ML101930104: Difference between revisions

From kanterella
Jump to navigation Jump to search
(Created page by program invented by StriderTol)
(Created page by program invented by StriderTol)
Line 15: Line 15:


=Text=
=Text=
{{#Wiki_filter:MASSACHUSETTS INSTITUTE OF TECHNOLOGY RESEARCH REACTOR LICENSE NO. R-37 DOCKET NO. 50-20  
{{#Wiki_filter:MASSACHUSETTS INSTITUTE OF TECHNOLOGY RESEARCH REACTOR LICENSE NO. R-37 DOCKET NO. 50-20 REQUEST AND APPLICATION; SELF GUARANTEE DECOMMISSIONING EXPENSES DATED DECEMBER 22, 2009 REDACTED VERSION*
IN ACCORDANCE WITH 10 CFR 2.390(a)(6)
*Redacted text and figures blacked out or denoted by brackets


REQUEST AND APPLICATION; SELF GUARANTEE DECOMMISSIONING EXPENSES DATED DECEMBER 22, 2009 REDACTED VERSION*
Massachusetts Institute of Technology   Regina Dugan                       77 Massachusetts Avenue Associate Counsel/Insurance Manager Cambridge, Massachusetts 02139-4307 Office of the General Counsel Building 12-090                     Phone  617-253-2823 Fax    617-258-0267 Email  dugan@mit.edu Via Federal Express Mail December 22, 2009 U.S. Nuclear Regulatory Commission Office of Nuclear Material Safety and Safeguards One White Flint North 11555 Rockville Pike Rockville, MD 20852 Attn.: 0-12D3 Re: Request and Application, Self Guarantee, Decommissioning Expenses -
IN ACCORDANCE WITH 10 CFR 2.390(a)(6)
License No. SNM-986, License No. R-37 To Whom It May Concern:
*Redacted text and figures blacked out or denoted by brackets Massachusetts Institute of Technology Via Federal Express Mail December 22, 2009 U.S. Nuclear Regulatory Commission Regina Dugan Associate Counsel/Insurance Manager Office of the General Counsel Building 12-090 Office of Nuclear Material Safety and Safeguards One White Flint North 11555 Rockville Pike Rockville, MD 20852 Attn.: 0-12D3 77 Massachusetts Avenue Cambridge, Massachusetts 02139-4307 Phone 617-253-2823 Fax 617-258-0267 Email dugan@mit.edu Re: Request and Application, Self Guarantee, Decommissioning Expenses -License No. SNM-986, License No. R-37 To Whom It May Concern: In October 2009, Massachusetts Institute of Technology
In October 2009, Massachusetts Institute of Technology ("MIT") submitted a request to self-guarantee the estimated decommissioning expenses associated with MIT's above-referenced licensed activities, along with the supportinKexecuted agreement and other required documentation. At the NRC's request, MIT has revised its Self Guarantee Agreement and supplemented its original application for approval by providing the additional documentation requested.
("MIT") submitted a request to self-guarantee the estimated decommissioning expenses associated with MIT's referenced licensed activities, along with the supportinKexecuted agreement and other required documentation.
MIT requests the NRC's approval to self guarantee the required decommissioning assurance for these licensed activities. The following documents are enclosed for the reconsideration of MIT's application as guarantor of financial assurance for its estimated decommissioning expenses of the NRC licenses:
At the NRC's request, MIT has revised its Self Guarantee Agreement and supplemented its original application for approval by providing the additional documentation requested.
MIT requests the NRC's approval to self guarantee the required decommissioning assurance for these licensed activities.
The following documents are enclosed for the reconsideration of MIT's application as guarantor of financial assurance for its estimated decommissioning expenses of the NRC licenses:
: 1. Copy of the Letter from MIT's Chief FinancIal Officer in Support of Self Guarantee (Original provided to the NRC with the October request.).
: 1. Copy of the Letter from MIT's Chief FinancIal Officer in Support of Self Guarantee (Original provided to the NRC with the October request.).
: 2. Copy of the Report of MIT's Auditor, PricewaterhouseCoopers (Original provided to the NRC with the October request.).
: 2. Copy of the Report of MIT's Auditor, PricewaterhouseCoopers (Original provided to the NRC with the October request.).
: 3. Schedule Reconciling Chief Financial Officer's Letter. 4. Original Executed Revised Self Guarantee Agreement, dated December 17, 2009. 5. Organizational Chart reflecting MIT Corporation and Institutional Officers.
: 3. Schedule Reconciling Chief Financial Officer's Letter.
: 4. Original Executed Revised Self Guarantee Agreement, dated December 17, 2009.
: 5. Organizational Chart reflecting MIT Corporation and Institutional Officers.
: 6. Names and Addresses of MIT Institutional Officers.
: 6. Names and Addresses of MIT Institutional Officers.
u.s. Nuclear Regulatory Commission Request for Self Guarantee of Decommissioning Expenses December 21, 2009 Page Two 7. MIT Executive Committee vote, reflecting signing authority for Theresa M. Stone, as Executive Vice President and Treasurer.
 
u.s. Nuclear Regulatory Commission Request for Self Guarantee of Decommissioning Expenses December 21, 2009 Page Two
: 7. MIT Executive Committee vote, reflecting signing authority for Theresa M.
Stone, as Executive Vice President and Treasurer.
: 8. MIT's Bond Rating information.
: 8. MIT's Bond Rating information.
: 9. MIT's most recent audited financials, Report of the Treasurer for the year ended June 30,2009. Please contact me should any additional information be required to complete this process. Thank you for your assistance with this request. Very truly yours, Enclosures cc: Alexander Adams, Jr., U.S. Nuclear Regulatory Commission   
: 9. MIT's most recent audited financials, Report of the Treasurer for the year ended June 30,2009.
Please contact me should any additional information be required to complete this process. Thank you for your assistance with this request.
Very truly yours, Enclosures cc: Alexander Adams, Jr., U.S. Nuclear Regulatory Commission
 
':-~':;, ,: ** .....liffice of the Vice President for Finance                                    Massachusetts Institute of Technology
                                                                                                  '!1 fv1as:.ac:\u$ut:s ,t..,v*211U8, i3Lilriinq Nr.:lU 3000 C?~1t)(i(iDe. I'Vi~lSS(!dHl :;~Tt:.; O/:! :39":4307 October 15, 2009 u.s. Nuclear Regulatory Commission Washington, D,C. 20555-0001 I am the ChieHincindalOfficerofthe Massachusetts Institute of Technology ("MIT"), a nonprofit Ilniversity. This letter is in support ofMIT's,useofthesel(-guarantee fii-Iam;ial test to demonstrate finanCial assurance; as ,specified inlO CFR Part30. MIT has noparent company!ioldingmajority control onts voting stOCK,                      ,  "                      .
                              , "MIT guarantees, through theself~gLiarantee $ubinitledtodemonstrate compliance ,under 10 CFRPart30, tl1e,'decommissiq'ning ofth.e, fol!6'iriJ1g fa¢ilities owned oroperatE!rlbyMIT. Thecljrrent ,cost' so
:estim;ltes or certified amounts. for decornmissloningj guaranteed, are shown for each facility:                                    ','
                                                                                                                          ,Certified Amounts or Name of Facility            UcenseNumber            Lbtatioriof Facility                          Current Cost Estimates
                        'MrrResearch Reactor 'SNM7986                          77 Massachuserts,AV                          $1,125,000.00, Cambridg~,    MJl,02139 MIT Research ReactorR-37                            138 Alb,my St. .                              $30,000,000,00 Cambridge; MA 02139 I hereby certify that MITis currently a goingconcern an9 that it possesses positive tangible net worth inthe amount of $12,949.6 miliion*.
This fiscal year of this firm ends on June 30. Thefigures for the above item marked with an asterisk are derived from MIT's independently audited, year-end financial statements and footnotes for the latest completed fiscal year, ended June 3D, 2009.
1.' . .".\
MIT is not required to file a Form 10-K with the U .5. Securities and Exchange Commission for the latest fiscal year.
 
.... ,,- - "",,
This firm satisfies the following self-guarantee test:
: 1. Current bond rating of most recent uninsured, uncollateralized, and unencumbered issuance of this institution:
Rating: Aaa Name    Of rating service:      Moody's Investors Service
: 2. Date of issuance of bonds:                January 8, 2009
: 3. Description & date of maturity of bonds:
Amount                          Interest rate
                                                                                        -
Maturity Date            1 Description
                    $10,000,000                    4.00%                  July),2016              I MHEFA Series 057586ECG4
                    $78,000,000                    5,00%                  July'l,2016                MHEFA Series 0 57586ECH2
                    $23;485,000                    5,00%                  Julyl,2026                MHEFA Series. O;;7586ECJ8
                    ,$47,975!000                    5.75%                  July 1,2026                MHEFASeries 057586.ECKS
                    $42,000;000                    5.50%                  July C1,2036              MHEFA Series.O 57586ECL3
                    $65;000,000                    6.00%                  July 1, 2036              MHEFA Series 05}586ECMl
: 4. Is the ra'ting specified on line INA" or better?              Yes I hereby certify that the content of this letter is true a nd correct to the best of my knowledge .
Signature
('./,.----1    . . . Ill' ~
                                        "tCVtii..<0tC ....lh_. . . .;'(ll'Z-L&#xa3;')
                              &sect;                                    ~
Name:        Terry Stone                                              c: 70/\;/. /--
                                                                                        -- ,        .L Title:      Chief Financial Officer
 
'('
    . . -r ...,',,. .
Pdcl.:watt'rhouseCuopl*rs Ll.P 12.; Ilil:1i SI.
lle'ston MA. 0211(1 W\\'W,P\\'C,COIll Report of Independent Accountants To the Board of Trustees of Massachusetts Institute of Technology:
lj1Jehave performed the procedures enumerated below; which were agreed to by Massachusetts Institute of Technology ("the Institute"), NRC MIT licenses SNM-986 and R-37, solely to assist you in complying with the Nuclear Regulatory Commission's financial assurance reguiations, 10 CFR Part 30.
Management is. responsible for the Institute's compliance with those regulations. This agreed~upon proceduresengage.m.entwasconducted in accordance with attestation standards established' by the American Institute of Certified Public Accountants, The sufficiency of these procedures is solely the responsibility of those parties'specified in this report. Consequently, we make:no representation regar(jingthe sufficiency ofthe procedures described below either for the purpose ,for which this,report has been requested or for any other purpose.                                    .                              .
The procedures and associated findings are as follows:
                          *1;, Confirmed that thehetWorth in the "PerFinancial Statements"columricif theaccorripanying schedule agrees with total netassets coritainediri the Institute's firianck31 statements for the year ended June 30, 2009,which we*have audited in accordancewith'auditingstandards' .
generally accepted in the United States of America and have issued our.report thereon dated September 16,2009;
: 2. Confirmed that the tangible net Worth in the "Per CFO's Letter" colurrinaf the accompanying schedule agrees with tangible net wbrthin the CFO'slettefdated October 15, 2009;
: 3. Inquired of management as to the existence af any reconciling items between Hie CFO's Lette'r and the audited financial stateinents'notingthat there are none; and          ..            ...    '.
: 4. Mathematically check the totals intheaccompanying schedule, includinglhe current.cost estimates of decommissioning for each facility listed p~r the CFO's lette~.
Nb exceptions were noted, We were not engaged to and did not conduct an examination, the objective of which would be the expression of an opinion on compliance with the regulations. Accordingly, we do not express.such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.        .
This report is intended solely for the information and use of management and the Board of Trustees of Massachusetts Institute of Technology and the Nuclear Regulatory Commission, and is not intended to be and should not be used by anyone other than these specified parties.
Y!U&~~~ UP October 16, 2009
 
Schedule Reconciling Amounts Contained nn (~hief Executive OfficCi"'S or Chief lFnnancialOfficer's Letter with Amounts in Financial Statements M1IT YEAR E.NDED .DUNE. 30, 2009
                .. _--                      (000.000)
Pcr Fiilancial    Reconcilinl!      ero's Letter Statements    I    Items Net \\'01th  ~-----  .. "
                                    $12 949.6              0            $12.949.6 - - -
Less: Cost in cxcess of value ofiangiblc assets                0                0                  0 acquired Net vvorth after cost in excess of value o[tangible        $12.949;6              0          $]22 949 .6
~ets acq\lIfcd      ;"        "                      "          -0'          -------'----
Accnied - decommissionin
                      ..
u
                              ~
costs includedinculTcnt 0                  0                  0
  !iahi1ities
----              -                              -                      _..
Tangibknet worth (plus
                                    $12.949.6              0          $12~949.6 dcc{)mm issioningcosts)
L - ...                                                          I          --
(2)
 
MIT Organization Chart - Corporation and Institutional Officers                                                  http://web.mit.edulorgchartlcorporation.html Organization Chart Illii Corporation and Institutional Officers EXecutive VP & CEO;: :
                                            ~!umni ASso,~.iatio~,;:"
                                            ,~!!.~it~:~~~u::;~;.',:::;i'::; "",
Notes on the reporting retationships The Chairman, Presiden~ ElO3CutiW Vice President and Treasurer, and Vice President for Institute Affairs and Secretary of the Corporation are officers of the MIT Corporation.
The Alumni Association reports to the Alumni Association Board, and its ElO3CutiW Vice President reports informally to the President The MI T Inws!ment Management Company reports to the IMC Board, which is appointed by the Executiw Comnittee of the MIT Corporation. The IMC President also reports to the President of MIT.
Updated: August 3, 2009 II Iii  Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139-4307 1 of 1                                                                                                                                  1211 0/2009 11 :09 AM
 
Kirk D. Kolenbrandcr
__ __
NlASSAClitiSF.lTS INsTITlrrE Of 'H:CHNOLOGY
          -
- - - ... ........._._- ... ... ......._-_. --,.--. '."              _-    Vice Pi-csid('TI1 jiiT Institute AJJair., and Secretary of tbcCorponJti(J11
_-
                                                        '--'-" -..... .. _--_.-------- . _.... ----- _._---_ ......_._- .. _--._---_.....*. -
Office of the President 77 i\hssachusctts AVellue, Building 3-2&deg;7 Cambridge, AlA 02139-4307 Phone 617~253-3365 7 Septemb(!r 200 7:.
Ms. Theresa M. Stone Room r221 MIT DearTeny' I am writing co confirm foryour records that at its meeting on September 5, the Executive ,.
Committee VOTED:                That, effective on. and after September 6, 2007, the individuals fromtime to time holding the folloWing positions at the Institute are, and each of them acting singly is, hereby authorizeclto sign in the name and on behalf of the Institute any and all contracts, bonds,and- other agreements and documents which any such person acting in such p6sitiondeems'advisable and in the interests of the Institute: .
                              .              -Chair of the Corporation o President
* EXeClltivcVice President and Treasurer o Vice President and General Counsel o VIce fJrcsidentfor Finance
                                              .. Director,Office 6fSponsored Programs; that anyactiontakenonor after September 6,2007 within. the scope of the .
authority granted by this vote by any person holding any ofthe above-listed positions is hereby ratified as authorized; and that the signing and delivery of any such document in the name and on behalf of the Institute by any person holding any of the abovc-:listed positions in order to carry out the purposes orthis vote..
shall bec<mclusive as to the authority of the person so acting_
If you have any questions, please give me a call.
iZl' Kirk D. Kolenbrandcr KDKJacb Enclosures cc:    Mr. James L Morgan Mr: R Gregory Morgan Ms. Eiizabeth M. Ogar Me. Israel Ruiz Ms. Kathy D. Vitale
 
  ~I ,"
\.
SELF-GUARANTEE AGREEMENT Guarantee made this        }7      day of December, 2009,          by Massachusetts Institute of Technology ("MIT"), a "non-profit university," organized under the laws of the Commonwealth of Massachusetts, with principal place of administration at 77 Massachusetts Avenue, Cambridge, Massachusetts, herein referred to as "guarantor," to the U.S. Nuclear Regulatory Commission (NRC), beneficiary, on behalf of itself as licensee.
Recitals
: 1. The guarantor has full authority and capacity to enter into this self-guarantee under its bylaws, articles of incorporation, and the laws of the Commonwealth of Massachusetts.
: 2. This self-guarantee is being issued to comply with regulations issued by the NRC, an agency of the U.S. Government, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974. NRC has promulgated regulations in Title 10, Chapter I of the Code of Federal Regulations, Part 70, and Title 10, Chapter I of the Code of Federal Regulations, Part 72, which require that a holder of, or an applicant for, a materials license issued pursuant to 10 CFR Part 50 and 10 CFR Part 70, provide assurance that funds will be available when needed for required
            . decommissioning activities.
: 3. The self-guarantee is issued to provide financial assurance for decommissioning activities for the licenses and facilities set forth in the following schedule and as required by 10 CFR Part 50 and 10 CFR Part 70 and Appendix E to 10 CFR Part 30 :
License No.            License Location and      Estimate based on        Certified Amounts or Description        year 2001 dollars        2009 Cost Estimates R-37                        MIT Research              $23,000,000,            $30,000,000. Due to Reactor, 138 Albany      including a 10%          the contingency St., Cambridge MA        contingency.            applied in 2001 and 02139; education                                  low to negative and research                                      inflation factors in activities                                        2001-2007, no changes were made until 2008. The estimate was then
 
adjusted based on separate inflation factors applied against the labor (representing 11 % of the total) costs.
Using the NUREG-1307, Rev. 12, Page 0.1, Example 2 (Northeast Region),
the respective inflation factors used for the '08 estimate were 1.28 (labor) and 1.42 (burial), to arrive at the estimate of
                                                                                                                                                                                                                        $29,793,000 for 2008, which was rounded up to $30 million for 2009 ..
(See calculation below).
SNM-986                                                              MIT Research                                                                        $1,125,000, statutory                                          $1,125,000.
Reactor and 77                                                                      - in accordance with Massachusetts Ave.,                                                                  10 C.F.R. 70.25(d),
Cambridge MA                                                                        based on the 02139; storage of                                                                    applicable quantities Special Nuclear                                                                      of SNM stored at this Materials                                                                            facility.
Total Estimated                                                                                                                                    $31,125,000.
Costs Decommissioning Estimate Adjustment Calculation:
        *_._. ______ .H_.H*.. _.. _*, ********___ *__*__ **.H**********HHH****..H..H..H*_..*_W_......... _ _.H**.. ___ .....H......... _...... _***.**                ................. *H****H.H. _______ ...... _._ .........*H.                ...
Duke Study                                23,000,000.00                                                                  %Total                          NUREG                                  Inflator                        29,793,000.00 Inflation Model Labor Portion                            20,470,000.00                                                      89%                                      Labor                                1.28                                26,200,000.00 Burial Portion                              2,530,000.00                                                    11%                                      Burial                                1.42                                  3,593,000.00 Inflation figures for 2008, were calculated based upon NUREG-1307, for the years 2002 (year closest to when the Duke study was completed, 11/01) @ 1.862, and 2006 @ 2.21.The calculation for 2008 assumes linear cost increases through 2008:
Cost inflator for 2008 = 1.862+ {(2.21-1.862)/(2006-2002) x(2008-2002)} = 2.384. The factor for the labor portion of the cost to be applied in 2008 = 2.384/1.862= 1.28. The same method was used to develop the burial factor of 1.42.
In order to comply with the guarantor's longstanding commitment to being environmentally responsible, the reactor facility will be decontaminated, and spent nuclear materials will be properly 2


,: ** ..... liffice of the Vice President for Finance October 15, 2009 u.s. Nuclear Regulatory Commission Washington, D,C. 20555-0001 Massachusetts Institute of Technology
'.
'!1 fv1as:.ac:\u$ut:s ,t..,v*211U8, i3Lilriinq Nr.:lU 3000 O/:! :39":4307 I am the ChieHincindalOfficerofthe Massachusetts Institute of Technology
transported by a licensed carrier to a licensed disposal facility only, to meet the requirements of 10 CFR 20.1402 radiological criteria for unrestricted use. Guarantor may not demolish the building, but the building and subsurface will be analyzed and characterized so that the site meets this criterion and is approved for release for unrestricted use. At the time decommissioning begins, guarantor shall determine the best computer codes and instrumentation for the specific decommissioning activities.
("MIT"), a nonprofit Ilniversity.
: 4. The guarantor meets or exceeds the following financial test criteria, as a nonprofit university that issues bonds, and agrees to comply with all notification requirements as specified in 10 CFR Part 50 and 10 CFR Part 70 and Appendix E to 10 CFR Part 30.
This letter is in support ofMIT's,useofthesel(-guarantee fii-Iam;ial test to demonstrate finanCial assurance; as ,specified inlO CFR Part30. MIT has noparent company!ioldingmajority control onts voting stOCK, , " . , "MIT guarantees, through
The guarantor meets the following self-guarantee test:
$ubinitledtodemonstrate compliance ,under 10 CFRPart30, tl1e,'decommissiq'ning ofth.e, fol!6'iriJ1g fa&#xa2;ilities owned oroperatE!rlbyMIT.
(a) A current rating for its most recent uninsured, uncollateralized, and unencumbered bond issuance of AAA, AA, or A as issued by Standard & Poor's, or Aaa, Aa, or A as issued by Moody's.
Thecljrrent ,cost' :estim;ltes or certified amounts. for decornmissloningj so guaranteed, are shown for each facility:
Specifically, the current rating for guarantor's most recent uninsured, uncollateralized and unencumbered bond issuance is Aaa by Moody's Investors Service.
',' Name of Facility UcenseNumber
: 5. The guarantor does not have a parent company holding majority control of its voting stock.
'MrrResearch Reactor 'SNM7986 MIT Research ReactorR-37 Lbtatioriof Facility 77 Massachuserts,AV MJl,02139 138 Alb,my St. . Cambridge; MA 02139 ,Certified Amounts or Current Cost Estimates
: 6. Decommissioning activities as used below refer to the activities required by 10 CFR Part 50 and 10 CFR Part 70, for decommissioning of the facilities identified above.
$1,125,000.00, $30,000,000,00 I hereby certify that MITis currently a goingconcern an9 that it possesses positive tangible net worth inthe amount of $12,949.6 miliion*.
: 7. Pursuant to the guarantor's authority to enter into this guarantee, the guarantor guarantees to NRC that the guarantor shall:
This fiscal year of this firm ends on June 30. Thefigures for the above item marked with an asterisk are derived from MIT's independently audited, year-end financial statements and footnotes for the latest completed fiscal year, ended June 3D, 2009. 1.' .. ".\ MIT is not required to file a Form 10-K with the U .5. Securities and Exchange Commission for the latest fiscal year. 
(a) carry out the required decommissioning activities, as required by License No. SNM-986 and License No. R-37 or (b) set up a trust fund in favor of the above identified beneficiary in the amount of the' current cost estimates for these activities.
                                                                                                                                                                                                                                                                                                  .... ,,--"",, This firm satisfies the following self-guarantee test: 1. Current bond rating of most recent uninsured, uncollateralized, and unencumbered issuance of this institution:
Rating: Aaa Name Of rating service: Moody's Investors Service 2. Date of issuance of bonds: January 8, 2009 3. Description
& date of maturity of bonds: -1 Description Amount Interest rate Maturity Date $10,000,000 4.00% July),2016 I MHEFA Series 057586ECG4
$78,000,000 5,00% July'l,2016 MHEFA Series 0 57586ECH2
$23;485,000 5,00% Julyl,2026 MHEFA Series. O;;7586ECJ8
,$47,975!000 5.75% July 1,2026 MHEFASeries 057586.ECKS
$42,000;000 5.50% July C 1,2036 MHEFA Series.O 57586ECL3
$65;000,000 6.00% July 1, 2036 MHEFA Series 05}586ECMl
: 4. Is the ra'ting specified on line INA" or better? Yes I hereby certify that the content of this letter is true a nd correct to the best of my knowledge . ('.,.----1 . . . Ill' Signature
/ "tCVtii..<0tC
... .lh_ ........ ;'(ll'Z-L&#xa3;')
&sect; Name: Terry Stone c: 70/\ .. /----, ;/ .L Title: Chief Financial Officer 
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  '(' ...,', .... -r ,. . Report of Independent Accountants To the Board of Trustees of Massachusetts Institute of Technology:
Pdcl.:watt'rhouseCuopl*rs Ll.P 12.; Ilil:1i SI. lle'ston MA. 0211(1 W\\'W,P\\'C,COIll lj1Jehave performed the procedures enumerated below; which were agreed to by Massachusetts Institute of Technology
("the Institute"), NRC MIT licenses SNM-986 and R-37, solely to assist you in complying with the Nuclear Regulatory Commission's financial assurance reguiations, 10 CFR Part 30. Management is. responsible for the Institute's compliance with those regulations.
This proceduresengage.m.entwasconducted in accordance with attestation standards established' by the American Institute of Certified Public Accountants, The sufficiency of these procedures is solely the responsibility of those parties'specified in this report. Consequently, we make:no representation regar(jingthe sufficiency ofthe procedures described below either for the purpose ,for which this,report has been requested or for any other purpose. . . The procedures and associated findings are as follows: *1;, Confirmed that thehetWorth in the "PerFinancial Statements"columricif theaccorripanying schedule agrees with total netassets coritainediri the Institute's firianck31 statements for the year ended June 30, 2009,which we*have audited in accordancewith'auditingstandards' . generally accepted in the United States of America and have issued our.report thereon dated September 16,2009; 2. Confirmed that the tangible net Worth in the "Per CFO's Letter" colurrinaf the accompanying schedule agrees with tangible net wbrthin the CFO'slettefdated October 15, 2009; 3. Inquired of management as to the existence af any reconciling items between Hie CFO's Lette'r and the audited financial stateinents'notingthat there are none; and .. ... '. 4. Mathematically check the totals intheaccompanying schedule, includinglhe current.cost estimates of decommissioning for each facility listed the CFO's Nb exceptions were noted, We were not engaged to and did not conduct an examination, the objective of which would be the expression of an opinion on compliance with the regulations.
Accordingly, we do not express.such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. . This report is intended solely for the information and use of management and the Board of Trustees of Massachusetts Institute of Technology and the Nuclear Regulatory Commission, and is not intended to be and should not be used by anyone other than these specified parties.
UP October 16, 2009 Schedule Reconciling Amounts Contained nn Executive OfficCi"'S or Chief lFnnancialOfficer's Letter with Amounts in Financial Statements M1IT YEAR E.NDED .DUNE. 30, 2009 (000.000)
.. _--Pcr Fiilancial I Reconcilinl!
ero's Letter Statements Items Net \\'01th $12 949.6 0 $12.949.6
.. " ---Less: Cost in cxcess of value ofiangiblc assets 0 0 0 acquired Net vvorth after cost in excess of value o[tangible
$12.949;6 0 $]22 949.6 acq\lIfcd
;" " " -0' -------'----
Accnied decommissionin u -.. costs includedinculTcnt 0 0 0 !iahi1ities
------_ .. Tangibknet worth (plus $12.949.6 0 I dcc{)mm issioningcosts)
L-... --(2)
MIT Organization Chart -Corporation and Institutional Officers http://web.mit.edulorgchartlcorporation.html Organization Chart Illii Corporation and Institutional Officers II Iii 1 of 1 EXecutive VP & CEO;: :
"", Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139-4307 Notes on the reporting retationships The Chairman, ElO3CutiW Vice President and Treasurer, and Vice President for Institute Affairs and Secretary of the Corporation are officers of the MIT Corporation.
The Alumni Association reports to the Alumni Association Board, and its ElO3CutiW Vice President reports informally to the President The MI T I nws!ment Management Company reports to the IMC Board, which is appointed by the Executiw Comnittee of the MIT Corporation.
The IMC President also reports to the President of MIT. Updated: August 3, 2009 1211 0/2009 11 :09 AM Kirk D. Kolenbrandcr NlASSAClitiSF.lTS INsTITlrrE Of 'H:CHNOLOGY Vice Pi-csid('TI1 jiiT Institute AJJair., and Secretary of tbcCorponJti(J11
---... -.........
_._-... __ ... __ ....... _-_. --,.--. '." '--'-" -..... _-.. _--_.--------. _ .... _------_._---_ ...... _._-.. _--._---_
.....*. -Office of the President 77 i\hssachusctts AVellue, Building 3-2&deg;7 Cambridge, AlA 02139-4307 Phone 7 Septemb(!r 200 7:. Ms. Theresa M. Stone Room r221 MIT DearTeny' I am writing co confirm foryour records that at its meeting on September 5, the Executive
,. Committee VOTED: That, effective on. and after September 6, 2007, the individuals fromtime to time holding the folloWing positions at the Institute are, and each of them acting singly is, hereby authorizeclto sign in the name and on behalf of the Institute any and all contracts, bonds,and-other agreements and documents which any such person acting in such p6sitiondeems'advisable and in the interests of the Institute: . . -Chair of the Corporation o President
* EXeClltivcVice President and Treasurer o Vice President and General Counsel o VIce fJrcsidentfor Finance .. Director,Office 6fSponsored Programs; that anyactiontakenonor after September 6,2007 within. the scope of the . authority granted by this vote by any person holding any of the above-listed positions is hereby ratified as authorized; and that the signing and delivery of any such document in the name and on behalf of the Institute by any person holding any of the abovc-:listed positions in order to carry out the purposes orthis vote .. shall bec<mclusive as to the authority of the person so acting_ If you have any questions, please give me a call. iZl' Kirk D. Kolenbrandcr KDKJacb Enclosures cc: Mr. James L Morgan Mr: R Gregory Morgan Ms. Eiizabeth M. Ogar Me. Israel Ruiz Ms. Kathy D. Vitale 
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          ," \. SELF-GUARANTEE AGREEMENT Guarantee made this } 7 day of December, 2009, by Massachusetts Institute of Technology
("MIT"), a "non-profit university," organized under the laws of the Commonwealth of Massachusetts, with principal place of administration at 77 Massachusetts Avenue, Cambridge, Massachusetts, herein referred to as "guarantor," to the U.S. Nuclear Regulatory Commission (NRC), beneficiary, on behalf of itself as licensee.
Recitals 1. The guarantor has full authority and capacity to enter into this self-guarantee under its bylaws, articles of incorporation, and the laws of the Commonwealth of Massachusetts.
: 2. This self-guarantee is being issued to comply with regulations issued by the NRC, an agency of the U.S. Government, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974. NRC has promulgated regulations in Title 10, Chapter I of the Code of Federal Regulations, Part 70, and Title 10, Chapter I of the Code of Federal Regulations, Part 72, which require that a holder of, or an applicant for, a materials license issued pursuant to 10 CFR Part 50 and 10 CFR Part 70, provide assurance that funds will be available when needed for required . decommissioning activities.
: 3. The self-guarantee is issued to provide financial assurance for decommissioning activities for the licenses and facilities set forth in the following schedule and as required by 10 CFR Part 50 and 10 CFR Part 70 and Appendix E to 10 CFR Part 30 : License No. License Location and Estimate based on Certified Amounts or Description year 2001 dollars 2009 Cost Estimates R-37 MIT Research $23,000,000, $30,000,000.
Due to Reactor, 138 Albany including a 10% the contingency St., Cambridge MA contingency.
applied in 2001 and 02139; education low to negative and research inflation factors in activities 2001-2007, no changes were made until 2008. The estimate was then adjusted based on separate inflation factors applied against the labor (representing 11 % of the total) costs. Using the NUREG-1307, Rev. 12, Page 0.1, Example 2 (Northeast Region), the respective inflation factors used for the '08 estimate were 1.28 (labor) and 1.42 (burial), to arrive at the estimate of $29,793,000 for 2008, which was rounded up to $30 million for 2009 .. (See calculation below). SNM-986 MIT Research $1,125,000, statutory
$1,125,000.
Reactor and 77 -in accordance with Massachusetts Ave., 10 C.F.R. 70.25(d), Cambridge MA based on the 02139; storage of applicable quantities Special Nuclear of SNM stored at this Materials facility.
Total Estimated
$31,125,000.
Costs Decommissioning Estimate Adjustment Calculation:
*_._. ______ .H_.H* .. _ .. _*, ******** ___
* __
* __ **.H**********HHH****
.. H .. H .. H*_ .. *_W_ .........
_ _ .H** .. ___ ..... H .........
_ ...... _***.** .................
*H****H.H.
_______ ...... _._ .........*
H. ... Duke Study 23,000,000.00
%Total NUREG Inflator 29,793,000.00 Inflation Model Labor Portion 20,470,000.00 89% Labor 1.28 26,200,000.00 Burial Portion 2,530,000.00 11% Burial 1.42 3,593,000.00 Inflation figures for 2008, were calculated based upon NUREG-1307, for the years 2002 (year closest to when the Duke study was completed, 11/01) @ 1.862, and 2006 @ 2.21.The calculation for 2008 assumes linear cost increases through 2008: Cost inflator for 2008 = 1.862+ {(2.21-1.862)/(2006-2002) x(2008-2002)}
= 2.384. The factor for the labor portion of the cost to be applied in 2008 = 2.384/1.862=
1.28. The same method was used to develop the burial factor of 1.42. In order to comply with the guarantor's longstanding commitment to being environmentally responsible, the reactor facility will be decontaminated, and spent nuclear materials will be properly 2 
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        '. transported by a licensed carrier to a licensed disposal facility only, to meet the requirements of 10 CFR 20.1402 radiological criteria for unrestricted use. Guarantor may not demolish the building, but the building and subsurface will be analyzed and characterized so that the site meets this criterion and is approved for release for unrestricted use. At the time decommissioning begins, guarantor shall determine the best computer codes and instrumentation for the specific decommissioning activities.
: 4. The guarantor meets or exceeds the following financial test criteria, as a nonprofit university that issues bonds, and agrees to comply with all notification requirements as specified in 10 CFR Part 50 and 10 CFR Part 70 and Appendix E to 10 CFR Part 30. The guarantor meets the following self-guarantee test: (a) A current rating for its most recent uninsured, uncollateralized, and unencumbered bond issuance of AAA, AA, or A as issued by Standard & Poor's, or Aaa, Aa, or A as issued by Moody's. Specifically, the current rating for guarantor's most recent uninsured, uncollateralized and unencumbered bond issuance is Aaa by Moody's Investors Service. 5. The guarantor does not have a parent company holding majority control of its voting stock. 6. Decommissioning activities as used below refer to the activities required by 10 CFR Part 50 and 10 CFR Part 70, for decommissioning of the facilities identified above. 7. Pursuant to the guarantor's authority to enter into this guarantee, the guarantor guarantees to NRC that the guarantor shall: (a) carry out the required decommissioning activities, as required by License No. SNM-986 and License No. R-37 or (b) set up a trust fund in favor of the above identified beneficiary in the amount of the' current cost estimates for these activities.
3
3
: 8. The guarantor agrees to submit revised financial statements, financial test data, evidence of MIT's bond rating, and reconciling schedule annually within 90 days of the completion of its fiscal year-end audit.9. The guarantor agrees that if, at the end of any fiscal year before termination of this self-guarantee, it fails to meet the self-guarantee financial test criteria, it shall send within 90 days of the end of the fiscal year, by certified mail, notice to NRC that it intends to provide alternative financial assurance as specified in 10 CFR Part 50 and 10 CFR Part 70. Within 120 days after the end of the fiscal year, the guarantor shall establish such financial assurance.
: 8. The guarantor guarantor agrees agrees to submit revised financial statements, financial test data, evidence of MIT's evidence        MIT's bond rating, and reconciling schedule annually within 90 days of the            the completion of its fiscal year-end completion                  year-end audit.
: 10. The guarantor also agrees to notify the beneficiary promptly if the ownership of the licensed activity is transferred, and to maintain this guarantee until the new licensee provides alternative financial assurance acceptable to the beneficiary.
: 9. The guarantor       agrees that if, guarantor agrees            if, at the end of any fiscal year before before termination of this self-guarantee, it fails to meet the self-guarantee self-guarantee financial test criteria, criteria, it shall send within 9090 days of the end of the fiscal year, by certified  certified mail, notice to NRC that itit intends to provide alternative alternative financial assurance assurance as specified specified in 10 CFR Part 50 and 10 CFR Part
: 11. The guarantor agrees that if it determines, at any time other than as described in Recital 9, that it no longer meets the self-guarantee financial test criteria or it is disallowed from continuing as a self-guarantor, it shall establish alternative financial assurance as specified in 10 CFR Part 50 and 10 CFR Part 70, as applicable, within 30 days.12. The guarantor, as well as its successors and assigns, agrees to remain bound jointly and severally under this guarantee notwithstanding any or all of the following:
: 70. Within 120 days after  after the end of the fiscal year, the guarantor                establish such guarantor shall establish financial financial assurance.
amendment or modification of the license or NRC-approved decommissioning funding plan for that facility, the extension or reduction of the time of performance of requiredactivities, or any other modification or alteration of an obligation of the licensee pursuant to 10 CFR Part 50 and 10 CFR Part 70.13. The guarantor agrees that it shall be liable for all reasonable litigation costs incurred by the beneficiary, NRC, in any successful effort to enforce the agreement against the guarantor.
guarantor also agrees to notify the beneficiary
4 8. The guarantor agrees to submit revised financial statements, financial test data, evidence of MIT's bond rating, and reconciling schedule annually within 90 days of the completion of its fiscal year-end audit. 9. The guarantor agrees that if, at the end of any fiscal year before termination of this guarantee, it fails to meet the self-guarantee financial test criteria, it shall send within 90 days of the end of the fiscal year, by certified mail, notice to NRC that it intends to provide alternative financial assurance as specified in 10 CFR Part 50 and 10 CFR Part 70. Within 120 days after the end of the fiscal year, the guarantor shall establish such financial assurance.
: 10. The guarantor                                         beneficiary promptly promptly if the ownership of the     the licensed activity licensed     activity is transferred, transferred, and to maintain maintain this guarantee guarantee until the new licensee licensee provides alternative provides     alternative financial assurance assurance acceptable acceptable to the beneficiary.
: 10. The guarantor also agrees to notify the beneficiary promptly if the ownership of the licensed activity is transferred, and to maintain this guarantee until the new licensee provides alternative financial assurance acceptable to the beneficiary.
beneficiary.
: 11. The guarantor agrees that if it determines, at any time other than as described in Recital 9, that it no longer meets the self-guarantee financial test criteria or it is disallowed from continuing as a self-guarantor, it shall establish alternative financial assurance as specified in 10 CFR Part 50 and 10 CFR Part 70, as applicable, within 30 days. 12. The guarantor, as well as its successors and assigns, agrees to remain bound jointly and severally under this guarantee notwithstanding any or all of the following:
: 11. The guarantor
amendment or modification of the license or NRC-approved decommissioning funding plan for that facility, the extension or reduction of the time of performance of required activities, or any other modification or alteration of an obligation of the licensee pursuant to 10 CFR Part 50 and 10 CFR Part 70. 13. The guarantor agrees that it shall be liable for all reasonable litigation costs incurred by the beneficiary, NRC, in any successful effort to enforce the agreement against the guarantor.
: 11.     guarantor agrees that ifif itit determines, determines, at any time other than as described in Recital 9, that itit no longer meets the self-guarantee self-guarantee financial test criteria or itit is disallowed disallowed from continuing as a self-guarantor, itit shall establish alternative continuing                                                      alternative financial assurance assurance as  as specified in 10 CFR Part 50 and 10 CFR Part 70, as applicable, specified                                                      applicable, within 30 days.
4 8. The guarantor agrees to submit revised financial statements, financial test data, evidence of MIT's bond rating, and reconciling schedule annually within 90 days of the completion of its fiscal year-end audit. 9. The guarantor agrees that if, at the end of any fiscal year before termination of this guarantee, it fails to meet the self-guarantee financial test criteria, it shall send within 90 days of the end of the fiscal year, by certified mail, notice to NRC that it intends to provide alternative financial assurance as specified in 10 CFR Part 50 and 10 CFR Part 70. Within 120 days after the end of the fiscal year, the guarantor shall establish such financial assurance.
12.
: 10. The guarantor also agrees to notify the beneficiary promptly if the ownership of the licensed activity is transferred, and to maintain this guarantee until the new licensee provides alternative financial assurance acceptable to the beneficiary.
: 12. The guarantor, as well as its successorssuccessors and assigns, agreesagrees to remain bound bound jointly and severally severally under this guarantee             notwithstanding any or all of the following:
: 11. The guarantor agrees that if it determines, at any time other than as described in Recital 9, that it no longer meets the self-guarantee financial test criteria or it is disallowed from continuing as a self-guarantor, it shall establish alternative financial assurance as specified in 10 CFR Part 50 and 10 CFR Part 70, as applicable, within 30 days. 12. The guarantor, as well as its successors and assigns, agrees to remain bound jointly and severally under this guarantee notwithstanding any or all of the following:
guarantee notwithstanding amendment or modification amendment            modification of the license          NRC-approved decommissioning license or NRC-approved         decommissioning fundingfunding plan for that facility, the extension extension or reduction of the time of performance of required activities, or any other modification or alteration alteration of an obligation of the licensee licensee pursuant to 10 CFR Part 50 and 10 CFR Part 70.
amendment or modification of the license or NRC-approved decommissioning funding plan for that facility, the extension or reduction of the time of performance of required activities, or any other modification or alteration of an obligation of the licensee pursuant to 10 CFR Part 50 and 10 CFR Part 70. 13. The guarantor agrees that it shall be liable for all reasonable litigation costs incurred by the beneficiary, NRC, in any successful effort to enforce the agreement against the guarantor.
13.
: 13. The guarantor agrees that itit shall be liable for all reasonable litigation costs incurred by the beneficiary, beneficiary, NRC, in any successful successful effort to enforce the agreement agreement against      the against the guarantor.
4
4
: 14. The guarantor agrees to remain bound under this self-guarantee for as long as it, as licensee, must comply with the applicable financial assurance requirements of 10 CFR Part 50 and 10 CFR Part 70, for the previously listed facilities, except that the guarantor may cancel this self-guarantee by sending notice by certified mail to NRC, such cancellation to become effective not before an alternative financial assurance mechanism has been put in place by the guarantor.
: 15. The guarantor agrees that if it, as licensee, fails to provide alternative financial assurance as specified in 10 CFR Part 50 and 10 CFR Part 70, as applicable, and obtain written approval of such assurance from NRC within 90 days after a notice of cancellation by the guarantor is received by NRC from the guarantor, the guarantor shall make full payment under the self-guarantee.
Such payment shall be held in escrow, by NRC, for the estimated decommissioning activities for the previously listed facilities, and shall satisfy guarantor's financial assurance required under 10 CFR Part 50 and 10 CFR Part 70, as may be subject to adjustment to keep such estimate current, until guarantor furnishes evidence of alternative financial assurance in compliance with 10 CFR Part 50 and 10 CFR Part 70. Upon the approval by NRC of such alternative financial assurance, NRC shall return the payment made by guarantor in full.16. The guarantor waives notice of acceptance of this self-guarantee by NRC. The guarantor expressly waives notice of amendments or modifications of the decommissioning requirements.
: 17. If the guarantor files financial reports with the U.S. Securities and Exchange Commission, then it shall promptly submit them to its independent auditor and to NRC during each year in which this self-guarantee is in effect.18. The guarantor agrees that if, at any time before termination of this self-guarantee, its most recent bond issuance ceases to be rated in the category of "A" or above by either Standard & Poor's or Moody's, it shall provide notice in writing of such fact to NRC within 20 days after publication of the change by the rating service.5". 14. The guarantor agrees to remain bound under this self-guarantee for as long as it, as licensee, must comply with the applicable financial assurance requirements of 10 CFR Part 50 and 10 CFR Part 70, for the previously listed facilities, except that the guarantor may cancel this self-guarantee by sending notice by certified mail to NRC, such cancellation to become effective not before an alternative financial assurance mechanism has been put in place by the guarantor.
: 15. The guarantor agrees that if it, as licensee, fails to provide alternative financial assurance as specified in 10 CFR Part 50 and 10 CFR Part 70, as applicable, and obtain written approval of such assurance from NRC within 90 days after a notice of cancellation by the guarantor is received by NRC from the guarantor, the guarantor shall make full payment under the self-guarantee.
Such payment shall be held in escrow, by NRC, for the estimated decommissioning activities for the previously listed facilities, and shall satisfy guarantor's financial assurance required under 10 CFR Part 50 and 10 CFR Part 70, as may be subject to adjustment to keep such estimate current, until guarantor furnishes evidence of alternative financial assurance in compliance with 10 CFR Part 50 and 10 CFR Part 70. Upon the approval by NRC of such alternative financial assurance, NRC shall return the payment made by guarantor in full. 16. The guarantor waives notice of acceptance of this self-guarantee by NRC. The guarantor expressly waives notice of amendments or modifications of the decommissioning requirements.
: 17. If the guarantor files financial reports with the U. S. Securities and Exchange Commission, then it shall promptly submit them to its independent auditor and to NRC during each year in which this self-guarantee is in effect. 18. The guarantor agrees that if, at any time before termination of this self-guarantee, its most recent bond issuance ceases to be rated in the category of "An or above by either Standard & Poor's or Moody's, it shall provide notice in writing of such fact to NRC within 20 days after publication of the change by the rating service. 5 ". 14. The guarantor agrees to remain bound under this self-guarantee for as long as it, as licensee, must comply with the applicable financial assurance requirements of 10 CFR Part 50 and 10 CFR Part 70, for the previously listed facilities, except that the guarantor may cancel this self-guarantee by sending notice by certified mail to NRC, such cancellation to become effective not before an alternative financial assurance mechanism has been put in place by the guarantor.
: 15. The guarantor agrees that if it, as licensee, fails to provide alternative financial assurance as specified in 10 CFR Part 50 and 10 CFR Part 70, as applicable, and obtain written approval of such assurance from NRC within 90 days after a notice of cancellation by the guarantor is received by NRC from the guarantor, the guarantor shall make full payment under the self-guarantee.
Such payment shall be held in escrow, by NRC, for the estimated decommissioning activities for the previously listed facilities, and shall satisfy guarantor's financial assurance required under 10 CFR Part 50 and 10 CFR Part 70, as may be subject to adjustment to keep such estimate current, until guarantor furnishes evidence of alternative financial assurance in compliance with 10 CFR Part 50 and 10 CFR Part 70. Upon the approval by NRC of such alternative financial assurance, NRC shall return the payment made by guarantor in full. 16. The guarantor waives notice of acceptance of this self-guarantee by NRC. The guarantor expressly waives notice of amendments or modifications of the decommissioning requirements.
: 17. If the guarantor files financial reports with the U. S. Securities and Exchange Commission, then it shall promptly submit them to its independent auditor and to NRC during each year in which this self-guarantee is in effect. 18. The guarantor agrees that if, at any time before termination of this self-guarantee, its most recent bond issuance ceases to be rated in the category of "An or above by either Standard & Poor's or Moody's, it shall provide notice in writing of such fact to NRC within 20 days after publication of the change by the rating service. 5 I hereby certify, under the penalty of perjury, that this self-guarantee is true and correct to the best of my knowledge.
Effective date: / 12 /02 SELF-GUARANTOR:
Massachusetts Institute of Technology By: I Theresa M. Stone Executive Vice President and Treasurer Signature of witness or notary: ( Notary Public*C '$1/ 3y XoPi F~xe a 6 I hereby certify, under the penalty of perjury, that this self-guarantee is true and correct to the best of my knowledge.
Effective date: Id 117/0GJ i I SELF-GUARANTOR:
Massachusetts Institute of Technology By: /
Theresa M:StOne Executive Vice President and Treasurer Signature of witness or notary: .-s* "'.lON PINKSTEN , r . , , .. ,. Notary Public : .1 ,WEAlTH OF MAlSACHUIITTS )j My Commission Expires :d. January 31, 2014 6 I hereby certify, under the penalty of perjury, that this self-guarantee is true and correct to the best of my knowledge.
Effective date: Id 117/0GJ i I SELF-GUARANTOR:
Massachusetts Institute of Technology By: /
Theresa M:StOne Executive Vice President and Treasurer Signature of witness or notary: .-s* "'.lON PINKSTEN , r . , , .. ,. Notary Public : .1 ,WEAlTH OF MAlSACHUIITTS )j My Commission Expires :d. January 31, 2014 6 MV I Urganization Chart -Corporatlon anld Institutional UTicers sILLp.ri VS LVII IL L.LAJUI 131 =LLLU*
LI "'~' H"' LILIVI.. 111111~inlium Organization Chart Corporation and Institutional Officers~Corporation i Chairman Pre-idenm~'Eesive VP & CEO T&#xfd; VP Institute Affairs ., Executive Vice President Prsidentl, MIT Invstmetittin Alu m'erniAssoeialion F & Corporation Secretary
& Treasurer Management Company JudithCoin talc Kitk tvlentirasnder Theress Slone Seth.Alexander Notes on the reporting relationships The Chairman, President, Executive Vice President and Treasurer, and Vice President for Institute Affairs and Secretary of the Corporation are officers of the MIT Corporation.
The Alumni Association reports to the Alumni Association Board, and its Executive Vice President reports informally to the President The MIT Investment Management Company reports to the IMC Board, which is appointed by the Executive Comnittee of the MIT Corporation.
The IMC President also reports to the President of MIT.Updated: August 3, 2009 Massachusetts Institute of Technology 77 Massachusetts Avenue ." Cambridge, MA 02139-4307 I oflI 12/10/2009 11:09 A]MlT Urgal11zatlon Chart -CorporatIon and ll1sntutIOnal umcers Illlp.! I YY I,...l).lllIl.vU.UI Vl5V1LUt u put. UI.IVlld'I,.UU Illif Organization Chart Corpora tion and Insti tu tional 'Officers 1 of 1 Executive VP & CEO Alumni AssochHion . Judith Col" . Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139-4307 MIT Corporation Notes on the reporting relationships The Chairman, President, Executive Vice President and Treasurer, and Vice President for InstiMe Affairs and Secretary of the Corporation are officers of the MIT Corporation.
The Alumni Association reports to the Alumni Association Board, and its Executive Vice President reports informally to the President The MIT Investiment Management Company reports to the IMC Board, which is apPointed by the Executive COmrrittee of the MIT Corporation.
The IMC President also reports to the President of MIT. L\:ldated:
August 3, 2009 12/10/2009 11 :09 AJ MlT Urgal11zatlon Chart -CorporatIon and ll1sntutIOnal umcers Illlp.! I YY I,...l).lllIl.vU.UI Vl5V1LUt u put. UI.IVlld'I,.UU Illif Organization Chart Corpora tion and Insti tu tional 'Officers 1 of 1 Executive VP & CEO Alumni AssochHion . Judith Col" . Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139-4307 MIT Corporation Notes on the reporting relationships The Chairman, President, Executive Vice President and Treasurer, and Vice President for InstiMe Affairs and Secretary of the Corporation are officers of the MIT Corporation.
The Alumni Association reports to the Alumni Association Board, and its Executive Vice President reports informally to the President The MIT Investiment Management Company reports to the IMC Board, which is apPointed by the Executive COmrrittee of the MIT Corporation.
The IMC President also reports to the President of MIT. L\:ldated:
August 3, 2009 12/10/2009 11 :09 AJ Massachusetts Institute of Technology Office of the General Counsel Building 10-370 CONFIDENTIAL MIT Institutional Officers (as of December 21,2009)Name: Address: Citizenship:
Office Held: Dana G. Mead USA Chairman of the Corporation Susan Hockfield USA President j Name: Address: IIlii" Citizenship:
Office Held: Name: Address: Citizenship:
Office Held: Name: Address: Citizenship:
Office Held: Name: Address: Citizenship:
Office Held: Name: Address: Citizenship:
Office Held: Theresa M. Stone USA Executive Vice President and Treasurer Judith M. Cole USA Executive Vice President and CEO, Alumni Association Kirk D. Kolenbrander USA Vice President for Institute Affairs and Secretary of the Corporation Seth Alexander USA President, MIT Investment Management Company Massachusetts Institute of Technology Office of the General Counsel Building 10-370 Name: Address: Citizenship:
Office Held: Name: Address: Ci tizenship:
Office Held: Name: Address: Citizenship:


Office Held: Name: Address: Citizenship:
".
Office Held: Name: Address: Citizenship:  
: 14. The guarantor agrees to remain bound under        under this self-guarantee self-guarantee for as long as it,  it, as as licensee, must comply with the applicable financial assurance assurance requirements of 10 CFR Part 50 and 10 CFR Part 70, for the previously      previously listed facilities, except except that thethe guarantor guarantor may cancel this self-guarantee self-guarantee by sending sending notice by certified mail to NRC, such    cancellation to become effective such cancellation                    effective not before an alternative alternative financial assurance assurance mechanism has been put in place mechanism                        place by the guarantor.
: 15. The guarantor guarantor agrees agrees that ifif it,it, as licensee, fails to provide alternative alternative financial assurance assurance as specified specified in 10 CFR Part 50 and 10 CFR Part 70, as applicable, and obtain written obtain                                  assurance from NRC within 90 days after a notice of written approval of such assurance cancellation cancellation by the guarantor is received received by NRC from the guarantor, the guarantor shall make full payment payment under the self-guarantee. Such payment shall be held in                  in escrow, by NRC, for the estimated decommissioning decommissioning activities for the previously listed facilities, and shall satisfy guarantor's guarantor's financial      assurance required under 10 CFR Part financial assurance 50 and 10 CFR Part 70, as may be subject to adjustment to keep such estimate                estimate guarantor furnishes current, until guarantor      furnishes evidence            alternative financial evidence of alternative      financial assurance assurance in  in compliance with 10 CFR Part 50 and 10          10 CFR Part 70. Upon the approval by NRC of such such alternative alternative financial assurance, NRC  NRC shall return the payment made by guarantorguarantor in full.
: 16. The guarantor guarantor waives notice notice of acceptance acceptance of this self-guarantee self-guarantee by NRC. The    The guarantor guarantor      expressly waives        notice        amendments notice of amendments            or  modifications modifications        the of the decommissioning requirements.
decommissioning 17.
: 17. If the guarantor guarantor files financial reports with the U.          U.S.
S. Securities and Exchange Exchange Commission, then it shall promptly promptly submit them to its independent independent auditor and to NRC NRC during each yearyear in which which this self-guarantee self-guarantee is in effect.
: 18.        guarantor agrees that if, The guarantor                    if, at any time before before termination of this self-guarantee, self-guarantee, its most recent bond issuance ceases to be rated in the category    category of "A" "An or above by either Standard Standard &    & Poor's or Moody's, itit shall provide notice in writing of such fact to NRC      NRC within 20 days after publication publication of the change change by the rating service.
55
 
that this self-guarantee is true and correct to the I Ihereby  certify, under herebycertify,            penaltyofofperjury, thepenalty underthe              perjury, that this self-guarantee is true and correct to the best      myknowledge.
bestofofmy  knowledge.
Effectivedate:
Effective  date:
i 117/0GJ
                          / Id 12 I
                                  /02 SELF-GUARANTOR:
SELF-GUARANTOR:                                  Massachusetts MassachusettsInstitute InstituteofofTechnology Technology
                                                          ~J By:
By:    I/
Theresa f{,uUufJ~
TheresaM.      M:StOne Stone Executive VicePresident Executive        Vice      Presidentand    andTreasurer Treasurer Signature Signatureofofwitness  witnessorornotary:
notary:
                                                            .-
(                      Notary Public
                                                              ~.            s* "'.lON PINKSTEN          ,
                                                            ~
i r . ,,.. ,. Notary Public        :
                                                              *C .1 J:;C('~"" ,WEAlTH'$1/    MAlSACHUIITTS OF3y  XoPi F~xe a
                                                                  )j          My Commission Expires
:d.              January 31, 2014 66
 
MV MlTI Urganization Urgal11zatlon Chart Chart -- Corporatlon CorporatIon anld  and Institutional ll1sntutIOnal UTicers umcers                                                                        sILLp.ri Illlp.! I VSYY LVII      IL L.LAJUI 131 I,...l).lllIl.vU.UI    =LLLU* LI Vl5V1LUt    u "'~'
                                                                                                                                                                                                          ~VI H"'
put. LILIVI.. 111111~
UI.IVlld'I,.UU Illif inlium Organization Chart Organization Chart Corporation Corpora tion and            and Institutional Insti tu tional Officers 'Officers
                                                                                              *          ~Corporation MIT
                                                                                            ~~;;::~, Corporation i  Chairman                                                  Pre-idenm
                                                  ~'Eesive ExecutiveVPVP &
                                                                & CEO CEO Alu m'erniAssoeialion T&#xfd; F
VPInstitute Affairs
                                                                                & Corporation Secretary
                                                                                                                          .,      Executive Vice President
                                                                                                                                  & Treasurer Prsidentl, MIT Invstmetittin Management Company Alumni AssochHion .
JudithCoin Judithtalc Col" .                  Kitk tvlentirasnder                              Theress Slone                                        Seth.Alexander Notes Notes on on the thereporting reporting relationships relationships The TheChairman, Chairman, President, President, Executive ExecutiveVice VicePresident President and andTreasurer, Treasurer, and andVice Vice President Presidentfor for Institute InstiMeAffairs Affairs and  Secretary    of  the  Corporation    are and Secretary of the Corporation are officers ofofficers  ofthe the MIT MITCorporation.
Corporation.
The The Alumni Alumni Association Association reports reportstotothe theAlumni Alumni Association Association Board, Board, andand its  ExecutiveVice its Executive  Vice President President reports  informally    to the  President reports informally to the President The The MIT MIT Investment InvestimentManagement ManagementCompany Company reports reports toto the the IMC IMCBoard, Board, which which isis appointed apPointed byby the the Executive Executive Comnittee      of the  MIT  Corporation.
COmrrittee of the MIT Corporation. The IMC President The  IMC  President also alsoreports reportstoto the the President PresidentofofMIT.
MIT.
Updated:
L\:ldated: August August 3,  3, 2009 2009 Massachusetts Massachusetts Institute Institute of of Technology Technology 77 Massachusetts 77 Massachusetts Avenue Avenue ."
Cambridge, Cambridge, MA MA 02139-4307 02139-4307 I1oflI of 1                                                                                                                                                                                          12/10/2009 12/10/2009 11:09  11 :09 A]  AJ
 
Massachusetts Institute of Massachusetts          of Technology Technology                      Office of the General Counsel Building 10-370 Building 10-370 CONFIDENTIAL CONFIDENTIAL MIT Institutional Officers December 21,2009)
(as of December Name:            DanaG.
Dana  G. Mead Address:      '
j Citizenship:    USA USA Office Held:    Chairman of the Corporation Corporation Name:            Susan Hockfield Hockfield Address:
Citizenship:
Citizenship:
Ci tizenship:    USA USA Office Office Held:    President President IIlii" Name:            Theresa M. Stone Address:
Citizenship:
Citizenship:    USA Office Office Held:    Executive Vice President and Treasurer Executive                      Treasurer Name:            Judith M. Cole Address:
Citizenship:
Citizenship:    USA .
USA' USA Office Office Held:     Executive Vice President and CEO, Alumni Association Executive                                      Association Name:           Kirk D. Kolenbninder Kolenbrander Address:
Citizenship:
Citizenship:    USA Office Office Held:     Vice President for Institute Affairs and Secretary Secretary of the Corporation Corporation Name:           Seth Alexander Address:
Citizenship:
Citizenship:     USA USA Office Held:
Office          President, MIT Investment    Mana~ement Company Investment Management
 
MI  ~,A                                                          Kirk D. Kolenbrandcr NlASSACliliSf.n'S I~.sTITt:Tf:
                          ,INSSSAC* *t;SV..T-rs
                          ],              " ECsrOLVY                    Kirk  D. Kolenbrander
                                                                          .'ce 1P'id&#xfd;C-l  for      tzite Ait.'ir:
OF "iECHNOL()GY                  Vice  Pnsidl.71t forlllrtit71te  Ajjtlir.; and Secretary Secn:tary of thc Corporation o/tbc  Corporatin Office of the President President 77 A1assachusctts Massachusetts Avenue, Avemne, Building Building 3-207 3-2&deg;7 Cambridge, Cambridge, i\1AMIA 02139-4307 02139-4307 Phone Phone 617-253-3365 77 September September 20020077.,
Ms. Theresa Theresa M. Stone Room3-Room    3-=2i z21 MIT MIT DearTeny Dear.Terry II am writing to confirm for your records that at its meeting on September 5, the Executiv.c                        Executive.
Committee Committee VOTED:              That,  effective on and That; effectiye            and after after.September      6, 2007, the individuals September 6,2007,                  individuals from time to time
                    . holding holding the following folloWing. positions positions atat the Institute Institute are, and,  and each of them,  themacting acting singly hereby authorized to sign is, hcrebyauthorizedto              sign-in      name and on behalf in the6namne                behalf of the  the Institute any andalI and all contracts,-bonds, yand coritracts,'bonds,and            other agreements'anddocumerits agreements-and documents which any .suchpersort          such -person acting in such positiondCemsadvisable acting              po'ition deems advisable and in            in the interests of the Institute:
                                                *P Chairoof Chairof,thethe Corporation Corporation                                            .
                                                &deg;'President
                                              -President
                                              *- Ex<,;c~ti~e Executive Vice      President and Treasurcr VicePresidcrit              Treasurer
                                              *-Vice Vice President President and General General Counsel Vic~Pr<:!~ident
                                              *'Vice    President for.Finance.
foe Finance                          .
                                              -Director,
                                                  .Director, OfficebfSponsored Office.of Sponsored Programs; that any              taken on or after any action takerionor                  September 6, after September          2007 within the scope of the 6;2007 autiority    grante~ by authority granted                    vote by any person holding any oftheabove-:listed bythis vOte                                              of the above-listed positions is  IS hereby ratified as authorized; authorized; and that the signing and            ~ndd(!liveIY delivery of any such document documenrin      in the name and'  and on bchalfof behalf of the Institute Institute by anny    any person    holding
* personholding any of    the above7listed positions oftheabove:1isted          positions in order to carry canyout  out the purpposes purp.oses of this votc.Vote.
shall be    conclusive beconclusivc          as to the  authority authority    of  the  person      so so  acting.
If If you have any questions, please give me a call.
jZ'l Kirk D. Kolenbrandcr Kolenbrander KDK/acb KDJ):/acb Enclosures Enclosures cc:      Mr. James L Morgan Mr.James Mr. R. R. Gregory Gregory Morgan Morgan Ms. Elizabeth M. Ogar    Ogar Mr. Israel Ruiz Ms. Kathy D. Vitale Vitale
 
NEW ISSUE-NEW          ISSUE'"", BOOK    BOOKENTRY      ENTRYONLY    ONLY In In the the opinion opiniOn of            Edwards Angell ojEdwaidS            AngeUPalmerPalmer &      & Dodge Dodge LLP, LLP, Bond B,?nd Counsel, Counsel, based        .updn.an basedupdn          an analysis anaiysiSoJ    of existing existing law  law ad a1ul anssuming llSS  uming,among  among.          other"    mattersl ot1ieimatters,          compliance compliance        with with      certain certain        covenants,      interest covenants,intereston'the      on  :the  Bonds Bonds    is is  excluded excluded    from from gros grosS  s income iftcomefor            j~dda~ inco*te*
for federal,                            axpurposes under incometax*puTPoses                  under the        Internal Revenue the Internal          ReVenUe Code Code of  Of1986.
1986; Interest IntereSt on on the.
the Bond BondS is is not        a not a speeifc: specific prefereneitem PrejerfJi!ce item for        for purposes purposes of    oj thefederal t!Wjederal individualindividual or          corporate alternative minimum orcorporateqlternative                  m.iriimum taxes,taxes, although although such              interestis~nciuded such interest              is included in      in adjusted adjusted current            earnings when citrrentearnings                        calculating corporate whenca,Jculating                          alternative minimum:
cOTporatealternative              minimum taxableincome:.
taxable          incorru;: 'Under  Under existingexistingta,w, law,. interest intereSt.on  on the. Bonds and any iJieBonds        awl            proftJ. on:
anyprofit      ontlW      sOle of th, sale    ojthe    Bonds are:
the Bords        are exempt    from:
e:iempt,from M~achus({tspersonalincomeiaXes a:rut the Bonds are exemptfrornMassach'li&sect;ettspersOnalprOpertyta:ces,BOrui Massachusetts                personal          income,      taxes    and    the  Bonds      are  exemptfrom            Massachusetts        personaliproperty            taxes. Bond
    *Couru;el expresses no opinion' regarding a.ny .other taxconS~quences reL4tedt<>the oumership or d1-sPosiii9!L. oj, or the Counsel          expresses          noaopinion            regarding        any.other      tax    consequences            related    to  the  ownership        or  disposition      of, or      ("I.e' accrual acl:rUfllor    orreceipt receipt of          ~nterest on,!
ojinterest                theBonds.
on,' the    Bonds. See        "TAX EXEMPTION" herein.
See''TAxEXEMFI'ION''hereirt,.
                      .                '.                  . . . . .'                          ~266,460,OOO
                                                                                              . $266,460,000 MASSACHUSETTS MAsSACHUSETrSHEALTH ANDEDUC.A.TIONALFACILITIES.HEALTH              AND        EDUCATIONAL FACILITIES, AUTHORITY                              AtmIORITY REvEijiJE BONDS,
                        . . REVENUE                    B()Nl)S,MASSACI(uSEtT~IN"STITUTEOF MASSACHUSETTS INSTITUTE OF TECHNOLOGY                                ~CHNOLOGYIS~PE,              ISSUE,
                                                                                              ~ERIES*O(2008)
SERIES          0.(2008)
Dated:'
Dated: Date    Date of  ofdelivery delivery                                                                                                                Due:
Due': July    1, as shown July1,as                below shown.below The Series 0 Bonds (the "Bonds") will be issued only as fully registered bonds without coupons, and, when issued, will be
              'J'heSenes 0 Bonds.(the*Bonds~)\Vill he iSsUe<lOril~3sfUJ.ly regiStered bondS ~tltOlJtcoupons,arid, whEmissued,willbe registered regiStered in      iri'the thename name of      ofCede Cede &  &Co;iasBond6~erand Co., as Bondowner and nominee      nominee for    forTheD~pository The Depository Trust  TrUStCompany Company ("DTC),            NewYork,.New
("DTC"),Newyork,.New York.
York. .DTCwill DTCwillact      'act as      securities depository for assecuritiesdepository                forthethe Bonds.
Bonds. Purchases Purchases of      ofthe the Bonds BondS will will be bemade      inbook-entry form.
madembook-enfry                      Purchasers fmID,Purchasers will    not receive willncit        receive certificates certificates representing l'epreSEmtmgtheir  their interests mterestsin  in the the. Bonds        purchased. So Bondspurchised;                          as long as Cede So long        Cede &Co,.isthe
                                                                                                                                                                    & *CO. is the Bondowner, BondoWner,as        as nominee          of  DTC,    references          herein    to  theBondowners            or  registered        owners nominee ofOTe, references herein to the Boridowners or regist'eredo\vners shall mean Cede & CO.j 3s aforesaid, and shall not  shall  mean    Cede    &  Co.,  as  aforesaid,    and  shall    not mean      the-beneficial owners meanthebenefici31                    owners of    ofthe    Bonds: See the Bonds.              'THE BONDS See "THE                    -Book-EntrybnlySYstem~
BONDS -Book-Entry                  Only System" herein.herem.
                                                                                  .                                                                        .
            .Principal          of andinterest            on Principal arid interest the Bonds will be paid by The Bank of New YoikMeUonTruStCompany, of                          on  the,  Bonds    will  be  paid  by  The    Bank      of New    York.Mellon      Trust    Company, N.A.,  N:A,NewNew.York,New York,New York,    as    Trustee.        So    long  as    DTC    or  its nominee,        Cede  &    Co.,  is  the    Bondowner, York; as,Trustee, So lang asDTC orits riommee,Cede & Co;, is the BondoWner; such payments wlllbemadedirectlyto's'Qch                such  payments        will  be  made    directlyto'such
                                              ~ described                                                            will p
Bondowner, Bondowner, as.          asmore II\ore fully        describedherei. herein. Interest
                                                                                ,Interest onthe Qnthe BondsBonds.will be      be payable    onfJuly 1,2009, payableon'July        1,2009, and and semiannually        thereafter serniannuallythere:after on on January January!1 and      and July Julylof    1 of each each year yearto to the the Bondowners Bondowners of          record as ofreconl        as of ofthe the close close of  business on ofbusil1ess    on thethe. fifteenth fifteenth dayday of of the the month month such interest payment. date. .......
pr~~ingsuchin~restpaym~nt~a:te, preceding                                                                                  ...                          . . . . ...                  ....                  . . ..    . ' ....... .
The    Bonds are subject The!Bondsare                !!ubjecttQ  to redemption redemptl(mprlor  prior to    ma~ty as to maturity      as more more.fullyfully described described herein.
herein.
The The Bonds shall be special obligations of the Massachusetts Health and Educational Facilities Bonds      shall      be    special    obligations      of  the  Massachusetts        Health      and  Educational      FacilitiesAuthority Authority (the (the "Authority")
                                                                                                                                                                                        "AuthoritY")
T  *payable payable        solely solely    from from      the the  Revenues Revenues      (as (as  hereinafter hereinafter      defined) defined)    of of the the Authority, Authority,      including including    payments payments      to to The The  Bank Bank    of 9f New    York Mellon New-York    Mellon Trust Company, N.A., New, York, New York, as Trustee, for the account of the Authority by the Massachusetts Institute                                                                              of TrustCompany;NA, New York, New&#xa5;ork, as Trustee, for the accOlmt of the Authority by the Massachusetts institUte of Technology            (the  "Institute")          in  accordancemwith          the  provisions      of  the.Agreement(as Technology (the "Institute") in accordance. with the provisions of the AgreelTlenf(as defined ,herein).* 8U(:hpaymentS purSuant          defined    herein).      Such  payments      pursuant to to the      Agreement are tlleAgreement                an~ aageneraI general: obligation obngationof    of the    Institute. "Reference the Institute;        Reference is      is made madeto  to this  {)ffid.al$~tementfoipertinent this Official  giatement forpertLnent Security    security
    *provisions provisiollS of      of the the .Bonds.
Bonds.                                                        .                                                          .
THE THE BONDS  BONDS SHALL    SHALL NOT      N()T BE  BE DEEMED DEEMED.TO        TO. CONSTITUTE CONSTITUTE A                A DEBT DEBT OR:LIABILITY OR LIABll.ITY OF        OF THE        COMMONWEALTH THE COMMONWEALTH OF MASSACHUSETI'S ORANYPOLITICALSUBDIVISIONTBEREOF, ORA PLEDGE OF TIm FAITBAND OF    MASSACHUSETTS                            OR    ANY    POLITICAL            SUBDIVISION            THEREOF,            ORA      PLEDGE        OF    THE    FAITH    AND CREDIT CREDIT.
OF OF THE:tHE.COMMONWEALTHOFMAS~ACHUSETrS COMMONWEALTH OF MASSACHUSETTS OR                                              OR ANYANYPOLITICAL POLITICAL SUBDIVISIONSUBDIVISION THEREOF,    TIlEREOF,BUT      BUT SHALL SHALL BE    BE PAYABLE SOLELY PAYABLE              SOLELY FROM        FROM THE    THE REVENUES REVENUES PROVIDED    PROVIDED UNDER    UNDERTHE        THE AGREEMENT.
AGREEMENT. NEITHER      NEITHER THE    TIlE FAITH FAlTHAND  AND CREDIT CJffiDIT NOR      NOR THE  THE TAXING TAXING POWEROF  POwER OF THE.COMMONWEALTH THE COMMONwEALTH OR                          OR ANY ANY POLITICAL              SUBDIVISION:THEREOF IS POLITICALSUB])lVISION;THEREOJ~lS PLEDGED PLEDGED TO            TO THETHE PAYMENT  PAYMENT OF        OF THE        PRINCIPAL THEPIHNCIP              AL OF OF OROR INTEREST INTEREST ON          ON THE THE BONDS.
BONDS. THE            .ACT DOES NOT, IN TllEACTDOESNOTIN ANYWAYCREATEASO~CALLEDMORALOBLIGATIONOFTHECOMMONWEAI.TH TO PAY'UEBT ANYiWAY.CREATE                          A    SO-CALLED            MORAL.OBLIGATION                      OF      THE    COMMONWEALTH                  TO    PAY    DEBT SERVICE SERVICE IN        IN THE EVENT TIm      EVE~OFDEFAuLr BY.~INSTITl1TE. ,TImAUTH()RITY DOES NOTHAYETAXING POwEIt, OF      DEFAULT              BY  THE      INsTITrT.            THE      AUTHORITY              DOES      NOT    HAVE      TAXING        POWER.              "
i
                                      $10,000,000
                                      $10,000,000 4.00%
                                      $78,000;00.0 5.00%
                                      $78,000,000
                                        $23,48:5,000 5.00%
                                      $23,485,000
                                    $47,975,000 4~00% Bonds Bonds due 5.0()%Boridsdue due July
:Bonds due July 5;00% BondsBonds due July 1, 1, 2016 Juiy 1,2016 July 1, due July 2016 -...... Yield 1, ;2016-  - Yield Yield 3.60%        CUSIP No. 57586ECG4 3.60%CUSIPNo.
3~60% CUSIP Yield 3.60%        CUSIP No.
Yield 5.28% CUSIP No.
2026 --Yield5.28%CUSIP 1,2026 57586ECG4 No; 57586ECH2 57586ECH2 57586ECJ8 No.5'1586ECJ8' 347;975,QOO 5.75%        5.75% Bonds Bonds due  due July July 1,  I, 2026      - Yield 5.28*%9 2026",...Yield          5.28*% CUSIP          No,: 57586ECK5
                                                                                                                                            .CU!;IPNo;57586ECK5
                                      $42,000,000
                                      $42,000,000 5.50%
                                  .$65,000,000 Bonds due-July 5~50,%'BoJidsdue            July 1,  i~ 2036 2036 -,..,.. Yield Yield 5.70%                  No.
CUSIP No. 57586ECL3
: 5. 70%CUSIP                57586ECLs
                                  . $65~OOO,000 6.00%        6.00%. BondsBorids due due July July 1, 1, 2036'-
2036- Yield      Yield 5.70*%
5~70*%CUSIPNo; CUSIP No. 57586ECM157586ECM1 I)          The Bonds The    Bonds are  are offered 9ffered when, whe?t, as  as and    ifissued and received-by an4iJissued                received by the 'Underwriters,Subject Underwriters,subject to modification of the offer without notice,. and to the approvaltof their legality and certain other matters by Edwards Angell prior sale, to w prior              withdrawal or wyJithdrawal            or.
71U?diJU;ation oj tlu3 offer witlwlft notice, and. to the approval oj their legalityarul certain other matters by Edwards AngeU Palmer
    ?aimer &            Dodge LLP, Boston,
                      &Dod{jeLLP,                B,oswn, Massachusetts, Massach~etts, Bond        Bond Counsel COU1'1$ei to  tl> the the Authority.
Autltority, Certain Certain legal legal matters matters will willbe be passed passed uponupon for Jor thethe Institute Inst~tu~by      by its  its counsel, counsel, Mintz, Mintz,Lemn,Levin, Cohn,Cohn, Ferris, Ferris; Glovsky GWvsky and          Popeo, P.C.;
andPopeo,      P.C.; Boston, fioston, Massachusetts.
Massachusetts . .CertainCertain legal legal
          ... ' . .          . .Ksse*uponforthe
                                  ' . sectuponJor              me    Underwritersby            their UnderufritersbY their counse*lOrrick                      ,Hemngton &
counseliornck.HerringtJYn                  & Sutcliffe    LUP, New Sutcli.lteLLP.              York New York.
NeWYoric;New          York .
t
    .His January Janud:ry8; etedth
                . ':'pected 8,2009.-
that 2009..                ) ondsin
                                              '. onds      in . ' .
definitive    form      will  be  available      for    delivery    to  DTC dejinitive!iJrm Will be availahleJor delivery'toDTCin New York, New York; on
                                                                                                                    . .'
in  New      York,  New
                                                                                                                                                                              .
York,      or about on;;;'  about CAPITAL                                                                                                                                                Morgan Morgan Stanley      Stanley Dated`
Dated: December1 December 10,2008: 0, 2008!
    *Yield to the July*, 2018 optional redemption date.
      *Yield to the July 1,2018 optional redemption date, L
 
CONTINUING CONTINUING DISCLOSURE        DISCLOSURE The    Authority has The Authority          has determined detem:iined that  thatno no linanciai"oroperating financial or operating data      data concerning concerning the Authority  Authority is    IS material m'ateria! to  to an  evaluation      of  the  offering  of  the  Bonds,    or  to  any an evaluation of the offering of the Bonds or to any&'cisionto purchase,    decision    to  purchase,      hold    or  sell or sell    the  Bonds      and    the Bonds'andtheAuthority    Authority
.will not provide any such infbrmation. The Institute has unrdertaken all responsibilities for any .continuing win not providejiny such informati()n.. The )Institute has illldertaken aU resporisiljilitics /oranys()ntinui~g disclosure disclosure to  to owners:of owners of the      Bonds as the Bonds      asdescribed described below,below; andarid the    Authority shall the AlJthority      shall havehave no  no liabilblty.tothe liability lothe owners  owners of    of the  Bonds      or  any  other    person the Bonds or any otherperson with r(!spest'toSecurities and Exc~angeCommission.Rule 15c2.;12.
with    respect    'to0Securities      and    Exchange      CommissionRule                1562-12.                .      '.
The    Institute has Thefustitute        has covenanted covenanted for      for the the benefit benefit of of holders holders and and beneficial          owners of the Bonds to provide beneficialownersoqheBonds                                  p,fovide certain    financial    information      relatingto0 certain financial information relating,to the, Institute  the  Institut~((thethe "Annual        Report") by "AIlriuaI Report")              notlater~
by not      laterthan      180 days than .180'    days afterthe after the end    end .
of of each each fiscal'year, fiscal year; commencing cOlllmencirig with with thethe report report for for the the 2009 2009 fiscal fiscal year, and to provide provide notices notices of  ofthethe occurrence' occurrence' of of certain certain enumerated enumerated .events,
                                  .events, if'material.
if material. The          Annual Report The Anriual      Report' and and~henotice~
                                                                                                      -the notices&#xfd; of  of: material      events~illbefiled:by" rmlterial events        will'be.filed by the  Institute or.
the Institute      or aa dissemination disserniriation Agent  agent with with each.
each. Nationally
                                                                                  ~ationally Recognized Recognized MunicipalMunicipal Securities Securities Information lriformation Repository        and    with    the  State    Repository,        if  any. These      covenants Repository arid with tlJe State Reposit9ry,if any. These covenants have been. made in order to assist      have    been      made    in  order      to    assi!;tthe the Underwriters in complying with Securities and ExchringeComrriissi()1l, Rule 15c2~ 12(b)( 5J(the "Rule:'). ..
Underwriters        in  complying      with    Securities      and. Exchange      Commission        Rule    15c2-12(b)(5)          (the  "Rule").
            ,ali the On    the date date of    delivery of the o(deliveryof              offered Bonds,:the tb.eo(feied      Bon~,;the Institute          :and the Instiillteand      the Trustee Trustee will  will enter    into the'Continuing enter jnto      the' C()ntinuing Disclosure      Agreement        substantially      in  the  form    attached Disclosure Agreement substantially in the, form attached, hereto as AppehdixE          hereto    as  Appendix          E -- "FORM "FORM OF      OF CONTINUING CONTINlJING DISCLOSURE DISCLOSURE AGREEMENT." AGREEMENT"                                  ..                                                                                . .. ,        .
The The Institute Institute hashas never never failed faikd to  to comply comply in'  in all all material material respects.
respects with with any any previous previous undertakings undertakings with        with regard    to  the    Rule    to  provide    annual      reports    or  notices    of reg~d to the Ruleto'Pfovide,ann,tlal report's or.noticesofmateTialevcnts,'excep(that'thematerial      events,  .except      that the filin    g with.'respect to filiiigwith:respec(to fiscal fiscalyear year 2006 2006 waswasnot not made made in:a ina timely timely manner.
manner.                                          . . . . ".                                  . ...... ' . .
                                                                                                                                                                                    ,
COMMONWEALTH COMMQNWEAL TIl NOT                      NOT LIABLELIABLE ON      ON THE          BONDS THEsoNi>S'                                                          t
                                                                                                                                                                                  "
        , TheThe Bonds Bonds shallshall not not bebe deemed deemed to    to constitute constitute aa debt  d&#xa2;bt or.or liability Iiaqility of            Comtl1onwealth~r the Commonwealth.
ofJhe                                or anyany political:
politIcal subdivision      thereof,'or    a pledge    of  the  faith:and,    credit  of  the:Commonwealth            .r    any    such  *political    :subdi    vision,      but be payable solely a.from subdivjsionthcreof,or shall                                pledge    of  the  faitha.n<i    credit  of  the  Commonwealth            or  any the Revenues derived by the Authority undertheAgrieement. Neither the.faith and      such  ,politiCal    subdivision;            but shall Qcpayable,soIeJy from the Revenues derived by the Authority under,theAg~ecment. N.either the.f~ith and credit credit nor nor.thethe taxing taxing power power of      the Commonwealth of .the    Comm()nv.:ealth or        or ofof any any*political political subdivision subdivision thereof'is there.o(is* pledged-to pledged,to the        the
.payment      of    the  principal    of  or  interest.-on      the  Bonds.      The    Act    does payment of the principal of or int~restolltheBon.<is; The Act does not in anywaycreate'h sO:-calledmoral  not    in  any    way    create'a    sb-called          noral:
obligation o!Jligation of ofthe.
the.Commonwealth Comrm~mwealth()r,of    or-of any'political any' poiltical subdivision subdivision thereof thereofto0pay to :pay debt        ~ervice in debt service        iii the  ~v~.ntofdefault the event      of default by  the. Institute.      The  Authority      does    not by the Institute. The Authority does not havetaxingpower. have  'taxing    power.                            . .                      ..'
                                                                                                                                                                                      *I:
i:
Moody's        Investors Service, IV[oody'sIrivestors                      Inc. and Standr ServiCe,lnc.and            Standard &oor's; (iDivision    Division: of  ofthe      Mcbraw~HiIj'Comp(lnies, the McGraw-Hill:          Companies, Inc.:        Inc; have have assigned'ratings assigned:ratingsof"Aaa" of "Aaa" and        "AAA" respectively, and'~AAA"          respecti..,ely, to      th~ Bonds.
to the  Bonds. Such Such ratings ratings reflect reflectonly only thethe views views()f  of suchsuch organizations"aind organizations and any      any desired desired explanation explanation of      ofthe the significance significanc'e of  ofsuch such ratings      should be ratingsshouJd            be obtained obtained from from the  the rating rating agency      furnishing agency furnishIng the same, at thefollowirigaddresses: *Moody's II1v~~tors~eryice; Inc.,) W'orIdTradeCenter; the  same,    at the  following      addresses:      'Moody's        Investors      Service,      Inc.,, 7  World      Trade        Center:,
250 250 Greenwich Greenwich Street,,          New York, Street,.New      York, New New York York 10007; 10007; and and Standard Standard &    & Poor's, Poor's, 55    55 Water      Street, New York, WilterStreet,New                York, New    New York    1004  1. Generally,      a- rating    agency      basds.Its    rating    on  the  information York 1004 [Generally, a ratihg agencybases;it~ ratirig on the iriformatioll and matcriaJsfurriishedtoit          and    materials      furnished        to it.and  and on  on investigations, investigations, studies-and studies'lmdassumptions              of assumptions of its'own. its own.                                            .          .....                            .'
          .The Th,e above above ratings ratings are,    not recommendations are,no,t    recol1llllendatlons totobuy;  buy; sell sell or
                                                                                                      .or own own the theBonds, Bonds; and  and.-s'such uch ratings ratings may    m~ybe  be subject    to  revision    or  withdrawal subject to revision or withdrawaLatany          at any time timeby  by the the rating rating agencies.
agencies ..Any  Any downward dO\'.-'TIward revision revisionor    orwithdrawal withdrawalofof any.or any orallall ratings ratingsmay mayhavehaveanadverse an' adverseeffect effectonthe      market price onthemar~~t          priceof  ofthe theBonds.
B.onds.
UNDERWRITING:
UNDERWRITiNG
          -The, The BondsBonds are  are being being purchased purchased for          reoffering by forreoffering          by Barclays        'Capital -Inc.,
BarclaysCapitaf              Inc., as.as representative representative of        of the the Underwriters.        The    Underwriters        have    agreed    to  purchase      the  Bonds    at Underwriters. The Underwriters have ab'Teed to purchase the Bonds at an aggregate discount Of SI,218,273. 77an  aggregate        'discotunt    of  S  1,218,273.77 from from the the public public offering offering prices prices oror yields yields setset forth forth on"the on the cover cover pagepage hereof her~()fand  and will..be
                                                                                                                              \Nill ,be reimbursed..for reimbursed for certain'    certain .
 
                                                    -I
                                                    ,/
i 1
Report Report of the Treasurer Treasurer for the year ended              --
I Massachusetts irInstitute III OI    Massachusetts of Institute of June 30, 2009 2009                1U      Technology Technology
 
Report    of    the Report of the Treasurer Treasurer for the  year ended June 30, 2009 for the year ended June 30, 2009 Massachusetts Institute of Technology Massachusetts Institute of Technology


Office Held: Name: Address: Citizenship:
The Corporation Corporation 2008-2009 2008-2009 as ofJune of June 30, 2009 2009 Chairman: Dana G. Mead*
Office Held: DanaG. Mead ' CONFIDENTIAL MIT Institutional Officers (as of December 21,2009)  USA Chairman of the Corporation Susan Hockfield USA President Theresa M. Stone   USA Executive Vice President and Treasurer Judith M. Cole  USA' Executive Vice President and CEO, Alumni Association Kirk D. Kolenbninder USA Vice President for Institute Affairs and Secretary of the Corporation Seth Alexander USA President, MIT Investment Company Massachusetts Institute of Technology Office of the General Counsel Building 10-370 CONFIDENTIAL MIT Institutional Officers (as of December 21,2009) Name: Dana G. Mead Address: Citizenship:
President:
USA Office Held: Chairman of the Corporation Name: Susan Hockfield Address: Citizenship:
President: Susan Hockfield*
USA Office Held: President Name: Theresa M. Stone Address: Citizenship:
Executive Executive Vice President and Treasurer:
USA Office Held: Executive Vice President and Treasurer Name: Judith M. Cole Address: Citizenship:
Treasurer: Theresa Theresa M. Stone*
USA . Office Held: Executive Vice President and CEO, Alumni Association Name: Kirk D. Kolenbninder Address: Citizenship:
Vice President for Institute Affairs and Secretary: Kirk D. Kolenbrander*
USA Office Held: Vice President for Institute Affairs and Secretary of the Corporation Name: Seth Alexander Address: Citizenship:
Life Members Members John S. Reed; Shirley A. Jackson; Raymond S.,
USA Office Held: President, MIT Investment Company MI ~ ,A Kirk D. Kolenbrander t;SV..T-rs
A.Jackson;                Stata*; David H. Koch; Patrick].
], ECsrOLVY " .'ce 1P'id&#xfd;C-l for tzite Ait.'ir: and Secretary of thc Corporatin Office of the President 77 Massachusetts Avemne, Building 3-207 Cambridge, MIA 02139-4307 Phone 617-253-3365 7 September 2007 Ms. Theresa M. Stone Room 3-=2i MIT Dear.Terry I am writing to confirm for your records that at its meeting on September 5, the Executive.
S.,Stata*;                    PatrickJ. McGovern; Robert RobertA.A. Muh; Denis A. Bovin*;James Bovin*; James A. Champy*;Judy Champy*; Judy C. Lewent; A. Neil Pappalardo*; Arthur  Arthur Gelb; Edie N. Goldenberg; Robert Robert M. Metcalfe; Metcalfe; Kenan Kenan E. Sahin; John K. K. Castle; Susan E. Whitehead; Whitehead; Charles M. Vest; Brian G. R. Hughes; Norman                  Robert Johnson; Arthur Norman E. Gaut; L. RobertJohnson;                 J. Samberg*.
Committee VOTED: That, effective on and after.September 6, 2007, the individuals from time to time holding the following positions at the Institute are, and each of themacting singly is, hereby authorized to sign-in the 6namne and on behalf of the Institute any and all contracts,-bonds, yand other agreements-and documents which any such -person acting in such po'ition deems advisable and in the interests of the Institute:
Arthur]. Samberg*.
P Chairoof the Corporation
Members Members Barrie Barrie R. Zesiger*; Gordon        Binder; Gururaj Deshpande; Linda C. Sharpe; John A. Thain; Thomas P.
&deg;'President
Gordon M. Binder;                                                                        P. Gerrity; Mark P.P. Gorenberg; Gorenberg; Scott P. P. Marks, Jr.; Marjorie M.T M.T. Yang; James H. Simons; Alan G. Spoon;        Lawrence K. Fish; Spoon; Lawrence David D. Ho; Abigail P. P.Johnson; Johnson; Robert Robert B. Millard*;
-Executive Vice President and Treasurcr-Vice President and General Counsel'Vice President for.Finance..Director, Office.of Sponsored Programs;that any action taken on or after September 6, 2007 within the scope of the autiority granted by this vote by any person holding any of the above-listed positions is hereby ratified as authorized; and that the signing and delivery of any such document in the name and on behalf of the Institute by anny person holding any of the above7listed positions in order to carry out the purpposes of this Vote.shall be conclusive as to the authority of the person so acting.If you have any questions, please give me a call.Kirk D. Kolenbrander KDK/acb Enclosures cc: Mr. James L Morgan Mr. R. Gregory Morgan Ms. Elizabeth M. Ogar Mr. Israel Ruiz Ms. Kathy D. Vitale Kirk D. Kolenbrandcr NlASSACliliSf.n'S OF "iECHNOL()GY Vice Pnsidl.71t forlllrtit71te Ajjtlir.;
Millard*; Carly S.S. Fiorina; Fiorina; Anita K. Jones*;
and Secn:tary o/tbc Corporation Office of the President 77 A1assachusctts Avenue, Building 3-2&deg;7 Cambridge, i\1A 02139-4307 Phone 617-253-3365 7 September 200 7., Ms. Theresa M. Stone Room3-z21 MIT DearTeny I am writing to confirm for your records that at its meeting on September 5, the Executiv.c Committee VOTED: That; effectiye on and after September 6,2007, the individuals from time to time . holding the folloWing.
Jones*; Paula J. Olsiewski; Paula]. Olsiewski; Sanjay K. Rao; Milton H. Roye, Jr.; Martin Y. Y. Tang; Robert L. Blumberg; R. Erich Caulfield; Raymond C. Kurzweil; Kurzweil; Kenneth Kenneth Wang; David A. Berry; James A. Lash; Paul F. E Levy; Megan].
positions at the Institute are, and, each of them, acting singly is, hcrebyauthorizedto sign in the name and on behalf of the Institute any andalI coritracts,'bonds,and other agreements'anddocumerits which any .suchpersort acting in such positiondCemsadvisable and in the interests of the Institute:
Megan J. Smith; Henri A. Termeer; Chiquita V.     V White*; 0.
* Chairof,the Corporation . -President
O. Reid Ashe, Jr.;
* VicePresidcrit and Treasurer
Jr.;
* Vice President and General Counsel
John W Jarve; Jarve; Frederick A. Middleton, Jr.; Barun Singh; Diana C. Walsh; Ursula M. Burns;  Burns; Diane B. Greene; Helen Greiner; Harbo P. P. Jensen; Marta Marta M. Luczynska; Luczynska; Victor  J. Menezes; Victor]. Menezes; Peter Peter L. Slavin; Laura D. Tyson; Tony Keng Yam Tan.
* foe Finance . -Director, OfficebfSponsored Programs; that any action takerionor after September 6;2007 within the scope of the authority by this vOte by any person holding any oftheabove-:listed positions IS hereby ratified as authorized; and that the signing of any such documenrin the name and' on bchalfof the Institute by any personholding
President of the Association Association of Alumni and      and Alumnae Alumnae Antonia D. Schuman Schuman Representatives Representatives of the Commonwealth Commonwealth Governor:
* any oftheabove:1isted positions in order to canyout the purp.oses of this votc. shall beconclusivc as to the authority of the person so acting. If you have any questions, please give me a call. jZ'l Kirk D. Kolenbrandcr KDJ):/acb Enclosures cc: Mr.James L Morgan Mr. R. Gregory Morgan Ms. Elizabeth M. Ogar Mr. Israel Ruiz Ms. Kathy D. Vitale Kirk D. Kolenbrandcr NlASSACliliSf.n'S OF "iECHNOL()GY Vice Pnsidl.71t forlllrtit71te Ajjtlir.;
Governor: Deval L. Patrick Patrick Chief Justice of the Supreme Supreme Judicial Court: Margaret Margaret H. Marshall Secretary of Education: S. Paul Reville Secretary Life Members Members Emeriti Ir6n6e duPont, Jr.; John C. Haas; Norman B.
and Secn:tary o/tbc Corporation Office of the President 77 A1assachusctts Avenue, Building 3-2&deg;7 Cambridge, i\1A 02139-4307 Phone 617-253-3365 7 September 200 7., Ms. Theresa M. Stone Room3-z21 MIT DearTeny I am writing to confirm for your records that at its meeting on September 5, the Executiv.c Committee VOTED: That; effectiye on and after September 6,2007, the individuals from time to time . holding the folloWing.
Irenee                                        B. Leventhal; Leventhal; George George P.P. Gardner; Mitchell W.W Spellman; Spellman; D. Reid Reid Weedon,  Jr.;
positions at the Institute are, and, each of them, acting singly is, hcrebyauthorizedto sign in the name and on behalf of the Institute any andalI coritracts,'bonds,and other agreements'anddocumerits which any .suchpersort acting in such positiondCemsadvisable and in the interests of the Institute:
Weedon, Jr.;
* Chairof,the Corporation . -President
Chandler; Carl M. Mueller; Joseph Colby H. Chandler;                        Joseph G. Gavin,Jr.;
* VicePresidcrit and Treasurer
Gavin, Jr.; Louis WW Cabot; ChristianJ.
* Vice President and General Counsel
Christian J. Matthew; Howard WJohnson; W.Johnson; Paul M. Cook; William S. S. Edgerly; Edgerly; Frank Press; Edward E. David, Jr.; Emily V    V. Wade; Angus N. N. MacDonald; MacDonald; Kenneth H. Olsen; George N. N. Hatsopoulos; Hatsopoulos;  Charles  H. Spaulding; Spaulding;  Mary  Frances Frances  Wagley;  Michael  M. Koerner; Morris  Tanenbaum; Morris Tanenbaum;      Breene  M. Kerr;  W  Gerald Kerr; W Gerald    Austen;  Richard  P Simmons; Morris Chang; Paul E. Gray; P.
* foe Finance . -Director, OfficebfSponsored Programs; that any action takerionor after September 6;2007 within the scope of the authority by this vOte by any person holding any oftheabove-:listed positions IS hereby ratified as authorized; and that the signing of any such documenrin the name and' on bchalfof the Institute by any personholding
Alexander W W Dreyfoos, Jr.; Ronald A. Kurtz; Du  DuWayne Wayne]. J. Peterson, Jr.
* any oftheabove:1isted positions in order to canyout the purp.oses of this votc. shall beconclusivc as to the authority of the person so acting. If you have any questions, please give me a call. jZ'l Kirk D. Kolenbrandcr KDJ):/acb Enclosures cc: Mr.James L Morgan Mr. R. Gregory Morgan Ms. Elizabeth M. Ogar Mr. Israel Ruiz Ms. Kathy D. Vitale NEW ISSUE- BOOK ENTRY ONLY In the opinion of Edwards Angell Palmer & Dodge LLP, Bond Counsel, based .updn. an analysis of existing law ad anssuming among. other" mattersl compliance with certain covenants, interest on :the Bonds is excluded from gros s income for federal, axpurposes under the Internal Revenue Code of 1986. Interest on the. Bond is not a speeifc: prefereneitem for purposes of thefederal individual or corporate alternative minimum taxes, although such interest is included in adjusted current earnings when calculating corporate alternative minimum: taxable income:. Under existing law,. interest on the. Bonds and any profit on: th, sale of the Bords are: exempt from: Massachusetts personal income, taxes and the Bonds are exemptfrom Massachusetts personaliproperty taxes. Bond Counsel expresses noaopinion regarding any.other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on,! the Bonds. See "TAX EXEMPTION" herein.$266,460,000 MASSACHUSETTS HEALTH AND EDUCATIONAL FACILITIES, AUTHORITY REVENUE BONDS, MASSACHUSETTS INSTITUTE OF TECHNOLOGY ISSUE, SERIES 0.(2008)Dated:' Date of delivery Due: July 1, as shown below The Series 0 Bonds (the "Bonds") will be issued only as fully registered bonds without coupons, and, when issued, will be registered in the name of Cede & Co., as Bondowner and nominee for The Depository Trust Company ("DTC), NewYork,.New York. DTCwill act as securities depository for the Bonds. Purchases of the Bonds will be made inbook-entry form. Purchasers will not receive certificates representing their interests in the Bonds purchased.
Jr.
So long as Cede &Co,.isthe Bondowner, as nominee of DTC, references herein to theBondowners or registered owners shall mean Cede & Co., as aforesaid, and shall not mean the-beneficial owners of the Bonds. See "THE BONDS -Book-Entry Only System" herein.
Members' Members' names names are listed in chronological order order of election election to each category.
.Principal of andinterest on the, Bonds will be paid by The Bank of New York.Mellon Trust Company, N.A., New.York,New York, as Trustee. So long as DTC or its nominee, Cede & Co., is the Bondowner, such payments will be made directlyto'such Bondowner, as. more fully described herei. Interest onthe Bonds .will be payable onfJuly 1,2009, and semiannually thereafter on January 1 and July 1 of each year to the Bondowners of record as of the close of business on the fifteenth day of the month p preceding such interest payment. date.The Bonds are subject to redemption prior to maturity as more fully described herein.The Bonds shall be special obligations of the Massachusetts Health and Educational Facilities Authority (the "Authority")
*member of the Executive Committee
T payable solely from the Revenues (as hereinafter defined) of the Authority, including payments to The Bank of New York Mellon Trust Company, N.A., New, York, New York, as Trustee, for the account of the Authority by the Massachusetts Institute of Technology (the "Institute") in accordancemwith the provisions of the.Agreement(as defined herein). Such payments pursuant to the Agreement are a general: obligation of the Institute.
 
Reference is made to this Official giatement forpertLnent Security provisions of the Bonds.THE BONDS SHALL NOT BE DEEMED TO. CONSTITUTE A DEBT OR:LIABILITY OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY POLITICAL SUBDIVISION THEREOF, ORA PLEDGE OF THE FAITH AND CREDIT OF THE: COMMONWEALTH OF MASSACHUSETTS OR ANY POLITICAL SUBDIVISION THEREOF, BUT SHALL BE PAYABLE SOLELY FROM THE REVENUES PROVIDED UNDER THE AGREEMENT.
Table of Contents Contents
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWEROF THE.COMMONWEALTH OR ANY POLITICAL SUBDIVISION:THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE BONDS. THE .ACT DOES NOT, IN ANYiWAY.CREATE A SO-CALLED MORAL.OBLIGATION OF THE COMMONWEALTH TO PAY DEBT SERVICE IN THE EVENT OF DEFAULT BY THE INsTITrT.
"* Report of theTreasurer the Treasurer ...............................................
THE AUTHORITY DOES NOT HAVE TAXING POWER.$10,000,000 4.00% Bonds due July 1, 2016 -Yield 3.60% CUSIP No. 57586ECG4 i $78,000,000 5.00% :Bonds due July 1,2016 -Yield 3.60% CUSIP No. 57586ECH2$23,485,000 5.00% Bonds due July 1, 2026 -Yield 5.28% CUSIP No. 57586ECJ8$47,975,000 5.75% Bonds due July 1, 2026 -Yield 5.28*%9 CUSIP No,: 57586ECK5$42,000,000 5.50% Bonds due-July 1, 2036 -Yield 5.70% CUSIP No. 57586ECL3.$65,000,000 6.00% Bonds due July 1, 2036'- Yield 5.70*% CUSIP No. 57586ECM1 I) The Bonds are offered when, as and ifissued and received-by the Underwriters, subject to prior sale, to withdrawal or modification of the offer without notice,. and to the approvaltof their legality and certain other matters by Edwards Angell Palmer & Dodge LLP, Boston, Massachusetts, Bond Counsel to the Authority.
                                          .............................................5-8                                        5-8
Certain legal matters will be passed upon for the Institute by its counsel, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.; Boston, Massachusetts.
"* Financial Statements Statements The financial statements summarize financial statements summarize the finances finances ofMIT for the fiscal        fiscal years 2008 and  and 2009 Statem ents of Financial Statements      Financial Position ..............................................
Certain legal Underwritersby their ,Hemngton
                                            ..............................................                                            9 Statem ents of Activities .................................................
& Sutcliffe LUP, New York New York.t etedth ondsin definitive form will be available for delivery to DTC in New York, New York, on or about January 8,2009.- )CAPITAL Morgan Stanley Dated` December1 0, 2008!*Yield to the July*, 2018 optional redemption date.L NEW ISSUE'"", BOOK ENTRY ONLY In the opiniOn ojEdwaidS AngeU Palmer & Dodge LLP, B,?nd Counsel, basedupdn an anaiysiSoJ existing law a1ul llSS uming,among ot1ieimatters, compliance with certain covenants,intereston'the Bonds is excluded from grosS iftcomefor incometax*puTPoses under the Internal ReVenUe Code Of 1986; IntereSt on the BondS is not a specific PrejerfJi!ce item for purposes oj t!Wjederal individual orcorporateqlternative m.iriimum taxes, although such in adjusted citrrentearnings whenca,Jculating cOTporatealternative minimum taxable incorru;:
Statements                .................................................                                               10-11 Statem ents of Cash Statements      C ash Flows ...................................................
'Under existingta,w, intereSt.on iJieBonds awl any proftJ. ontlW sOle ojthe Bonds are e:iempt,from a:rut the Bonds are exemptfrornMassach'li&sect;ettspersOnalprOpertyta:ces,BOrui
                                ...................................................                                                   12 12 N otes to Financial Statements Notes                Statem ents ............................................
* Couru;el expresses no opinion' regarding a.ny .other reL4tedt<>the oumership or d1-sPosiii9!L.
                                        ............................................                                          13-32 Report                                    ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3333 Report of Independent Auditors .............................................
oj, or ("I.e' acl:rUfll or receipt oj on,' the Bonds. See''TAxEXEMFI'ION''hereirt,. . '. .... .' .
** Additional      Information Additional Information Five-Year Five-Year Trend Analysis ................................................
MAsSACHUSETrSHEALTH ANDEDUC.A.TIONALFACILITIES.
                                ................................................ 34-36                                        34-36
AtmIORITY . .. REvEijiJE Dated: Date of delivery Due': July1,as shown.below
 
'J'heSenes 0
Report of the Treasurer  Treasurer To Members                    Corporation Members of the Corporation General General                                                                  investment    performance across all invested assets including investment performance                                      including Fiscal 2009 was a notable year for MIT from a financial                  endowment, working working capital, and retirement assets.
he regiStered bondS whEmissued,willbe regiStered iri' the name of Cede nominee TrUSt Company ("DTC"),Newyork,.New York. . DTCwill 'act assecuritiesdepository for the Bonds. Purchases of the BondS will be madembook-enfry fmID,Purchasers willncit receive certificates l'epreSEmtmgtheir mterestsin the. Bondspurchised; So long as Cede & *CO. is the BondoWner ,as nominee ofOTe, references herein to the Boridowners or regist'eredo\vners shall mean Cede & CO.j 3s aforesaid, and shall not meanthebenefici31 owners of the Bonds: See 'THE BONDS herem. . . Principal of arid interest on the Bonds will be paid by The Bank of New YoikMeUonTruSt Company, N:A,New York,New York; as,Trustee, So lang asDTC orits riommee,Cede
perspective.
& Co;, is the BondoWner; such payments wlllbemadedirectlyto's'Qch Bondowner, as II\ore described herein. ,Interest Qnthe Bonds will be payableon'July 1,2009, and serniannuallythere:after on January! and Julylof each year to the Bondowners ofreconl as of the close ofbusil1ess on the. fifteenth day of the month
perspective. Guided by the comprehensive comprehensive financial                We are appreciative appreciative of the MIT community community - our alumni, alumni, planning planning work conducted in 2008, we entered 2009                        donors, board members, members, research partners, faculty and staff, with a balanced budget for the first time in many years.                 colleagues, and students students - for their financial support, advice, As the worldwide      economic crisis unfolded in the fall, worldwide economic                                              and collaboration collaboration that were most generously generously offered as we we recognized likely effects on our future support from                  navigated navigated this challenging challenging year for MIT.MIT. We are optimistic:
....... ... .... ... .... .. .. . ' ....... . The!Bondsare
optimistic endowment, as well as possible pressures on gifts and grants            that, with their continued involvement, MIT will emerge MIT, net tuition (after needed financial aid), and research to MIT,                                                       research                                contraction stronger, more from this global economic contraction funding. By carefully carefully managing liquidity liquidity and expenses,           flexible, and better equipped to fulfill the Institute's mission mission MIT concluded concluded 2009 with the general Institute Institute budget budget        for the nation and the world.
!!ubjecttQ redemptl(mprlor to as more.fully described herein. The Bonds shall be special obligations of the Massachusetts Health and Educational Facilities Authority (the " AuthoritY")
and consolidated    operating results in line with our plan.
* payable solely from the Revenues (as hereinafter defined) of the Authority, including payments to The Bank 9f New-York Mellon TrustCompany;NA, New York, New&#xa5;ork, as Trustee, for the accOlmt of the Authority by the Massachusetts institUte of Technology (the "Institute")
consolidated operating MIT was also able to secure                                              Following are additional additional details on MIT's financial secure $610.0
in accordance.
                                    $610.0 million of tax-exempt tax-exempt position, operating activities, gifts and pledges, pledges, investments, financing despite market market turbulence turbulence and, as a result, will endowments, fixed assets, and borrowings.
with the provisions of the AgreelTlenf(as defined ,herein) .* 8U(:hpaymentS purSuant to tlleAgreement ageneraI obngationof the Institute; " Reference is madeto this security
endowments, complete construction complete    construction of three major new buildings, the Koch Institute for Integrative Integrative Cancer Cancer Research, the Sloan  Sloan Financial Position Financial      Position School of Management, and the Media Lab and School of              of Architecture Architecture    and  Planning,  over  the next eighteen    months.                     presented in three categories Net assets are presented                categories to recognize the significant ways in which universities are different from Starting in the fall and through early spring, administrative administrative    profit-making organizations. These categories profit-making                              categories reflect the academic departments, labs, and centers units and academic                                centers focused      nature of the restrictions restrictions placed on gifts by donors.
* provisio llS of the . Bonds. . . THE BONDS SHALL N()T BE DEEMED.TO CONSTITUTE A DEBT OR LIABll.ITY OF THE COMMONWEALTH OF MASSACHUSETI'S ORANYPOLITICALSUBDIVISIONTBEREOF, ORA PLEDGE OF TIm FAITBAND CREDIT. OF OR ANY POLITICAL SUBDIVISION TIlEREOF,BUT SHALL BE PAYABLE SOLELY FROM THE REVENUES PROVIDED UNDERTHE AGREEMENT.
on strategies strategies to operate operate with reduced reduced budgets. Projections were developed that indicated indicated a potential potential need to reduce        Permanently restricted net assets represent Permanently                              represent those gifts expenditures by ten to fifteen percent within two to expenditures                                                            for which the original principal principal is to be preserved. This three years. Initial savings savings have been    achieved in 2009.
NEITHER TIlE FAlTHAND CJffiDIT NOR THE TAXING POwER OF THE COMMONwEALTH OR ANY PLEDGED TO THE PAYMENT OF THEPIHNCIP AL OF OR INTEREST ON THE BONDS. TllEACTDOESNOTIN TO PAY'UEBT SERVICE IN TIm ,TImAUTH()RITY DOES NOTHAYETAXING POwEIt, " $10,000,000 Bonds due July 1, 2016 ...... Yield 3.60%CUSIPNo.
been achieved                    category category includes includes gifts and pledges pledges to true endowment endowment With With additional 2010 budgetedbudgeted savings of at least five          together with assets held in trust, such as life income funds, percent, about half of the needed reductions will have                  which, when received received or matured, will be added to the been achieved. The majority majority of units are planning to reach reach  endowment. The increase in permanently permanently restricted restricted net net ultimate required required reductions in the 2011 budget cycle. cycle.       assets of$67.0 of $67.0 million, or 3.5 percent, to a total of       $1,985.4 of$1,985.4 In addition to these unit-based unit-based efforts, the Institute-wide Institute-wide      million, primarily primarily reflects new gifts and pledges made to Planning Task Force, through nine separate separate working working            restricted restricted endowment endowment funds.
57586ECG4
groups, developed recommendations recommendations for improvements                Temporarily restricted Temporarily    restricted net assets represent represent those gifts to MIT's academic, research,             administrative activities research, and administrative      activities  that ultimately can be used to fund operating or capital aimed at strengthening strengthening our ability to fulfill MIT's mission mission    expenditures.
$78,000;00.0 5.0()%Boridsdue Juiy 1, ;2016-Yield CUSIP No; 57586ECH2
expenditures. They require require an event or lapse of time to while reducing required funding. The work of this task                  occur before they are available available for spending. Over 90 force, which included included close to 200 faculty, staff, and              percent percent of the assets in this category are accumulated accumulated students working in cross-organizational cross-organizational groups, has been  been  market market gains on permanently restricted endowment endowment funds.
$23,48:5,000 5;00% Bonds due July 1,2026 -Yield5.28%CUSIP No.5'1586ECJ8' 347;975,QOO 5.75% Bonds due July I, 2026",...Yield 5.28*% .CU!;IPNo;57586ECK5
an impressive impressive demonstration demonstration of MIT's culture of tackling problems problems and of our community's community's commitment commitment to the             This category also includes includes pledges pledges not permanently permanently Institute's mission.                                                   restricted, gifts for construction construction projects that have not been  been completed completed and put into use, and life income funds, which, As we plan for future years, the level of endowment support
$42,000,000 July 2036 ,..,.. Yield 5. 70%CUSIP No. 57586ECLs .
.As                                                              support upon maturity, will be available for spending. The decrease is an important factor. Our endowment endowment investment returns          in temporarily temporarily restricted net assets of $1  $1,364.3
6.00%. Borids due July 1, 2036-Yield 57586ECM1 The Bonds are 9ffered whe?t, as an4iJissued and received by the 'Underwriters,Subject w prior sale, wyJithdrawal or. 71U?diJU;ation oj tlu3 offer witlwlft notice, and. to the approval oj their legalityarul certain other matters by Edwards AngeU ?aimer &Dod{jeLLP, B,oswn, Bond COU1'1$ei tl> the Autltority, Certain legal matters willbe passed upon Jor the its counsel, Mintz,Lemn, Cohn, Ferris; GWvsky andPopeo, P.C.; fioston, Massachusetts
                                                                                                                          ,364.3 million, for 2009 were down 17.1 percent. When adjusted for          for       or 23.7 percent, to a total of $4,401.0
.. Certain legal ... ' . . ..' . sectuponJor me UnderufritersbY their counseliornck.HerringtJYn
                                                                                                            $4,401.0 million, primarily planned planned support to MIT during 2009, endowment funds                    results results from the decrease decrease in the market value of assets held before before pledges atJune at June 30, 2009 were $7,982.0 million, million,      in permanently permanently restricted restricted funds. The Commonwealth Commonwealth of      of down down 20.7 percent percent from June 30,                   of $10,068.8 30, 2008 levels of$10,068.8        Massachusetts    requires Massachusetts requires      that  all universities universities located within million. Consolidated Consolidated net assets at year end were $9,946.4 $9,946.4          Commonwealth report accumulated the Commonwealth                accumulated market market gains on on million million as of June 30, 2009, down $2,823.6 million from                  both permanently and temporarily restricted restricted net assets as net assets of$12,nO.0 of $12,770.0 million in 2008.2008. The decrease in          temporarily restricted net assets until appropriated appropriated for use.
& Sutcli.lteLLP.
net assets reflects the effect of the economy's economy's impact impact on on
NeWYoric;New York . . His . ':'pected that '. onds in dejinitive!iJrm Will be availahleJor delivery'toDTCin New York, New York; on;;;' about Janud:ry8; 2009.. . '. . .' . Morgan Stanley Dated: December 10,2008: *Yield to the July 1,2018 optional redemption date, NEW ISSUE'"", BOOK ENTRY ONLY In the opiniOn ojEdwaidS AngeU Palmer & Dodge LLP, B,?nd Counsel, basedupdn an anaiysiSoJ existing law a1ul llSS uming,among ot1ieimatters, compliance with certain covenants,intereston'the Bonds is excluded from grosS iftcomefor incometax*puTPoses under the Internal ReVenUe Code Of 1986; IntereSt on the BondS is not a specific PrejerfJi!ce item for purposes oj t!Wjederal individual orcorporateqlternative m.iriimum taxes, although such in adjusted citrrentearnings whenca,Jculating cOTporatealternative minimum taxable incorru;:
'Under existingta,w, intereSt.on iJieBonds awl any proftJ. ontlW sOle ojthe Bonds are e:iempt,from a:rut the Bonds are exemptfrornMassach'li&sect;ettspersOnalprOpertyta:ces,BOrui
* Couru;el expresses no opinion' regarding a.ny .other reL4tedt<>the oumership or d1-sPosiii9!L.
oj, or ("I.e' acl:rUfll or receipt oj on,' the Bonds. See''TAxEXEMFI'ION''hereirt,. . '. .... .' .
MAsSACHUSETrSHEALTH ANDEDUC.A.TIONALFACILITIES.
AtmIORITY . .. REvEijiJE Dated: Date of delivery Due': July1,as shown.below
'J'heSenes 0
he regiStered bondS whEmissued,willbe regiStered iri' the name of Cede nominee TrUSt Company ("DTC"),Newyork,.New York. . DTCwill 'act assecuritiesdepository for the Bonds. Purchases of the BondS will be madembook-enfry fmID,Purchasers willncit receive certificates l'epreSEmtmgtheir mterestsin the. Bondspurchised; So long as Cede & *CO. is the BondoWner ,as nominee ofOTe, references herein to the Boridowners or regist'eredo\vners shall mean Cede & CO.j 3s aforesaid, and shall not meanthebenefici31 owners of the Bonds: See 'THE BONDS herem. . . Principal of arid interest on the Bonds will be paid by The Bank of New YoikMeUonTruSt Company, N:A,New York,New York; as,Trustee, So lang asDTC orits riommee,Cede
& Co;, is the BondoWner; such payments wlllbemadedirectlyto's'Qch Bondowner, as II\ore described herein. ,Interest Qnthe Bonds will be payableon'July 1,2009, and serniannuallythere:after on January! and Julylof each year to the Bondowners ofreconl as of the close ofbusil1ess on the. fifteenth day of the month
....... ... .... ... .... .. .. . ' ....... . The!Bondsare
!!ubjecttQ redemptl(mprlor to as more.fully described herein. The Bonds shall be special obligations of the Massachusetts Health and Educational Facilities Authority (the " AuthoritY")
* payable solely from the Revenues (as hereinafter defined) of the Authority, including payments to The Bank 9f New-York Mellon TrustCompany;NA, New York, New&#xa5;ork, as Trustee, for the accOlmt of the Authority by the Massachusetts institUte of Technology (the "Institute")
in accordance.
with the provisions of the AgreelTlenf(as defined ,herein) .* 8U(:hpaymentS purSuant to tlleAgreement ageneraI obngationof the Institute; " Reference is madeto this security
* provisio llS of the . Bonds. . . THE BONDS SHALL N()T BE DEEMED.TO CONSTITUTE A DEBT OR LIABll.ITY OF THE COMMONWEALTH OF MASSACHUSETI'S ORANYPOLITICALSUBDIVISIONTBEREOF, ORA PLEDGE OF TIm FAITBAND CREDIT. OF OR ANY POLITICAL SUBDIVISION TIlEREOF,BUT SHALL BE PAYABLE SOLELY FROM THE REVENUES PROVIDED UNDERTHE AGREEMENT.
NEITHER TIlE FAlTHAND CJffiDIT NOR THE TAXING POwER OF THE COMMONwEALTH OR ANY PLEDGED TO THE PAYMENT OF THEPIHNCIP AL OF OR INTEREST ON THE BONDS. TllEACTDOESNOTIN TO PAY'UEBT SERVICE IN TIm ,TImAUTH()RITY DOES NOTHAYETAXING POwEIt, " $10,000,000 Bonds due July 1, 2016 ...... Yield 3.60%CUSIPNo.
57586ECG4
$78,000;00.0 5.0()%Boridsdue Juiy 1, ;2016-Yield CUSIP No; 57586ECH2
$23,48:5,000 5;00% Bonds due July 1,2026 -Yield5.28%CUSIP No.5'1586ECJ8' 347;975,QOO 5.75% Bonds due July I, 2026",...Yield 5.28*% .CU!;IPNo;57586ECK5
$42,000,000 July 2036 ,..,.. Yield 5. 70%CUSIP No. 57586ECLs .
6.00%. Borids due July 1, 2036-Yield 57586ECM1 The Bonds are 9ffered whe?t, as an4iJissued and received by the 'Underwriters,Subject w prior sale, wyJithdrawal or. 71U?diJU;ation oj tlu3 offer witlwlft notice, and. to the approval oj their legalityarul certain other matters by Edwards AngeU ?aimer &Dod{jeLLP, B,oswn, Bond COU1'1$ei tl> the Autltority, Certain legal matters willbe passed upon Jor the its counsel, Mintz,Lemn, Cohn, Ferris; GWvsky andPopeo, P.C.; fioston, Massachusetts
.. Certain legal ... ' . . ..' . sectuponJor me UnderufritersbY their counseliornck.HerringtJYn
& Sutcli.lteLLP.
NeWYoric;New York . . His . ':'pected that '. onds in dejinitive!iJrm Will be availahleJor delivery'toDTCin New York, New York; on;;;' about Janud:ry8; 2009.. . '. . .' . Morgan Stanley Dated: December 10,2008: *Yield to the July 1,2018 optional redemption date, CONTINUING DISCLOSURE The Authority has determined that no financial or operating data concerning the Authority is material to an evaluation of the offering of the Bonds, or to any decision to purchase, hold or sell the Bonds and the Authority.will not provide any such infbrmation.
The Institute has unrdertaken all responsibilities for any .continuing disclosure to owners:of the Bonds asdescribed below, and the Authority shall have no liabilblty.tothe owners of the Bonds or any other person with respect 'to0Securities and Exchange CommissionRule 1562-12.The Institute has covenanted for the benefit of holders and beneficial owners of the Bonds to provide certain financial information relatingto0 the Institute (the "Annual Report") by not laterthan 180 days afterthe end of each fiscal'year, commencing with the report for the 2009 fiscal year, and to provide notices of the occurrence' of certain enumerated .events, if'material.
The Annual Report and -the notices&#xfd; of material events will'be.filed by the Institute or a dissemination Agent with each. Nationally Recognized Municipal Securities Information Repository and with the State Repository, if any. These covenants have been made in order to assist the Underwriters in complying with Securities and. Exchange Commission Rule 15c2-12(b)(5) (the "Rule").On the date of delivery of the offered Bonds,:the Institute
:and the Trustee will enter into the'Continuing Disclosure Agreement substantially in the form attached hereto as Appendix E -"FORM OF CONTINUING DISCLOSURE AGREEMENT." The Institute has never failed to comply in' all material respects.
with any previous undertakings with regard to the Rule to provide annual reports or notices of material events, .except that the filin g with.'respect to fiscal year 2006 was not made in:a timely manner.COMMONWEALTH NOT LIABLE ON THE BONDS The Bonds shall not be deemed to constitute a debt or liability of the Commonwealth.
or any political:
subdivision thereof,'or a pledge of the faith:and, credit of the:Commonwealth .r any such
:subdi vision, but shall be payable solely from the Revenues derived by the Authority undertheAgrieement.
Neither the.faith and credit nor the taxing power of the Commonwealth or of any political subdivision thereof'is pledged-to the.payment of the principal of or interest.-on the Bonds. The Act does not in any way create'a sb-called noral: obligation of the. Commonwealth or-of any'political subdivision thereof to0pay debt service in the event of default by the. Institute.
The Authority does not have 'taxing power.Moody's Investors Service, Inc. and Standr Division:
of the McGraw-Hill:
Companies, Inc.: have assigned'ratings of "Aaa" and "AAA" respectively, to the Bonds. Such ratings reflect only the views of such organizations"aind any desired explanation of the significance of such ratings should be obtained from the rating agency furnishing the same, at the following addresses:
'Moody's Investors Service, Inc.,, 7 World Trade Center:, 250 Greenwich Street,, New York, New York 10007; and Standard & Poor's, 55 Water Street, New York, New York 1004 1. Generally, a- rating agency basds.Its rating on the information and materials furnished to it. and on investigations, studies-and assumptions of its'own..The above ratings are, not recommendations to buy; sell or own the Bonds, and .-such ratings may be subject to revision or withdrawal at any time by the rating agencies.
Any downward revision or withdrawal of any.or all ratings may have anadverse effect onthe market price of the Bonds.UNDERWRITING:-The, Bonds are being purchased for reoffering by Barclays 'Capital -Inc., as. representative of the Underwriters.
The Underwriters have agreed to purchase the Bonds at an aggregate
'discotunt of S 1,218,273.77 from the public offering prices or yields set forth on"the cover page hereof and will..be reimbursed..for certain'-12-CONTINUING DISCLOSURE The Authority has detem:iined thatno linanciai"oroperating data concerning the Authority IS m'ateria!
to an evaluation of the offering of the Bonds or to any&'cisionto purchase, hold or sell the Bonds'andtheAuthority win not providejiny such informati()n
.. The )Institute has illldertaken aU resporisiljilitics disclosure to owners of the Bonds as described below; arid the AlJthority shall have no liability lothe owners of the Bonds or any otherperson with r(!spest'toSecurities and 15c2.;12. . '. Thefustitute has covenanted for the benefit of holders and beneficialownersoqheBonds to p,fovide certain financial information relating,to
: the, the "AIlriuaI Report") by than .180' days after the end . of each fiscal year; cOlllmencirig with the report for the 2009 fiscal year, and to provide notices of the occurrence' of certain enumerated .events, if material.
The Anriual Report' of: rmlterial the Institute or. a disserniriation agent with each.
Recognized Municipal Securities lriformation Repository arid with tlJe State Reposit9ry,if any. These covenants have been. made in order to assi!;tthe Underwriters in complying with Securities and ExchringeComrriissi()1l, Rule 12(b)( 5J(th e "Rule:'). . .. ,ali the date o(deliveryof tb.eo(feied Instiillteand the Trustee will enter jnto the' C()ntinuing Disclosure Agreement substantially in the, form attached, hereto as AppehdixE
-"FORM OF CONTINlJING DISCLOSURE AGREEMENT" . . . .. , . The Institute has never faikd to comply in all material respects with any previous undertakings with to the Ruleto'Pfovide,ann,tlal report's or.noticesofmateTialevcnts,'excep(that'the filiiigwith:respec(to fiscal year 2006 was not made ina timely manner. .... ". . ...... ' .. . COMMQNWEAL TIl NOT LIABLE ON THEsoNi>S' , The Bonds shall not be deemed to constitute a d&#xa2;bt .or Iiaqility ofJhe any politIcal subdivjsionthcreof,or
: a. pledge of the faitha.n<i credit of the Commonwealth or any such ,politiCal subdivision; but shall Qcpayable,soIeJy from the Revenues derived by the Authority N.either and credit nor. the taxing power of .the Comm()nv.:ealth or of any* political subdivision there.o(is*
pledged,to the payment of the principal of or The Act does not in anywaycreate'h sO:-calledmoral o!Jligation of the.
any' poiltical subdivision thereof to :pay debt iii the by the Institute.
The Authority does not havetaxingpower. . . ..' IV[oody'sIrivestors ServiCe,lnc.and Standard &oor's; (iDivision of the Inc; have assigned:ratingsof"Aaa" respecti..,ely, to Bonds. Such ratings reflect only the views()f such organizations and any desired explanation of the significanc'e of such ratingsshouJd be obtained from the rating agency furnishIng the same, at thefollowirigaddresses:
*Moody's Inc.,) W'orIdTradeCenter; 250 Greenwich Street,.New York, New York 10007; and Standard & Poor's, 55 WilterStreet,New York, New York 1004 [Generally, a ratihg ratirig on the iriformatioll and matcriaJsfurriishedtoit and on investigations, studies'lmdassumptions of its own. . ..... .' Th,e above ratings are,no,t recol1llllendatlons tobuy; sell .or own the Bonds; and 'such ratings subject to revision or withdrawaLatany time by the rating agencies .. Any dO\'.-'TIward revision or withdrawal of any or all ratings may have an' adverse effect price of the B.onds. UNDERWRITiNG The Bonds are being purchased forreoffering by BarclaysCapitaf Inc., as representative of the Underwriters.
The Underwriters have ab'Teed to purchase the Bonds at an aggregate discount Of SI,218,273.
77 from the public offering prices or yields set forth on the cover page and \Nill ,be reimbursed for certain . , t " *I: i: CONTINUING DISCLOSURE The Authority has detem:iined thatno linanciai"oroperating data concerning the Authority IS m'ateria!
to an evaluation of the offering of the Bonds or to any&'cisionto purchase, hold or sell the Bonds'andtheAuthority win not providejiny such informati()n
.. The )Institute has illldertaken aU resporisiljilitics disclosure to owners of the Bonds as described below; arid the AlJthority shall have no liability lothe owners of the Bonds or any otherperson with r(!spest'toSecurities and 15c2.;12. . '. Thefustitute has covenanted for the benefit of holders and beneficialownersoqheBonds to p,fovide certain financial information relating,to
: the, the "AIlriuaI Report") by than .180' days after the end . of each fiscal year; cOlllmencirig with the report for the 2009 fiscal year, and to provide notices of the occurrence' of certain enumerated .events, if material.
The Anriual Report' of: rmlterial the Institute or. a disserniriation agent with each.
Recognized Municipal Securities lriformation Repository arid with tlJe State Reposit9ry,if any. These covenants have been. made in order to assi!;tthe Underwriters in complying with Securities and ExchringeComrriissi()1l, Rule 12(b)( 5J(th e "Rule:'). . .. ,ali the date o(deliveryof tb.eo(feied Instiillteand the Trustee will enter jnto the' C()ntinuing Disclosure Agreement substantially in the, form attached, hereto as AppehdixE
-"FORM OF CONTINlJING DISCLOSURE AGREEMENT" . . . .. , . The Institute has never faikd to comply in all material respects with any previous undertakings with to the Ruleto'Pfovide,ann,tlal report's or.noticesofmateTialevcnts,'excep(that'the filiiigwith:respec(to fiscal year 2006 was not made ina timely manner. .... ". . ...... ' .. . COMMQNWEAL TIl NOT LIABLE ON THEsoNi>S' , The Bonds shall not be deemed to constitute a d&#xa2;bt .or Iiaqility ofJhe any politIcal subdivjsionthcreof,or
: a. pledge of the faitha.n<i credit of the Commonwealth or any such ,politiCal subdivision; but shall Qcpayable,soIeJy from the Revenues derived by the Authority N.either and credit nor. the taxing power of .the Comm()nv.:ealth or of any* political subdivision there.o(is*
pledged,to the payment of the principal of or The Act does not in anywaycreate'h sO:-calledmoral o!Jligation of the.
any' poiltical subdivision thereof to :pay debt iii the by the Institute.
The Authority does not havetaxingpower. . . ..' IV[oody'sIrivestors ServiCe,lnc.and Standard &oor's; (iDivision of the Inc; have assigned:ratingsof"Aaa" respecti..,ely, to Bonds. Such ratings reflect only the views()f such organizations and any desired explanation of the significanc'e of such ratingsshouJd be obtained from the rating agency furnishIng the same, at thefollowirigaddresses:
*Moody's Inc.,) W'orIdTradeCenter; 250 Greenwich Street,.New York, New York 10007; and Standard & Poor's, 55 WilterStreet,New York, New York 1004 [Generally, a ratihg ratirig on the iriformatioll and matcriaJsfurriishedtoit and on investigations, studies'lmdassumptions of its own. . ..... .' Th,e above ratings are,no,t recol1llllendatlons tobuy; sell .or own the Bonds; and 'such ratings subject to revision or withdrawaLatany time by the rating agencies .. Any dO\'.-'TIward revision or withdrawal of any or all ratings may have an' adverse effect price of the B.onds. UNDERWRITiNG The Bonds are being purchased forreoffering by BarclaysCapitaf Inc., as representative of the Underwriters.
The Underwriters have ab'Teed to purchase the Bonds at an aggregate discount Of SI,218,273.
77 from the public offering prices or yields set forth on the cover page and \Nill ,be reimbursed for certain . , t " *I: i: 
-I Report of the Treasurer for the year ended Massachusetts I irInstitute of June 30, 2009 1U Technology Report of the Treasurer for the year ended June 30, 2009 III--Massachusetts O I Institute of Technology
,/ i 1 Report of the Treasurer for the year ended June 30, 2009 III--Massachusetts O I Institute of Technology
,/ i 1 Report of the Treasurer for the year ended June 30, 2009 Massachusetts Institute of Technology Report of the Treasurer for the year ended June 30, 2009 Massachusetts Institute of Technology Report of the Treasurer for the year ended June 30, 2009 Massachusetts Institute of Technology The Corporation 2008-2009 as ofJune 30, 2009Chairman: Dana G. Mead*President:
Susan Hockfield*
Executive Vice President and Treasurer:
Theresa M. Stone*Vice President for Institute Affairs and Secretary: Kirk D. Kolenbrander*
Life Members John S. Reed; Shirley A. Jackson; Raymond S., Stata*; David H. Koch; PatrickJ.
McGovern; Robert A. Muh;Denis A. Bovin*; James A. Champy*; Judy C. Lewent; A. Neil Pappalardo*;
Arthur Gelb; Edie N. Goldenberg; Robert M. Metcalfe; Kenan E. Sahin; John K. Castle; Susan E. Whitehead; Charles M. Vest; Brian G. R. Hughes;Norman E. Gaut; L. Robert Johnson; Arthur J. Samberg*.
Members Barrie R. Zesiger*;
Gordon M. Binder; Gururaj Deshpande; Linda C. Sharpe; John A. Thain; Thomas P. Gerrity;Mark P. Gorenberg; Scott P. Marks, Jr.; Marjorie M.T Yang; James H. Simons; Alan G. Spoon; Lawrence K. Fish;David D. Ho; Abigail P. Johnson; Robert B. Millard*;
Carly S. Fiorina; Anita K. Jones*; Paula J. Olsiewski; Sanjay K. Rao;Milton H. Roye, Jr.; Martin Y. Tang; Robert L. Blumberg; R. Erich Caulfield; Raymond C.
Kurzweil; Kenneth Wang;David A. Berry; James A. Lash; Paul E Levy; Megan J. Smith; Henri A. Termeer; Chiquita V White*; 0. Reid Ashe, Jr.;John W Jarve; Frederick A. Middleton, Jr.; Barun Singh; Diana C. Walsh; Ursula M. Burns; Diane B. Greene;Helen Greiner; Harbo P. Jensen; Marta M. Luczynska; Victor J. Menezes; Peter L. Slavin; Laura D. Tyson;Tony Keng Yam Tan.President of the Association of Alumni and Alumnae Antonia D. Schuman Representatives of the Commonwealth Governor:
Deval L. Patrick Chief Justice of the Supreme Judicial Court: Margaret H. Marshall Secretary of Education:
S. Paul Reville Life Members Emeriti Ir6n6e duPont, Jr.; John C. Haas; Norman B. Leventhal; George P.
Gardner; Mitchell W. Spellman; D. Reid Weedon, Jr.;Colby H. Chandler; Carl M. Mueller; Joseph G. Gavin, Jr.; Louis W Cabot; Christian J. Matthew; Howard W. Johnson;Paul M. Cook; William S. Edgerly; Frank Press; Edward E.
David, Jr.; Emily V Wade; Angus N. MacDonald; Kenneth H. Olsen; George N. Hatsopoulos; Charles H. Spaulding; Mary Frances Wagley; Michael M. Koerner;Morris Tanenbaum; Breene M. Kerr; W Gerald Austen; Richard P Simmons; Morris Chang; Paul E. Gray;Alexander W Dreyfoos, Jr.; Ronald A. Kurtz; DuWayne J. Peterson, Jr.Members' names are listed in chronological order of election to each category.*member of the Executive Committee The Corporation 2008-2009 as of June 30, 2009 Chairman:
Dana G. Mead* President:
Susan Hockfield*
Executive Vice President and Treasurer:
Theresa M. Stone* Vice President for Institute Affairs and Secretary:
Kirk D. Kolenbrander*
Life Members John S. Reed; Shirley A.Jackson; Raymond S.,Stata*;
David H. Koch; Patrick].
McGovern; RobertA. Muh; Denis A. Bovin*;James A. Champy*;Judy C. Lewent; A. Neil Pappalardo*;
Arthur Gelb; Edie N. Goldenberg; Robert M. Metcalfe; Kenan E. Sahin; John K. Castle; Susan E. Whitehead; Charles M. Vest; Brian G. R. Hughes; Norman E. Gaut; L. RobertJohnson; Arthur]. Samberg*.
Members Barrie R. Zesiger*;
Gordon M. Binder; Gururaj Deshpande; Linda C. Sharpe; John A. Thain; Thomas P. Gerrity; Mark P. Gorenberg; Scott P. Marks, Jr.; Marjorie M.T. Yang; James H. Simons; Alan G. Spoon; Lawrence K. Fish; David D. Ho; Abigail P. Johnson; Robert B. Millard*;
Carly S. Fiorina; Anita K. Jones*; Paula]. Olsiewski; Sanjay K. Rao; Milton H. Roye, Jr.; Martin Y. Tang; Robert L. Blumberg; R. Erich Caulfield; Raymond C. Kurzweil; Kenneth Wang; David A. Berry; James A. Lash; Paul F. Levy; Megan]. Smith; Henri A. Termeer; Chiquita V. White*; O. Reid Ashe, Jr.; John W Jarve; Frederick A. Middleton, Jr.; Barun Singh; Diana C. Walsh; Ursula M. Burns; Diane B. Greene; Helen Greiner; Harbo P. Jensen; Marta M. Luczynska; Victor]. Menezes; Peter L. Slavin; Laura D. Tyson; Tony Keng Yam Tan. President of the Association of Alumni and Alumnae Antonia D. Schuman Representatives of the Commonwealth Governor:
Deval L. Patrick Chief Justice of the Supreme Judicial Court: Margaret H. Marshall Secretary of Education:
S. Paul Reville Life Members Emeriti Irenee duPont, Jr.; John C. Haas; Norman B. Leventhal; George P. Gardner; Mitchell W Spellman; D. Reid Weedon, Jr.; Colby H. Chandler; Carl M. Mueller; Joseph G. Gavin,Jr.;
Louis W Cabot; ChristianJ.
Matthew; Howard WJohnson; Paul M. Cook; William S. Edgerly; Frank Press; Edward E. David, Jr.; Emily V. Wade; Angus N. MacDonald; Kenneth H. Olsen; George N. Hatsopoulos; Charles H. Spaulding; Mary Frances Wagley; Michael M. Koerner; Morris Tanenbaum; Breene M. Kerr; W Gerald Austen; Richard P. Simmons; Morris Chang; Paul E. Gray; Alexander W Dreyfoos, Jr.; Ronald A. Kurtz; Du Wayne]. Peterson, Jr. Members' names are listed in chronological order of election to each category.
*member of the Executive Committee The Corporation 2008-2009 as of June 30, 2009 Chairman:
Dana G. Mead* President:
Susan Hockfield*
Executive Vice President and Treasurer:
Theresa M. Stone* Vice President for Institute Affairs and Secretary:
Kirk D. Kolenbrander*
Life Members John S. Reed; Shirley A.Jackson; Raymond S.,Stata*;
David H. Koch; Patrick].
McGovern; RobertA. Muh; Denis A. Bovin*;James A. Champy*;Judy C. Lewent; A. Neil Pappalardo*;
Arthur Gelb; Edie N. Goldenberg; Robert M. Metcalfe; Kenan E. Sahin; John K. Castle; Susan E. Whitehead; Charles M. Vest; Brian G. R. Hughes; Norman E. Gaut; L. RobertJohnson; Arthur]. Samberg*.
Members Barrie R. Zesiger*;
Gordon M. Binder; Gururaj Deshpande; Linda C. Sharpe; John A. Thain; Thomas P. Gerrity; Mark P. Gorenberg; Scott P. Marks, Jr.; Marjorie M.T. Yang; James H. Simons; Alan G. Spoon; Lawrence K. Fish; David D. Ho; Abigail P. Johnson; Robert B. Millard*;
Carly S. Fiorina; Anita K. Jones*; Paula]. Olsiewski; Sanjay K. Rao; Milton H. Roye, Jr.; Martin Y. Tang; Robert L. Blumberg; R. Erich Caulfield; Raymond C. Kurzweil; Kenneth Wang; David A. Berry; James A. Lash; Paul F. Levy; Megan]. Smith; Henri A. Termeer; Chiquita V. White*; O. Reid Ashe, Jr.; John W Jarve; Frederick A. Middleton, Jr.; Barun Singh; Diana C. Walsh; Ursula M. Burns; Diane B. Greene; Helen Greiner; Harbo P. Jensen; Marta M. Luczynska; Victor]. Menezes; Peter L. Slavin; Laura D. Tyson; Tony Keng Yam Tan. President of the Association of Alumni and Alumnae Antonia D. Schuman Representatives of the Commonwealth Governor:
Deval L. Patrick Chief Justice of the Supreme Judicial Court: Margaret H. Marshall Secretary of Education:
S. Paul Reville Life Members Emeriti Irenee duPont, Jr.; John C. Haas; Norman B. Leventhal; George P. Gardner; Mitchell W Spellman; D. Reid Weedon, Jr.; Colby H. Chandler; Carl M. Mueller; Joseph G. Gavin,Jr.;
Louis W Cabot; ChristianJ.
Matthew; Howard WJohnson; Paul M. Cook; William S. Edgerly; Frank Press; Edward E. David, Jr.; Emily V. Wade; Angus N. MacDonald; Kenneth H. Olsen; George N. Hatsopoulos; Charles H. Spaulding; Mary Frances Wagley; Michael M. Koerner; Morris Tanenbaum; Breene M. Kerr; W Gerald Austen; Richard P. Simmons; Morris Chang; Paul E. Gray; Alexander W Dreyfoos, Jr.; Ronald A. Kurtz; Du Wayne]. Peterson, Jr. Members' names are listed in chronological order of election to each category.
*member of the Executive Committee Table of Contents" Report of theTreasurer
..............................................
5-8" Financial Statements The financial statements summarize the finances of MIT for the fiscal years 2008 and 2009 Statem ents of Financial Position ..............................................
9Statem ents of Activities
.................................................
10-11 Statem ents of C ash Flows ...................................................
12 N otes to Financial Statem ents ............................................
13-32 Report of Independent Auditors .............................................3 3* Additional Information Five-Year Trend Analysis ................................................
34-36 Table of Contents
* Report of the Treasurer
..............................................
5-8
* Financial Statements The financial statements summarize the finances of MIT for the fiscal years 2008 and 2009 Statements of Financial Position ..............................................
9 Statements of Activities
.................................................
10-11 Statements of Cash Flows ...................................................
12 Notes to Financial Statements
............................................
13-32 Report of Independent Auditors .............................................
33
* Additional Information Five-Year Trend Analysis ................................................
34-36 Table of Contents
* Report of the Treasurer
..............................................
5-8
* Financial Statements The financial statements summarize the finances of MIT for the fiscal years 2008 and 2009 Statements of Financial Position ..............................................
9 Statements of Activities
.................................................
10-11 Statements of Cash Flows ...................................................
12 Notes to Financial Statements
............................................
13-32 Report of Independent Auditors .............................................
33
* Additional Information Five-Year Trend Analysis ................................................
34-36 Report of the Treasurer To Members of the Corporation General Fiscal 2009 was a notable year for MIT from a financial perspective.
Guided by the comprehensive financial planning work conducted in 2008, we entered 2009 with a balanced budget for the first time in many years.As the worldwide economic crisis unfolded in the fall, we recognized likely effects on our future support from endowment, as well as possible pressures on gifts and grants to MIT, net tuition (after needed financial aid), and research funding. By carefully managing liquidity and expenses, MIT concluded 2009 with the general Institute budget and consolidated operating results in line with our plan.MIT was also able to secure $610.0 million of tax-exemptfinancing despite market turbulence and, as a result, will complete construction of three major new buildings, the Koch Institute for Integrative Cancer Research, the Sloan School of Management, and the Media Lab and School of Architecture and Planning, over the next eighteen months.Starting in the fall and through early spring, administrative units and academic departments, labs, and centers focused on strategies to operate with reduced budgets. Projections were developed that indicated a potential need to reduce expenditures by ten to fifteen percent within two to three years. Initial savings have been achieved in 2009.With additional 2010 budgeted savings of at least five percent, about half of the needed reductions will have been achieved.
The majority of units are planning to reach ultimate required reductions in the 2011 budget cycle.In addition to these unit-based efforts, the Institute-wide Planning Task Force, through nine separate working groups, developed recommendations for improvements to MIT's academic, research, and administrative activities aimed at strengthening our ability to fulfill MIT's mission while reducing required funding. The work of this task force, which included close to 200 faculty, staff, andstudents working in cross-organizational groups, has been an impressive demonstration of MIT's culture of tackling problems and of our community's commitment to the Institute's mission.As we plan for future years, the level of endowment support is an important factor. Our endowment investment returnsfor 2009 were down 17.1 percent. When adjusted for planned support to MIT during 2009, endowment fundsbefore pledges at June 30, 2009 were $7,982.0 million, down 20.7 percent from June 30, 2008 levels of $10,068.8 million. Consolidated net assets at year end were $9,946.4 million as of June 30, 2009, down $2,823.6 million from net assets of $12,770.0 million in 2008. The decrease in net assets reflects the effect of the economy's impact on investment performance across all invested assets including endowment, working capital, and retirement assets.We are appreciative of the MIT community
-our alumni,donors, board members, research partners, faculty and staff, colleagues, and students -for their financial support, advice, and collaboration that were most generously offered as we navigated this challenging year for MIT. We are optimistic:
that, with their continued involvement, MIT will emerge from this global economic contraction stronger, more flexible, and better equipped to fulfill the Institute's missionfor the nation and the world.Following are additional details on MIT's financial position, operating activities, gifts and pledges, investments, endowments, fixed assets, and borrowings.
Financial Position Net assets are presented in three categories to recognize the significant ways in which universities are different from profit-making organizations.
These categories reflect the nature of the restrictions placed on gifts by donors.Permanently restricted net assets represent those giftsfor which the original principal is to be preserved.
This category includes gifts and pledges to true endowment together with assets held in trust, such as life income funds, which, when received or matured, will be added to the endowment.
The increase in permanently restricted net assets of $67.0 million, or 3.5 percent, to a total of $1,985.4million, primarily reflects new gifts and pledges made to restricted endowment funds.Temporarily restricted net assets represent those gifts that ultimately can be used to fund operating or capital expenditures.
They require an event or lapse of time to occur before they are available for spending.
Over 90 percent of the assets in this category are accumulated market gains on permanently restricted endowment funds.This category also includes pledges not permanently restricted, gifts for construction projects that have not been completed and put into use, and life income funds, which, upon maturity, will be available for spending.
The decrease in temporarily restricted net assets of $1,364.3 million, or 23.7 percent, to a total of $4,401.0 million, primarilyresults from the decrease in the market value of assets held in permanently restricted funds. The Commonwealth of Massachusetts requires that all universities located within the Commonwealth report accumulated market gains on both permanently and temporarily restricted net assets as temporarily restricted net assets until appropriated for use.


==SUMMARY==
==SUMMARY==
5 Report of the Treasurer To Members of the Corporation General Fiscal 2009 was a notable year for MIT from a financial perspective.
Guided by the comprehensive financial planning work conducted in 2008, we entered 2009 with a balanced budget for the first time in many years. As the worldwide economic crisis unfolded in the fall, we recognized likely effects on our future support from endowment, as well as possible pressures on gifts and grants to MIT, net tuition (after needed financial aid), and research funding. By carefully managing liquidity and expenses, MIT concluded 2009 with the general Institute budget and consolidated operating results in line with our plan. MIT was also able to secure $610.0 million of tax-exempt financing despite market turbulence and, as a result, will complete construction of three major new buildings, the Koch Institute for Integrative Cancer Research, the Sloan School of Management, and the Media Lab and School of Architecture and Planning, over the next eighteen months. Starting in the fall and through early spring, administrative units and academic departments, labs, and centers focused on strategies to operate with reduced budgets. Projections were developed that indicated a potential need to reduce expenditures by ten to fifteen percent within two to three years. Initial savings have been achieved in 2009. With additional 2010 budgeted savings of at least five percent, about half of the needed reductions will have been achieved.
The majority of units are planning to reach ultimate required reductions in the 2011 budget cycle. In addition to these unit-based efforts, the Institute-wide Planning Task Force, through nine separate working groups, developed recommendations for improvements to MIT's academic, research, and administrative activities aimed at strengthening our ability to fulfill MIT's mission while reducing required funding. The work of this task force, which included close to 200 faculty, staff, and students working in cross-organizational groups, has been an impressive demonstration of MIT's culture of tackling problems and of our community's commitment to the Institute's mission. .As we plan for future years, the level of endowment support is an important factor. Our endowment investment returns for 2009 were down 17.1 percent. When adjusted for planned support to MIT during 2009, endowment funds before pledges atJune 30, 2009 were $7,982.0 million, down 20.7 percent from June 30, 2008 levels of$10,068.8 million. Consolidated net assets at year end were $9,946.4 million as of June 30, 2009, down $2,823.6 million from net assets of$12,nO.0 million in 2008. The decrease in net assets reflects the effect of the economy's impact on


==SUMMARY==
==SUMMARY==
investment performance across all invested assets including endowment, working capital, and retirement assets. We are appreciative of the MIT community
5
-our alumni, donors, board members, research partners, faculty and staff, colleagues, and students -for their financial support, advice, and collaboration that were most generously offered as we navigated this challenging year for MIT. We are optimistic that, with their continued involvement, MIT will emerge from this global economic contraction stronger, more flexible, and better equipped to fulfill the Institute's mission for the nation and the world. Following are additional details on MIT's financial position, operating activities, gifts and pledges, investments, endowments, fixed assets, and borrowings.
 
Financial Position Net assets are presented in three categories to recognize the significant ways in which universities are different from profit-making organizations.
Unrestricted Unrestricted net assets comprise all the remaining remaining economic      over 2008. Included Included in the campus figure are Broad    Broad resources  available to MIT resources available      MIT. This category includes MIT's            Institute research revenues of $166.3 $166.3 million, which grew working capital and those assets designated by MIT as                  17.0 percent over 2008. At Lincoln Lincoln Laboratory, research "funds "funds functioning as endowment,"
These categories reflect the nature of the restrictions placed on gifts by donors. Permanently restricted net assets represent those gifts for which the original principal is to be preserved.
endowment," to be invested over the                              $669.8 million in 2009, an increase revenue totaled $669.8                              increase of 8.1  8.1 long term to generate generate support for MIT's MIT's operations and           percent. Research at the Lincoln Laboratory is funded capital projects. Also included in this category category are current current    primarily under a contract with the Department of Defense funds received received from donors for restricted restricted purposes purposes that,        (Air Force). At the Singapore-MIT Singapore-MIT Alliance for Research and under the accounting accounting rules, are categorized categorized as unrestricted unrestricted    Technology (SMART), $14.5 Technology                  $14.5 million of research research revenue if MIT spends an equivalent equivalent amount of unrestricted unrestricted funds      was generated generated during 2009, its second year of operation, for for the same purpose. Unrestricted Unrestricted net assets decreased decreased        research activities taking place in Singapore.
This category includes gifts and pledges to true endowment together with assets held in trust, such as life income funds, which, when received or matured, will be added to the endowment.
$1,526.3 million, or 30.0 percent, to a total of
The increase in permanently restricted net assets of$67.0 million, or 3.5 percent, to a total of$1,985.4 million, primarily reflects new gifts and pledges made to restricted endowment funds. Temporarily restricted net assets represent those gifts that ultimately can be used to fund operating or capital expenditures.
$1,526.3                                              $3,559.9 of$3,559.9 On MIT's campus, the Department Department of Health and Human    Human million. The decrease in unrestricted unrestricted net assets is due to Services (primarily Services  (primarily through the National Institutes of        of two major factors: first, the decrease in endowment value Health) was the largest research research sponsor, growing $29.6  $29.6 and second, the net decrease decrease in the overfunded overfunded status of  of million, or 13.1 percent percent over 2008,2008, and providing 37.0  37.0 retirement plan assets resulting          decreased fair value resulting from decreased            value of of percent of MIT's campus researchresearch revenue in 2009. Overall, plan assets and increased benefit obligations.
They require an event or lapse of time to occur before they are available for spending.
obligations. During    2009 federal sponsorship of campus campus research research grew 8.0 percent.
Over 90 percent of the assets in this category are accumulated market gains on permanently restricted endowment funds. This category also includes pledges not permanently restricted, gifts for construction projects that have not been completed and put into use, and life income funds, which, upon maturity, will be available for spending.
and 2008, unrestricted unrestricted net assets were reduced reduced by $24.0
The decrease in temporarily restricted net assets of $1 ,364.3 million, or 23.7 percent, to a total of $4,401.0 million, primarily results from the decrease in the market value of assets held in permanently restricted funds. The Commonwealth of Massachusetts requires that all universities located within the Commonwealth report accumulated market gains on both permanently and temporarily restricted net assets as temporarily restricted net assets until appropriated for use. 5 Report of the Treasurer To Members of the Corporation General Fiscal 2009 was a notable year for MIT from a financial perspective.
                                                          $24.0 Federal sponsorship from the Department Department of Defense Defense grew million and $0.3
Guided by the comprehensive financial planning work conducted in 2008, we entered 2009 with a balanced budget for the first time in many years. As the worldwide economic crisis unfolded in the fall, we recognized likely effects on our future support from endowment, as well as possible pressures on gifts and grants to MIT, net tuition (after needed financial aid), and research funding. By carefully managing liquidity and expenses, MIT concluded 2009 with the general Institute budget and consolidated operating results in line with our plan. MIT was also able to secure $610.0 million of tax-exempt financing despite market turbulence and, as a result, will complete construction of three major new buildings, the Koch Institute for Integrative Cancer Research, the Sloan School of Management, and the Media Lab and School of Architecture and Planning, over the next eighteen months. Starting in the fall and through early spring, administrative units and academic departments, labs, and centers focused on strategies to operate with reduced budgets. Projections were developed that indicated a potential need to reduce expenditures by ten to fifteen percent within two to three years. Initial savings have been achieved in 2009. With additional 2010 budgeted savings of at least five percent, about half of the needed reductions will have been achieved.
              $0.3 million respectively, to offset investment investment
The majority of units are planning to reach ultimate required reductions in the 2011 budget cycle. In addition to these unit-based efforts, the Institute-wide Planning Task Force, through nine separate working groups, developed recommendations for improvements to MIT's academic, research, and administrative activities aimed at strengthening our ability to fulfill MIT's mission while reducing required funding. The work of this task force, which included close to 200 faculty, staff, and students working in cross-organizational groups, has been an impressive demonstration of MIT's culture of tackling problems and of our community's commitment to the Institute's mission. .As we plan for future years, the level of endowment support is an important factor. Our endowment investment returns for 2009 were down 17.1 percent. When adjusted for planned support to MIT during 2009, endowment funds before pledges atJune 30, 2009 were $7,982.0 million, down 20.7 percent from June 30, 2008 levels of$10,068.8 million. Consolidated net assets at year end were $9,946.4 million as of June 30, 2009, down $2,823.6 million from net assets of$12,nO.0 million in 2008. The decrease in net assets reflects the effect of the economy's impact on
                                                                          $10.2 million, or 11.6 percent. National Aeronautics by $10.2 losses on permanently permanently restricted net assets where        market where market Administration revenue increased and Space Administration                  increased $1.9
                                                                                                                              $1.9 million, value value dropped below book value. This amount will be or 7.4 percent, while revenue revenue from the National Science  Science unrestricted net assets in-line restored to unrestricted                              subsequent in-line with subsequent Foundation decreased      $3.6 decreased $3.6      million, or  5.5 percent,    over over market value increases.
last year. Revenue from Department Department of Energy and otller    other federal agencies remained remained close to 2008 levels. Nonfederal Operations Operations funding for campus research        increased by $38.5 research increased          $38.5 million, or  or MIT's operations operations include tuition, research research revenues,              25.9 percent, in 2009 with the greatest increases coming    coming unrestricted gifts and bequests for current current use, fees and          from nonprofit foundations and foreign governments.
services, other programs, investment income, income, the portion portion of net investment investment    gains distributed distributed to funds under MIT's            Research revenues include reimbursement reimbursement from sponsors spending policy, auxiliary revenues',
revenues, payments payments on pledges          for both direct and indirect (facilities and administration) for unrestricted unrestricted gifts, and operating operating expenditures.
expenditures. The            costs. MIT's modified total direct research expenditures expenditures Statements of Activities, on pages 10 and 11,  11, show that          (MTDC or "base"),
                                                                                    "base"), that form the basis for recovery recovery of  of operating operating revenues revenues exceeded operating expenses by $182.7  $182.7    indirect        increased by $57.8 indirect costs, increased          $57.8 million, or 8.6 percent.
million in 2009, due primarily    to unspent distributions primarily to                                   Of this increase, increase, $24.5
                                                                                          $24.5 million is campus campus research; $33.3$33.3 from the endowment. In 2008, operating operating revenues exceeded        million is Lincoln Laboratory Laboratory and SMART SMART research.
research.
operating operating expenses expenses by $114.2
                          $114.2 million.                              Revenue from fees and services decreaseddecreased $5.9
                                                                                                                          $5.9 million, or  or Operating Operating revenues increased      $235.5 million, or 9.8 increased $235.5                  9.8                            $157.1 million. This was due primarily to 3.6 percent, to $157.1 percent, to $2,644.0
            $2,644.0 million due primarily primarily to increases in  in   decreased revenues from technology technology licensing, for which distributed distributed net gains on investments and research revenues            2008 revenue revenue included amounts related to a non-recurring non-recurring and offset by a decrease in investment investment income. Operating            legal legal settlement. Investment Investment      income,    defined  as dividends, expenses  increased expenses increased $167.0 million, or 7.3 percent, to a total
                      $167.0                                          interest, and rents, decreased decreased $83.5$83.5 million, or 45.3 percent, of $2,461.3
  $2,461.3 million driven primarily by increases increases in salaries salaries  to $100.6
                                                                          $100.6 million, due primarily primarily to declining interest rates and wages and supplies and services.                                  and economic economic conditions. Net asset reclassifications reclassifications to operations      $57.8 million primarily operations of $57.8                primarily reflect payments payments on    on Net tuition revenue decreased decreased $11.7
                                  $11.7 million, or 5.15.1            unrestricted unrestricted pledges pledges received received and released to operations in percent, to $217.4 million. Reflecting Reflecting MIT's commitment commitment        2009.
2009.
to increasing increasing the affordability affordability of undergraduate undergraduate education, financial support for undergraduate undergraduate students students from MIT MIT        Operating  expenses increased $167.0 Operating expenses                    $167.0 million, or 7.3 7.3 sources grew 12.5 percent.                                             percent, to a total of $2,461.3 million in 2009. The largest    largest component component of the increase increase was sponsored research expense, In 2009, MIT experienced experienced a 10.4 10.4 percent percent increase in in                       $112.6 million, or 10.7 percent. A significant which grew $112.6                                        significant research revenues, research  revenues, from $1,245.2                  $1,375.1
                            $1,245.2 million to $1,375.1              contributor contributor to this expense growth growth was The Broad million. On-campus On-campus research programs programs are carried carried out          Institute, where direct spending spending for sponsored research at departments, departments, labs, and centers where research research revenue        grew $23.0
                                                                            $23.0  million  to a total of   $121.3 million. Instruction of$121.3              Instruction totaled $690.8 million in 2009, an 11.1 percent increase              and unsponsored research increased increased $39.6
                                                                                                                    $39.6 million, or 6.2 6.2 6                                                                                              MIT REPORT OF THE TREASURER TREASURER 2009    2009
 
percent. General and administrative administrative expenses expenses increased          The Board Board of Directors Directors of the MIT Investment Investment
$10.6
$10.6 million, or 2.2 percent. Employee benefits expenses                Management Company (MITIMCo) held four regularly Management                                              regularly increased $3.4 increased  $3.4 million, or 2.0 percent, due primarilyprimarily to an    scheduled meetings during the fiscal year. During  During increase in costs for employee employee and retiree retiree medical medical benefits, benefits, 2009, MITIMCo, MITIMCo, in conjunction with MIT's senior      senior employment tax, and disability employment                disability benefits, offset        pension offset by pension      administration, administration, acted defensively defensively to manage liquidity in credits resulting from the overfunded overfunded status of MIT's              the turbulent markets while still capturing        investment capturing investment defined benefit plan in prior years.                                     opportunities opportunities in the equity and marketable alternative arenas consistent consistent with      investment policies and asset with its investment Gifts and Pledges Pledges                                                    allocation allocation targets. Equities include investments in venture With the successful public launch of the Campaign  Campaign for          capital and private equity. Marketable Marketable alternatives alternatives include Students Students on October 3,2008,3, 2008, the Campaign Campaign now stands            investments in event arbitrage, investments              arbitrage, distressed debt and hedge at a total of $351.3
              $351.3 million, with 70.3 percent of the $500      $500    funds. The alternative investments investments are managed by more million goal raised. Gifts support support scholarships, fellowships,        than one hundred hundred independent independent organizations organizations primarily educational educational programming, and student life activities. The                through pooled investment partnerships.
partnerships.
MIT Energy Initiative (MITEI) now has 1,154 donors, and has raised $54.1
            $54.1 million as of June 2009.                              Endowment and Similar Funds          Funds The market value of investments in the endowment and Gifts and pledges for 2009 totaled $303.9  $303.9 million, a              similar funds totaled $7,982.0
                                                                                                  $7,982.0 million as ofJune of June 30, 2009.
decrease decrease of 21.3 percent from the 2008 total of $3        $386.0 86.0 The endowment assets are managed to maximize  maximize total million. Gifts from individuals represented represented 35.6 percent percent      investment investment return relative to appropriate appropriate risk. Investment Investment of new gifts and pledges, down from 50.9 percent in the                   income  and  a portion  of gains  are  distributed  for spending income previous previous year. Gifts from foundations foundations represented represented 40.9          in a manner that, over the long term, retainsretains for reinvest-reinvest-percent percent  of new  gifts and pledges pledges  in  2009,   up from 35.2 35.2      ment an amount at least equalequal to the anticipated anticipated rate ofof percent percent in the previous previous year. Gifts from corporations corporations and       inflation. Endowment funds invested in Pool A, MIT's other sources sources represented 23.5 percent, up from 13.9        13.9 primary  investment pool, receive primary investment            receive distributions distributions based on the percent percent in 2008. New gifts and paymentspayments on pledges                number of units held. Units are valued monthly and new for unrestricted unrestricted purposes were 7.7 percent of the total,                  gifts or other funds transferred transferred to Pool A are credited with compared compared with 3.9 percent in 2008. The largest category    category      Pool A units based on the previous previous month's market value of    of of gifts for 2009 was Research and Education, which the units in Pool A.
accounted accounted for 62.0 percent of the total.
Land, Buildings, and Equipment  Equipment Investments Investments Fixed Fixed assets had a net book value of $2,120.6
                                                                                                                    $2, 120.6 million as of of Investments Investments at fair value value were $9,519.4
                                    $9,519.4 million, a decrease decrease    June 30, 2009, an increase of 9.4 percent              $1,938.9 percent from $1,938.9 of $1,789.0 of$I,789.0   million,   or  15.8  percent,  from   the $11,308.4
                                                          $11,308.4      million as of June 30, 2008. The most significant significant area of of million of the previous      year. Over previous year. Over the past five years, total      increase increase this past fiscal year was in the area of educational invested invested assets have increased from $7,250.5 million to buildings.
$9,519.4
$9,519.4 million while distributions for    for expenditures expenditures have totaled $2,063.4 million. More specific    specific    Major Major ongoing construction construction projects projects include a new information information is included in Note B      B to the Financial                163,000-square-foot building for the Media Lab and 163,000-square-foot Statements.                                                              School of Architecture and Planning to be completed in          in October 2009, 2009, a new 217,000-square-foot 217,000-square-foot building building for the The financial statements statements include both realizedrealized and                                Management with a three-level, 430-Sloan School of Management unrealized unrealized gains and losses on investments. Realized    Realized and car garage located directly under the new buildingbuilding and unrealized unrealized gains and losses, including including those related to the scheduled for occupancy in 2010, a new 3367,000-square-67,000-square-disposition of fixed assets, decreased decreased from a gain of $154.8 $154.8 foot laboratory  research building laboratory research    building for the Koch Institute million in 2008 to a loss of     $1,854.4 million in 2009.
of$I,854.4                                  for Integrative  Cancer    Research Integrative            Research to be completed by    by The asset allocation allocation among fixed income, equity, marketablemarketable  December 2010, significant improvements improvements to Vassar Vassar alternatives, and real estate investments remained remained similiar similiar  Street west of Massachusetts Massachusetts Avenue, various utility and    and to 2008 during 2009. Equity, marketable alternatives, and                infrastructure improvements, infrastructure                                    rehabilitation improvements, and exterior rehabilitation real estate investments investments at market value value were 84.5 percent percent    of the undergraduate dormitory dormitory at 305 Memorial Memorial Drive.
of the investments as ofJune 30, 2009, as compared  compared to 88.588.5 More              renovations related to 305 Memorial More extensive renovations at June 30, 2008.
percent atJune                                                            Drive have been deferred as part of a portfolio portfolio of measures


==SUMMARY==
==SUMMARY==
investment performance across all invested assets including endowment, working capital, and retirement assets. We are appreciative of the MIT community
-our alumni, donors, board members, research partners, faculty and staff, colleagues, and students -for their financial support, advice, and collaboration that were most generously offered as we navigated this challenging year for MIT. We are optimistic that, with their continued involvement, MIT will emerge from this global economic contraction stronger, more flexible, and better equipped to fulfill the Institute's mission for the nation and the world. Following are additional details on MIT's financial position, operating activities, gifts and pledges, investments, endowments, fixed assets, and borrowings.
Financial Position Net assets are presented in three categories to recognize the significant ways in which universities are different from profit-making organizations.
These categories reflect the nature of the restrictions placed on gifts by donors. Permanently restricted net assets represent those gifts for which the original principal is to be preserved.
This category includes gifts and pledges to true endowment together with assets held in trust, such as life income funds, which, when received or matured, will be added to the endowment.
The increase in permanently restricted net assets of$67.0 million, or 3.5 percent, to a total of$1,985.4 million, primarily reflects new gifts and pledges made to restricted endowment funds. Temporarily restricted net assets represent those gifts that ultimately can be used to fund operating or capital expenditures.
They require an event or lapse of time to occur before they are available for spending.
Over 90 percent of the assets in this category are accumulated market gains on permanently restricted endowment funds. This category also includes pledges not permanently restricted, gifts for construction projects that have not been completed and put into use, and life income funds, which, upon maturity, will be available for spending.
The decrease in temporarily restricted net assets of $1 ,364.3 million, or 23.7 percent, to a total of $4,401.0 million, primarily results from the decrease in the market value of assets held in permanently restricted funds. The Commonwealth of Massachusetts requires that all universities located within the Commonwealth report accumulated market gains on both permanently and temporarily restricted net assets as temporarily restricted net assets until appropriated for use. 5 Unrestricted net assets comprise all the remaining economic resources available to MIT This category includes MIT's working capital and those assets designated by MIT as"funds functioning as endowment," to be invested over the long term to generate support for MIT's operations and capital projects.
Also included in this category are currentfunds received from donors for restricted purposes that, under the accounting rules, are categorized as unrestricted if MIT spends an equivalent amount of unrestricted funds for the same purpose. Unrestricted net assets decreased$1,526.3 million, or 30.0 percent, to a total of $3,559.9 million. The decrease in unrestricted net assets is due to two major factors: first, the decrease in endowment value and second, the net decrease in the overfunded status of retirement plan assets resulting from decreased fair value of plan assets and increased benefit obligations.
During 2009 and 2008, unrestricted net assets were reduced by $24.0 million and $0.3 million respectively, to offset investment losses on permanently restricted net assets where market value dropped below book value. This amount will be restored to unrestricted net assets in-line with subsequent market value increases.
Operations MIT's operations include tuition, research revenues, unrestricted gifts and bequests for current use, fees and services, other programs, investment income, the portion of net investment gains distributed to funds under MIT's spending policy, auxiliary revenues', payments on pledges for unrestricted gifts, and operating expenditures.
The Statements of Activities, on pages 10 and 11, show that operating revenues exceeded operating expenses by
$182.7 million in 2009, due primarily to unspent distributionsfrom the endowment.
In 2008, operating revenues exceeded operating expenses by
$114.2 million.Operating revenues increased
$235.5 million, or 9.8 percent, to $2,644.0 million due primarily to increases in distributed net gains on investments and research revenuesand offset by a decrease in investment income. Operating expenses increased
$167.0 million, or 7.3 percent, to a total of $2,461.3 million driven primarily by increases in salaries and wages and supplies and services.Net tuition revenue decreased
$11.7 million, or 5.1 percent, to $217.4 million. Reflecting MIT's commitment to increasing the affordability of undergraduate education, financial support for undergraduate students from MIT sources grew 12.5 percent.In 2009, MIT experienced a 10.4 percent increase in research revenues, from $1,245.2 million to $1,375.1 million. On-campus research programs are carried out at departments, labs, and centers where research revenue totaled $690.8 million in 2009, an 11.1 percent increase over 2008. Included in the campus figure are Broad Institute research revenues of $166.3 million, which grew 17.0 percent over 2008. At Lincoln Laboratory, research revenue totaled $669.8 million in 2009, an increase of 8.1 percent. Research at the Lincoln Laboratory is funded primarily under a contract with the Department of Defense (Air Force). At the Singapore-MIT Alliance for Research and Technology (SMART), $14.5 million of research revenue was generated during 2009, its second year of operation, for research activities taking place in Singapore.
On MIT's campus, the Department of Health and Human Services (primarily through the National Institutes of Health) was the largest research sponsor, growing $29.6 million, or 13.1 percent over 2008, and providing 37.0 percent of MIT's campus research revenue in 2009. Overall, federal sponsorship of campus research grew 8.0 percent.Federal sponsorship from the Department of Defense grew by $10.2 million, or 11.6 percent. National Aeronautics and Space Administration revenue increased
$1.9 million, or 7.4 percent, while revenue from the National Science Foundation decreased
$3.6 million, or 5.5 percent, over last year. Revenue from Department of Energy and otherfederal agencies remained close to 2008 levels.
Nonfederal funding for campus research increased by $38.5 million, or 25.9 percent, in 2009 with the greatest increases coming from nonprofit foundations and foreign governments.
Research revenues include reimbursement from sponsors for both direct and indirect (facilities and administration) costs. MIT's modified total direct research expenditures (MTDC or "base"), that form the basis for recovery of indirect costs, increased by $57.8 million, or 8.6 percent.Of this increase, $24.5 million is campus research;
$33.3 million is Lincoln Laboratory and SMART research.Revenue from fees and services decreased
$5.9 million, or 3.6 percent, to $157.1 million. This was due primarily to decreased revenues from technology licensing, for which 2008 revenue included amounts related to a non-recurring legal settlement.
Investment income, defined as dividends, interest, and rents, decreased
$83.5 million, or 45.3 percent, to $100.6 million, due primarily to declining interest rates and economic conditions.
Net asset reclassifications to operations of $57.8 million primarily reflect payments on unrestricted pledges received and released to operations in 2009.Operating expenses increased
$167.0 million, or 7.3 percent, to a total of $2,461.3 million in 2009. The largestcomponent of the increase was sponsored research expense, which grew $112.6 million, or 10.7 percent. A significant contributor to this expense growth was The Broad Institute, where direct spending for sponsored research grew $23.0 million to a total of $121.3 million. Instruction and unsponsored research increased
$39.6 million, or 6.2 6 MIT REPORT OF THE TREASURER 2009 Unrestricted net assets comprise all the remaining economic resources available to MIT. This category includes MIT's working capital and those assets designated by MIT as "funds functioning as endowment," to be invested over the long term to generate support for MIT's operations and capital projects.
Also included in this category are current funds received from donors for restricted purposes that, under the accounting rules, are categorized as unrestricted if MIT spends an equivalent amount of unrestricted funds for the same purpose. Unrestricted net assets decreased
$1,526.3 million, or 30.0 percent, to a total of$3,559.9 million. The decrease in unrestricted net assets is due to two major factors: first, the decrease in endowment value and second, the net decrease in the overfunded status of retirement plan assets resulting from decreased fair value of plan assets and increased benefit obligations.
During 2009 and 2008, unrestricted net assets were reduced by $24.0 million and $0.3 million respectively, to offset investment losses on permanently restricted net assets where market value dropped below book value. This amount will be restored to unrestricted net assets in-line with subsequent market value increases.
Operations MIT's operations include tuition, research revenues, unrestricted gifts and bequests for current use, fees and services, other programs, investment income, the portion of net investment gains distributed to funds under MIT's spending policy, auxiliary revenues, payments on pledges for unrestricted gifts, and operating expenditures.
The Statements of Activities, on pages 10 and 11, show that operating revenues exceeded operating expenses by $182.7 million in 2009, due primarily to unspent distributions from the endowment.
In 2008, operating revenues exceeded operating expenses by $114.2 million. Operating revenues increased
$235.5 million, or 9.8 percent, to $2,644.0 million due primarily to increases in distributed net gains on investments and research revenues and offset by a decrease in investment income. Operating expenses increased
$167.0 million, or 7.3 percent, to a total of $2,461.3 million driven primarily by increases in salaries and wages and supplies and services.
Net tuition revenue decreased
$11.7 million, or 5.1 percent, to $217.4 million. Reflecting MIT's commitment to increasing the affordability of undergraduate education, financial support for undergraduate students from MIT sources grew 12.5 percent. In 2009, MIT experienced a 10.4 percent increase in research revenues, from $1,245.2 million to $1,375.1 million. On-campus research programs are carried out at departments, labs, and centers where research revenue totaled $690.8 million in 2009, an 11.1 percent increase 6 over 2008. Included in the campus figure are Broad Institute research revenues of $166.3 million, which grew 17.0 percent over 2008. At Lincoln Laboratory, research revenue totaled $669.8 million in 2009, an increase of 8.1 percent. Research at the Lincoln Laboratory is funded primarily under a contract with the Department of Defense (Air Force). At the Singapore-MIT Alliance for Research and Technology (SMART), $14.5 million of research revenue was generated during 2009, its second year of operation, for research activities taking place in Singapore.
On MIT's campus, the Department of Health and Human Services (primarily through the National Institutes of Health) was the largest research sponsor, growing $29.6 million, or 13.1 percent over 2008, and providing 37.0 percent of MIT's campus research revenue in 2009. Overall, federal sponsorship of campus research grew 8.0 percent. Federal sponsorship from the Department of Defense grew by $10.2 million, or 11.6 percent. National Aeronautics and Space Administration revenue increased
$1.9 million, or 7.4 percent, while revenue from the National Science Foundation decreased
$3.6 million, or 5.5 percent, over last year. Revenue from Department of Energy and otller federal agencies remained close to 2008 levels. Nonfederal funding for campus research increased by $38.5 million, or 25.9 percent, in 2009 with the greatest increases coming from nonprofit foundations and foreign governments.
Research revenues include reimbursement from sponsors for both direct and indirect (facilities and administration) costs. MIT's modified total direct research expenditures (MTDC or "base"), that form the basis for recovery of indirect costs, increased by $57.8 million, or 8.6 percent. Of this increase, $24.5 million is campus research;
$33.3 million is Lincoln Laboratory and SMART research.
Revenue from fees and services decreased
$5.9 million, or 3.6 percent, to $157.1 million. This was due primarily to decreased revenues from technology licensing, for which 2008 revenue included amounts related to a non-recurring legal settlement.
Investment income, defined as dividends, interest, and rents, decreased
$83.5 million, or 45.3 percent, to $100.6 million, due primarily to declining interest rates and economic conditions.
Net asset reclassifications to operations of $57.8 million primarily reflect payments on unrestricted pledges received and released to operations in 2009. Operating expenses increased
$167.0 million, or 7.3 percent, to a total of $2,461.3 million in 2009. The largest component of the increase was sponsored research expense, which grew $112.6 million, or 10.7 percent. A significant contributor to this expense growth was The Broad Institute, where direct spending for sponsored research grew $23.0 million to a total of$121.3 million. Instruction and unsponsored research increased $39.6 million, or 6.2 MIT REPORT OF THE TREASURER 2009 Unrestricted net assets comprise all the remaining economic resources available to MIT. This category includes MIT's working capital and those assets designated by MIT as "funds functioning as endowment," to be invested over the long term to generate support for MIT's operations and capital projects.
Also included in this category are current funds received from donors for restricted purposes that, under the accounting rules, are categorized as unrestricted if MIT spends an equivalent amount of unrestricted funds for the same purpose. Unrestricted net assets decreased
$1,526.3 million, or 30.0 percent, to a total of$3,559.9 million. The decrease in unrestricted net assets is due to two major factors: first, the decrease in endowment value and second, the net decrease in the overfunded status of retirement plan assets resulting from decreased fair value of plan assets and increased benefit obligations.
During 2009 and 2008, unrestricted net assets were reduced by $24.0 million and $0.3 million respectively, to offset investment losses on permanently restricted net assets where market value dropped below book value. This amount will be restored to unrestricted net assets in-line with subsequent market value increases.
Operations MIT's operations include tuition, research revenues, unrestricted gifts and bequests for current use, fees and services, other programs, investment income, the portion of net investment gains distributed to funds under MIT's spending policy, auxiliary revenues, payments on pledges for unrestricted gifts, and operating expenditures.
The Statements of Activities, on pages 10 and 11, show that operating revenues exceeded operating expenses by $182.7 million in 2009, due primarily to unspent distributions from the endowment.
In 2008, operating revenues exceeded operating expenses by $114.2 million. Operating revenues increased
$235.5 million, or 9.8 percent, to $2,644.0 million due primarily to increases in distributed net gains on investments and research revenues and offset by a decrease in investment income. Operating expenses increased
$167.0 million, or 7.3 percent, to a total of $2,461.3 million driven primarily by increases in salaries and wages and supplies and services.
Net tuition revenue decreased
$11.7 million, or 5.1 percent, to $217.4 million. Reflecting MIT's commitment to increasing the affordability of undergraduate education, financial support for undergraduate students from MIT sources grew 12.5 percent. In 2009, MIT experienced a 10.4 percent increase in research revenues, from $1,245.2 million to $1,375.1 million. On-campus research programs are carried out at departments, labs, and centers where research revenue totaled $690.8 million in 2009, an 11.1 percent increase 6 over 2008. Included in the campus figure are Broad Institute research revenues of $166.3 million, which grew 17.0 percent over 2008. At Lincoln Laboratory, research revenue totaled $669.8 million in 2009, an increase of 8.1 percent. Research at the Lincoln Laboratory is funded primarily under a contract with the Department of Defense (Air Force). At the Singapore-MIT Alliance for Research and Technology (SMART), $14.5 million of research revenue was generated during 2009, its second year of operation, for research activities taking place in Singapore.
On MIT's campus, the Department of Health and Human Services (primarily through the National Institutes of Health) was the largest research sponsor, growing $29.6 million, or 13.1 percent over 2008, and providing 37.0 percent of MIT's campus research revenue in 2009. Overall, federal sponsorship of campus research grew 8.0 percent. Federal sponsorship from the Department of Defense grew by $10.2 million, or 11.6 percent. National Aeronautics and Space Administration revenue increased
$1.9 million, or 7.4 percent, while revenue from the National Science Foundation decreased
$3.6 million, or 5.5 percent, over last year. Revenue from Department of Energy and otller federal agencies remained close to 2008 levels. Nonfederal funding for campus research increased by $38.5 million, or 25.9 percent, in 2009 with the greatest increases coming from nonprofit foundations and foreign governments.
Research revenues include reimbursement from sponsors for both direct and indirect (facilities and administration) costs. MIT's modified total direct research expenditures (MTDC or "base"), that form the basis for recovery of indirect costs, increased by $57.8 million, or 8.6 percent. Of this increase, $24.5 million is campus research;
$33.3 million is Lincoln Laboratory and SMART research.
Revenue from fees and services decreased
$5.9 million, or 3.6 percent, to $157.1 million. This was due primarily to decreased revenues from technology licensing, for which 2008 revenue included amounts related to a non-recurring legal settlement.
Investment income, defined as dividends, interest, and rents, decreased
$83.5 million, or 45.3 percent, to $100.6 million, due primarily to declining interest rates and economic conditions.
Net asset reclassifications to operations of $57.8 million primarily reflect payments on unrestricted pledges received and released to operations in 2009. Operating expenses increased
$167.0 million, or 7.3 percent, to a total of $2,461.3 million in 2009. The largest component of the increase was sponsored research expense, which grew $112.6 million, or 10.7 percent. A significant contributor to this expense growth was The Broad Institute, where direct spending for sponsored research grew $23.0 million to a total of$121.3 million. Instruction and unsponsored research increased $39.6 million, or 6.2 MIT REPORT OF THE TREASURER 2009 percent. General and administrative expenses increased$10.6 million, or 2.2 percent. Employee benefits expenses increased
$3.4 million, or 2.0 percent, due primarily to an increase in costs for employee and retiree medical benefits, employment tax, and disability benefits, offset by pension credits resulting from the overfunded status of MIT's defined benefit plan in prior years.Gifts and Pledges With the successful public launch of the Campaign for Students on October 3, 2008, the Campaign now stands at a total of $351.3 million, with 70.3 percent of the $500 million goal raised. Gifts support scholarships, fellowships, educational programming, and student life activities.
The MIT Energy Initiative (MITEI) now has 1,154 donors, and has raised $54.1 million as of June 2009.Gifts and pledges for 2009 totaled $303.9 million, a decrease of 21.3 percent from the 2008 total of $386.0 million. Gifts from individuals represented 35.6 percent of new gifts and pledges, down from 50.9 percent in theprevious year. Gifts from foundations represented 40.9percent of new gifts and pledges in 2009, up from 35.2 percent in the previous year. Gifts from corporations and other sources represented 23.5 percent, up from 13.9 percent in 2008. New gifts and payments on pledges for unrestricted purposes were 7.7 percent of the total,compared with 3.9 percent in 2008. The largest category of gifts for 2009 was Research and Education, which accounted for 62.0 percent of the total.
Investments Investments at fair value were $9,519.4 million, a decrease of $1,789.0 million, or 15.8 percent, from the $11,308.4 million of the previous year. Over the past five years, total invested assets have increased from
$7,250.5 million to$9,519.4 million while distributions for expenditures have totaled $2,063.4 million. More specific information is included in Note B to the Financial Statements.
The financial statements include both realized and unrealized gains and losses on investments. Realized and unrealized gains and losses, including those related to the disposition of fixed assets, decreased from a gain of $154.8 million in 2008 to a loss of $1,854.4 million in 2009.The asset allocation among fixed income, equity, marketable alternatives, and real estate investments remained similiar to 2008 during 2009. Equity, marketable alternatives, and real estate investments at market value were 84.5 percent of the investments as ofJune 30, 2009, as compared to 88.5 percent at June 30, 2008.The Board of Directors of the MIT Investment Management Company (MITIMCo) held four regularly scheduled meetings during the fiscal year. During 2009, MITIMCo, in conjunction with MIT's senior administration, acted defensively to manage liquidity in the turbulent markets while still capturing investment opportunities in the equity and marketable alternative arenas consistent with its investment policies and asset allocation targets. Equities include investments in venturecapital and private equity. Marketable alternatives include investments in event arbitrage, distressed debt and hedge funds. The alternative investments are managed by more than one hundred independent organizations primarily through pooled investment partnerships.
Endowment and Similar Funds The market value of investments in the endowment and similar funds totaled $7,982.0 million as ofJune 30, 2009.The endowment assets are managed to maximize total investment return relative to appropriate risk. Investment income and a portion of gains are distributed for spendingin a manner that, over the long term, retains for reinvest-ment an amount at least equal to the anticipated rate of inflation.
Endowment funds invested in Pool A, MIT's primary investment pool, receive distributions based on the number of units held. Units are valued monthly and new gifts or other funds transferred to Pool A are credited with Pool A units based on the previous month's market value ofthe units in Pool A.Land, Buildings, and Equipment Fixed assets had a net book value of $2,120.6 million as of June 30, 2009, an increase of 9.4 percent from $1,938.9 million as of June 30, 2008. The most significant area of increase this past fiscal year was in the area of educational buildings.
Major ongoing construction projects include a new163,000-square-foot building for the Media Lab and School of Architecture and Planning to be completed in October 2009, a new 217,000-square-foot building for the Sloan School of Management with a three-level, 430-car garage located directly under the new building and scheduled for occupancy in 2010, a new 3 67,000-square-foot laboratory research building for the Koch Institute for Integrative Cancer Research to be completed by December 2010, significant improvements to Vassar Street west of Massachusetts Avenue, various utility and infrastructure improvements, and exterior rehabilitation of the undergraduate dormitory at 305 Memorial Drive.
More extensive renovations related to 305 Memorial Drive have been deferred as part of a portfolio of measures


==SUMMARY==
==SUMMARY==
7 percent. General and administrative expenses increased $10.6 million, or 2.2 percent. Employee benefits expenses increased
7
$3.4 million, or 2.0 percent, due primarily to an increase in costs for employee and retiree medical benefits, employment tax, and disability benefits, offset by pension credits resulting from the overfunded status of MIT's defined benefit plan in prior years. Gifts and Pledges With the successful public launch of the Campaign for Students on October 3,2008, the Campaign now stands at a total of $351.3 million, with 70.3 percent of the $500 million goal raised. Gifts support scholarships, fellowships, educational programming, and student life activities.
 
The MIT Energy Initiative (MITEI) now has 1,154 donors, and has raised $54.1 million as of June 2009. Gifts and pledges for 2009 totaled $303.9 million, a decrease of 21.3 percent from the 2008 total of $3 86.0 million. Gifts from individuals represented 35.6 percent of new gifts and pledges, down from 50.9 percent in the previous year. Gifts from foundations represented 40.9 percent of new gifts and pledges in 2009, up from 35.2 percent in the previous year. Gifts from corporations and other sources represented 23.5 percent, up from 13.9 percent in 2008. New gifts and payments on pledges for unrestricted purposes were 7.7 percent of the total, compared with 3.9 percent in 2008. The largest category of gifts for 2009 was Research and Education, which accounted for 62.0 percent of the total. Investments Investments at fair value were $9,519.4 million, a decrease of$I,789.0 million, or 15.8 percent, from the $11,308.4 million of the previous year. Over the past five years, total invested assets have increased from $7,250.5 million to $9,519.4 million while distributions for expenditures have totaled $2,063.4 million. More specific information is included in Note B to the Financial Statements.
designed to preserve financial flexibility. These These projects      Summary are part of a new construction initiative that adds state-of-  MIT's full financial statements statements and footnotes follow, follow, the-art facilities for emerging emerging areas of research, increases              describing our financial position and activities more fully describing educational  infrastructure that supports residential and educational infrastructure                                      through June 30, 2009. In closing, .we we again thank the community community life, and revitalizes the physical campus. The            community for its generous financial support, advice, MIT community major project completed completed during 2009 was the new 540-bed 540-bed  and collaboration collaboration throughout the year and reaffirm our our graduate graduate residence residence at 235 23 5 Albany Street.                     optimism optimism for the future.
The financial statements include both realized and unrealized gains and losses on investments.
Borrowings Borrowings                                                      Respectfully Respectfully submitted, Total borrowings borrowings outstanding increased from $1,335.4
Realized and unrealized gains and losses, including those related to the disposition of fixed assets, decreased from a gain of $154.8 million in 2008 to a loss of$I,854.4 million in 2009. The asset allocation among fixed income, equity, marketable alternatives, and real estate investments remained similiar to 2008 during 2009. Equity, marketable alternatives, and real estate investments at market value were 84.5 percent of the investments as ofJune 30, 2009, as compared to 88.5 percent atJune 30, 2008.
                                                $1,335.4 million as of  June 30, 2008, ofJune      2008, to $1,735.8
                                  $1,735.8 million as ofJune of June 30, 2009, primarily due to the issuance 30,2009,                        issuance of $610.0 million in of$610.0 new, tax-exempt tax-exempt debt to finance major construction construction projects currently underway and to replace $203.0 million in line of currently                                                    of Theresa M. Stone credit financing. MIT's publicly publicly held debt continues continues to be Executive Vice President Executive                    Treasurer President and Treasurer rated AAA by both Moody's Moody's and Standard Standard &
                                            & Poor's. More specific information information is included in Note G  G to the Financial September September 16, 2009 Statements.
8                                                                                     MIT  REPORT OF MIT REPORT  OF THE THE TREASURER TREASURER 2009 2009


==SUMMARY==
Massachusetts Massachusetts Institute of Technology                          Technology Statements of Financial Position Statements at June 30, 2009 and 2008 (in thousandsof dollars)
The Board of Directors of the MIT Investment Management Company (MITIMCo) held four regularly scheduled meetings during the fiscal year. During 2009, MITIMCo, in conjunction with MIT's senior administration, acted defensively to manage liquidity in the turbulent markets while still capturing investment opportunities in the equity and marketable alternative arenas consistent with its investment policies and asset allocation targets. Equities include investments in venture capital and private equity. Marketable alternatives include investments in event arbitrage, distressed debt and hedge funds. The alternative investments are managed by more than one hundred independent organizations primarily through pooled investment partnerships.
(in thousands        dollars) 2009            2008 Assets Assets C ash ......................................................................
Endowment and Similar Funds The market value of investments in the endowment and similar funds totaled $7,982.0 million as of June 30, 2009. The endowment assets are managed to maximize total investment return relative to appropriate risk. Investment income and a portion of gains are distributed for spending in a manner that, over the long term, retains for ment an amount at least equal to the anticipated rate of inflation.
Cash    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $    77,387 77,387    $    81,106 81,106 A ccounts receivable, Accounts    receivable, net .....................................................
Endowment funds invested in Pool A, MIT's primary investment pool, receive distributions based on the number of units held. Units are valued monthly and new gifts or other funds transferred to Pool A are credited with Pool A units based on the previous month's market value of the units in Pool A. Land, Buildings, and Equipment Fixed assets had a net book value of $2, 120.6 million as of June 30, 2009, an increase of 9.4 percent from $1,938.9 million as of June 30, 2008. The most significant area of increase this past fiscal year was in the area of educational buildings.
                                      ......................................................                                                  .      241,024 241,024        223,790 Pledges Pledges receivable, receivable, net, at fair value ............................................
Major ongoing construction projects include a new 163,000-square-foot building for the Media Lab and School of Architecture and Planning to be completed in October 2009, a new 217,000-square-foot building for the Sloan School of Management with a three-level, 430-car garage located directly under the new building and scheduled for occupancy in 2010, a new foot laboratory research building for the Koch Institute for Integrative Cancer Research to be completed by December 2010, significant improvements to Vassar Street west of Massachusetts Avenue, various utility and infrastructure improvements, and exterior rehabilitation of the undergraduate dormitory at 305 Memorial Drive. More extensive renovations related to 305 Memorial Drive have been deferred as part of a portfolio of measures 7 percent. General and administrative expenses increased $10.6 million, or 2.2 percent. Employee benefits expenses increased
                                                        .............................................                                        .     464,736 464,736        443,303 Contracts in progress, principally U.S. Government ..............................      ...............................                        .      85,821 85,821          67,938 67,938 Deferred charges, inventories inventories and other assets ...................................
$3.4 million, or 2.0 percent, due primarily to an increase in costs for employee and retiree medical benefits, employment tax, and disability benefits, offset by pension credits resulting from the overfunded status of MIT's defined benefit plan in prior years. Gifts and Pledges With the successful public launch of the Campaign for Students on October 3,2008, the Campaign now stands at a total of $351.3 million, with 70.3 percent of the $500 million goal raised. Gifts support scholarships, fellowships, educational programming, and student life activities.
                                                                            ....................................                               .       57,457 57,457          62,316 62,316 Student notes receivable, net .................................................
The MIT Energy Initiative (MITEI) now has 1,154 donors, and has raised $54.1 million as of June 2009. Gifts and pledges for 2009 totaled $303.9 million, a decrease of 21.3 percent from the 2008 total of $3 86.0 million. Gifts from individuals represented 35.6 percent of new gifts and pledges, down from 50.9 percent in the previous year. Gifts from foundations represented 40.9 percent of new gifts and pledges in 2009, up from 35.2 percent in the previous year. Gifts from corporations and other sources represented 23.5 percent, up from 13.9 percent in 2008. New gifts and payments on pledges for unrestricted purposes were 7.7 percent of the total, compared with 3.9 percent in 2008. The largest category of gifts for 2009 was Research and Education, which accounted for 62.0 percent of the total. Investments Investments at fair value were $9,519.4 million, a decrease of$I,789.0 million, or 15.8 percent, from the $11,308.4 million of the previous year. Over the past five years, total invested assets have increased from $7,250.5 million to $9,519.4 million while distributions for expenditures have totaled $2,063.4 million. More specific information is included in Note B to the Financial Statements.
                                              ..................................................                                              .      48,953          47,327 47,327 Investm  ents, at fair value .....................................................
The financial statements include both realized and unrealized gains and losses on investments.
Investments,                           ......................................................                                                 . 9,519,413 9,519,413      11,308,429 11,308,429 Collateral for securities lending and minority interest .............................    ..............................                        .     168,306 168,306        363,516 363,516 asset-overfunded status ........................................
Realized and unrealized gains and losses, including those related to the disposition of fixed assets, decreased from a gain of $154.8 million in 2008 to a loss of$I,854.4 million in 2009. The asset allocation among fixed income, equity, marketable alternatives, and real estate investments remained similiar to 2008 during 2009. Equity, marketable alternatives, and real estate investments at market value were 84.5 percent of the investments as ofJune 30, 2009, as compared to 88.5 percent atJune 30, 2008.  
Retirement plan asset-overfunded                                  .........................................                                   .     165,842        922,338 922,338 Land, buildings & equipment, (at cost $2,994,190              $2,994,190 forJune  for June       2009;    $2,728,805    forJune for June      2008),
net of accumulated          depreciation ................................................
accumulated depreciation                  ............................................... .                                               2,120,613 2,120,613      1,938,919 1,938,919 Total assets .............................................................
Total            ..............................................................                                                          . $ 12,949,552
                                                                                                                                                $12,949,552  $$15,458,982 15,458,982 Liabilities and Net Assets Liabilities Liabilities:
Accounts Accounts payable, accruals  accruals and other liabilities                  ....................................
liabilities ...................................                                   . $   299,565    $    267,837 267,837 Liabilities due under life income fund agreements                                  .................................
agreements ................................                                      .       72,606          78,372 Collateral for securities Collateral          securities lending and minority interest .............................
                                                                                        ..............................                        .      168,306 168,306        363,516 363,516 D eferred revenue Deferred    revenue and other credits                  .............................................
credits ............................................                                              .      175,070 175,070        164,470 164,470 A dvance paym Advance    payments ents ..........................................................
                            ...........................................................                                                        .     343,296        315,202 B orrow in gs ................................................................
Borrowings      .................................................................                                                              . 1,735,843      1,335,393 Government Government advancesadvances        for  student       loans    ..........................................
                                                                ......................................... .                                            33,341          33,057 Accrued                                  .....................................................
Accrued benefit liabilities ....................................................                                                               .     175,137 175,137        131,161 Total liabilities ..........................................................
Total                  ...........................................................                                                        . 3,003,164 3,003,164      2,689,008 2,689,008 Net Assets:
Un restricted ...............................................................
Unrestricted      ................................................................                                                             . 3,559,925 3,559,925      5,086,270 5,086,270 Tem  porarily    restricted      .........................................................
Temporarily restricted ....................... '.' .............................. .                                                                 4,401,015 4,401,015      5,765,302 Perm anently restricted Permanently        restricted .......................................................
                                    ...................................................... .                                                        1,985,448 1,985,448      1,918,402 1,918,402 Total net assets .........................................................
Total                    ..........................................................                                                       . 9,946,388 9,946,388      12,769,974 12,769,974 Total liabilities and net assets ..............................................
                                                    ...............................................                                          . $ 12,949,552
                                                                                                                                                $12,949,552    $15,458,982
                                                                                                                                                                $15,458,982 The accompanying accompanying notes are    are an integral integralpartpart of the financial        statements.
financial statements.
FINANCIAL      STATEMENTS FINANCIAL STATEMENTS 9


==SUMMARY==
Massachusetts Massachusetts Institute of Technology                              Technology Statements Statements of Activities        Activities for the years ended June 30, 2009 and 2008 (in thousandsof dollars)
The Board of Directors of the MIT Investment Management Company (MITIMCo) held four regularly scheduled meetings during the fiscal year. During 2009, MITIMCo, in conjunction with MIT's senior administration, acted defensively to manage liquidity in the turbulent markets while still capturing investment opportunities in the equity and marketable alternative arenas consistent with its investment policies and asset allocation targets. Equities include investments in venture capital and private equity. Marketable alternatives include investments in event arbitrage, distressed debt and hedge funds. The alternative investments are managed by more than one hundred independent organizations primarily through pooled investment partnerships.
(in thousands          dollars)
Endowment and Similar Funds The market value of investments in the endowment and similar funds totaled $7,982.0 million as of June 30, 2009. The endowment assets are managed to maximize total investment return relative to appropriate risk. Investment income and a portion of gains are distributed for spending in a manner that, over the long term, retains for ment an amount at least equal to the anticipated rate of inflation.
                                                                                                  --         Unrestricted Unrestricted  ~
Endowment funds invested in Pool A, MIT's primary investment pool, receive distributions based on the number of units held. Units are valued monthly and new gifts or other funds transferred to Pool A are credited with Pool A units based on the previous month's market value of the units in Pool A. Land, Buildings, and Equipment Fixed assets had a net book value of $2, 120.6 million as of June 30, 2009, an increase of 9.4 percent from $1,938.9 million as of June 30, 2008. The most significant area of increase this past fiscal year was in the area of educational buildings.
                                                                                                                          --       I r---- Temporarily Restricted ~
Major ongoing construction projects include a new 163,000-square-foot building for the Media Lab and School of Architecture and Planning to be completed in October 2009, a new 217,000-square-foot building for the Sloan School of Management with a three-level, 430-car garage located directly under the new building and scheduled for occupancy in 2010, a new foot laboratory research building for the Koch Institute for Integrative Cancer Research to be completed by December 2010, significant improvements to Vassar Street west of Massachusetts Avenue, various utility and infrastructure improvements, and exterior rehabilitation of the undergraduate dormitory at 305 Memorial Drive. More extensive renovations related to 305 Memorial Drive have been deferred as part of a portfolio of measures 7 designed to preserve financial flexibility.
r-2009               2008             2009               2008 Operating Operating ActivitiesActivities Operating Operating Revenues:
These projects are part of a new construction initiative that adds state-of-the-art facilities for emerging areas of research, increases educational infrastructure that supports residential and community life, and revitalizes the physical campus. The major project completed during 2009 was the new 540-bed graduate residence at 235 Albany Street.Borrowings Total borrowings outstanding increased from $1,335.4 million as of June 30, 2008, to $1,735.8 million as of June 30, 2009, primarily due to the issuance of $610.0 million in new, tax-exempt debt to finance major construction projects currently underway and to replace $203.0 million in line of credit financing.
Tuition and similar revenues, net of discount of                             of
MIT's publicly held debt continues to be rated AAA by both Moody's and Standard & Poor's. More specific information is included in Note G to the Financial Statements.
      $214,383 in 2009 and $192,131        $192,131 in 2008               ............
Summary MIT's full financial statements and footnotes follow, more fully describing our financial position and activities through June 30, 2009. In closing, we again thank the MIT community for its generous financial support, advice, and collaboration throughout the year and reaffirm ouroptimism for the future.Respectfully submitted, Theresa M. Stone Executive Vice President and Treasurer September 16, 2009 8 MIT REPORT OF THE TREASURER 2009 designed to preserve financial flexibility.
2008 ............               $     217,389 217,389    $     229,099 229,099    $           -    $$
These projects are part of a new construction initiative that adds the-art facilities for emerging areas of research, increases educational infrastructure that supports residential and community life, and revitalizes the physical campus. The major project completed during 2009 was the new 540-bed graduate residence at 23 5 Albany Street. Borrowings Total borrowings outstanding increased from $1,335.4 million as ofJune 30, 2008, to $1,735.8 million as ofJune 30,2009, primarily due to the issuance of$610.0 million in new, tax-exempt debt to finance major construction projects currently underway and to replace $203.0 million in line of credit financing.
Research Research revenues:
MIT's publicly held debt continues to be rated AAA by both Moody's and Standard & Poor's. More specific information is included in Note G to the Financial Statements.
8 Summary MIT's full financial statements and footnotes follow, more fully describing our financial position and activities through June 30, 2009. In closing, .we again thank the MIT community for its generous financial support, advice, and collaboration throughout the year and reaffirm our optimism for the future. Respectfully submitted, Theresa M. Stone Executive Vice President and Treasurer September 16, 2009 MIT REPORT OF THE TREASURER 2009 designed to preserve financial flexibility.
These projects are part of a new construction initiative that adds the-art facilities for emerging areas of research, increases educational infrastructure that supports residential and community life, and revitalizes the physical campus. The major project completed during 2009 was the new 540-bed graduate residence at 23 5 Albany Street. Borrowings Total borrowings outstanding increased from $1,335.4 million as ofJune 30, 2008, to $1,735.8 million as ofJune 30,2009, primarily due to the issuance of$610.0 million in new, tax-exempt debt to finance major construction projects currently underway and to replace $203.0 million in line of credit financing.
MIT's publicly held debt continues to be rated AAA by both Moody's and Standard & Poor's. More specific information is included in Note G to the Financial Statements.
8 Summary MIT's full financial statements and footnotes follow, more fully describing our financial position and activities through June 30, 2009. In closing, .we again thank the MIT community for its generous financial support, advice, and collaboration throughout the year and reaffirm our optimism for the future. Respectfully submitted, Theresa M. Stone Executive Vice President and Treasurer September 16, 2009 MIT REPORT OF THE TREASURER 2009 Massachusetts Institute of Technology Statements of Financial Position at June 30, 2009 and 2008 (in thousands of dollars)2009 2008 Assets C ash ......................................................................
A ccounts receivable, net ......................................................
Pledges receivable, net, at fair value .............................................
Contracts in progress, principally U.S. Government
...............................
Deferred charges, inventories and other assets ....................................
Student notes receivable, net ..................................................
Investm ents, at fair value ......................................................
Collateral for securities lending and minority interest ..............................
Retirement plan asset-overfunded status
.........................................
Land, buildings
& equipment, (at cost $2,994,190 forJune 2009; $2,728,805 forJune 2008), net of accum ulated depreciation
................................................
T o tal assets ..............................................................
Liabilities and Net Assets Liabilities:
Accounts payable, accruals and other liabilities
....................................
Liabilities due under life income fund agreements
.................................
Collateral for securities lending and minority interest ..............................
D eferred revenue and other credits .............................................
A dvance paym ents
...........................................................
B orrow in gs .................................................................
Government advances for student loans ..........................................
Accrued benefit liabilities
.....................................................T otal liabilities ...........................................................
Net Assets: U n restricted
................................................................
Tem porarily restricted
.........................................................
Perm anently restricted
.......................................................T otal net assets ..........................................................Total liabilities and net assets ...............................................
$77,387 241,024 464,736 85,821 57,457 48,953 9,519,413 168,306 165,842 2,120,613$ 12,949,552
$ 299,565 72,606 168,306 175,070 343,296 1,735,843 33,341 175,137 3,003,164 3,559,925 4,401,015 1,985,448 9,946,388$ 12,949,552
$ 81,106 223,790 443,303 67,938 62,316 47,327 11,308,429 363,516 922,338 1,938,919$15,458,982
$ 267,837 78,372 363,516 164,470 315,202 1,335,393 33,057 131,161 2,689,008 5,086,270 5,765,302 1,918,402 12,769,974
$15,458,982 The accompanying notes are an integral part of the financial statements.
FINANCIAL STATEMENTS 9 Massachusetts Institute of Technology Statements of Financial Position at June 30, 2009 and 2008 (in thousands of dollars) Assets Cash ..................................................................... . Accounts receivable, net ..................................................... . Pledges receivable, net, at fair value ............................................ . Contracts in progress, principally U.S. Government
.............................. . Deferred charges, inventories and other assets ................................... . Student notes receivable, net ................................................. . Investments, at fair value ..................................................... . Collateral for securities lending and minority interest ............................. . Retirement plan asset-overfunded status ........................................ . Land, buildings
& equipment, (at cost $2,994,190 for June 2009; $2,728,805 for June 2008), net of accumulated depreciation
............................................... . Total assets ............................................................. . Liabilities and Net Assets Liabilities:
Accounts payable, accruals and other liabilities
................................... . Liabilities due under life income fund agreements
................................ . Collateral for securities lending and minority interest ............................. . Deferred revenue and other credits ............................................ . Advance payments .......................................................... . Borrowings
................................................................ . Government advances for student loans ......................................... . Accrued benefit liabilities
.................................................... . Total liabilities
.......................................................... . Net Assets: Unrestricted
............................................................... . Temporarily restricted
.......................
'.' .............................. . Permanently restricted
...................................................... . Total net assets ......................................................... . Total liabilities and net assets .............................................. . The accompanying notes are an integral part of the financial statements.
FINANCIAL STATEMENTS 2009 $ 77,387 241,024 464,736 85,821 57,457 48,953 9,519,413 168,306 165,842 2,120,613
$12,949,552
$ 299,565 72,606 168,306 175,070 343,296 1,735,843 33,341 175,137 3,003,164 3,559,925 4,401,015 1,985,448 9,946,388
$12,949,552 2008 $ 81,106 223,790 443,303 67,938 62,316 47,327 11,308,429 363,516 922,338 1,938,919
$ 15,458,982
$ 267,837 78,372 363,516 164,470 315,202 1,335,393 33,057 131,161 2,689,008 5,086,270 5,765,302 1,918,402 12,769,974
$15,458,982 9 Massachusetts Institute of Technology Statements of Financial Position at June 30, 2009 and 2008 (in thousands of dollars) Assets Cash ..................................................................... . Accounts receivable, net ..................................................... . Pledges receivable, net, at fair value ............................................ . Contracts in progress, principally U.S. Government
.............................. . Deferred charges, inventories and other assets ................................... . Student notes receivable, net ................................................. . Investments, at fair value ..................................................... . Collateral for securities lending and minority interest ............................. . Retirement plan asset-overfunded status ........................................ . Land, buildings
& equipment, (at cost $2,994,190 for June 2009; $2,728,805 for June 2008), net of accumulated depreciation
............................................... . Total assets ............................................................. . Liabilities and Net Assets Liabilities:
Accounts payable, accruals and other liabilities
................................... . Liabilities due under life income fund agreements
................................ . Collateral for securities lending and minority interest ............................. . Deferred revenue and other credits ............................................ . Advance payments .......................................................... . Borrowings
................................................................ . Government advances for student loans ......................................... . Accrued benefit liabilities
.................................................... . Total liabilities
.......................................................... . Net Assets: Unrestricted
............................................................... . Temporarily restricted
.......................
'.' .............................. . Permanently restricted
...................................................... . Total net assets ......................................................... . Total liabilities and net assets .............................................. . The accompanying notes are an integral part of the financial statements.
FINANCIAL STATEMENTS 2009 $ 77,387 241,024 464,736 85,821 57,457 48,953 9,519,413 168,306 165,842 2,120,613
$12,949,552
$ 299,565 72,606 168,306 175,070 343,296 1,735,843 33,341 175,137 3,003,164 3,559,925 4,401,015 1,985,448 9,946,388
$12,949,552 2008 $ 81,106 223,790 443,303 67,938 62,316 47,327 11,308,429 363,516 922,338 1,938,919
$ 15,458,982
$ 267,837 78,372 363,516 164,470 315,202 1,335,393 33,057 131,161 2,689,008 5,086,270 5,765,302 1,918,402 12,769,974
$15,458,982 9
Massachusetts Institute of Technology Statements of Activities for the years ended June 30, 2009 and 2008 (in thousands of dollars)-- Unrestricted
-- I r- Temporarily Restricted 2009 2008 2009 2008 Operating Activities Operating Revenues: Tuition and similar revenues, net of discount of$214,383 in 2009 and $192,131 in 2008 ............Research revenues:
D irect ........................................
D irect ........................................
In direct ......................................
Direct    ........................................                                              1,153,620 1,153,620        1,038,998 1,038,998 In direct ......................................
Total research revenues ..........................
Indirect      ......................................                                              221,452          206,172 Total research research revenues              ..........................
Gifts and bequests for current use ....................
revenues ..........................                                    1,375,072 1,375,072        1,245,170 1,245,170 Gifts and bequests for current                            ....................
Fees and services ..................................
current use ....................                                  100,072          122,091 Fees Fees and services ..................................
O ther program s ...................................
                            ..................................                                          157,110 157,110          162,994 162,994 O  ther program Other    programss ...................................
Investm ent incom e ................................
                          ...................................                                            86,133 86,133            93,268 Investm Investment  ent income income ................................
Net gains on investments, distributed
                                .......
.................
Auxiliary enterprises
...............................
Net asset reclassification and transfers
.................
Total operating revenue ............................
Operating Expenses: Salaries and w ages .................................
Em ployee benefits .................................Supplies and services ...............................
Subrecipient agreem ents ............................
U tilities, rent, and repairs ...........................
D epreciation
.....................................
Interest expense ...................................
Total operating expenses ............................
Results of operations
...............................
Non-Operating Revenues, Gains and Losses P ledges ..........................................
G ifts and bequests .................................
Investm ent Incom e ................................
Net (loss) gain on investments and other assets ..........
Distribution of accumulated investment gains ...........
Net change in life income funds ......................
Pension-related charges other than netperiodic pension (cost) ...
T otal ......................................
T otal ......................................
Amounts recognized in unrestricted net assets consist of: N et actuarial loss (gain) ..........................
Total.    .....................................                                        $ 165,842        $ 922,338      $ (175,137)
Prior service cost ...............................
(175,137) $ (131,161)
Transition liability
(131,161) recognized in unrestricted Amounts recognized                      unrestricted net        net assets consist of:    of:
..............................
N Net et actuarial loss (gain) ..........................
T otal ......................................
                                        ..........................                        $    (20,371)
$ 2,066,978 54,344 134,080 (111,972)(25,596)1,143 2,118,977 2,989,316 (538,325)(54,200)(111,972)2,284,819$ 165,842$ 2,042,729 47,122 127,332 3,598 (107,757)(46,046)2,066,978$ 382,845 15,009 25,137 3,105 (22,043)5,685 409,738$334,436 13,335 21,084 2,914 3,062,516 251,684 34,557
(20,371)    $ (780,024)
Total investment return ..........................
Total investment return ..........................
(596,046)
                              ..........................                                 (596,046)
(1,095,262)
(596,046)        (1,095,262)
(20,291) (1,711,599)
(1,095,262)           (20,291)
Contributions
(20,291)        (1,711,599)
.................................
(1,711,599)
4,650 -108,155 112,805 Appropriation of endowment assets for expenditure... (153,545) (364,402)  
Contributions .................................
-(517,947)Other changes: Underwater gain adjustment and funds held for reinvestment
                    .................................                                           4,650                  -        108,155 108,155            112,805 Appropriation of endowment assets for expenditure Appropriation                                            expenditure...      ...       (153,545)
.........................
(153,545)          (364,402)
(23,984) 23,984 4,587 4,587 Net asset reclassifications and transfers to create board-designated endowment funds ..............
(364,402)                  -         (517,947)
56,805 (25,774) (1,572) 29,459 Endowment net assets, June 30, 2009 ...........  
Other Other changes:
$ 2,378,990
Underwater Underwater gain adjustment and funds held for reinvestment .........................
$ 3,858,863
                                .........................                                  (23,984)           23,984              4,587              4,587 Net asset reclassifications reclassifications and transfers to create board-designated board-designated endowment endowment funds .............. ..............                       56,805          (25,774)          (1,572)
$ 1,913,952
(1,572)           29,459 29,459 Endowment net assets, June 30, 2009 ...........
$ 8,151,805 30 MIT REPORT OF THE TREASURER 2009 K. Components of Net Assets and Endowment (continued)
Endowment                                                  ...........               2,378,990
MIT's endowment consists of approximately 3,000 individual funds established for a variety of purposes and includes.
                                                                                      $ 2,378,990         3,858,863 $ 1,913,952
both donor-restricted endowment funds and funds designated by the Board of Trustees to function as endowments.
                                                                                                        $ 3,858,863         1,913,952 $ 8,151,805 8,151,805 30                                                                                                               MIT REPORT MIT    REPORT OFOF THE THE TREASURER TREASURER 2009 2009
As required by GAAP, net assets associated with endowment funds, including funds designated by the Board of Trustees to function as endowments, are classified and reported based on the existence or absence of donor imposed restrictions.
 
The Board of Trustees of MIT has interpreted the Massachusetts enacted version of Uniform Prudent Management ofInstitutional Funds Act (UPMIFA) as allowing MIT to appropriate for expenditure or accumulate so much of an endowment fund as MIT determines is prudent for the uses, benefits, purposes and duration for which the endowment fund is established, subject to the intent of the donor as expressed in the gift instrument.
Components of Net Assets and Endowment K. Components                                                    Endowment (continued)
Unless stated otherwise in the gift instrument, the assets in an endowment fund shall be donor-restricted assets until appropriated for expenditure by the Board of Trustees.
Fiscal Year 2008 Table Table 24. Endowment Endowment Net Asset          Asset Composition by Type of Fund as of                  ofJune June 30, 2008 Temporarily Temporarily    Permanently Permanently (in thousands ofdollars)
As Fiscal Year 2009 a result of this interpretation, MIT has not changed the way permanently restricted net assets are classified.
(in thousands    dollars)                                                              Unrestricted Unrestricted        Restricted      Restricted Restricted            Total Donor-restricted endowment Donor-restricted      endowment funds ............... ................           . $            -  $ 5,320,317 5,320,317    $ 1,823,073      $ 7,143,390 7,143,390 Board-designated endowment Board-designated      endowment funds ..............   ...............          . 3,091,110 3,091,110                    -                -      3,091,110 3,091,110 Total endowment endowment        funds      ......................
See note A for further information on net asset classification.
                                      ..................... .                       $ 3,091,110 3,091,110      $ 5,320,317 5,320,317    $ 1,823,073        $10,234,500
The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure in a manner consistent with the standard of prudence prescribed by UPMIFA. In accordance with UPMIFA, the Board of Trustees considers the following factors in making a determination to appropriate or accumulate endowment funds: 1. the duration and preservation of the fund II. the purposes of MIT and the endowment fund Ill. general economic conditions IV. the possible effect of inflation and deflation
                                                                                                                                            $10,234,500 Table Table 25.
: v. the expected total return from income and the appreciation of investments VI. other resources of MIT VII. the investment policies of MIT Table 22. Endowment Net Asset Composition by Type of Fund as ofJune 30, 2009 (in thousands of dollan) Donor-restricted endowment funds ............... . Board-designated endowment funds .............. . Total endowment funds ..................... . Unrestricted
: 25. Changes in EndowmentEndowment Net Assets            Assets for the Fiscal Year ended June 30, 2008 Temporarily Temporarily    Permanently (in thousands of dollars)
$ 2,378,990  
(in thousands    dollars)                                                              Unrestricted Unrestricted        Restricted      Restricted Restricted            Total Endowment net assets, June 30, 2007 ..............        ..............           $ 3,147,258 3,l47,258        $5,273,222
$ 2,378,990 Temporarily Restricted
                                                                                                          $5,273,222        $1,695,909
$ 3,858,863
                                                                                                                            $1,695,909      $10,116,389
$ 3,858,863 Permanently Restricted
                                                                                                                                            $10,116,389 Investment return:
$ 1,913,952  
Investment                ...........................
$ 1,913,952 Total $ 5,772,815 2,378,990
Investment income ...........................                                           46,960          107,261            3,551 3,551          157,772 Net depreciation depreciation (realized and unrealized) ........               ........            86,065          131,332            8,209          225,606 Total  investment Total investment      return    ..........................
$ 8,151,805 Table 23. Changes in Endowment Net Assets for the Fiscal Year ended June 30, 2009 Temporarily Permanently (in thousands of dollars) Unrestricted Restricted Restricted Total Endowment net assets, June 30, 2008 ..............
                                  ..........................                                133,025          238,593            11,760          383,378 383,378
$ 3,091,110
                    .................................
$5,320,317
Contributions .................................                                           15,242                  -        106,129 106,129          121,371 Appropriation        endowment assets for expenditure...
$1,823,073
Appropriation of endowment                                  expenditure ...            (116,874)          (275,788)                 -        (392,662)
$10,234,500 Investment return: Investment income ...........................
21,970 48,094 4,046 74,110 Net depreciation (realized and unrealized)
........ (618,016)
(1,143,356)
(24,337) (1,785,709)
Total investment return ..........................
(596,046)
(1,095,262)
(20,291) (1,711,599)
Contributions
.................................
4,650 108,155 112,805 Appropriation of endowment assets for expenditure
... (153,545)
(364,402)
(517,947)
Other changes: Underwater gain adjustment and funds held for reinvestment
.........................
(23,984) 23,984 4,587 4,587 Net asset reclassifications and transfers to create board-designated endowment funds ..............
56,805 (25,774) (1,572) 29,459 Endowment net assets, June 30, 2009 ...........
$ 2,378,990
$ 3,858,863
$ 1,913,952
$ 8,151,805 30 MIT REPORT OF THE TREASURER 2009 K. Components of Net Assets and Endowment (continued)
MIT's endowment consists of approximately 3,000 individual funds established for a variety of purposes and includes.
both donor-restricted endowment funds and funds designated by the Board of Trustees to function as endowments.
As required by GAAP, net assets associated with endowment funds, including funds designated by the Board of Trustees to function as endowments, are classified and reported based on the existence or absence of donor imposed restrictions.
The Board of Trustees of MIT has interpreted the Massachusetts enacted version of Uniform Prudent Management ofInstitutional Funds Act (UPMIFA) as allowing MIT to appropriate for expenditure or accumulate so much of an endowment fund as MIT determines is prudent for the uses, benefits, purposes and duration for which the endowment fund is established, subject to the intent of the donor as expressed in the gift instrument.
Unless stated otherwise in the gift instrument, the assets in an endowment fund shall be donor-restricted assets until appropriated for expenditure by the Board of Trustees.
As Fiscal Year 2009 a result of this interpretation, MIT has not changed the way permanently restricted net assets are classified.
See note A for further information on net asset classification.
The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure in a manner consistent with the standard of prudence prescribed by UPMIFA. In accordance with UPMIFA, the Board of Trustees considers the following factors in making a determination to appropriate or accumulate endowment funds: 1. the duration and preservation of the fund II. the purposes of MIT and the endowment fund Ill. general economic conditions IV. the possible effect of inflation and deflation
: v. the expected total return from income and the appreciation of investments VI. other resources of MIT VII. the investment policies of MIT Table 22. Endowment Net Asset Composition by Type of Fund as ofJune 30, 2009 (in thousands of dollan) Donor-restricted endowment funds ............... . Board-designated endowment funds .............. . Total endowment funds ..................... . Unrestricted
$ 2,378,990
$ 2,378,990 Temporarily Restricted
$ 3,858,863
$ 3,858,863 Permanently Restricted
$ 1,913,952
$ 1,913,952 Total $ 5,772,815 2,378,990
$ 8,151,805 Table 23. Changes in Endowment Net Assets for the Fiscal Year ended June 30, 2009 Temporarily Permanently (in thousands of dollars) Unrestricted Restricted Restricted Total Endowment net assets, June 30, 2008 ..............
$ 3,091,110
$5,320,317
$1,823,073
$10,234,500 Investment return: Investment income ...........................
21,970 48,094 4,046 74,110 Net depreciation (realized and unrealized)
........ (618,016)
(1,143,356)
(24,337) (1,785,709)
Total investment return ..........................
(596,046)
(1,095,262)
(20,291) (1,711,599)
Contributions
.................................
4,650 108,155 112,805 Appropriation of endowment assets for expenditure
... (153,545)
(364,402)
(517,947)
Other changes: Underwater gain adjustment and funds held for reinvestment
.........................
(23,984) 23,984 4,587 4,587 Net asset reclassifications and transfers to create board-designated endowment funds ..............
56,805 (25,774) (1,572) 29,459 Endowment net assets, June 30, 2009 ...........
$ 2,378,990
$ 3,858,863
$ 1,913,952
$ 8,151,805 30 MIT REPORT OF THE TREASURER 2009 K. Components of Net Assets and Endowment (continued)
Fiscal Year 2008 Table 24. Endowment Net Asset Composition by Type of Fund as ofJune 30, 2008 Temporarily Permanently (in thousands of dollars) Unrestricted Restricted Restricted Total Donor-restricted endowment funds ................
$ -$ 5,320,317
$ 1,823,073
$ 7,143,390 Board-designated endowment funds ...............
3,091,110
--3,091,110 Total endowment funds ......................
$ 3,091,110
$ 5,320,317
$ 1,823,073
$10,234,500 Table 25. Changes in Endowment Net Assets for the Fiscal Year ended June 30, 2008 Temporarily Permanently (in thousands of dollars) Unrestricted Restricted Restricted Total Endowment net assets, June 30, 2007 ..............
$ 3,147,258
$5,273,222
$1,695,909
$10,116,389 Investment return: Investment income ...........................
46,960 107,261 3,551 157,772 Net depreciation (realized and unrealized)
........ 86,065 131,332 8,209 225,606 Total investment return ..........................
133,025 238,593 11,760 383,378 Contributions
.................................
15,242 -106,129 121,371 Appropriation of endowment assets for expenditure...
(116,874)
(275,788)
-(392,662)Other changes: Underwater gain adjustment and fundsheld for reinvestment
.........................
(329) 329 1,482 1,482 Net asset reclassifications and transfers to create board-designated endowment funds ..............
(87,212) 83,961 7,793 4,542 Endowment net assets, June 30, 2008 ...........
$ 3,091,110
$ 5,320,317
$ 1,823,073
$10,234,500 Underwater Endowment Funds From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the value of the initial and subsequent donor gift amounts (underwater).
When underwater endowment funds exist, they are classified as a reduction of unrestricted net assets. Total underwater endowment funds reported in unrestricted net assets were $24.3 million and $0.3 million as ofJune 30, 2009 and 2008, respectively.
The underwater status of these funds resulted from unfavorable market fluctuations.
Investment and Spending Policies MIT maintains its investments primarily in two investment pools: Pool A, principally for endowment and funds functioning as endowment, and Pool C, principally for investment of current funds of MIT's schools and departments and MIT's operating funds. Pool A operates asa mutual fund with units purchased and redeemed based on the previous month's unit market value of Pool A. The total market value of Pool A was $8,143.7 million at June 30, 2009 and $10,292.5 million in 2008. The total value of Pool A includes Pool C investments of $323.7 million atJune 30, 2009 and $416.0 million in 2008. Certain assets are also maintained in separately invested funds. Separately invested funds totaled $162.1 million as of June 30 2009 and $192.3 million in 2008.NOTES TO FINANCIAL STATEMENTS 31 K. Components of Net Assets and Endowment (continued)
Fiscal Year 2008 Table 24. Endowment Net Asset Composition by Type of Fund as of June 30, 2008 (in thousands of dollars) Donor-restricted endowment funds ............... . Board-designated endowment funds .............. . Total endowment funds ..................... . Unrestricted
$ 3,091,110
$ 3,091,110 Temporarily Restricted
$ 5,320,317
$ 5,320,317 Permanently Restricted
$ 1,823,073
$ 1,823,073 Total $ 7,143,390 3,091,110
$10,234,500 Table 25. Changes in Endowment Net Assets for the Fiscal Year ended June 30, 2008 (in thousands of dollars) Endowment net assets, June 30, 2007 ..............
Investment return: Investment income ...........................
Net depreciation (realized and unrealized)
........ Total investment return ..........................
Contributions
.................................
Appropriation of endowment assets for expenditure
... Other changes: Underwater gain adjustment and funds held for reinvestment
.........................
Net asset reclassifications and transfers to create board-designated endowment funds ..............
Endowment net assets, June 30, 2008 ...........
Underwater Endowment Funds From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the value of the initial and subsequent donor gift amounts (underwater).
When underwater endowment funds exist, they are classified as a reduction of unrestricted net assets. Total underwater endowment funds reported in unrestricted net assets were $24.3 million and $0.3 million as ofJune 30, 2009 and 2008, respectively.
The underwater status of these funds resulted from unfavorable market fluctuations.
NOTES TO FINANCIAL STATEMENTS Temporarily Permanently Unrestricted Restricted Restricted Total $ 3,l47,258
$5,273,222
$1,695,909
$10,116,389 46,960 107,261 3,551 157,772 86,065 131,332 8,209 225,606 133,025 238,593 11,760 383,378 15,242 106,129 121,371 (116,874)
(275,788)
(392,662)
(392,662)
(329) 329 1,482 1,482 (87,212) 83,961 7,793 4,542 $ 3,091,110
Other changes:
$ 5,320,317
Underwater Underwater gain adjustment adjustment and funds held for reinvestment reinvestment .........................
$ 1,823,073
                                    .........................                                  (329)              329            1,482            1,482 Net asset reclassifications reclassifications and transfers to create board-designated board-designated endowment funds ..............        ..............                  (
$10,234,500 Investment and Spending Policies MIT its primarily in two investment pools: Pool A, principally for endowment and funds functioning as endowment, and Pool C, principally for investment of current funds of MIT's schools and departments and MIT's operating funds. Pool A operates as a mutual fund with units purchased and redeemed based on the previous month's unit market value of Pool A. The total market value of Pool A was $8,143.7 million atJune 30, 2009 and $10,292.5 million in 2008. The total value of Pool A includes Pool C investments of$323.7 million atJune 30,2009 and $416.0 million in 2008. Certain assets are also maintained in separately invested funds. Separately invested funds totaled $162.1 million as ofJune 302009 and $192.3 million in 2008. 31 K. Components of Net Assets and Endowment (continued)
Fiscal Year 2008 Table 24. Endowment Net Asset Composition by Type of Fund as of June 30, 2008 (in thousands of dollars) Donor-restricted endowment funds ............... . Board-designated endowment funds .............. . Total endowment funds ..............
E nrolled .........................
E nrolled .........................
Y ield ............................
Enrolled      .........................                            1,048 1,048        1,067 1,067        1,002            996        1,077 1,077 Yield ............................
Freshmen ranking in the top 10%of their class ...................
Yield    ............................                                66%
Average SAT scores (math and verbal) ...............
66%          69%
Graduate Full-tim e ........................
69%          66%
Part-tim e ........................
66%            67%
Graduate applicationsApplicants .......................Accepted ..................  
67%          65%
.....Acceptance rate ...................
65%
Freshmen Freshmen ranking in the top 10%                   10%
of of their class ...................
                                ...................                        97%
97%          97%
97%          97%
97%            97%
97%          97%
97%
Average Average SAT scores (math and verbal) verbal) ...............
                                        ...............                  1,453 1,453        1,458 1,458        1,460 1,460          1,461        1,471 Graduate Full-timee ........................
Full-tim         ........................                           5,991        5,837 5,837        5,924 5,924          5,865 5,865        5,907 5,907 Part-tim Part-timee ........................
                      ........................                              155          211 211          202            275          277 Graduate applications Applicants        .......................
Applicants .......................                                  17,325 17,325      16,208      15,968        14,958 14,958        15,015 15,015 Accepted         ..................
Accepted ..................                          : .....
                                                            .....        3,215        3,058 3,058        3,002          3,115 3,115        3,159 3,159 Acceptance Acceptance rate ...................
                                ...................                        19%
19%          19%
19%          19%
19%            21%
21%          21%
21%
E nrolled .........................
E nrolled .........................
Y ield ............................
Enrolled      .........................                             1,955 1,955        1,825 1,825        1,857 1,857          1,876 1,876        1,782 Yield ............................
4,118 35 13,396 1,589 12%1,048 66%97%1,453 5,991 155 17,325 3,215 19%1,955 61%4,119 53 12,445 1,553 13%1,067 69%97%1,458 5,837 211 16,208 3,058 19%1,825 60%4,068 59 11,374 1,514 13%1,002 66%97%1,460 5,924 202 15,968 3,002 19%1,857 62%4,014 52 10,440 1,494 14%996 67%97%1,461 5,865 275 14,958 3,115 21%1,876 60%4,078 58 10,466 1,665 16%1,077 65%97%1,471 5,907 277 15,015 3,159 21%1,782 56%Student Financial Aid: (in thousands of dollars)Undergraduate tuition support.Graduate tuition support  
Yield    ............................                                61%
......Fellowship stipends ..........
61%          60%         62%
Student loans ...............
62%           60%
Student employment
60%           56%
.........Total financial assistance
56%
.............
Student Financial Aid:
Tuition (in dollars): Tuition and fees ......................
(in thousandsof dollars)
Average room and board ...............Faculty and staff: Faculty .............................Staff ...............................
(in thousands           dollars)
$ 78,534 187,732 27,509 9,641 82,287$ 385,703$ 36,390 10,860 1,009 13,320$ 70,157 174,847 25,647 8,766 78,892$ 358,309$ 65,529 172,021 25,020 8,962 77,732$ 349,264$ 57,963 167,297 32,440 9,542 78,503$ 345,745$ 54,649 161,384 31,717 11,052 75,917$ 334,719$34,986 10,400 1,008 12,832$33,600 9,950 998 12,453$32,300 9,500 992 11,970$30,800 9,100 983 11,490 36MIT REPORT OF THE TREASURER 2009 Massachusetts Institute of Technology Five-YearTrend Analysis -Financial Highlights (continued) 2009 2008 2007 2006 2005 Students:
Undergraduate Undergraduate tuition support         support...........           $$    78,534 78,534  $    70,157 70,157  $    65,529 65,529    $    57,963    $  54,649 Graduate tuition support ............... ......                         187,732 187,732      174,847      172,021 172,021        167,297 167,297      161,384 161,384
Undergraduate Full-time
                                ..........
........................
Fellowship stipends ...................                                 27,509      25,647      25,020 25,020        32,440        31,717 31,717 Student loans ........................
4,118 4,119 4,068 4,014 4,078 Part-time
                      ...............                                     9,641        8,766        8,962          9,542        11,052 11,052 Student employment                .........
........................
employment ..................                                82,287       78,892      77,732 77,732        78,503        75,917 75,917 Total financial assistance ..............    ........' ....      $  385,703  $ 358,309   $ 349,264     $ 345,745    $ 334,719 334,719 Tuition (in  (in dollars):
35 53 59 52 58 Undergraduate Applications Applicants
dollars):
.......................
                          ......................
13,396 12,445 11,374 10,440 10,466 Accepted ........................
Tuition and fees ......................                            $$    36,390 36,390  $$  34,986 34,986  $$   33,600 33,600  $$   32,300   $$  30,800 Average room and      and board ...............
1,589 1,553 1,514 1,494 1,665 Acceptance rate ...................
                                        ...............                 10,860      10,400 10,400        9,950 9,950          9,500        9,100 Faculty and staff:  staff:
12% 13% 13% 14% 16% Enrolled .........................
          .............................
1,048 1,067 1,002 996 1,077 Yield ............................ 66% 69% 66% 67%
Faculty .............................                                    1,009        1,008          998            992          983 983
65% Freshmen ranking in the top 10% of their class ................... 97% 97% 97% 97% 97% Average SAT scores (math and verbal) ...............
      ...............................
1,453 1,458 1,460 1,461 1,471 Graduate Full-time
Staff ...............................                                   13,320 13,320      12,832 12,832      12,453 12,453        11,970 11,970        11,490 11,490 36 36                                                                                                MIT MIT REPORT REPORT OF OF THE THE TREASURER TREASURER 2009 2009
........................
 
5,991 5,837 5,924 5,865 5,907 Part-time
Treasurer Report of the Treasurer N 11Ml Massachusetts Massachusetts for the year ended                Institute of June 30, 2009                     IIl nstitute of Technology Technology}}
........................
155 211 202 275 277 Graduate applications Applicants
.......................
17,325 16,208 15,968 14,958 15,015 Accepted ..................
: ..... 3,215 3,058 3,002 3,115 3,159 Acceptance rate ................... 19% 19% 19% 21% 21% Enrolled .........................
1,955 1,825 1,857 1,876 1,782 Yield ............................ 61% 60% 62% 60%
56% Student Financial Aid: (in thousands of dollars) Undergraduate tuition support ..........
$ 78,534 $ 70,157 $ 65,529 $ 57,963 $ 54,649 Graduate tuition support ...............
187,732 174,847 172,021 167,297 161,384 Fellowship stipends ...................
27,509 25,647 25,020 32,440 31,717 Student loans ........................
9,641 8,766 8,962 9,542 11,052 Student employment
..................
82,287 78,892 77,732 78,503 75,917 Total financial assistance
......... ' .... $ 385,703 $ 358,309 $ 349,264 $ 345,745 $ 334,719 Tuition (in dollars):
Tuition and fees ......................
$ 36,390 $ 34,986 $ 33,600 $ 32,300 $ 30,800 Average room and board ...............
10,860 10,400 9,950 9,500 9,100 Faculty and staff: Faculty .............................
1,009 1,008 998 992 983 Staff ...............................
13,320 12,832 12,453 11,970 11,490 36 MIT REPORT OF THE TREASURER 2009 Massachusetts Institute of Technology Five-YearTrend Analysis -Financial Highlights (continued) 2009 2008 2007 2006 2005 Students:
Undergraduate Full-time
........................
4,118 4,119 4,068 4,014 4,078 Part-time
........................
35 53 59 52 58 Undergraduate Applications Applicants
.......................
13,396 12,445 11,374 10,440 10,466 Accepted ........................
1,589 1,553 1,514 1,494 1,665 Acceptance rate ...................
12% 13% 13% 14% 16% Enrolled .........................
1,048 1,067 1,002 996 1,077 Yield ............................ 66% 69% 66% 67%
65% Freshmen ranking in the top 10% of their class ................... 97% 97% 97% 97% 97% Average SAT scores (math and verbal) ...............
1,453 1,458 1,460 1,461 1,471 Graduate Full-time
........................
5,991 5,837 5,924 5,865 5,907 Part-time
........................
155 211 202 275 277 Graduate applications Applicants
.......................
17,325 16,208 15,968 14,958 15,015 Accepted ..................
: ..... 3,215 3,058 3,002 3,115 3,159 Acceptance rate ................... 19% 19% 19% 21% 21% Enrolled .........................
1,955 1,825 1,857 1,876 1,782 Yield ............................ 61% 60% 62% 60%
56% Student Financial Aid: (in thousands of dollars) Undergraduate tuition support ..........
$ 78,534 $ 70,157 $ 65,529 $ 57,963 $ 54,649 Graduate tuition support ...............
187,732 174,847 172,021 167,297 161,384 Fellowship stipends ...................
27,509 25,647 25,020 32,440 31,717 Student loans ........................
9,641 8,766 8,962 9,542 11,052 Student employment
..................
82,287 78,892 77,732 78,503 75,917 Total financial assistance
......... ' .... $ 385,703 $ 358,309 $ 349,264 $ 345,745 $ 334,719 Tuition (in dollars):
Tuition and fees ......................
$ 36,390 $ 34,986 $ 33,600 $ 32,300 $ 30,800 Average room and board ...............
10,860 10,400 9,950 9,500 9,100 Faculty and staff: Faculty .............................
1,009 1,008 998 992 983 Staff ...............................
13,320 12,832 12,453 11,970 11,490 36 MIT REPORT OF THE TREASURER 2009 Report of the Treasurer for the year ended June 30, 2009 N 11Ml Massachusetts IIl nstitute of Technology Report of the Treasurer for the year ended June 30, 2009 Massachusetts Institute of Technology Report of the Treasurer for the year ended June 30, 2009 Massachusetts Institute of Technology}}

Revision as of 16:18, 13 November 2019

Redacted Version of Mit Application for Self-Guarantee
ML101930104
Person / Time
Site: 07000938, MIT Nuclear Research Reactor
Issue date: 12/22/2009
From: Dugan R
Massachusetts Institute of Technology (MIT)
To: Duane Hardesty
Office of Nuclear Material Safety and Safeguards, Division of Policy and Rulemaking
Hardesty, D NRC/NRR/DPR/PRLB 415-3724
References
Download: ML101930104 (57)
v • d • e


Text

MASSACHUSETTS INSTITUTE OF TECHNOLOGY RESEARCH REACTOR LICENSE NO. R-37 DOCKET NO. 50-20 REQUEST AND APPLICATION; SELF GUARANTEE DECOMMISSIONING EXPENSES DATED DECEMBER 22, 2009 REDACTED VERSION*

IN ACCORDANCE WITH 10 CFR 2.390(a)(6)

  • Redacted text and figures blacked out or denoted by brackets

Massachusetts Institute of Technology Regina Dugan 77 Massachusetts Avenue Associate Counsel/Insurance Manager Cambridge, Massachusetts 02139-4307 Office of the General Counsel Building 12-090 Phone 617-253-2823 Fax 617-258-0267 Email dugan@mit.edu Via Federal Express Mail December 22, 2009 U.S. Nuclear Regulatory Commission Office of Nuclear Material Safety and Safeguards One White Flint North 11555 Rockville Pike Rockville, MD 20852 Attn.: 0-12D3 Re: Request and Application, Self Guarantee, Decommissioning Expenses -

License No. SNM-986, License No. R-37 To Whom It May Concern:

In October 2009, Massachusetts Institute of Technology ("MIT") submitted a request to self-guarantee the estimated decommissioning expenses associated with MIT's above-referenced licensed activities, along with the supportinKexecuted agreement and other required documentation. At the NRC's request, MIT has revised its Self Guarantee Agreement and supplemented its original application for approval by providing the additional documentation requested.

MIT requests the NRC's approval to self guarantee the required decommissioning assurance for these licensed activities. The following documents are enclosed for the reconsideration of MIT's application as guarantor of financial assurance for its estimated decommissioning expenses of the NRC licenses:

1. Copy of the Letter from MIT's Chief FinancIal Officer in Support of Self Guarantee (Original provided to the NRC with the October request.).
2. Copy of the Report of MIT's Auditor, PricewaterhouseCoopers (Original provided to the NRC with the October request.).
3. Schedule Reconciling Chief Financial Officer's Letter.
4. Original Executed Revised Self Guarantee Agreement, dated December 17, 2009.
5. Organizational Chart reflecting MIT Corporation and Institutional Officers.
6. Names and Addresses of MIT Institutional Officers.

u.s. Nuclear Regulatory Commission Request for Self Guarantee of Decommissioning Expenses December 21, 2009 Page Two

7. MIT Executive Committee vote, reflecting signing authority for Theresa M.

Stone, as Executive Vice President and Treasurer.

8. MIT's Bond Rating information.
9. MIT's most recent audited financials, Report of the Treasurer for the year ended June 30,2009.

Please contact me should any additional information be required to complete this process. Thank you for your assistance with this request.

Very truly yours, Enclosures cc: Alexander Adams, Jr., U.S. Nuclear Regulatory Commission

':-~':;, ,: ** .....liffice of the Vice President for Finance Massachusetts Institute of Technology

'!1 fv1as:.ac:\u$ut:s ,t..,v*211U8, i3Lilriinq Nr.:lU 3000 C?~1t)(i(iDe. I'Vi~lSS(!dHl :;~Tt:.; O/:! :39":4307 October 15, 2009 u.s. Nuclear Regulatory Commission Washington, D,C. 20555-0001 I am the ChieHincindalOfficerofthe Massachusetts Institute of Technology ("MIT"), a nonprofit Ilniversity. This letter is in support ofMIT's,useofthesel(-guarantee fii-Iam;ial test to demonstrate finanCial assurance; as ,specified inlO CFR Part30. MIT has noparent company!ioldingmajority control onts voting stOCK, , " .

, "MIT guarantees, through theself~gLiarantee $ubinitledtodemonstrate compliance ,under 10 CFRPart30, tl1e,'decommissiq'ning ofth.e, fol!6'iriJ1g fa¢ilities owned oroperatE!rlbyMIT. Thecljrrent ,cost' so

estim;ltes or certified amounts. for decornmissloningj guaranteed, are shown for each facility: ','

,Certified Amounts or Name of Facility UcenseNumber Lbtatioriof Facility Current Cost Estimates

'MrrResearch Reactor 'SNM7986 77 Massachuserts,AV $1,125,000.00, Cambridg~, MJl,02139 MIT Research ReactorR-37 138 Alb,my St. . $30,000,000,00 Cambridge; MA 02139 I hereby certify that MITis currently a goingconcern an9 that it possesses positive tangible net worth inthe amount of $12,949.6 miliion*.

This fiscal year of this firm ends on June 30. Thefigures for the above item marked with an asterisk are derived from MIT's independently audited, year-end financial statements and footnotes for the latest completed fiscal year, ended June 3D, 2009.

1.' . .".\

MIT is not required to file a Form 10-K with the U .5. Securities and Exchange Commission for the latest fiscal year.

.... ,,- - "",,

This firm satisfies the following self-guarantee test:

1. Current bond rating of most recent uninsured, uncollateralized, and unencumbered issuance of this institution:

Rating: Aaa Name Of rating service: Moody's Investors Service

2. Date of issuance of bonds: January 8, 2009
3. Description & date of maturity of bonds:

Amount Interest rate

-

Maturity Date 1 Description

$10,000,000 4.00% July),2016 I MHEFA Series 057586ECG4

$78,000,000 5,00% July'l,2016 MHEFA Series 0 57586ECH2

$23;485,000 5,00% Julyl,2026 MHEFA Series. O;;7586ECJ8

,$47,975!000 5.75% July 1,2026 MHEFASeries 057586.ECKS

$42,000;000 5.50% July C1,2036 MHEFA Series.O 57586ECL3

$65;000,000 6.00% July 1, 2036 MHEFA Series 05}586ECMl

4. Is the ra'ting specified on line INA" or better? Yes I hereby certify that the content of this letter is true a nd correct to the best of my knowledge .

Signature

('./,.----1 . . . Ill' ~

"tCVtii..<0tC ....lh_. . . .;'(ll'Z-L£')

§ ~

Name: Terry Stone c: 70/\;/. /--

-- , .L Title: Chief Financial Officer

'('

. . -r ...,',,. .

Pdcl.:watt'rhouseCuopl*rs Ll.P 12.; Ilil:1i SI.

lle'ston MA. 0211(1 W\\'W,P\\'C,COIll Report of Independent Accountants To the Board of Trustees of Massachusetts Institute of Technology:

lj1Jehave performed the procedures enumerated below; which were agreed to by Massachusetts Institute of Technology ("the Institute"), NRC MIT licenses SNM-986 and R-37, solely to assist you in complying with the Nuclear Regulatory Commission's financial assurance reguiations, 10 CFR Part 30.

Management is. responsible for the Institute's compliance with those regulations. This agreed~upon proceduresengage.m.entwasconducted in accordance with attestation standards established' by the American Institute of Certified Public Accountants, The sufficiency of these procedures is solely the responsibility of those parties'specified in this report. Consequently, we make:no representation regar(jingthe sufficiency ofthe procedures described below either for the purpose ,for which this,report has been requested or for any other purpose. . .

The procedures and associated findings are as follows:

  • 1;, Confirmed that thehetWorth in the "PerFinancial Statements"columricif theaccorripanying schedule agrees with total netassets coritainediri the Institute's firianck31 statements for the year ended June 30, 2009,which we*have audited in accordancewith'auditingstandards' .

generally accepted in the United States of America and have issued our.report thereon dated September 16,2009;

2. Confirmed that the tangible net Worth in the "Per CFO's Letter" colurrinaf the accompanying schedule agrees with tangible net wbrthin the CFO'slettefdated October 15, 2009;
3. Inquired of management as to the existence af any reconciling items between Hie CFO's Lette'r and the audited financial stateinents'notingthat there are none; and .. ... '.
4. Mathematically check the totals intheaccompanying schedule, includinglhe current.cost estimates of decommissioning for each facility listed p~r the CFO's lette~.

Nb exceptions were noted, We were not engaged to and did not conduct an examination, the objective of which would be the expression of an opinion on compliance with the regulations. Accordingly, we do not express.such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. .

This report is intended solely for the information and use of management and the Board of Trustees of Massachusetts Institute of Technology and the Nuclear Regulatory Commission, and is not intended to be and should not be used by anyone other than these specified parties.

Y!U&~~~ UP October 16, 2009

Schedule Reconciling Amounts Contained nn (~hief Executive OfficCi"'S or Chief lFnnancialOfficer's Letter with Amounts in Financial Statements M1IT YEAR E.NDED .DUNE. 30, 2009

.. _-- (000.000)

Pcr Fiilancial Reconcilinl! ero's Letter Statements I Items Net \\'01th ~----- .. "

$12 949.6 0 $12.949.6 - - -

Less: Cost in cxcess of value ofiangiblc assets 0 0 0 acquired Net vvorth after cost in excess of value o[tangible $12.949;6 0 $]22 949 .6

~ets acq\lIfcd  ;" " " -0' -------'----

Accnied - decommissionin

..

u

~

costs includedinculTcnt 0 0 0

!iahi1ities

- - _..

Tangibknet worth (plus

$12.949.6 0 $12~949.6 dcc{)mm issioningcosts)

L - ... I --

(2)

MIT Organization Chart - Corporation and Institutional Officers http://web.mit.edulorgchartlcorporation.html Organization Chart Illii Corporation and Institutional Officers EXecutive VP & CEO;: :

~!umni ASso,~.iatio~,;:"

,~!!.~it~:~~~u::;~;.',:::;i'::; "",

Notes on the reporting retationships The Chairman, Presiden~ ElO3CutiW Vice President and Treasurer, and Vice President for Institute Affairs and Secretary of the Corporation are officers of the MIT Corporation.

The Alumni Association reports to the Alumni Association Board, and its ElO3CutiW Vice President reports informally to the President The MI T Inws!ment Management Company reports to the IMC Board, which is appointed by the Executiw Comnittee of the MIT Corporation. The IMC President also reports to the President of MIT.

Updated: August 3, 2009 II Iii Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139-4307 1 of 1 1211 0/2009 11 :09 AM

Kirk D. Kolenbrandcr

__ __

NlASSAClitiSF.lTS INsTITlrrE Of 'H:CHNOLOGY

-

- - - ... ........._._- ... ... ......._-_. --,.--. '." _- Vice Pi-csid('TI1 jiiT Institute AJJair., and Secretary of tbcCorponJti(J11

_-

'--'-" -..... .. _--_.-------- . _.... ----- _._---_ ......_._- .. _--._---_.....*. -

Office of the President 77 i\hssachusctts AVellue, Building 3-2°7 Cambridge, AlA 02139-4307 Phone 617~253-3365 7 Septemb(!r 200 7:.

Ms. Theresa M. Stone Room r221 MIT DearTeny' I am writing co confirm foryour records that at its meeting on September 5, the Executive ,.

Committee VOTED: That, effective on. and after September 6, 2007, the individuals fromtime to time holding the folloWing positions at the Institute are, and each of them acting singly is, hereby authorizeclto sign in the name and on behalf of the Institute any and all contracts, bonds,and- other agreements and documents which any such person acting in such p6sitiondeems'advisable and in the interests of the Institute: .

. -Chair of the Corporation o President

  • EXeClltivcVice President and Treasurer o Vice President and General Counsel o VIce fJrcsidentfor Finance

.. Director,Office 6fSponsored Programs; that anyactiontakenonor after September 6,2007 within. the scope of the .

authority granted by this vote by any person holding any ofthe above-listed positions is hereby ratified as authorized; and that the signing and delivery of any such document in the name and on behalf of the Institute by any person holding any of the abovc-:listed positions in order to carry out the purposes orthis vote..

shall bec<mclusive as to the authority of the person so acting_

If you have any questions, please give me a call.

iZl' Kirk D. Kolenbrandcr KDKJacb Enclosures cc: Mr. James L Morgan Mr: R Gregory Morgan Ms. Eiizabeth M. Ogar Me. Israel Ruiz Ms. Kathy D. Vitale

~I ,"

\.

SELF-GUARANTEE AGREEMENT Guarantee made this }7 day of December, 2009, by Massachusetts Institute of Technology ("MIT"), a "non-profit university," organized under the laws of the Commonwealth of Massachusetts, with principal place of administration at 77 Massachusetts Avenue, Cambridge, Massachusetts, herein referred to as "guarantor," to the U.S. Nuclear Regulatory Commission (NRC), beneficiary, on behalf of itself as licensee.

Recitals

1. The guarantor has full authority and capacity to enter into this self-guarantee under its bylaws, articles of incorporation, and the laws of the Commonwealth of Massachusetts.
2. This self-guarantee is being issued to comply with regulations issued by the NRC, an agency of the U.S. Government, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974. NRC has promulgated regulations in Title 10, Chapter I of the Code of Federal Regulations, Part 70, and Title 10, Chapter I of the Code of Federal Regulations, Part 72, which require that a holder of, or an applicant for, a materials license issued pursuant to 10 CFR Part 50 and 10 CFR Part 70, provide assurance that funds will be available when needed for required

. decommissioning activities.

3. The self-guarantee is issued to provide financial assurance for decommissioning activities for the licenses and facilities set forth in the following schedule and as required by 10 CFR Part 50 and 10 CFR Part 70 and Appendix E to 10 CFR Part 30 :

License No. License Location and Estimate based on Certified Amounts or Description year 2001 dollars 2009 Cost Estimates R-37 MIT Research $23,000,000, $30,000,000. Due to Reactor, 138 Albany including a 10% the contingency St., Cambridge MA contingency. applied in 2001 and 02139; education low to negative and research inflation factors in activities 2001-2007, no changes were made until 2008. The estimate was then

adjusted based on separate inflation factors applied against the labor (representing 11 % of the total) costs.

Using the NUREG-1307, Rev. 12, Page 0.1, Example 2 (Northeast Region),

the respective inflation factors used for the '08 estimate were 1.28 (labor) and 1.42 (burial), to arrive at the estimate of

$29,793,000 for 2008, which was rounded up to $30 million for 2009 ..

(See calculation below).

SNM-986 MIT Research $1,125,000, statutory $1,125,000.

Reactor and 77 - in accordance with Massachusetts Ave., 10 C.F.R. 70.25(d),

Cambridge MA based on the 02139; storage of applicable quantities Special Nuclear of SNM stored at this Materials facility.

Total Estimated $31,125,000.

Costs Decommissioning Estimate Adjustment Calculation:

  • _._. ______ .H_.H*.. _.. _*, ********___ *__*__ **.H**********HHH****..H..H..H*_..*_W_......... _ _.H**.. ___ .....H......... _...... _***.** ................. *H****H.H. _______ ...... _._ .........*H. ...

Duke Study 23,000,000.00 %Total NUREG Inflator 29,793,000.00 Inflation Model Labor Portion 20,470,000.00 89% Labor 1.28 26,200,000.00 Burial Portion 2,530,000.00 11% Burial 1.42 3,593,000.00 Inflation figures for 2008, were calculated based upon NUREG-1307, for the years 2002 (year closest to when the Duke study was completed, 11/01) @ 1.862, and 2006 @ 2.21.The calculation for 2008 assumes linear cost increases through 2008:

Cost inflator for 2008 = 1.862+ {(2.21-1.862)/(2006-2002) x(2008-2002)} = 2.384. The factor for the labor portion of the cost to be applied in 2008 = 2.384/1.862= 1.28. The same method was used to develop the burial factor of 1.42.

In order to comply with the guarantor's longstanding commitment to being environmentally responsible, the reactor facility will be decontaminated, and spent nuclear materials will be properly 2

'.

transported by a licensed carrier to a licensed disposal facility only, to meet the requirements of 10 CFR 20.1402 radiological criteria for unrestricted use. Guarantor may not demolish the building, but the building and subsurface will be analyzed and characterized so that the site meets this criterion and is approved for release for unrestricted use. At the time decommissioning begins, guarantor shall determine the best computer codes and instrumentation for the specific decommissioning activities.

4. The guarantor meets or exceeds the following financial test criteria, as a nonprofit university that issues bonds, and agrees to comply with all notification requirements as specified in 10 CFR Part 50 and 10 CFR Part 70 and Appendix E to 10 CFR Part 30.

The guarantor meets the following self-guarantee test:

(a) A current rating for its most recent uninsured, uncollateralized, and unencumbered bond issuance of AAA, AA, or A as issued by Standard & Poor's, or Aaa, Aa, or A as issued by Moody's.

Specifically, the current rating for guarantor's most recent uninsured, uncollateralized and unencumbered bond issuance is Aaa by Moody's Investors Service.

5. The guarantor does not have a parent company holding majority control of its voting stock.
6. Decommissioning activities as used below refer to the activities required by 10 CFR Part 50 and 10 CFR Part 70, for decommissioning of the facilities identified above.
7. Pursuant to the guarantor's authority to enter into this guarantee, the guarantor guarantees to NRC that the guarantor shall:

(a) carry out the required decommissioning activities, as required by License No. SNM-986 and License No. R-37 or (b) set up a trust fund in favor of the above identified beneficiary in the amount of the' current cost estimates for these activities.

3

8. The guarantor guarantor agrees agrees to submit revised financial statements, financial test data, evidence of MIT's evidence MIT's bond rating, and reconciling schedule annually within 90 days of the the completion of its fiscal year-end completion year-end audit.
9. The guarantor agrees that if, guarantor agrees if, at the end of any fiscal year before before termination of this self-guarantee, it fails to meet the self-guarantee self-guarantee financial test criteria, criteria, it shall send within 9090 days of the end of the fiscal year, by certified certified mail, notice to NRC that itit intends to provide alternative alternative financial assurance assurance as specified specified in 10 CFR Part 50 and 10 CFR Part
70. Within 120 days after after the end of the fiscal year, the guarantor establish such guarantor shall establish financial financial assurance.

guarantor also agrees to notify the beneficiary

10. The guarantor beneficiary promptly promptly if the ownership of the the licensed activity licensed activity is transferred, transferred, and to maintain maintain this guarantee guarantee until the new licensee licensee provides alternative provides alternative financial assurance assurance acceptable acceptable to the beneficiary.

beneficiary.

11. The guarantor
11. guarantor agrees that ifif itit determines, determines, at any time other than as described in Recital 9, that itit no longer meets the self-guarantee self-guarantee financial test criteria or itit is disallowed disallowed from continuing as a self-guarantor, itit shall establish alternative continuing alternative financial assurance assurance as as specified in 10 CFR Part 50 and 10 CFR Part 70, as applicable, specified applicable, within 30 days.

12.

12. The guarantor, as well as its successorssuccessors and assigns, agreesagrees to remain bound bound jointly and severally severally under this guarantee notwithstanding any or all of the following:

guarantee notwithstanding amendment or modification amendment modification of the license NRC-approved decommissioning license or NRC-approved decommissioning fundingfunding plan for that facility, the extension extension or reduction of the time of performance of required activities, or any other modification or alteration alteration of an obligation of the licensee licensee pursuant to 10 CFR Part 50 and 10 CFR Part 70.

13.

13. The guarantor agrees that itit shall be liable for all reasonable litigation costs incurred by the beneficiary, beneficiary, NRC, in any successful successful effort to enforce the agreement agreement against the against the guarantor.

4

".

14. The guarantor agrees to remain bound under under this self-guarantee self-guarantee for as long as it, it, as as licensee, must comply with the applicable financial assurance assurance requirements of 10 CFR Part 50 and 10 CFR Part 70, for the previously previously listed facilities, except except that thethe guarantor guarantor may cancel this self-guarantee self-guarantee by sending sending notice by certified mail to NRC, such cancellation to become effective such cancellation effective not before an alternative alternative financial assurance assurance mechanism has been put in place mechanism place by the guarantor.
15. The guarantor guarantor agrees agrees that ifif it,it, as licensee, fails to provide alternative alternative financial assurance assurance as specified specified in 10 CFR Part 50 and 10 CFR Part 70, as applicable, and obtain written obtain assurance from NRC within 90 days after a notice of written approval of such assurance cancellation cancellation by the guarantor is received received by NRC from the guarantor, the guarantor shall make full payment payment under the self-guarantee. Such payment shall be held in in escrow, by NRC, for the estimated decommissioning decommissioning activities for the previously listed facilities, and shall satisfy guarantor's guarantor's financial assurance required under 10 CFR Part financial assurance 50 and 10 CFR Part 70, as may be subject to adjustment to keep such estimate estimate guarantor furnishes current, until guarantor furnishes evidence alternative financial evidence of alternative financial assurance assurance in in compliance with 10 CFR Part 50 and 10 10 CFR Part 70. Upon the approval by NRC of such such alternative alternative financial assurance, NRC NRC shall return the payment made by guarantorguarantor in full.
16. The guarantor guarantor waives notice notice of acceptance acceptance of this self-guarantee self-guarantee by NRC. The The guarantor guarantor expressly waives notice amendments notice of amendments or modifications modifications the of the decommissioning requirements.

decommissioning 17.

17. If the guarantor guarantor files financial reports with the U. U.S.

S. Securities and Exchange Exchange Commission, then it shall promptly promptly submit them to its independent independent auditor and to NRC NRC during each yearyear in which which this self-guarantee self-guarantee is in effect.

18. guarantor agrees that if, The guarantor if, at any time before before termination of this self-guarantee, self-guarantee, its most recent bond issuance ceases to be rated in the category category of "A" "An or above by either Standard Standard & & Poor's or Moody's, itit shall provide notice in writing of such fact to NRC NRC within 20 days after publication publication of the change change by the rating service.

55

that this self-guarantee is true and correct to the I Ihereby certify, under herebycertify, penaltyofofperjury, thepenalty underthe perjury, that this self-guarantee is true and correct to the best myknowledge.

bestofofmy knowledge.

Effectivedate:

Effective date:

i 117/0GJ

/ Id 12 I

/02 SELF-GUARANTOR:

SELF-GUARANTOR: Massachusetts MassachusettsInstitute InstituteofofTechnology Technology

~J By:

By: I/

Theresa f{,uUufJ~

TheresaM. M:StOne Stone Executive VicePresident Executive Vice Presidentand andTreasurer Treasurer Signature Signatureofofwitness witnessorornotary:

notary:

.-

( Notary Public

~. s* "'.lON PINKSTEN ,

~

i r . ,,.. ,. Notary Public  :

  • C .1 J:;C('~"" ,WEAlTH'$1/ MAlSACHUIITTS OF3y XoPi F~xe a

)j My Commission Expires

d. January 31, 2014 66

MV MlTI Urganization Urgal11zatlon Chart Chart -- Corporatlon CorporatIon anld and Institutional ll1sntutIOnal UTicers umcers sILLp.ri Illlp.! I VSYY LVII IL L.LAJUI 131 I,...l).lllIl.vU.UI =LLLU* LI Vl5V1LUt u "'~'

~VI H"'

put. LILIVI.. 111111~

UI.IVlld'I,.UU Illif inlium Organization Chart Organization Chart Corporation Corpora tion and and Institutional Insti tu tional Officers 'Officers

  • ~Corporation MIT

~~;;::~, Corporation i Chairman Pre-idenm

~'Eesive ExecutiveVPVP &

& CEO CEO Alu m'erniAssoeialion Tý F

VPInstitute Affairs

& Corporation Secretary

., Executive Vice President

& Treasurer Prsidentl, MIT Invstmetittin Management Company Alumni AssochHion .

JudithCoin Judithtalc Col" . Kitk tvlentirasnder Theress Slone Seth.Alexander Notes Notes on on the thereporting reporting relationships relationships The TheChairman, Chairman, President, President, Executive ExecutiveVice VicePresident President and andTreasurer, Treasurer, and andVice Vice President Presidentfor for Institute InstiMeAffairs Affairs and Secretary of the Corporation are and Secretary of the Corporation are officers ofofficers ofthe the MIT MITCorporation.

Corporation.

The The Alumni Alumni Association Association reports reportstotothe theAlumni Alumni Association Association Board, Board, andand its ExecutiveVice its Executive Vice President President reports informally to the President reports informally to the President The The MIT MIT Investment InvestimentManagement ManagementCompany Company reports reports toto the the IMC IMCBoard, Board, which which isis appointed apPointed byby the the Executive Executive Comnittee of the MIT Corporation.

COmrrittee of the MIT Corporation. The IMC President The IMC President also alsoreports reportstoto the the President PresidentofofMIT.

MIT.

Updated:

L\:ldated: August August 3, 3, 2009 2009 Massachusetts Massachusetts Institute Institute of of Technology Technology 77 Massachusetts 77 Massachusetts Avenue Avenue ."

Cambridge, Cambridge, MA MA 02139-4307 02139-4307 I1oflI of 1 12/10/2009 12/10/2009 11:09 11 :09 A] AJ

Massachusetts Institute of Massachusetts of Technology Technology Office of the General Counsel Building 10-370 Building 10-370 CONFIDENTIAL CONFIDENTIAL MIT Institutional Officers December 21,2009)

(as of December Name: DanaG.

Dana G. Mead Address: '

j Citizenship: USA USA Office Held: Chairman of the Corporation Corporation Name: Susan Hockfield Hockfield Address:

Citizenship:

Citizenship:

Ci tizenship: USA USA Office Office Held: President President IIlii" Name: Theresa M. Stone Address:

Citizenship:

Citizenship: USA Office Office Held: Executive Vice President and Treasurer Executive Treasurer Name: Judith M. Cole Address:

Citizenship:

Citizenship: USA .

USA' USA Office Office Held: Executive Vice President and CEO, Alumni Association Executive Association Name: Kirk D. Kolenbninder Kolenbrander Address:

Citizenship:

Citizenship: USA Office Office Held: Vice President for Institute Affairs and Secretary Secretary of the Corporation Corporation Name: Seth Alexander Address:

Citizenship:

Citizenship: USA USA Office Held:

Office President, MIT Investment Mana~ement Company Investment Management

MI ~,A Kirk D. Kolenbrandcr NlASSACliliSf.n'S I~.sTITt:Tf:

,INSSSAC* *t;SV..T-rs

], " ECsrOLVY Kirk D. Kolenbrander

.'ce 1P'idýC-l for tzite Ait.'ir:

OF "iECHNOL()GY Vice Pnsidl.71t forlllrtit71te Ajjtlir.; and Secretary Secn:tary of thc Corporation o/tbc Corporatin Office of the President President 77 A1assachusctts Massachusetts Avenue, Avemne, Building Building 3-207 3-2°7 Cambridge, Cambridge, i\1AMIA 02139-4307 02139-4307 Phone Phone 617-253-3365 77 September September 20020077.,

Ms. Theresa Theresa M. Stone Room3-Room 3-=2i z21 MIT MIT DearTeny Dear.Terry II am writing to confirm for your records that at its meeting on September 5, the Executiv.c Executive.

Committee Committee VOTED: That, effective on and That; effectiye and after after.September 6, 2007, the individuals September 6,2007, individuals from time to time

. holding holding the following folloWing. positions positions atat the Institute Institute are, and, and each of them, themacting acting singly hereby authorized to sign is, hcrebyauthorizedto sign-in name and on behalf in the6namne behalf of the the Institute any andalI and all contracts,-bonds, yand coritracts,'bonds,and other agreements'anddocumerits agreements-and documents which any .suchpersort such -person acting in such positiondCemsadvisable acting po'ition deems advisable and in in the interests of the Institute:

  • P Chairoof Chairof,thethe Corporation Corporation .

°'President

-President

  • - Ex<,;c~ti~e Executive Vice President and Treasurcr VicePresidcrit Treasurer
  • -Vice Vice President President and General General Counsel Vic~Pr<:!~ident
  • 'Vice President for.Finance.

foe Finance .

-Director,

.Director, OfficebfSponsored Office.of Sponsored Programs; that any taken on or after any action takerionor September 6, after September 2007 within the scope of the 6;2007 autiority grante~ by authority granted vote by any person holding any oftheabove-:listed bythis vOte of the above-listed positions is IS hereby ratified as authorized; authorized; and that the signing and ~ndd(!liveIY delivery of any such document documenrin in the name and' and on bchalfof behalf of the Institute Institute by anny any person holding

  • personholding any of the above7listed positions oftheabove:1isted positions in order to carry canyout out the purpposes purp.oses of this votc.Vote.

shall be conclusive beconclusivc as to the authority authority of the person so so acting.

If If you have any questions, please give me a call.

jZ'l Kirk D. Kolenbrandcr Kolenbrander KDK/acb KDJ):/acb Enclosures Enclosures cc: Mr. James L Morgan Mr.James Mr. R. R. Gregory Gregory Morgan Morgan Ms. Elizabeth M. Ogar Ogar Mr. Israel Ruiz Ms. Kathy D. Vitale Vitale

NEW ISSUE-NEW ISSUE'"", BOOK BOOKENTRY ENTRYONLY ONLY In In the the opinion opiniOn of Edwards Angell ojEdwaidS AngeUPalmerPalmer & & Dodge Dodge LLP, LLP, Bond B,?nd Counsel, Counsel, based .updn.an basedupdn an analysis anaiysiSoJ of existing existing law law ad a1ul anssuming llSS uming,among among. other" mattersl ot1ieimatters, compliance compliance with with certain certain covenants, interest covenants,intereston'the on :the Bonds Bonds is is excluded excluded from from gros grosS s income iftcomefor j~dda~ inco*te*

for federal, axpurposes under incometax*puTPoses under the Internal Revenue the Internal ReVenUe Code Code of Of1986.

1986; Interest IntereSt on on the.

the Bond BondS is is not a not a speeifc: specific prefereneitem PrejerfJi!ce item for for purposes purposes of oj thefederal t!Wjederal individualindividual or corporate alternative minimum orcorporateqlternative m.iriimum taxes,taxes, although although such interestis~nciuded such interest is included in in adjusted adjusted current earnings when citrrentearnings calculating corporate whenca,Jculating alternative minimum:

cOTporatealternative minimum taxableincome:.

taxable incorru;: 'Under Under existingexistingta,w, law,. interest intereSt.on on the. Bonds and any iJieBonds awl proftJ. on:

anyprofit ontlW sOle of th, sale ojthe Bonds are:

the Bords are exempt from:

e:iempt,from M~achus({tspersonalincomeiaXes a:rut the Bonds are exemptfrornMassach'li§ettspersOnalprOpertyta:ces,BOrui Massachusetts personal income, taxes and the Bonds are exemptfrom Massachusetts personaliproperty taxes. Bond

  • Couru;el expresses no opinion' regarding a.ny .other taxconS~quences reL4tedt<>the oumership or d1-sPosiii9!L. oj, or the Counsel expresses noaopinion regarding any.other tax consequences related to the ownership or disposition of, or ("I.e' accrual acl:rUfllor orreceipt receipt of ~nterest on,!

ojinterest theBonds.

on,' the Bonds. See "TAX EXEMPTION" herein.

SeeTAxEXEMFI'IONhereirt,.

. '. . . . . .' ~266,460,OOO

. $266,460,000 MASSACHUSETTS MAsSACHUSETrSHEALTH ANDEDUC.A.TIONALFACILITIES.HEALTH AND EDUCATIONAL FACILITIES, AUTHORITY AtmIORITY REvEijiJE BONDS,

. . REVENUE B()Nl)S,MASSACI(uSEtT~IN"STITUTEOF MASSACHUSETTS INSTITUTE OF TECHNOLOGY ~CHNOLOGYIS~PE, ISSUE,

~ERIES*O(2008)

SERIES 0.(2008)

Dated:'

Dated: Date Date of ofdelivery delivery Due:

Due': July 1, as shown July1,as below shown.below The Series 0 Bonds (the "Bonds") will be issued only as fully registered bonds without coupons, and, when issued, will be

'J'heSenes 0 Bonds.(the*Bonds~)\Vill he iSsUe<lOril~3sfUJ.ly regiStered bondS ~tltOlJtcoupons,arid, whEmissued,willbe registered regiStered in iri'the thename name of ofCede Cede & &Co;iasBond6~erand Co., as Bondowner and nominee nominee for forTheD~pository The Depository Trust TrUStCompany Company ("DTC), NewYork,.New

("DTC"),Newyork,.New York.

York. .DTCwill DTCwillact 'act as securities depository for assecuritiesdepository forthethe Bonds.

Bonds. Purchases Purchases of ofthe the Bonds BondS will will be bemade inbook-entry form.

madembook-enfry Purchasers fmID,Purchasers will not receive willncit receive certificates certificates representing l'epreSEmtmgtheir their interests mterestsin in the the. Bonds purchased. So Bondspurchised; as long as Cede So long Cede &Co,.isthe

& *CO. is the Bondowner, BondoWner,as as nominee of DTC, references herein to theBondowners or registered owners nominee ofOTe, references herein to the Boridowners or regist'eredo\vners shall mean Cede & CO.j 3s aforesaid, and shall not shall mean Cede & Co., as aforesaid, and shall not mean the-beneficial owners meanthebenefici31 owners of ofthe Bonds: See the Bonds. 'THE BONDS See "THE -Book-EntrybnlySYstem~

BONDS -Book-Entry Only System" herein.herem.

. .

.Principal of andinterest on Principal arid interest the Bonds will be paid by The Bank of New YoikMeUonTruStCompany, of on the, Bonds will be paid by The Bank of New York.Mellon Trust Company, N.A., N:A,NewNew.York,New York,New York, as Trustee. So long as DTC or its nominee, Cede & Co., is the Bondowner, York; as,Trustee, So lang asDTC orits riommee,Cede & Co;, is the BondoWner; such payments wlllbemadedirectlyto's'Qch such payments will be made directlyto'such

~ described will p

Bondowner, Bondowner, as. asmore II\ore fully describedherei. herein. Interest

,Interest onthe Qnthe BondsBonds.will be be payable onfJuly 1,2009, payableon'July 1,2009, and and semiannually thereafter serniannuallythere:after on on January January!1 and and July Julylof 1 of each each year yearto to the the Bondowners Bondowners of record as ofreconl as of ofthe the close close of business on ofbusil1ess on thethe. fifteenth fifteenth dayday of of the the month month such interest payment. date. .......

pr~~ingsuchin~restpaym~nt~a:te, preceding ... . . . . ... .... . . .. . ' ....... .

The Bonds are subject The!Bondsare  !!ubjecttQ to redemption redemptl(mprlor prior to ma~ty as to maturity as more more.fullyfully described described herein.

herein.

The The Bonds shall be special obligations of the Massachusetts Health and Educational Facilities Bonds shall be special obligations of the Massachusetts Health and Educational FacilitiesAuthority Authority (the (the "Authority")

"AuthoritY")

T *payable payable solely solely from from the the Revenues Revenues (as (as hereinafter hereinafter defined) defined) of of the the Authority, Authority, including including payments payments to to The The Bank Bank of 9f New York Mellon New-York Mellon Trust Company, N.A., New, York, New York, as Trustee, for the account of the Authority by the Massachusetts Institute of TrustCompany;NA, New York, New¥ork, as Trustee, for the accOlmt of the Authority by the Massachusetts institUte of Technology (the "Institute") in accordancemwith the provisions of the.Agreement(as Technology (the "Institute") in accordance. with the provisions of the AgreelTlenf(as defined ,herein).* 8U(:hpaymentS purSuant defined herein). Such payments pursuant to to the Agreement are tlleAgreement an~ aageneraI general: obligation obngationof of the Institute. "Reference the Institute; Reference is is made madeto to this {)ffid.al$~tementfoipertinent this Official giatement forpertLnent Security security

  • provisions provisiollS of of the the .Bonds.

Bonds. . .

THE THE BONDS BONDS SHALL SHALL NOT N()T BE BE DEEMED DEEMED.TO TO. CONSTITUTE CONSTITUTE A A DEBT DEBT OR:LIABILITY OR LIABll.ITY OF OF THE COMMONWEALTH THE COMMONWEALTH OF MASSACHUSETI'S ORANYPOLITICALSUBDIVISIONTBEREOF, ORA PLEDGE OF TIm FAITBAND OF MASSACHUSETTS OR ANY POLITICAL SUBDIVISION THEREOF, ORA PLEDGE OF THE FAITH AND CREDIT CREDIT.

OF OF THE:tHE.COMMONWEALTHOFMAS~ACHUSETrS COMMONWEALTH OF MASSACHUSETTS OR OR ANYANYPOLITICAL POLITICAL SUBDIVISIONSUBDIVISION THEREOF, TIlEREOF,BUT BUT SHALL SHALL BE BE PAYABLE SOLELY PAYABLE SOLELY FROM FROM THE THE REVENUES REVENUES PROVIDED PROVIDED UNDER UNDERTHE THE AGREEMENT.

AGREEMENT. NEITHER NEITHER THE TIlE FAITH FAlTHAND AND CREDIT CJffiDIT NOR NOR THE THE TAXING TAXING POWEROF POwER OF THE.COMMONWEALTH THE COMMONwEALTH OR OR ANY ANY POLITICAL SUBDIVISION:THEREOF IS POLITICALSUB])lVISION;THEREOJ~lS PLEDGED PLEDGED TO TO THETHE PAYMENT PAYMENT OF OF THE PRINCIPAL THEPIHNCIP AL OF OF OROR INTEREST INTEREST ON ON THE THE BONDS.

BONDS. THE .ACT DOES NOT, IN TllEACTDOESNOTIN ANYWAYCREATEASO~CALLEDMORALOBLIGATIONOFTHECOMMONWEAI.TH TO PAY'UEBT ANYiWAY.CREATE A SO-CALLED MORAL.OBLIGATION OF THE COMMONWEALTH TO PAY DEBT SERVICE SERVICE IN IN THE EVENT TIm EVE~OFDEFAuLr BY.~INSTITl1TE. ,TImAUTH()RITY DOES NOTHAYETAXING POwEIt, OF DEFAULT BY THE INsTITrT. THE AUTHORITY DOES NOT HAVE TAXING POWER. "

i

$10,000,000

$10,000,000 4.00%

$78,000;00.0 5.00%

$78,000,000

$23,48:5,000 5.00%

$23,485,000

$47,975,000 4~00% Bonds Bonds due 5.0()%Boridsdue due July

Bonds due July 5;00% BondsBonds due July 1, 1, 2016 Juiy 1,2016 July 1, due July 2016 -...... Yield 1, ;2016- - Yield Yield 3.60% CUSIP No. 57586ECG4 3.60%CUSIPNo.

3~60% CUSIP Yield 3.60% CUSIP No.

Yield 5.28% CUSIP No.

2026 --Yield5.28%CUSIP 1,2026 57586ECG4 No; 57586ECH2 57586ECH2 57586ECJ8 No.5'1586ECJ8' 347;975,QOO 5.75% 5.75% Bonds Bonds due due July July 1, I, 2026 - Yield 5.28*%9 2026",...Yield 5.28*% CUSIP No,: 57586ECK5

.CU!;IPNo;57586ECK5

$42,000,000

$42,000,000 5.50%

.$65,000,000 Bonds due-July 5~50,%'BoJidsdue July 1, i~ 2036 2036 -,..,.. Yield Yield 5.70% No.

CUSIP No. 57586ECL3

5. 70%CUSIP 57586ECLs

. $65~OOO,000 6.00% 6.00%. BondsBorids due due July July 1, 1, 2036'-

2036- Yield Yield 5.70*%

5~70*%CUSIPNo; CUSIP No. 57586ECM157586ECM1 I) The Bonds The Bonds are are offered 9ffered when, whe?t, as as and ifissued and received-by an4iJissued received by the 'Underwriters,Subject Underwriters,subject to modification of the offer without notice,. and to the approvaltof their legality and certain other matters by Edwards Angell prior sale, to w prior withdrawal or wyJithdrawal or.

71U?diJU;ation oj tlu3 offer witlwlft notice, and. to the approval oj their legalityarul certain other matters by Edwards AngeU Palmer

?aimer & Dodge LLP, Boston,

&Dod{jeLLP, B,oswn, Massachusetts, Massach~etts, Bond Bond Counsel COU1'1$ei to tl> the the Authority.

Autltority, Certain Certain legal legal matters matters will willbe be passed passed uponupon for Jor thethe Institute Inst~tu~by by its its counsel, counsel, Mintz, Mintz,Lemn,Levin, Cohn,Cohn, Ferris, Ferris; Glovsky GWvsky and Popeo, P.C.;

andPopeo, P.C.; Boston, fioston, Massachusetts.

Massachusetts . .CertainCertain legal legal

... ' . . . .Ksse*uponforthe

' . sectuponJor me Underwritersby their UnderufritersbY their counse*lOrrick ,Hemngton &

counseliornck.HerringtJYn & Sutcliffe LUP, New Sutcli.lteLLP. York New York.

NeWYoric;New York .

t

.His January Janud:ry8; etedth

. ':'pected 8,2009.-

that 2009.. ) ondsin

'. onds in . ' .

definitive form will be available for delivery to DTC dejinitive!iJrm Will be availahleJor delivery'toDTCin New York, New York; on

. .'

in New York, New

.

York, or about on;;;' about CAPITAL Morgan Morgan Stanley Stanley Dated`

Dated: December1 December 10,2008: 0, 2008!

  • Yield to the July*, 2018 optional redemption date.
  • Yield to the July 1,2018 optional redemption date, L

CONTINUING CONTINUING DISCLOSURE DISCLOSURE The Authority has The Authority has determined detem:iined that thatno no linanciai"oroperating financial or operating data data concerning concerning the Authority Authority is IS material m'ateria! to to an evaluation of the offering of the Bonds, or to any an evaluation of the offering of the Bonds or to any&'cisionto purchase, decision to purchase, hold or sell or sell the Bonds and the Bonds'andtheAuthority Authority

.will not provide any such infbrmation. The Institute has unrdertaken all responsibilities for any .continuing win not providejiny such informati()n.. The )Institute has illldertaken aU resporisiljilitics /oranys()ntinui~g disclosure disclosure to to owners:of owners of the Bonds as the Bonds asdescribed described below,below; andarid the Authority shall the AlJthority shall havehave no no liabilblty.tothe liability lothe owners owners of of the Bonds or any other person the Bonds or any otherperson with r(!spest'toSecurities and Exc~angeCommission.Rule 15c2.;12.

with respect 'to0Securities and Exchange CommissionRule 1562-12. . '.

The Institute has Thefustitute has covenanted covenanted for for the the benefit benefit of of holders holders and and beneficial owners of the Bonds to provide beneficialownersoqheBonds p,fovide certain financial information relatingto0 certain financial information relating,to the, Institute the Institut~((thethe "Annual Report") by "AIlriuaI Report") notlater~

by not laterthan 180 days than .180' days afterthe after the end end .

of of each each fiscal'year, fiscal year; commencing cOlllmencirig with with thethe report report for for the the 2009 2009 fiscal fiscal year, and to provide provide notices notices of ofthethe occurrence' occurrence' of of certain certain enumerated enumerated .events,

.events, if'material.

if material. The Annual Report The Anriual Report' and and~henotice~

-the noticesý of of: material events~illbefiled:by" rmlterial events will'be.filed by the Institute or.

the Institute or aa dissemination disserniriation Agent agent with with each.

each. Nationally

~ationally Recognized Recognized MunicipalMunicipal Securities Securities Information lriformation Repository and with the State Repository, if any. These covenants Repository arid with tlJe State Reposit9ry,if any. These covenants have been. made in order to assist have been made in order to assi!;tthe the Underwriters in complying with Securities and ExchringeComrriissi()1l, Rule 15c2~ 12(b)( 5J(the "Rule:'). ..

Underwriters in complying with Securities and. Exchange Commission Rule 15c2-12(b)(5) (the "Rule").

,ali the On the date date of delivery of the o(deliveryof offered Bonds,:the tb.eo(feied Bon~,;the Institute :and the Instiillteand the Trustee Trustee will will enter into the'Continuing enter jnto the' C()ntinuing Disclosure Agreement substantially in the form attached Disclosure Agreement substantially in the, form attached, hereto as AppehdixE hereto as Appendix E -- "FORM "FORM OF OF CONTINUING CONTINlJING DISCLOSURE DISCLOSURE AGREEMENT." AGREEMENT" .. . .. , .

The The Institute Institute hashas never never failed faikd to to comply comply in' in all all material material respects.

respects with with any any previous previous undertakings undertakings with with regard to the Rule to provide annual reports or notices of reg~d to the Ruleto'Pfovide,ann,tlal report's or.noticesofmateTialevcnts,'excep(that'thematerial events, .except that the filin g with.'respect to filiiigwith:respec(to fiscal fiscalyear year 2006 2006 waswasnot not made made in:a ina timely timely manner.

manner. . . . . ". . ...... ' . .

,

COMMONWEALTH COMMQNWEAL TIl NOT NOT LIABLELIABLE ON ON THE BONDS THEsoNi>S' t

"

, TheThe Bonds Bonds shallshall not not bebe deemed deemed to to constitute constitute aa debt d¢bt or.or liability Iiaqility of Comtl1onwealth~r the Commonwealth.

ofJhe or anyany political:

politIcal subdivision thereof,'or a pledge of the faith:and, credit of the:Commonwealth .r any such *political :subdi vision, but be payable solely a.from subdivjsionthcreof,or shall pledge of the faitha.n<i credit of the Commonwealth or any the Revenues derived by the Authority undertheAgrieement. Neither the.faith and such ,politiCal subdivision; but shall Qcpayable,soIeJy from the Revenues derived by the Authority under,theAg~ecment. N.either the.f~ith and credit credit nor nor.thethe taxing taxing power power of the Commonwealth of .the Comm()nv.:ealth or or ofof any any*political political subdivision subdivision thereof'is there.o(is* pledged-to pledged,to the the

.payment of the principal of or interest.-on the Bonds. The Act does payment of the principal of or int~restolltheBon.<is; The Act does not in anywaycreate'h sO:-calledmoral not in any way create'a sb-called noral:

obligation o!Jligation of ofthe.

the.Commonwealth Comrm~mwealth()r,of or-of any'political any' poiltical subdivision subdivision thereof thereofto0pay to :pay debt ~ervice in debt service iii the ~v~.ntofdefault the event of default by the. Institute. The Authority does not by the Institute. The Authority does not havetaxingpower. have 'taxing power. . . ..'

  • I:

i:

Moody's Investors Service, IV[oody'sIrivestors Inc. and Standr ServiCe,lnc.and Standard &oor's; (iDivision Division: of ofthe Mcbraw~HiIj'Comp(lnies, the McGraw-Hill: Companies, Inc.: Inc; have have assigned'ratings assigned:ratingsof"Aaa" of "Aaa" and "AAA" respectively, and'~AAA" respecti..,ely, to th~ Bonds.

to the Bonds. Such Such ratings ratings reflect reflectonly only thethe views views()f of suchsuch organizations"aind organizations and any any desired desired explanation explanation of ofthe the significance significanc'e of ofsuch such ratings should be ratingsshouJd be obtained obtained from from the the rating rating agency furnishing agency furnishIng the same, at thefollowirigaddresses: *Moody's II1v~~tors~eryice; Inc.,) W'orIdTradeCenter; the same, at the following addresses: 'Moody's Investors Service, Inc.,, 7 World Trade Center:,

250 250 Greenwich Greenwich Street,, New York, Street,.New York, New New York York 10007; 10007; and and Standard Standard & & Poor's, Poor's, 55 55 Water Street, New York, WilterStreet,New York, New New York 1004 1. Generally, a- rating agency basds.Its rating on the information York 1004 [Generally, a ratihg agencybases;it~ ratirig on the iriformatioll and matcriaJsfurriishedtoit and materials furnished to it.and and on on investigations, investigations, studies-and studies'lmdassumptions of assumptions of its'own. its own. . ..... .'

.The Th,e above above ratings ratings are, not recommendations are,no,t recol1llllendatlons totobuy; buy; sell sell or

.or own own the theBonds, Bonds; and and.-s'such uch ratings ratings may m~ybe be subject to revision or withdrawal subject to revision or withdrawaLatany at any time timeby by the the rating rating agencies.

agencies ..Any Any downward dO\'.-'TIward revision revisionor orwithdrawal withdrawalofof any.or any orallall ratings ratingsmay mayhavehaveanadverse an' adverseeffect effectonthe market price onthemar~~t priceof ofthe theBonds.

B.onds.

UNDERWRITING:

UNDERWRITiNG

-The, The BondsBonds are are being being purchased purchased for reoffering by forreoffering by Barclays 'Capital -Inc.,

BarclaysCapitaf Inc., as.as representative representative of of the the Underwriters. The Underwriters have agreed to purchase the Bonds at Underwriters. The Underwriters have ab'Teed to purchase the Bonds at an aggregate discount Of SI,218,273. 77an aggregate 'discotunt of S 1,218,273.77 from from the the public public offering offering prices prices oror yields yields setset forth forth on"the on the cover cover pagepage hereof her~()fand and will..be

\Nill ,be reimbursed..for reimbursed for certain' certain .

-I

,/

i 1

Report Report of the Treasurer Treasurer for the year ended --

I Massachusetts irInstitute III OI Massachusetts of Institute of June 30, 2009 2009 1U Technology Technology

Report of the Report of the Treasurer Treasurer for the year ended June 30, 2009 for the year ended June 30, 2009 Massachusetts Institute of Technology Massachusetts Institute of Technology

The Corporation Corporation 2008-2009 2008-2009 as ofJune of June 30, 2009 2009 Chairman: Dana G. Mead*

President:

President: Susan Hockfield*

Executive Executive Vice President and Treasurer:

Treasurer: Theresa Theresa M. Stone*

Vice President for Institute Affairs and Secretary: Kirk D. Kolenbrander*

Life Members Members John S. Reed; Shirley A. Jackson; Raymond S.,

A.Jackson; Stata*; David H. Koch; Patrick].

S.,Stata*; PatrickJ. McGovern; Robert RobertA.A. Muh; Denis A. Bovin*;James Bovin*; James A. Champy*;Judy Champy*; Judy C. Lewent; A. Neil Pappalardo*; Arthur Arthur Gelb; Edie N. Goldenberg; Robert Robert M. Metcalfe; Metcalfe; Kenan Kenan E. Sahin; John K. K. Castle; Susan E. Whitehead; Whitehead; Charles M. Vest; Brian G. R. Hughes; Norman Robert Johnson; Arthur Norman E. Gaut; L. RobertJohnson; J. Samberg*.

Arthur]. Samberg*.

Members Members Barrie Barrie R. Zesiger*; Gordon Binder; Gururaj Deshpande; Linda C. Sharpe; John A. Thain; Thomas P.

Gordon M. Binder; P. Gerrity; Mark P.P. Gorenberg; Gorenberg; Scott P. P. Marks, Jr.; Marjorie M.T M.T. Yang; James H. Simons; Alan G. Spoon; Lawrence K. Fish; Spoon; Lawrence David D. Ho; Abigail P. P.Johnson; Johnson; Robert Robert B. Millard*;

Millard*; Carly S.S. Fiorina; Fiorina; Anita K. Jones*;

Jones*; Paula J. Olsiewski; Paula]. Olsiewski; Sanjay K. Rao; Milton H. Roye, Jr.; Martin Y. Y. Tang; Robert L. Blumberg; R. Erich Caulfield; Raymond C. Kurzweil; Kurzweil; Kenneth Kenneth Wang; David A. Berry; James A. Lash; Paul F. E Levy; Megan].

Megan J. Smith; Henri A. Termeer; Chiquita V. V White*; 0.

O. Reid Ashe, Jr.;

Jr.;

John W Jarve; Jarve; Frederick A. Middleton, Jr.; Barun Singh; Diana C. Walsh; Ursula M. Burns; Burns; Diane B. Greene; Helen Greiner; Harbo P. P. Jensen; Marta Marta M. Luczynska; Luczynska; Victor J. Menezes; Victor]. Menezes; Peter Peter L. Slavin; Laura D. Tyson; Tony Keng Yam Tan.

President of the Association Association of Alumni and and Alumnae Alumnae Antonia D. Schuman Schuman Representatives Representatives of the Commonwealth Commonwealth Governor:

Governor: Deval L. Patrick Patrick Chief Justice of the Supreme Supreme Judicial Court: Margaret Margaret H. Marshall Secretary of Education: S. Paul Reville Secretary Life Members Members Emeriti Ir6n6e duPont, Jr.; John C. Haas; Norman B.

Irenee B. Leventhal; Leventhal; George George P.P. Gardner; Mitchell W.W Spellman; Spellman; D. Reid Reid Weedon, Jr.;

Weedon, Jr.;

Chandler; Carl M. Mueller; Joseph Colby H. Chandler; Joseph G. Gavin,Jr.;

Gavin, Jr.; Louis WW Cabot; ChristianJ.

Christian J. Matthew; Howard WJohnson; W.Johnson; Paul M. Cook; William S. S. Edgerly; Edgerly; Frank Press; Edward E. David, Jr.; Emily V V. Wade; Angus N. N. MacDonald; MacDonald; Kenneth H. Olsen; George N. N. Hatsopoulos; Hatsopoulos; Charles H. Spaulding; Spaulding; Mary Frances Frances Wagley; Michael M. Koerner; Morris Tanenbaum; Morris Tanenbaum; Breene M. Kerr; W Gerald Kerr; W Gerald Austen; Richard P Simmons; Morris Chang; Paul E. Gray; P.

Alexander W W Dreyfoos, Jr.; Ronald A. Kurtz; Du DuWayne Wayne]. J. Peterson, Jr.

Jr.

Members' Members' names names are listed in chronological order order of election election to each category.

  • member of the Executive Committee

Table of Contents Contents

"* Report of theTreasurer the Treasurer ...............................................

.............................................5-8 5-8

"* Financial Statements Statements The financial statements summarize financial statements summarize the finances finances ofMIT for the fiscal fiscal years 2008 and and 2009 Statem ents of Financial Statements Financial Position ..............................................

.............................................. 9 Statem ents of Activities .................................................

Statements ................................................. 10-11 Statem ents of Cash Statements C ash Flows ...................................................

................................................... 12 12 N otes to Financial Statements Notes Statem ents ............................................

............................................ 13-32 Report ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3333 Report of Independent Auditors .............................................

    • Additional Information Additional Information Five-Year Five-Year Trend Analysis ................................................

................................................ 34-36 34-36

Report of the Treasurer Treasurer To Members Corporation Members of the Corporation General General investment performance across all invested assets including investment performance including Fiscal 2009 was a notable year for MIT from a financial endowment, working working capital, and retirement assets.

perspective.

perspective. Guided by the comprehensive comprehensive financial We are appreciative appreciative of the MIT community community - our alumni, alumni, planning planning work conducted in 2008, we entered 2009 donors, board members, members, research partners, faculty and staff, with a balanced budget for the first time in many years. colleagues, and students students - for their financial support, advice, As the worldwide economic crisis unfolded in the fall, worldwide economic and collaboration collaboration that were most generously generously offered as we we recognized likely effects on our future support from navigated navigated this challenging challenging year for MIT.MIT. We are optimistic:

optimistic endowment, as well as possible pressures on gifts and grants that, with their continued involvement, MIT will emerge MIT, net tuition (after needed financial aid), and research to MIT, research contraction stronger, more from this global economic contraction funding. By carefully carefully managing liquidity liquidity and expenses, flexible, and better equipped to fulfill the Institute's mission mission MIT concluded concluded 2009 with the general Institute Institute budget budget for the nation and the world.

and consolidated operating results in line with our plan.

consolidated operating MIT was also able to secure Following are additional additional details on MIT's financial secure $610.0

$610.0 million of tax-exempt tax-exempt position, operating activities, gifts and pledges, pledges, investments, financing despite market market turbulence turbulence and, as a result, will endowments, fixed assets, and borrowings.

endowments, complete construction complete construction of three major new buildings, the Koch Institute for Integrative Integrative Cancer Cancer Research, the Sloan Sloan Financial Position Financial Position School of Management, and the Media Lab and School of of Architecture Architecture and Planning, over the next eighteen months. presented in three categories Net assets are presented categories to recognize the significant ways in which universities are different from Starting in the fall and through early spring, administrative administrative profit-making organizations. These categories profit-making categories reflect the academic departments, labs, and centers units and academic centers focused nature of the restrictions restrictions placed on gifts by donors.

on strategies strategies to operate operate with reduced reduced budgets. Projections were developed that indicated indicated a potential potential need to reduce Permanently restricted net assets represent Permanently represent those gifts expenditures by ten to fifteen percent within two to expenditures for which the original principal principal is to be preserved. This three years. Initial savings savings have been achieved in 2009.

been achieved category category includes includes gifts and pledges pledges to true endowment endowment With With additional 2010 budgetedbudgeted savings of at least five together with assets held in trust, such as life income funds, percent, about half of the needed reductions will have which, when received received or matured, will be added to the been achieved. The majority majority of units are planning to reach reach endowment. The increase in permanently permanently restricted restricted net net ultimate required required reductions in the 2011 budget cycle. cycle. assets of$67.0 of $67.0 million, or 3.5 percent, to a total of $1,985.4 of$1,985.4 In addition to these unit-based unit-based efforts, the Institute-wide Institute-wide million, primarily primarily reflects new gifts and pledges made to Planning Task Force, through nine separate separate working working restricted restricted endowment endowment funds.

groups, developed recommendations recommendations for improvements Temporarily restricted Temporarily restricted net assets represent represent those gifts to MIT's academic, research, administrative activities research, and administrative activities that ultimately can be used to fund operating or capital aimed at strengthening strengthening our ability to fulfill MIT's mission mission expenditures.

expenditures. They require require an event or lapse of time to while reducing required funding. The work of this task occur before they are available available for spending. Over 90 force, which included included close to 200 faculty, staff, and percent percent of the assets in this category are accumulated accumulated students working in cross-organizational cross-organizational groups, has been been market market gains on permanently restricted endowment endowment funds.

an impressive impressive demonstration demonstration of MIT's culture of tackling problems problems and of our community's community's commitment commitment to the This category also includes includes pledges pledges not permanently permanently Institute's mission. restricted, gifts for construction construction projects that have not been been completed completed and put into use, and life income funds, which, As we plan for future years, the level of endowment support

.As support upon maturity, will be available for spending. The decrease is an important factor. Our endowment endowment investment returns in temporarily temporarily restricted net assets of $1 $1,364.3

,364.3 million, for 2009 were down 17.1 percent. When adjusted for for or 23.7 percent, to a total of $4,401.0

$4,401.0 million, primarily planned planned support to MIT during 2009, endowment funds results results from the decrease decrease in the market value of assets held before before pledges atJune at June 30, 2009 were $7,982.0 million, million, in permanently permanently restricted restricted funds. The Commonwealth Commonwealth of of down down 20.7 percent percent from June 30, of $10,068.8 30, 2008 levels of$10,068.8 Massachusetts requires Massachusetts requires that all universities universities located within million. Consolidated Consolidated net assets at year end were $9,946.4 $9,946.4 Commonwealth report accumulated the Commonwealth accumulated market market gains on on million million as of June 30, 2009, down $2,823.6 million from both permanently and temporarily restricted restricted net assets as net assets of$12,nO.0 of $12,770.0 million in 2008.2008. The decrease in temporarily restricted net assets until appropriated appropriated for use.

net assets reflects the effect of the economy's economy's impact impact on on

SUMMARY

SUMMARY

5

Unrestricted Unrestricted net assets comprise all the remaining remaining economic over 2008. Included Included in the campus figure are Broad Broad resources available to MIT resources available MIT. This category includes MIT's Institute research revenues of $166.3 $166.3 million, which grew working capital and those assets designated by MIT as 17.0 percent over 2008. At Lincoln Lincoln Laboratory, research "funds "funds functioning as endowment,"

endowment," to be invested over the $669.8 million in 2009, an increase revenue totaled $669.8 increase of 8.1 8.1 long term to generate generate support for MIT's MIT's operations and percent. Research at the Lincoln Laboratory is funded capital projects. Also included in this category category are current current primarily under a contract with the Department of Defense funds received received from donors for restricted restricted purposes purposes that, (Air Force). At the Singapore-MIT Singapore-MIT Alliance for Research and under the accounting accounting rules, are categorized categorized as unrestricted unrestricted Technology (SMART), $14.5 Technology $14.5 million of research research revenue if MIT spends an equivalent equivalent amount of unrestricted unrestricted funds was generated generated during 2009, its second year of operation, for for the same purpose. Unrestricted Unrestricted net assets decreased decreased research activities taking place in Singapore.

$1,526.3 million, or 30.0 percent, to a total of

$1,526.3 $3,559.9 of$3,559.9 On MIT's campus, the Department Department of Health and Human Human million. The decrease in unrestricted unrestricted net assets is due to Services (primarily Services (primarily through the National Institutes of of two major factors: first, the decrease in endowment value Health) was the largest research research sponsor, growing $29.6 $29.6 and second, the net decrease decrease in the overfunded overfunded status of of million, or 13.1 percent percent over 2008,2008, and providing 37.0 37.0 retirement plan assets resulting decreased fair value resulting from decreased value of of percent of MIT's campus researchresearch revenue in 2009. Overall, plan assets and increased benefit obligations.

obligations. During 2009 federal sponsorship of campus campus research research grew 8.0 percent.

and 2008, unrestricted unrestricted net assets were reduced reduced by $24.0

$24.0 Federal sponsorship from the Department Department of Defense Defense grew million and $0.3

$0.3 million respectively, to offset investment investment

$10.2 million, or 11.6 percent. National Aeronautics by $10.2 losses on permanently permanently restricted net assets where market where market Administration revenue increased and Space Administration increased $1.9

$1.9 million, value value dropped below book value. This amount will be or 7.4 percent, while revenue revenue from the National Science Science unrestricted net assets in-line restored to unrestricted subsequent in-line with subsequent Foundation decreased $3.6 decreased $3.6 million, or 5.5 percent, over over market value increases.

last year. Revenue from Department Department of Energy and otller other federal agencies remained remained close to 2008 levels. Nonfederal Operations Operations funding for campus research increased by $38.5 research increased $38.5 million, or or MIT's operations operations include tuition, research research revenues, 25.9 percent, in 2009 with the greatest increases coming coming unrestricted gifts and bequests for current current use, fees and from nonprofit foundations and foreign governments.

services, other programs, investment income, income, the portion portion of net investment investment gains distributed distributed to funds under MIT's Research revenues include reimbursement reimbursement from sponsors spending policy, auxiliary revenues',

revenues, payments payments on pledges for both direct and indirect (facilities and administration) for unrestricted unrestricted gifts, and operating operating expenditures.

expenditures. The costs. MIT's modified total direct research expenditures expenditures Statements of Activities, on pages 10 and 11, 11, show that (MTDC or "base"),

"base"), that form the basis for recovery recovery of of operating operating revenues revenues exceeded operating expenses by $182.7 $182.7 indirect increased by $57.8 indirect costs, increased $57.8 million, or 8.6 percent.

million in 2009, due primarily to unspent distributions primarily to Of this increase, increase, $24.5

$24.5 million is campus campus research; $33.3$33.3 from the endowment. In 2008, operating operating revenues exceeded million is Lincoln Laboratory Laboratory and SMART SMART research.

research.

operating operating expenses expenses by $114.2

$114.2 million. Revenue from fees and services decreaseddecreased $5.9

$5.9 million, or or Operating Operating revenues increased $235.5 million, or 9.8 increased $235.5 9.8 $157.1 million. This was due primarily to 3.6 percent, to $157.1 percent, to $2,644.0

$2,644.0 million due primarily primarily to increases in in decreased revenues from technology technology licensing, for which distributed distributed net gains on investments and research revenues 2008 revenue revenue included amounts related to a non-recurring non-recurring and offset by a decrease in investment investment income. Operating legal legal settlement. Investment Investment income, defined as dividends, expenses increased expenses increased $167.0 million, or 7.3 percent, to a total

$167.0 interest, and rents, decreased decreased $83.5$83.5 million, or 45.3 percent, of $2,461.3

$2,461.3 million driven primarily by increases increases in salaries salaries to $100.6

$100.6 million, due primarily primarily to declining interest rates and wages and supplies and services. and economic economic conditions. Net asset reclassifications reclassifications to operations $57.8 million primarily operations of $57.8 primarily reflect payments payments on on Net tuition revenue decreased decreased $11.7

$11.7 million, or 5.15.1 unrestricted unrestricted pledges pledges received received and released to operations in percent, to $217.4 million. Reflecting Reflecting MIT's commitment commitment 2009.

2009.

to increasing increasing the affordability affordability of undergraduate undergraduate education, financial support for undergraduate undergraduate students students from MIT MIT Operating expenses increased $167.0 Operating expenses $167.0 million, or 7.3 7.3 sources grew 12.5 percent. percent, to a total of $2,461.3 million in 2009. The largest largest component component of the increase increase was sponsored research expense, In 2009, MIT experienced experienced a 10.4 10.4 percent percent increase in in $112.6 million, or 10.7 percent. A significant which grew $112.6 significant research revenues, research revenues, from $1,245.2 $1,375.1

$1,245.2 million to $1,375.1 contributor contributor to this expense growth growth was The Broad million. On-campus On-campus research programs programs are carried carried out Institute, where direct spending spending for sponsored research at departments, departments, labs, and centers where research research revenue grew $23.0

$23.0 million to a total of $121.3 million. Instruction of$121.3 Instruction totaled $690.8 million in 2009, an 11.1 percent increase and unsponsored research increased increased $39.6

$39.6 million, or 6.2 6.2 6 MIT REPORT OF THE TREASURER TREASURER 2009 2009

percent. General and administrative administrative expenses expenses increased The Board Board of Directors Directors of the MIT Investment Investment

$10.6

$10.6 million, or 2.2 percent. Employee benefits expenses Management Company (MITIMCo) held four regularly Management regularly increased $3.4 increased $3.4 million, or 2.0 percent, due primarilyprimarily to an scheduled meetings during the fiscal year. During During increase in costs for employee employee and retiree retiree medical medical benefits, benefits, 2009, MITIMCo, MITIMCo, in conjunction with MIT's senior senior employment tax, and disability employment disability benefits, offset pension offset by pension administration, administration, acted defensively defensively to manage liquidity in credits resulting from the overfunded overfunded status of MIT's the turbulent markets while still capturing investment capturing investment defined benefit plan in prior years. opportunities opportunities in the equity and marketable alternative arenas consistent consistent with investment policies and asset with its investment Gifts and Pledges Pledges allocation allocation targets. Equities include investments in venture With the successful public launch of the Campaign Campaign for capital and private equity. Marketable Marketable alternatives alternatives include Students Students on October 3,2008,3, 2008, the Campaign Campaign now stands investments in event arbitrage, investments arbitrage, distressed debt and hedge at a total of $351.3

$351.3 million, with 70.3 percent of the $500 $500 funds. The alternative investments investments are managed by more million goal raised. Gifts support support scholarships, fellowships, than one hundred hundred independent independent organizations organizations primarily educational educational programming, and student life activities. The through pooled investment partnerships.

partnerships.

MIT Energy Initiative (MITEI) now has 1,154 donors, and has raised $54.1

$54.1 million as of June 2009. Endowment and Similar Funds Funds The market value of investments in the endowment and Gifts and pledges for 2009 totaled $303.9 $303.9 million, a similar funds totaled $7,982.0

$7,982.0 million as ofJune of June 30, 2009.

decrease decrease of 21.3 percent from the 2008 total of $3 $386.0 86.0 The endowment assets are managed to maximize maximize total million. Gifts from individuals represented represented 35.6 percent percent investment investment return relative to appropriate appropriate risk. Investment Investment of new gifts and pledges, down from 50.9 percent in the income and a portion of gains are distributed for spending income previous previous year. Gifts from foundations foundations represented represented 40.9 in a manner that, over the long term, retainsretains for reinvest-reinvest-percent percent of new gifts and pledges pledges in 2009, up from 35.2 35.2 ment an amount at least equalequal to the anticipated anticipated rate ofof percent percent in the previous previous year. Gifts from corporations corporations and inflation. Endowment funds invested in Pool A, MIT's other sources sources represented 23.5 percent, up from 13.9 13.9 primary investment pool, receive primary investment receive distributions distributions based on the percent percent in 2008. New gifts and paymentspayments on pledges number of units held. Units are valued monthly and new for unrestricted unrestricted purposes were 7.7 percent of the total, gifts or other funds transferred transferred to Pool A are credited with compared compared with 3.9 percent in 2008. The largest category category Pool A units based on the previous previous month's market value of of of gifts for 2009 was Research and Education, which the units in Pool A.

accounted accounted for 62.0 percent of the total.

Land, Buildings, and Equipment Equipment Investments Investments Fixed Fixed assets had a net book value of $2,120.6

$2, 120.6 million as of of Investments Investments at fair value value were $9,519.4

$9,519.4 million, a decrease decrease June 30, 2009, an increase of 9.4 percent $1,938.9 percent from $1,938.9 of $1,789.0 of$I,789.0 million, or 15.8 percent, from the $11,308.4

$11,308.4 million as of June 30, 2008. The most significant significant area of of million of the previous year. Over previous year. Over the past five years, total increase increase this past fiscal year was in the area of educational invested invested assets have increased from $7,250.5 million to buildings.

$9,519.4

$9,519.4 million while distributions for for expenditures expenditures have totaled $2,063.4 million. More specific specific Major Major ongoing construction construction projects projects include a new information information is included in Note B B to the Financial 163,000-square-foot building for the Media Lab and 163,000-square-foot Statements. School of Architecture and Planning to be completed in in October 2009, 2009, a new 217,000-square-foot 217,000-square-foot building building for the The financial statements statements include both realizedrealized and Management with a three-level, 430-Sloan School of Management unrealized unrealized gains and losses on investments. Realized Realized and car garage located directly under the new buildingbuilding and unrealized unrealized gains and losses, including including those related to the scheduled for occupancy in 2010, a new 3367,000-square-67,000-square-disposition of fixed assets, decreased decreased from a gain of $154.8 $154.8 foot laboratory research building laboratory research building for the Koch Institute million in 2008 to a loss of $1,854.4 million in 2009.

of$I,854.4 for Integrative Cancer Research Integrative Research to be completed by by The asset allocation allocation among fixed income, equity, marketablemarketable December 2010, significant improvements improvements to Vassar Vassar alternatives, and real estate investments remained remained similiar similiar Street west of Massachusetts Massachusetts Avenue, various utility and and to 2008 during 2009. Equity, marketable alternatives, and infrastructure improvements, infrastructure rehabilitation improvements, and exterior rehabilitation real estate investments investments at market value value were 84.5 percent percent of the undergraduate dormitory dormitory at 305 Memorial Memorial Drive.

of the investments as ofJune 30, 2009, as compared compared to 88.588.5 More renovations related to 305 Memorial More extensive renovations at June 30, 2008.

percent atJune Drive have been deferred as part of a portfolio portfolio of measures

SUMMARY

SUMMARY

7

designed to preserve financial flexibility. These These projects Summary are part of a new construction initiative that adds state-of- MIT's full financial statements statements and footnotes follow, follow, the-art facilities for emerging emerging areas of research, increases describing our financial position and activities more fully describing educational infrastructure that supports residential and educational infrastructure through June 30, 2009. In closing, .we we again thank the community community life, and revitalizes the physical campus. The community for its generous financial support, advice, MIT community major project completed completed during 2009 was the new 540-bed 540-bed and collaboration collaboration throughout the year and reaffirm our our graduate graduate residence residence at 235 23 5 Albany Street. optimism optimism for the future.

Borrowings Borrowings Respectfully Respectfully submitted, Total borrowings borrowings outstanding increased from $1,335.4

$1,335.4 million as of June 30, 2008, ofJune 2008, to $1,735.8

$1,735.8 million as ofJune of June 30, 2009, primarily due to the issuance 30,2009, issuance of $610.0 million in of$610.0 new, tax-exempt tax-exempt debt to finance major construction construction projects currently underway and to replace $203.0 million in line of currently of Theresa M. Stone credit financing. MIT's publicly publicly held debt continues continues to be Executive Vice President Executive Treasurer President and Treasurer rated AAA by both Moody's Moody's and Standard Standard &

& Poor's. More specific information information is included in Note G G to the Financial September September 16, 2009 Statements.

8 MIT REPORT OF MIT REPORT OF THE THE TREASURER TREASURER 2009 2009

Massachusetts Massachusetts Institute of Technology Technology Statements of Financial Position Statements at June 30, 2009 and 2008 (in thousandsof dollars)

(in thousands dollars) 2009 2008 Assets Assets C ash ......................................................................

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 77,387 77,387 $ 81,106 81,106 A ccounts receivable, Accounts receivable, net .....................................................

...................................................... . 241,024 241,024 223,790 Pledges Pledges receivable, receivable, net, at fair value ............................................

............................................. . 464,736 464,736 443,303 Contracts in progress, principally U.S. Government .............................. ............................... . 85,821 85,821 67,938 67,938 Deferred charges, inventories inventories and other assets ...................................

.................................... . 57,457 57,457 62,316 62,316 Student notes receivable, net .................................................

.................................................. . 48,953 47,327 47,327 Investm ents, at fair value .....................................................

Investments, ...................................................... . 9,519,413 9,519,413 11,308,429 11,308,429 Collateral for securities lending and minority interest ............................. .............................. . 168,306 168,306 363,516 363,516 asset-overfunded status ........................................

Retirement plan asset-overfunded ......................................... . 165,842 922,338 922,338 Land, buildings & equipment, (at cost $2,994,190 $2,994,190 forJune for June 2009; $2,728,805 forJune for June 2008),

net of accumulated depreciation ................................................

accumulated depreciation ............................................... . 2,120,613 2,120,613 1,938,919 1,938,919 Total assets .............................................................

Total .............................................................. . $ 12,949,552

$12,949,552 $$15,458,982 15,458,982 Liabilities and Net Assets Liabilities Liabilities:

Accounts Accounts payable, accruals accruals and other liabilities ....................................

liabilities ................................... . $ 299,565 $ 267,837 267,837 Liabilities due under life income fund agreements .................................

agreements ................................ . 72,606 78,372 Collateral for securities Collateral securities lending and minority interest .............................

.............................. . 168,306 168,306 363,516 363,516 D eferred revenue Deferred revenue and other credits .............................................

credits ............................................ . 175,070 175,070 164,470 164,470 A dvance paym Advance payments ents ..........................................................

........................................................... . 343,296 315,202 B orrow in gs ................................................................

Borrowings ................................................................. . 1,735,843 1,335,393 Government Government advancesadvances for student loans ..........................................

......................................... . 33,341 33,057 Accrued .....................................................

Accrued benefit liabilities .................................................... . 175,137 175,137 131,161 Total liabilities ..........................................................

Total ........................................................... . 3,003,164 3,003,164 2,689,008 2,689,008 Net Assets:

Un restricted ...............................................................

Unrestricted ................................................................ . 3,559,925 3,559,925 5,086,270 5,086,270 Tem porarily restricted .........................................................

Temporarily restricted ....................... '.' .............................. . 4,401,015 4,401,015 5,765,302 Perm anently restricted Permanently restricted .......................................................

...................................................... . 1,985,448 1,985,448 1,918,402 1,918,402 Total net assets .........................................................

Total .......................................................... . 9,946,388 9,946,388 12,769,974 12,769,974 Total liabilities and net assets ..............................................

............................................... . $ 12,949,552

$12,949,552 $15,458,982

$15,458,982 The accompanying accompanying notes are are an integral integralpartpart of the financial statements.

financial statements.

FINANCIAL STATEMENTS FINANCIAL STATEMENTS 9

Massachusetts Massachusetts Institute of Technology Technology Statements Statements of Activities Activities for the years ended June 30, 2009 and 2008 (in thousandsof dollars)

(in thousands dollars)

-- Unrestricted Unrestricted ~

-- I r---- Temporarily Restricted ~

r-2009 2008 2009 2008 Operating Operating ActivitiesActivities Operating Operating Revenues:

Tuition and similar revenues, net of discount of of

$214,383 in 2009 and $192,131 $192,131 in 2008 ............

2008 ............ $ 217,389 217,389 $ 229,099 229,099 $ - $$

Research Research revenues:

D irect ........................................

Direct ........................................ 1,153,620 1,153,620 1,038,998 1,038,998 In direct ......................................

Indirect ...................................... 221,452 206,172 Total research research revenues ..........................

revenues .......................... 1,375,072 1,375,072 1,245,170 1,245,170 Gifts and bequests for current ....................

current use .................... 100,072 122,091 Fees Fees and services ..................................

.................................. 157,110 157,110 162,994 162,994 O ther program Other programss ...................................

................................... 86,133 86,133 93,268 Investm Investment ent income income ................................

................................ 100,624 100,624 184,119 184,119 Net gains on investments, investments, distributed ................. ................. 455,680 228,403 Auxiliary Auxiliary enterprises enterprises ...............................

............................... 94,041 91,190 Net asset reclassification reclassification and transfers ................. ................. 57,837 57,837 52,094 52,094 Total operating ............................

operating revenue ............................ 2,643,958 2,643,958 2,408,428 2,408,428 Operating Operating Expenses:

Salaries and wages. wages .................................

............................... 967,383 896,145 Em ployee benefits .................................

Employee ................................. 173,616 173,616 170,266 Supplies and servicesservices ...............................

............................... 872,725 872,725 822,953 Subrecipient agreem Subrecipient agreements ents ............................

............................ 85,550 85,550 68,944 68,944 U tilities, rent, and repairs ...........................

Utilities, ........................... 181,264 181,264 177,308 D epreciation .....................................

Depreciation ..................................... 125,018 125,018 111,611 Interest Interest expense ...................................

expense ................................... 55,730 55,730 47,020 47,020 Total operating operating expenses ............................

............................ 2,461,286 2,461,286 2,294,247 Results Results of operations operations ...............................

............................... 182,672 114,181 Non-Operating Non-Operating Revenues, Revenues, Gains and Losses Losses P ledges ..........................................

Pledges .......................................... 92,836 92,836 146,116 146,116 G ifts and bequests .................................

Gifts ................................. 2,730 2,730 9,967 Investm Investment ent Incom Incomee ................................

................................ 5,084 5,084 6,384 6,384 Net (loss) gain on investmentsinvestments and other other assets ..........

.......... (686,881)

(686,881) 65,515 (1,143,063)

(1,143,063) 81,041 Distribution Distribution of accumulated accumulated investment gains ........... ........... (151,590)

(151,590) (78,579) (304,090) (151,306)

Net change in life income funds ............................................ 1,775 1,775 (1,053)

(1,053) (4,669) 396 Pension-related Pension-related charges charges other than net periodic periodic pension (cost) ..........................

.......................... (825,440) (188,325)

(188,325)

Net asset reclassifications reclassifications and transfers ................ ................ (46,881) (42,313) (13,115)

(13,115) (11,302)

(11,302) non-operating activities ........................

Total non-operating ........................ (1,709,017)

(1,709,017) (244,755) (1,364,287)

(1,364,287) 81,296 (Decrease) Increase in net assets ......................

(Decrease) Increase ...................... (1,526,345)

(1,526,345) (130,574) (1,364,287)

(1,364,287) 81,296 Net assets at the beginningbeginning of the year ................

................ 5,086,270 5,086,270 5,216,844 5,216,844 5,765,302 5,684,006 5,684,006 Net assets at the end of the year year.......................

..................... $ 3,559,925 3,559,925 $ 5,086,270 5,086,276 $ 4,401,015 4,401,015 $ 5,765,302 The accompanying accompanying notes an are anan integral integralpartpal?: of the financial statements.

financial statements.

10 MIT REPORT OF MIT REPORT OF THE THE TREASURER TREASURER 2009 2009

Massachusetts Massachusetts Institute of Technology Technology Statements of ActivitiesActivities for the years ended June 30, 2009 and 2008 2008 (in thousands (in thousands ofdollars) dollars) r--- Permanently r- ~

Restricted--

Permanently Restricted r- Total 2009 2008 2009 2008 Operating Activities Operating Activities Operating Revenues:

Operating Tuition and similar revenues, net of discount of discount of

$

$ $ - $ 217,389 217,389 $ 229,099 229,099 $214,383

$214,383 in 2009 and $192,131

$192,131 in 2008 Research Research revenues:

- 1,153,620 1,153,620 1,038,998 Direct Direct

- 221,452 206,172 206,172 Indirect Indirect

- 1,375,072 1,245,170 1,245,170 Total research revenues

- 100,072 100,072 122,091 Gifts and bequests for current use

- 157,110 157,110 162,994 162,994 Fees and services services

- 86,133 86,133 93,268 Other Other programs

- 100,624 100,624 184,119 184,119 Investment Investment income income

- 455,680 455,680 228,403 Net gains on investments, distributed

- 94,041 91,190 Auxiliary Auxiliary enterprises enterprises

- 57,837 57,837 52,094 52,094 Net asset reclassifications reclassifications and transfers

- 2,643,958 2,643,958 2,408,428 2,408,428 operating revenues Total operating Operating Expenses:

- 967,383 896,145 Salaries and wages

- 173,616 173,616 170,266 Employee Employee benefits

- 872,725 872,725 822,953 822,953 Supplies and services

- 85,550 85,550 68,944 Subrecipient agreements

- 181,264 181,264 177,308 Utilities, rent, and repairs

- 125,018 12\018 111,611 111,611 Depreciation Depreciation

- 55,730 55,730 47,020 47,020 Interest Interest expense expense

- 2,461,286 2,461,286 2,294,247 Total operating operating expenses

- 182,672 114,181 Results of operations operations Non-Operating Revenues, Non-Operating Revenues, Gains and Losses Losses 35,028 35,028 59,856 59,856 127,864 127,864 205,972 Pledges 73,224 73,224 47,922 47,922 75,954 75,954 57,889 Gifts and bequests 4,046 3,551 9,130 9,130 9,935 Investment income (24,436) 8,209 (1,854,380)

(1,854,380) 154,765 154,765 Net (loss) gain on investments investments and other assets 1,482 1,482 (455,680) (228,403)

(228,403) Distribution of accumulated investment investment gains (22,975) 1,407 1,407 (25,869) 750 750 Net change change in life income income funds Pension-related charges Pension-related charges other than net periodic (825,440) (188,325)

(188,325) pension income (cost) 2,159 2,159 1,521 1,521 (57,837)

(57,837) (52,094) Net asset reclassifications reclassifications and transfers 67,046 67,046 123,948 (3,006,258) (39,511)

(39,511) Total non-operating activities activities 67,046 123,948 (2,823,586) 74,670 74,670 (Decrease) Increase in net assets 1,918,402 1,918,402 1,794,454 1,794,454 12,769,974 12,769,974 12,695,304 12,695,304 Net assets at the beginning of the yearyear

$$ 1,985,448 1,985,448 $ 1,918,402 1,918,402 $ 9,946,388 $ 12,769,974

$12,769,974 Net assets at the end of the year The Tbe accompanying accompanying notes are m*e an integral integralpart pm-r of of the financialstatements.

tbe financial statemellts.

FINANCIAL STATEMENTS FINANCIAL STATEMENTS it 11

Massachusetts Institute of Technology Massachusetts Technology Statements of Cash Flows Flows for the years ended ended June 30, 2009 and 2008 (in thousands of dollars)

(in thousands dollars) 2009 2008 Cash Flow from Operating Operating Activities:

(D ecrease) increase (Decrease) increase in net assets ...............................................

................................................ . $$ (2,823,586) 74,670

$ 74,670 Adjustments to reconcile reconcile change in net assets to net cash provided provided by operatingoperating activities:

N et loss (gain) on investm Net investments ents ..............................................

............................................. . 1,854,380 (154,765)

(154;765)

Change in retirement retirement plan asset, net of change in accrued benefit liability.. liability .......... . 800,472 179,589 179,589 D epreciation ...........................................................

Depreciation ................................................... . 125,018 125,018 111,611 111,611 G ifts of securities .......................................................

Gifts ............................................... . (1,894) (5,554)

N et loss on life incom Net incomee funds ..............................................

...................................... . 38,230 38,230 12,174 12,174 Amortization of bond premiums Amortization premiums and discounts and other adjustments .......... ..... , .. . (2,838)

(2,838) (2,039)

Change Change in operating operating assets and liabilities:liabilities: ...............................

....................................... .

Pledges receivable .........................................

receivable ......................................... .....

............. . (21,433)

(21,433) (111,860)

(111,860)

A ccounts receivable Accounts receivable ......................................................

.............................................. . (17,234)

(17,234) (16,455)

(16,455)

C ontracts in progress ....................................................

Contracts ............................................ . (17,883)

(17,883) (14,793)

(14,793)

Deferred Deferred charges, inventories and other assets ................................

........................ . 4,859 (1,536)

(1,536)

Accounts payable, accruals accruals and other liabilities, excluding building building and equipm equipment ent accruals ...................................................

........................................... . 22,928 22,928 (830)

Liabilities due under life income .....................

income fund agreements ............................. . (5,766)

(5,766) 3,711 Deferred Deferred revenue .................................

revenue and other credits ......................................... . 10,600 10,600 2,050 2,050 Advance payments Advance paym ents .......................................................

........................................................ . 28,094 28,094 36,452 Reclassify Reclassify investm investmentent income incom e .................................................

.................................................. . (9,130) (9,935)

(9,935)

Reclassify Reclassify contributed contributed securities received as payment on pledges ....................  ; .................. . (22,479) (34,535)

(34,535)

Reclassify Reclassify contributions restricted for long-term contributions restricted .........................

long-term investment ........................ . (75,954) (57,889)

Net cash (used in) providedprovided by operating ...........................

operating activities .......................... . (113,616)

(113,616) 10,066 10,066 Cash Flow from Investing Investing Activities:

Purchase of land, buildings and equipment .......................................

equipment ...................................... . (299,049) (285,877) investm ents ....................................................

Purchases of investments ..................................................... . (21,221,423)

(21,221,423) (65,738,595)

(65,738,595)

Proceeds from sale of investments, investments, including contributed securities .................. ................... . 21,105,189 21,105,189 65,687,444 65,687,444 Student Student notes issued ..................................................

.................................................. ...... .

..... (16,016)

(16,016) (15,673)

(15,673)

Collections from student notes ................................................

................................................. . 14,019 14,019 17,599 17,599 N et cash used in investing Net .......................................

investing activities ...................................... . (417,280) (335,102)

Cash Flow from Financing Financing Activities:

Proceeds from contributions contributions restricted restricted for:

Investm ent in endowm Investment endowment ent ................................................

................................................. . 73,224 73,224 47,922 Investm ent in plant and other .............................................

Investment .............................................. . 2,730 2,730 9,967 Less: contributed contributed securities, securities, gifts for endowment, plant and other ................ ................. . (2,145) (13,457)

(13,457)

Total Total proceeds from contributions .........................................

contributions ........................................ . 73,809 73,809 44,432 Increase in investment income for restricted restricted purposes purposes ..............................

............................. . 9,130 9,130 9,935 Proceeds from borrowings and re-marketing re-marketing of swap related to borrowings borrowings ....................... . 649,150 649,150 261,815 Repaym ent of borrowings .....................................................

Repayment borrowings .................................................... . (205,196) (2,085)

Increase in government advances for student loans ................................

................................. . 284 284 301 Net cash provided by financing activities ..................................

................................... . 527,177 527,177 314,398 N et decrease Net .........................................................

decrease in cash ........................................................ . (3,719) (10,638)

(10,638)

Cash at the beginning of the year year................................................

............................................. . 81,106 81,106 91,744 C ash at the end of the year ....................................................

Cash ................................................... . $ 77,387 $ 81,106 accompanying notes are The accompanying are an integral integral part of of the financial statements.

financial statements.

12 12 MIT MIT REPORT REPORT OF THETHE TREASURER TREASURER 2009 2009

Notes Financial Statements Notes to Financial Statements A. Accounting Policies Basis of Basis of Presentation Presentation MIT MIT administers administers itsits various funds, including various funds, including endowments, endowments, The accompanying accompanying financial statements have financial statements have been prepared prepared functioning as endowments, funds functioning endowments, school or or departmental departmental in accordance accordance with generally accepted accounting generally accepted accounting principles principles funds and related accumulated accumulated gains accordance with gains in accordance with (GAAP) in in the United America. The financial United States of America. financial principles of "Fund the principles "Fund Accounting." recorded Accounting." Gifts are recorded statements include statements include MIT MIT and its wholly owned subsidiaries.

subsidiaries. in accounts and investment in fund accounts income is investment income is distributed distributed to funds annually. Income distributed distributed to funds may be a assets, revenues, expenses, gains and losses are classi-Net assets, classi- combination of capital combination capital appreciation appreciation andand yield pursuant pursuant to fied into three categories categories based on the existence existence or or absence absence MIT's total MIT's total return investment investment and spending policies.

and spending policies. Each Each donor-imposed restrictions.

of donor-imposed The categories restrictions. The categories are perma-perma- year, the Executive Committee of Executive Committee of the the Corporation Corporation approves approves nently nently restricted, temporarily restricted restricted, temporarily restricted and unrestricted unrestricted the rates of distribution distribution of investment investment return return to the the funds net assets. Unconditional promises assets. Unconditional give (pledges) are promises to give are from MIT's investment pools. See Note MIT's investment Note K for further further recorded receivables and revenues within recorded as receivables within the appropriate appropriate information on income information income distributed distributed toto funds.

net asset asset category.

MIT's operations include tuition, research MIT's operations research revenues, Permanently restricted net assets include gifts, pledges, Permanently unrestricted gifts and bequests for current unrestricted current use, fees and trusts and remainder interests, and income and gains remainder interests, services, other programs, income, the portion programs, investment income, investment portion that that are required by donors permanently retained.

to be permanently gains distributed investment gains of net investment distributed to funds under MIT's

Pledges, Pledges, trusts and remainder and remainder interests are reported reported at their their spending policy, auxiliary revenues, payments payments on pledges pledges estimated fair values.

estimated unrestricted gifts, and operating expenditures.

for unrestricted expenditures. Results Temporarily restricted net assets include gifts, pledges, Temporarily restricted pledges, of operations operations are displayed in the Statements are displayed Statements of Activities.

trusts and remainder interests, and income and gains that remainder interests, that nonprofit organization that is tax exempt under MIT is a nonprofit under expended but for which restrictions have not yet can be expended yet Section 501(c)(3) of the Internal Revenue Code, originally Section 501(c)(3) been met. Such restrictions include purposepurpose restrictions October 1926, with the most recent affirma-recognized in October recognized affirma-where donors have specified the purpose for which the letter dated July 2001.

tion letter 2001.

net assets are to be spent, or time restrictions restrictions imposed by by donors or implied by the nature of the gift (capital projects, projects, Cash pledges to be paid in the future, life income funds) or by by interpretations of law (net gains on permanently interpretations permanently restricted Current arrangements do not require outstand-Current banking arrangements gifts, which have appropriated for spending).

have not been appropriated spending). Net Net checks and wires to be funded until actually presented ing checks presented unrealized losses on permanently unrealized endowment permanently restricted endowment for payment. Outstanding checks and wires in the amount Outstanding checks amount funds for which the book value exceeds market market value are $22.6 million and $21.4 of $22.6 $21.4 million in 2009 and 2008, 2008, unrestricted net assets.

recorded as a reduction to unrestricted respectively, are recorded in accounts payable payable until they are presented to our banks for payment. Certain cash balances, Unrestricted net assets are all the remaining remaining net assets of of totaling $42.1 million and $41.0 million in 2009 and 2008, MIT.

MIT. Donor-restricted gifts and unexpended restricted respectively, are restricted for use in connection with gov-endowment income that are received and either spent, or or ernment research.

the restriction is otherwise met within the same year, are unrestricted revenue. Gifts oflong-lived reported as unrestricted of long-lived assets Sponsored Research specified for the are reported as unrestricted revenue. Gifts specified acquisition or construction of long-lived assets are reported Revenue associated with contracts recognized contracts and grants is recognized as temporarily restricted net assets until the monies are as related costs are incurred. The capital costs of buildings expended and the buildings are put into use, at which point and equipment are and are depreciated over their estimated life life they are reclassified to to unrestricted unrestricted net assets. cycle and the sponsored research recovery allowance for cycle indirect research revenue. MIT depreciation is treated as indirectresearch depreciation MIT reclassifications and transfers consist primarily Net asset reclassifications reimbursement of indirect costs relating to has recorded reimbursement of payments on unrestricted pledges and use of building sponsored research at negotiated fixed billing rates. The sponsored The accordance with donor restrictions. Expirations of funds in accordance of income generated by the negotiated rates is adjusted each income each temporary restrictions on net assets and the release of per- fiscal year to reflect any variance between the negotiated fiscal manent restrictions by aa donor donor are also reported as reclas- fixed rates and rates based on actual cost. The actual cost cost temporarily or permanently sifications of net assets from temporarily rate is audited by the Defense Contract Audit Agency the Defense unrestricted net assets.

restricted net assets to unrestricted agreement is signed by the (DCAA) and a final fixed-rate agreement (DCAA)

NOTES TO TO FINANCIAL FINANCIAL STATEMENTS STATEMENTS 13 13

A. Accounting Accounting Policies Policies (continued)

(continued)

U.S. Government and MIT. MIT. The The variance between the Depreciation expense expense was $125.0 $125.0 million in 2009 2009 andand negotiated fixed rate rate andand the the final audited rate results in a $111.6 million in 2008. Net

$111.6 Net interest interest expense of $1 $10.5 0.5 carry-forward (over or under carry-forward under recovery). The The carry-forward million andand $4.8 millionmillion was capitalized during 2009 will be included included in the calculation of of negotiated negotiated fixed fixed billing and 2008, respectively, in in relation toto MIT's construction rates in furure future years. Any adjustment adjustment in the rate is charged projects.

or credited to unrestricted net assets.

or Land, Buildings and Equipment Equipment Tuition and Financial Aid Aid Land, buildings and equipment are shown at cost or fair fair Tuition and similarsimilar revenues, shown in Table 2 below, below,

Land, tuition and fees include ruition fees in degree programs as well as as value as of the date of a gift, net of accumulated deprecia-tion. When expended, costs associated with the construc-tion. construc- tuition and fees for executive and continuing ruition continuing education tion of new facilities are are shown as as construction in progress programs at MIT. MIT.

until such projects are completed. Depreciation is com-puted on a straight-line basis over the the estimated useful lives Table 2.

Table 2. Tuition and Similar Revenues of 25 to 50 years for buildings, 3 to 25 years for equipment, and 4 to 6 years for software. Fully depreciated assets were (in thousandsof dollar'S)

(in thousands dollars) 2009 2008 removed from the financial statements in the amount of Tuition revenue ........ ........ $ 409,195 $ 387,803

$42.5 million and $52.3 $52.3 million during 2009 and 2008, Executive and continuing respectively. Land, buildings and equipment at June 30, education revenues ..... ..... 22,577 33,427 33,427 2009 are shown in Table 11 below.

................

Total ................ 431,772 421,230 421,230 tuition discount ...

Less: ruition ... (214,383) (192,131)

(192,131)

Table 1. Land, Buildings and Equipment Net tuition ...........

........... $$ 217,389 $ 229,099 (in thousands (in thousands of dollars) dollars) 2009 2008 L and ................

Land ................. . $ 51,944 $ 51,944 51,944 Educational Educational buildings ... .. . 2,372,275 2,181,649 Tuition support is awarded awarded to undergraduate students by undergraduate srudents Equipment ...........

............ . 220,709 220,709 187,670 187,670 MIT based on need. Graduate students are provided with Graduate srudents Software SofnNare ..............

............. . 33,084 33,084 43,273 tuition support in connection with research assistance, Total ................

TotaL .............. . 2,678,012 2,678,012 2,464,536 2,464,536 teaching teaching assistance and fellowship appointments. appointments. Total Less: accumulated accumulated financial financial aid granted granted to srudents students was $376.1

$376.1 million and depreciation ..........

depreciation ........... . (873,577) (7891886)

(789,886) $349.5

$349.5 million in 2009 and 2008, 2008, respectively. Of that that Construction Construction in amount, $118.7

$118.7 million in 2009 and $117.6 $117.6 million in 2008, progress ..............

............. . 309,468 260,991 was aid from sponsors. Tuition support from MIT sources Software Software projects in is displayed displayed as tuition ruition discount. Components of financial financial progress progress ..............

............. . 6,710 6,710 3,278 3,278 aid aid are are detailed in Table 3.

Land, buildings and equipment equipment............ $2,120,613

. . . . . . . . . . $2,120,613 $1,938,919

$1,938,919 Table Table 3. 3. Financial Financial Aid Aid (in (in thousands thousands of dollars) of dollars) I 2009 2009 I I 2008 2008 Institute Institute External External Total Total Institute Institute External External Total Sources Sponsors Sponsors Financial Financial Aid Sources Sources Sponsors Financial Aid Financial Aid Tuition Tuition support ........... ............ $ 214,383 $ 51,883 51,883 $ 266,266 $ 192,131 192,131 $ 52,873 52,873 $ 245,004 245,004 Stipends .................

................. 15,566 11,943 11,943 27,509 13,418 13,418 12,229 12,229 25,647 Student Srudent salaries salaries ...........

........... 27,374 54,913 54,913 82,287 26,421 52,471 78,892 78,892 Total ..................

Total. ................. $257,323

$ 257,323 $ 118,739 118,739 $ 376,062 376,062 $ 231,970 231,970 $ 117,573 117,573 $ 349,543 14 MIT REPORT MIT REPORT OF OF THE THE TREASURER TREASURER 2009 2009

A. Accounting A. Accounting Policies (continued)

Gifts and Pledges Pledges disclosures about fair value measurements.

measurements. SFAS SIAS No.

Gifts and pledges pledges are recognized recognized when received. Gifts of of 157 applies to fair value measurements measurements that are already securities are recorded recorded at their fair value at the date of con-con- required or permitted by other accounting standards and accounting standards tribution. Gifts of equipment received received from manufacturers manufacturers does not require any new fair value measurements. The and other donors during 2009 and 2008 were put into use statement defines defines fair value value as "the price that would be and recorded recorded by MIT at fair value. Gifts of equipment equipment received to sell an asset or paid to transfer transfer a liability in

$2.0 million and $0.6 million in 2009 and 2008, totaled $2.0 an orderly transaction transaction between between market participants participants at the respectively. Pledges in the amount of $464.7 million and measurement measurement date."

$443.3 million are recorded recorded as receivables receivables with with the revenue MIT adopted FASB Staff Position 157-3, 157-3, Determining Determiningthe assigned to the appropriate appropriate classification classification of restriction FairValue ofa Financial Fair Financial Asset When the Market Mm"ket for fo7* That for 2009 and 2008, respectively. PledgesPledges consist of of Asset Is Not Active Active (FSP 157-3), as of July 157-3), ofJuly 1, 1, 2008. FSP unconditional unconditional written promises to contribute contribute to MIT in the 157-3 amends SEAS SFAS No. 157 to clarify clarify the application application future and are recorded after discounting the future cash cash markets and allows for the use value in inactive markets of fair value flows to the present value. of management's management's internal assumptions about future cash cash MIT records items of collections collections as a gift at nominal value. flows with appropriately appropriately risk-adjusted discount rates They are received received for educational educational purposes and generally generally when relevant relevant observable observable market market data does not exist. The displayed throughout MIT They are not disposed of for throughout MIT. for objective of SFAS objective SIAS No. 157 has not changed and continues No.157 encumbered in any manner.

financial gain or otherwise encumbered to be the determination of the price that would be received received in an orderly orderly transaction transaction that is not a forced liquidation liquidation oror Advance distressed distressed sale at the measurement measurement date. The adoption adoption of of Advance Payments Payments FSP 157-3 157-3 did not have a material effecteffect on MIT's results Amounts Amounts received received by MIT from the U.S. Government, Government, cor-of operations, financial position or liquidity.

porations, industrial sources, foundations foundations and other non-MIT sponsors under the terms of agreements that generally MIT adopted the provisions of FASB Staff Position 157-4, require the exchange of assets, rights, or privileges between privileges between Determining Determining FairFair Value flWhen When the Volume and Level of ofActivity Activity MIT and the sponsor are recorded as advance advance payments. for the Asset or Liability Liability Have Significantly Significantly Dw"eased and Decreased Revenue is recognized when MIT fulfills the terms of the Identifying IdentifYing Transactions That Are Not Orderly Transactions That Orderly (FSP 157-4),

agreement. as ofJuly 1, 1, 2008, and applied them prospectively in 2009.

FSP 157-4 157-4 provides provides additional additional guidance for estimating Life Income Funds Funds fair value in accordance accordance with SEASSFAS No. 157 when the volume and level of activity activity for the asset or liability have MIT's life income fund agreements agreements with donors consist consist significantly significantly decreased and re-emphasizes re-emphasizes that regardless primarily of irrevocable irrevocable charitable charitable gift annuities, pooled of market market conditions conditions the fair value measurement measurement is an exit exit income funds, and charitable charitable remainder trusts for which price concept as defined in SIAS SFAS No. 157. The scope of scope of MIT serves as trustee. Assets are invested and payments this FSP does not include include assets and liabilities liabilities measured are made to donors and other beneficiaries accordance beneficiaries in accordance under Level 1 inputs (quoted prices in active markets for for with the respective agreements.

agreements. MIT records the assets identical identical assets).

that are associated associated with each life income fund at fair value and records as liabilities the present value of the estimated SFAS No. 159 159 future payments at current interest rates to be made to In conjunction conjunction with SFAS SIAS No. 157, 157, FASB issued Statement Statement the donors and beneficiaries beneficiaries under these agreements.

agreements. Life of Financial Accounting Accounting Standards Standards No. 159, The Fair Fair Value income fund liabilities are classified classified as Level 3 under the Option for Option FinancialAssets and for Financial and Financial FinancialLiabilities Liabilities- including including valuation hierarchy hierarchy disclosed disclosed in Note B.

an Amendment of FASB Statement No. 115 (SFAS Amendment ofFASB (SIAS No. 159).

SIAS No. 159 allows an entity SFAS entity the irrevocable option Recently Recently Adopted Adopted Accounting Accounting Pronouncements Pronouncements to elect fair value to measure certain financial assets and to SFAS SFAS No. 157 157 liabilities under an instrument-by-instrument instrument-by-instrument election, and and MIT adopted Financial Accounting Standards Standards Board establishes additional additional disclosure requirements. MIT elected elected (FASB) Statement Statement of Financial Accounting Standards Financial Accounting the fair value option under the provisions of SEAS SFAS No.

No. 157, Fair FairValue Measurements Measurements (SFAS No. 157), as of of 159 in accounting for pledges receivable and life income 1, 2008. SFAS July 1, SEAS No. 157 defines fair value, establishes establishes fund liabilities liabilities as ofJuly 1, 2008. The adoption of SFAS of July 1, SEAS No. 159 159 did not have a material impact impact on MIT's financial framework for measuring fair value and expands a framework statements.

NOTES TO FINANCIAL NOTES FINANCIAL STATEMENTS STATEMENTS 15 15

A. Accounting Policies (continued)

A. (continued)

UPMIFA and FSP 117-1 UPMIFA SFAS No. 165 SFAS In July 2009, 2009, the Commonwealth Commonwealth of Massachusetts enacted MIT adopted FASB StatementStatement ofof Financial Accounting Accounting aa version of the UnifOt711 Uniform Prudent PrudentManagement Managementof ofInstitutional Institutional Standards No. 165, Subsequent Standards Subsequent Events Events (SFAS (SIAS No. 165), as of of FundsAct of2006 Funds of 2006 (UPMIFA),

(UPMIFA), which replaced Chapter 180A, 180A, 2009. SFAS No. 165 June 30, 2009. 165 establishes establishes general standards standards Massachusetts Attorney General's June 1995 statement of Massachusetts of of accounting of accounting for and disclosure of events that occur after after Uniform Management position, the Uniform ManagementInstitutional InstitutionalFunds FundsAct the balance sheet date but before financial statements (UMIFA). The new law, which has an effective date of (UMIFA). ofJune are issued. The adoption are adoption of SFAS No.165 did not have a 30, 2009, eliminates 30,2009, eliminates the historical dollar threshold and material impact on MIT's financial statements. MIT has establishes prudent spending guidelines that consider both establishes evaluated subsequent events through September evaluated September 16, 16, 2009, the duration and preservation of of the fund.

fund. As a result of the date of financial statement issuance.

this enactment, subject to the donor's intent as expressed in a gift agreement or similar document, a Massachusetts Non-Cash Non-Cash Items Items charitable organization may now spend charitable spend the amount of the excluded from the Non-cash transactions excluded the Statements of of principal and income income of an endowment fund, even from an Cash Flows include the (decrease) increase in collateral underwater fund, after considering the factors listed in the for securities lending and minority interest of ($195 ($195.2)

.2)

Act.

Act. million and $35.5

$35.5 million, as well as $30.3

$30.3 million and $21.5

$21.5 MIT adopted FASB Staff Position 117-1, 117-1, Endowments Endowments million of accrued liabilities related to plant and equipment equipment Not-for-Profit Organizations:

ofNot-for-Profit Organizations:Net Asset Classification Classificationof purchases, for 2009 and 2008, respectively.

Funds Subject to an Enacted Funds Enacted Version Version of the Unifol711 Uniform Pntdent Prudent Management InstitutionalFunds Management ofInstitutional and Enhanced Funds Act, and Enhanced Estimates Use of Estimates Disclosuresfor Disclosures for All Endowment Funds All Endowment Funds (FSP 117-1), as of July The preparation preparation of financial statements in conformity 1, 2008. FSP 117-1 provides guidance 1,2008. guidance on the net asset asset with GAAP requires management management to make estimates and classification of donor-restricted endowment funds for a assumptions that affect the reported amounts amounts of assets and not-for-profit organization that is subject to an enacted enacted liabilities and disclosure of contingent contingent assets and liabilities version of UPMIFA. The adoption of FSP 117-1 had no at the date of the financial statements statements and the reported reported impact on the way that MIT classifies classifies donor-restricted donor-restricted amounts of revenues and expenses during the reporting endowment funds, but does require additional financial period. Actual results could differ from those estimates.

statement disclosures endowment funds. The disclosures about MIT's endowment additional disclosures additional disclosures are included in Note K.

Reclassifications Reclassifications Certain June 30, 2008 balances balances previously reported have been reclassified to conform to the June 30, 30, 2009 presentation.

B. Investments B. Investments Investment Investment transactions transactions are accounted accounted for on the trade date. MIT may utilize various derivative instruments, instruments, such such asas Realized gains and losses are recorded Realized recorded by MIT using the forwards, forwards, futures, interest rate, total total return or currency average cost basis. Premiums and discounts on securities swaps swaps or forward contracts contracts to increase or decrease its purchased purchased and and securities securities sold short are amortized using using exposure to changes exposure changes in the level level of interest rates, underlying underlying the effective the effective yield method over yield over the the life of the respective respective asset asset values oror to partially partially offset offset exchange exchange rate movements.

movements.

security security when when cash collection collection is expected expected and included included Derivative Derivative instruments instruments are recorded recorded at fair value. As of June ofJune in in interest interest income (long investments) or income (long or interest expense expense 30, 2009, MIT 30,2009, MIT had entered into severalseveral interest interest rate swap swap (short investments). Dividend income investments). Dividend income isis recorded recorded on the contracts.

contracts. Certain of the contracts contracts were were executed executed to manage ex-dividend ex-dividend date. the the interest interest rate rate risk associated with its Massachusetts Health Health and Educational Educational Facilities Facilities Authority Authority (MIHEFA)

(MHEFA)

Cash Cash equivalents equivalents include include money money market market funds, commercial commercial paper, banker variable variable rate rate debt debt portfolios; portfolios; others were were to manage manage overall acceptances banker acceptances and negotiable certificates certificates of of interest interest rate risk of the the portfolio.

portfolio. The The interest-rate interest-rate swap swap deposit.

agreements agreements werewere recorded recorded at an estimated estimated market market value value 16 MIT REPORT MIT REPORT OF OF THE THE TREASURER TREASURER 2009 2009

B. Investments B. Investments (continued)(continued) of ($9.8) million and ($25.0) million atJune at June 30, 2009 and The following describes describes the hierarchy of inputs used to 2008, respectively, and the change in market value of ($6.9) measure fair value and the primaryprimary valuation methodologies million and ($10.6) million for 2009 and 2008 was included included used by MIT MIT for financial instruments measured fair measured at fair in non-operating non-operating net gain or loss on investments and other other value on a recurring basis. The three levels of inputs are as as assets. Pending spot and forward currency currency contracts contracts totaled totaled follows:

$0.6 million atJune 30, 30, 2009 and $1.8 $1.8 million atJune atJune 30,

    • Level Level 1 - Quoted prices prices in active markets for identical identical 2008.

assets or liabilities. Market price price data is generally obtained obtained As discussed in Note A, as ofJuly of July 1, 1, 2008, MIT adoptedadopted exchange or dealer markets.

from relevant exchange SEAS SFAS No. 157 and has valued its investments investments in accordance accordance

  • - Level Level 2 - Inputs other than Level 1 that are observable, observable, with the principles principles of this standard.

either directly or indirectly, such as quoted prices for for SEAS No. 157 establishes a hierarchy SFAS hierarchy of valuation valuation inputs similar assets or liabilities, liabilities, quoted prices in markets that based on the extent to which the inputs are observable in are not active, or other inputs that are observable or can be be the marketplace. Observable inputs inputs reflect market data corroborated by observable market data for substantially corroborated substantially obtained from sources independent independent of the reporting reporting entity the same term of the assets or liabilities. Inputs are obtained obtained and unobservable unobservable inputs reflect the entity's own assumptions from various sources including market participants, dealers, about how market participants participants would value an asset or or and brokers.

liability based on the best information available. Valuation available. Valuation

    • Level Unobservable inputs that are supported by little Level 3 - Unobservable techniques used to measure fair value under SFAS SEAS No. 157 157 or no market activity and that are significant to the fair must maximize the use of observable inputs and minimize value of the assets or liabilities.

the use of unobservable unobservable inputs. SFAS SEAS No. 157 describes describes a fair value hierarchy based on three levels of inputs, of of A financial instrument's categorization categorization within the valuation valuation which the first two are considered considered observable observable and the last last hierarchy hierarchy is based upon the lowest level of input that is is unobservable, that may be used to measure fair value.

unobservable, significant to the fair value measurement.

significant Table 4 below presents presents MIT's investments at fair value value as ofJune of June 30, 2009, grouped by the SEAS SFAS No. 157 valuation valuation hierarchy as defined above.

Table Table 4. Investments Investments I

2009 2008 Quoted prices inin Significant other Significant un-active markets markets observable inputs observable inputs inputs (in thousands (in thousands of dollars) doltan) 1)

(Level 1) (Level 2)

2) 3)

(Level 3) Total fair value value Total fair value value Cash equivalents ............

equivalents ............ $ 741,008 $ 10,915 10,915 $ 751,923 751,923 $ 433,989 433,989

___ ...........

income................

Fixed income 13,954 13,954 602,656 602,656 65,524 65,524 682,134 682,134 828,555 828,555 E quities ...................

Equities ................... 607,585 607,585 3 4,445,655 4,445,655 5,053,243 6,305,729 6,305,729 Marketable Alternatives Alternatives ...... ...... 2,203,965 2,203,965 2,203,965 2,203,965 2,898,174 2,898,174 Real estate .................

................. 790,348 790,348 790,348 800,054 800,054 Perpetual .............

Perpetual trusts ............. 47,618 47,618 47,618 47,618 66,912 66,912 Interest rate swaps ..........

Interest .......... (9,818) (9,818)

(9,818) (24,984)

Total investments ........... $ 1,362,547 investments ........... 603,756

$ 603,756 $7,553,110

$ 7,553,110 $ 9,519,413 9,519,413 11,308,429

$ 11,308,429 NOTES TO FINANCIAL FINANCIAL STATEMENTS STATEMENTS 17 17

Investments (continued)

B. Investments Investments included in Level 3 primarilyprimarily consist of of and specific specific risks inherent inherent in, the instrument as well as MIT's ownership ownership in alternative investments investments (principally the availability and reliability of observable inputs. Such observable inpu.ts. Such limited partnership interests interests in hedge, private equity, equity, real inputs inputs include market prices for reference securities, yield estate, and other similar similar funds). Securities held by limited curves, credit credit curves, measures of volatility, prepayment prepayment partnerships partnerships that do not have readily determinable determinable fair fair rates, and correlations correlations of such inputs. The interest rate values are determined by the general partner partner and are arrangements have inputs which can generally swap arrangements generally be based based on appraisals, or other estimates estimates that require varying varying corroborated corroborated by market data and therefore are generally generally degrees of judgment. If no public market exists for the classified within Level 2.

investment investment securities, the fair value determined by the value is determined the Perpetual Perpetual trusts held by third parties parties are valued at the general partner taking into consideration, consideration, among other other present present value of the future distributions expected expected to be significant things, the cost of the securities, prices of recent significant received received over the term of the agreement.

placements of securities of the same issuer, and subsequentsubsequent developments concerning concerning the companies companies to which the The methods described described above may produce a fair value that that securities relate. MIT has performed performed due diligence around may not be indicative of net realizable realizable value or reflective its alternative investments investments to ensure they are recorded at of future fair values. Furthermore, while MIT believes believes its fair value as ofJune of June 30, 2009 and 2008. valuation valuation methods methods are appropriate appropriate and consistent with other other market market participants, the use of different methodologies or or Interest Interest rate swaps are valued using observable inputs, assumptions to determine determine the fair value of certain financial financial such as quotations received received from the counterparty, dealers instruments instruments could result in a different different estimate of fair value or brokers, whenever available and consideredconsidered reliable.

at the reporting date.

In instances where instances where models are used, the value of the interest interest rate swap depends depends upon the contractual contractual terms of, of, Table 5 below is a rollforward roll forward of the investments investments classified by MIT within Level 3 of the fair value hierarchy value hierarchy defined defined on page 17. 17.

Rollforward of Level 3 Investments Table 5. Rollforward Marketable Marketable Perpetual Total (in thousands thousands ofdollars) dollars) Fixed income Equities alternatives alternatives Real estate estate trusts investments investments Fair value, July 1, 2008 .... .... $ 57,679 $ 4,915,258 $ 2,898,174 $ 800,055 800,055 $ 66,912 $ 8,738,078 8,738,078 Realized gains (losses) .....

Realized ..... - (62,307) (45,793) 91 - (108,009)

Unrealized losses ........

........ - (972,258) (522,800) (184,807)

(184,807) (19,850)

(19,850) (1,699,715)

(1,699,715)

Net purchases, sales, and settlements ...........

settlements ........... 7,845 564,962 (125,616)

(125,616) 175,009 556 622,756 622,756 Fair Value, June 30,30,.2009...

2009 ... $ 65,524 $ 4,445,655 $ 2,203,965 $ 790,348 $ 47,618 $ 7,553,110 7,553,110 All net realized and unrealized gains and losses relating to financial instruments held by MIT shown in Table 5 are reflected All reflected in the Statements of Activities. Unrealized gains related to Level 3 investments totaled $582.6 million atJune 30, 2009 and

$2,262.5

$2,262.5 million atJune 30, 2008.

18 18 MIT MIT REPORT REPORT OF THE TREASURER OF THE TREASURER 2009 2009

C. Collateral for Securities Lending C. Collateral Lending and Other Assets MIT has an agreement with a major financial institution institution 2009 and had $162.9

$162.9 million on loan at atJune June 30,30, 2008.

to to lend its securities exchange for a fixed annual fee less in exchange Cash collateral under management management related to the securities a contractual contractual rebate on the cash collateral received. All cash collateral All lending program was $164.9 $164.9 million atJune at June 30, 2008. As of of securities securities are returnable returnable on demand and are collateralized collateralized June 30, 2009 and 2008, MIT also recorded $168.3 $168.3 million million by daily cash deposits based on the market value of the and $198.6

$198.6 million, respectively, of minority minority interest in securities securities loaned. MIT manages the investment process privately held investments. The cash collateral collateral received received for all cash collateral collateral received and is indemnified against indemnified against under the securities securities lending lending program and minority interest minority interest borrower borrower default by the financial institution. MIT did are shown as assets and liabilities in the Statements of of not have any investment investment securities on loan as ofJuneof June 30, 30, Financial Financial Position.

D.

D. Pledges Pledges Receivable Receivable Table Table 6 below shows shows the time periods periods in which pledges As discussed in Note A, MIT adopted SFAS SEAS No. 159 in receivable receivable at atJune June 30, 2009 are expected expected to be realized.

realized. accounting accounting for pledges receivable.

receivable. Pledges receivable receivable are classified classified as Level 3 under the valuation hierarchy as defined defined Table Table 6. Pledges Receivable Receivable by SEAS disclosed in Note B.

SFAS No. 157 and disclosed B. Table 7 below is (in thousands (in thousands of dollars) dollars) 2009 2008 a rollforward rollforward of the pledges receivable for 2009.

In one year or less ...... ...... $ 152,686 $ 117,979 117,979 Between one year and Table 7. Rollforward Rollforward of Pledges Receivable Receivable five years .............

............. 195,033 200,849 (in thousands of dollars)

(in thousands dollars)

More More than five years ....

.... 168,897 173,175 Less: allowance for for Pledges receivable, receivable, June 30, 2008 .........

2008 ......... $ 443,303 unfulfilled pledges ...... ...... (51,880) (48,700) NNewew pledges ..........................

........................... . 125,502 Pledges Pledges receivable, ................

Pledge payments received ............... . (106,431)

(106,431) net .................

................. $ 464,736 464,736 $ 443,303 Decrease Decrease in pledge discount ............. .............. . 5,542 Increase Increase in reserve for unfulfilled unfulfilled pledges ... .... . (3,180)

Pledges Pledges receivable, June 30, 2009 .... $ 464,736 464,736 A review of pledges is periodically periodically made with regard to collectability. As a result, the allowance for pledges pledges that that may not be fulfilled is adjusted, and some pledges pledges have beenbeen canceled and are no longer recorded recorded in the financial state-ments. In addition, pledges are discounted in the amount of of

$89.5 million and $95.0 million in 2009 and 2008, respec-

$89.5 respec-tively. MIT tively. MIT has gross conditional pledges, not recorded, for for the promotion of education education and research research in the amount of of

$114.0 million and $150.2

$114.0 $150.2 million as ofJune ofJune 30, 2009 and and 2008, respectively.

NOTES TO i'lNANCIAL NOTES FINANCIAL STATEMENTS STATEMENTS 19

E. Student E. Student Notes Receivable Receivable Table 8 below details components of student details the components student notes $33.3

$33.3 million and $33.1

$33.1 million atJuneat June 30, 2009 and receivable receivable atJune 30, 2009 and 2008. 2008, 2008, respectively, are ultimately refundable refundable to the U.S.

Government and classified as liabilities. Due to the Perkins student notes receivable Perkins receivable are funded by are funded the U.S.

by the U.S. Government are and by MIT to the extent required by the nature and terms nature and terms of the student loans, which are subject toto Government Government extent required by the Direct Student Loan Program. Funds significant restrictions, significant restrictions, it is not feasible to determine determine the the Perkins Perkins National Student Loan Program. Funds fair value value of Government for this program, for this fair of such loans.

such loans.

advanced by the U.S. U.S. Government program, Table 8. Student Notes Receivable Receivable (in thousands (in thousands of dollars) dollars) 2009 2008 Institute-funded student notes receivable ....................................

Institute-funded ..................................... . $ 18,188 18,188 $ 19,974 19,974 Perkins student notes receivable ............................................

receivable ........................................... . 33,765 30,353 30,353 Total student notes receivable .......................................

........................................ . 51,953 50,327 50,327 Less: allowance allowance for doubtful accounts ......................................

....................................... . (3,000) (3,000)

Student Student notes receivable, net ........................................

.......................................... . $$ 48,953 $ 47,327 F Accounts F. Accounts Payable, Payable, Accruals Accruals and Other Liabilities Liabilities MIT's accounts payable, accruals and other liabilities at June 30, 2009 are shown in Table 9.

atJune 9 below.

Table 9. Accounts Accounts Payable, Accruals Accruals and Other Liabilities (in thousands (in thousands of dollars) dollars) 2009 2008

.............................................

Accounts payable and accruals ............................................ . $ 249,445 $ 220,107 220,107 Accrued vacation vacation .........

........ : ...............................................

.............................................. . 50,120 47,730 47,730 Total ............................................................

............................................................. . $ 299,565 $ 267,837 267,837 20 MIT MIT REPORT OF THE TREASURER OF THE TREASURER 2009 2009

G.

G. Borrowings Borrowings Table 10.

Table Borrowings

10. Borrowings thousands of dollars (in thousands dollan / due dates dates are calendarbased) are calendar 2009 2008 EDUCATIONAL PLANT EDUCATIONAL PLANT Massachusetts Massachusetts Health Health and Educational Educational Facilities Authority (MHEFA) 4.75%-5.20%, due 2028, par value $59,200 Series I, 4.75%-5.20%, $59,200 .........................

.......................... . $ 59,663 $ 59,688 59,688 Series J-1, variable rate, due 2031 ........................................

SeriesJ-1, ......................................... . 125,000 125,000 125,000

.........................................

Series J-2, variable rate, due 2031 ........................................ . 125,000 125,000 125,000 125,000 Series K, K, 5.25%-5.50%,

5.25%-5.50%, due 2012-2032, par value $230,000 ..................

2012-2032, ................... . 243,804 243,804 244,624 244,624 3.0%-5.25%, due 2004-2033, Series L, 3.0%-5.25%, 2004-2033, par value $184,860 $184,860 ....................

..................... . 188,616 188,616 191,804 191,804 Series MM,, 5.25%,

5.25%, due 2014-2030,2014-2030, par value $131,110 .........................

$131,110 ........................ . 145,998 146,981 N, 3.5%-5.0%,

Series N, 3.5%-5.0%, due 2014-2038, 2014-2038, par value .....................

value $325,195 .................... . 333,991 Series 0, 0, 4.0%-6.0%,

4.0%-6.0%, due 2016-2036, 2016-2036, par value $266,460 .....................

$266,460 .................... . 274,475 Total MHEFA ...................................................

................................................... . 1,496,547 893,097 Medium Medium Term Notes Series A, 7.125%, 7.125%, due 2026 ...........................

............................ . 17,347 17,343 Medium Medium Term Notes Series A, 7.25%,

7.25%, due 2096 .............................

............................ . 45,440 45,438 45,438 Notes Notes payable payable to bank, variable rate, due 2011 ..............................

............................... . 48,033 251,039 251,039 Total educational educational plant .............................................

............................................ . 1,607,367 1,607,367 1,206,917 1,206,917 STUDENT LOANS STUDENT Notes Notes payable payable to bank, variable rate, due 2011 ..............................

............................... . 5,000 5,000 OTHER Notes payable to bank, variable rate, due 2011 ............................................................. . 123,476 123,476 123,476 123,476 Total Borrowings .

Borrowings ................................................ . 1,735,843

$ 1,735,843 $ 1,335,393 The aggregate amount of debt payments and sinking fund of $500.0 million. As of of$500.0 June 30, ofJune 30, 2009, 2009, $323.5 million

$323.5 million requirements requirements for each of the next five fiscal years is shown in was available available under this line of credit. The line of credit credit Table 11 below. expires on March 28, 2011. 2011.

Variable Variable interest at June 30, 2009 are shown in Table interest rates atJune Table 11.11. Debt Obligations Obligations 12 below.

(in thousands (in thousands ofdollan) dollars) 2010 .................. $ 2,260 Table Table 12. 12. Variable Interest Interest Rates 2011 .................. 178,879 178,879 (in thousands thousands of dollars) dollars) Amount Rate Rate 2012 .................. 2,490 MHEFA SeriesJ-1 MHEFA Series J-l ......

....... . $ 125,000 0.17%

2013 .................. 26,500 MHEFA MHEFA SeriesJ-2 Series J-2 ......

....... . 125,000 125,000 0.10%

0.10%

2014 ..................

................. . 26,000 Notes payable to bank .... ..... . 176,509 0.37%

0.37%

Cash Cash paid for interest on long-term debt in 2009 and 2008 was $47.4 million and $46.7 million, respectively. In the event that MIT receives notice of any optional In 2009, fair value of the outstanding debt is approximately approximately tender on its SeriesJ-1 Series J-1 and SeriesJ-2 Series J-2 variable-rate variable-rate bonds, 3 percent percent greater greater than the carrying value. In 2008, 2008, the or if these bonds become subject to mandatory tender, carrying carrying value of the outstanding debt approximates approximates fair fair the purchase price of the bonds will be paid from the value. Carrying Carrying value is based on estimates using current current remarketing of such bonds. However, if the remarketing remarketing interest interest rates available for similarly rated debt of the same proceeds are insufficient, MIT will be obligated obligated to remaining remaining maturities. MIT MIT maintains a line of credit with purchase the bonds tendered.

a major financial institution for an aggregate commitment commitment NOTES TO FINANCIAL STATEMENTS STATEMENTS 21 21

H.

H. Commitments and Contingencies Contingencies Federal Government Funding Federal Government Funding Investments Investments MIT receives funding or reimbursement reimbursement from Federal As of June 30, 2009, MIT is committed to invest invest Government Government agencies agencies for sponsored research under under approximately $2,342.6 approximately $2,342.6 million with equity managers managers and Government Government grants and contracts. contracts. These These grants grants and con- with private partnerships partnerships for hedge funds, private equity tracts provide provide for reimbursement of indirect costs based on alternative investments. This compares and other alternative compares to rates negotiated with the Office Office of Naval Research (ONR),

Naval Research (ONR), of June 30, 2008. As of June 30, 2009,

$3,352.5 million as ofJune MIT's cognizant Federal agency. MIT's indirect cost cost $42.6 million of investments were pledged as collateral collateral to reimbursements have been based on fixed rates with carry- carry- various supplier supplier and government agencies, government agencies, the largest being forward of under or over recoveries, except in 2008, 2008, during to the Nuclear Regulatory Commission and for self-insured self-insured which fixed rates were negotiated without carry-forward carry-forward workers' compensation workers' compensation insurance.

for most on and off-campus off-campus research activity. At research activity. June 30, AtJune

2008, 2008, MIT recorded under-recovery of $5.8 recorded a net under-recovery million

$5.8 million Future Construction Future Construction resulting primarily primarily from activity in its specialized service MIT has contracted for educational educational plant in the amount amount facility, where carry-forward facility, carry-forward arrangements arrangements were still in $214.1 million atJune of $214.1 atJune 30, 2009. It is expected that the place. At June 30, 2009, MIT recorded AtJune recorded a net over-recovery resources to satisfy these commitments commitments will be provided provided of $2.4 million. from unexpended plant funds, anticipated anticipated gifts, unrestricted unrestricted funds and future furure borrowings. MITMIT will be committing committing The DCAA DCAA is responsible for auditing both direct and and additional resources resources to planned major construction projects indirect charges to grants grants and contracts contracts in support of of and improvements to the current current infrastructure infrastrucrure over the ONR's negotiating negotiating responsibility. MIT has final audited rates through 2007. MIT's 2009 research research revenues of of next several years.

$1,375.1

$1,375.1 million include reimbursement reimbursement indirect costs of indirect Related Entities Related Entities of $221.5 million, which includes the adjustment adjustment for the between the indirect variance between indirect cost income determined income determined MIT has entered into agreements, agreements, including collaborations by the fixed rates and actual acrual costs for 2009. In 2008, 2008, with third-party third-party not-for-profit and for-profit entities for research revenues were $1,245.2 $1,245.2 million, which included included* education, research and technology technology transfers. Some of these reimbursement of indirect reimbursement indirect costs of $206.2

$206.2 million. agreements involve funding from foreign governments.

agreements These agreements subject MIT to greater financial risk than Leases Leases do its normal operations. In the opinion of management, management, the likelihood of realization realization of increased financial risks byby At June 30, 2009, there were no capital AtJune capital lease obligations.

MIT under these agreements is remote.

MIT is committed committed under certain operating (rental) leases.

Rent expense incurred under operating operating lease obligations was $65.5 million and $62.3 million in 2009 and 2008, General respectively. Some of the leases expiring in 2010 subject 2010 are subject MIT is subject subject to certain certain other legal proceedings and claims to renewal. Furure Future minimum payments payments under operating operating that arise in the normal course course of operations. In the opinion opinion leases are shown in Table 13 below. of management, the ultimate outcome of these actionsactions will not have a material effect on MIT's financial position.

13. Lease Obligations Table 13.

(in thousands (in thousands of dollars) dollars) 2010 .................. $ 54,747 2011 .................. 49,467 2012 .................. 44,171 2013 .................. 40,959 40,959 2014 .................. 33,900 22 22 MIT REPORT MIT REPORT OFOF THE THE TREASURER TREASURER 2009 2009

I. Functional Expense Classification Functional Expense Classification MIT's MIT's expenditures expenditures on a functional functional basis basis are shown in Table 14 below.

14. Expenditures by Functional Classification Table 14. Classification (in thousands (in thousands of dollars) dollars) 2009 2008 General and administrative ................................................

administrative ............................................... . $ 497,043 $ 486,444 Instruction and unsponsored Instruction unsponsored research ......................................

....................................... . . 680,848 641,241 Sponsored ......................................................

Sponsored research ..................................................... . 1,167,036 1,167,036 1,054,474 1,054,474 enterprises ....................................................

Auxiliary enterprises ..................................................... . 104,443 100,545 Operation Operation of alumni association ............................................

........................................... . 11,916 11,543 Total operating .............................................

operating expense ............................................ . $2,461,286

$2,461,286 $2,294,247

$2,294,247 Retirement Benefits J. Retirement Benefits MIT offers a defined defined benefit plan and a defined con- During 2008, MIT amended its defined benefit plan benefit plan tribution plan to its employees. The plans cover substan- substan- participants with immediate to provide participants immediate vesting of theirtheir tially all of MIT's.

MIT's employees.

employees. accrued benefits. The Pension Pension Protection Protection Act required required MIT a change change from five-year vesting to three-year three-year vesting vesting for MIT also provides retiree welfare benefits benefits (certain health MIT's defined benefit plan; this change change has been been treated as as care and life insurance benefits) for retired employees.

mandatory and the impact has been reflectedreflected as an actu~

actu, Substantially all of MIT's employees may become become eligible for arial loss. The change arialloss. change from three-year three-year vesting to immediate those benefits if they reach a qualifying qualifying retirement age while while vesting was reflected reflected as a plan amendment.

working for MIT.

MIT. Retiree health plans are paid for in part part by retirees and covered covered retirees, their covered covered dependents The amount contributed contributed and expenses recognized recognized during and beneficiaries.

beneficiaries. Benefits are provided provided through various 2009 and 2008 related to the defined contribution plan plan were insurance companies whose charges are based either on the $40.3 million and $37.8 million, respectively.

benefits and administrative expenses expenses paid during the year or or For purposes of calculating calculating net periodic postretirement postretirement annual insured premiums. RetireeRetiree life insurance plans are non-contributory and cover the retiree only. benefit cost, a portion of the current obligation, related to non-contributory only. MIT maintains the transition transition to SFAS No. 106, is being amortized amortized on a a trust to pay for retiree welfare benefits.

straight line basis over over 20 years from the date of adoption adoption MIT contributes contributes to the defined defined benefit plan amounts that that of that statement in 1994. Plan amendments amendments are amortized are actuarially determined actuarially determined to provide the retirement plan plan on a straight line basis over the average average future service to full with sufficient assets to meet future benefit requirements. requirements. eligibility of active active participants participants at the date of amendment.

There were were no contributions to the defined benefit plan in Cumulative gains and losses (including changes in assump-Cumulative 2009 or 2008. tions) in excess of 10 percent of the greater of the plan's For purposes of calculating obligation and the market related value of assets are amor-calculating net periodic pension cost for tized over the average future service of active active participants.

the defined benefit benefit plan, plan amendments are amortized The annual amortization amortization shall not be less than the total on a straight line basis over the average future service to expected retirement of active participants at the date of amount of unrecognized unrecognized gains and losses up to $1 million.

expected of the amendment. Cumulative gains and losses (including changes in assumptions) in excess of 10 percent of the greater of the projected projected benefit obligation obligation and the market market related value of assets are amortized over the average future service of active participants.

participants. The annual amortization amortization shall not be less than the total amount of unrecognized unrecognized gains and and losses up to $1 million.

NOTES NOTES TO TO FINANCIAL STATEMENTS FINANCIAL STATEMENTS 23

J. Retirement J. Retirement Benefits Benefits (continued)

Components of Components of Net Periodic Periodic BenefitBenefit (Income) Cost and Other Other Amounts Recognized in Amounts Recognized Unrestricted Net in Unrestricted Net Assets Table Table 15 summarizes summarizes the the components components of net periodic periodic benefit benefit (income)

(income) cost cost recognized recognized in in the Statement of the Statement of Activities Activities and and other other amounts amounts recognized recognized in unrestricted unrestricted net net assets for the the years years ended ended June June 30, 30, 2009 2009 and and 2008.

Table Table 15.15. Components Components of Net Net Periodic Periodic BenefitBenefit (Income) Cost and Other Other Amounts Amounts Recognized Recognized in in Unrestricted Unrestricted Net Assets (in thousands thousands of dollars) dollars) r--- Pension Benefits Benefits ~ Other 9- Benefits Benefits_

2009 2008 2009 2008 Components Components of net periodic periodic benefitbenefit (income)

(income) cost cost Service Service cost ...............................

................................... ... $ 54,344 $$

54,344 47,122 47,122 $ 15,009 $

15,009 13,335 13,335 Interest Interest cost cost ...................................

................................... 134,080 134,080 127,332 127,332 25,137 25,137 21,084 21,084 Expected Expected return return on plan assets ....................

.................... (215,752)

(215,752) (201,487) (20,647) (19,756)

Amortization Amortization of transition transition amount .................

................. 4,776 4,776 4,775 Amortization of net actuarial (gain) loss .............

Amortization ............. (31,172)

(31,172) (7,802)

(7,802) 2,380 2,380 1,000 1,000 Amortization Amortization of prior service service cost .................

................. 2,180 2,180 2,103 3,555 3,555 3,557 3,557 One-time specific termination termination benefits (FAS 88) ......

88) ...... 1,143 Net periodic periodic benefit benefit (income) cost .............. .............. (55,177) (32,732) 30,210 30,210 23,995 Other amounts recognizedrecognized in unrestrictedunrestricted net assets year actuarial Current year actuarial loss .......................

....................... 728,482 120,884 120,884 78,677 78,677 67,476 67,476 Amortization Amortization of actuarial actuarial gain (loss) ................

................ 31,172 31,172 7,802 7,802 (2,380) (1,000)

(1,000)

Current year prior service service cost ....................

.................... 3,598 3,598 Amortization Amortization of prior service cost ................. ................. (2,180) (2,103)

(2,103) (3,555)

(3,555) (3,557)

(3,557)

.Amortization of transition

.Amortization ...............

transition obligation ............... (4,776) (4,775)

Total recognized recognized in unrestricted unrestricted net assets ....... ....... 757,474 757,474 130,181 130,181 67,966 58,144 Total recognized recognized in net periodic periodic benefit (income) cost and unrestricted unrestricted net assets ................ ................ $ 702,297 $ 97,449 $ 98,176 $ 82,139 82,139 The estimated estimated net actuarial gain and prior service cost for for cost and transition obligation for the other postretirement other postretirement the defined benefit plan that will be amortized from unre- plans that will be amortized amortized from unrestricted net assets stricted net assets into net periodic benefit income during into net periodic benefit cost during the next fiscal year are the next fiscal year are $29.5 $29.5 million and $2.2 million, $4.4 million, $3.6 million and $4.8 million, respectively.

respectively. The estimated net actuarial loss, prior service 24 MIT MIT REPORT REPORT OF OF THE THE TREASURER TREASURER 2009 2009

J.

J. Retirement Retirement Benefits Benefits (continued)

Benefit Obligations Obligations and Fair Value of Assets Table 16 summarizes summarizes the funded status, benefit obligations, amounts recognized recognized in the Statements Statements of Financial Position, and amounts amounts recognized in unrestricted net assets for the MIT's benefit plans. MIT MIT uses a June 30 measurement date for its pension and postretirement postretirement benefit plans.

Table 16. 16~ Benefit Obligations and Fair Value of Assets (in thousands (in thousands ofdollars) dollars) r---

I - Pension Benefits ~ -- ] i

  • Other Benefits Benefits ~

2009 2008 2009 2008 Change in benefit obligation Change obligation Benefit Benefit obligation obligation at beginning of year ............. ............. $ 2,066,978 2,066,978 $ 2,042,729 2,042,729 $ 382,845 $ 334,436 334,436 Service Service cost ...................................

................................... 54,344 54,344 47,122 15,009 15,009 13,335 13,335 Interest ...................................

Interest cost ................................... 134,080 134,080 127,332 127,332 25,137 25,137 21,084 21,084 Retiree contributions ............................

Retiree contributions ............................ 3,105 2,914 2,914 Plan am endm ent ...............................

amendment ............................... 3,598 Net benefit payments and transfers ................ ................ (111,972)

(111,972) (107,757)

(107,757) (22,043)

(22,043) (23,544)

Assumption changes and actuarial net loss (gain) .....

Assumption ..... (25,596) (46,046) 5,685 34,620 34,620

......................

Special termination benefits ...................... 1,143 Benefit Benefit obligation obligation at end of year ...............

year ............... 2,118,977 2,118,977 2,066,978 2,066,978 409,738 409,738 382,845 Change Change in plan assets Fair value of plan assets at beginning beginning of year. year .........

........ 2,989,316 2,989,316 3,062,516 251,684 251,684 285,414 285,414 Actual return on plan assets ......................

...................... (538,325)

(538,325) 34,557 (52,345)

(52,345) (13,100)

(13,100)

Employer contributions contributions .........................

......................... (54,200) - 54,200 Retiree contributions ............................

Retiree contributions ............................ - 3,105 3,lO5 2,914 2,914 Net benefit payments and transfers ................ ................ (111,972)

(111,972) (107,757)

(107,757) (22,043)

(22,043) (23,544)

Fair value of plan assets at end of year........... ........... 2,284,819 2,284,819 2,989,316 234,601 251,684 Funded (unfunded) status at end of year ......... ......... $ 165,842 $ 922,338 $ (175,137)

(175,137) $ (131,161.)

(131,161)

Amounts recognized recognized in the statements statements of of financial position position consistconsist of:

Benefit Benefit assets ..................................

.................................. $ 165,842 165,842 $ 922,338 $ $

Benefit liability Benefit liability ................................

................................ - (175,137)

(175,13 7) (131,161)

(131,161)

T otal ......................................

Total. ..................................... $ 165,842 $ 922,338 $ (175,137)

(175,137) $ (131,161)

(131,161) recognized in unrestricted Amounts recognized unrestricted net net assets consist of: of:

N Net et actuarial loss (gain) ..........................

.......................... $ (20,371)

(20,371) $ (780,024) $ 148,942 148,942 $S 72,645 Prior service ...............................

service cost ............................... 11,182 11,182 13,362 7,113 7,113 10,668 10,668

..............................

Transition liability .............................. 19,103 19,1O3 23,879 23,879 T otal ......................................

Total. ..................................... $ (9,189) $ (766,662)

(766,662) $ 175,158 175,158 $ 107,192 107,192 NOTES TO FINANCIAL STATEMENTS FINANCIAL STATEMENTS 25 25

J. Retirement J. Retirement Benefits (continued) (continued)

The accumulated accumulated benefit benefit obligation for MIT's defined defined accumulated benefit obligation accumulated obligation (ABO) or the projected projected benefit pension plan was $2,011.3 million and $1,966.5 $1,966.5 benefit obligation (PBO). The ABO equals the present present million atJune 30, 2009 and 2008, respectively. value of benefits as of the end of the fiscal year (June aune 30).

The PBO equals the ABO adjusted for the effect of future Defined benefit plan funding rules are set forth under the expected pay increases. As of June 30, 2009, the MIT expected MIT Pension Protection Act of 2006 (PPA). On a PPA basis, defined benefit pension plan was 113.6 percent funded on on the funded position of a plan is measured by comparing comparing an ABO basis. This is based on an ABO of $2,011.3 million million the actuarial value of assets with the funding target. The and the fair value of assets of $2,284.8

$2,284.8 million.

actuarial value of assets is an average of the fair market actuarial market value value three-year period adjusted for cash flow and expected over a three-year expected The ABO and PPA funded percentages percentages differ primarily due earnings, but not greater than 110 percent percent of the fair market market to the difference difference in plan assets and economic economic conditions value. The funding target is the present present value of benefits valuation assumptions) between therefore plan valuation (and therefore between January accrued accrued or earned as of the valuation date (January aanuary 1). 1). As of of 1, 2009 and June 30, 2009.

1,2009 January 1, January 1, 2009 (the plan's valuation valuation date), the MIT defined MIT has recognized recognized the effect of the expected Medicare benefit pension plan was 129.7 percent funded on a PPA PPA subsidy by reducing its accumulated accumulated postretirement postretirement benefit benefit basis. This is based on a funding target of $1,957.2 of$1,957.2 million obligation by $67.8 million and $64.0 million as ofJune obligation actuarial value of assets of $2,538.5 and an actuarial $2,538.5 million.

30, 2009 and 2008, 30,2009 2008, respectively. This initial reduction was Under accounting accounting rules set forth in Statement Statement of Financial Financial recognized as an actuarial gain. Additionally, the service and Accounting Standards Standards No. 87 Employers'Accounting Employers' AccountingfoT for interest cost components postretirement benefits components of postretirement cost benefits cost Pension Pension (SFAS No. 87), the funded position of the plan is is were reduced in 2009 2009 and future periods.

measured by comparing comparing the fair value of assets with the Table Assumptions and Health Table 17. Assumptions Health Care Care Cost Trend Rates c= Benefits ~I c==

Pension Benefits F-----Pension Benefits~

- Other Benefits-----

2009 2008 2009 2008 Assumptions Assumptions used to determine determine benefit obligation obligation of June 30:

as ofJune Discount rate .................................

.................................. . 6.25%

6.25% 6.50%

6.50% 6.25%

6.25% 6.50%

Rate of compensation compensation increase ....................

................... . 4.00%W 4.00%1 4.00%

Assumptions Assumptions used to determine determine net periodic benefit benefit (income) cost for year ended June 30:

Discount rate .................................

.................................. . 6.50%

6.50% 6.25%

6.25% 6.50%

6.50% 6.25%

6.25%

Expected long-term return return on plan assets ...........

.......... . 8.00%

8.00% 8.25%

8.25% 7.00%

7.00% 7.50%

7.50%

Rate of compensation ....................

compensation increase ................... . 4.00%

4.00% 4.00%

Assumed Assumed health care cost trend rates:

Health care cost trend rate assumed for next year. year ......... 8.00% 8.50%

Rate to which the cost trend rate is assumed to to decline (the ultimate trend rate) ........................

......................... . 5.00% 5.00%

5.00%

Year that the rate reaches the ultimate trend rate .... ..... . 2015 2015 1

The average rate ofsalagy increase is assumed to be 2% for 2010 and 2011, 3%for 2012, and 4% thereafter The average rate afsalmy increase is assumed to be 2% fin' 20] 0 and 2011, 3% for 2012, and 4% the7'eafte1:

The expected long-term rate of return return assumption assumption of factors, including historical market market index returns, the represents represents the expected average rate of earnings earnings on the anticipated long-term asset allocation of the plans, histori-funds invested or to be invested to provide for the benefits cal plan return data, plan expenses and,the andthe potential to included included in the benefit benefit obligation. The long-term long-term rate outperform market index returns.

outperform of return assumption is determined determined based on a number 26 MIT MIT REPORT REPORT OFOF THE THE TREASURER TREASURER 2009 2009

J. Retirement Retirement Benefits Benefits (continued)

(continued)

As an indicator indicator of sensitivity, a one percentagepercentage point change change in the assumed health care care cost trend rate would effect 2009 as shown in Table 18 below.

Table Table 18. Health Health Care Cost Trend Rate Sensitivity (in thousands of dollan)

(in thousands dollars)  % point increase 11% increase 1% point decrease 1%

Effect on 2009 post-retirement post-retirement service and interest interest cost ..................

................... . $ 5,963 $ (4,941)

Effect on post-retirement benefit benefit obligation obligation as of June 30, 2009 ............

............. . $$$46,870 46,870 $ (39,674)

(39,67.4)

Plan Assets allocations and weighted-average Target allocations weighted-average asset allocations of the investment portfolio for the MIT defined defined benefit plan and other postretirement postretirement benefit plans atJune at June 30, 2009 and 2008 are shown in Table 19 below.

Table Table 19. Plan Assets Pension Benefits Benefits Benefits Other Benefits Plan Assets Assets as of June June 30 Plan Assets as of June 30 30 Target Target Target Allocation 2009 2008 Allocation 2009 2008 Cash .......................

....................... - 4%

4% - - 2% -

Equity securities .............

............. 73%

73% 71%

71% 79%

79% 75%

75% 77%

77% 75%

75%

Fixed income securities ........

securities ........ 8%

8% 8% 13%

13% 20%

20% 18%

18% 24%

Real estate ..................

estate .................. 19%

19% 17%

17% 8%

8% 5% 3%

3% 1%

Total .....................

Total. ..........*......... 100% 100% 100% 100% 100% 100%

The investment investment objectives objectives for the assets of the plans are to Contributions minimize expected funding contributions minimize expected contributions and to meet or or MIT does not expectexpect to contribute to its defined benefit benefit exceed exceed the rate of return return assumed for plan funding pur- pension plan, and expects expects to contribute contribute approximately $36.8 approximately $36.8 poses over the long term. The nature and duration of ben- ben- million to its other postretirement postretirement benefit benefit plan in 2010.

efit obligations, along with assumptions concerning concerning asset asset These contributions contributions have been estimated based based on the same class returns and return correlations, correlations, are considered considered when assumptions assumptions used to measure MIT's benefit obligation at determining appropriate asset allocation determining an appropriate allocation to achieve the June 30, 2009.

investment investment objectives.

In 2009, under provision of Section Section 420 of the Internal Internal Investment Investment policies and strategies governing the assets of of Revenue Revenue Code, the MIT defined defined benefit plan transferred transferred the plans are designed to to achieve investment objectives objectives $54.2

$54.2 million of excess pensionpension assets to the postretirement postretirement within prudent risk parameters.

parameters. Risk management management practices welfare benefit plan. The Internal Revenue Revenue Code permits include include the use of external investment investment managers and the transfers transfers annually of an amount not to exceed actual maintenance maintenance of a portfolio diversified by asset class" class: invest- expenditures on retiree retiree health health care benefits. The transfer transfer ment approach and security holdings, and the maintenance resulted resulted in a negative contribution of $54.2 $54.2 million for the of sufficient liquidity liquidity to meet benefit obligations as they benefit obligations defined benefit plan and a positive contribution of $54.2 come due. In 2008, the defined defined benefit plan participated participated million to the postretirement postretirement welfare benefit plan.

in securities securities lending programsprograms in order to generate additional income by loaning plan assets to borrowers borrowers on on collateralized basis. The defined benefit a fully collateralized benefit plan had no outstanding securities securities lending arrangements arrangements atJune 30, 2009.

NOTES TO FINANCIAL FINANCIAL STATEMENTSSTATEMENTS 27

J. Retirement Benefits (continued) (continued)

Expected Future Future Benefit Payments reflects total expected benefit payments for Table 20 reflects for the the defined defined benefit and and other postretirement postretirement benefit plans,plans, as well as expected receipt receipt of the federal subsidy. subsidy. These payments have been estimated estimated based on the same assumptions assumptions used to to measure MIT's benefit obligation at year end.

Table 20. Expected Future Benefit Payments Table Pension Other Federal (in thousands (in thousandsof dollars) dollars) Benefits Benefits'1 Benefits Subsidy2 Subsidy2

............................................

2010 ................... , ....................... . $ 117,270 $ 28,759 $ 2,893

...........................................

2011 .......................................... . 125,361 31,154 31,154 3,176

...........................................

2012 .......................................... . 128,446 33,044 33,044 3,498

...........................................

2013 ........................................... . 131,426 34,870 34,870 3,814 3,814

...........................................

2014 .......................................... . 134,532 36,595 36,595 4,122

......................................

2015-2019 ..................................... . 729,805 208,258 24,886

'Other 10 benefits reflect ther benefits reflect the the total total net net benefits benefits expected expected to be paid paid from the the plans plans and and exclude the participants' share of the participants' share the cost, which is funded by participant contributions to the plans, and does not reflect any subsidy expected to be received from the by participant contributions to the plans, and does not reflect any subsidy expected to be received from the government for government MIT's retiree for MIT's retiree prescription drug coverage.

prescription drug coverage.

2 2

Federalsubsidy reflects Federal subsidy the amount reflects the amount MIT MIT is expected to is expected to receive receive from from the the government government and and reflects reflects MIT's MIT's expected drugs claims expected drugs claims experience.

experience.

28 28 MIT REPORT MIT REPORT OF OF THE THE TREASURER TREASURER 2009 2009

Components of Net Assets and Endowment K. Components Endowment Table 21 below presents the three categories categories of net assets by purpose as of June 30, 2009.

ofJune 2009. The amounts amounts listed in the unrestricted unrestricted columncolumn labeled Endowment Funds Principal Principal are those gifts received over the years that MIT designated designated as funds functioning as endowment and invested invested with the endowment endowment funds. A large component of temporarily restrictedrestricted net net assets is pledges, pledges, the majority of which will be reclassified reclassified toto unrestricted net assets when cash is received.

Table 21.21. Fund Category 2009 2009 Temporarily Permanently I 2008 (inthousands (in thousands of dollars) Unrestricted Unrestricted Restricted Restricted Restricted Restricted Total Total Endowment Endowment funds principal General purpose ....................

purpose .................... $$ 594,998 $ 707,929 707,929 $ 214,524 214,524 $$ 1,517,451 $$ 1,929,726 1,929,726 Departments and research .............. ............. 325,179 325,179 562,495 383,533 383,533 1,271,207 1,597,782 L ibrary ............................

Library ............................ 7,883 12,781 7,799 28,463 36,031 36,031 Salaries and wages ...................

................... 285,788 1,559,674 1,559,674 571,340 2,416,802 3,062,843 Graduate general ....................

Graduate .................... 47,580 47,580 72,129 72,129 69,981 189,690 189,690 210,750 210,750 Graduate departments Graduate departments ................

................. 55,309 55,309 171,312 171,312 159,681 386,302 478,012 Undergraduate ......................

Undergraduate ...................... 142,731 142,731 629,330 629,330 286,449 1,058,510 1,058,510 1,333,218 1,333,218 P rizes .............................

Prizes ............................. 4,780 15,278 15,278 17,167 37,225 37,225 47,583 M iscellaneous .......................

Miscellaneous ....................... 668,552 127,935 127,935 33,694 33,694 830,181 1,056,514 1,056,514 Investment income held for distribution distribution . 246,190 246,190 316,328 316,328 Endowment funds before pledges ....... ....... 2,378,990 2,378,990 3,858,863 1,744,168 1,744,168 7,982,021 7,982,021 10,068,787 Pledges ............................

Pledges ............................ 169,784 169,784 169,784 169,784 165,713 165,713 Total endowment endowment funds ............. ............. 2,378,990 2,378,990 3,858,863 1,913,952 1,913,952 8,151,805 8,151,805 10,234,500 10,234,500 Other invested funds Student loan funds ...................

................... 19,889 19,889 17,536 17,536 37,425 37,425 36,900 36,900

......................

Building funds ...................... 58,258 58,258 147,623 205,881 185,771 Designated purposes: .................

.................

- Departments and research ...........

research ........... 258,747 - 258,747 246,194 246,194

- Other purposes ....................

.................... 51,440 51,440 - 51,440 51,440 47,038 Reserve funds .......................

....................... 98,316 98,316 - 98,316 98,316 3,777 3,777 Real estate gifts held for sale ........... ........... 7,908 - 7,908 7,653 7,653 Life income funds ...................

................... 6,179 39,273 39,273 53,960 53,960 99,412 99,412 122,457 122,457 Pledges ............................

............................ 294,953 - 294,953 277,590 Other funds available available for current current expenses expenses 254,780 254,780 60,303 - 315,083 1,154,847 Funds expended for educational educational plant ... ... 425,418 425,418 - 425,418 425,418 453,247 Total other funds ...................

................... 1,180,935 1,180,935 542,152 542,152 71,496 71,496 1,794,583 2,535,474 2,535,474 Total net assets at fair value ............ ............ $ 3,559,925 4,401,015

$ 4,401,015 9,946,388

$ 1,985,448 $ 9,946,388 $12,769,974

$12,769,974 NOTES NOTES TO FINANCIAL FINANCIAL STATEMENTSSTATEMENTS 29

K.

K. Components Components of Net Assets and Endowment Endowment (continued)

MIT's endowment consists consists of approximately approximately 3,000 3,000 a result of this interpretation, MIT MIT has not changed the individual funds established established for a variety variety of purposes and way permanently restricted net assets are classified.

classified. See includes both donor-restricted includes. donor-restricted endowment funds and and note A for further information classification.

information on net asset classification.

funds designated by the Board of Trustees to function as as The remaining remaining portion of the donor-restricted donor-restricted endowment endowment endowments. As required by GAAP, net assets associated fund that is not classified classified in permanently restricted net restricted net endowment funds, including funds designated with endowment designated by the assets is classified as temporarily restricted restricted net assets Board of Trustees to function as endowments, endowments, are classified classified until those amounts are appropriated appropriated for expenditure in a and reported reported based on the existence existence or absence of donor manner consistent consistent with the standard of prudence prudence prescribed prescribed imposed restrictions. by UPMIFA. In accordance accordance with UPMIFA, the Board of Trustees Trustees considers the following factors in making making a The Board of Trustees of MIT MIT has interpreted interpreted the determination to appropriate or accumulate determination accumulate endowment endowment Massachusetts Massachusetts enacted version of Uniform Prudent Prudent funds:

Management Management of Institutional Funds ofInstitutional Funds Act (UPMIFA) as allowing MIT to appropriate for expenditure expenditure or accumulate accumulate i.

1. the duration and preservation of the fund so much of an endowment fund as MIT determines is is ii.

II. the purposes of MIT and the endowment endowment fund prudent for the uses, benefits, purposes purposes and duration for for iii.

Ill. general economic economic conditions which the endowment fund is established, subject to the iv.

IV. the possible effect of inflation and deflation deflation intent of the donor as expressed in the gift instrument. v. the expected total return from income and the otherwise in the gift instrument, the assets in Unless stated otherwise in appreciation of investments appreciation an endowment endowment fund shall be donor-restricted donor-restricted assets until vi.

VI. other resources of MITMIT appropriated for expenditure appropriated expenditure by the Board of Trustees. As vii.

VII. the investment investment policies of MITMIT Fiscal Year 2009 Table 22. Endowment Endowment Net Asset Composition by Type Type of Fund as ofJune of June 30, 2009 Temporarily Permanently Permanently (in (in thousands thousands of dollan) dollars) Unrestricted Unrestricted Restricted Restricted Total Donor-restricted Donor-restricted endowment endowment funds ................

............... . $ - $ 3,858,863 3,858,863 $ 1,913,952 1,913,952 5,772,815

$ 5,772,815 Board-designated Board-designated endowment funds .............. ............... . 2,378,990 - - 2,378,990 2,378,990

......................

Total endowment funds ..................... . $$ 2,378,990 2,378,990 $ 3,858,863 3,858,863 1,913,952

$ 1,913,952 $ 8,151,805 8,151,805 Table 23. Changes in Endowment Endowment Net Assets for the Fiscal Year ended June 30, 2009 Temporarily Temporarily Permanently Permanently (in thousands (in thousands of dollars) dollars) Unrestricted Unrestricted Restricted Restricted Total Endowment net assets, June 30, 2008 ..............

Endowment .............. $ 3,091,110 3,091,110 $5,320,317

$5,320,317 $1,823,073

$1,823,073 $10,234,500

$10,234,500 Investment Investment return:

Investment Investment income ...........................

income ........................... 21,970 48,094 48,094 4,046 4,046 74,110 74,110 Net depreciation depreciation (realized and unrealized) ........ ........ (618,016) (1,143,356) (24,337) (1,785,709)

(1,785,709)

Total investment return ..........................

.......................... (596,046)

(596,046) (1,095,262)

(1,095,262) (20,291)

(20,291) (1,711,599)

(1,711,599)

Contributions .................................

................................. 4,650 - 108,155 108,155 112,805 Appropriation of endowment assets for expenditure Appropriation expenditure... ... (153,545)

(153,545) (364,402)

(364,402) - (517,947)

Other Other changes:

Underwater Underwater gain adjustment and funds held for reinvestment .........................

......................... (23,984) 23,984 4,587 4,587 Net asset reclassifications reclassifications and transfers to create board-designated board-designated endowment endowment funds .............. .............. 56,805 (25,774) (1,572)

(1,572) 29,459 29,459 Endowment net assets, June 30, 2009 ...........

Endowment ........... 2,378,990

$ 2,378,990 3,858,863 $ 1,913,952

$ 3,858,863 1,913,952 $ 8,151,805 8,151,805 30 MIT REPORT MIT REPORT OFOF THE THE TREASURER TREASURER 2009 2009

Components of Net Assets and Endowment K. Components Endowment (continued)

Fiscal Year 2008 Table Table 24. Endowment Endowment Net Asset Asset Composition by Type of Fund as of ofJune June 30, 2008 Temporarily Temporarily Permanently Permanently (in thousands ofdollars)

(in thousands dollars) Unrestricted Unrestricted Restricted Restricted Restricted Total Donor-restricted endowment Donor-restricted endowment funds ............... ................ . $ - $ 5,320,317 5,320,317 $ 1,823,073 $ 7,143,390 7,143,390 Board-designated endowment Board-designated endowment funds .............. ............... . 3,091,110 3,091,110 - - 3,091,110 3,091,110 Total endowment endowment funds ......................

..................... . $ 3,091,110 3,091,110 $ 5,320,317 5,320,317 $ 1,823,073 $10,234,500

$10,234,500 Table Table 25.

25. Changes in EndowmentEndowment Net Assets Assets for the Fiscal Year ended June 30, 2008 Temporarily Temporarily Permanently (in thousands of dollars)

(in thousands dollars) Unrestricted Unrestricted Restricted Restricted Restricted Total Endowment net assets, June 30, 2007 .............. .............. $ 3,147,258 3,l47,258 $5,273,222

$5,273,222 $1,695,909

$1,695,909 $10,116,389

$10,116,389 Investment return:

Investment ...........................

Investment income ........................... 46,960 107,261 3,551 3,551 157,772 Net depreciation depreciation (realized and unrealized) ........ ........ 86,065 131,332 8,209 225,606 Total investment Total investment return ..........................

.......................... 133,025 238,593 11,760 383,378 383,378

.................................

Contributions ................................. 15,242 - 106,129 106,129 121,371 Appropriation endowment assets for expenditure...

Appropriation of endowment expenditure ... (116,874) (275,788) - (392,662)

(392,662)

Other changes:

Underwater Underwater gain adjustment adjustment and funds held for reinvestment reinvestment .........................

......................... (329) 329 1,482 1,482 Net asset reclassifications reclassifications and transfers to create board-designated board-designated endowment funds .............. .............. (87,212) 83,961 7,793 7,793 4,542 Endowment Endowment net assets, June 30, 2008 ...........

........... $ 3,091,110 3,091,110 $ 5,320,317 5,320,317 $ 1,823,073 1,823,073 $10,234,500

$10,234,500 Underwater Endowment Funds Investment and Spending Policies From time to time, the fair value of assets associated associated with MIT maint~ins its investments MIT maintains in~estments primarily in two investment investment individual donor-restricted donor-restricted endowment funds may fall fall pools: Pool A, principally principally for endowment endowment and funds below the value of the initial and subsequent subsequent donor gift functioning as endowment, and Pool C, principally principally amounts (underwater). When underwater underwater endowment endowment for investment of current funds of MIT's schoolsschools and funds exist, they are classified classified as a reduction reduction of unrestricted unrestricted departments and MIT's operating funds. Pool A operates as departments net assets. Total underwater underwater endowment funds reported in a mutual fund with units purchased and redeemed redeemed based on on unrestricted net assets were $24.3 unrestricted $24.3 million and $0.3 million

$0.3 million the previous month's unit market value of Pool A. The total as ofJune ofJune 30, 2009 and 2008, respectively. The underwater underwater market value of Pool A was $8,143.7

$8,143.7 million atJune at June 30, status of these funds resulted from unfavorable market market 2009 and $10,292.5

$10,292.5 million in 2008. The total value of Pool fluctuations. A includes Pool C investments investments of $323.7 million atJune of$323.7 30, 2009 and $416.0 million in 2008. Certain assets are also 30,2009 Separately invested maintained in separately invested funds. Separately funds totaled $162.1

$162.1 million as ofJune of June 302009 30 2009 and $192.3

$192.3 million in 2008.

NOTES TO FINANCIAL FINANCIAL STATEMENTS STATEMENTS 31 31

K. Components K. Components of Net Net Assets Assets and Endowment Endowment (continued)

MIT has MIT has adopted adopted endowment endowment investment investment and and spending spending was $69.21 per Pool

$69.21 per Pool AA unit, unit, up up 30.6 30.6 percent percent from from $53.00

$53.00 policies designed policies designed to to provide provide a predictable predictable stream stream of of funding in 2008. The The increase increase inin the distribution distribution per per unit unit from programs supported to programs supported by itsits endowment endowment while while maintaining maintaining 2008 2009 is the 2008 to 2009 the result of aa planned planned increase increase consistent consistent the purchasing purchasing power endowment assets. Under power of endowment Under this with the comprehensive comprehensive financial financial framework framework developed developed policy, the return return objective endowment assets is objective for the endowment in 2008. The financial financial framework addressed aa long framework addressed long term to attain an average, average, annual, least 6 annual, real total return of at least structural imbalance structural imbalance in the funding of operations, operations, bringing bringing percent over the long term. Real Real total total return is the sum of of MIT's MIT's operating operating revenues alignment with planned revenues into alignment planned capital appreciation depreciation) and current appreciation (or depreciation) current income operating operating expenses including adjusting the annual expenses in 2009, including adjusted for inflation adjusted inflation by by the Higher Higher Education Education Price Index endowment endowment spending.

(HEPI).

(HEP!). An additional investment goal is to maximize An additional maximize appropriate risk such return relative to appropriate such that that performance performance In 2009, the amount distributed for spending amount distributed spending from exceeds exceeds appropriate benchmark returns appropriate benchmark returns at the total pool, Pool A and and Pool C totaled $582.8 totaled $582.8 million, compared to compared asset class and and individual individual manager manager levels. $443.5

$443.5 million distributed in the prior year. In million distributed In 2009, 2009, the distribution distribution included included $455.7

$455.7 million investment gains, million from investment To achieve its long-term long-term rate rate of return return objectives, objectives, MIT MIT or 78.2 percent distributed to funds. In 2008, percent of the total distributed 2008, relies on on a total return investment returns return strategy in which investment comparable amount distributed included the comparable included $244.8

$244.8 million, realized through both capital appreciation (realized are realized (realized and unrealized gains) and current yield (interest and dividends). or 54.9 percent, from investment gains. During 2009, MIT targets diversified asset allocation targets a diversified allocation that places places greater greater distributions separately invested distributions from separately invested funds were emphasis on equity-based emphasis equity-based investments to achieveachieve its long- $3.3 compared to $3.9

$3.3 million, compared $3.9 million in 2008.

2008. The income income objectives within prudent term objectives prudent risk constraints. earned earned in Pool C, or currently invested currently invested funds, was fully fully addition to the aforementioned distributed. In addition aforementioned distributions, distributions, Executive Committee of the Corporation The Executive Corporation votes votes to there was also aa special special distribution of $24.0 $24.0 million from distribute distribute funds for operational operational support from general gains in Pool C in 2009 and $5.0 $5.0 million in 2008.

2008.

investments. In In accordance accordance withwith MIT's MIT's spending spending policy, these distributions are funded from both investment investment income distribution rate and market appreciation. In 2009, the distribution L. Subsequent Subsequent Events Events The Broad Institute On July 1, OnJuly 1, 2009, The Broad Institute, previously a unit of of The Broad Broad Institute's assets and liabilities reflected in MIT's

MIT, MIT, became a separately incorporated entity.

incorporated entity. The Broad Statements of Financial Position as ofJune Statements of June 30, 2009 were center located adjacent to the MIT Institute is a research center MIT $199.5

$199.5 million and $106.2

$106.2 million, respectively. Assets campus. Before Before July 1, 1, 2009, MIT administered administered The BroadBroad consist primarily of equipment, leasehold improvements, improvements, Institute as a collaboration among MIT, MIT, Harvard University accounts receivable, grants and contracts in progress, cash, affiliated hospitals, and The Whitehead Institute and its affiliat.ed investments, and inventory. Liabilities include sponsor sponsor for Biomedical Research. Following the separation,separation, The advances, agency funds held, and deferred landlord financed self-administered collaboration of MIT, Broad Institute is a self-administered MIT, leasehold improvements. At separation on July 1, 1, 2009, Harvard University, and affiliated hospitals. MIT transferred these assets and liabilities to the separately separately incorporated incorporated Broad Institute. The Broad Institute's separation was enabled by a $400 million gift The separation Statement of Activities in revenues as reflected in MIT's Statement pledged by Los Angeles philanthropists Eli and Edythe 2009 totaled $206.0 million; expe~sesexpenses were $215.4 million.

Broad to The BroadBroad Institute. The gift serves to create endowment to transform The Broad Institute an endowment Institute from a 10-year experiment, as it was conceived when founded in

$100 million gift of operating funds 2004 with a $100 funds to MIT, MIT, entity.

permanent entity.

into a permanent 32 32 MIT MIT REPORT REPORT OF OF THE THE TREASURER TREASURER 2009 2009

PRCEWATERHOUsECOOPERS M PricewaterflouseCoopers PricewaterhouseCoopers LLP 125 125 High Street Boston MA MA02110 02110 Telephone Telephone (617).530 (617)530 5000 Facsimile (617) 530 5001 Report Report of Independent Independent Auditors To the Audit Committee of the Massachusetts Massachusetts Institute Institute of Technology Technology In our opinion, the accompanying accompanying consolidated balance balance sheets and the related related consolidated statements of activities and cash flows present fairly, in all material respects, the financial position of the Massachusetts Massachusetts Institute of Technology (the "Institute")

"Institute") at June 30, 2009 and 2008, 2008, and the changes changes in in its net assets and its cash flows for the years then ended inin conformity with accounting accounting principles generally generally accepted accepted in America. These financial statements in the United States of America statements are the responsibility responsibility of the Institute's Institute's management. Our responsibility responsibility is to express an opinion on these financial statements based on our audits. We conductedconducted our audits of these statements in accordance accordance with auditing standards generally accepted generally accepted in the United States of America. Those standards standards require that we plan and perform perform the audit to obtain reasonable reasonable assurance about whether whether the financial statements statements are free of material misstatement. An audit includesincludes examining, examining, on a test basis, basis~ evidence supporting the amounts and disclosures disclosures in the financial statements, statements, assessing the accounting principles principles used and significant significant estimates estimates made by management, and evaluating the overall financial statement presentation.

management, and evaluating the overall financial statement presentation. We believe believe that our audits provide a reasonable reasonable basis for our opinion.

As described in As described in Note Note A A to the accompanying to the consolidated financial accompanying consolidated financial statements, statements, as of of July July 1, 1,

2008, 2008, the Institute Institute adopted adopted Financial Financial Accounting Accounting Standards Board (FASB) StatementStatement No. 157, Fair Value Measurements.

Fair Measurements.

uP September September 16, 2009 16,2009 REPORT OF INDEPENDENT AUDITORS INDEPENDENT AUDITORS 33

Massachusetts Institute of Technology Massachusetts Technology Five-YearTrend Five-Year Trend Analysis - Financial Highlights Highlights (Dollarsin thousands)

(Dollar's thousands) 2009 2008 2007 2006 2005 Financial Position:

Financial Investments, at fair value ...............

Investments, ............... $$ 9,519,413 $ 11,308,429 11,308,429 $ 11,061,142

$11,061,142 $ 9,500,178 9,500,178 $ 8,022,655 8,022,655 Land, buildings, buildings, and equipment, at cost less accumulated depreciation....

accumulated depreciation 2,120,613 1,938,919 1,938,919 1,743,203 1,687,835 1,687,835 1,608,719 1,608,719 Borrow Borrowingsings ..........................

.......................... 1,735,843 1,335,393 1,335,393 1,078,234 1,078,234 1,278,489 1,278,489 1,249,591

..........................

Total assets .......................... 12,949,552 12,949,552 15,458,982 14,946,369 14,946,369 12,362,451 12,362,451 10,856,158 10,856,158 Total liabilities .......................

liabilities ....................... 3,003,164 3,003,164 2,689,008 2,251,065 2,251,065 2,302,676 2,302,676 2,230,588 2,230,588 Unrestricted net assets, at market.

Unrestricted market ............... 3,559,925 3,559,925 5,086,270 5,086,270 5,216,844 5,216,844 3,732,539 3,732,539 3,277,741 Temporarily restricted net assets, at market Temporarily market 4,401,015 4,401,015 5,765,302 5,684,006 5,684,006 4,699,881 3,792,029 3,792,029 Permanently restricted net assets, at market Permanently market 1,985,448 1,985,448 1,918,402 1,918,402 1,794,454 1,794,454 1,627,355 1,627,355 1,555,800 1,555,800 Total net assets .......................

....................... 9,946,388 9,946,388 12,769,974 12,769,974 12,695,304 12,695,304 10,059,775 10,059,775 8,625,570 8,625,570 Market value of endowment endowment funds ....... ....... 7,982,021 10,068,787 10,068,787 9,980,409 9,980,409 8,368,066 8,368,066 6,712,436 6,712,436 Principal Sources of Revenue:

Tuition and other income .............. .............. $ 431,772 $$ 421,230 $ 394,652 $ 373,309 373,309 $ 362,299 362,299 Research Research revenues:

Cam Campus pus direct ....................

.................... 497,493 448,065 407,650 407,650 419,144 419,144 400,345 Campus ..................

Campus indirect .................. 193,289 193,289 173,455 173,455 163,148 163,340 159,359 159,359 Lincoln Laboratory Laboratory direct direct ...........

........... 642,101 587,076 573,696 602,426 602,426 579,915 579,915 Lincoln Laboratory Laboratory indirect ......... ......... 27,667 27,667 32,611 32,234 32,234 33,968 33,968 31,210 31,210 SM SMARTART direct.

direct ....................

................... 14,026 14,026 3,857 3,857 SM SMARTART indirect ..................

.................. 496 106 106 Gifts, bequests bequests and pledges .......................... 303,890 385,952 332,874 332,874 232,472 177,305 Net (losses)

Oosses) gains on investments and other assets (1,854,380)

(1,854,380) 154,765 1,673,275 1,673,275 1,432,552 1,432,552 885,605 Investment distribution ................

................ 603,907 603,907 456,154 456,154 355,848 329,375 329,375 318,067 Principal Purposes of Expenditures:Expenditures:

Total operating expenditures ............

operating expenditures ............ $ 2,461,286 2,461,286 $ 2,294,247 $ 2,201,696 2,201,696 $ 2,175,913 2,175,913 2,032,517

$ 2,032,517 General and administrative .............

General ............. 497,043 486,444 482,527 482,527 485,306 424,770 424,770 Instruction and unsponsored unsponsored research .... .... 680,848 641,241 608,423 608,423 548,256 548,256 503,901 Direct cost of sponsored sponsored research -

....................

current dollars .................... 1,167,036 1,167,036 1,054,474 1,054,474 1,001,144 1,001,144 1,035,417 1,035,417 996,943 Direct cost of sponsored sponsored researchresearch -

constant dollars (2005 == 100) ........ ........ 1,042,176 1,042,176 954,803 940,104 940,104 997,433 997,433 996,943 Scholarships and fellowships ............

Scholarships ............ 214,383 192,131 192,131 185,399 185,399 174,140 165,458 165,458 34 MIT REPORT MIT REPORT OF THE TREASURER OF THE TREASURER 2009 2009

Massachusetts Institute Massachusetts Institute of Technology Technology Five-YearTrend Five-Year Trend Analysis - Financial Highlights (continued)

(Dollarsin thousands)

(Dollars thousands) 2009 2008 2007 2006 2005 Research Research Revenues:(A)

Campus:

Federal Federal government sponsored:

Health and Human Human Services ............

Services ............ $

$ 255,896 255,896 $ 226,307 226,307 $ 201,557 201,557 $ 195,573 195,573 $ 180,682 Department Department of Defense ................................ 97,528 97,528 87,370 87,370 90,571 89,552 86,096 86,096 Department Department of Energy ................

................ 65,773 65,611 65,611 64,899 64,899 67,265 69,927 69,927 National Science FoundationFoundation ...................... 61,386 64,973 64,973 65,057 65,057 65,163 66,768 66,768 National Aeronautics Aeronautics and Administration ..............

Space Administration .............. 27,358 27,358 25,479 25,479 27,889 27,889 31,228 31,228 32,170 32,170 O

Otherther federal ........................

........................ 14,559 14,559 14,169 14,169 14,431 14,431 15,570 15,570 11,954 11,954

.........................

Total federal ......................... 522,500 483,909 483,909 464,404 464,404 464,351 447,597 Non-federal Non-federal sponsored:

State/local/foreign governments .........

State/local/foreign governments ......... 27,145 18,549 18,549 13,055 13,055 15,137 15,137 17,912 17,912 N on-profits .........................

Non-profits ......................... 60,538 60,538 47,695 32,200 32,200 24,833 24,833 19,744 Industry ............................

Industry ............................ 99,219 99,219 82,194 82,194 79,725 79,725 72,743 65, 108 65,108 Total non-federal .....................

non-federal ..................... 186,902 148,438 148,438 124,980 124,980 112,713 112,713 102,764 102,764 Total federal & non-federal.

non-federal .............

............ 709,402 632,347 589,384 589,384 577,064 550,361 F&A and other adjustments ............

adjustments ............ (18,620) (10,827)

(10,827) (18,586)

(18,586) 5,420 5,420 9,343 cam pus ........................

Total campus ........................ 690,782 621,520 621,520 570,798 582,484 582,484 559,704 Lincoln Laboratory:

Lincoln Federal Federal government sponsored sponsored ..........

.......... 675,329 675,329 606,850 606,850 607,270 607,270 631,292 606,441 Non-federal Non-federal sponsored ................

sponsored ................ 2,989 3,602 4,602 5,102 4,684 4,684 F&A and other adjustments ............

adjustments ............ (8,550) 9,235 9,235 (5,942)

Total Lincoln Laboratory ..............

Laboratory .............. 669,768 669,768 619,687 619,687 605,930 605,930 636,394 636,394 611,125 611,125 SMART.(B)

SMART: (B)

Non-federal Non-federal sponsored ................................ 14,522 14,522 3,963 Total SMART SMART .......................

....................... 14,522 14,522 3,963 Total Research Research Revenues ............ ............ $ 1,375,072 1,375,072 $$1,245,170 1,245,170 $1,176,728

$1,176,728 $$1,218,878 1,218,878 $$1,170,829 1,170,829 (4)

(.4) The aniounts amounts in thisthis table table reflect revenues fion the original from tbe originalsource of fil11ds.

offilnds.

(B)The amounts representresearch that has taken place in Singapore.

(B) Tbe amounts l'epresent resem-cb tbat bas taken place in Singapore.

ADDITIONAL INFORMATION ADDITIONAL INFORMATION 35 35

Massachusetts Massachusetts Institute Institute of of Technology Technology Five-YearTrend Analysis Five-YearTrend Analysis - Financial Financial Highlights Highlights (continued) 2009 2009 2008 2008 2007 2007 2006 2006 2005 2005 Students:

Students:

Undergraduate Undergraduate Full-timee ........................

Full-tim ........................ 4,118 4,118 4,119 4,119 4,068 4,014 4,014 4,078 4,078 Part-timee ........................

Part-tim ........................ 35 35 53 59 52 58 Undergraduate Applications Undergraduate Applications Applicants .......................

Applicants..................... 13,396 13,396 12,445 11,374 11,374 10,440 10,440 10,466 10,466 A ccepted ........................

Accepted ........................ 1,589 1,589 1,553 1,553 1,514 1,514 1,494 1,494 1,665 Acceptance rate ...................

Acceptance ................... 12%

12% 13%

13% 13%

13% 14%

14% 16%

16%

E nrolled .........................

Enrolled ......................... 1,048 1,048 1,067 1,067 1,002 996 1,077 1,077 Yield ............................

Yield ............................ 66%

66% 69%

69% 66%

66% 67%

67% 65%

65%

Freshmen Freshmen ranking in the top 10% 10%

of of their class ...................

................... 97%

97% 97%

97% 97%

97% 97%

97% 97%

97%

Average Average SAT scores (math and verbal) verbal) ...............

............... 1,453 1,453 1,458 1,458 1,460 1,460 1,461 1,471 Graduate Full-timee ........................

Full-tim ........................ 5,991 5,837 5,837 5,924 5,924 5,865 5,865 5,907 5,907 Part-tim Part-timee ........................

........................ 155 211 211 202 275 277 Graduate applications Applicants .......................

Applicants ....................... 17,325 17,325 16,208 15,968 14,958 14,958 15,015 15,015 Accepted ..................

Accepted ..................  : .....

..... 3,215 3,058 3,058 3,002 3,115 3,115 3,159 3,159 Acceptance Acceptance rate ...................

................... 19%

19% 19%

19% 19%

19% 21%

21% 21%

21%

E nrolled .........................

Enrolled ......................... 1,955 1,955 1,825 1,825 1,857 1,857 1,876 1,876 1,782 Yield ............................

Yield ............................ 61%

61% 60% 62%

62% 60%

60% 56%

56%

Student Financial Aid:

(in thousandsof dollars)

(in thousands dollars)

Undergraduate Undergraduate tuition support support........... $$ 78,534 78,534 $ 70,157 70,157 $ 65,529 65,529 $ 57,963 $ 54,649 Graduate tuition support ............... ...... 187,732 187,732 174,847 172,021 172,021 167,297 167,297 161,384 161,384

..........

Fellowship stipends ................... 27,509 25,647 25,020 25,020 32,440 31,717 31,717 Student loans ........................

............... 9,641 8,766 8,962 9,542 11,052 11,052 Student employment .........

employment .................. 82,287 78,892 77,732 77,732 78,503 75,917 75,917 Total financial assistance .............. ........' .... $ 385,703 $ 358,309 $ 349,264 $ 345,745 $ 334,719 334,719 Tuition (in (in dollars):

dollars):

......................

Tuition and fees ...................... $$ 36,390 36,390 $$ 34,986 34,986 $$ 33,600 33,600 $$ 32,300 $$ 30,800 Average room and and board ...............

............... 10,860 10,400 10,400 9,950 9,950 9,500 9,100 Faculty and staff: staff:

.............................

Faculty ............................. 1,009 1,008 998 992 983 983

...............................

Staff ............................... 13,320 13,320 12,832 12,832 12,453 12,453 11,970 11,970 11,490 11,490 36 36 MIT MIT REPORT REPORT OF OF THE THE TREASURER TREASURER 2009 2009

Treasurer Report of the Treasurer N 11Ml Massachusetts Massachusetts for the year ended Institute of June 30, 2009 IIl nstitute of Technology Technology

Retrieved from "https://kanterella.com/w/index.php?title=ML101930104&oldid=2131030"