Contact: Monty Jones, (512) 499-4363

Date:

UT System News Release

Date: March 29, 1999

UTIMCO Changes Policy on Public Disclosure

AUSTIN -- The board of directors of the University of Texas Investment Management Co. has decided to increase the amount of information available to the public regarding its private equities investments, U.T. System Chancellor William H. Cunningham told the House Appropriations Committee on Monday.

Cunningham said the policies regarding what information to make public had been reviewed by UTIMCO's senior management and the board of directors after recent media reports raised questions about UTIMCO's practices.

In future private equity investments in which UTIMCO participates, the names of all individual principals who manage the investments will be part of the public record, according to the policy change approved by the UTIMCO board. The board also decided to make public the annual rate of return on each private investment.

"UTIMCO and the U.T. System are committed to the highest standards of public accountability, as well as to the imperative that we achieve a high rate of return on the funds that we invest on behalf of the public," Cunningham said.

"We believe that the new policy requiring public disclosure of the names of individual principals will not result in a more limited array of private investment opportunities and will not be detrimental to the performance of funds managed by UTIMCO. However, if a private entity should decline to enter into an investment agreement with UTIMCO because of these disclosure requirements, UTIMCO will forego the investment opportunity in favor of the public interest for open disclosure."

UTIMCO also is asking its partners in already existing private equity investments to release UTIMCO from confidentiality agreements so that the names of individual principals associated with those investments can also be made public.

Thomas G. Ricks, president and CEO of UTIMCO, said: "I am writing each of the firms that manage private investments for UTIMCO and am asking them to release us from the confidentiality agreements that we have signed with respect to who manages the private investments. While I understand that the firms would not want to disclose information such as a description of their investment strategies and projected rates of returns, I am very hopeful that the firms will permit us to release the names of their fund managers."

The confidentiality of the names of individual principals and certain other information related to UTIMCO's private investments has been upheld by the Texas Attorney General's Office as permitted exceptions to the state's open records law in order to prevent disclosures that would result in a competitive disadvantage for the public's investments. UTIMCO plans to continue to maintain the confidentiality of various details contained in private investment prospectuses, such as business plans, investment strategies, and projected rates of return.

Thomas O. Hicks, chairman of the UTIMCO board of directors, said: "I am very pleased with the action taken by the UTIMCO board. I believe that it is in the public interest that the news media and other interested parties know who is managing UTIMCO's private investments and that we publicly disclose the rates of return that individual private investments earn on a yearly basis."

Private equity investments, as opposed to publicly traded securities, typically involve limited partnerships involved in transactions such as venture capital investments and buyouts. Over the past five years, these alternative equities have produced, as a group, an average annual rate of return of 22.9 percent for UTIMCO.

The information that the UTIMCO board voted to make public in the future will supplement a variety of other detailed information that is already publicly available regarding UTIMCO's private investments. UTIMCO's Annual Reports (audited by the accounting firm of Deloitte & Touche) are available both in print form and electronically via the UTIMCO Web site (www.UTIMCO.org). These reports contain data on the performance of the private investment portfolio as a whole.

An annual report of detailed schedules of investment securities is published and is available on request. These schedules (also audited by Deloitte & Touche) include the book value and market value for every investment (including every private investment) as of the end of each fiscal year. This report is sent to the Governor, the State Comptroller, The State Auditor, the Legislative Budget Board, and others. It is also on the UTIMCO Web site.

Quarterly investment reports are presented to the Board of Regents. These reports include information on investment activity, balances, and performances by asset class. Included every quarter are two pages of information on private investments.