The City and County of San Francisco Retirement Board recently completed an extensive review of the 457 Deferred Compensation Plan (Plan), including the investment options and services offered. ING Life Insurance and Annuity Company (ILIAC) is pleased to have been re-selected by the City and County of San Francisco as the Plan Administrator, and is looking forward to introducing changes that will improve the Plan to help CCSF employees reach their retirement goals.

As a result of its review, a number of Plan changes will be implemented. Some of these changes will be effective February 2, 2004 and others, including a revised “best-of-class” investment option menu selected by the Board and its independent consultant, will take effect later in 2004.

Plan Changes Effective February 2, 2004

There are four changes that will be effective February 2, 2004:

1) Five investment options will be terminated from the current menu. The investment options that will be terminated are:

• Janus Twenty Fund
• Janus Aspen Series Balanced Portfolio – Inst. Shares
• Janus Aspen Series Flexible Income Portfolio – Inst. Shares
• Janus Aspen Series Worldwide Growth Portfolio – Inst. Shares
• ING JPMorgan Fleming International Portfolio – Initial Class

To review the one-page information sheets for these funds, as well as the one-page information sheets for all of the Plan’s investment options, you can visit the Plan’s Web site at ingretirementplans.com/custom/sanfran or call ING’s local San Francisco Regional Office (415) 364-2000 or toll-free at (888) 822-1211.

2.) Effective January 29th the credited interest rate on the ING Fixed Account will increase to 5.00% from 4.675%. Additionally the renewal of the contract with ING provides for minimum guaranteed interest rates on the ING Fixed Account of 5.00% for 2004 and 4.50% for both 2005 and 2006. These guarantees are based on the claims-paying ability of ILIAC.

3.) Elimination of the $50 annual fee to utilize the ING Ultimate Account, the Plan’s self-directed brokerage option.

4.) Elimination of the 0.175% transferred asset benefit recovery charge, which was assessed to the expenses of each investment option to recover the cost of the market value adjustment assessed by The Hartford at the termination of their contract. This means that the Plan expenses will decrease by 0.175%.

What Are Your Next Steps?

To make the above fund changes as quickly and smoothly as possible, there are three alternatives for Participants who are invested in one or more of the options listed above.

Alternative 1 - Before 1:00 p.m. Pacific Time on January 30, 2004, you can transfer your existing assets and direct future contributions to alternate investment choices. To make changes, call ING’s toll-free Customer Contact Center toll-free at (800) 584-6001 or use the Internet at ingretirementplans.com/custom/sanfran.

Alternative 2 - If you prefer to continue to invest in the funds that are being terminated from the core menu, you may do so by transferring a portion of your account to the retail counterparts of these funds through the ING Ultimate Account, the Plan’s Self-Directed Brokerage Account (SDBA). The SDBA option is a supplement to the core product and provides over 10,000 additional mutual fund choices, including 900 no-load/no transaction fee funds. Although similar mutual funds may be available through the Plan’s SDBA; the performance, expenses, fund managers and investment fees may differ from those of the group annuity options previously available under the Plan. If you are not currently enrolled in the ING Ultimate Account brokerage option, you may request an enrollment kit as well as prospectuses containing more complete information, including charges and expenses by calling ING’s local San Francisco Regional Office at (415) 364-2000 or toll-free at (888) 822-1211. Read the material carefully before investing. Please note: The maximum that can be transferred to your ING Ultimate Account is 50% of your total deferred compensation account balance.

Alternative 3 – You can choose to do nothing. In this case the assets remaining in, and the contributions directed to, the terminated investment options would be automatically transferred to other options within the Plan based on the chart below. The following are the defaults that will take place if you do not select Alternative 1 or 2 above before 1:00 Pacific Time on January 30, 2004.

Terminated Investment Option Transfers To Replacement Option as of February 2:

Janus Aspen Series Worldwide Growth Portfolio – Inst. Shares transfers to ING VP International Value Portfolio – Class R
ING JPMorgan Fleming International Portfolio – Initial Class transfers to ING VP International Value Portfolio – Class R
Janus Twenty Fund transfers to ING T. Rowe Price Growth Equity Portfolio – Initial Class
Janus Aspen Series Balanced Portfolio – Inst. Shares transfers to ING VP Balanced Portfolio, Inc. – Class R
Janus Aspen Series Flexible Income Portfolio – Inst. Shares transfers to ING VP Bond Portfolio – Class R

Keep informed about the changes taking place with the Plan:

• Review the information that ING mailed to each Participant in early January
• Visit the Plan’s Web site at ingretirementplans.com/custom/sanfran for additional information.
• Call ING’s local San Francisco Regional Office at (415) 364-2000 or toll-free at (888) 822-1211 for answers to your specific questions.

Call Meghan Doherty, our local ING Representative, if you have any questions, need assistance in making your investment changes, or would like additional investment information including prospectuses and the Plan Information Booklet.

Group annuity contracts that are offered through a retirement plan are long-term investments designed for retirement purposes. Money distributed will be taxed as ordinary income in the year the money is received. Account values fluctuate with market conditions, and when surrendered the principal may be worth more or less than the original amount invested. The Participant Information Booklet and fund prospectuses contain additional information about the expenses associated with these funds. Please read this information carefully before you invest.

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