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
Bingham McCutchen 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, 2005 - December 31, 2005
Item 1. Reports to Stockholders.
A copy of the 2005 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
[GRAPHIC]
2005
[LOGO] Annual Report
[GRAPHIC]
The AFL-CIO Housing Investment Trust is a fixed-income 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.
The Trust 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.
MESSAGE FROM THE
Chairman
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[PHOTO]
RICHARD RAVITCH
Chairman
AFL-CIO Housing Investment Trust
I am pleased to report that 2005 was another successful year for the AFL-CIO
Housing Investment Trust (the Trust) in meeting its goal of competitive
risk-adjusted returns. It was also a milestone year for the Trust and for
pension investors: the 40th anniversary of the 1965 launch of the Trust's
predecessor, the AFL-CIO Mortgage Investment Trust, which offered union pension
investors their first opportunity to pool funds nationally for housing-related
investments. The world of pension investing has experienced dramatic growth
since then, and so has the AFL-CIO Housing Investment Trust. Today, with
approximately $3.6 billion in assets under management, the Trust can be proud of
its long record of service to labor related pension investors.
Two things that distinguish the Trust today as a fixed-income investment manager
are its specialization in an important market niche - multifamily finance - and
its management of its portfolio of mortgage-backed securities. The Trust's focus
on multifamily investments has enabled it to maintain a highly competitive
position with respect to its industry benchmark over the years, as described in
greater detail in this Annual Report. As an internally managed fund, the Trust
differs from other fixed-income managers that simply buy and sell securities;
instead, the Trust actively seeks investments in newly originated securities
having first sought to negotiate terms favorable to its portfolio. In 2005, the
Trust's new financing commitments totaled $258.3 million for 16 multifamily
projects. To do this work well, the Trust has placed high priority on developing
the quality of its staff and systems. Its staff have significant expertise in
real estate development, multifamily finance and portfolio management, and a
state-of-the-art technological infrastructure supports these investment
functions. This internal capacity has enabled the Trust to respond quickly to
changing market conditions and seize opportunities that can benefit its
participants in meeting their investment objectives.
The Trust's fund management capabilities and proven performance are a credit to
the union pension plans whose investments over the years have helped fuel the
growth of the Trust. Our future efforts will continue to be guided by the
interests of our participants and their goal of competitive fixed-income
investments.
/s/ Richard Ravitch
Richard Ravitch
Annual Report | 1
MESSAGE FROM THE
AFL-CIO President
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[POHTO]
JOHN J. SWEENEY
President, AFL-CIO
When the pension plans of union workers invest in the AFL-CIO Housing Investment
Trust, they are seeking retirement security for their beneficiaries, but they
are also helping confront an urgent national problem: the shortage of decent
rental housing for working families. While competitive returns are the primary
goal of the Trust, its financing of union-built housing also helps to create and
preserve housing for families at all income levels across the country.
The nation's shortage of affordable housing is a serious concern for working
families. Every year, the gap increases between what people earn and what they
must pay for rising rents, even for modest housing. In 2005, the National Low
Income Housing Coalition reported that due to escalating costs, a worker earning
minimum wage can no longer afford the rent on a one-bedroom apartment in any
city in the country. Rising energy prices have left less household income for
rent. The displacement of tens of thousands of Gulf Coast residents further
intensified the housing shortfall for low- and moderate-income families.
In the past 10 years, the Trust's investments have provided the financing to
build, renovate or preserve more than 37,000 units of multifamily housing,
including many affordable rental units. In 2005, approximately 85 percent of the
4,171 units financed by the Trust will be affordable to persons of low or
moderate means.
In high-cost New York City, the Trust has financed more than 11,600 affordable
units in the past four years, preserving the affordability of housing that might
otherwise be converted to market rate. This financing was part of the Trust's
New York City Community Investment Initiative, a program created by the Trust to
bring needed investment capital to New York following the 9/11 tragedy. In 2005,
the Trust exceeded its $500 million target for multifamily investments and
homeownership opportunities under this initiative - one year ahead of schedule.
In the aftermath of hurricane Katrina, the Trust has been exploring how the same
"community investment" approach might be used to assist in the recovery and
reconstruction of Gulf Coast housing. Meanwhile, in Chicago this past year, the
Trust launched its Chicago Community Investment Plan, with financing already
committed for several union-built projects that will provide affordable homes.
Through these important investment initiatives, the Trust is not only pursuing
competitive returns for its investors but also putting union capital to work in
job-generating projects that address the increasingly acute need for affordable
housing. Those are achievements of which we can indeed be proud.
/s/ John J. Sweeney
John J. Sweeney
2 | AFL-CIO Housing Investment Trust
REPORT TO PARTICIPANTS
2005 Overview
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The AFL-CIO Housing Investment Trust outperformed its benchmark for the year
ended December 31, 2005. It closed the year with approximately $3.6 billion in
total net assets under management for 417 participants, including eight new
investors. Through its community-based investment initiatives and other
programs, the Trust helped finance over $380 million in total development
activity.
DISCUSSION OF THE TRUST'S PERFORMANCE
The Trust was successful in meeting its objective of generating competitive
risk-adjusted returns in 2005, as seen in the bar chart below. For the year
ended December 31, the Trust outperformed its primary benchmark, the Lehman
Brothers Aggregate Bond Index (the Aggregate), with a total net return of 2.64
percent for the Trust as compared to the Aggregate's 2.43 percent. The Trust
also outperformed the Aggregate for the five- and ten-year periods but not for
the three-year period.
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COMPETITIVE PERFORMANCE
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AVERAGE ANNUAL TOTAL RETURN
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
AFL-CIO Housing Lehman Brothers Aggregate
Investment Trust Bond Index
-------------------------- -------------------------
1 Year 2.64% 2.43%
3 Years 3.54% 3.62%
5 Years 6.04% 5.87%
10 Years 6.56% 6.16%
COMPARISON OF $50,000 INVESTMENT IN THE
TRUST AND LEHMAN AGGREGATE
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Lehman HIT net
Dec-95 50 50
Dec-96 51.82 52.56
Dec-97 56.82 58.21
Dec-98 61.75 63.03
Dec-99 61.25 62.67
Dec-00 68.37 70.38
1-Dec 74.14 76.16
2-Dec 81.74 85.02
3-Dec 85.1 88.24
4-Dec 88.79 91.94
5-Dec 90.95 94.38
HIT $94,376
Lehman $90,946
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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.
The Lehman Brothers Aggregate Bond Index is an unmanaged index and is not
available for direct investment. Its returns would be lower if they reflected
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, or by viewing the Trust's website at
www.aflcio-hit.com. The prospectus should be read carefully before investing.
Annual Report | 3
REPORT TO PARTICIPANTS
2005 Overview
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MARKET ENVIRONMENT
The U.S. economy continued to expand in 2005, supported by strong consumer
spending, despite rising oil prices and continued tightening of monetary policy
by the Federal Reserve. The economy grew at 3.1 percent for the year, compared
to 3.8 percent in 2004.* Historically, higher oil prices have elevated inflation
expectations and driven longer-maturity interest rates higher. For the second
year in a row, however, this was not the case, as both inflation and future
inflation expectations remained tame. The economy added an average of 165,000
new jobs per month in 2005, but the manufacturing sector did not participate in
this growth, losing an average of approximately 7,000 jobs each month. Increased
purchases of U.S. debt by foreign investors and concerns about a slowing housing
market helped keep long-term interest rates low.
The Federal Reserve continued its program of increasing the Federal Funds target
rate, which is the rate at which banks borrow from each other. This market
benchmark rate was increased by 25 basis points at each of the Federal Reserve's
eight meetings in 2005, finishing the year at 4.25 percent. Just as in 2004, the
rate hikes caused a rise in the short end of the yield curve but did not result
in a corresponding increase in long-term interest rates.
Indeed, 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 a distinguishing feature of the fixed-income market for the
second year in a row. Two-year Treasury rates rose 133 basis points in response
to the Federal Reserve's actions, while ten-year Treasury rates rose only 17
basis points. The stability in the longer end of the curve, representing
securities with longer-term maturities, was supported by a view that core
inflation remained under control. In fact, the two-year Treasury's yield ended
2005 one basis point higher than the yield on the ten-year Treasury - the first
such yield curve "inversion" since December 2000. Nor did the continuing
increase in the U.S. trade deficit have the expected effect of pushing long-term
rates higher in 2005.
* GDP in chain-weighted 2000 U.S. dollars, adjusted for inflation,
year-over-year.
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U.S. TREASURY YIELD CURVE SHIFT
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Years to Yield Percent
Maturity 12/31/2004 12/31/2005
2 3.07 4.4
3 3.22 4.36
5 3.61 4.35
10 4.22 4.39
30 4.83 4.54
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FOREIGN & INTERNATIONAL HOLDERS OF U.S. SECURITIES
- --------------------------------------------------------------------------------
Aggregate U.S. Public Debt (Percent)
1985 15.7
1986 16.8
1987 17.3
1988 19.4
1989 21.7
1990 20.1
1991 19.3
1992 18.9
1993 19.9
1994 20.1
1995 25.4
1996 30.2
1997 34.1
1998 34.4
1999 31.9
2000 33.6
2001 36.2
2002 38.8
2003 41.8
2004 47.3
2005* 49.8
* Data as of June 30, 2005.
4 | AFL-CIO Housing Investment Trust
REPORT TO PARTICIPANTS
2005 Overview
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PORTFOLIO STRATEGY
The Trust outperformed its benchmark, the Aggregate, by 21 basis points in 2005.
Its outperformance can be largely attributed to its successful management of
interest rate risk and its focus on multifamily mortgage-backed securities (MBS)
insured or guaranteed by a government-sponsored enterprise (GSE) or a U.S.
government agency - sometimes referred to collectively as agency credit. These
tended to produce higher yields than other securities with similar credit
ratings. A total of 94.6 percent of the Trust's non-cash investments at December
31 was agency credit. By comparison, the Aggregate had an allocation of only
72.3 percent to agency credit. Additionally, unlike the Aggregate, the Trust had
no exposure to corporate bonds, which underperformed other major sectors in the
benchmark.
The Trust's strategy for managing interest rate risk - active duration
management as well as pursuit of a barbell portfolio strategy - paid off as the
yield curve continued to flatten. The Trust managed the portfolio duration to be
effectively neutral but slightly short of the Aggregate. Duration is a measure
of a fund's sensitivity to changes in the direction of interest rates.
The Trust's "duration neutral" position meant that its portfolio maintained
roughly the same sensitivity to interest rate movement as its benchmark. 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. A barbell strategy tends to outperform in
flattening yield curve scenarios and contributed positively to the Trust's
performance as the yield curve continued to flatten in 2005.
THE YEAR AHEAD
The Trust expects to maintain its overweight in agency credit, as this sector
has a record of providing higher yields than many other securities with similar
credit ratings. The Trust currently anticipates it will maintain its
duration-neutral strategy relative to the Aggregate.
The Trust's continued success in managing the portfolio will depend, in part, on
its ability to maintain and increase its commitments for multifamily housing.
The Trust expects to continue its focus on multifamily project loans in order to
help ensure that it continues to grow in a sector where it has a competitive
advantage.
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TRUST PORTFOLIO DISTRIBUTION*
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[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE GRAPH IN THE PRINTED MATERIAL.]
U.S. Treasury & Government Sponsored Enterprise Securities 6.8%
Short-Term Intermediate Securities 1.0%
Cash and Cash Equivalents 1.6%
Mulifamily Permanent Mortgage-Backed Securities 44.8%
Multifamily Construction Mortgage-Backed Securities 13.2%
Construction and Permanent Mortgages 3.1%
State Housing Finance Agency Securities 0.2%
Single Family Mortgage-Backed Securities 29.3%
* Includes funded and unfunded commitments as of December 31, 2005.
Annual Report | 5
REPORT TO PARTICIPANTS
Creating Multifamily Housing
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The Trust issued $258.3 million in financing commitments in 2005 for 16
multifamily housing projects. The Trust's investments will create or preserve
4,171 units of multifamily housing. Approximately 85 percent of this housing
will be affordable to working families and seniors with low or moderate incomes.
With these investments, the Trust has leveraged total development activity of
over $380 million and the creation of approximately 3.3 million hours of work
for union members in construction and related industries.
State housing finance agencies represent one of the fastest-growing areas of
Trust business. Under a 2005 memorandum of understanding with the Illinois
Housing Development Authority (IHDA), the Trust set a target of investing $250
million in Illinois housing over the next five years. It is expected that this
relationship will help the Trust maintain an active presence in an important
market while also assisting IHDA to boost production of affordable housing in
the state. During 2005, the Trust committed financing for four mixed-income IHDA
projects representing $75 million in total development costs. The new initiative
builds on a long relationship between the Trust and IHDA. In the previous nine
years, the Trust participated with IHDA in the financing of approximately $300
million in development activity in Illinois, creating more than 2,700 units of
mixed-income housing. The Trust also financed two projects in 2005 with
MassHousing, the state housing finance agency in Massachusetts, with total
development costs exceeding $75 million.
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[PHOTO]
Columbus Tower, Jersey City, NJ - With $75 million in Trust financing, this $92
million highrise will offer 392 rental apartments and 9,000 square feet of
retail space. It is the most recent New Jersey project in which the Trust has
invested to help revitalize the waterfront neighborhoods of Jersey City and
Hoboken.
[PHOTO]
Victory Centre of Roseland, Chicago - One of the Trust's first projects under
the new initiative with the Illinois Housing Development Authority is this $20.7
million, 124-unit supportive living facility, with 80 percent of the units
reserved for low-income seniors.
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6 | AFL-CIO Housing Investment Trust
REPORT TO PARTICIPANTS
Expanding Investment Initiatives
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COMMUNITY INVESTMENT INITIATIVES
The Trust made important strides in 2005 with its strategy of targeted community
investing, which draws on its expertise in housing finance and its network of
relationships with key partners in labor, housing development, government and
real estate finance to address critical housing needs.
In the fourth year of its community investment initiative in New York City, the
Trust exceeded its investment target a year ahead of schedule. The New York City
Community Investment Initiative was launched in January 2002, in concert with
labor leaders and city officials, to help meet the urgent need for investment
capital after September 11, 2001. With $596 million committed through 2005,
including $248 million for multifamily housing and $348 million for
homeownership opportunities, the Trust surpassed its five-year investment goal
of $500 million in just four years. As the initiative's first project, the Trust
committed financing for Manhattan's first multifamily construction after 9/11 -
the $74 million Hudson Crossings apartments. The Trust's multifamily investments
have provided financing for 11 projects with a total appraised value of more
than $1.2 billion to create or preserve more than 12,300 units of housing. Over
90 percent of this Trust-financed housing is affordable to low- and
moderate-income households. In addition, the Trust's HIT HOME single-family
program provided $348 million in mortgage loans for union members and municipal
workers in New York City - a total of 1,760 mortgage loans benefiting teachers,
police, firefighters, hospital workers and other working families.
With the New York City initiative as a model, the Trust launched a similar
targeted investment plan in Chicago in 2005 to spur investments in housing and
support homeownership. Making a fast start toward its $250 million five-year
target for multifamily investments, the Trust committed $60 million in 2005 for
seven Chicago-area multifamily developments. A total of $42 million was issued
for single-family mortgages through the Trust's homeownership program in
Chicago.
At year-end, the Trust was exploring opportunities to utilize the targeted
investment strategy in other communities with acute needs for affordable
housing, such as those in the Gulf Coast.
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NEW YORK CITY COMMUNITY INVESTMENT INITIATIVE
- --------------------------------------------------------------------------------
West Village Houses, New York City - Helping the Trust to exceed
its investment goal for the New York City Community Investment
Initiative was the $40 million commitment made in 2005 to West
[PHOTO] Village Houses. The financing from the Trust will enable tenants
to convert this 420-unit rental apartment building into a
cooperative and become homeowners in Manhattan at below-market
costs.
Anuual Report | 7
REPORT TO PARTICIPANTS
Your Investment Dollars at Work
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[PHOTO] [PHOTO]
Trust investments have helped transform a decaying New Jersey industrial area
(above) into a thriving waterfront community.
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The AFL-CIO Housing Investment Trust has invested more than $600 million to help
revitalize the waterfront communities of Hoboken and Jersey City, New Jersey.
Following the collapse of the area's traditional industrial base, these Hudson
River communities experienced economic decline and an exodus of jobs and
residents. Now a vigorous rebirth is underway, bringing development, commerce,
jobs and a new community to the waterfront.
The HIT and its investors have played an important part in this transformation,
helping finance 13 multifamily projects to bring approximately 3,700 housing
units to these waterfront communities. The projects have generated over 6
million hours of union construction work and about $750 million in total
development. The Trust's most recent Hoboken project, the Sovereign (below),
neared completion in 2005 as new financing was committed for Columbus Tower in
Jersey City (page 6).
- --------------------------------------------------------------------------------
1.Tower of America East
[PHOTO] Trust financing: $54.2 million
Jersey City
2. Hudson Square South
[PHOTO] Trust financing: $19.9 million
Hoboken
3. South Waterfront (333 River Street)
[PHOTO] Trust financing: $90.6 million
Hoboken
4. Constitution North & South
[PHOTO] Trust financing: $52.2 million
Hoboken
5. Pacific at Newport
[PHOTO] Trust financing: $51.2 million
Jersey City
6. Sovereign Apartments
[PHOTO] Trust financing: $66.0 million
Hoboken
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8 | AFL-CIO Housing Investment Trust
OTHER IMPORTANT INFORMATION
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EXPENSE EXAMPLE
Participants in 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, 2005, and held for
the entire period ended December 31, 2005.
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 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 percent 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
percent hypothetical example with the 5 percent 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.
Beginning Ending Expenses Paid
Account Value Account Value During the Period
July 1, 2005 December 31, 2005 Ended December 31, 2005*
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Actual expenses $50,000 $49,883.57 $93.15
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Hypothetical expenses
(5% return before expenses) $50,000 $51,167.01 $94.35
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* Expenses are equal to the Trust's annualized expense ratio of 0.37%,
multiplied by the average account value over the period, multiplied by 184/365
(to reflect the one-half year period).
Annual Report | 9
OTHER IMPORTANT INFORMATION
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AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULE
In addition to disclosure in the Annual and Semi-Annual Report 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 most recent twelve-month period ended June 30 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.
Shown opposite: The $16.7 million
Lofts at Lafayette Square project in St.
Louis received a $7.4 million investment
from the Trust to transform former
industrial facilities into apartments.
10 | AFL-CIO Housing Investment Trust
Financial Statements
AMERICAN FEDERATION OF LABOR AND CONGRESS
OF INDUSTRIAL ORGANIZATIONS
HOUSING INVESTMENT TRUST
With Report of Independent Registered Public Accounting Firm
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, 2005 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 four 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 the year 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. We were
not engaged to perform an audit of the Trust's internal control over financial
reporting. Our audits included 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, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2005, by correspondence with the custodian.
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, 2005, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the four years in the
period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
McLean, Virginia
January 13, 2006
12 AFL-CIO Housing Investment Trust
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2005 (Dollars in thousands, unless otherwise noted)
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Assets
Investments, at fair value (amortized cost $3,458,345)* $ 3,468,223
Cash 10,076
Accrued interest receivable 18,234
Receivables for investments sold 89,575
Accounts receivable 82
Prepaid expenses and other assets 1,064
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Total Assets 3,587,254
- --------------------------------------------------------------------------------------------------
Liabilities
Accounts payable and accrued expenses 2,394
Redemptions payable 4,888
Refundable deposits 1,259
Income distribution payable, net of dividends reinvested of $12,791 1,838
- --------------------------------------------------------------------------------------------------
Total Liabilities 10,379
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Net Assets Applicable to Participants' Equity -
Certificates of Participation - Authorized Unlimited;
Outstanding 3,290,698 Units $ 3,576,875
==================================================================================================
==================================================================================================
Net Asset Value Per Unit of Participation (in dollars) $ 1,086.97
Participants' Equity
Participants'equity consisted of the following:
Amount invested and reinvested by current participants $ 3,572,931
Net unrealized appreciation of investments 9,878
Undistributed net investment income 3,023
Accumulated net realized losses (8,957)
==================================================================================================
Total Participants' Equity $ 3,576,875
==================================================================================================
* The cost for federal tax purposes approximates book cost.
See accompanying Notes to Financial Statements.
Annual Report 13
SCHEDULE OF PORTFOLIO INESTMENTS
December 31, 2005 (Dollars in thousands)
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Interest Rate Maturity Date Face Amount Amortized Cost Value
- ------------------------------------------------------------------------------------------------
Single Family 7.75% Jul-2021-Aug-2021 $ 39 $ 39 $ 39
8.00% Jul-2021 85 85 85
- ------------------------------------------------------------------------------------------------
124 124 124
- ------------------------------------------------------------------------------------------------
Multifamily(1) 5.25% Mar-2024 5,293 5,326 5,206
5.60% Jun-2038 2,910 2,916 2,936
5.62% Jun-2014 800 800 800
5.65% Oct-2038 2,231 2,305 2,248
5.87% Jun-2044 1,982 1,983 2,061
6.02% Jun-2035 7,243 7,246 7,522
6.65% Apr-2040 947 955 1,030
6.66% May-2040 5,797 5,799 6,016
6.70% Dec-2042 6,049 6,050 6,440
6.75% Feb-2039-Jul-2040 5,577 5,540 5,994
6.88% Apr-2031 29,003 28,690 30,648
7.00% Jun-2039 6,078 6,122 6,320
7.05% Jul-2043 5,356 5,356 5,837
7.13% Mar-2040 7,944 7,919 8,772
7.17% Feb-2040 4,775 4,776 4,962
7.20% Nov-2033-Oct-2039 10,169 10,173 11,201
7.50% Sep-2032 1,644 1,649 1,880
7.70% Oct-2039 12,175 12,118 12,816
7.75% Oct-2038 1,405 1,398 1,451
7.88% Nov-2036-Jul-2038 9,127 9,130 9,226
7.93% Apr-2042 2,908 2,908 3,396
8.15% Mar-2037 1,200 1,318 1,297
8.27% Jul-2042 2,543 2,543 2,887
8.38% Feb-2007 304 313 308
8.40% Apr-2012 781 781 785
8.75% Jul-2036-Aug-2036 11,899 11,854 11,974
8.80% Oct-2032 5,389 5,389 5,389
8.88% May-2036 2,415 2,381 2,432
- ------------------------------------------------------------------------------------------------
153,944 153,738 161,834
- ------------------------------------------------------------------------------------------------
Total FHA Permanent Securities $ 154,068 $ 153,862 $ 161,958
================================================================================================
14 AFL-CIO Housing Investment Trust
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 2005 (Dollars in thousands)
- --------------------------------------------------------------------------------
FHA Construction Securities and Commitments (0.5% of net assets)
Interest Rates(2) Commitment
Permanent Construction Maturity Date Amount Face Amount Amortized Cost Value
- -----------------------------------------------------------------------------------------------------------------------------------
Multifamily(1) 5.35% 5.35% Mar-2047 $ 8,050 $ 8,050 $ 8,055 $ 8,042
5.55% 5.55% May-2042 8,950 8,950 8,950 9,081
- -----------------------------------------------------------------------------------------------------------------------------------
17,000 17,000 17,005 17,123
- -----------------------------------------------------------------------------------------------------------------------------------
Total FHA Construction Securities
and Commitments $ 17,000 $ 17,000 $ 17,005 $ 17,123
===================================================================================================================================
Ginnie Mae Securities and Commitments (25.1% of net assets)
Commitment
Interest Rate Maturity Date Amount Face Amount Amortized Cost Value
- -----------------------------------------------------------------------------------------------------------------------------------
Single Family 3.75% Dec-2033 $ $ 18,666 $ 18,576 $ 18,304
4.00% Feb-2033 5,347 5,383 5,343
4.13% Nov-2032-Oct-2033 16,839 17,002 16,921
5.00% Aug-2033 6,250 6,297 6,281
5.50% Jan-2033-Aug-2033 12,981 13,133 13,082
6.00% Jan-2032-Jun-2033 6,726 6,970 6,900
6.50% Jul-2028-Jun-2032 5,596 5,785 5,859
7.00% Nov-2016-Jan-2030 10,431 10,683 10,929
7.50% Apr-2013-Aug-2030 10,598 10,858 11,183
8.00% Nov-2009-Dec-2030 4,883 5,001 5,201
8.50% Nov-2009-Aug-2027 3,862 3,952 4,139
9.00% May-2016-Jun-2025 1,105 1,133 1,203
9.50% Sep-2021-Sep-2030 384 390 420
10.00% Jun-2019 1 1 2
12.00% May-2015-Jun-2015 1 1 1
13.00% Jul-2014 1 1 1
13.25% Dec-2014 1 1 1
13.50% Aug-2014 1 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
103,673 105,168 105,771
- -----------------------------------------------------------------------------------------------------------------------------------
Multifamily(1) 2.91% Aug-2020 6,864 6,860 6,557
3.61% May-2018 19,992 19,588 19,376
3.62% May-2017 11,524 11,120 11,141
3.65% Sep-2017-Oct-2027 21,502 21,275 20,714
4.25% Feb-2031 6,000 5,968 5,809
4.26% Jul-2029 3,000 2,992 2,898
4.43% Apr-2034-Jun-2034 103,698 101,667 98,149
4.49% Apr-2023 8,531 8,531 8,304
4.57% Sep-2027 10,000 9,999 9,751
4.59% May-2033 16,300 16,290 16,011
(continued, next page)
Annual Report 15
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 2005 (Dollars in thousands)
- --------------------------------------------------------------------------------
Ginnie Mae Securities and Commitments (25.1% of net assets), continued
Commitment
Interest Rate Maturity Date Amount Face Amount Amortized Cost Value
- -----------------------------------------------------------------------------------------------------------------------------------
Multifamily(1) 4.65% Mar-2026-Oct-2045 29,369 29,367 29,072
4.66% Dec-2030 23,617 23,553 23,005
4.71% May-2025 33,293 33,289 32,624
4.78% Apr-2034 29,513 30,907 29,145
4.88% Mar-2036 10,000 10,011 9,825
4.92% May-2034 40,000 40,052 39,353
4.95% Dec-2044 11,063 11,263 10,921
4.98% Jun-2045 10,000 9,948 9,927
5.00% Dec-2033 5,405 5,467 5,321
5.05% Nov-2028 32,000 32,115 31,886
5.12% Feb-2037 10,000 10,190 9,945
5.13% Jul-2024 5,000 5,083 5,028
5.15% Jun-2023 36,546 37,370 36,332
5.18% Dec-2044 5,950 5,981 5,989
5.21% Jan-2045 5,796 5,799 5,824
5.25% Sep-2028-Oct-2044 26,526 26,631 26,984
5.30% Apr-2039 55,000 54,085 55,466
5.32% Aug-2030 35,000 34,847 35,261
5.40% Nov-2015 11,419 11,468 11,491
5.50% Sep-2023-Aug-2038 53,113 55,070 53,991
5.55% Mar-2045 9,236 9,238 9,505
5.58% May-2031 25,582 26,048 26,278
5.60% Nov-2036 4,349 4,246 4,570
5.68% Jul-2027 5,152 5,331 5,313
5.71% Jan-2045 7,424 7,424 7,728
5.86% Oct-2023 10,000 10,543 10,216
5.88% Mar-2024 11,229 11,230 11,429
6.11% Nov-2021 821 821 835
6.26% Apr-2027 10,000 10,810 10,524
6.34% Aug-2023 3,464 3,464 3,629
7.00% Jun-2043 28,718 28,718 31,154
8.75% Dec-2026 4,025 4,025 4,046
- -----------------------------------------------------------------------------------------------------------------------------------
796,021 798,684 791,327
- -----------------------------------------------------------------------------------------------------------------------------------
Forward Commitments(1)
4.97% Dec-2035 6,125 -- 31 (58)
5.75% Jul-2037 3,360 -- -- 33
5.85% Dec-2037 3,250 -- -- 13
7.50% Dec-2043 23,300 -- 93 233
- -----------------------------------------------------------------------------------------------------------------------------------
36,035 -- 124 221
- -----------------------------------------------------------------------------------------------------------------------------------
Total Ginnie Mae Securities and Commitments $ 36,035 $ 899,694 $ 903,976 $ 897,319
===================================================================================================================================
16 AFL-CIO Housing Investment Trust
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 2005 (Dollars in thousands)
- --------------------------------------------------------------------------------
Ginnie Mae Construction Securities and Commitments (9.0% of net assets)
Interest Rates(2) Commitment
Permanent Construction Maturity Date Amount Face Amount Amortized Cost Value
- -----------------------------------------------------------------------------------------------------------------------------------
Multifamily(1)
4.70% 4.70% Jan-2047 $ 6,035 $ 6,035 $ 6,035 $ 5,928
4.74% 4.74% Feb-20453 6,418 3,445 3,250 3,273
4.82% 4.82% Jul-20463 6,300 6,300 6,304 6,196
4.83% 4.83% May-20463 5,650 5,650 5,650 5,560
4.88% 4.88% Jun-2045 35,000 31,798 31,977 31,109
4.89% 4.89% Dec-2044 10,440 10,440 10,470 10,398
4.94% 4.94% Jun-20463 4,000 4,000 4,005 3,965
5.10% 2.25% Sep-20453 7,230 7,230 7,243 7,221
5.10% 5.10% Oct-2046 25,363 17,727 17,859 18,119
5.19% 5.19% Oct-2045 11,880 11,264 11,326 11,365
5.20% 5.20% Mar-2047 26,236 9,145 9,409 8,897
5.21% 5.21% Jan-20473 16,188 3,198 3,068 3,261
5.25% 5.95% Feb-2031 42,100 32,205 32,104 32,339
5.34% 5.34% Mar-20463 11,340 5,225 5,242 5,371
5.35% 5.35% Dec-2044-Mar-2046 19,600 18,399 18,587 18,741
5.46% 5.46% Feb-2047 3,165 25 41 128
5.51% 5.51% Apr-2046 27,944 23,150 23,804 24,384
5.62% 5.62% Nov-2046 8,200 6,448 6,662 6,888
5.75% 5.75% Sep-2045-Aug-2046 27,954 24,760 24,678 26,165
5.85% 5.85% Nov-2045 2,091 1,896 1,899 2,008
6.00% 6.00% Jan-2046 3,689 3,610 3,613 3,854
6.22% 5.75% Aug-2035 14,599 11,727 11,734 12,829
6.60% 6.60% May-2043 17,793 16,296 15,889 17,716
7.75% 7.25% Aug-2035 51,779 51,779 51,535 56,958
- -----------------------------------------------------------------------------------------------------------------------------------
390,994 311,752 312,384 322,673
- -----------------------------------------------------------------------------------------------------------------------------------
Total Ginnie Mae Construction Securities and Comitments $ 390,994 $ 311,752 $ 312,384 $ 322,673
===================================================================================================================================
Fannie Mae Securities and Commitments (34.2% of net assets)
Commitment
Interest Rate Maturity Date Amount Face Amount Amortized Cost Value
- -----------------------------------------------------------------------------------------------------------------------------------
Single Family 3.97% Aug-2033 $ $ 2,109 $ 2,102 $ 2,069
4.00% Jul-2033 14,290 14,396 14,059
4.10% Jul-2033 7,531 7,467 7,412
4.30% May-2033-Aug-2033 14,498 14,535 14,330
4.31% Aug-2033 21,144 21,079 20,931
4.50% Jun-2018-Nov-2033 36,648 36,963 36,091
4.61% Aug-2034 1,253 1,262 1,241
5.00% Jul-2018-Jul-2035 83,560 83,963 81,942
5.50% Jul-2017-Aug-2035 249,833 253,148 248,192
6.00% Apr-2016-Jan-2036 186,991 190,556 189,029
6.50% Nov-2016-Jan-2036 47,752 48,822 49,027
7.00% Nov-2013-May-2032 10,762 10,907 11,196
7.50% Nov-2016-Sep-2031 3,802 3,776 3,996
8.00% Jan-2007-May-2031 2,630 2,672 2,746
8.50% Nov-2009-Apr-2031 1,872 1,907 1,976
9.00% Jul-2009-May-2025 567 572 606
- -----------------------------------------------------------------------------------------------------------------------------------
685,242 694,127 684,843
- -----------------------------------------------------------------------------------------------------------------------------------
(continued, next page)
Annual Report 17
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 2005 (Dollars in thousands)
- --------------------------------------------------------------------------------
Fannie Mae Securities and Commitments (34.2% of net assets), continued
Commitment
Interest Rate Maturity Date Amount Face Amount Amortized Cost Value
- -----------------------------------------------------------------------------------------------------------------------------------
Multifamily(1) 3.94% Jan-2006(4) 29,209 29,203 29,209
3.81% Nov-2012 7,893 7,882 7,587
4.10% Jun-2027 9,498 9,278 9,172
4.48% Oct-2031 30,138 30,146 29,637
4.55% Oct-2033 5,240 5,296 5,033
4.66% Jul-2021-Sep-2033 8,790 8,928 8,502
4.67% Aug-2033 9,600 9,582 9,206
4.71% Feb-2011 5,640 5,692 5,608
4.77% Apr-2012 4,033 4,136 4,004
4.99% Aug-2021 2,405 2,380 2,378
5.15% Oct-2022 4,869 4,916 4,916
5.23% Mar-2018-Apr-2021 4,865 5,016 4,936
5.24% Dec-2012 1,898 1,902 1,913
5.30% Oct-2014 888 914 908
5.30% May-20185 7,342 6,967 8,856
5.34% Apr-2012 310 320 316
5.35% Dec-2012 5,851 5,863 5,931
5.43% May-2021 3,493 3,586 3,603
5.44% Sep-2013 2,091 2,117 2,154
5.45% May-2033 3,317 3,364 3,360
5.50% Sep-2011 20,000 20,969 20,543
5.58% Jan-2021 3,805 3,855 3,947
5.70% Mar-2009-May-2011 7,592 7,996 7,749
5.78% Dec-2008 1,460 1,535 1,490
5.80% Jan-2033 5,279 5,367 5,528
5.83% Aug-2014 1,184 1,244 1,228
5.84% Aug-2010 220 229 220
5.85% Oct-2008 953 992 959
5.88% Nov-2027 3,445 3,518 3,619
5.89% Nov-2008-Mar-2009 8,731 9,118 8,927
5.91% Dec-2008 1,003 1,055 1,026
5.96% Jan-2029 499 510 526
6.03% Jun-2017 1,948 2,108 2,094
6.06% Jul-2034 10,829 11,321 11,506
6.09% May-2009 1,325 1,368 1,364
6.10% Apr-2011 2,838 3,020 2,980
6.13% Dec-2016 3,772 4,110 4,074
6.14% Sep-2033 328 355 352
6.15% Oct-2032 3,781 3,892 4,048
6.16% Aug-2013 12,464 13,430 12,742
6.19% Jul-2013 5,000 5,391 5,319
6.22% Aug-2032-Jul-2034 11,285 12,117 12,143
6.23% Dec-2008-Sep-2034 1,867 1,988 1,998
6.25% Dec-2013 1,880 1,927 1,972
6.27% Jan-2012 2,163 2,199 2,301
6.28% Oct-2008-Nov-2028 5,807 6,245 6,150
6.34% Feb-2008 772 787 783
6.35% May-2010-Aug-2032 40,790 42,263 43,052
6.39% Apr-2019 1,052 1,138 1,149
(continued, next page)
18 AFL-CIO Housing Investment Trust
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 2005 (Dollars in thousands)
- --------------------------------------------------------------------------------
Fannie Mae Securities and Commitments (34.2% of net assets), continued
Commitment
Interest Rate Maturity Date Amount Face Amount Amortized Cost Value
- -----------------------------------------------------------------------------------------------------------------------------------
Multifamily(1) 6.41% Aug-2013 1,995 2,135 2,051
6.42% Apr-2011-Aug-2013 7,207 7,740 7,415
6.44% Apr-2014-Dec-2018 48,016 48,655 53,190
6.46% Jun-2009 1,099 1,139 1,126
6.50% May-2008-Jun-2016 8,082 8,307 8,441
6.52% Jul-2008-May-2029 7,563 8,292 8,209
6.53% May-2030 5,659 5,675 5,741
6.63% Jun-2014-Apr-2019 4,922 4,949 5,294
6.65% Aug-2007-Aug-2011 2,119 2,293 2,260
6.70% Jan-2011 2,529 2,700 2,610
6.74% Aug-2007 13,450 14,243 13,649
6.75% Aug-2007 898 942 915
6.79% Aug-2009 7,341 7,344 7,742
6.80% Jul-2016 981 981 1,068
6.85% Aug-2014 45,486 45,489 50,666
6.88% Feb-2028 5,155 5,767 5,598
6.91% Jun-2007 3,571 3,651 3,607
6.96% Aug-2007 4,599 4,681 4,696
7.01% Apr-2031 3,592 3,631 4,010
7.07% Feb-2031 18,146 18,554 20,312
7.16% Jan-2022 669 697 672
7.18% Aug-2016 603 603 667
7.20% Apr-2010-Aug-2029 9,763 9,502 10,738
7.25% Nov-2011-Jul-2012 9,134 9,134 9,473
7.30% May-2010 745 764 784
7.38% Nov-2018 1,521 1,631 1,522
7.40% Aug-2010 1,220 1,307 1,330
7.46% Aug-2029 9,879 11,294 11,136
7.50% Dec-2014-Feb-2024 11,376 12,537 11,880
7.71% Feb-2010 9,446 9,546 9,717
7.75% Dec-2012-Dec-2024 4,243 4,245 4,714
7.88% Jun-2018 4,412 4,412 4,812
8.00% Nov-2019-May-2020 6,049 6,031 6,076
8.13% Sep-2012-Aug-2020 9,392 9,368 9,663
8.38% Jan-2022 985 987 1,013
8.40% Jul-2023 537 527 626
8.50% Sep-2006-Sep-2026 5,940 6,402 6,777
8.63% Sep-2028 6,915 6,915 8,112
9.13% Sep-2015 3,129 3,116 3,150
- -----------------------------------------------------------------------------------------------------------------------------------
597,810 613,721 628,480
- -----------------------------------------------------------------------------------------------------------------------------------
Forward Commitments(1)/TBA(6)
4.99% Mar-2021 $ 40, 000 -- -- (801)
5.00% Jan-2034-Jan-2036(6) -- (40,000) (38,636) (38,763)
5.19% Mar-2021 5,546 -- -- 61
5.24% Feb-2021 11,000 -- -- 182
5.50% Jan-20366 -- (50,000) (49,630) (49,515)
5.60% Jan-2024 12,550 -- -- 501
- -----------------------------------------------------------------------------------------------------------------------------------
69,096 (90,000) (88,266) (88,335)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Fannie Mae Securities and Commitments $ 69,096 $ 1,193,052 $ 1,219,582 $ 1,224,988
===================================================================================================================================
Annual Report 19
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 2005 (Dollars in thousands)
- --------------------------------------------------------------------------------
Freddie Mac Securities (11.2% of net assets)
Interest Rate Maturity Date Face Amount Amortized Cost Value
- ---------------------------------------------------------------------------------------------------------------------
Single Family 3.99% Oct-2033 $ 12,985 $ 12,797 $ 12,721
4.23% Jun-2033 4,806 4,787 4,735
4.37% Jul-2035 3,312 3,297 3,265
4.50% Aug-2018-Feb-2019 26,766 26,886 26,115
5.00% Jan-2019-Jul-2035 54,719 55,361 54,028
5.05% Apr-2035 3,930 3,930 3,918
5.50% Oct-2017-Jan-2035 51,315 52,432 51,137
6.00% Dec-2006-Dec-2035 187,645 192,775 189,602
6.50% Feb-2007-Nov-2035 39,438 40,381 40,499
7.00% Mar-2011-Mar-2030 3,706 3,680 3,815
7.50% Jul-2010-Apr-2031 3,731 3,693 3,883
8.00% May-2008-Feb-2030 1,876 1,878 1,943
8.50% Jun-2010-Jan-2025 1,270 1,282 1,340
9.00% Sep-2010-Mar-2025 375 379 399
- ---------------------------------------------------------------------------------------------------------------------
395,874 403,558 397,400
- ---------------------------------------------------------------------------------------------------------------------
Multifamily(1) 8.00% Feb-2009 3,503 3,498 3,519
- ---------------------------------------------------------------------------------------------------------------------
3,503 3,498 3,519
- ---------------------------------------------------------------------------------------------------------------------
Total Freddie Mac Securities $ 399,377 $ 407,056 $ 400,919
=====================================================================================================================
Government-Sponsored Enterprise Securities (5.8% of net assets)
Issuer Interest Rate Maturity Date Face Amount Amortized Cost Value
- ---------------------------------------------------------------------------------------------------------------------
Fannie Mae 3.13% Jul-2006 $ 40,000 $ 40,095 $ 39,678
Fannie Mae 4.63% Dec-2008 70,000 69,781 69,833
Fannie Mae 6.00% Feb-2020-Mar-2025 98,660 99,242 97,086
- ---------------------------------------------------------------------------------------------------------------------
Total Government-Sponsored Enterprise Securities $ 208,660 $ 209,118 $ 206,597
=====================================================================================================================
United States Treasury Securities (1.4% of net assets)
Interest Rate Maturity Date Face Amount Amortized Cost Value
- ---------------------------------------------------------------------------------------------------------------------
4.25% Oct-2007 $ 50,000 $ 49,870 $ 49,855
- ---------------------------------------------------------------------------------------------------------------------
Total United States Treasury Securities $ 50,000 $ 49,870 $ 49,855
=====================================================================================================================
20 AFL-CIO Housing Investment Trust
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 2005 (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 5.92% Dec-2037 $ 6,710 6,710 $ 6,834
MA Housing Finance Agency 8.63% Jan-2013 340 344 370
- ---------------------------------------------------------------------------------------------------------------------
Total State Housing Finance Agency Securities $ 7,050 $ 7,054 $ 7,204
=====================================================================================================================
Other Multifamily Investments and Commitments (2.6% of net assets)
Interest Rates(2) Commitment
Permanent Construction Maturity Date Amount Face Amount Amortized Cost Value
- -----------------------------------------------------------------------------------------------------------------------------------
Multifamily Construction/Permanent Mortgages
5.54% 5.30% Jul-2017(7) $ 62,016 $ 43,180 $ 43,243 $ 44,513
7.63% N/A Jan-2011 813 455 455 472
8.63% N/A Jun-2025 1,469 1,295 1,295 1,295
9.50% N/A Apr-2024 760 685 685 685
9.75% N/A Aug-2012 1,524 1,203 1,203 1,203
- -----------------------------------------------------------------------------------------------------------------------------------
66,582 46,818 46,881 48,168
- -----------------------------------------------------------------------------------------------------------------------------------
Privately Insured Construction/Permanent Mortgages(8)
5.40% 5.40% Mar-2047 9,000 9,000 9,000 8,805
5.55% N/A Apr-2021 12,006 11,581 11,583 11,505
5.55% 5.55% Jan-2047 12,809 12,809 12,811 12,655
5.73% 5.73% Aug-2047 5,575 5,575 5,575 5,601
5.95% 5.95% Mar-2044 4,400 4,355 4,371 4,442
6.15% 6.15% Feb-2045 1,600 1,594 1,599 1,657
6.20% 6.20% Mar-2047 5,200 840 861 997
- -----------------------------------------------------------------------------------------------------------------------------------
50,590 45,754 45,800 45,662
- -----------------------------------------------------------------------------------------------------------------------------------
Total Other Multifamily Investments and Commitments $ 117,172 $ 92,572 $ 92,681 $ 93,830
===================================================================================================================================
===================================================================================================================================
Total Long-Term Investments $ 3,333,225 $ 3,372,588 $ 3,382,466
===================================================================================================================================
Annual Report 21
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 2005 (Dollars in thousands)
- --------------------------------------------------------------------------------
Short-Term Investments (2.4% of net assets)
Description Maturity Date Interest Rate(9) Face Amount Amortized Cost Value
- --------------------------------------------------------------------------------------------------------------------------
Short-term - Intermediates(10)
Freddie Mac June 20, 2006 4.45% $ 22,250 $ 21,782 $ 21,782
Freddie Mac September 18, 2006 4.47% 15,500 15,000 15,000
- --------------------------------------------------------------------------------------------------------------------------
37,750 36,782 36,782
- --------------------------------------------------------------------------------------------------------------------------
Short-term - Cash Equivalents(11)
Repurchase Agreement
Amalgamated Bank(12) January 23, 2006 4.00% 2,000 2,000 2,000
- --------------------------------------------------------------------------------------------------------------------------
2,000 2,000 2,000
- --------------------------------------------------------------------------------------------------------------------------
Commercial Paper
CRC Funding January 3, 2006 4.18% 8,800 8,798 8,798
Yorktown Capital January 10, 2006 4.25% 6,003 5,997 5,997
SYSCO Corp January 27, 2006 4.25% 8,675 8,648 8,648
Jupiter Sec Corp January 18, 2006 4.27% 5,000 4,990 4,990
Jupiter Sec Corp January 20, 2006 4.27% 10,241 10,218 10,218
GW University January 30, 2006 4.42% 8,224 8,224 8,224
- --------------------------------------------------------------------------------------------------------------------------
46,943 46,875 46,875
- --------------------------------------------------------------------------------------------------------------------------
Certificate of Deposit
Shore Bank - Pacific January 4, 2006 3.41% 100 100 100
- --------------------------------------------------------------------------------------------------------------------------
100 100 100
- --------------------------------------------------------------------------------------------------------------------------
==========================================================================================================================
Total Short-Term Investments $ 86,793 $ 85,757 $ 85,757
==========================================================================================================================
==========================================================================================================================
Total Investments $ 3,420,018 $ 3,458,345 $ 3,468,223
==========================================================================================================================
(1) Multifamily MBS securities and forward commitments 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) Construction interest rates are the rates charged to the borrower during
the construction phase of the project. e permanent interest rates are
charged to the borrower during the amortization period of the loan,
unless, in the case of FHA or Ginnie Mae securities, HUD requires that
such rates be charged earlier.
(3) Tax-exempt bonds collateralized by Ginnie Mae Securities.
(4) Discount note secured by Fannie Mae MBS. Interest rate is yield calculated
based on purchase price of discount note.
(5) During construction, this investment is a 100% participation interest in a
construction loan enhanced by a letter of credit issued by PNC Bank, N.A.
in favor of the Trust. The interest rate during construction is a floating
rate equal to LIBOR plus 150 basis points for the related monthly period
up to a maximum rate of 5.80%. At stabilization, the Trust will take
delivery of a Fannie Mae MBS with an interest rate of 5.80% and a term of
ten years.
(6) Represents to be announced ("TBA") securities, securities the Trust agreed
to sell for which the specific securities have not yet been identified.
(7) During construction, this investment is a mortgage loan enhanced by a
letter of credit issued by PNC Bank, N.A. in favor of the Trust.
Additionally, the interest rate during construction is a floating rate
equal to LIBOR plus 150 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 partial credit enhancement with an interest rate of
5.45% and a term of five years.
(8) Loan insured by Ambac Assurance Corporation.
(9) Interest rate is yield calculated based on purchase price of discount
note.
(10) Short-term investments with remaining maturities between 61 days and 365
days.
(11) Short-term investments with remaining maturities of 60 days or less.
(12) This instrument was purchased in December 2005. The Trust will receive
$2,006,795 upon maturity. e underlying collateral for the repurchase
agreement is a Ginnie Mae security with a market value of $2,088,945.
See accompanying Notes to Financial Statements.
22 AFL-CIO Housing Investment Trust
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2005 (Dollars in thousands)
- --------------------------------------------------------------------------------
Investment Income
FHA permanent securities $ 11,322
FHA construction securities 402
Ginnie Mae securities* 43,399
Ginnie Mae construction securities 16,881
Fannie Mae securities* 64,009
Freddie Mac securities 19,587
Government Sponsored Entities securities 10,533
United States Treasury securities 3,017
State Housing Finance Agency securities 261
Other multifamily investments 3,093
Short-term investments 4,027
- ------------------------------------------------------------------------------------------
Total Income 176,531
- ------------------------------------------------------------------------------------------
Expenses
Officer salaries and fringe benefits 2,394
Other salaries and fringe benefits 6,447
Legal fees 363
Consulting fees 286
Auditing, tax and accounting fees 249
Insurance 325
Marketing and sales promotion (12b-1) 526
Investment management 672
Trustee expenses 34
Rental expenses 708
General expenses 1,359
- ------------------------------------------------------------------------------------------
Total Expenses 13,363
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Net Investment Income 163,168
- ------------------------------------------------------------------------------------------
Net realized gain on investments 334
Net change in unrealized appreciation (depreciation) on investments (69,016)
- ------------------------------------------------------------------------------------------
Realized and Unrealized Net Losses on Investments (68,682)
- ------------------------------------------------------------------------------------------
==========================================================================================
Net Increase in Net Assets Resulting from Operations $ 94,486
==========================================================================================
* Including forward commitments.
See accompanying Notes to Financial Statements.
Annual Report 23
STATEMENT OF CHANGE IN NET ASSETS
(Dollars in thousands)
- --------------------------------------------------------------------------------
2005 2004
- -------------------------------------------------------------------------------------------
Increase in Net Assets From Operations
Net investment income $ 163,168 $ 157,612
Net realized gain on investments 334 40,091
Net change in unrealized depreciation on investments (69,016) (45,819)
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 94,486 151,884
- -------------------------------------------------------------------------------------------
Decrease in Net Assets From Distributions
Distributions paid to participants or reinvested from:
Net investment income (170,964) (159,172)
Net realized gains on investments -- (38,531)
- -------------------------------------------------------------------------------------------
Net decrease in net assets from distributions (170,964) (197,703)
- -------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Unit Transactions
Proceeds from the sale of units of participation 111,325 94,404
Dividend reinvestment of units of participation 148,694 175,076
Payments for redemption of units of participation (272,616) (165,850)
- -------------------------------------------------------------------------------------------
Net (decrease)/increase from unit transactions (12,597) 103,630
- -------------------------------------------------------------------------------------------
Total (decrease)/increase in net assets (89,075) 57,811
- -------------------------------------------------------------------------------------------
Net assets at beginning of period 3,665,950 3,608,139
===========================================================================================
$ 3,576,875 $ 3,665,950
===========================================================================================
Unit Information
Units sold 101,212 84,609
Distributions reinvested 135,208 156,550
Units redeemed (246,580) (146,927)
===========================================================================================
(Decrease)/Increase in Units Outstanding (10,160) 94,232
===========================================================================================
See accompanying Notes to Financial Statements.
24 AFL-CIO Housing Investment Trust
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) 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 securities,
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, mortgage securities and construction
mortgage securities and loans) 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.
Annual Report 25
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, a pro rata distribution is made to
participants of the net investment income earned during the month. is pro-rata
distribution is based on the participant's number of units held as of the
immediately preceding month-end and excludes realized gains (losses) on paydowns
of mortgage- and asset-backed securities which are distributed at year-end.
Participants redeeming their investments are paid their pro rata share of
undistributed net income accrued through the month-end of the month in which
they redeem.
The Trust offers an income reinvestment plan that permits current participants
automatically to reinvest their income distributions into Trust units of
participation. Total reinvestment was approximately 87 percent of distributable
income for the year ended December 31, 2005.
Investment Transactions and Income
Security transactions are accounted for as of the 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 distribution activities (12b-1 expenses). For the year
2005, the Trust was authorized to pay 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, 2005, the Trust
incurred approximately $526,000 of 12b-l expenses.
Receivables for Investments Sold
Receivables for Investments Sold represent investments that were sold on or
prior to December 31, 2005, which settled subsequent to December 31, 2005.
26 AFL-CIO Housing Investment Trust
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 earlier 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 sensitivity of the Trust's portfolio 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, 2005, 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,
2005, amounted to approximately $1,143,000. During the year ended December 31,
2005, the Trust was reimbursed for approximately $1,074,000 of current year
costs. As of December 31, 2005, approximately $69,000, 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, 2005, was approximately $48,000. During the year
ended December 31, 2005, the Trust paid the ITC approximately $46,000 of current
costs.
Annual Report 27
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, 2005, the Trust had outstanding unfunded purchase commitments of
approximately $278.2 million. The Trust maintains a reserve, in the form of
securities, of no less than the total of the outstanding unfunded purchase
commitments, less short-term investments. As of December 31, 2005, the value of
the publicly traded mortgage-backed securities maintained for the reserve in a
segregated account was approximately $3.16 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 securities) for the separate instruments included in the Trust's
investment portfolio, at amortized cost, for the year ended December 31, 2005,
follows (dollars in thousands):
State
Government- 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 Securities Securities Investments
- -----------------------------------------------------------------------------------------------------------------------------------
Balance,
January 1, 2005 $161,998 $ 7,246 $839,242 $240,388 $1,153,951 $410,416 $181,838 $5,820 $36,202
Purchases and
insured construction
securities advances, 1,206 17,000 411,926 186,786 881,763 204,754 278,215 6,710 57,125
net of discounts
Change in discounts 217 2 (5,600) 1,642 506 (1,845) (225) 4 (1,379)
and (premiums)
Transfers 3,728 (7,243) 92,942 (89,427) (1,471) -- -- -- 1,471
Principal reductions/ (13,287) -- (434,534) (27,005) (815,167) (206,269) (250,710) (5,480) (738)
Sales
- -----------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 2005 $153,862 $17,005 $903,976 $312,384 $1,219,582 $407,056 $209,118 $7,054 $92,681
- -----------------------------------------------------------------------------------------------------------------------------------
* Including forward commitments.
28 AFL-CIO Housing Investment Trust
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 6. Federal Taxes
The tax character of distributions paid during 2005 and 2004 was as follows
(dollars in thousands):
2005 2004
- --------------------------------------------------------------------------------------
Ordinary investment income - net $ 170,964 $ 164,877
Long-term capital gains on investments -- 32,826
======================================================================================
Total net distributions paid to participants or reinvested $ 170,964 $ 197,703
======================================================================================
As of December 31, 2005, the components of accumulated earnings on a tax basis
were as follows (dollars in thousands):
2005
- --------------------------------------------------------------------------------
Accumulated capital loss carryforward $ (8,030)
Unrealized appreciation 8,951
Other temporary differences 3,023
================================================================================
Total accumulated earnings $ 3,944
================================================================================
Accumulated capital loss carryforward may be used to offset future capital gain
recognized by the Trust through December 31, 2013.
For financial reporting purposes, capital accounts are adjusted to reflect the
tax character of permanent book/tax differences. For the year ended December 31,
2005, the Trust recorded the following permanent reclassifications (dollars in
thousands):
2005
- --------------------------------------------------------------------------------
Undistributed net investment income $ 10,398
Accumulated net realized losses (9,224)
Amount invested and reinvested by current participants $ (1,174)
================================================================================
Reclassifications are primarily due to the different book and tax treatment of
paydowns and distributions. Results of operations and net assets were not
affected by these reclassifications.
Note 7. Retirement and Deferred
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 17.21% percent of employees' salaries for the year ended December
31, 2005. The total Trust pension expense for the year ended December 31, 2005,
was approximately $1,029,000.
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 2005, the Trust matched dollar for dollar the first $3,100 of
each employee's contributions. The Trust's 401(k) contribution for the year
ended December 31, 2005, was approximately $179,000.
Note 8. Loan Facility
The Trust has a $25 million uncommitted loan facility which expires on June 30,
2006. Borrowings under this facility bear interest at LIBOR plus one-half
percent plus a 12.5 basis point administrative fee charged for each advance. The
Trust had no outstanding balance under the facility 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.
Annual Report 29
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios for the Years Ended December 31, 2005, 2004,
2003, 2002, and 2001.
- --------------------------------------------------------------------------------
2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
Per Share Data
Net asset value,
beginning of period $ 1,110.61 $ 1,125.21 $ 1,152.30 $ 1,098.40 $ 1,085.42
Income from investment operations:
Net investment income 50.08 48.63 54.26 65.19 70.86
Net realized and unrealized (losses) gains
on investments (21.25) (2.38) (11.69) 59.15 16.24
- ----------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) from
Investment Operations 28.83 46.25 42.57 124.34 87.10
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income (52.47) (49.10) (54.26) (65.19) (70.93)
Net realized gains on investments -- (11.75) (15.40) (5.25) (3.19)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (52.47) (60.85) (69.66) (70.44) (74.12)
- ----------------------------------------------------------------------------------------------------------------------------------
==================================================================================================================================
Net Asset Value, End of Period $ 1,086.97 $ 1,110.61 $ 1,125.21 $ 1,152.30 $ 1,098.40
==================================================================================================================================
Ratios Ratio of expenses to average on net assets 0.37% 0.37% 0.37% 0.36% 0.37%
Ratio of net investment income
to avearage net assets 4.5% 4.4% 4.7% 5.8% 6.4%
Portfolio turnover rate 68.4% 85.5% 73.1% 64.3% 40.9%
==================================================================================================================================
Number of Outstanding Units at End of Period 3,290,698 3,300,858 3,206,626 2,848,002 2,504,984
==================================================================================================================================
==================================================================================================================================
Net Assets, End of Period (in thousands) $ 3,576,875 $ 3,665,950 $ 3,608,139 $ 3,281,763 $ 2,751,482
==================================================================================================================================
==================================================================================================================================
Total Return* 2.64% 4.20% 3.78% 11.64% 8.21%
==================================================================================================================================
* Net of fund expenses.
See accompanying Notes to Financial Statements.
30 AFL-CIO Housing Investment Trust
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 the Trust's Investor Relations office at (202) 331-
8055.
Richard Ravitch**, age 72; 610 5th Avenue, Ste. 420, New York, NY 10020;
Chairman of the Board; term commenced 1991, expires 2006; 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 71; 815 16th Street, NW, Washington, DC 20006; Union
Trustee; term commenced 1981, expires 2007; President, AFL-CIO.
Richard L. Trumka, age 56; 815 16th Street, NW, Washington, DC 20006; Union
Trustee; term commenced 1995, expires 2008; Secretary-Treasurer, AFL-CIO.
Linda Chavez-Thompson, age 61; 815 16th Street, NW, Washington, DC 20006; Union
Trustee; term commenced 1996, expires 2008; Executive Vice President, AFL-CIO.
John J. Flynn, age 71; 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 65; 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 67; 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 70; 1600 Grand Avenue, St. Paul, MN 55105; Management
Trustee; term commenced 1996, expires 2008; Professor of Urban Land Studies,
Malacalester College; Director, Preservation of Affordable Housing, Inc. ;
Indentix, Inc.; Labor Arbitrator, State of Minnesota; formerly Director, Special
Actions Office, Department of Housing and Urban Development.
Jack Quinn, age 54; 700 13th Street, NW, Suite 400, Washington, DC 20005;
Management Trustee; term commenced 2005, expires 2008; President, Cassidy and
Associates, formerly Member of Congress, 27th District, New York.
Marlyn J. Spear, CFA, age 52; 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 72; 25250 Rockside Road, Cleveland, OH 44146; Management
Trustee; term commenced 1983, expires 2007; Director, TransCon Builders, Inc.;
formerly Executive Vice President.
Edward C. Sullivan, age 62; 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.
Jon F. Walters, age 64; 900 7th Street, NW, Washington, DC 20001; Union Trustee;
term commenced 2005, expires 2006; Secretary-Treasurer, International
Brotherhood of Electrical Workers; formerly International Vice President of the
Eighth District IBEW.
James A. Williams, age 55; 1750 New York Avenue, NW, Washington, DC 20006; Union
Trustee; term commenced 2005, expires 2008; General President, International
Union of Painters and Allied Trades of the United States and Canada; formerly
General Secretary-Treasurer, IUPAT.
* 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.
Annual Report 31
Leadership
- --------------------------------------------------------------------------------
All officers of the Trust are located at 1717 K Street, NW, Suite 707,
Washington, DC 20036.*
Stephen Coyle,+ age 60; Chief Executive Officer since 1992; AFL-CIO Housing
Investment Trust.
Helen R. Kanovsky,+ age 54; 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 38; 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 39; 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 34; Executive Vice President and Chief Portfolio Manager,
AFL-CIO Housing Investment Trust since January 2005; formerly Chief Portfolio
Manager, Assistant Portfolio Manager and Senior Portfolio Analyst, AFL-CIO
Housing Investment Trust.
Mary C. Moynihan,+ age 46; General Counsel, AFL-CIO Housing Investment Trust
since 2004; formerly Chief Counsel and Deputy General Counsel, AFL-CIO Housing
Investment Trust; Associate Specialist, Sullivan & Cromwell.
Stephanie Wiggins,+ age 40; 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 58; Senior Vice President, AFL-CIO Housing Investment Trust
since 2002; formerly Director of the New York Office, and Director of
Development, AFL-CIO Housing Investment Trust.
Harpreet Peleg,+ age 32; Controller, AFL-CIO Housing Investment Trust since
2005; formerly Chief Financial Officer, AFL-CIO Investment Trust Corporation;
Supervisor - Gas Settlements, PG&E National Energy Group; Financial Analyst,
Goldman Sachs.
Lesyllee White, age 43; Director of Marketing, AFL-CIO Housing Investment Trust
since 2004; formerly Regional Marketing Director and Senior Marketing Associate,
AFL-CIO Housing Investment Trust.
Nicholas Milano,+ age 38; Deputy 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.
32 AFL-CIO Housing Investment Trust
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
McLean, Virginia
Investment Adviser
Wellington Management Company, LLP
Boston, Massachusetts
Transfer Agent
PFPC Inc.
Wilmington, Delaware
Custodian
PFPC Trust Company
Philadelphia, Pennsylvania
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, New York 10011
(212) 414-8500
Western Regional Office
Aaron Prince, Director
235 Montgomery Street, Suite 1001
San Francisco, California 94104
(415) 433-3044
[GRAPHIC]
[LOGO] 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, 2005. 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 $215,000
for the fiscal year ended December 31, 2005.
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 $212,500 for the fiscal year ended
December 31, 2004.
(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 $0 for the fiscal year ended December 31,
2005. 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, 2005. 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 $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 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, 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%.
(c) Tax fees.
The aggregate fees billed by the Registrant's independent auditors
for tax-related services provided to the Registrant were $13,000 for
the fiscal year ended December 31, 2005. 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, 2005. 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 $15,120 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 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%.
(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 $8,000 for the fiscal
year ended December 31, 2005. 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, 2005. 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 $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%.
(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, 2005.
(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 last fiscal quarter
of the period covered by this report 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:
Title:
Date: March 9, 2006
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, 2006
/s/ Erica Khatchadourian
- -----------------------------------
Erica Khatchadourian
Chief Financial Officer
(Principal Financial Officer)
Date: March 8, 2006