53% May-2030 8,869 8,898 9,345
6.63% Jun-2018-Apr-2019 2,863 2,894 3,163
6.65% Aug-2007 465 468 485
6.70% Jan-2011 2,558 2,771 2,743
6.74% Aug-2007 13,450 14,421 14,176
6.75% Aug-2007 915 970 973
6.79% Jul-2009 7,400 7,403 8,179
6.80% Jul-2016 1,040 1,040 1,173
6.85% Aug-2014 45,879 45,882 52,600
6.88% Jun-2007 11,459 11,787 11,983
6.94% Aug-2007 8,361 8,555 8,921
7.01% Apr-2031 3,635 3,678 4,078
7.07% Feb-2031 18,369 18,806 20,673
7.16% Jan-2022 902 942 941
7.18% Aug-2016 636 636 728
7.20% Apr-2010-Aug-2029 10,001 9,728 11,232
7.25% Oct-2022(4) 12,550 12,268 13,237
7.25% Nov-2011-Jul-2012 9,308 9,308 9,738
7.30% May-2010 868 896 950
7.38% Jun-2014 2,212 2,226 2,433
7.41% Nov-2018 19,214 20,721 19,918
7.46% Aug-2029 10,018 11,505 11,476
7.50% Dec-2014 2,133 2,140 2,451
7.54% Feb-2024 13,985 15,804 14,982
7.71% Feb-2010 9,546 9,682 10,292
7.75% Dec-2012-Dec-2024 4,492 4,496 5,076
8.00% Nov-2019-May-2020 6,246 6,232 6,309
8.13% Sep-2012-Aug-2020 9,844 9,824 10,395
8.38% Jan-2022 1,010 1,013 1,087
8.40% Jul-2023 548 539 647
8.50% Sep-2006-Sep-2026 6,282 6,810 7,300
8.63% Sep-2028 6,996 6,996 8,368
9.13% Sep-2015 3,313 3,301 3,418
9.25% Jun-2018 4,601 4,591 4,894
- ------------------------------------------------------------------------------------------------------------
643,393 662,285 689,311
- ------------------------------------------------------------------------------------------------------------
Forward Commitments/TBA(5)
5.00% Various (75,000) (74,179) (74,344)
5.50% Various (50,000) (50,425) (50,719)
- ------------------------------------------------------------------------------------------------------------
(125,000) (124,604) (125,063)
- ------------------------------------------------------------------------------------------------------------
Total Fannie Mae Securities and Commitments $1,126,460 $1,153,951 $1,184,713
============================================================================================================
(1) Multifamily mortgage-backed securities are valued by the fair value
procedures adopted by the Trust's Board of Trustees. Refer to Note 1
of the financial statements for further information.
(2) During construction the investment is a participation in the
construction loan which is secured by a repurchase guaranty from the
Bank of America; the permanent financing will be a Fannie Mae MBS for
which the Trust has issued its commitment to purchase.
(3) This security is held in a segregated account as collateral for the
Trust's secured bank line of credit.
(4) During construction the investment is a participation in the
construction loan which is secured by a letter of credit from LaSalle
Bank National Association; the permanent financing will be a Fannie
Mae MBS for which the Trust has issued its commitment to purchase.
(5) Represents to be announced ("TBA") securities, securities the Trust
agreed to sell for which the specific securities have not yet been
identified.
See accompanying notes to financial statements.
20 |
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
December 31, 2004 (Dollars in thousands)
Freddie Mac Securities (11.2% of net assets)
Interest Rate Maturity Dates Face Amount Amortized Cost Value
- --------------------------------------------------------------------------------------------
Single Family 4.25% Jun-2033 $ 6,798 $ 6,769 $ 6,838
4.50% Aug-2018-Feb-2019 31,626 31,791 31,601
5.00% Jan-2019-Mar-2034 63,248 64,018 64,085
5.50% Oct-2017-Sep-2034 31,856 32,691 32,576
6.00% Apr-2005-Nov-2034 226,197 233,758 233,901
6.50% Dec-2006-Aug-2032 19,444 19,694 20,474
7.00% Mar-2011-Mar-2030 5,663 5,635 6,010
7.50% Jul-2010-Apr-2031 5,814 5,771 6,195
8.00% May-2008-Feb-2030 3,159 3,168 3,333
8.50% Jun-2010-Jan-2025 2,277 2,300 2,430
9.00% Sep-2010-Mar-2025 511 520 550
- --------------------------------------------------------------------------------------------
396,593 406,115 407,993
- --------------------------------------------------------------------------------------------
Multifamily(1) 8.00% Feb-2009 4,299 4,301 4,319
- --------------------------------------------------------------------------------------------
4,299 4,301 4,319
- --------------------------------------------------------------------------------------------
Total Freddie Mac Securities and Commitments $400,892 $410,416 $412,312
============================================================================================
(1) Multifamily mortgage-backed securities are valued by the fair value
procedures adopted by the Trust's Board of Trustees. Refer to Note 1
of the financial statements for further information.
Government Sponsored Enterprise Notes (4.9% of net assets)
Issuer Interest Rate Maturity Date Face Amount Amortized Cost Value
- ------------------------------------------------------------------------------------------
Freddie Mac 1.88% Feb-2006 $ 25,000 $ 24,863 $ 24,678
Fannie Mae 2.25% May-2006 15,045 15,144 14,867
Fannie Mae 2.50% Jun-2006 40,000 39,767 39,622
Fannie Mae 3.13% Jul-2006 40,000 40,269 39,972
Fannie Mae 5.50% Jul-2012 30,000 30,518 30,350
Fannie Mae 6.00% Jan-2012 31,110 31,277 31,149
- ------------------------------------------------------------------------------------------
Total Government Sponsored Enterprise Notes $181,155 $181,838 $180,638
==========================================================================================
United States Treasury Notes (8.6% of net assets)
Interest Rate Maturity Dates Face Amount Amortized Cost Value
- ----------------------------------------------------------------------------------------------
1.63% Mar-2005-Oct-2005 $ 85,000 $ 84,966 $ 84,480
1.88% Dec-2005-Jan-2006 60,000 60,152 59,432
2.00% May-2006 15,000 14,945 14,823
2.25% Apr-2006-Feb-2007 40,000 40,135 39,497
2.75% Aug-2007 96,500 96,346 95,444
3.25% Aug-2007 21,100 21,375 21,135
3.50% Nov-2006 2,085 2,149 2,103
- ----------------------------------------------------------------------------------------------
Total United States Treasury Notes $319,685 $320,068 $316,914
==============================================================================================
See accompanying notes to financial statements.
| 21
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
December 31, 2004 (Dollars in thousands)
State Housing Finance Agency Securities (0.2% of net assets)
Issuer Interest Rate Maturity Date Face Amount Amortized Cost Value
- -------------------------------------------------------------------------------------------------
Multifamily(1)
MA Housing Finance Agency 8.00% Jan-2026 $4,510 $4,505 $4,630
MA Housing Finance Agency 8.63% Jan-2013 370 375 411
MA Housing Finance Agency 9.00% Jan-2025 940 940 965
- -------------------------------------------------------------------------------------------------
Total State Housing Finance Agency Securities $5,820 $5,820 $6,006
=================================================================================================
(1) Multifamily mortgage-backed securities are valued by the fair value
procedures adopted by the Trust's Board of Trustees. Refer to Note 1
of the financial statements for further information.
Other Multifamily Investments and Commitments (1.0% of net assets)
Interest Rates Maturity Commitment Face Amortized
Permanent Construction(1) Dates(2) Amount Amount Cost Value
- --------------------------------------------------------------------------------------------
Multifamily Construction/Permanent Mortgages
5.54% N/A Apr-2017(3) $62,016 $ 1,471 $ 1,471 $ 989
7.63% N/A Jan-2011 813 539 539 572
8.13% N/A Aug-2005 1,016 114 111 114
8.63% N/A Jun-2025 -- 1,320 1,320 1,320
9.50% N/A Apr-2024 -- 696 696 696
9.75% N/A Aug-2012 -- 1,246 1,246 1,246
- --------------------------------------------------------------------------------------------
63,845 5,386 5,383 4,937
- --------------------------------------------------------------------------------------------
Privately Insured Construction/Permanent Mortgage(4)
5.55% N/A Apr-2021(5) 12,006 12,006 12,006 12,016
5.55% N/A Jan-2047(5) 12,809 12,809 12,809 12,897
6.20% N/A Feb-2047 5,200 -- -- 90
5.95% 5.95% Mar-2044 4,400 4,384 4,400 4,466
6.15% 6.15% Feb-2045 1,600 1,600 1,604 1,682
- --------------------------------------------------------------------------------------------
36,015 30,799 30,819 31,151
- --------------------------------------------------------------------------------------------
Total Other Multifamily
Investments and Commitments $99,860 $ 36,185 $ 36,202 $ 36,088
============================================================================================
============================================================================================
Total Long-Term Investments $3,310,617 $3,357,169 $3,436,080
============================================================================================
(1) Construction interest rates are the rates charged to the borrower
during the construction phase of the project. The permanent interest
rates are charged to the borrower during the amortization period of
the loan, unless HUD requires that such rates be charged earlier.
(2) Permanent mortgage maturity date.
(3) During construction, this investment is a mortgage credit enhanced by
a letter of credit issued in favor of the Trust. Additionally, the
interest rate during construction is a floating rate equal to LIBOR
plus one hundred and fifty basis points for the related monthly period
up to a maximum rate of 5.30%. At the completion of construction, the
Trust will take delivery of either a Government Sponsored Enterprise
MBS with an interest rate of 5.54% and a term of ten years or under
certain conditions a Mini-Perm Loan with an interest rate of 5.45% and
a term of five years.
(4) Loan insured by Ambac Assurance Corporation.
(5) These loans are evidenced by a single participation certificate in the
aggregate amount of $24,815,000.
See accompanying notes to financial statements.
22 |
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
December 31, 2004 (Dollars in thousands)
Short-term Investments (2.9% of net assets)
Description Maturity Date Interest Rate(1) Face Amount Amortized Cost Value
- ---------------------------------------------------------------------------------------------------------------
Short-term - Intermediates(2)
Freddie Mac May 2005 2.35% $ 25,000 $ 24,768 $ 24,755
Freddie Mac May 2005 2.40% 11,878 11,776 11,772
Freddie Mac May 2005 2.43% 25,000 24,771 24,766
Freddie Mac Apr 2005 2.48% 20,000 19,844 19,848
- ---------------------------------------------------------------------------------------------------------------
81,878 81,159 81,141
- ---------------------------------------------------------------------------------------------------------------
Short-term - Cash Equivalents(3)
Repurchase Agreement
Amalgamated Bank(4) Jan 21, 2005 2.10% 2,000 2,000 2,000
- ---------------------------------------------------------------------------------------------------------------
2,000 2,000 2,000
- ---------------------------------------------------------------------------------------------------------------
Commercial Paper
New York Times Jan 4, 2005 2.22% 9,000 8,999 8,999
GW University Jan 4, 2005 2.40% 14,546 14,546 14,546
- ---------------------------------------------------------------------------------------------------------------
23,546 23,545 23,545
- ---------------------------------------------------------------------------------------------------------------
Certificate of Deposit
Shore Bank - Pacific Jan 28, 2005 2.29% 100 100 100
- ---------------------------------------------------------------------------------------------------------------
100 100 100
===============================================================================================================
Total Short-Term Investments $ 107,524 $ 106,804 $ 106,786
===============================================================================================================
===============================================================================================================
Total Investments $3,418,141 $3,463,973 $3,542,866
===============================================================================================================
(1) Interest rate is yield calculated based on purchase price of discount
notes.
(2) Short-term investments with remaining maturities between sixty-one
days and three hundred and sixty-five days.
(3) Short-term investments with remaining maturities of sixty days or
less. These securities are valued on the basis of amortized cost,
which approximates fair value.
(4) This instrument was purchased in December 2004. The Trust will receive
$2,003,452 upon maturity. The underlying collateral of the repurchase
agreement is a Ginnie Mae security with a market value of $2,104,468.
See accompanying notes to financial statements.
| 23
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
For the Year Ended December 31, 2004 (Dollars in thousands)
Investment Income FHA permanent securities $ 13,080
FHA construction securities 429
Ginnie Mae securities 49,848
Ginnie Mae construction securities 11,417
Fannie Mae securities 67,715
Freddie Mac securities 14,574
Government Sponsored Enterprise Notes 4,101
United States Treasury Notes 6,658
State Housing Finance Agency securities 529
Other multifamily investments 777
Short-term investments 1,866
- -------------------------------------------------------------------------------
Total Income 170,994
- -------------------------------------------------------------------------------
Expenses Officer salaries and fringe benefits 2,218
Other salaries and fringe benefits 6,434
Legal fees 405
Consulting fees 374
Auditing, tax and accounting fees 248
Insurance 347
Marketing and sales promotion (12b-1) 566
Investment management 507
Trustee expenses 42
Rental expenses 683
General expenses 1,558
- -------------------------------------------------------------------------------
Total Expenses 13,382
- -------------------------------------------------------------------------------
Net Investment Income 157,612
- -------------------------------------------------------------------------------
Net realized gain on investments 40,091
Net change in unrealized appreciation
(depreciation) on investments (45,819)
- -------------------------------------------------------------------------------
Realized and Unrealized Net Losses on Investments (5,728)
===============================================================================
Net Increase in Net Assets Resulting from Operations $151,884
===============================================================================
See accompanying notes to financial statements.
24 |
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Years Ended December 31, 2004 and 2003 (Dollars in thousands)
2004 2003
- -----------------------------------------------------------------------------------
Increase in Net Assets from Operations
Net investment income $ 157,612 $ 163,446
Net realized gain on investments 40,091 48,588
Net change in unrealized depreciation on investments (45,819) (84,342)
- -----------------------------------------------------------------------------------
Net increase in net assets resulting from operations 151,884 127,692
- -----------------------------------------------------------------------------------
Decrease in Net Assets from Distributions
Distributions paid to participants or reinvested from:
Net investment income (159,172) (163,446)
Net realized gains on investments (38,531) (48,588)
- -----------------------------------------------------------------------------------
Net decrease in net assets from distributions (197,703) (212,034)
- -----------------------------------------------------------------------------------
Increase (Decrease) in Net Assets from Unit Transactions
Proceeds from the sale of units of participation 94,404 290,936
Dividend reinvestment of units of participation 175,076 191,791
Payments for redemption of units of participation (165,850) (72,009)
- -----------------------------------------------------------------------------------
Net increase from unit transactions 103,630 410,718
- -----------------------------------------------------------------------------------
Total increase in net assets 57,811 326,376
Net assets at beginning of period 3,608,139 3,281,763
===================================================================================
Net Assets at End of Period $3,665,950 $3,608,139
===================================================================================
Unit Information
Units sold 84,609 252,914
Distributions reinvested 156,550 168,434
Units redeemed (146,927) (62,724)
===================================================================================
Increase in Units Outstanding 94,232 358,624
===================================================================================
See accompanying notes to financial statements.
| 25
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 1. Summary of Significant Accounting Policies
The American Federation of Labor and Congress of Industrial Organizations
(AFL-CIO) Housing Investment Trust (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 Statement of Additional
Information and Prospectus.
Participation in the Trust is limited to eligible labor organizations and
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 accounting principles generally accepted in the United States.
Investment Valuation
Net asset value per share (NAV calculation) is calculated as of the close of
business of the major bond markets in New York City on the last business day of
the month.
Portfolio securities for which market quotations are readily available (single
family mortgage-backed securities, Government Sponsored Enterprise notes, and
U.S. Treasury securities) are valued by an independent pricing service,
published prices, market quotes and dealer bids.
Portfolio investments for which market quotations are not readily available
(multifamily mortgage-backed securities investments, mortgage securities and
construction mortgage securities) are valued at their fair value determined in
good faith under consistently applied procedures adopted by the Board of
Trustees using dealer bids and discounted cash flow models. The respective cash
flow models use 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 market place 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 securities or participation
interests, value is determined based upon the total amount, funded and/or
unfunded, of the commitment. The Trust has retained an independent firm to
determine the fair market value of such securities. In accordance with the
procedures adopted by the Board, the monthly third-party valuation is reviewed
by the Trust staff to determine whether valuation adjustments are appropriate
based on any material impairments in value arising from specific facts and
circumstances of the investment (e.g., mortgage defaults). All such adjustments
must be reviewed and approved by the independent valuation firm prior to
incorporation in the NAV.
Short-term investments with remaining maturities of sixty days or less are
valued on the basis of amortized cost, which approximates fair value. Cash and
cash equivalents include overnight money market funds which are also carried at
cost.
Use of Estimates
The preparation of financial statements in conformity with U.S. 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.
| 26
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
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 participants. Therefore, no federal income tax
provision is required.
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 permits current participants
automatically to reinvest their income distribution into Trust units of
participation. Total reinvestment was approximately 89 percent of distributable
income for the year ended December 31, 2004.
Investment Transactions and Income
Security transactions are accounted for as of trade date. Gains and losses on
securities sold are determined on the basis of amortized cost. Realized gains
(losses) on paydowns of mortgage- and asset-backed securities are classified as
interest income. Interest income, which includes amortization of premium and
accretion of discount on debt securities, is accrued as earned.
12b-1 Plan of Distribution
The Board of Trustees annually approves a 12b-1 Plan of Distribution to pay for
marketing and sales promotion expenses incurred in connection with the offer and
sale of units and related service and distribution activities (12b-1 expenses).
For the year ended December 31, 2004, the Trust was authorized to pay for 12b-1
expenses in an amount up to $600,000 or 0.05 percent of its average monthly net
assets on an annualized basis, whichever is greater. During the year ended
December 31, 2004, the Trust incurred approximately $566,000 of 12b-l expenses.
Receivables for Investments Sold
Receivables for Investments Sold represents investments that were sold on or
prior to December 31, 2004, which settled subsequent to December 31, 2004.
Payables for Investments Purchased
Payables for Investments Purchased represents investments that were purchased on
or prior to December 31, 2004, which settled subsequent to December 31, 2004.
| 27
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 2. Investment Risks
Interest Rate Risk
As with any fixed-income investment, the market value of the Trust's investments
will fall below the principal amount of those investments at times when market
interest rates rise above the interest rates of the investments. Rising interest
rates may also reduce prepayment rates, causing the average life of the Trust's
investments to increase. This could in turn further reduce the value of the
Trust's portfolio.
Prepayment and Extension Risk
The Trust invests in certain fixed-income securities whose value is derived from
an underlying pool of mortgage loans that are subject to prepayment and
extension risk.
Prepayment risk is the risk that a security will pay faster than its assumed
payment rate, shortening its expected average life, resulting in a lower return
from the security. In such an event, the Trust may be required to reinvest the
proceeds of such prepayments in other investments bearing lower interest rates.
The majority of the Trust's securities backed by loans for multifamily projects
include restrictions on prepayments for specified periods to mitigate this risk.
Extension risk is the risk that a security will pay more slowly than its assumed
payment rate, extending its expected average life, resulting in a lower return
from the security. When this occurs, the ability to reinvest principal
repayments in higher returning investments may be limited.
These two risks may increase the Trust's portfolio's sensitivity to fluctuations
in interest rates and change the value of the Trust's portfolio.
Note 3. Transactions with Related Entities
During the year ended December 31, 2004, the Trust provided the time of certain
personnel to the AFL-CIO Investment Trust Corporation (ITC), a D.C.
not-for-profit corporation, on a cost-reimbursement basis. During the year,
certain employees of the Trust also served as officers of the ITC. The total
cost for such personnel and related expenses for the year ended December 31,
2004 amounted to approximately $1,628,000. During the year ended December 31,
2004, the Trust was reimbursed for approximately $1,509,000 of current year
costs. As of December 31, 2004, approximately $119,000, representing a current
balance, is included within the accounts receivable in the accompanying
financial statements for amounts outstanding under the arrangement.
The ITC provided the time of certain personnel to the Trust on a
cost-reimbursement basis. The total cost for such personnel and related expenses
for the year ended December 31, 2004 was approximately $38,000. During the year
ended December 31, 2004, the Trust paid the ITC approximately $30,000 of current
costs.
28 |
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 4. Commitments
Certain assets of the Trust are invested in short-term investments until they
are required to fund purchase commitments for long-term investments. As of
December 31, 2004, the Trust had outstanding unfunded purchase commitments of
approximately $294.7 million. The Trust maintains a reserve, in the form of
securities, no less than the total of the outstanding unfunded purchase
commitments, less short-term investments. As of December 31, 2004, the value of
the publicly traded mortgage-backed securities maintained for the reserve in a
segregated account was approximately $3.3 billion.
The commitment amounts disclosed on the Schedule of Portfolio Investments
represent the original commitment amount, which includes both funded and
unfunded commitments.
Note 5. Investment Transactions
A summary of investment transactions (excluding short-term investments and
U.S. Treasury Notes) for the separate instruments included in the Trust's
investment portfolio, at amortized cost, for the year ended December 31, 2004,
follows (dollars in thousands):
Government State Housing
FHA FHA Ginnie Ginnie Mae Fannie Freddie Sponsored Finance Other
Permanent Construction Mae Construction Mae Mac Enterprise Agency Multifamily
Securities Securities Securities* Securities* Securities* Securities Notes Securities Investments
- ----------------------------------------------------------------------------------------------------------------------------------
Balance,
January 1, 2004 $221,425 $ -- $ 913,624 $ 198,682 $ 1,464,438 $ 169,477 $ 56,688 $ 7,068 $ 8,016
Purchases and
insured
construction
securities
advances,
net of
discounts 22,664 7,243 430,308 153,389 891,870 385,065 443,660 -- 27,886
Change in
discounts and
(premiums) 323 3 3,239 396 (6,332) 6,968 40 (20) 6
Transfers (56,838) -- 158,812 (101,463) -- -- -- (1,115) 604
Principal
reductions/
Sales (25,576) -- (666,741) (10,616) (1,196,025) (151,094) (318,550) (113) (310)
- ---------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31,
2004 $161,998 $7,246 $ 839,242 $ 240,388 $ 1,153,951 $ 410,416 $ 181,838 $ 5,820 $36,202
=================================================================================================================================
* Including forward commitments.
Note 6. Federal Taxes
The tax character of distributions paid during 2004 and 2003 was as follows
(dollars in thousands):
2004 2003
- --------------------------------------------------------------------------------
Ordinary investment income - net $164,877 $163,446
Long-term capital gains on investments 32,826 48,588
- --------------------------------------------------------------------------------
Total net distributions paid to participants or reinvested $197,703 $212,034
================================================================================
| 29
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
As of December 31, 2004, the components of accumulated earnings on a tax basis
were as follows (dollars in thousands):
2004
- --------------------------------------------------------------------------------
Undistributed ordinary income $ 3,445
Unrealized appreciation 77,397
Other temporary differences (1,595)
- --------------------------------------------------------------------------------
Total accumulated earnings $79,247
================================================================================
For financial reporting purposes, capital accounts are adjusted to reflect the
tax character of permanent book/tax differences. For the year ended December
31, 2004, the Trust recorded the following permanent reclassifications (dollars
in thousands):
2004
- --------------------------------------------------------------------------------
Undistributed net investment income $ 1,674
Accumulated net realized losses (1,627)
Amount invested and reinvested by current participants (47)
================================================================================
Reclassifications are primarily due to tax treatment of paydowns of mortgage and
asset-backed securities. Results of operations and net assets were not affected
by these reclassifications.
Note 7. Retirement and Deferred Compensation Plans
The Trust participates in the AFL-CIO Staff Retirement Plan, which is a multiple
employer-defined benefit pension plan, covering substantially all employees.
This plan was funded by employer contributions, at rates approximating 16.31%
percent of employees' salaries for the year ended December 31, 2004. The total
Trust pension expense for the year ended December 31, 2004 was approximately
$1,016,000.
The Trust also participates in a deferred compensation plan, referred to as a
401(k) plan, covering substantially all employees. This plan permits employees
to defer the lesser of 100 percent of their total compensation or the applicable
IRS limit. During 2004, the Trust matched dollar for dollar the first $2,900 of
each employee's contributions. The Trust's 401(k) contribution for the year
ended December 31, 2004 was approximately $180,000.
Note 8. Bank Securities
The Trust has a secured $12.5 million bank line of credit. A segregated account
of Trust-owned securities serves as collateral for the line of credit. As of
December 31, 2004, the market value of the collateral in the account is
approximately $46.6 million. In addition, the Trust has a $12.5 million
uncommitted and unsecured line of credit facility. Borrowings under these
agreements bear interest at LIBOR plus one-half percent. Both lines of credit
mature on June 30, 2005. The Trust had no outstanding balance on either of these
facilities during the period. No compensating balances are required.
Note 9. Contract Obligations
In the ordinary course of business, the Trust enters into contracts that contain
a variety of indemnifications. The Trust's maximum exposure under these
arrangements is unknown. However, the Trust has not had prior claims or losses
pursuant to these contracts and expects the risk of loss to be remote.
30 |
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected Per Share Data and Ratios for the Years Ended December 31, 2004, 2003,
2002, 2001 and 2000
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------
Per Share Data
Net asset value,
beginning of period $ 1,125.21 $ 1,152.30 $ 1,098.40 $ 1,085.42 $ 1,035.72
Income from investment operations:
Net investment income 48.63 54.26 65.19 70.86 72.83
Net realized and unrealized
(losses) gains on investments (2.38) (11.69) 59.15 16.24 49.70
- ------------------------------------------------------------------------------------------------------------------
Total Income (Loss) from Investment Operations 46.25 42.57 124.34 87.10 122.53
- ------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income (49.10) (54.26) (65.19) (70.93) (72.83)
Net realized gains on investments (11.75) (15.40) (5.25) (3.19) --
- ------------------------------------------------------------------------------------------------------------------
Total Distributions (60.85) (69.66) (70.44) (74.12) (72.83)
==================================================================================================================
Net Asset Value, End of Period $ 1,110.61 $ 1,125.21 $ 1,152.30 $ 1,098.40 $ 1,085.42
==================================================================================================================
Ratios
Ratio of expenses to average net assets 0.37% 0.37% 0.36% 0.37% 0.38%
Ratio of net investment income
to average net assets 4.4% 4.7% 5.8% 6.4% 6.9%
Portfolio turnover rate 85.5% 73.1% 64.3% 40.9% 25.9%
==================================================================================================================
Number of Outstanding Units
at End of Period 3,300,858 3,206,626 2,848,002 2,504,984 2,282,511
==================================================================================================================
Net Assets, End of Period
(in thousands) $3,665,950 $3,608,139 $3,281,763 $2,751,482 $2,477,482
==================================================================================================================
Total Return* 4.20% 3.78% 11.64% 8.21% 12.31%
==================================================================================================================
* Net of fund expenses.
See accompanying notes to financial statements.
| 31
- --------------------------------------------------------------------------------
Trustees
- --------------------------------------------------------------------------------
Overall responsibility for the management of the AFL-CIO Housing Investment
Trust, the establishment of policies and the oversight of activities is vested
in its Board of Trustees. The list below provides the following information for
each of the trustees: name, age, address, term of office, length of time served,
principal occupations during the past five years and other directorships held. *
The Trust's Statement of Additional Information includes additional information
about the trustees and is available, without charge, upon request, by placing a
collect call directed to Stephanie Turman, Investor Relations Coordinator, at
(202) 331-8055.
Richard Ravitch**, age 71; 610 5th Avenue, Ste. 420, New York, NY 10020;
Chairman of the Board; term commenced 1991, expires 2005; Principal, Ravitch,
Rice and Co. LLC; Director, Parsons Brinckerhoff Inc; formerly President and
Chief Executive Officer, Player Relations Committee of Major League Baseball;
formerly Chairman, Aquarius Management Corporation (limited profit housing
project management).
John J. Sweeney**, age 70; 815 16th Street, NW, Washington, DC 20006; Union
Trustee; term commenced 1981, expires 2007; President, AFL-CIO.
Richard L. Trumka, age 55; 815 16th Street, NW, Washington, DC 20006; Union
Trustee; term commenced 1995, expires 2005; Secretary-Treasurer, AFL-CIO.
Linda Chavez-Thompson, age 60; 815 16th Street, NW, Washington, DC 20006; Union
Trustee; term commenced 1996, expires 2005; Executive Vice President, AFL-CIO.
John J. Flynn, age 70; 1776 Eye Street, NW, Washington, DC 20006; Union
Trustee; term commenced 2000, expires 2006; President, International Union of
Bricklayers and Allied Craftworkers (BAC); formerly BAC Secretary-Treasurer.
Stephen Frank, age 64; 9509 Lost Trail Way, Potomac, Maryland 20854; Management
Trustee; term commenced 2003, expires 2006; Independent Consultant; formerly
Vice President and Chief Financial Officer, the Small Business Funding
Corporation.
Frank Hurt, age 66; 10401 Connecticut Avenue, Kensington, MD 20895; Union
Trustee; term commenced 1993, expires 2007; President, Bakery, Confectionery &
Tobacco Workers and Grain Millers International Union.
George Latimer, age 69; 1600 Grand Avenue, St. Paul, MN 55105; Management
Trustee; term commenced 1996, expires 2005; Chief Executive Officer of the
National Equity Fund (a tax credit investment company); Distinguished Visiting
Professor of Urban Land Studies at Macalester College; Director, Visionics
Corporation; formerly Director, Special Actions Office, Department of Housing
and Urban Development.
Jeremiah O'Connor, age 70; 900 Seventh Street, NW, Washington, DC 20001; Union
Trustee; term commenced 2001, expires 2006; Secretary-Treasurer, International
Brotherhood of Electrical Workers (IBEW); formerly International Vice
President, 6th District, IBEW.
Marlyn J. Spear, CFA, age 51; 500 Elm Grove Road, Elm Grove, WI 53122;
Management Trustee; term commenced 1995, expires 2006; Chief Investment Officer,
Milwaukee and Vicinity Building Trades United Pension Trust Fund; formerly
Investment Coordinator, Milwaukee and Vicinity Building Trades.
Tony Stanley**, age 71; 25250 Rockside Road, Cleveland, OH 44146; Management
Trustee; term commenced 1983, expires 2007; Executive Vice President and
Director, TransCon Builders, Inc. (retired).
Andrew Stern, age 54; 1313 L Street, NW, Washington, DC 20005; Union Trustee;
term commenced 1998, expires 2005; President, Service Employees International
Union, AFL-CIO.
Edward C. Sullivan, age 61; 815 16th Street, NW, Suite 600, Washington, DC
20006; Union Trustee; term commenced 2000, expires 2006; President, Building and
Construction Trades Department, AFL-CIO; formerly General President,
International Union of Elevator Constructors.
* Only directorships in a corporation or trust having securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended,
or subject to the requirements of Section 15(d) of such Act or a company
registered as an investment company under the Investment Company Act of
1940, as amended, are listed.
** Executive Committee member.
32 |
- --------------------------------------------------------------------------------
Leadership
- --------------------------------------------------------------------------------
All officers of the Trust are located at 1717 K Street, NW, Suite 707,
Washington, DC 20036.*
Stephen Coyle, + age 59; Chief Executive Officer since 1992; AFL-CIO Housing
Investment Trust.
Michael M. Arnold, + age 64; Senior Executive Vice President--Marketing,
Investor and Labor Relations, AFL-CIO Housing Investment Trust since 2001;
formerly Executive Vice President--Marketing, Investor and Labor Relations;
Director of Investor Relations, AFL-CIO Housing Investment Trust.
Helen R. Kanovsky, + age 53; Chief Operating Officer, AFL-CIO Housing Investment
Trust since 2002; formerly Chief Operating Officer, AFL-CIO Investment Trust
Corporation; Executive Vice President--Finance and Administration, AFL-CIO
Housing Investment Trust; Chief of Staff for U.S. Senator John F. Kerry; General
Counsel, AFL-CIO Housing Investment Trust.
Erica Khatchadourian, + age 37; Chief Financial Officer (position formerly
titled Executive Vice President--Finance and Administration), AFL-CIO Housing
Investment Trust since 2001; formerly Controller, Chief of Staff and Director of
Operations, AFL-CIO Housing Investment Trust.
John Hanley, + age 38; Executive Vice President--Investments and Portfolio
Management, AFL-CIO Housing Investment Trust since 2003; formerly Executive Vice
President, AFL-CIO Investment Trust Corporation; Chief Investment
Officer--Multifamily, AFL-CIO Housing Investment Trust.
Chang Suh, + CFA, age 33; Chief Portfolio Manager, AFL-CIO Housing Investment
Trust since March 2003; formerly Assistant Portfolio Manager and Senior
Portfolio Analyst, AFL-CIO Housing Investment Trust.
Mary C. Moynihan, + age 45; General Counsel, AFL-CIO Housing Investment Trust
since April 2004; formerly Chief Counsel and Deputy General Counsel, AFL-CIO
Housing Investment Trust; Associate Specialist, Sullivan & Cromwell.
Stephanie Wiggins, + age 39; Chief Investment Officer--Multifamily Finance,
AFL-CIO Housing Investment Trust since 2001; formerly Director, Prudential
Mortgage Capital Company; Vice President/Multifamily Transaction Manager, WMF
Capital Corporation.
Marcie Cohen, age 57; Senior Vice President, AFL-CIO Housing Investment Trust
since 2002; formerly Director of the New York Office, 2002-2004; Director of
Development, AFL-CIO Housing Investment Trust.
Mara C. Riggins, age 33 Controller, AFL-CIO Housing Investment Trust since 2002;
formerly Director of Financial Reporting, The Mills Corporation; Director of
Financial Reporting, American Management Systems, Inc.
Nicholas Milano, + age 37; Associate General Counsel (since January 2003) and
Chief Compliance Officer (since May 2004), AFL-CIO Housing Investment
Trust; formerly Senior Counsel, Division of Investment Management,
U.S. Securities and Exchange Commission; Senior Counsel, Division of Trading and
Markets, U.S. Commodity Futures Trading Commission.
* No officer of the Trust serves as a trustee or director in any corporation
or trust having securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended, or subject to the requirements
of Section 15(d) of such Act, or any company registered as an investment
company under the Investment Company Act of 1940, as amended.
+ Board-appointed officer. These officers are appointed annually to a term
expiring December 31 of the year appointed, or until their respective
successors are appointed and qualify.
Corporate Counsel
Swidler Berlin LLP
Washington, DC
Securities Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Washington, DC
Independent Registered Public Accounting Firm
Ernst & Young LLP
Philadelphia, PA
Investment Adviser
Wellington Management Company, LLP
Boston, MA
Transfer Agent
PFPC Inc., Wilmington, DE
Custodian
PFPC Trust Company, Philadelphia, PA
- --------------------------------------------------------------------------------
National Office
1717 K Street, NW, Suite 707
Washington, DC 20036
(202) 331-8055
New York Office
Carol Nixon, Director
31 West 15th Street, Suite 203
New York, NY 10011
(212) 414-8500
Western Regional Office
Aaron Prince, Director
235 Montgomery Street, Suite 1001
San Francisco, CA 94104
(415) 433-3044
[GRAPHIC]
AFL-CIO Housing Investment Trust
1717 K Street, NW, Suite 707
Washington, DC 20036
202-331-8055
www.aflcio-hit.com
Item 2. Code of Ethics.
(a) The Trust has adopted a Code of Ethics to comply with Section 406 of
the Sarbanes-Oxley Act of 2002, as of December 31, 2004. This Code
of Ethics applies to the Trust's principal executive officer,
principal financial officer, and principal accounting officer or
controller or persons performing similar functions.
(b) For purposes of this Item, the term "code of ethics" means written
standards that are reasonably designed to deter wrongdoing and to
promote:
(1) Honest and ethical conduct, including the ethical handling of
actual or apparent conflicts of interest between personal and
professional relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits
to, the Commission and in other public communications made by
the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) There have been no amendments granted to the Trust's Code of Ethics
during the period covered by the Report.
(d) There have been no waivers granted from any provision of the Trust's
Code of Ethics during the period covered by the Report.
(e) Not applicable.
(f) (1) A copy of the Trust's Code of Ethics is filed herewith as an
Exhibit pursuant to Item 12(a)(1).
Item 3. Audit Committee Financial Expert.
(a) (1) The Trust's Board of Trustees has determined that it has two
audit committee financial experts serving on its audit
committee, Marlyn Spear and Stephen Frank.
(2) Ms. Spear and Mr. Frank are both are independent for purposes
of this Item 3.
Item 4. Principal Accountant Fees and Services.
(a) Audit fees.
The aggregate fees billed for services provided to the Registrant by
its independent auditors for the audit of the Registrant's annual
financial statements and for services normally provided by the
independent auditors in connection
with statutory and regulatory filings or engagements were $183,082
for the fiscal year ended December 31, 2004.
The aggregate fees billed for services provided to the Registrant by
its independent auditors for the audit of the Registrant's annual
financial statements and for services normally provided by the
independent auditors in connection with statutory and regulatory
filings or engagements were $196,515 for the fiscal year ended
December 31, 2003.
(b) Audit-related fees.
The aggregate fees billed by the Registrant's independent auditors
for services relating to the performance of the audit of the
Registrant's financial statements and not reported under paragraph
(a) of this Item were $7,500 for the fiscal year ended December 31,
2004. The percentage of these fees relating to services approved by
the Registrant's Audit Committee pursuant to the de minimis
exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C)
of Regulation S-X was 0%.
The aggregate fees billed for services relating to the performance
of the audit of the financial statements of the Registrant's
investment adviser(s) and other service providers under common
control with the adviser(s) and that relate directly to the
operations or financial reporting of the Registrant were $0 for the
Registrant's fiscal year ended December 31, 2004. The percentage of
these fees relating to services approved by the Registrant's Audit
Committee pursuant to the de minimis exception from the pre-approval
requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
The aggregate fees billed by the Registrant's independent auditors
for services relating to the performance of the audit of the
Registrant's financial statements and not reported under paragraph
(a) of this Item were $0 for the fiscal year ended December 31,
2003. The percentage of these fees relating to services approved by
the Registrant's Audit Committee pursuant to the de minimis
exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C)
of Regulation S-X was 0%.
The aggregate fees billed by the Registrant's independent auditors
for services relating to the performance of the audit of the
financial statements of the Registrant's investment adviser(s) and
other service providers under common control with the adviser(s) and
that relate directly to the operations or financial reporting of the
Registrant were $0 for the Registrant's fiscal year ended December
31, 2003. The percentage of these fees relating to services approved
by the Registrant's Audit Committee pursuant to the de minimis
exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C)
of Regulation S-X was 0%.
(c) Tax fees.
The aggregate fees billed by the Registrant's independent auditors
for tax-related services provided to the Registrant were $13,500 for
the fiscal year ended December 31, 2004. The percentage of these
fees relating to services approved
by the Registrant's Audit Committee pursuant to the de minimis
exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C)
of Regulation S-X was 0%.
The aggregate fees billed by the Registrant's independent auditors
for tax-related services provided to the Registrant's investment
adviser(s) and other service providers under common control with the
adviser(s) and that relate directly to the operations or financial
reporting of the Registrant were $0 for the Registrant's fiscal year
ended December 31, 2004. The percentage of these fees relating to
services approved by the Registrant's Audit Committee pursuant to
the de minimis exception from the pre-approval requirement in Rule
2-01(c)(7)(i)(C) of Regulation S-X was 0%.
The aggregate fees billed by the Registrant's independent auditors
for tax-related services provided to the Registrant were $15,000 for
the fiscal year ended December 31, 2003. The percentage of these
fees relating to services approved by the Registrant's Audit
Committee pursuant to the de minimis exception from the pre-approval
requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
The aggregate fees billed by the Registrant's independent auditors
for tax-related services provided to the Registrant's adviser(s) and
other service providers under common control with the adviser(s) and
that relate directly to the operations or financial reporting of the
Registrant were $0 for the Registrant's fiscal year ended December
31, 2003. The percentage of these fees relating to services approved
by the Registrant's Audit Committee pursuant to the de minimis
exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C)
of Regulation S-X was 0%.
(d) All other fees.
The aggregate fees billed for all services provided by the
independent auditors to the Registrant other than those set forth in
paragraphs (a), (b) and (c) of this Item were $7,000 for the fiscal
year ended December 31, 2004. The percentage of these fees relating
to services approved by the Registrant's Audit Committee pursuant to
the de minimis exception from the pre-approval requirement in Rule
2-01(c)(7)(i)(C) of Regulation S-X was 0%.
The aggregate fees billed for all services other than those set
forth in paragraphs (b) and (c) of this Item provided by the
Registrant's independent auditors to the Registrant's adviser(s) and
other service providers under common control with the adviser(s) and
that relate directly to the operations or financial reporting of the
Registrant were $0 for the Registrant's fiscal year ended December
31, 2004. The percentage of these fees relating to services approved
by the Registrant's Audit Committee pursuant to the de minimis
exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C)
of Regulation S-X was 0%.
The aggregate fees billed for all services provided by the
independent auditors to the Registrant other than those set forth in
paragraphs (a), (b) and (c) of this Item were $6,690 for the fiscal
year ended December 31, 2003. The percentage of these fees relating
to services approved by the Registrant's Audit Committee pursuant to
the de minimis exception from the pre-approval requirement in Rule
2-01(c)(7)(i)(C) of Regulation S-X was 0%.
The aggregate fees billed for all services other than those set
forth in paragraphs (b) and (c) of this Item provided by the
Registrant's independent auditors to the Registrant's adviser(s) and
other service providers under common control with the adviser(s) and
that relate directly to the operations or financial reporting of the
Registrant were $0 for the Registrant's fiscal year ended December
31, 2003. The percentage of these fees relating to services approved
by the Registrant's Audit Committee pursuant to the de minimis
exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C)
of Regulation S-X was 0%.
(e) (1) The Charter of the Trust's Audit Committee provides that the
Audit Committee shall review and, if appropriate, approve in
advance all audit and non-audit services (as such term may be
from time to time defined in the Securities Exchange Act of
1934, as amended) to be provided to the Trust by the Trust's
independent auditor; provided, however, that the Charter
provides that the Audit Committee shall only approve the
following non-audit services: tax preparation and the
Association for Investment Management Research (AIMR) Level 2
Compliance Review. In making a determination, the Audit
Committee considers whether the services are consistent with
maintaining the principal accountant's independence. If such a
service is required between regularly scheduled audit
committee meetings, pre-approval may be authorized by a
majority of the audit committee members at a special meeting
called for such purposes or by unanimous written consent. The
Audit Committee's Charter does not permit waiver of
pre-approval for audit or non-audit services requiring fees of
a de minimis amount.
(2) No percentage of the services included in (b)-(d) above were
approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) For the most recent fiscal year, less than 50 percent of the hours
expended by the Trust's principal accountant were performed by
persons other than the accountant's full-time permanent employees.
(g) The Trust's accountant performed no non-audit services for the
Trust's investment adviser during each of the last two fiscal years.
(h) Not applicable. The Trust's accountant performed no non-audit
services for the Trust's investment adviser during each of the last
two fiscal years.
Item 5. Audit Committee of Listed Registrants.
Not Applicable.
Item 6. Schedule of Investments.
Not Applicable
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not Applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not Applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not Applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
No material changes have been made to the procedures by which participants may
recommend nominees to the Board of Trustees of the Trust, where those changes
were implemented after the Trust last provided disclosure in response to the
requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101) or this
Item 10.
Item 11. Controls and Procedures.
(a) The Trust's Chief Executive Officer (the principal executive
officer) and Chief Financial Officer (the principal financial
officer) have concluded that the Trust's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Act (17 CFR
270.30a-3(c)), are effective to ensure that material information
relating to the Trust is made known to them by appropriate persons,
based on their evaluation of such controls and procedures as of
December 31, 2004.
(b) There was no change in the Trust's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act (17 CFR
270.30a-3(d)) that occurred during the Trust's second fiscal
half-year that has materially affected, or is reasonably likely to
materially affect, the Trust's internal control over financial
reporting.
Item 12. Exhibits.
(a) (1) The Trust's Code of Ethics applicable to its principal
executive officer, principal financial officer, and principal
accounting officer or persons performing similar functions is
attached hereto.
(2) A separate certification for each principal executive officer
and principal financial officer of the registrant as required
by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)).
(3) Not Applicable.
(b) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule
30a-2(b) under the Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the AFL-CIO Housing Investment Trust has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AFL-CIO HOUSING INVESTMENT TRUST
By: /s/ Stephen Coyle
------------------------------------
Name: Stephen Coyle
Title: Chief Executive Officer
Date: March 9, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the AFL-CIO Housing Investment Trust and in the
capacities and on the dates indicated.
/s/ Stephen Coyle
- ----------------------------------------
Stephen Coyle
Chief Executive Officer
(Principal Executive Officer)
Date: March 9, 2005
/s/ Erica Khatchadourian
- ----------------------------------------
Erica Khatchadourian
Chief Financial Officer
(Principal Financial Officer)
Date: March 9, 2005