Contact: Anthony de Bruyn, (512) 499-4363

Date: August 12, 2004

UT System News Release

UT System Regents Approve UTIMCO Changes

HOUSTON -- The University of Texas System 's Board of Regents today voted unanimously to implement recommended changes in the management and oversight of the University of Texas Investment Management Company (UTIMCO). The regents approved amendments to several existing UTIMCO-related documents and also approved funds to create and maintain investment oversight at System Administration.

The approved changes included:

• Amendment of the Bylaws for UTIMCO
• Revisions to the Investment Management Services Agreement between the Board of Regents and UTIMCO
• Amendment of the Regents' Rules and Regulations as they relate to UTIMCO
• Approval of a new Investment Oversight Fee to be assessed against the managed funds for the purpose of paying for added oversight costs including the retention of an outside investment consultant and outside legal counsel to the Board and creation of one new oversight position (Director of Investment Oversight) at UT System

These approved changes were made as a result of the December 19, 2003, Board resolution wherein the Board of Regents determined to "…examine and evaluate UTIMCO as to structure and services…with the goal of defining and structurally improving the investment management function of the UT System." That December resolution led to the development of fifteen primary recommendations from the UTIMCO Working Group, which the Board approved in April. Among the 15 primary recommendations of the working group, the Regents gave authority to the UT System Chancellor to create an effective management of UTIMCO's authority for investment policies, establish new procedures for the selection of outside UTIMCO directors, a process for budget review, and periodic review of the contract with UTIMCO for investment management services.

In making his recommendations, Chancellor Mark G. Yudof said, "These changes in by-laws, contract and policies governing the oversight of UTIMCO will permit the Board and the System to more effectively perform its investment-related fiduciary duties. These changes along with previous improvements made by the Regents over the past 18 months are critical to a more productive relationship between the Board of Regents and its sole investment manager – a relationship built on clarity, transparency, accountability, and sustainability."

From the meeting of the board on April 29, 2004:

• News Release: Regents Approve Recommendations of UTIMCO Review
• Archived webcast of the Board meeting
• Approved Board Motion from Open Session (by Regent Estrada/Seconded Vice Chairman Krier)
• UT System Staff Observations and Recommendations on UTIMCO Review Issues
• Report of UTIMCO Working Group

Other materials:

Regents Announce Working Group to Review UTIMCO (Feb. 3, 2004)

UT System Regents Approve Agenda Items in Final Meeting of 2003 (Dec. 19, 2003) [includes UTIMCO items and resolution]

UTIMCO website

Other news and materials from the August 2004 meeting of the board