497 1 d68649_497.txt 497 AFL-CIO AFL-CIO HOUSING INVESTMENT TRUST HOUSING [LOGO] PERFORMANCE INVESTMENT as of June 30, 2006 TRUST -------------------------------------------------------------------------------- The Trust seeks to provide competitive risk-adjusted returns relative to its benchmark, the Lehman Brothers Aggregate Bond Index by investing in assets that provide premium income, while maintaining a portfolio risk profile comparable to its benchmark. This combination of investment and risk management has enabled the Trust to compile a successful record of performance and to attract additional funds to manage from both new and current participants. The performance data shown on this website represents past performance and does not mean that the Trust will achieve similar results in the future. The investment return and principal value of an investment in the Trust will fluctuate so that an investor's shares, when redeemed, may be worth more or less than its original cost. A Prospectus containing more complete information may be downloaded from this web site or obtained from the Trust by contacting the Marketing and Investor Relations Department at 202-331-8055. The Prospectus sets forth information about the Trust that an investor should read carefully before investing. NET ASSET GROWTH [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.] June 30, 1996 - June 30, 2006 HIT Net Asset Value (In Billions) Jun-96 1.26 Jun-97 1.48 Jun-98 1.85 Jun-99 2.10 Jun-00 2.26 Jun-01 2.58 Jun-02 2.96 Jun-03 3.57 Jun-04 3.59 Jun-05 3.59 Jun-06 3.44 o The Trust is a fixed-income fund in which historically the main component of the Trust's performance is interest income on investments. Apart from deducting operating expenses, all Trust income is distributed monthly to Participants. o Average net assets increased by approximately 12.1% for the period June 30, 1996 to June 30, 2006. o Approximately 86% of distributions are automatically reinvested by the Trust's Participants. ANNUALIZED RETURNS [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] For Periods Ended June 30, 2006 1 Year 3 Year 5 Year 10 Year HIT Net Return -0.78% 2.01% 5.22% 6.51% Lehman Aggregate Bond Index -0.81% 2.05% 4.97% 6.22% (1) Returns shown reflect the net return of an investment for the specified periods (after the deduction of the Trust's expenses). The HIT does not assess a sales charge (load) on the purchase of Units of participation ("Units") in the Trust, any fee on the sale or redemption of Units, or any other exchange fee or account fee. Participants pay only for the actual administrative expenses of operating the Trust. (2) 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. The performance data provided represents past performance. 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. Investors should consider the HIT's investment objectives, risks and expenses carefully before investing. A Prospectus containing more complete information may be obtained from the HIT by calling the Marketing Department at 202-331-8055, or by viewing the above-referenced link. The prospectus should be viewed carefully before investing. VALUE GROWTH OF $50,000 INVESTED [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.] For Period Ending June 30, 2006 Lehman Aggregate Bond Index HIT Net Jun-96 50,000 50,000 Jun-97 54,075 54,888 Jun-98 59,775 60,655 Jun-99 61,656 62,633 Jun-00 64,470 65,487 Jun-01 71,709 72,848 Jun-02 77,896 80,303 Jun-03 85,997 88,505 Jun-04 86,272 88,481 Jun-05 92,140 94,683 Jun-06 91,302 93,938 The chart shows the comparative value growth of $50,000 invested in the Trust (minimum initial investment) and its benchmark (theoretical values) over the course of ten years, assuming the reinvestment of all distributions. PORTFOLIO ALLOCATION [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] June 30, 2006 - Includes Funded and Unfunded Commitments Construction and Permanent Mortgages 3.17% Multifamily Construction Mortgage-Backed Securities 11.52% Multifamily Permanent Mortgage-Backed Securities 47.74% Cash and Cash Equivalents 0.42% Short Term Intermediate Securities 0.00% US Treasury Securities 0.00% Commercial MBS 1.89% Government Sponsored Enterprise Securities 2.91% Single Family Mortgage-Backed Securities 32.03% State Housing Finance Agency Securities 0.32% ------ 100.00% o Multifamily Construction Mortgage-Backed Securities: The Trust invests in fixed-income securities that finance the construction of multifamily properties. These securities generally have credit enhancements from FHA, Ginnie Mae (GNMA), or a letter of credit or repurchase guarantee from an entity rated "A" or better by Standard and Poor's. These securities generally fund over 12-24 months and upon completion of construction, a permanent security is issued. These securities typically generate yields above U.S. Treasury investments with comparable average lives and generally have significant prepayment protections. o Multifamily Permanent Mortgage-Backed Securities: The Trust invests in securities that are either backed by permanent loans for multifamily properties or by loans for existing single family homes. These FHA, GNMA, Fannie Mae, or Freddie Mac credit enhanced investments typically generate yield spreads above U.S. Treasury investments with comparable average lives. Additionally, multifamily mortgage-backed securities generally have significant prepayment protections. o State Housing Finance Agency Securities: The Trust invests in securities that are guaranteed or insured by a state or local housing finance agency ("A" rated or better or top tier by Standard and Poor's) and are backed by both construction and permanent loans for multifamily properties. -------------------------------------------------------------------------------- o Single Family Mortgage-Backed Securities: The Trust invests in securities that pool individual mortgages from single family homes. The interest and principal cash flows are passed through to the investor of the MBS net of any servicing fees. These Fannie Mae, GNMA, or Freddie Mac credit enhanced investments typically generate yield spreads above U.S. Treasury bonds. There is no prepayment protection on these securities meaning payments could be more than the scheduled amount. o Construction and Permanent Mortgages: The Trust invests in loans used to finance the purchase, refinance or construction of a property. --------------------------------------------------------------------------------