What’s in this Issue?

• Welcome to the UT System Retirement Programs
• Introducing Roth Contributions
• Fund Performance Summary Highlights
• Fund Performance Definitions
• New IRS 403(b) limits for 2007

The UT System recently completed a thorough review of the retirement platforms and Providers. This research revealed an opportunity to make positive changes to the Retirement Programs, which included some of the following enhancements effective September 1, 2006:

Expanded investment options

• More comprehensive communications and education programs
• Significantly reduced costs
• Improved recordkeeping and administrative capabilities.

Your Future. Your Choice.

UT System’s research led to the creation of one platform—the UT System Retirement Programs. This new structure is intended to provide you with easy access to quality Retirement Providers and investment products for all UT System Retirement Programs.

Who Are The Authorized Providers?

The six currently authorized Retirement Providers of the UT System Retirement Programs are:

• AIG-VALIC
• Fidelity
• ING
• Lincoln Financial
• MetLife Resources
• TIAA-CREF

If you are currently investing with a Provider that is not on the approved Provider list, you do not have to make any changes to your account at this time. However, the UT System is implementing standards that your Provider must meet to continue to receive your contributions. If your Provider cannot meet these standards or chooses not to, you will be asked to start investing your future contributions with one of the six approved Providers. You will not be required to transfer your accumulated balances. If you are affected by these changes, you will receive a separate letter with instructions later this fiscal year.

Roth Contributions: Take advantage of new after-tax contributions!

Your UTSaver Tax Sheltered Annuity (TSA) now gives you the opportunity to contribute after-tax dollars through a Roth option. The Roth option is not a separate retirement account, but another way to contribute to your UTSaver TSA account, which currently provides a traditional (pre-tax) option for contributions. You can elect a Roth TSA anytime, but in order to have your contributions deducted from your January paycheck, you must enroll at the UTRetirement Manager website between December 1 st and December 10, 2006.

Do Roth contributions make sense for you? For help making your decision and to enroll, visit www.utretirement.utsystem.edu.

Introducing the New Fund Performance Summary!

For the very first time, participants in the UT System Retirement Programs can view a comprehensive performance summary of all the funds offered by all six of the UT Retirement Programs Providers. This summary provides valuable statistics regarding the individual funds available to you as a participant.

How Am I Supposed to Read the Performance Summary?

Because there are over 600 funds offered through the UT System Retirement Programs, reading a comprehensive review of those funds can be daunting. Below is a guide on how to navigate through the report, and some useful definitions of the terms used in the report.

Navigating the Report:

The report is provided in an Excel© format for ease both in viewing and navigating. A menu is provided on the first page of the report with three separate methods of viewing the report. Simply click on the “HERE” and you will be directed to the report summary, sorted by your selection.

View the UT Retirement Programs Fund Performance Summary (as of 9/30/2006).
* You must open document as 'read only'.

What Does All This Mean?

The report uses several terms that you may not be familiar with. We have provided a few definitions to assist in your research.

Annual Report Expense Ratio - The percentage of fund assets paid for operating expenses and management fees. Fund expenses are reflected in the fund’s NAV/price on a daily basis.

Annualized Return - The average return for the mutual fund during that time period. For example, if a fund had a 10% average annualized return for the 1 Year time period ending 12/31/2005, an investment of $10,000 on 1/1/2005 would have grown to $11,000 by 12/31/2005.

Fund Name - The fund’s official name, as stated in the fund’s prospectus. This also includes the share class as denoted by "A", "R4", "Adv", etc. Note that all "A" shares are offered at NAV and all funds are offered in this plan as load waived or no-load.

Inception Date - The date on which the fund began its operations and the point at which the fund's performance history began for public use.

Investment Category/Asset Class - In an effort to distinguish funds by what they own, as well as by their prospectus objectives and styles, funds are identified by Investment Category or Asset Class. While the prospectus objective identifies a fund’s investment goals based on the wording in the fund prospectus, the Investment Category identifies funds based on their actual investment styles as measured by their underlying portfolio holdings. For example Large Value denotes a fund that invests primarily in domestic large cap companies that the fund's manager feels is undervalued.

Load/No Load - Funds that use brokers to sell their shares must compensate the brokers. Funds may do this by imposing a fee on investors, known as a "sales load" (or "sales charge (load)"), which is paid to the selling brokers.

NASDAQ— NASDAQ stands for the National Association of Securities Dealers Automated Quotation System. NASDAQ is an electronic stock market that uses a computerized system to provide brokers and dealers with price quotes. The NASDAQ Stock Market comprises two separate markets: (1) the NASDAQ National Market that trades the largest and most active securities, and (2) The NASDAQ SmallCap Market that lists a smaller number of emerging growth companies.

NAV—Net Asset Value is a company’s total assets minus its total liabilities. Because an investment company’s assets and liabilities change daily, NAV will also change daily.

Prospectus—A prospectus describes a mutual fund to prospective investors. Every mutual fund has a prospectus, which contains information about the mutual fund’s costs, investment objectives, risks and performance.

Ticker - The NASDAQ assigned symbol commonly used to locate the fund on electronic price-quoting systems, periodicals, financial journals and websites

New 2007 Contribution Limits Announced

The IRS has released the new annual limits for the 2007 calendar year for your UTSaver Tax Sheltered Annuity 403(b) (TSA) and your UTSaver Deferred Compensation Plan (DCP) 457(b) plans! These limits also apply to the Optional Retirement Program and the Teacher Retirement System as shown below:

The information in this newsletter is for general information purposes only and is not intended to be legal, investment or tax advice. Please consult your own advisor for advice targeted to your particular circumstances.