INVESTMENT INFORMATION

We are pleased to share with you the following information prepared by the Office of Retirement Services, Department of Management and Budget.

Investing With Your 401(k)/457 in 2005

Each year, the IRS reviews the amount it will allow you to invest on a pre-tax basis in your 401(k) and 457 accounts. This year, the annual contribution limits are $14,000 (up from $13,000 in 2004) for each plan. You can contribute up to $14,000 in each of the two plans (total $28,000). If you are over 50 or within 3 years of retirement and are interested in investing over the limit (the catch-up provisions), contact CitiStreet at 800-748-6128.

New Investment Opportunities

Effective January 1, 2005, one of the Tier II investment funds was replaced with a new investment option. Western Asset Core Bond Portfolio replaced the Strong Corporate Bond Fund. These funds have similar investment styles and levels of risk. If you had a balance with the Strong Corporate Bond Fund, all assets were shifted to the new fund as of December 31, 2004. All other investments remained unchanged.

Why Change Funds?

The State of Michigan oversees the Plan investment options and strives to offer a variety of funds that help you target your retirement goals. All investment options are reviewed regularly using an extensive evaluation process. Together with CitiStreet, the state monitors all funds’ performances against their indices and their peer groups, and evaluates whether the fund consistently maintains its investment style. The most recent assessment of the Strong Corporate Bond Fund indicated it was time to make a change.

If you do not want to invest with Western Asset Core Bond Portfolio, you may contact CitiStreet at any time to redirect your assets. You can make changes on the Plan website at http://stateofmi.csplans.com or speak to a Plan representative at 800-748-6128.

Western Asset Core Bond Portfolio

Classification: Bond Fund

Objective: Seeks to maximize total return, consistent with prudent investment management and liquidity needs, by investing to obtain an average duration of 3 to 6 years.

Strategy: The Fund invests primarily in US dollar-denominated fixed income securities and other debt instruments of domestic and foreign entities, including corporate bonds, securities issued or guaranteed by the US government, its agencies or instrumentalities, mortgage-backed securities and money market instruments.

If you would like more information about this new fund, including a fund fact sheet or prospectus, log on to the Plan Web Site at http://stateofmi.csplans.com and click on the “Investment Information” tab. Alternatively, you can call the Plan Information Line at 800-748-6128.