Important Notice—Change Affecting Unit Price of Domestic Bond Fund

The General Board of Pension and Health Benefits has changed the methodology that it will use to determine the fair market value of approximately 20% of the holdings in the Domestic Bond Fund. Most of these holdings are loans secured by mortgages on multi-family apartment buildings that qualify for the federal Low Income Housing Tax Credit program. Historically, the General Board has referred to this program as its Affordable Housing program.

This change will be effective on Monday, March 10, 2008 and will have a one-time positive impact on the per unit value of the Domestic Bond Fund and the Multiple Asset Fund.

The Domestic Bond Fund and the Multiple Asset Fund are two of seven funds available to participants through the General Board’s defined contribution plans. As of March 4, the total value of the Domestic Bond Fund investments represented approximately $3.0 billion of the General Board’s $16.1 billion in assets under management. The Domestic Bond Fund complements the General Board’s Inflation Protection Fund and invests in a broad variety of fixed income instruments. Though a majority of the holdings are U.S. securities, the fund can hold up to 20% in foreign bonds and it also invests in privately placed fixed income instruments. For more information about the Domestic Bond Fund, please refer to the General Board’s Investment Funds Description.

Since 1990, the General Board has financed its Affordable Housing loans through private transactions. There is no readily available “market price” for these loans because they are private transactions. Therefore, the General Board had to develop an alternate method of determining their fair value. One method is to base the value of these investments on the fair market value of comparable publicly traded securities. The General Board regularly evaluates its valuation methodology to assure it is appropriate. After evaluating a variety of comparable fixed income securities, the General Board began using its current method in July 2005 by calculating the fair market value of its loans based on the market prices of commercial mortgage backed securities (CMBS).

In 2007, credit markets in the United States began to erode due to a loss of confidence resulting from improper lending practices. At first, this loss of confidence adversely affected residential mortgage bonds made up of loans to high-risk (subprime) borrowers. However, market prices for CMBS were also affected due to investor fears that these loans were also subject to improper lending practices and fears of adverse consequences to these securities in the event of a severe U.S. economic recession.

The General Board believes that there has been no corresponding deterioration in the quality of the General Board’s Affordable Housing loan portfolio. Borrowers are presently continuing to make payments on all of the General Board’s loans. Accordingly, the General Board believes that the CMBS market does not currently represent the most appropriate market to use for the valuation of these loans.

The General Board engaged the services of and consulted with several independent sources to help develop a more appropriate means of determining the fair market value of its loans. The General Board adopted this change in valuation methodology on Friday, March 7. We anticipate this change will result in a one-time increase in the per unit value of the Domestic Bond Fund of approximately $.51 ( 51 cents). We also anticipate a one-time increase in the per unit value of the Multiple Asset Fund of approximately $.12 (12 cents), because the Domestic Bond Fund comprises approximately 25% of the General Board’s Multiple Asset Fund.

This change will be effective Monday, March 10, 2008. All transactions entered after 3:00 p.m. on Friday, March 7 will be processed using the new methodology.

For more information regarding the Domestic Bond Fund and the Multiple Asset Fund, please refer to the General Board’s Investment Funds Description at www.gbop.org/sri_funds/funds/home.asp.