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The University of North Carolina General Administration Changes in the UNC Optional Retirement Program Fund Lineup The UNC Optional Retirement Program (ORP) Investment Advisory Committee, assisted by a national benefits consulting firm, has conducted its annual review of the ORP and made several recommendations that have been approved by the President of the University. This is to inform you about these recommendations including the removal of one fund and the addition of six new funds under the UNC ORP investment fund lineup. Removal of CREF Growth Account The CREF Growth Account will be removed from the ORP available investment lineup effective January 1, 2008. The UNC ORP Investment Advisory Committee has closely monitored this account and proceeded with this recommendation due to its long-term, rolling and risk-adjusted performance results relative to its peer group. What You Need To Do If you are directing current or future contributions to the CREF Growth Account, please be aware that this option will no longer be available beginning January 1, 2008. Please visit the UNC ORP website at www.tiaa-cref.org/uncorp or call 800-842-2776, Monday through Friday, from 8 a.m. to 10 p.m. (ET) and Saturday from 9 a.m. to 6 p.m. (ET), to direct your future contributions among the remaining available investment options. Please note that the T. Rowe Price Large Cap Growth fund will remain as an available option within the ORP, and occupies the same sub-asset class as the CREF Growth Account. If you do not redirect your future contributions, any remaining contributions directed to the CREF Growth Account after January 1, 2008, will be invested in an age appropriate default TIAA-CREF Lifecycle fund until such time as you change your election. Balances invested within the CREF Growth Account prior to January 1, 2008 will not be affected; however, you may wish to review your investment strategy in light of changes to the available fund lineup. Existing money invested in this account as of January 1, 2008 may be transferred to any of the other available core funds at any time; however, since this fund will no longer be included in the core investment fund lineup, you will not be able to transfer new balances into this account after January 1, 2008. Due to the removal of this account from the core investment lineup, the performance, objectives, and returns within the CREF Growth Account will no longer be monitored by the UNC ORP Investment Advisory Committee. New Funds Available The ORP Investment Advisory Committee has recommended the addition of six new funds under the ORP lineup. Only those ORP carriers that do not currently have at least 20 funds in their core fund lineup were allowed to add new funds. These funds are now available and include: 2 ORP Carrier AIG VALIC Lincoln Financial Group TIAA-CREF Asset Class Fund Name Money Market American Century Capital Preservation Fund Large Cap Growth Calvert Large Cap Growth Fund International Equity Columbia Acorn International Fund Large Cap Blend Neuberger Berman Socially Responsive Fund Specialty Fund-Real Estate First American Real Estate Securities Fund Large Cap Growth TIAA-CREF Institutional Large Cap Growth Index Reason for Fund Addition Replaces the American Century Government Agency Money Market Fund that was recently closed to participants by American Century. All AIG VALIC participants investing in this fund should have been notified by AIG VALIC that existing assets in the Government Agency Fund were automatically mapped to the Capital Preservation Fund on August 31, 2007. Adds a socially responsible fund to AIG VALIC’s core fund lineup. This fund invests in larger companies that meet certain social screening criteria such as being environmentally conscious and not involved in the production of alcohol or tobacco. This fund joins the American Funds Growth Fund of America in the large-cap growth sub-asset class. This fund adds to the Non-U.S. equity offering from Lincoln. The fund focuses mainly on small to mid cap international cap stocks. The other Non-U.S. equity fund, The American Funds EuroPacific Growth Fund, focuses primarily on large international stocks. Adds a socially responsible fund to Lincoln’s core fund lineup. This fund is similar to the Calvert Large Cap Growth fund in that it employs social screens to construct the portfolio. However, the fund may invest in sectors such as energy and materials in which other socially responsible funds may not invest. This fund adds an asset class in the Lincoln lineup and offers participants the potential for further diversification. With the addition of this fund to the Lincoln lineup, all ORP providers now offer a real estate fund. This fund primarily invests in Real Estate Investment Trusts (REITs). Adds a passively managed fund to TIAACREF’s Large Cap Growth sub-asset class to complement the actively managed T. Rowe Price fund. This fund is designed to track the performance of the Russell 1000 Growth Index. 3 For your long-term retirement security, you should give careful consideration to the importance of a wellbalanced and diversified investment portfolio, taking into account all your assets, income, and investments. Before investing in any investment option, please carefully consider the investment objectives, risks, charges and expenses. You may access your ORP carrier’s dedicated website and learn more about the investment fund selection offered by your investment carrier and how to redirect your future contributions as follows: o o o o AIG VALIC: www.aigvalic.com/uncorp Fidelity Investments: www.mysavingsatwork.com/uncorp Lincoln Financial Group: www.lfg.com/unc TIAA-CREF: www.tiaa-cref.org/uncorp You may wish to visit the UNC system wide benefits website for more detailed information about the ORP at: http://www.northcarolina.edu/content.php/hr/benefits/retirement/orp/UnivWideORPMain.htm. October 2, 2007