Text

Compliance Submissions, Self Guarantee Agreement Pursuant to 10 CFR Part 50, 10 CFR Part 70 and NUREG-1757, Vol. 3
	ML12312A475
Person / Time
Site:	07000938, MIT Nuclear Research Reactor
Issue date:	10/31/2012
From:	Ruiz I; Massachusetts Institute of Technology (MIT)
To:	Adams M; Office of Nuclear Material Safety and Safeguards
References
	NUREG-1757, V03
	Download: ML12312A475 (67)
	v • d • e

Massachusetts Institute of Technology Office of Executive Vice 77 Massachusetts Avenue President and Treasurer Cambridge, Massachusetts Building 4-204 02139-4307 Phone 617-253-3928 October 31, 2012 U.S. Nuclear Regulatory Commission Office of Nuclear Material Safety and Safeguards 11555 Rockville Pike 1 Whiteflint North Rockville, Maryland 20852 Attention:

Alexander Adams Via Federal Express Re: Compliance Submissions, Self Guarantee Agreement Pursuant to 10 CFR Part 50, 10 i CFR Part 70 and NUREG- 1757, Vol.3

Dear Mr. Adams:

In my capacity as the Executive Vice President and Treasurer of the Massachusetts Institute of Technology

("MIT"), a nonprofit university, I serve as MIT's Chief Financial Officer. This letter is in support of MIT's use of the self-guarantee financial test to demonstrate financial assurance, as specified in 10 CFR Part 50 and 10 CFR Part 70, as ongoing compliance with MIT's Self-Guarantee Agreement, dated May 3, 2010 (the "Agreement"), and approved by the Nuclear Regulatory Commission on July 16, 2010.In order to demonstrate ongoing compliance with the Agreement and 10 CFR Part 50 and 10 CFR Part 70, and MIT's ability to self-guarantee the decommissioning of the following facilities owned or operated by MIT, the current cost estimates or certified amounts for decommissioning each facility, so guaranteed, are shown below, along with their calculation (if applicable), and supporting attachments are enclosed: Certified Amounts or Name of Facility License Number Location of Facility Current Cost Estimates MIT SNM-986 77 Massachusetts Ave. $1,125,000.00 Cambridge, MA 02139 MIT Research Reactor R-37 138 Albany St.$33,149,000.00 Cambridge, MA 02139 A. License No. SNM-986 Based upon the applicable quantities of special nuclear materials stored at this facility, in accordance with 10 C.F.R. 70.25(d), MIT must guarantee the statutory minimum of $1,125,000 for the proper disposal of these materials.

B. License No. R-37

1. Justification for 2005 $23M Decommissioning Estimate: Duke Engineering provided MIT with a cost estimate of $23.0M. That study was completed in November 2001. It included a 10% contingency.

Inflation was quite low and for some sectors of the economy slightly negative for the years 2001-2005.

Accordingly, for our 2006 submittal, we used the uninflated detailed Duke estimate which was $23.OM. For 2008, we provided an estimate of $29.8 million, based on separate inflation factors applied against the labor costs, using the NUREG- 1307, Rev. 12, Page D. 1, Example 2,(Northeast Region) of 1.40 (labor) and 1.72 (burial).2. Decommissioning Estimate for 2012: For 2013, we estimate the decommissioning cost of the MIT Reactor to be $33.1 million. This figure is obtained by taking the $23.OM Duke estimate as a base and inflating it for both the cost of labor and burial as shown below: Duke Study 23,000,000

%Total NUREG Inflator 33,149,000 Inflation Model Labor Portion 20,470,000 89% Labor 1.40 28,800,000 Burial Portion 2,530,000 11% Burial 1.72 4,349,000 Please note that labor was 89% of the total estimate and burial was 11%. The inflator figures are obtained from NUREG-1307, Rev. 14, Page D. 1, Example 2 (Appendix D). We take the date of completion of the Duke study to be 2002 as this is closest to the actual date of November 2001.For labor, the cost index is 2.41 in 2010 and 1.862 for 2002. We assume that cost increases are linear through 2013 and obtain: (1.862+ ((2.41-1.862)/(2010-2002))(2013-2002))

= 2.616 The inflation factor for 2013 as compared to 2002 is therefore 2.616/1.862 or 1.40. Hence, the labor portion of the cost is ($20.5M)(140) or $28.8 million. For burial, the same approach is used to yield a factor of 30.806, an inflation factor of 1.72 and a cost of $4.3 million (Please refer to Attachment 1).I hereby certify that MIT is currently a going concern, and that it possesses positive tangible net worth in the amount of $12.8 billion, as of the fiscal year ending on June 30, 2012.This figure is derived from MIT's independently audited, year-end financial statements and footnotes for the latest completed fiscal year, which is enclosed.

MIT's independent auditor, PricewaterhouseCoopers, has included its review of this letter, which is also enclosed.MIT is not required to file a Form 10-K with the U.S. Securities and Exchange Commission for the latest fiscal year.MIT 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: Standard & Poor's Financial Services LLC

2. Date of issuance of bonds: May 18, 2011 3. Description and date of maturity of bonds: 4. Is the rating specified on line 1 "A" or better?Yes I hereby letter is true and correct to the best of my knowledge.

Signature Name: Israel Ruiz Title: Executive Vice President and Treasurer (Chief Financial Officer)Date: /O -.5/- ?,9AO/, Enclosures IL pwc Report of Independent Accountants To the Board of Trustees of Massachusetts Institute of Technology:

We have 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 regulations, 10 CFR Part 50 and 10 CFR Part 70. Management is responsible for the Institute's compliance with those regulations.

This agreed-upon procedures engagement was conducted 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 regarding the sufficiency of the 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 the tangible net worth in the CFO letter agrees with total net assets contained in the Institute's financial statements for the year ended June 30, 2012, which we have audited in accordance with auditing standards generally accepted in the United States of America and have issued our report thereon dated September 14, 2012;2. Inquired of management as to the existence of any reconciling items between the CFO's Letter and the audited financial statements noting that there are none; and 3. Mathematically checked the totals in the accompanying schedule, including the current cost estimates of decommissioning for each facility listed per the CFO's letter.No 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.October 25, 2012 PricewaterhouseCoopers LLP, 125 High Street, Boston, MA 02110 T: (617) 530 5ooo, F: (617) 530 5001, www. pwc.com/us ATTACHMENT I NRC Decommissioning Estimate 2013 Duke Study (2002)Labor Portion Burial portion 23,000,000.00 20,470,000.00 2,530,000.00 89%11%NRC Inflation Model 2013 Labor Burial, Inflator 1.40 1.72 33,149,000.00 28,800,000.00 4,349,000.00 LABOR BURIAL 2006 2.384 1.28 2013 2.6155 1.40 25.4385 1.42 30.80575 1.72 Appendix D Representative Examples of Decommissioning Costs for 2000 through 2010 In Section 3.4 of this revision and the four previous revisions of NUREG-1307, decommissioning costs for four typical situations were developed.

Results of these calculations are summarized below.Example 1 (LLW Direct Disposal)Reactor Type: PWR Thermal Power Rating: 3400 MW thermal Location of Plant: Northwest Compact LLW Burial Location:

Washington 2000 2002 2004 2006 2008 2010 1.612 1.775 1.984 2.11 2.23 2.29 1.016 0.985 1.483 2.152 2.746 2.139 2.223 3.634 5.374 6.829 8.283 8.035$175 $219 $280 $331 $381 $371 Decommissioning Cost (Millions)

Example 2 (LLW Direct Disposal)Reactor Type: PWR Thermal Power Rating: 3400 MW thermal Location of Plant: Atlantic Compact LLW Burial Location:

South Carolina (Atlantic Compact)2000 2002 2004 2006 2008 2010 1.719 1.862 2.070 2.21 2.33 2.41 1.016 0.985 1.483 2.152 2.746 2.139 17.922 17.922 19.500 22.933 25.231 27.292$545 $555 $612 $710 $779 $824 Decommissioning Cost (Millions)

Example 3 (LLW Disposition by Waste Vendors)Reactor Type: PWR Thermal Power Rating: 3400 MW thermal Location of Plant: Atlantic Compact LLW Burial Location:

South Carolina (Atlantic Compact)2000 2002 2004 2006 2008 2010 1.719 1.862 2.070 2.21 2.33 2.41 1.016 0.985 1.483 2.152 2.746 2.139 7.878 9.273 7.790 8.600 9.872 12.280$313 $355 $341 $379 $425 $477 Decommissioning Cost (Millions)

D.1 Massachusetts Development Finance Agency, Massachusetts Institute Of Technology; Private Coll/Univ

-General Obligation Primary Credit Analyst: Jessica Matsumori, San Francisco (1) 415-371-5083; jessica matsumoni@standardandpoors.com Secondary Contact: Nick Waugh, Boston (1) 617-530-8342; nicklwaugh@standardandpoors.com Table Of Contents...........................................................................................................

oo Rationale Outlook Economic Profile Financial Profile Related Criteria And Research www.standardandpoors.com

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-General Obligation Long Term Rating AAA/A-1+/Stable Affirmed Long Tenn Rating AAA/Stable Affirmed Rationale Standard & Poor's Ratings Services affirmed its 'AAA' long-term rating and 'A-1+' short-term rating on the Massachusetts Institute of Technology's (MIT) outstanding debt, some of which was issued by the Massachusetts Development Finance Agency. The outlook is stable.The 'AAA' rating reflects our view of MIT's substantial endowment, incredible demand for its programs, growing research, and positive operating performance.

This offsets our view of the institute's adequate, but lower than average financial resource ratios compared to the 'AAA' category, due in part to its recent century bond issuance.

MIT has significant capital plans during the next 10 years, which management plans to fund through a variety of sources, including non-recourse debt. The potential effect, if any, of these additional projects to MIT's credit rating will be assessed as the structure, amount, timing, etc., are better determined.

More specifically, the rating is supported by the institute's: " Status as a pre-eminent research institute with $1.45 billion in research revenues in fiscal year 2011;* Strong financial resources provided by an endowment and similar funds of $9.7 billion as of June 30, 2011;" Significant demand, excellent student quality, and increasingly competitive admissions;

Strong operating performance, supported by good revenue diversity and the demonstrated ability to raise funds; and* Relatively high, but still manageable, debt levels, due in part to its recent $750 million century bond issuance.The 'A-1+' short-term rating reflects our view of MIT's general credit strengths and considerable experience in managing its own liquidity.

MIT is providing its own liquidity to support its $250 million of series J-1 (swapped to fixed) and J-2 variable-rate demand bonds (VRDBs). We believe MIT demonstrates sufficient liquid assets of high credit quality, largely in U.S. Treasuries, as well as a bank lines that it can use, among other things, to cover the purchase price of VRDBs in the event any of the bonds are tendered, but not successfully remarketed.

As of June 30, 2012, availability of liquid assets was, in our opinion, a sufficient

$1.157 billion in same-day liquidity composed of high quality US. government securities and cash. In our opinion, MIT has demonstrated the policies and procedures Standard & Poor's I Research I July 26, 2012 2© Standard & Poor's. All rghts reserved.

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-General Obligation necessary to provide self-liquidity.

MIT had approximately

$2.47 billion in debt outstanding as of June 30, 2011. Of the total debt, a small portion is variable-rate debt (12% or $302 million), and the largest portion is fixed-rate debt (87%). All debt is an unsecured general obligation of MIT.MIT is implementing a large development framework during the next 10 years, also in conjunction with MIT 2030, to add new research facilities and new academic space, improve its infrastructure, and to reduce the amount of deferred maintenance on campus. The academic components' projected cost for the next 10 years is $1.55 billion, which we consider high, with the proceeds from the May 2011 $750 million 100-year taxable issuance supporting a portion of capital needs. Other financing sources include fund raising, internal funding sources, and external borrowings.

There are other capital plans on campus, including additional financings in the form of nonrecourse debt for investment in the institute's existing real estate assets as well as a revitalization of Lincoln Lab, a federally funded research and development center managed by MIT. Management indicates that the existing real estate portfolio is managed like an endowment asset and provides important flexibility for future institutional development.

Management indicated that it intends to pursue real estate financings that can be supported by nonrecourse arrangements supported by external lessees. The proposed new facilities at Lincoln Laboratory are likely to be financed by a third-party backed by federal assurances, which management believes would be effectively nonrecourse to MIT.Outlook The stable outlook reflects our expectation that the university's extremely strong demand and financial performance will continue.

We believe that MIT's financial resource ratios are relatively low for the rating category and the issuance of additional debt needs to be commensurate with growth in financial resources.

We would have a negative view of considerable deterioration of operating performance or dilution of financial resource measures relative to either operating expenses or debt during the next one to two years.Economic Profile The institute The Massachusetts Institute of Technology is a private, nonsectarian, coeducational, nonprofit institution of higher education.

As of fall 2011, MIT had 10,894 students, with about 6,400 full-time graduate students.

MIT has 1,018 faculty members and more than 4,000 other academic staff. The institute is located on a 168-acre-residential campus fronting the Charles River in Cambridge, Mass. MIT is organized into five schools and one college: architecture and planning; engineering; humanities, arts and social sciences; management; science; and the Whitaker College of Health Sciences.MIT is one of the pre-eminent research institutes in the world, composed of major interdisciplinary organizations as well as three off-campus research facilities in Massachusetts:

Lincoln Laboratory in Lexington, Haystack Observatory in Tyngsboro, and the Bates Linear Accelerator Center in Middleton.

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-General Obligation federally funded research and development center focused on advanced electronics.

In fiscal 2011, MIT's research activities grew to more than $1.447 billion, up from $1.18 billion in 2007.In total, MIT's sponsored research revenue (which includes federal, foundation, industrial, and international sponsors)was a substantial 48.4% of MIT's adjusted unrestricted operating revenues in 2011. Management indicated that MIT negotiates its research recoveries on an annual basis with its agent -the Office of Naval Research.

The fiscal 2012 indirect cost recovery rate is 60.5% and MIT's particular negotiated rates generally allow it to recover full costs in a multi-year period.Management and governance MIT recently named L. Rafael Reif as its new president.

President Reif began his service as the institute's president in July 2012 after serving as provost for seven years and in various other positions at MIT since 1980. MIT also has a new provost (Chris A. Kaiser) who has been on the faculty since 1991, executive vice president/treasurer (Israel Ruiz)who served as vice president for finance for four years prior to becoming executive vice president and in other MIT roles for six years before that, and vice president for finance (Michael Howard). MIT is governed by the MIT Corp., a 74-member body composed of national leaders in science, industry, and education.

The Executive Committee, a smaller subset of the same body, has responsibility for the general administration of MIT, and approves borrowing plans. Management routinely prepares interim, full-accrual results, which the executive committee reviews. We view the preparation and review of interim financial statements as a best practice for the industry.Demand and enrollment MIT is an exceptionally selective institute, and admissions remain very competitive at both the undergraduate level and graduate and professional level. Freshman applications at MIT continue to be extremely strong with only 9.7% of the institute's freshman applicants accepted for fall 2011 and a very strong 64.6% matriculating.

Undergraduate student quality is impressive, with an average two-part SAT score of approximately 1473 and an average ACT score of 33. Freshman to sophomore retention is a very high 98% and approximately 91% of its undergraduate students graduate within five years. MIT draws students from 50 states and more than 115 countries.

Total student charges of$52,507 for the 2011-2012 academic year places MIT in line with its peer institutions, such as Harvard, Columbia, and Yale universities.

Fall 2012 demand and enrollment information were not available as of this report, but we expect it to be similar to previous years.MIT's professional schools are also highly competitive.

For fall 2011, MIT enrolled 6,510 graduate and professional students.

Applications for graduate and professional studies were flat from fall 2010 to 2011 at 22,220, with a low 14.9% of applicants accepted.

There are no current plans to add new schools or significantly change the academic mission or structure of the institute.

MIT is actively engaged with international partners, but has no plans to increase its physical footprint globally.Financial Profile Standard & Poor's I Research I July 26, 2012 4© Standard & Poor's. All rights reserved.

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See Terms of Use/Disclaimer on the last page. 993964 1 300642892 Massachusetts Development Finance Agency, Massachusetts Institute Of Technology; Privjat Coil/Un'iv z Geeral SObligation Operating performance We consider MIT's diverse revenue stream a credit strength, with tuition and fees accounting for $494 million of unrestricted revenue (on a gross basis) in fiscal 2011. Other major revenue sources included sponsored research ($1.45 billion), gifts and bequests ($111 million), fees and services ($199 million), and endowment income and gain used for operations

($444.8 million).

Federal research increased 7.2% for the year to $469.5 million in grants including those from the: " Department of Health and Human Services ($152.7 million)," Department of Defense ($107.8 million)," Department of Energy ($89.6 million)," National Science Foundation

($74.9 million), and* NASA ($28.1 million).The institute produced a $179.5 million surplus in fiscal 2011, continuing its positive operating performance from the past three years. Fiscal 2012 financial results were not available at the time of this report, but we anticipate additional net asset growth for the year. In 2011, MIT reduced its endowment distribution payout per unit by 18% in response to the financial crisis. Despite the increase in 2009, endowment spending as a percentage of trailing-three-year endowment market value was in our view moderate at about 5.7% in 2009 and fell to 4.9% for fiscal 2011. The institute implemented several cost-cutting measures in fiscals 2010 and 20 11, which resulted in about $120 million of budgetary savings. Most of these cuts were recurring administrative and maintenance efficiencies.

Financial resources In our opinion, MIT's financial resources remain quite strong. Total cash and investments exceeded $12.3 billion as of fiscal 2011 year-end, and provided 4.3x coverage of adjusted expenses and nearly 5.Ox coverage of debt then outstanding of $2.47 billion. Fiscal 2011 closed with expendable resources of approximately

$9.7 billion or 3.4x annual adjusted operating expenses of $2.811 billion and 3.9x then-outstanding debt. These financial ratios relative to debt are improving, but still lower than historical levels. However, they remain in line with some other 'AAA' rated educational institutions.

Endowment and fund raising MIT Investment Management Co. (MITIMCo) manages the institute's investment assets under the supervision of a separate MITIMCo board. MIT's endowment assets totaled $9.7 billion as of June 30, 2011, up from $8.3 billion the previous year. The core Pool A endowment produced a 17.9% return for fiscal 2011. Including short-term investments, MIT had total cash and investments of approximately

$12.3 billion as of June 2011. Of $12.2 billion of long-term investments as of June 30, 2011, a low $2.8 billion or 23%, was considered to be level 1, or active market securities, followed by $1.0 billion in level 2, and the majority in level 3 or $8.37 billion. Management reports that MIT's asset allocation has been stable and is tracking close to the policy. As of June 30, 2012, MIT held same-day liquid investments of about $1.157 billion.MIT holds investments in two primary asset pools--pool A, which is composed of its long-term endowment investments and pool C--a pool of short-term, high-quality investments to provide working capital and to hold various reserves.

From 2008-2010 the amount of reserves in pool C was increased to provide for additional liquidity.

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-.General Obligation investment pool liquidity was sufficient to support calls on capital. As of June 30, 2011, MIT had total urifinded capital calls of approximately

$1.85 billion. During the next several years,"management indicates that distributions from nonmarketable securities should exceed expected capitalcalls.

The-unfunded commitment amount represents a moderate 19% of market value of endowment, which is lower than some of MIT's peers.The institute implemented a planned reduction of the annual endowment distribution in fiscal 2011, with the distribution declining

$81.7 million to $444.8 million for the year. The endowment distribution to support operations in 2011 equaled approximately 5.3% of endowed funds or 4.9% of the moving three-year average. Endowment spending for fiscal 2012 was estimated to be 4.9%.MIT recently concluded a $500 million "Campaign for Students" fund-raising initiative

-- with more than $578 million raised. Total gifts and pledges in fiscal 2011 were $522.4 million. It is likely that MIT will embark on another fund-raising drive, or series of fund-raising initiatives, in conjunction with its new strategic development framework, MIT 2030, but no plans have been publicly announced.

Management reports that fiscal 2012 alumni-participation rate is approximately 29% for undergraduate, graduate, and professional alumni.Debt MIT had a total debt of $2.47 billion as of June 2011, including about $176 million drawn under a $500 million bank line of credit. MIT's management has developed an. active approach to debt management aimed at providing the maximum financing flexibility.

MIT maintains a $500 million bank line of credit for additional liquidity.

We understand that the institute uses this line opportunistically and periodically for various funding purposes.b MIT's debt structure includes a number of bullet maturities and due to the institute's tendency to use bullet maturities to repay principal on its debt, total annual debt service, on average, through fiscal 2041 is approximately

$146 million, ranging from $46.4. million in 2039 to $334.5 million in 2031. MADS of $334.5 million in the next 30 years is in our view high at 11.9% of fiscal 2011 adjusted operating expenses.

In 2011, the institute also issued century bonds, which produce MADS of $792,000 in 2111 (28% of fiscal 2011 expenses).

Average annual debt service of $146 million is a more manageable 5.2% of fiscal 2011 expenses, and fiscal 2011 actual debt service was a much lower 2.88%.MIT remains conservative in its use of variable-rate-debt exposure, compared with its peers, net of swaps. Total unhedged variable-rate-demand debt, excluding the line of credit, is 11% of debt. Including variable-rate bank debt, the exposure is approximately 12%. In our opinion, MIT has adequate liquidity to fund its VRDOs.MIT has a defined-benefit and defined-contribution retirement plan for employees.

Its defined-benefit plan is well funded and required no contribution in fiscal 2011. MIT had $198 million in accrued post-employment benefit obligations as of June 30, 2011, but we view this as a manageable level of exposure.Contingent liabilities Standard & Poor's believes the institute's swap portfolio poses very low risk to the credit rating overall with a low degree of involuntary termination risk due to limited termination events other than those permissible, moderate counterparty risk, and the swap portfolio's sound economic viability during stressful economic cycles.MIT has historically managed its debt carefully, in our opinion, limiting its exposure to variable-rate debt and interest rate swaps. MIT has one interest rate swap with Deutsche Bank. The agreement is a $125 million floating-to fixed-rate Standard & Poor's I Research I July 26, 2012 6© Standard & Poor's. All rights reserved.

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-General Obligation swap that synthetically fixes the series J-1 bonds at 4.91%, with MIT receiving a rate equal to the Securities Industry and Financial Markets Assn. (SIFMA) index less 15 basis points; the agreement terminates upon maturity in 2031. As of June 30, 2011, this swap had a notional amount and fair value of $125 million and negative $32.8 million respectively.

Table 1 Fiscal Year Ended Medians (2011)Enrollment And Demand 2012 2011 2010 2009 'AAA! Rated Peers Headcount (HC) 10,894 10,566 10,384 10,299 MNR Full time equivalent (FTE) 10,762 10,429 10,277 10,172 9,099 Freshman acceptance rate (%) 9.7 10.1 10.7 11.9 15.0 Freshman matriculation rate (%) 64.6 63.7 64.0 66.0 42.0 Undergraduates as a % of total enrollment 40.2 40.7 40.8 40.3 56.0 (%)Freshman retention

(%) 98.0 97.0 97.0 98.0 97.0 Graduation rates (5 years) (%) 91.0 91.0 91.4 90.1 93.4 Income Statement Adjusted operating revenue ($000s) N.A. 2,990,946 2,893,372 2,858,341 MNR Adjusted operating expense ($000s) N.A. 2,811,446 2,612,835 2,675,669 MNR Net operating income ($000s) N.A. 179,500 280,537 182,672 MNR Net operating margin (%) N.A. 6.4 10.7 6.8 2.6 Change in unrestricted net assets ($000s) N.A. 843,979 199,376 (1,526,345)

MNR Tuition discount (%) N.A. 48.7 49.1 49.7 42.5 Tuition dependence

(%) N.A. 16.5 16.2 15.1 28.4 Debt Outstanding debt ($000s) N.A. 2,467,825 1,728,526 1,735,843 1,062,416 Current debt service burden (%) N.A. 2.9 3.1 9.6 5.9 Current MADS burden (%) N.A. 28.2 10.8 4.7 MNR Financial Resource Ratios Endowment market value ($000s) N.A. 9,712,628 8,317,321 7,880,321 5,401,221 Cash and investments

($000s) N.A. 12,330,672 10,047,850 9,596,800 MNR Unrestricted net assets ($000s) N.A. 4,603,280 3,759,301 3,559,925 MNR Expendable resources

($000s) N.A. 9,840,645 7,623,083 7,576,170 MNR Cash and investments to operations

(%) N.A. 438.6 384.6 358.7 889.4 Cash and investments to debt (%) N.A. 499.7 581.3 552.9 639.8 Expendable resources to operations

(%) N.A. 350.0 291.8 283.2 656.7 Expendable resources to debt (%) N.A. 391.6 441.0 436.5 507.0 Average age of plant (years) N.A. 8.2 8.5 7.0 10.5 N.A. not available; MNR median not reported; Total adjusted operating revenue = unrestricted revenue less realized and unrealized gains/losses and financial aid; Total adjusted operating expense = unrestricted expense plus financial aid expense; Net operating margin = 100*(net adjusted operating income/adjusted operating expense);

Tuition dependence

= 100*(gross tuition revenue/adj.

operating revenue) Current debt service burden = 100*(current debt service expense/adjusted operating expenses);

Current MADS burden = 100*(maximum annual debt service expense/adjusted operating expenses);

Cash and investments

= cash + short-term

& long-term investments; Expendable resources

= unrestricted net assets + temp. restricted net assets -(net PPE- outstanding debt); Average age of plant = accumulated depreciation/depreciation

&amortization expense.www.standardandpoors.com

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-General Obligation Related Criteria And Research* USPF Criteria:

Higher Education, June 19, 2007* USPF Criteria:

Contingent Liquidity Risks, March 5, 2012* USPF Criteria:

Commercial Paper, VRDO, And Self-Liquidity, July 3, 2007 Ratings~ ~~~ ~ Deal(sO Jd 6 02 Long Term Rating AAA/Stable Affirmed Standard & Poor's I Research I July 26, 2012© Standard & Poor's. All rights reserved.

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Report of the Treasurer for the year ended June 30, 2012 Massachusetts Institute of Technology The Corporation 2011-2012 as ofJune 30, 2012 Chairman:

John S. Reed*President:

Susan Hockfield*

Executive Vice President and Treasurer:

Israel Ruiz*Vice President and Secretary:

Kirk D. Kolenbrander Life Members Shirley A. Jackson; 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;Charles M. Vest; Susan E. Whitehead; Brian G. R. Hughes; Norman E. Gaut; L. Robert Johnson; Arthur J. Samberg*;Gururaj Deshpande; Barrie R. Zesiger*;

James H. Simons; John A. Thain.Members Alan G. Spoon; Lawrence K. Fish*; David D. Ho; Robert B. Millard*;

Carly S. Fiorina; Anita K. Jones; Martin Y. Tang;Raymond C. Kurzweil; Kenneth Wang; Megan J. Smith; Henri A. Termeer*;

Chiquita V. White; 0. Reid Ashe, Jr.; John W Jarve; Harbo P. Jensen; Abigail P. Johnson; Frederick A. Middleton, Jr.; Barun Singh; Diana C. Walsh; Ursula M.Burns; Diane B. Greene*; Helen Greiner; Marta M. Luczynska; Victor J. Menezes; Antonia D. Schuman; Peter L. Slavin;Laura D. Tyson; Raja H.R. Bobbili; Rafael del Pino; Mohammed A. L. Jameel; Cleve L. Killingsworth; Alejandro Padilla;Samuel W Bodman; Sarah Stewart Johnson; Reginald Van Lee; Eve J. Higginbotham, Charlene C. Kabcenell; Barry Lam; Leonard H. Schrank; K. Anne Street, Alia Whitney-Johnson.

President of the Association of Alumni and Alumnae R. Gregory Turner Representatives of the Commonwealth Governor:

Deval L. Patrick Chief Justice of the Supreme Judicial Court: Roderick L. Ireland Secretary of Education:

S. Paul Reville Life Members Emeritus Ir~n6e duPont, Jr.; Norman B. Leventhal; Mitchell W. Spellman; D. Reid Weedon, Jr.; Colby H. Chandler; Carl M.Mueller; Louis W. Cabot; Christian J. Matthew; Paul M. Cook; William S. Edgerly; Frank Press; Edward E. David, Jr.;Emily V. Wade; Angus N. MacDonald; George N. Hatsopoulos; Mary Frances Wagley; Michael M. Koerner; Morris Tanenbaum; Breene M. Kerr; W. Gerald Austen; Richard P. Simmons; Morris Chang; Alexander W. Dreyfoos, Jr.; Paul E. Gray; Ronald A. Kurtz; DuWayne J. Peterson, Jr.; Raymond S. Stata; Gordon M. Binder; Brit J. d'Arbeloff; Dana G.Mead.Members' names are listed in chronological order of election to each category.`member of the Executive Committee Table of Contents" Report of theTreasurer

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

5-11" Financial Statements The financial statements summarize the finances of MIT for the fiscal years 2011 and 2012.Statem ents of Financial Position .............................................

13 Statem ent of Activities

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

14 Statem ents of C ash Flows ...................................................

15 N otes to Financial Statem ents ............................................

16-46 Report of Independent Auditors .............................................

47* Additional Information Five-Year Trend Analysis ................................................

49-51 Report of the Treasurer To Members of the Corporation MIT ends fiscal 2012 in a robust financial position.Net assets increased 3.3 percent to end the year at$12.8 billion, with the Institute's endowment before pledges reaching $10.1 billion and both surpassing the peaks achieved in fiscal 2008 before the financial crisis.Operating revenues approached the $3 billion mark, almost doubling from a decade earlier, and exceeded expenses by $245.7 million, compared to $179.5 million in fiscal 2011. The year was marked by significant contri-butions to education innovation, expanded international collaborations and ongoing excellence in research and technological achievement.

In fiscal 2012, MIT benefited from solid investment returns and giving, healthy research growth, and unwav-ering fiscal stewardship by the entire MIT community.

These successes further strengthen the.Institute's foun-dation, position MIT to take advantage of compelling opportunities as they arise, and enable us to address the critical need for renewing our aging campus. We are well poised to balance these needs with sound fiscal manage-ment, recognizing that some revenue sources may come under pressure in the continuing uncertain funding climate.Over the year following the Institute's 150th anniver-sary, MIT's exceptional faculty and students continued to generate groundbreaking discoveries and research and achieve educational milestones.

Additionally, MIT continued to actively pursue initiatives to expand the Institute's role in bringing new learnings and technolo-gies to bear in solving the nation's and the world's great challenges.

Among the most significant fiscal 2012 initiatives, the Institute announced the launch of edX/MITx, a joint partnership with Harvard University to enhance campus-based teaching and learning, build a global community of online learners and research how students learn and how technologies can facilitate ef-fective teaching both on campus and online. MIT also embarked upon other new global initiatives, notably an international collaboration to help develop the Skolkovo Institute of Science and Technology (SkTech) in Russia, and continues to explore other opportunities to engage with the global community in higher education, research and innovation.

Turning to MIT's financial position and activities, the Institute's solid condition can be highlighted in many ways: The Institute's financial strength, as measured by the increase of 3.3 percent in total net assets, improved primarily due to endowment performance, gifts and operating results, offset by an increase in unfunded postretirement benefit obligations.

MIT's operating revenues approached

$3 billion driven by growth in all revenue sources, and almost doubled from a decade earlier. Tuition net of financial aid in-creased 8.9 percent driven by an increase of students and moderate financial aid growth. Research revenues showed healthy growth of 5.6 percent in spite of the di-minishing contribution from. the American Reinvestment and Recovery Act (ARRA) funding received in the previous years. Fees and services, principally driven by one-time technology licensing results, grew 10.3 per-cent. Finally, operating gifts increased by 40.6 percent and contribution from investments into the Institute's operating revenue, driven by the endowment and other invested assets, grew 10.2 percent.Strong operating revenue growth, up 8.7 percent from fiscal 2011, complemented by managed, moderate expense growth, up 6.7 percent from the previous year, led to operating results of $245.7 million in fiscal 2012, a 36.9 percent increase from fiscal 2011 results. This marks the fifth consecutive year of positive operating results for MIT. Through continued focus on fiscal management, MIT has reversed the trend of operating losses that existed from fiscal 2003 through fiscal 2007 and significantly improved MIT's financial strength and flexibility for the future as illustrated in the Summary of Key Financial Highlights.

SUMMARY

OF KEY FINANCIAL HIGHLIGHTS (10-year trend)(in millions of dollars) 2003 2004 Operating Revenues 1,658 1,832 Operating Expenses 1,687 1,840 Operating Results (29) (8)2005 2,031 2,037 (6)2006 2,141 2,182 (41)2007 2,180 2,208 (28)12,695 9,943 1,078 2008 2009 2010 2011 2012 2,408 2,644 2,663 2,751 2,990 2,294 2,461 2,383 2,571 2,744 114 183 280 180 246 Net Assets Endowment Borrowings

SUMMARY

6,931 7,741 8,626 10,060 5,134 5,870 6,712 8,368 912 1,286 1,250 1,278 12,770 9,948 1,335 9,946 10,324 7,880 8,317 1,736 1,729 12,388 9,713 2,468 12,799 10,150 2,460 5 In fiscal 2011, MIT announced its development frame-work for the campus and surrounding neighborhood, MIT 2030. This framework continues to guide MIT's capital planning and renewal decisions for programs in the coming years, especially through 2020. In fiscal 2012, MIT focused on advancing the approved capital project priorities and preparing to launch the comprehensive Accelerated Capital Renewal Program.During fiscal 2012, MIT completed two major suc-cessful renovations, Fariborz Maseeh Hall (formerly Old Ashdown-W1) and the former A.D. Little building (E60). Fariborz Maseeh Hall's welcoming of 460 un-dergraduates for the academic year just ended will allow MIT to achieve the goal of increasing its undergraduate student body to 4,500 students by the 2013-2014 aca-demic year, and E60 renovation provides further mod-ernization of the Sloan School's physical environment.

In addition, the renovations of Fariborz Maseeh Hall and the E60 demonstrate MIT's commitment to sustain-ability, having recently achieved, in the case of Fariborz Maseeh Hall, or applied for LEED Gold certification.

Enhancing the physical environment that sustains the Institute's academic and research mission is essential de-spite the significant cost of upgrading the aging buildings and infrastructure.

MIT remains committed to renewing our existing campus, and is moving firmly ahead with an Accelerated Capital Renewal Program designed to improve the quality of spaces most directly impacting the Institute's faculty and students.The following are additional details on MIT's fiscal 2012 Statements of Financial Position and Statement of Activities.

Statements of Financial Position The following discussion highlights key elements of MIT's financial position -net assets; investments; endowment and similar funds; land, buildings and equip-ment; postretirement benefit assets and liabilities; and borrowings.

Net Assets Total net assets increased to $12,799.3 million, up 3.3 percent from fiscal 2011. This level marks a new historic peak and demonstrates the recovery of net assets from the financial crisis of fiscal 2009.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.14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Net Assets$ millions 12,383 12,708 2003 2004 2005 2006 2007 2008 2009 aPen-nendy MT.mp OUnr..tocted 2010 2011 2012 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 $154.9 million, or 6.3 percent, to a total of$2,612.8 million, primarily reflects new gifts and pledges made to permanently 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.Approximately 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 proj-ects that have not been completed and put into use, and life income funds, which, upon maturity, will be available for spending.

The increase in temporarily restricted net assets of $253.0 million, or 5.0 percent, to a total of$5,297.6 million, primarily resulted from the increase 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.Unrestricted net assets comprise all the remaining economic resources available to MIT. This category includes MIT's working capital and those assets, desig-nated 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 6 MIT REPORT OF THE TREASURER 2012 this category are current funds received from donors for restricted purposes that, under generally accepted accounting principles (GAAP) in the United States of America, are categorized as unrestricted if MIT spends an equivalent amount of unrestricted funds for the same purpose. In fiscal 2012, MIT adopted new accounting guidance dealing with noncontrolling interests (formerly minority interests) which dealt with reclassification of the liability to net assets. Unrestricted net assets increased$3.6 million, or 0.1 percent, to a total of $4,889.0 mil-lion, including the effects of postretirement benefit assets and obligations.

The increase in unrestricted net assets is due primarily to the increase in unrestricted endowment value, investment gain on other invested funds, and re-lease of temporarily restricted funds when the buildings are put into use, offset by an increase in postretirement obligations.

Investments Investments at fair value were $12,847.9 million at fiscal year end 2012, an increase of $611.3 million, or 5.0 percent, from $12,236.5 million at the previous year end. Over the past five years, total invested assets have increased to $12,847.9 million from $11,068.9 million while investment income and distributions have totaled$2,635.3 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, were $738.3 million in fiscal 2012 and $1,483.7 million in fiscal 2011.MIT's investment policy is based on the primary goal of generating high real rates of return without exceptional volatility.

To reduce volatility, the portfolio is broadly diversified.

To generate high real rates of return, MIT's investment policy favors equity investments over fixed income instruments and is heavily weighted towards less efficient markets such as private equity, real estate, and real assets. MIT primarily invests through external fund managers, thereby allowing MIT to tap into the best in-vestment talent globally.

By identifying a wide variety of top-tier investment managers with specific competencies, MIT is able to construct a broadly diversified portfolio while accessing deep sector expertise.

Decision authority for the selection of managers, direct investments, and asset allocation resides with MIT's Investment Management Company (MITIMCo).

The Board of Directors of MITIMCo holds four regularly scheduled meetings during the fiscal year where investment policy, performance, and asset allocation are reviewed with MITIMCo professionals.

Endowment and Similar Funds Endowment assets are managed to maximize total invest-ment return relative to appropriate risk. The market value of investments in the endowment and similar funds, excluding pledges for endowed purposes, totaled$10,149.6 million as of fiscal year end 2012, an increase of 4.5 percent over the $9,712.6 million level of last year, and surpassed the peak year end level reached in fiscal 2008 of $9,947.6 million.Endowment 12,000 $ millions 10,0009,713 10,150 8,000 4,000 2,000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 This year, MIT's core Pool A endowment produced a return of 8.0 percent. Investment income and a portion of gains are distributed for spending in a manner that over the long term preserves for reinvestment an amount at least equal to annual inflation on the value of the in-vestment pool at the beginning of that year. Endowment funds invested in Pool A, MIT's primary investment pool, receive distributions based on relative ownership, which is valued monthly.Land, Buildings, and Equipment Land, buildings and equipment had a net book value of$2,497.7 million as of fiscal year end 2012, an increase of$46.2 million, or 1.9 percent, from $2,451.5 million the previous year, driven by expenditures for research and educational facilities, including the completion of major renovations to the 29 thousand square-foot building E60 and the 186 thousand square-foot undergraduate resi-dence Fariborz Maseeh Hall.Capital projects in development as part of the MIT 2030 initial set of priorities include renovation projects

SUMMARY

7

SUMMARY

7 for Chemistry and Math in Building 2 and for the original Sloan building (E52), occupied by the Sloan School and the Department of Economics.

We are also actively studying a new facility for the Nano-Materials, Structures and Systems (nMaSS) program. As part of the Accelerated Capital Renewal Program, the Institute is studying multiple sets of projects and interventions to maximize the impact of capital investments in renovating spaces that enable the academic mission.These projects, among others, are part of ongoing campus development that adds state-of-the-art facilities for emerging areas of research, increases educational infrastructure to support residential and community life, and renews and renovates our existing physical resources.

Postretirement Benefit Assets and Liabilities MIT's defined benefit pension plan had assets of $2,577.8 million at fiscal year end 2012, an increase of $5.5 mil-lion from $2,572.3 million at fiscal year end 2011. The plan's projected liabilities were $2,890.6 million at fiscal year end 2012, up $432.0 million from $2,458.6 mil-lion a year earlier, resulting in a net pension liability of$312.8 million at fiscal year end 2012, which compares to an overfunded status of $113.7 million at fiscal year end 2011. MIT also maintains a postretirement welfare benefit plan that covers retiree expenses associated with medical and life insurance benefits, with assets of $358.9 million and liabilities of $489.5 million at fiscal year end 2012, resulting in a net benefits liability of $130.6 mil-lion compared to $198.2 million at fiscal year end 2011.On an accounting basis, the combined plans' fiscal 2012 underfunded status was $443.4 million, up from $84.5 million one year ago. The investments of both plans'assets are managed by MITIMCo.In prior years, defined benefit pension plan funding beyond market appreciation had not been necessary due to positive investment performance and stable discount rates. Since the financial and economic crisis of 2008, the combination of declining interest and discount rates and lower than expected asset returns has pushed MIT's pension obligations into unfunded territory for the last four years. This situation will likely require the Institute to contribute additional capital in future years beyond market appreciation of plan assets; such capital contributions will be funded through the employee benefits rate.MIT also offers a 401(k) plan to its employees, which is not reflected in the Statements of Financial Position, invested at the direction of participants in a broad array of investment funds. The plan's investments market value was $2,952.6 million at fiscal year end 2012.Borrowings The increase in borrowings over the last decade, along with gifts received from donors, helped finance the more than doubling of the value of land, buildings and equip-ment as MIT has invested in its physical infrastructure to support its growing mission into the next century.Near the end of fiscal 2011, MIT executed a $750 mil-lion century bond issuance to finance the first decade of projects and accelerate the renewal of the campus con-templated by the MIT 2030 framework.

The full impact of the interest expense of this debt is reflected for the first time in fiscal 2012. No new debt was issued in fiscal 2012 and therefore borrowings have remained relatively unchanged from last year at just under $2.5 billion.MIT's financial strength is reviewed periodically by both Moody's Investors Service and Standard & Poor's Rating Services.

These agencies rated the century bond issuance as "Aaa" and "AAA", their highest rating levels, and their ongoing reviews of MIT's finances in and subsequent to fiscal 2012 have continued to affirm these ratings.Statement of Activities Operating Activities In fiscal 2012, MIT continued to grow research activity and maintain excellence in its education mission while exercising expense control in core administrative areas.MIT ended the year with a surplus from operations of$245.7 million, $66.2 million, or 36.9 percent, higher than the fiscal 2011 result. The MIT community has demonstrated its commitment to financial discipline by achieving an operating surplus in each of the past five years.Operating Activities 3,500 $ millions 2,990 3,000 2,751"".2,571 275 2,500 2,000 1,687 1,500 1,5000 ,8 1,000 500 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 NRevenues CExpensos 8 MIT REPORT OF THE TREASURER 2012 Operating revenues increased

$239.6 million, or 8.7 percent, to $2,990.3 million in fiscal 2012, while oper-ating expenses increased

$173.4 million, or 6.7 percent, to a total of $2,744.6 million.Year-over-year comparisons of the components of operating results are influenced by fundamental trends, as well as such drivers as timing effects and policy deci-sions on endowment payout. The Operating Activities section of our Statement of Activities on page 13 sets forth details on these trends. Some of the specific trends in various revenue and expense categories are described below.Operating Revenues MIT's operating revenues include tuition, research, unrestricted gifts and bequests for current use, fees and services, other programs, endowment distribution and income from other investments, auxiliaries, and pay-ments on pledges for unrestricted gifts (within net asset reclassifications and transfers).

Revenues Net Asset Reclasses Auxiliaries 2% Net Tuition 4% ~ 9$1,527.9 million, up $80.6 million, or 5.6 percent, from the previous year. Of these amounts, on-campus depart-ments, labs and centers at MIT experienced a $3 5.4 million, or 5.7 percent, increase in research revenues to$654.4 million. Research revenues at Lincoln Laboratory totaled $844.9 million, an increase of $40.1 million, or 5.0 percent. The Singapore-MIT Alliance for Research and Technology (SMART) generated

$28.6 million of research revenue during fiscal 2012, an increase of$5.1 million, or 21.6 percent, for research activities taking place in Singapore.

Total research awards and other funding received via the American Recovery and Reinvestment Act of 2009 (ARRA) totaled $151.5 mil-lion. Of the $151.5 million figure, $128.7 million was to fund research with the remainder funding infrastructure investments and student support. ARRA funding sup-ported $31.2 million of research in fiscal 2012, included in the research figures above. Total ARRA research volume through fiscal year end 2012 has been $102.5 million, leaving $26.2 million of the $128.7 million in committed ARRA research funding to support research in fiscal 2013 and beyond.Research revenues include reimbursement from sponsors for both direct and indirect (facilities and administration) costs. MIT's modified total direct research expenditures, which form the basis for recovery of indirect costs, increased by $63.7 million, or 7.7 percent.Growth in MIT's campus research is being driven by both Federal and non-Federal sponsors.

Total Federal sponsorship of research grew $3.1 million, or 0.7 per-cent, to $472.6 million. Research volume sponsored by the Department of Health and Human Services decreased

$19.0 million, or 12.4 percent, to $133.7 million; research volume sponsored by the Department of Defense increased

$9.7 million, or 9.0 percent, to$117.5 million; Department of Energy volume grew by$1.4 million, or 1.5 percent, to $90.9 million; National Science Foundation volume grew by $6.6 million, or 8.9 percent, to $81.5 million; and volume sponsored by the National Aeronautics and Space Administration increased

$2.1 million, or 7.6 percent, from last year to$30.2 million.Non-Federal funding for campus research increased by$18.2 million, or 10.2 percent, to $196.4 million, with the greatest increase coming from industry sponsors.While research supports more than half of MIT's revenue, we experienced significant growth in other revenue categories as well, the largest being revenues from fees and services at $219.4 million, an increase of Other Prol 4%Fees & Services 7%Tuition revenue for graduate, undergraduate and non-degree executive programs net of financial aid grew by$22.5 million, or 8.9 percent, to $276.0 million. The growth in tuition revenue was driven by a 3.1 percent increase in student population and a 3.9 percent increase in tuition rate. Financial aid for undergraduate students grew to $88.0 million, or 2.4 percent above that for fiscal 2011. Financial aid for graduate education grew to$163.7 million, or by 6.0 percent.MIT demonstrated strong growth in research funding in fiscal 2012. Total research revenues increased to

SUMMARY

9

SUMMARY

9

$20.4 million, or 10.3 percent. The primary driver of this strong growth of revenues was a one-time increase in technology licensing fees. MIT's support from invest-ments increased 10.2 percent due primarily to revenue from the increase in the endowment distribution rate, additions to the endowment and other invested assets.The distribution rate on endowed funds was 4.9 percent, or 5.4 percent on a three-year-average basis, in fiscal 2012.MIT also saw significant growth in support from its donor base in the form of gifts and bequests for current use. Gifts grew by $45.1 million, or 40.6 percent, mainly due to gifts from foundations that supported program-matic initiatives.

Operating Expenses Operating expenses grew to $2,744.6 million, an increase of $173.4 million or 6.7 percent. This consolidated result combines differing underlying trends in units funded by the general Institute unrestricted budget, the research enterprise and expenditures from accumulated unit fund balances.Depreciation 5%Utilities/Rent)

Repairs 6%Subreciplent Agreements 4%Expenses Interest 4%2012. Interest expense grew by 45.7 percent, driven by the century bond issuance in late fiscal 2011 to support the next phase of investment in the campus environment.

Utilities, rent, and repairs grew by 24.9 percent, mainly due to leasehold expenses incurred at Lincoln Lab, and depreciation increased by 7.5 percent.Non-Operating Revenues, Gains and Losses Summary Non-operating activities contributed

$143.5 million to MIT's fiscal 2012 total net asset balance of $12,799.3 million. Growth in invested assets net of distribution, gifts and bequests, and improved pledge activity were the principal contributors to positive non-operating performance.

Gifts and Pledges Gifts to MIT support scholarships, fellowships, educa-tional programming, and student life activities.

Gifts and pledges for fiscal 2012 totaled $433.4 million, a decrease of 17.0 percent from the fiscal 2011 total of $522.4 million. Gifts from individuals represented 31.8 percent of new gifts and pledges, down from 65.5 percent in the previous year. Gifts from foundations represented 53.3 percent of new gifts and pledges in fiscal 2012, up from 19.8 percent in the previous year. Gifts from corpora-tions and other sources represented 14.9 percent, up from 14.7 percent in fiscal 2011. New gifts and pledges for research and education were the largest category of gifts for fiscal 2012.MIT's full financial statements and footnotes, further describing our financial position and activities through June 30, 2012, are included on the following pages.Closing Remarks This past year has seen continued progress in the finan-cial condition of the Institute and its impact nationally and globally.

We improved in most revenue sources and, coupled with managed expense growth, we realized improved results of operations.

We grew net assets to a record level, and our endowment, aptly managed by MITIMCo and propelled by the generosity of our do-nors and friends, also achieved its highest market value in history, surpassing its highest level before the fiscal 2009 financial crisis.On every dimension, the last decade has witnessed a vibrant MIT. Our faculty and students dramatically expanded MIT's research landscape, launching and accelerating an array of interdisciplinary labs, centers, Overall Institute salary costs rose 5.9 percent while employee benefits costs rose 4.4 percent. Institute salary increases were 2.9 percent while headcount grew by 3.0 percent. Behind the campus salary increase, salaries funded centrally through the general Institute unre-stricted budget grew by 5.2 percent while those funded through research grew by 6.6 percent.Expense increases were concentrated in operating categories other than salaries and employee benefits in 10 MIT REPORT OF THE TREASURER 2012 and initiatives.

The MIT learning community expanded in both size and diversity, and students from around the world increasingly view MIT as the place to which they want to be connected.

The future of MIT's campus is now unfolding through the MIT 2030 framework, in support of the Institute's academic priorities and physical resources.

Additionally, through a range of expanded col-laborations, MIT continues to further its impact on the world with leadership in global education and research.On behalf of the MIT community, I take this opportu-nity to express our appreciation for Susan Hockfield's leadership, dedication and vision as MIT's President during the last eight years as well as for Executive Vice President and Treasurer Theresa (Terry) M. Stone who earlier in the year retired after five years of service to MIT. I am grateful for the opportunity to have worked closely with them over the years and feel honored and privileged in being entrusted by the MIT Corporation to succeed Terry in the role of MIT's Executive Vice President and Treasurer.

We also take the opportunity to celebrate the selection of the Institute's seventeenth President by the MIT Corporation in May 2 012.-Effective July 2, 2 012, MIT Provost L. Rafael Reif became the Institute's seventeenth President and, concurrently, Professor Chris A. Kaiser, who had led MIT's Department of Biology, became MIT's new Provost. Congratulations to both and we look forward to the excitement of working together in advancing the Institute's mission and supporting it with appropriate financial and operational resources.

In closing, I would like to acknowledge that although our financial position is strong and able to sustain our excellence, and positions the Institute to take advantage of future exciting directions and opportunities, we also face important challenges.

Our principal revenue sources are more volatile than in the past, and our funding model may come under pressure in a still uncertain economic climate and changing competitive landscape for higher education.

At the same time, we must continue ad-dressing the need to rebuild and renew our campus. As a result, we look forward to fiscal year 2013 and beyond with a continued commitment to balancing MIT's aspira-tions with prudent fiscal management and stewardship.

As always, the commitment and dedication of our stu-dents, faculty, staff, alumni, friends, and members of the MIT Corporation are and will continue to be the most valuable assets of the Institute in' successfully navigating future challenges and opportunities.

Respectfully submitted, Israel Ruiz Executive Vice President and Treasurer September 14, 2012

SUMMARY

11 12 MIT REPORT OF THE TREASURER 2012 Massachusetts Institute of Technology Statements of Financial Position at June 30, 2012 and 2011 (in thousands of dollars)2012 2011 Assets C ash ......................................................................

$ 239,377 Accounts receivable, net ......................................................

208,297 Pledges receivable, net, at fair value .............................................

479,659 Contracts in progress, principally U.S. Government

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

66,724 Deferred charges, inventories and other assets ....................................

93,499 Student notes receivable, net ..................................................

49,529 Investm ents, at fair value ......................................................

12,847,866 N oncontrolling interests

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

304,436 Retirement plan asset-overfunded status .........................................

-Land, buildings

& equipment (at cost of $3,546,351 for June 2012; $3,406,169 for June 2011), net of accumulated depreciation

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

2,497,711 Total assets ..............................................................

$ 16,787,098 Liabilities and Net Assets Liabilities:

Accounts payable, accruals and other liabilities

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

$ 378,369 Liabilities due under life income fund agreements, at fair value .......................

87,899 Deferred revenue and other credits .............................................

155,476 Advance paym ents ...........................................................

428,507 Borrow ings .................................................................

2,460,002 Government advances for student loans ..........................................

34,103 Accrued benefit liabilities

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

443,398 Total liabilities

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

3,987,754 Net Assets: Unrestricted net assets controlled by the Institute

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

$ 4,584,516 Unrestricted net assets attributable to noncontrolling interests

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

304,436 Total unrestricted net assets ................................................

4,888,952 Tem porarily restricted

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

5,297,554 Perm anently restricted

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

2,612,838 Total net assets ..........................................................

12,799,344 Total liabilities and net assets ...............................................

$ 16,787,098

$ 131,471 261,206 385,885 68,411 71,735 49,757 12,236,531 282,041 113,715 2,451,479$16,052,231

$ 366,161 84,225 124,848 389,478 2,467,825 33,754 198,209 3,664,500$ 4,603,280 282,041 4,885,321 5,044,519 2,457,891 12,387,731

$16,052,231 The accompanying notes are an integral part of the financial statements.

FINANCIAL STATEMENTS 13 Massachusetts Institute of Technology Statement of Activities for the year ended June 30, 2012 (with summarized financial information for the year ended June 30, 2011)(in thousands of dollars)2012 Total Temporarily Permanently Unrestricted Restricted Restricted 2012 2011 Operating Activities Operating Revenues: Tuition and similar revenues, net of discount of$251,709 in 2012 and $240,299 in 2011 ........Research revenues: D irect .......................................

In direct ......................................

Total research revenues .........................

Gifts and bequests for current use ................

Fees and services ..............................

O ther program s ...............................

Support from investments:

Endowm ent ...............................

Other investments

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

Total support from investments

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

Auxiliary enterprises

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

Net asset reclassifications and transfers

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

Total operating revenue ........................

Operating Expenses: Salaries and wages .............................

Employee benefits .............................

Supplies and services ...........................

Subrecipient agreements

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

Utilities, rent, and repairs .......................

D epreciation

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

Interest expense ...............................

Total operating expenses ........................

Results of operations

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

Non-Operating Activities Pledge revenue ...............................

G ifts and bequests .............................

Investment income ............................

Net gain on investments and other assets ..........

Distribution of accumulated investment gains .......Net change in life income funds ..................

Pension-related charges other than net periodic pension benefit income ......................

Net asset reclassifications and transfers

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

Total non-operating activities

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

Increase in net assets controlled by Institute

........Change in net assets attributable to noncontrolling interests

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

Net assets at the beginning of the year ............

Net assets at the end of the year ..................

$ 275,993 $-$ 275,993 $ 253,478 1,319,112 208,738$ 1,527,850--1,319,112--208,738$ -$ -$ 1,527,850 156,172 219,391 104,556-156,172-219,391-104,556 1,250,388 196,818$ 1,447,206 111,114 198,971 87,133 444,836 51,961 496,797 100,135 55,813$ 2,750,647 468,604 78,681 547,285 108,868 50,181$ 2,990,296$ 1,065,529 233,343 926,760 121,892 164,273 125,100 107,689 2,744,586$ 245,710--468,604--78,681--547,285--108,868--50,181$ -$ -$ 2,990,296-$-$ 1,065,529

$ 1,006,458-233,343 223,568-926,760 898,284-121,892 120,977-164,273 131,539-125,100 116,385-107,689 73,936-2,744,586 2,571,147-$ 245,710 $ 179,500-$$ -$ 135,879 275,868 (155,527)(1,478)(394,469)11,132 (264,474)(18,764)22,395 4,885,321$ 4,888,952 489 447,241 (285,789)3,766 (48,551)253,035 253,035 5,044,519$5,297,554

$ 46,869 $ 182,748 $94,504 94,504 6,853 7,342 15,199 738,308-(441,316)4,284 6,572-(394,469)(12,762) (50,181)154,947 143,508 154,947 389,218-22,395 110,577 300,718 8,706 1,483,669 (379,793)28,413 105,408 (55,813)1,601,885 1,781,385 51,6.08 2,457,891$2,612,838 12,387,731 10,554,738

$12,799,344

$12,387,731 The accompanvinv notes are an inteoral Part of the financial statements.

14 MIT REPORT OF THE TREASURER 2012 Massachusetts Institute of Technology Statements of Cash Flows for the years ended June 30, 2012 and 2011 (in thousands of dollars)2012 2011 Cash Flow from Operating Activities:

Increase in net assets ...................................................

Adjustments to reconcile change in net assets to net cash used in operating activities:

N et gain on investm ents ...................................................

Change in retirement plan asset, net of change in accrued benefit liability

...........

D epreciation

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

G ifts of securities

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

N et gain on life incom e funds ..............................................

Change in noncontrolling interests

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

Amortization of bond premiums and discounts and other adjustments

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

Change in operating assets and liabilities:

Pledges receivable

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

A ccounts receivable

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

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

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

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

Liabilities due under life income fund agreements

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

Deferred revenue and other credits ..........................................

A dvance paym ents ........................................................

Reclassify investm ent incom e ..................................................

Contributed securities received as payment on pledges .............................

Contributions restricted for long-term investment

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

Net cash provided by (used in) operating activities

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

Cash Flow from Investing Activities:

Purchase of land, buildings and equipment

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

Purchases of investm ents .....................................................

Proceeds from sale of investments, including contributed securities

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

Student notes issued .........................................................

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

N et cash used in investing activities

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

Cash Flow from Financing Activities:

Proceeds from contributions restricted for: Investm ent in endowm ent .................................................

Investm ent in plant and other ..............................................

Less: contributed securities, gifts for endowment, plant and other .................

Total proceeds from contributions

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

Increase in investment income for restricted purposes ..............................

Proceeds from borrowings

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

Repaym ent of borrowings

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

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

Net cash provided by financing activities

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

N et increase (decrease) in cash .................................................

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

C ash at the end of the year ....................................................

$ 411,613 $ 1,832,993 (734,374)358,904 125,100 (2,978)(2,442)(22,395)(2,431)(93,774)52,909 1,687 (21,764)21,970 3,674 30,628 39,029 (7,342)(37,302)(94,504)26,208 (183,958)(52,463,972) 52,638,753 (20,013)20,198 (8,992)94,504 (9,015)85,489 7,342 (2,490)349 90,690 107,906 131,471$ 239,377 (1,483,669)

(134,300)116,385 (1,921)(25,383)(51,608)(7,949)(10,655)(58,090)(67)(15,821)68,948 9,969 10,699 27,106 (8,706)(27,380)(300,718)(60,167)(251,932)(41,050,404) 40,570,574 (9,967)9,282 (732,447)293,317 7,401 (267,356)33,362 8,706 750,000 (2,370)164 789,862 (2,752)134,223$ 131,471 The accompanying notes are an integral part of the financial statements.

15 FINANCIAL STATEMENTS Notes to Financial Statements A. Accounting Policies Basis of Presentation The accompanying financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) in the United States of America. The financial statements include MIT and its wholly-owned subsidiaries.

Net assets, revenues, expenses, gains and losses are classi-fied into three categories based on the existence or absence of donor-imposed restrictions.

The categories are perma-nently restricted, temporarily restricted, and unrestricted net assets. Unconditional promises to give (pledges) are recorded as receivables and revenues within the appropriate net asset category.Permanently restricted net assets include gifts, pledges, trusts and remainder interests, and income and gains that are required by donors to be permanently retained.Pledges, trusts, and remainder interests are reported at their estimated fair values.Temporarily restricted net assets include gifts, pledges, trusts and remainder interests, and income and gains that can be expended but for which restrictions have not yet been met. Such restrictions include purpose restrictions where donors have specified the purpose for which the net assets are to be spent, or time restrictions imposed by donors or implied by the nature of the gift (capital projects, pledges to be paid in the future, life income funds), or by interpretations of law (net gains on permanently restricted gifts that have not been appropriated for spending).

Gifts specified for the acquisition or construction of long-lived assets are reported as temporarily restricted net assets until the monies are expended and the buildings are put into use, at which point they are reclassified to unrestricted net assets. Net unrealized losses on permanently restricted endowment funds for which the book value exceeds market value are recorded as a reduction to unrestricted net assets.Unrestricted net assets are all the remaining net assets of MIT. Donor-restricted gifts and unexpended restricted endowment income that are received and either spent, or the restriction is otherwise met within the same year, are reported as unrestricted revenue. Gifts of long-lived assets are reported as unrestricted revenue.Net asset reclassifications and transfers consist primarily of payments on unrestricted pledges and use of building funds in accordance with donor restrictions for buildings put into use during the year. Expirations of temporary restrictions on net assets, release of permanent restrictions by a donor, and change of restrictions imposed by donors are also reported as reclassifications of net assets among unrestricted, temporarily and permanently restricted net assets.16 MIT administers its various funds, including endowments, funds functioning as endowments, school or departmental funds, and related accumulated gains in accordance with the principles of "Fund Accounting." Gifts are recorded in fund accounts and investment income is distributed to funds annually.

Income distributed to funds may be a combination of capital appreciation and yield pursuant to MIT's total return investment and spending policies.

Each year, the Executive Committee of the Corporation approves the rates of distribution of investment return to the funds from MIT's investment pools. See Note K for further information on income distributed to funds.MIT's operations include tuition, research revenues, unre-stricted gifts and bequests for current use, fees and services, other programs, endowment distribution and income from other investments, auxiliary revenues, payments on pledges for unrestricted gifts, and operating expenditures.

Results of operations are displayed in the Statement of Activities.

MIT is a nonprofit organization that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code, originally recognized in October 1926, with the most recent affirma-tion letter dated July 2001.Restricted Cash Certain cash balances, totaling $60.3 million and $42.5 million at June 30, 2012 and 2011, respectively, are restricted for use under certain sponsored research agreements.

The Institute had approximately

$238.1 million and $129.8 million at June 30, 2012 and 2011, respectively, of its cash and cash equivalents accounts with a single institution.

The Institute has not experienced any losses associated with deposits at this institution.

Sponsored Research Revenue associated with contracts and grants is recognized as related costs are incurred.

The capital costs of buildings and equipment are depreciated over their estimated life cycle and the sponsored research recovery allowance for depreciation is treated as indirect research revenue. MIT has recorded reimbursement of indirect costs relating to sponsored research at negotiated fixed billing rates. The income generated by the negotiated rates is adjusted each fiscal year to reflect any variance between the negotiated fixed rates and rates based on actual cost. The actual cost rate is audited by the Defense Contract Audit Agency (DCAA) and a final fixed-rate agreement is signed by the U.S. Government and MIT The variance between the negotiated fixed rate and the final audited rate results in a MIT REPORT OF THE TREASURER 2012 A. Accounting Policies (continued) carry forward (over or under-recovery).

The carry forward is included in the calculation of negotiated fixed billing rates in future years. Any adjustment in the rate is charged or credited to unrestricted net assets.Land, Buildings and Equipment Land, buildings and equipment are shown at cost when purchased or fair value as of the date of a gift when received as gifts, net of accumulated depreciation.

When expended, costs associated with the construction of new facilities are shown as construction in progress until such projects are completed.

Depreciation is computed on a straight-line basis over the estimated useful lives of 25 to 50 years for buildings, 3 to 25 years for equipment, and 4 to 6 years for software.

Fully depreciated assets were removed from the financial statements in the amount of $27.2 million and$37.5 million during 2012 and 2011, respectively.

Land, buildings and equipment at June 30, 2012 and 2011 are shown in Table 1 below.Depreciation expense was $125.1 million in 2012 and$116.4 million in 2011. Net interest expense of $3.8 million and $6.6 million was capitalized during 2012 and 2011, respectively, in connection with MIT's construction projects.Tuition and Financial Aid Tuition and similar revenues, shown in Table 2 below, include tuition and fees in degree programs as well as tuition and fees for executive and continuing education programs at MIT Table 2. Tuition and Similar Revenues (in thousands of dollars) 2012 2011 Tuition revenue ........ $ 491,046 $ 457,494 Executive and continuing education revenues ..... 36,656 36,283 Total ................

527,702 493,777 Less: tuition discount ... (251,709)

(240,299)Net tuition & similar revenue ..............

$ 275,993 $ 253,478 Table 1. Land, Buildings and Equipment (in thousands of dollars)2012 2011 Land .................

Land improvements

.....Educational buildings

...Equipment

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

Software ..............

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

Less: accumulated depreciation

...........

Construction in progress ..............

Software projects in progress ..............

Land, buildings and equipment

...........

$65,198 $ 59,598 64,299 60,795 3,106,569 2,936,816 175,046 164,909 31,933 29,938 3,443,045 3,252,056 (1,048,640)

(954,690)Tuition support is awarded to undergraduate students by MIT based on need. Graduate students are provided with tuition support in connection with research assistance, teaching assistance, and fellowship appointments.

Total student support granted to students was $441.2 million and $409.8 million in 2012 and 2011, respectively.

Of that amount, $144.5 million in 2012 and $125.8 million in 2011 was aid from sponsors.

Tuition support from MIT sources is displayed as tuition discount.

Components of student support are detailed in Table 3 below.87,177 16,129$ 2,497,711 142,788 11,325$2,451,479 Table 3. Student Support 2012 I I 2011 Institute External Total Institute External Total (in thousands of dollars) sources sponsors financial aid sources sponsors financial aid Tuition support ...........

$ 251,709 $ 66,074 $ 317,783 $ 240,299 $ 53,756 $ 294,055 Stipends .................

18,203 15,060 33,263 17,680 12,755 30,435 Student salaries ...........

26,723 63,412 90,135 26,051 59,284 85,335 Total ..................

$ 296,635 $ 144,546 $ 441,181 $ 284,030 $ 125,795 $ 409,825 NOTES TO FINANCIAL STATEMENTS 17 A. Accounting Policies (continued)

Gifts and Pledges Gifts and pledges are recognized when received.

Gifts of securities are recorded at their fair value at the date of con-tribution.

Gifts of equipment received from manufacturers and other donors are put into use and recorded by MIT at fair value. Gifts of equipment totaled $0.4 million in 2012 and 2011. Pledges in the amount of $479.7 million and$385.9 million were recorded as receivables at June 30, 2012 and 2011, respectively, with the revenue assigned to the appropriate classification of restriction.

Pledges consist of unconditional written promises to contribute to MIT in the future and are recorded after discounting the future cash flows to the present value.MIT records items of collections as gifts at nominal value.They are received for educational purposes and most are displayed throughout MIT. In general, collections are not disposed of for financial gain or otherwise encumbered in any manner.Advance Payments Amounts received by MIT from the U.S. Government, corporations, industrial sources, foundations, and other non-MIT sponsors under the terms of agreements that generally require the exchange of assets, rights, or privileges between MIT and the sponsor are recorded as advance payments.

Revenue is recognized as MIT fulfills the terms of the agreement.

Life Income Funds MIT's life income fund agreements with donors consist primarily of irrevocable charitable gift annuities, pooled income funds, and charitable remainder trusts for which MIT serves as trustee. Assets are invested and payments are made to donors and other beneficiaries in accordance with the respective agreements.

MIT records the assets that are associated with each life income fund at fair value and records as liabilities the present value of the estimated future payments at current interest rates to be made to the donors and beneficiaries under these agreements.

A rollforward of liabilities due under life income fund agreements is presented in Table 4.Revised Classifications On July 1, 2011, MIT adopted the accounting standard, Not-for-Profit Entities:

Mergers and Acquisitions.

This standard specifies that noncontrolling interests (formerly known as minority interests, classified as a liability) be reported within unrestricted net assets on the Statements of Financial Position and the change in net assets attributable to noncontrolling interests be reported separately within the Statement of Activities.

The standard had an effective date of June 30, 2011, but was not adopted until fiscal year 2012, and as a result, the Institute has revised the prior year presentation of its noncontrolling interests to conform to the correct current year presentation and generally accepted accounting principles.

The impact of this revision to the prior year financial statements decreased total liabilities from $3,994.7 million to $3,664.5 million and increased total net assets from $12,105.7 million to $12,387.7 million.As a result, the Institute reported net assets attributable to non-controlling interests in the amount of approximately

$282.0 million. In addition, the increase in net assets on the Statement of Activities and Statements of Cash Flows changed from $1,781.4 million to $1,833.0 million.Management does not believe that the impact of the prior year revision is material.Recently Adopted Accounting Standards On July 1, 2011, MIT adopted new guidance enhancing the Fair Value Measurement standard.

This standard requires further disclosure on the activity in the Level 3 rollforward to be reported on a gross, rather than net, basis.On July 1, 2010, MIT adopted new guidance enhancing the Fair Value Measurement standard.

This standard requires further disclosure of significant transfers in and out of Level 1 and Level 2 fair value measurements, including the reasons for the transfers, and requires discussions of their fair value measurement disclosures on a disaggregated basis.Refer to Note B for further details.On July 1, 2010, MIT adopted the accounting standard, Credit Quality. This standard requires the disclosure about the credit quality of financing receivables and the related allowance for credit losses. The disclosures are included in Note E.Table 4. Liabilities Due Under Life Income Funds (in thousands of dollars) 2012 2011 Balance at beginning of year .......................................

$ 84,225 $ 74,256 Additions for new gifts ............................................

7,389 8,907 Terminations and payments to beneficiaries

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

(12,200) (12,164)Net investment and actuarial gain ..................................

8,485 13,226 Balance at end of year .........................................

$ 87,899 $ 84,225 18 MIT REPORT OF THE TREASURER 2012 A. Accounting Policies (continued)

Noncontrolling Interests AI4T is the general partner for several private equity funds and has displayed the noncontrolling interests on the Statements of Financial Position.Non-Cash Items Non-cash transactions excluded from the Statements of'Cash Flows include $12.9 million and $23.2 million of accrued liabilities related to plant and equipment purchases for 2012 and 2011, respectively.

Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, contingent assets and liabilities at the date of the financial Statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications Certain June 30, 2011 balances and amounts previously reported have been reclassified to conform to the June 30, 2012 presentation.

Subsequent Events MIT has evaluated subsequent events through September 14, 2012, the date the financial statements were issued.There were no subsequent events that occurred after the balance sheet date that have a material impact on MIT's financial statements.

B. Investments Investment transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date.Realized gains and losses are recorded by MIT using the average cost basis.MIT values its investments in accordance with the principles of accounting standards which establish a hierarchy of valuation inputs based on the extent to which the inputs are observable in the marketplace.

Observable inputs reflect market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity's own assumptions about how market participants would value an asset or liability based on the best information available.

Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. MIT follows a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is unobservable.

The following describes the hierarchy of inputs used to measure fair value and the primary valuation methodologies used by MIT for financial instruments measured at fair value on a recurring basis. The three levels of inputs are as follows:* Level 1 -Quoted prices in active markets for identical assets or liabilities.

Market price data is generally obtained from relevant exchanges or dealer markets.9 Level 2 -Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the same term of the assets or liabilities.

Inputs are obtained from various sources including market participants, dealers, and brokers.* Level 3 -Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Investments may be classified as Level 2 when market information (including observable net asset values) is available, yet the investment is not traded in an active market. Market information, including observable net asset values, subscription and redemption activity, if applicable, and the length of time until the investment will become redeemable are NOTES TO FINANCIAL STATEMENTS 19 B. Investments (continued)

Table 5. Investmnents Quoted prices in active markets (in thousands of dollars) (Level 1)Significant other observable inputs (Level 2)Significant un-observable inputs (Level 3)Total fair value Fiscal year 2012 Cash and cash equivalents

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

U S treasury ............................

US government agency ...................

Domestic bonds**........................

Foreign bonds**.........................

Common equity Long domestic equity ...................

Long foreign equity ....................

Short domestic equity ...................

Short foreign equity ....................

Equity*'Absolute return ........................

D om estic .............................

Foreign ..............................

P rivate ...............................

R eal estate* .............................

R eal assets** ............................

Split interest agreements

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

O ther .................................

D erivatives

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

Total investm ents .......................

Fiscal year 2011 Cash and cash equivalents

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

U S treasury .............................

US government agency ...................

Dom estic bonds**........................

Foreign bonds**.........................

Common equity Long domestic equity ...................

Long foreign equity ....................

Short domestic equity ...................

Short foreign equity ....................

Equity**$ 1,599,874 462,111 23,243 933,902 290,853 (570,076)(76,711)69,625 8,124 1,648 (1,239)$ 2,741,354$ 1,175,781 588,650 22,075 902,225 318,089 (358,283)(88,108)$84,625 229,872 15,043 1,559 5,891 (609)393,396 27,701 281,523 75,377 5,002$ 1,119,380$78,9d 279,52 1,283,4 1,038,53 1,070,98 2,610,02 1,964,91 536,2 121,81 2,63$ 8,987,13-1,599,874-462,111-84,625 61 332,076-15,043 21 1,214,982-296,744 13) (570,688)-(76,711)90 1,676,886 37 1,135,863 81 1,360,628 24 2,610,024 01 1,964,901 66 613,291 16 121,816 38 2,638-3,763 32 $ 12,847,866

$-$63,153 243,806 12,074 5,359 7,916 (122)-$ 1,175,781-588,650-63,153 75,644 341,525 3 12,077 273,148 1,180,732 326,005 (358,405)(88,108)Absolute return ........................

-470,086 1,408,152 1,878,23 Domestic .............................

201,117 33,093 564,360 798,5;Foreign ..............................

51,766 110,055 1,112,986 1,274,8(Private ...............................

--2,479,017 2,479,01 Real estate*.............................

--1,691,704 1,691,7(Real assets** ............................

--699,098 699,09, Split interest agreements

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

--101,125 101,1 O ther .................................

--2,592 D erivatives

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

(1,757) 71,727 -69,9;j Total investments

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

$ 2,811,555

$ 1,017,147

$ 8,407,829

$ 12,236,53*Real estate includes direct investments and investments held through commingled vehicles.**Real assets, Equity, Domestic bonds and Foreign bonds categories include commingled vehicles that invest in these types of investments.

38 70 07 17 14 98 52 92 70 1 20 MIT REPORT OF THE TREASURER 2012 B. Investments (continued) considered when determining the proper categorization of the investment's fair value measurement within the fair valuation hierarchy.

Fund investments that have observable market inputs (such as net asset values) and from which MIT has the ability to redeem within twelve months of June 30 are classified in the fair value hierarchy as Level 2.Investment funds that have unobservable inputs or from which MIT does not have the ability to redeem within twelve months are classified in the fair value hierarchy as Level 3.Table 5 on the previous page presents MIT's investments at fair value as of June 30, 2012 and 2011, grouped by the valuation hierarchy as defined in this note. Transfers between levels are recognized at the beginning of the reporting period. There were no significant transfers in and out of Level 1 and Level 2 fair value measurements in 2012 and 2011. Significant transfers out of level three and into level two in 2012 and 2011 resulted from the expiration of lockups which had prevented MIT from exiting the fund within twelve months.Cash and cash equivalents include cash, money market funds, repurchase agreements and negotiable certificates of deposit and are valued at cost, which approximates fair value. Instruments listed or traded on a securities exchange are valued at the last quoted price on the primary exchange where the security is traded. Investments in non-exchange traded debt are primarily valued using independent pricing sources that use broker quotes or models using market observable inputs. Investments managed by external advisors include investments in absolute return, domestic, foreign and private equity, real estate and real asset commingled vehicles.

The majority of these investments are not readily marketable and are reported at fair value utilizing the most current information provided by the external advisors.

Securities held in these external investment vehicles that do not have readily determinable fair values are determined by the external managers and are based on appraisals or other estimates that require varying degrees of judgment.

If no public market exists for the investment securities, the fair value is determined by the external managers taking into consideration, among other things, the cost of the securities, prices of recent significant placements of securities of the same issuer, and subsequent developments concerning the companies to which the securities relate. Using these valuations, most of these external managers calculate MIT's capital account or net asset value (NAV) in accordance with, or in a manner consistent with, GAAP. As a practical expedient, MIT is permitted under GAAP to estimate the fair value of its investments with external managers using the external managers' reported NAV without further adjustment unless MIT expects to sell the investment at a value other than NAV or the NAV is not calculated in accordance with GAAP. Direct real estate holdings are valued at fair market value based on external appraisals.

Other direct investments that are not readily marketable are valued by MIT based upon valuation information received from the entity which may include last trade information or valuations prepared in connection with the administration of an employee stock ownership plan. MIT may also utilize industry standard valuation techniques.

Split-interest agreements are generally valued at the present value of the future distributions expected to be received over the term of the agreement.

Over-the-counter positions such as interest rate and total return swaps, credit default swaps, options, exchange agreements, and interest rate cap and floor agreements are valued using broker quotes or models using market observable inputs. Because the swaps and other over-the-counter derivative instruments have inputs that can generally be corroborated by observable market data, they are generally classified within Level 2.The methods described above may produce a fair value that may not be indicative of net realizable value or reflective of future fair values. MIT performs ongoing due diligence around its non-public investments to determine that fair value is reasonable as of June 30, 2012 and 2011.Furthermore, while MIT believes its valuation methods are appropriate and consistent with those of other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.Table 6 is a rollforward of the investments classified by MIT within Level 3 of the fair value hierarchy defined on page 19 at June 30, 2012 and 2011.All net realized and unrealized gains and losses relating to financial instruments held by MIT and shown in Table 5 are reflected in the Statement of Activities.

Cumulative unrealized gains related to Level 3 investments totaled$2,476.9 million and $2,012.9 million for the years ended June 30, 2012 and 2011, respectively.

The net change in unrealized gains (losses) related to these financial instruments held by MIT at June 30, 2012 are disclosed in Table 6.MIT enters into short sales whereby it sells securities which may or may not be owned by MIT in anticipation of a decline in the price of such securities or in order to hedge portfolio positions.

Cash collateral and certain securities owned by MIT were held at counterparty brokers to NOTES TO FINANCIAL STATEMENTS 21 B. Investments (continued) collateralize these positions and are included in investments on the Statements of Financial Position.Certain investments in real estate, equities, and private investments may be subject to restrictions that (i) limit MIT's ability to withdraw capital after such investment and (ii) may be subject to limitations that limit the amount that may be withdrawn as of a given redemption date.Most absolute return, domestic equity and foreign equity commingled funds limit withdrawal to monthly, quarterly, or other periods, and may require notice periods. In addition, certain of these funds are able to designate a portion of the investments as "illiquid" in "side-pockets," and these funds may not be available for withdrawal until liquidated by the investing fund. Generally, MIT has no discretion as to withdrawal with respect to its investment in private equity and real estate funds. Distributions are made when sales of assets are made within these funds and the investment cycle for these funds can be as long as fifteen to twenty years. These restrictions may limit MIT's ability to respond quickly to changes in market conditions.

MIT does have various sources of liquidity at its disposal, including cash, cash equivalents, marketable debt and equity securities, and lines of credit.Table 6. Roliforward of Level 3 Investments (in thousands of dollars)Fair Value Realized Gains Unrealized Beginning (Losses) Gains (Losses)Purchases Transfer of Assets Fair Value Sales between Levels Ending Fiscal Year 2012 Domestic bonds .....................

Foreign bonds .......................

Common equity .....................

Long domestic equity ...............

Short domestic equity ..............

E quity .............................

Absolute return ....................

D om estic .........................

Foreign ..........................

Private ...........................

R eal estate ..........................

R eal assets ..........................

Split interest agreements

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

O ther ..............................

Total investments Fiscal Year 2011 Domestic bonds .....................

Foreign bonds .......................

Common equity .....................

Long domestic equity ...............

E quity .............................

Absolute return ....................

D om estic .........................

Foreign ..........................

P rivate ...........................

R eal estate ..........................

R eal assets ..........................

Split interest agreements

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

O ther ..............................

Total investments S 75,644 3 273,148 1,408,152 564,360 1,112,986 2,479,017 1,691,704 699,098 101,125 2,592$8,407,829

$ 73,310 2$$ 1 $ 11,550 $ (7,879)--(2)$(355) $ 78,961 (1)-279,521-(3)8 5,379 (3)(7,750)(10,918)(24,375)(6,185)5,149 167 S (43,904)13,925 143,115 (19,476)125,079 142,723 (6,189)2,319 124 S 406,997 7,716 39,161 400,257 181,410 319,630 441,466 12,094 18,478 30$1,431,792

$ 10,680 (6,730)(169,998)(58,277)(166,705)(307,517)(316,141)(78,326)(106)(275)$(1,111,956)

$ (8,346)-1,283,490-1,038,537 (12,859) 1,070,981-2,610,024-1,964,901 (90,411) 536,266-121,816-2,638$ (103,626)

$ 8,987,132$$$-$ 75,644 1 3 12,163 1,005 273,982 (14,002)273,148 1,452,998 393,870 887,667 2,092,094 1,401,896 639,663 90,214 1,713$7,045,590 (1)12,378 (2,433)12$ 9,956 164,512 103,227 75,121 335,577 157,997 66,748 10,911 373$ 915,471 21,394 132,000 492,852 374,407 225,899 24,786 575$1,556,575 (182,525)(64,737)(355,032)(320,628)(94,100)(32,099)(69)$(1,071,538)

(48,226) 1,408,152-564,360-1,112,986-2,479,017-1,691,704-699,098-101,125-2,592$ (48,225) $ 8,407,829 22 MIT REPORT OF THE TREASURER 2012 B. Investments (continued)

Details on the estimated remaining life, current redemption terms and restrictions by asset class and type of investment are provided below.Table 7. Unfunded Commnitments

-2012 Asset Class Unfunded (in thousands of dollars) Commitments

-r .2011 Fair Value Commitments Fair Value Redemption Terms Redemption Restrictions Equity: Domestic Foreign$ 26,941 S 1,135,863

$ 21,000 209,245 1,360,628 106,226 Absolute return 37,762 1,676,886 66,410$ 798,570 Redemption terms range from daily to annually with 90 days notice 1,274,807 Redemption terms range from daily to quarterly with 90 days notice 1,878,238 Redemption terms range from monthly with 3 business days notice to closed end structures not available for redemption 2,479,017 Closed end funds not eligible for redemption 648,677 Closed end funds not eligible for redemption 698,948 Redemption terms range from I fund annually with 90 days notice to all other funds are closed end funds not eligible for redemption

$ 7,778,257 Lock-up provisions range none to 4 years Lock-up provisions range from none to 8 years Lock-up provisions range from none to not redeemable Private Real estate Real assets 1,261,309 2,610,024 1,047,183 Not redeemable Not redeemable 531,904 135,516 757,715 613,083 510,321 101,168 Not redeemable except for 1 fund with a lock-up provision of 4 years Totals $ 2,202,677$8,154,198

$ 1,852,308 NOTES TO FINANCIAL STATEMENTS 23 C. Derivative Financial Instruments During the year ended June 30, 2011, MIT maintained two interest rate swap agreements to manage the interest cost and risk associated with its variable rate debt, further described in Note G. On June 5, 2011, one of these swap agreements expired. Under the terms of the expired agreement, MIT paid a fixed rate of 4.46% on a notional amount of $125 million and received a payment indexed to the Securities Industry and Financial Market Association (SIFMA) municipal swap index rate. Under the remaining agreement, MIT pays a fixed rate of 4.91% and receives a payment indexed to SIFMA on a notional amount of $125 million. At June 30, 2012, the remaining swap agreement had a total fair value of ($58.6) million and atJune 30, 2011 had a fair value of ($32.8) million. This swap portfolio had a total net loss for 2012 of $25.8 million and a total net gain, of $7.7 million for 2011. The notional amounts of these derivatives are not recorded on MIT's Statements of Financial Position.For its investment management, MIT uses a variety of financial instruments with off-balance sheet risk involving contractual or optional commitments for future settlement.

MIT uses these instruments primarily to manage its exposure to extreme market events and fluctuations in asset classes or currencies.

Instruments utilized include futures, total return and credit default swaps, and interest rate cap and swaption agreements.

The futures are exchange-traded and the swap, swaptions, and cap agreements are executed over the counter.Total return swaps involve commitments to pay interest in exchange for a market-linked return, both based on notional-amounts.

To the extent the total return of the security or index underlying the tranaction exceeds or falls short of the offsetting interest rate obligation, MIT will receive a payment from or make a payment to the counterparty.

MIT's portfolio of interest rate caps and swaptions is designed for protection from significant increases in interest rates. An interest rate swaption is an option to enter into an interest rate swap agreement on pre-set terms at a future date. The purchaser and seller of the swaption agree on the expiration date, option type, exercise style, the terms of the underlying swap and the type of settlement.

As the expiration date approaches, the swaption holder can either notify the seller of its intention to exercise or let the option expire. An interest rate cap places a ceiling on a floating rate of interest on a specified notional principal amount for a specific term. The buyer of the cap uses the cap contract to limit its maximum interest rate exposure.

If the buyer's floating rate rises above the cap strike, the cap contract provides for payments from the seller to the buyer of the cap for the difference between the floating rate and the cap strike. If the floating rate remains below the cap strike, no payments are required.

The cap buyer is required to pay an upfront fee or premium for the cap. The cap premium charged by the seller depends upon the market's assessment of the probability that rates will move through the cap strike over the time horizon of the deal. The payoff is expected to occur in extreme market conditions that would negatively impact other of MIT's assets.Table 8 summarizes the notional exposure and net ending fair value relative to the financial instruments with off-balance sheet risk as of June 30, 2012 and 2011 related to MIT's investment management.

Derivatives held by limited partnerships and commingled investment vehicles pose no off-balance sheet risk to MIT due to the limited liability structure of these investments.

To manage the counterparty credit exposure of MIT's direct off-balance sheet financial instruments, MIT requires collateral to the maximum extent possible under normal trading practices.

Collateral is moved on a daily basis as required by fluctuations in the market. The collateral is generally in the form of debt obligations issued by the U.S. Treasury or cash. In the event of counterparty default, MIT has the right to use the collateral to offset the loss associated with the replacement of the agreements.

MIT enters into arrangements only with counterparties believed to be creditworthy.

On June 30, 2012, cash collateral and certain securities owned by MIT were held at counterparty brokers to collateralize these positions and are included in investments on the Statements of Financial Position.24 MIT REPORT OF THE TREASURER 2012 C. Derivative Financial Instruments (continued)

Table 8. Derivative Financial Instruments Notional exposure Net ending (in thousands of dollars) Long Short fair value

Net gain (loss)**Fiscal year 2012 Fixed income instruments Fixed income futures ......................

Options on interest rate exchange agreements

.Interest rate caps and floors ................

Interest rate swaps ........................

Total fixed income instruments

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

Currency instruments Currency forwards ........................

Total currency instruments

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

Commodity instruments Commodity futures .......................

Equity index futures ......................

Equity index swaps .......................

IO S index swaps ..........................

Total commodity and index futures ............

Credit instrum ents .........................

2012 T otal ...............................

Fiscal year 2011 Fixed income instruments Fixed income futures ......................

Options on interest rate exchange agreements

.Interest rate caps and floors ................

Interest rate swaps ........................

Total fixed income instruments

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

$ 8,900 2,577,777 2,250,000 4,836,677$ (14,400)(55,000)(11,900)(81,300)$ (29)32,292 3,592 (270)35,585 (148)(148)(1,062)12 (1,050)$ 38 (37,142)(6,361)(321)(43,786)1,306 1,306 2,072-(60,036)-(18,889)72 (78,925)(952)1,449 603 1,100 20,975 2,07 410,358 (1,629,309) 28,024$ 5,249,107$ 2,500 1,884,777 2,250,000 4,137,277 61,541 61,541 15,993 15,993$ (1,789,534)

$ (19,400)(55,000)(2,808,000)

(34,436)(2,916,836)

(17,956)(17,956)(29,159)(29,159).S 62,411 S (20,405)Currency instruments Currency forwards ..........

Total currency instruments

....Commodity instruments Commodity futures .........Equity index future Total commodity futures ......$ (67)57,946 (4,221)(63)53,595 (131-)(131)(110)(1,449)(1,559)$ 459 9,119 (4,091)2,997 8,484 (836)(836)(379)(1,449)(1,828)Credit instrum ents .........................

2011 T otal ...............................

732,533 (2,617,037) 50,873 (5,561)$ 4,947,344$(5,580,988)

$ 102,778$ 259*The fair value of all derivative financial instruments is reflected in investments at fair value in the Statements of Financial Position.**Net gain (loss) from the derivative financial instruments is located in the non-operating section as net gain on investments and other assets in the Statement ofActivities.

NOTES TO FINANCIAL STATEMENTS 25 C. Derivative Financial Instruments (continued)

Table 9 provides further details related to MIT's credit instruments.

The act of entering into a credit default swap contract is often referred to as "buying protection" or"selling protection" on an underlying reference obligation.

The buyer is obligated to make premium payments to the seller over the term of the contract in return for a contingent payment upon the occurrence of a credit event with respect to the underlying obligation.

The seller bears the obligation to "protect" the buyer in the event of default of the underlying issuer. Upon this event, the cash payment which the buyer receives is equal to the clearing price established by an auction of credit default swap claims, which is designed to approximate the recovery value of an unsecured claim on the issuer in default. The swap will last for a predetermined amount of time, typically five years.Upon termination of the swap, the buyer is no longer obligated to make any premium payments and there is no other exchange of capital.The following table summarizes the notional amounts and fair value of the purchased and written credit derivatives, classified by the expiration terms and the external credit ratings of the reference obligations at June 30, 2012 and 2011.Table 9. Credit Derivatives F -Purchased protection I-- Written protection notional amount I Purchased notional amounts Purchased fair value*Written Years to maturity notional< 5 years 5-10 years amounts Offsetting purchased credit protection-Net written credit protection Net written credit protection fair value (in thousands of dollars)Fiscal year 2012 Credit rating on underlying or index A- to AAA .................

$BBB- to BBB+ ..............

Non-investment grade .......N on-rated .................

ABX -AA index .............

605,184 541,181 5,000 35,381 32,205 S (1,652)(5,703)(576)728 17,444$ 61,150 45,000 5,000$ 544,034 496,181 5,000 30,381 32,205 2012 Total .............

$1,218,951

$ 10,241$ 111,150 S1,107,801

$ 410,358 $ (410,358)

$ $ 17,783$ 410,358 $ (410,358)

$ -$17,783$732,533 S (732,533)

$ -$ 30,348$ 732,533 $ (732,533)

$ -$30,348 Fiscal year 2011 Credit rating on underlying or index A- to AAA .................

S BBB- to BBB+ ..............

Non-investment grade .......N on-rated .................

ABX -AA index .............

861,248 917,741 25,000 20,000 60,515$ (7,213)(7,363)914 (180)34,367$ 270,653 $ 590,595 187,098 730,643-25,000-20,000-60,515 2011 Total .............

$1,884,504

$ 20,525$ 457,751 $1,426,753

The fair value of all credit derivative instruments is reflected in investments, at fair value in the Statements of Financial Position.**Net gain (loss) of the credit derivative instruments is located in the non-operating section as net gain on investments and other assets in the Statement of Activities.

26 MIT REPORT OF THE TREASURER 2012 D. Pledges Receivable Table 10 below shows the time periods in which pledges receivable atJune 30, 2012 and 2011 are expected to be realized.Table 10. Pledges Receivable (in thousands of dollars) '2012 2011 A review of pledges is periodically made with regard to collectability.

As a result, the allowance for pledges that may not be fulfilled is adjusted, and some pledges have been canceled and are no longer recorded in the financial state-ments. In addition, pledges are discounted in the amount of$30.9 million and $55.0 million in 2012 and 2011, respec-tively. MIT has gross conditional pledges, not recorded, for the promotion of education and research in the amount of$118.2 million and $26.9 million as of June 30, 2012 and 2011, respectively.

MIT has pledges relating to research in the amount of $25.4 million and $8.0 million as of June 30, 2012 and 2011, respectively.

Pledges receivable are classified as Level 3 under the valuation hierarchy described in Note B.In one year or less ......Between one year and five years .............

More than five years ....Less: allowance for unfulfilled pledges ....Pledges receivable, net .................

$158,236$109,181 232,983 141,780 (53,340)$ 479,659 187,608 136,696 (47,600)$. 385,885 Table 11 below is a rollforward of the pledges receivable for 2012 and 2011.Table 11. Rollforward of Pledges Receivable (in thousands of dollars) 2012 2011 Balance at beginning of year ...............................................

$ 385,885 $ 375,230 N ew pledges ...........................................................

164,333 107,830 Pledge payments received .................................................

(88,975) (99,922)Decrease in pledge discount ...............................................

24,156 3,937 Increase in allowance for unfulfilled pledges ..................................

(5,740) (1,190)Balance at end of year ...............................................

$ 479,659 $ 385,885 E. Student Notes Receivable Table 12 below details the components of student notes receivable atJune 30, 2012 and 2011.Table 12. Student Notes Receivable (in thousands of dollars) 2012 2011 Institute-funded student notes receivable

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

$ 14,112 $ 15,191 Perkins student notes receivable

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

38,417 37,566 Total student notes receivable

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

52,529 52,757 Less: allowance for doubtful accounts .......................................

(3,000) (3,000)Student notes receivable, net .........................................

$ 49,529 $ 49,757 NOTES TO FINANCIAL STATEMENTS 27 E. Student Notes Receivable (continued)

Perkins student notes receivable are funded by the U.S.Government and by MIT to the extent required by the Perkins National Direct Student Loan Program. Funds advanced by the U.S. Government for this program,$34.1 million and $33.8 million atJune 30, 2012 and 2011, respectively, are ultimately refundable to the U.S.Government and are classified as liabilities.

Due to the nature and terms of the student loans, which are subject to significant restrictions, it is not feasible to determine the fair value of such loans.Allowance for Credit Losses Management regularly assesses the adequacy of the al-lowance for credit losses by performing ongoing evalua-tions of the student loan portfolio, including such factors as the differing economic risks associated with each loan category, the financial condition of specific borrowers, the economic environment in which the borrowers operate, the level of delinquent loans, the value of any collateral and, where applicable, the existence of any guarantees or indemnifications.

MIT's Perkins receivable represents the amounts due from current and former stu-dents under the Federal Perkins Loan Program. Loans disbursed under the Federal Perkins Loan program are able to be assigned to the U.S. Government in certain non-repayment situations.

In these situations the Federal portion of the loan balance is guaranteed.

Factors also considered by management when per-forming its assessment, in addition to general economic conditions and the other factors described above, included, but were not limited to, a detailed review of the aging of the student loan receivable and a review of the default rate by loan category in comparison to prior years. The level of the allowance is adjusted based on the results of management's analysis.Loans less than 120 days delinquent are deemed to have a minimal delay in payment and are generally not written off but are reserved in accordance with the terms discussed above. Loans more than 120 days delinquent are subject to standard collection practices including litigation.

Only loans that are deemed uncollectible are written off and this only occurs after several years of unsuccessful collection, including placement at more than one external collection agency.Considering the other factors already discussed herein, management considers the allowance for credit losses at June 30, 2012 and 2011 to be prudent and reasonable.

Furthermore, MIT's allowance is general in nature and is available to absorb losses from any loan category.Management believes that the allowance for credit losses atJune 30, 2012 and 2011 is adequate to absorb credit losses inherent in the portfolio as of that date.Changes in the allowance for credit losses for the year ended June 30, 2012 and 2011 were as shown in the following table.Table 13. Rollforward of Allowance for Credit Losses (in thousands of dollars) 2012 2011 Balance at beginning of year ....................................

$ 3,000 $ 3,000 Provision for credit losses ......................................

41 171 N et charge-offs

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

(41) (171)Balance at end of year .......................................

$ 3,000 $ 3,000 28 MIT REPORT OF THE TREASURER 2012 F Accounts Payable, Accruals and Other Liabilities MIT's accounts payable, accruals and other liabilities atJune 30, 2012 and 2011 are shown in Table 14 below.Table 14. Accounts Payable, Accruals and Other Liabilities (in thousands of dollars) 2012 2011 Accounts payable and accruals .............................................

$ 320,902 $ 310,476 Accrued vacation ........................................................

57,467 55,685 Total .............................................................

$ 378,369 $ 366,161 G. Borrowings Table 15. Borrowings (in thousands of dollars / due dates are calendar based) 2012 2011 EDUCATIONAL PLANT Massachusetts Health and Educational Facilities Authority (MHEFA)Series I, 4.75%-5.20%, due 2028, par value $59,200 ..........................

.$ 59,588 $ 59,613 Series J-1, variable rate, due 2031, par value .................................

125,000 125,000 Series J-2, variable rate, due 2031, par value .................................

125,000 125,000 Series K, 5.25%-5.50%, due 2012-2032, par value $230,000 ...................

241,405 242,242 Series L, 3.0%-5.25%, due 2004-2033, par value $170,160 .....................

178,635 182,072 Series M, 5.25%, due 2014-2030, par value $131,110 .........................

142,787 143,897 Series N, 3.5%-5.0%, due 2014-2038, par value $325,195 .....................

330,327 331,594 Series 0, 4.0%-6.0%, due 2016-2036, par value $266,460 .....................

271,022 272,218 Total MIHEFA ....................................................

1,473,764 1,481,636 Medium Term Notes Series A, 7.125%, due 2026 ............................

17,359 17,355 Medium Term Notes Series A, 7.25%, due 2096 .............................

45,445 45,443 Notes payable to bank, variable rate, due 2014 ...............................

83,033 83,033 Taxable Bonds, Series B, 5.60%, due 2111, par value $750,000 ..................

746,924 746,881 Total educational plant .............................................

2,366,525 2,374,348 OTHER Notes payable to bank, variable rate, due 2014 ...............................

93,477 93,477 Total borrowings

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

$ 2,460,002

$ 2,467,825 1 The proceeds of Taxable Bonds, Series B were held as liquid investments as of June 30, 2012 and 2011 and have notyet been invested in physical assets.Fair value of the outstanding debt is approximately 22.0% and 5.0% greater than the carrying value in 2012 and 2011, respectively.

Carrying value is based on estimates using current interest rates available for similarly rated debt of the same remaining maturities.

NOTES TO FINANCIAL STATEMENTS 29 G. Borrowings (continued)

The aggregate amounts of debt payments and sinking fund requirements for each of the next five fiscal years are shown in Table 16 below.Table 16. Debt Obligations (in thousands of dollars)2013 ..................

$ 26,500 2014 ..................

....202,509 2015 ..................

59,110 2016 ..................

9,585 2017 ..................

98,090 MIT maintains a line of credit with a major financial institution for an aggregate commitment of $500.0 million.As of June 30, 2012, $323.5 million was available under this line of credit. The line of credit expires on March 28, 2014.Cash paid for interest on long-term debt in 2012 and 2011 was $101.0 million and $78.7 million, respectively.

Variable ifiterest rates at June 30, 2012 are shown in Table 17 below.Table 17. Variable Interest Rates (in thousands of dollars) Amount Rate MHEFASeriesJ-1

....... $ 125,000 0.14%MHEFA Series J-2 ....... 125,000 0.15%Notes payable to bank ..... 176,509 0.84%In the event that MIT receives notice of any optional tender on its Series J-1 and Series J-2 variable-rate bonds, or if these bonds become subject to mandatory tender, the purchaseprice of the bonds will be paid from the remarketing of such bonds. However, if the remarketing proceeds are insufficient, MIT will be obligated to purchase the bonds tendered at 100 percent of par on the tender date.H. Commitments and Contingencies Federal Government Funding MIT receives funding or reimbursement from Federal agencies for sponsored research under Government grants and contracts.

These grants and contracts provide for reimbursement of indirect costs based on rates negotiated with the Office of Naval Research (ONR), MIT's cognizant Federal agency. MIT's indirect cost reimbursements have been based on fixed rates with carry forward of under or over-recoveries.

At June 30, 2012 and 2011, MIT recorded a net over-recovery of $56.7 million and $48.1 million, respectively.

The DCAA is responsible for auditing indirect charges to grants and contracts in support of ONR's negotiating responsibility.

MIT has final audited rates through 2009.MIT's 2012 research revenues of $1,527.9 million include reimbursement of indirect costs of $208.7 million, which includes the adjustment for the variance between the indirect cost income determined by the fixed rates and actual costs for 2012. In 2011, research revenues were $1,447.2 million, which included reimbursement of indirect costs of $196.8 million.Leases AtJune 30, 2012, there were no capital lease obligations.

MIT is committed under certain operating (rental) leases.Rent expense incurred under operating lease obligations was $37.1 million and $33.3 million in 2012 and 2011, respectively.

Future minimum payments under operating leases are shown in Table 18 below.Table 18. Lease Obligations (in thousands of dollars)2013 ..................

.$ 38,755 2014 ..................

37,311 2015 ..................

22,804 2016 ..................

19,280 2017 ..................

.. 14,774 Investments As ofJune 30, 2012, $9.9 million of investments were pledged as collateral to various supplier and government agencies.30 MIT REPORT OF THE TREASURER 2012 H. Commitments and Contingencies (continued)

Future Construction MIT has contracted for educational plant in the amount of $51.5 million at June 30, 2012. It is expected that the resources to satisfy these commitments will be provided from unexpended plant funds, anticipated gifts, and unrestricted funds. MIT will be committing additional resources to planned major construction projects and improvements to the current infrastructure over the next several years.Related Entities MIT has entered into agreements, including collaborations with third-party not-for-profit and for-profit entities, for education, research, and technology transfers.

Some of these agreements involve funding from foreign governments.

These agreements subject AI4T to greater financial risk than do its normal operations.

In the opinion of management, the likelihood of realization of increased financial risks by MIT under these agreements is remote.General MIT is subject to certain other legal proceedings and claims that arise in the normal course of operations.

In the opinion of management, the ultimate outcome of these actions will not have a material effect on MIT's financial position.I. Functional Expense Classification MIT's expenditures on a functional basis are shown in Table 19 below.Table 19. Expenditures by Functional Classification (in thousands of dollars)2012 2011 G eneral and adm inistrative

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

Instruction and unsponsored research .......................................

Sponsored research ......................................................

A uxiliary enterprises

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

Operation of Alumni Association

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

Total operating expense .............................................

$ 586,268 691,903 1,335,638 120,137 10,640$ 2,744,586$ 523,676 659,839 1,265,776 110,631 11,225$2,571,147 J. Retirement Benefits MIT offers a defined benefit plan and a defined con-tribution plan to its employees.

The plans cover substan-tially all of MIT's employees.

MIT also provides retiree welfare benefits (certain health care and life insurance benefits) for retired employees.

Substantially all of MIT's employees may become eligible for those benefits if they reach a qualifying retirement age while working for MIT. Retiree health plans are paid for in part by retirees, their covered dependents, and beneficiaries.

Benefits are provided through various insurance companies whose charges are based either on the claims and administrative expenses paid during the year or annual insured premiums.The basic retiree life insurance plan is non-contributory and covers the retiree only. The supplemental life insurance plan is paid for by the retiree. MIT maintains a trust to pay for retiree welfare benefits.MIT contributes to the defined benefit plan amounts that are actuarially determined to provide the retirement plan with sufficient assets to meet future benefit requirements.

There were no contributions to the defined benefit plan in 2012 or 2011.For purposes of calculating net periodic pension cost for the defined benefit plan, plan amendments are amortized on a straight-line basis over the average future service to expected retirement of active participants at the date of the amendment.

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

The annual amortization shall not be less than the total amount of unrecognized gains and losses up to $1 million.NOTES TO FINANCIAL STATEMENTS 31 J. Retirement Benefits (continued)

The amount contributed and expenses recognized during 2012 and 2011 related to the defined contribution plan were$43.5 million and $40.8 million, respectively.

For purposes of calculating net periodic postretirement welfare benefit cost, a portion of the current obligation, related to the transition to the accounting standard Employers' Accounting for Postretirement Benefits Other than Pensions, is being amortized on a straight-line basis over 20 years from the date of adoption of that statement in 1994. Plan changes resulted in a reduction of the remaining transition obligation this fiscal year so 2012 is the final year of amortization.

Plan amendments are amortized on a straight-line basis over the average future service to full eligibility of active participants at the date of amendment.

Cumulative gains and losses (including changes in assumptions) in excess of 10 percent of the greater of the plan's obligation or the market-related value of assets are amortized over the average future service of active participants.

The annual amortization shall not be less than the total amount of unrecognized gains and losses up to $1 million.Components of Net Periodic Benefit (Income) Cost Table 20 summarizes the components of net periodic benefit (income) cost recognized in operating activity and other amounts recognized in non-operating activity in unrestricted net assets for the years ended June 30, 2012 and 2011.Table 20. Components of Net Periodic Benefit (Income) Cost Defined benefit plan (in thousands of dollars) 2012 2011 Postretirement welfare benefit plan 2012 2011 Components of net periodic benefit (income) cost Service cost ....................................

Interest cost ...................................

Expected return on plan assets ....................

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

Amortization of net actuarial (gain) loss .............

Amortization of prior service cost .................

Net periodic benefit (income) cost recognized in operating activity ............................

Other amounts recognized in non-operating activity in unrestricted net assets Current year actuarial (gain) loss ..................

Amortization of actuarial gain (loss) ................

Current year prior service credit ..................

Amortization of prior service cost .................

Reduction in transition obligation due to plan change.Amortization of transition obligation

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

Total other amounts recognized in non-operating activity ....................................

Total recognized

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

$ 61,431 138,858 (217,979)(1,000)1,970 (16,720)$59,892 134,756 (221,135)$ 20,599 26,207 (23,399)1,194 9,314 (2,100)31,815 (2,323)2,180 (26,630)$ 19,957 27,380 (20,142)4,776 10,266 3,556 45,793$ (18,565)(10,266)(3,556)(4,776)(37,163)$ 8,630$ 444,241 $1,000 (1,970)(68,388) $ (8,118)2,323 (9,314)-(23,919)(2,180) 2,100-(8,357)-(1,194)443,271$ 426,551 (68,245)$ (94,875)(48,802)$ (16,987)The estimated net actuarial loss and prior service cost for the defined benefit plan that will be amortized from unre-stricted net assets into net periodic benefit cost during the next fiscal year are $17.5 million and $1.0 million, respec-tively. The estimated net actuarial loss and prior service credit for the postretirement welfare benefit plan that will be amortized from unrestricted net assets into net periodic benefit cost during the next fiscal year are $10.6 million and$2.8 million, respectively.

32 MIT REPORT OF THE TREASURER 2012 J. Retirement Benefits (continued)

Cumulative amounts recognized as non-operating changes in unrestricted net assets are summarized in the following table for the years endedJune 30, 2012 and 2011.Table 21. Cumulative Amounts Recognized in Unrestricted Net Assets Postretirement welfare benefit plan Defined benefit plan (in thousands of dollars)1 2012 20111 2012 2011 1 Amounts recognized in unrestricted net assets consist of-N et actuarial loss ...............................

Prior service cost ...............................

Transition liability

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

Total cumulative amounts recognized in unrestricted net assets .......................

$ 571,425 z1 Q4Z1$ 126,184 $ 138,708 AQ 1 ')1 QIQ\$ 156,141---9,551$ 576,276 $ 133,005 $ 116,890 $ 165,692 Benefit Obligations and Fair Value of Assets Table 22 summarizes the benefit obligations, plan assets, and amounts recognized in the Statements of Financial Position for MIT's retirement benefit plans. MIT uses a June 30 measurement date for its defined benefit pension and postretirement welfare benefit plans.Table 22. Projected Benefit Obligations and Fair Value of Assets Defined benefit plan Postretirement welfare benefit plan (in thousands of dollars)2012 2011 2012 2011 Change in projected benefit obligations Projected benefit obligations at beginning of year ....Service cost ...................................

Interest cost ...................................

Retiree contributions

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

Net benefit payments, transfers and other expenses...

Plan am endm ent ...............................

Assumption changes and actuarial net loss ...........

Projected benefit obligations at end of year ......Change in plan assets Fair value of plan assets at beginning of year .........Actual return on plan assets ......................

Employer contributions

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

Retiree contributions

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

Net benefit payments, transfers and other expenses ...Fair value of plan assets at end of year ...........

Funded (unfunded) status at end of year .........Amounts recognized in the Statements of Financial Position consist of: Benefit assets ..... ..........................

Benefit liability

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

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

$2 2 2,458,592

$ 2,293,877

$ 509,838 61,432 59,892 20,599 138,858 134,756 26,207--3,834 (116,351)

(115,523)

(22,109)--(32,276)348,056 85,590 (16,618),890,587 2,458,592 489,475 2,572,307 121,795 (116,350)2,577,752$ (312,835)2,312,718 311,629 375,112 14,899-52,920-3,834 (115,523)

(24,370)2,572,307 358,912$ 113,715 $ (130,563)$ 472,170 19,957 27,380 3,496 (23,574)10,409 509,838 234,535 49,116 50,399 3,496 (25,917)311,629$ (198,209)$(198,209)$ (198,209)$ -$ 113,71 (312,835)$ (312,835)5 $-(130,563)5 $ (130,563)$ 113,71 NOTES TO FINANCIAL STATEMENTS 33 J. Retirement Benefits (continued)

The accumulated benefit obligation for MIT's defined benefit plan was $2,681.9 million and $2,305.8 million at June 30, 2012 and 2011, respectively.

January 1, 2012, MIT began providing retiree drug coverage through an Employer Group Waiver Plan (EGWP). Under EGWP, the cost of drug coverage is offset through direct federal subsidies, brand name drug discounts and reinsurance reimbursements.

Prior to January 1, 2012, MIT received retiree drug subsidy (RDS) payments directly from the federal government.

The net effect of this change reduced the accumulated postretirement benefit obligation

$56.4 million at June 30, 2012. This was treated as an actuarial gain.Assumptions and Health Care Trend Rates The expected long-term rate of return assumption represents the expected average rate of earnings on the funds invested or to be invested to provide for the benefits included in the benefit obligation.

The long-term rate of return assumption is determined based on a number of factors, including historical market index returns, the anticipated long-term asset allocation of the plans, histori-cal plan return data, plan expenses and the potential to outperform market index returns.Table 23. Assumptions Defined benefit plan 12012 2011 I Postretirement welfare benefit plan I 2012 20111 Assumptions used to determine benefit obligation as of June 30: D iscount rate .. ...............................

Rate of compensation.

increase I ...................

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

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

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

Assumed health care cost trend rates: Health care cost trend rate assumed for next year .....Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) .........................

Year that the rate reaches the ultimate trend rate .....4.49%4.00%5.65%8.00%4.00%5.65%4.00%5.84%8.00%4.00%4.41%5.56%7.00%7.00%5.00%2018 5.56%5.71%7.00%7.50%5.00%2018 1 The average rate of salary increase is assumed to be 4% for 2013, and thereafter.

As an indicator of sensitivity, a one percentage point change in the assumed health care cost trend rate would effect 2012 as shown in Table 24 below.Table 24. Health Care Cost Trend Rate Sensitivity (in thousands of dollars) 1% point increase 1% point decrease Effect on 2012 postretirement service and interest cost ....................

$ 7,436 $ (6,022)Effect on postretirement-benefit obligation as of June 30, 2012 ...............

$ 63,584 $ (52,901)Plan Investments The investment objectives for the assets of the plans are to minimize expected funding contributions and to meet or exceed the rate of return assumed for plan funding purposes over the long term. The nature and duration of benefit obligations, along with assumptions concerning asset class returns and return correlations, are considered when determining an appropriate asset allocation to achieve the investment objectives.

Investment policies and strategies governing the assets of the plans are designed to achieve investment objectives within prudent risk parameters.

Risk management practices include the use of external investment managers, the maintenance of a portfolio diversified by asset class, investment approach, security holdings, and the maintenance of sufficient liquidity to meet benefit obligations as they come due.34 MIT REPORT OF THE TREASURER 2012 J. Retirement Benefits (continued)

Table 25 presents investments at fair value of MIT's defined benefit plan and postretirement welfare benefit plan, which are included in plan net assets as ofJune 30, 2012 and 2011, grouped by the valuation hierarchy detailed in Note B. There were no significant transfers in and out of Level 1 and Level 2 fair value measurements in 2012 or 2011.Table 25A. Defined Benefit Plan Investments Quoted prices in Significant other active markets observable inputs (Level 1) (Level 2)Significant un-observable inputs (Level 3)(in thousands of dollars)Total fair value Fiscal year 2012 Cash and cash equivalents

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

U S treasury .........................

US goverment agency .................

Domestic bonds .....................

Foreign bonds .......................

Common equity Long domestic equity ...............

Long foreign equity .................

Equity*Absolute return ....................

D om estic .........................

Foreign ...........................

P rivate ...........................

R eal estate ..........................

R eal assets* .........................

D erivatives

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

Total plan investments

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

Fiscal year 2011 Cash and cash equivalents

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

U S treasury .........................

US goverment agency .................

Domestic bonds .....................

Foreign bonds .......................

Common equity Long domestic equity ...............

Long foreign equity .................

Equity*Absolute return .. .................

D om estic .........................

Foreign ...........................

Private ...........................

R eal estate ..........................

R eal assets* .........................

D erivatives

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

Total plan investments

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

92,684 130,713 63,258 14,669 2,874 (9)304,189 32,893 188,705 72,774 9,198 18,900 112,775 (17)$ 435,228$$18,253 53,331 265 996 3,721 334,067 5,317 190,879 18,935 6,976 632,740 2,100 289,429 297,799 158,171 431,578 294,379 157,611$ 1,631,067$ 92,684 130,713 18,253 53,331 265 66,354 18,390 623,496 303,116 351,924 431,578 294,379 176,546 6,967$ 2,567,996$-$10,604 59,291 268-$ 32,893-188,705-10,604-59,291-268 7,173 219,631 5,467 166,418 22,393 13,230$ 504,475 1,049 444,384 175,339 137,014 399,681 282,404 180,268$ 1,620,139 73,823 16,371 664,015 199,706 416,207 399,681 282,404 202,661 13,213$ 2,559,842*Real assets and Equity categories include commingled vehicles that invest in these types of investments NOTES TO FINANCIAL STATEMENTS 35 J. Retirement Benefits (continued)

Table 25B. Postretirement Welfare Benefit Plan Investments Quoted prices in active markets (in thousands of dollars) (Level 1)Significant other observable inputs (Level 2)Significant un-observable inputs (Level 3)Total fair value Fiscal year 2012 Cash and cash equivalents

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

US goverment agency .................

Domestic bonds**....................

Common equity Long domestic equity ...............

Long foreign equity .................

Equity*Absolute return ....................

D om estic .....................

.Foreign ...........................

Private ...........................

R eal estate ..........................

Real assets* .........................

D erivatives

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

Total plan investments

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

$ 26,512$$2,147 66,632$ 26,512 2,147 66,632 24,026 1,565 24,026 1,565 6,146$ 58,249$ 5,765 53,986 325 64,168 1,596$ 188,854 21,705 49,236 5,906 16,936 14,627 3,502$ 111,912 75,691 49,561 76,220 16,936 i4,627 3,502 1,596$ 359,015 Fiscal year 2011 Cash and cash equivalents

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

US goverment agency .................

Domestic bonds** ....................

Common equity Long domestic equity ...............

Long foreign equity .................

Equity*$$67,143-$ 5,765 67,143 17,145 1,050 17,145 1,050 Absolute return ....................

-30,622 Dom estic .........................

3,086 35,374 Foreign ...........................

29,299 44,790 Private ...........................

-R eal estate ..........................

-R eal assets* .........................

-D erivatives

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

-1,581 Total plan investments

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

$ 56,345 179,510*Real assets and Equity categories include commingled vehicles that invest in these types of investments

- Includes common collective trusts (CCTs)22,134 19,876 8,670 11,786 10,344 3,059 75,869 52,756 58,336 82,759 11,786 10,344 3,059 1,581$ 311,724 36 MIT REPORT OF THE TREASURER 2012 J. Retirement Benefits (continued)

Table 26 is a rollforward of the investments classified by MIT's defined benefit plan and postretirement welfare benefit plan within Level 3 of the fair value hierarchy defined in Note B as at June 30, 2012 and 2011.Table 26. Roilforward of Level 3 Investments Fair Value Realized Gains Unrealized Beginning (Lasses) Gains (Losses)Transfer of Assets Fair Value Sales between Levels Ending (in thousands of dollars)Purchases Defined Benefit Plan Fiscal Year 2012 Common equity Domestic equity ...................

.S 1,049 Equity:$544 S-$ 1,191 $ (684) $$ 2,100 Absolute return ....................

D om estic .........................

Foreign ..........................

P rivate ...........................

R eal estate ..........................

R eal assets ..........................

Total plan investments 444,384 175,339 137,014 399,681 282,404 180,268$1,620,139 (1,938) (1,054)(3,639) 40,285 (7,051) 10,225 (11,085) 23,412 9,552 (12,828)$ (23,169) $ 69,592 41,047 98,279 40,908 68,569 52,080 4,307$ 306,381 (43,593)(12,465)(22,925)(48,999)(49,657)(14,136)$ (192,459)(149,417) 289,429-297,799-158,171-431,578-294,379-157,611$ (149,417)

$ 1,631,067 Fiscal Year 2011 Common equity Domestic equity....................

$ 1,049$-$$-$$Equity: Absolute return ....................

D om estic .........................

Foreign ..........................

P rivate ...........................

R eal estate ..........................

R eal assets ..........................

Total plan investments Postretirement Welfare Benefit Plan 596,309 97,514 84,592 351,093 227,871 190,994$1,549,422

-55,281-35,124 (28) 25,676-17,445 (3,012) 20,461 12,321$ (3,040) $ 166,308 20,657 49,530 27,107 73,677 63,820 7,775$ 242,566 (51,353)(4,879)(333)(42,534)(26,736)(11,917)$ (137,752)-$ 1,049 (176,510) 444,384 (1,950) 175,339-137,014-399,681-282,404 (18,905) 180,268 (197,365)

$ 1,620,139$Fiscal Year 2012 Equity: R R Tot Absolute return ....................

$ 22,134 D om estic .........................

19,876 Foreign ..........................

8,670 Private ...........................

11,786 eal estate ...........................

10,344 eal assets ..........................

3,059 tal plan investments

$ 75,869$-$ 230-5,292 (730) 1,115-969-1,393-121 (730) $ 9,120$Fiscal Year 2011 Equity: Absolute return ....................

$ 34,226 D om estic .........................

7,832 Foreign ..........................

12,995 Private ...........................

6,182 R eal estate ..........................

7,140 Real assets ..........................

2,408 Total plan investments

$ 70,783$ 3,827 24,068 2,400 5,508 5,044 371$ 41,218$ 994 9,093 3,044 5,106 3,440 431$ 22,108$ (2,560) S (1,926) $ 21,705--49,236 (2,424) (3,125) 5,906 (1,327) -16,936 (2,154) -14,627 (49) -3,502$ (8,514) $ (5,051) $ 111,912$ (2,346) $ (14,015) $ 22,134--19,876 (24) (8,144) 8,670 (627) -11,786 (1,953) -10,344 (2) -3,059$ (4,952) $ (22,159) $ 75,869 (3)$ (3)$ 3,275 2,951 802 1,125 1,717 222$ 10,092 NOTES TO FINANCIAL STATEMENTS 37 J. Retirement Benefits (continued)

The Plans have made investments in various long-lived partnerships, and in other cases, have entered into contractual arrangements that may limit their ability to initiate redemptions due to notice periods, lock-ups and gates. Details on estimated remaining life, current redemption terms and restrictions by asset class and type of investment for both the defined benefit plan and postretirement welfare plan are provided below as of June 30, 2012 and 2011.Table 27. Unfunded Commitments F 2012 --I .2011 Asset Class Unfunded Unfunded (in thoaands of dollars) Commitments Fair Value Commitments Fair Value Redemption Terms Redemption Restrictions Defined Benefit Plan Equity: Domestic $ 2,382 S 303,116 $ 12,034 Foreign $ 54,900 $ 351,924 $ -Absolute return $ 25,724 $ 623,496 $ 33,009 Private$ 232,418 $ 431,578 $ 212,575.199,706 Redemption terms range from daily to annually with 90 days notice$ 416,207 Redemption terms range from daily to quarterly with 90 days notice$ 664,015 Redemption terms range from monthly with 3 business days notice to closed end structures not available for redemption

$ 399,681 Closed end funds not eligible for redemption

$ 282,404 Redemption terms range from 1 fund quarterly with 45 days notice to all other funds are closed end funds not eligible for redemption

$ 202,661 Redemption terms range from 1 fund annually with 90 days notice to all other funds are closed end funds not eligible for redemption 2,164,674 Lock-up provisions range from none to 4 years Lock-up provisions range from none to 5 years Lock-up provisions range from none to not redeemable Not redeemable Real estate $ 185,374 $ 294,379 $ 191,106 Real assets $ 39,427 $ 176,546 $ 29,448 Totals S 540,225 $ 2,181,039

$ 478,172 $Not redeemable except for I holding with a lock-up provision of 5 years Not redeemable except for 1 fund with a lock-up provision of 4 year Postretirement Welfare Benefit Plan Equity: Domnestic

$ 265 S 49,561 $ 559 Foreign S 6,100 $ 76,220 $ -Absolute return $ 1,577 $ 75,691 $ 2,844$ 58,336 Redemption terms range from quarterly with 60 days notice to annually with 90 days notice$ 82,759 Redemption terms range from daily with 28 days notice to annually with 60 days notice$ 52,756 Redemption terms range from monthly with 3 business days notice to quarterly with 90 days notice$ 11,786 Closed end funds not eligible for redemption

$ 10,344 Closed end funds not eligible for redemption

$ 3,059 Closed end funds not eligible for redemption Lock-up provisions range from 30 months to 4 years Lock-up provisions range from none to 5 years Lock-up provisions range from none to 5 years Private Real estate Real assets$ 21,754 $ 16,936 $ 16,931$ 16,780 $ 14,627 $ 16,461$ 3,938 $ 3,502 $ 2,763 Not redeemable Not redeemable Not redeemable Totals $ 50,414 $ 236,537 $ 39,558 $ 219,040 38 MIT REPORT OF THE TREASURER 2012 J. Retirement Benefits (continued)

Target allocations and weighted-average asset allocations of the investment portfolio for the MIT defined benefit plan and postretirement welfare benefit plan at June 30, 2012 and 2011 are shown in Table 28.Table 28. Plan Investment Allocation Defined benefit plan Postretirement welfare benefit plan Plan assets as of June 30 Plan assets as of June 30 Target Target Allocation 2012 2011 Allocation 2012 2011 Cash & cash equivalents

...... -4% 2% -8% 2%Fixed income ................

8% 8% 10% 20% 19% 22%Equities ....................

52% 53% 51% 50% 48% 55%Marketable alternatives

...... 29% 24% 26% 25% 21% 18%Real estate ..................

11% 11% 11% 5% 4% 3%Total .....................

100% 100% 100% 100% 100% 100%The following table summarizes the notional exposure and net ending fair value of derivative financial instruments held by the MIT defined benefit plan at June 30, 2012 and 2011. Refer to Note C for detailed discussion regarding derivative financial instruments.

Table 29A. Derivative Financial Instruments for Defined Benefit Plan Notional exposure Net ending fair value amount (in thousands of dollars)Long Short Net gain (loss)Fiscal year 2012 Fixed income instruments Fixed income futures ................

Interest rate swaps ..................

Total fixed income instruments

..........

Commodity and other instruments IOS index swaps ....................

Total index instruments

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

Credit instruments

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

2012 Total .........................

Fiscal year 2011 Fixed income instruments Fixed income futures ................

Interest rate swaps ..................

Total fixed income instruments

..........

Credit instruments

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

$ -$ (3,700)-(3,743)-(7,443)$ -$ (7,322)-(7,322)-(13,027)$ (9)(85)(94)$ 5 5 7,056.$ 6,967$ 8 (1,056)(1,048)$ 205 205 (27)$ (870)$$ (27,792)$ (6,600)(13,206)(19,806)$ 1,000 1,000$ (17)(23)(40)13,253$ (179)(23)(202)(736)(24,565)2011 Total .........................

$ 1,000$ (44,371)$ 13,213 $ (938)NOTES TO FINANCIAL STATEMENTS 39 NOTES TO FINANCIAL STATEMENTS 39 J. Retirement Benefits (continued)

Table 29B. Derivative Financial Instruments for Postretirement Welfare Benefit Plan Notional exposure Net ending fair (in thousands of dollars) Long Short value amount Net gain (loss)Fiscal year 2012 Fixed income instruments Interest rate swaps ................

Total fixed income instruments

..........

Commodity and other instruments IOS index swaps ....................

Total index instruments

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

Credit instrum ents ......................

2012 Total .........................

Fiscal year 2011 Fixed income instruments Interest rate swaps ................

Total fixed income instruments

...........

Credit instruments

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

$$$ (857)(857)$ (1,675)(1,675)$ (19)(19)$ 1 1$ (242)(242)$ 47 47 (2,981)1,614 (6)$S (5,513)$ 1,596 $ (201)$ -$ (1,578)-(1,578)$ (3)-(3)(3)(3)(2,935)1,584 (88)2011 Total .........................

$$ (4,513)$ 1,581 $ (91)The table on the next page summarizes the notional amounts and fair value of the purchased and written credit derivatives classified by the expiration terms and the external credit ratings of the reference obligations at June 30, 2012 and 2011.40 MIT REPORT OF THE TREASURER 2012 J. Retirement Benefits (continued)

Table 30. Credit Derivatives Purchased protection Purchased notional amounts Purchased fair value*Years to maturity< 5 years 5-10 years (in thousands of dollars)Net gain/loss Defined Benefit Plan Fiscal year 2012 Credit rating on underlying or in ABX-AA index ..............

ABX-AAA index .............

2012 Total .............

Fiscal year 2011 Credit rating on underlying or in ABX-AA index ..............

2011 Total .............

Postretirement Welfare Benefi Fiscal year 2012 Credit rating on underlying or in ABX-AA index ..............

ABX-AAA index .............

2012 Total .............

Fiscal year 2011 Credit rating on underlying or in ABX-AA index ..............

2011 Total .............

dex$13,027$ 7,056$-$ 13,027 $ 65--(92)$ 13,027 $ 7,056 $ -$ 13,027 dex$ 24,565 $ 13,253 $ -$ 24,565$ 24,565 $ 13,253 $ -$ 24,565 t Plan dex$ 2,981 $ 1,614 $ -$ 2,981$ 2,981 $ 1,614 $ -$ 2,981 dex$ 2,935 $ 1,584 $ -$ 2,935$ 2,935 $ 1,584 $ -$ 2,935$ (27)$ (736)$ (736)$ 15 (21)$ (6)$ (88)$ (88)* The fair value of all credit derivative instruments is reflected in investments, at fair value in the Statements of Financial Position.NOTES TO FINANCIAL STATEMENTS 41 J. Retirement Benefits (continued)

Contributions MIT expects to contribute

$32.0 million and $13.7 million to its defined benefit pension plan and to its postretirement welfare benefit plan in 2013, respectively.

These contributions have been estimated based on the same assumptions used to measure MIT's benefit obligations at June 30, 2012. MIT also contributed

$52.9 million and$50.4 million to the postretirement welfare benefit plan in 2012 and 2011, respectively.

Expected Future Benefit Payments Table 31 reflects total expected benefit payments for the defined benefit and postretirement welfare benefit plans, as well as expected receipt of the federal subsidy.These payments have been estimated based on the same assumptions used to measure MIT's benefit obligations at June 30, 2012.Table 31. Expected Future Benefit Payments Pension Other (in thousands of dollars) benefits benefits'2013 ...........................................

144,049 $ 27,946 2014 ...........................................

149,891 29,833 2015 ...........................................

155,967 31,565 2016 ...........................................

162,285 33,233 2017 ...........................................

168,857 34,818 2018-2022

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

959,433 196,818'Other benefits r~flect the total net benefits expected to be paid from the plans (i.e., gross benefit reimbursements offset by retiree contributions).

42 MIT REPORT OF THE TREASURER 2012 K. Components of Net Assets and Endowment Table 32 below presents the three categories of net assets invested with the endowment funds. A large component by purpose as ofJune 30, 2012. The amounts listed in of temporarily restricted net assets in other invested funds the unrestricted column under endowment funds are is pledges, the majority of which will be reclassified to those gifts and other funds received over the years that unrestricted net assets when cash is received.MIT designated as funds functioning as endowment and Table 32. Fund Category 2012]Temporarily Permanently 2011 (in thousands of dollars) Unrestricted restricted restricted Total Total Endowment funds General purpose ....................

Departments and research .............

L ibrary ............................

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

Graduate general ....................

Graduate departments

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

Undergraduate

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

P rizes .............................

M iscellaneous

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

Investment income held for distribution

.Endowment funds before pledges .......Pledges ............................

Total endowment funds .............

Other invested funds Student loan funds ...................

Building funds ......................

Designated purposes:-Departments and research ...........

-Other purposes ....................

Reserve funds .......................

Real estate gifts held for sale ...........

Life income funds ...................

Pledges ............................

Other funds available for current expenses Funds expended for educational plant ...Total other funds ...................

Noncontrolling interests

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

Total net assets at fair value ............

$ 694,038 450,182 9,320 424,697 59,528 79,647 169,416 6,578 818,741 291,056 3,003,203 3,003,203 21,419 60,772 270,541 113,768 151,335 1,592 5,688 375,049 581,149 1,581,313 304,436$ 4,888,952$ 814,080 729,251 16,539 1,932,018 98,188 236,635 805,293 20,682 133,326 4,786,012 4,786,012$ 462,659 448,136 7,876 622,543 83,660 192,477 315,873 18,015 209,110 2,360,349 158,710 2,519,059$ 1,970,777 1,627,569 33,735 2,979,258 241,376 508,759 1,290,582 45,275 1,161,177 291,056 10,149,564 158,710 10,308,274

$ 1,913,280 1,532,928 32,845 2,869,660 231,063 483,447 1,261,609 43,108 1,061,146 283,542 9,712,628 140,946 9,853,574 36,632 96,236 280,162 89,883 123,903 6,261 130,183 282,019 648,039 558,798 2,252,116 282,041$12,387,731 16,683 38,102 78,786 18,014 44,158 50,435 320,948 77,987 511,542$ 5,297,554 77,096 93,779$ 2,612,838 270,541 157,926 151,335 1,592 133,219 320,948 453,036 581,149 2,186,634 304,436$ 12,799,344 NOTES TO FINANCIAL STATEMENTS 43 K. Components of Net Assets and Endowment (continued)

MIT's endowment consists of approximately 3,500 individual funds established for a variety of purposes and includes both donor-restricted endowment funds and funds designated by the Executive Committee of the MIT Corporation (Executive Committee) to function as endowment.

As required by GAAP, net assets associated with endowment funds, including funds designated by the Executive Committee to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions.

The Executive Committee of MIT has interpreted the Massachusetts-enacted version of Uniform Prudent Management of Institutional 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 Executive Committee.

As 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 Executive Committee considers the following factors in making a determination to appropriate or accumulate endowment funds: i. the duration and preservation of the fund ii. the purposes of MIT and the endowment fund iii. general economic conditions iv. the possible effects 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 33. Endowment Net Asset Composition by Type of Fund Temporarily Permanently Unrestricted restricted restricted Total (in thousands of dollars)Fiscal year 2012 Donor-restricted endowment funds ................

Board-designated endowment funds ...... ........Total endowment funds ......................

Fiscal year 2011 Donor-restricted endowment funds ................

Board-designated endowment funds ...............

Total endowment funds ......................

$ (3,444)3,006,647$ 3,003,203$ (7,071)2,896,666$ 2,889,595$ 4,786,012

$ 2,519,059$ 4,786,012$ 4,598,751$ 4,598,751$ 2,519,059$ 2,365,228$ 2,365,228$ 7,301,627 3,006,647$10,308,274

$ 6,956,908 2,896,666.

$ 9,853,574 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 $3.4 million and $7.1 million as of June 30, 2012 and 2011, respectively.

The underwater status of these funds resulted from unfavorable market fluctuations.

44 MIT REPORT OF THE TREASURER 2012 K. Components of Net Assets and Endowment (continued)

Table 34. Changes in Endowment Net Assets Temporarily Permanently Unrestricted restricted restricted (in thousands of dollars)Total Fiscal year 2012 Endowment net assets, June 30, 2011 ..............

Investment return: Investment incom e ...........................

Net appreciation (realized and unrealized)

.........Total investment return ..........................

C ontributions

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

Appropriation of endowment assets for expenditure...

Other changes: Underwater gain adjustment

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

Net asset reclassifications and transfers to create board-designated endowment funds ............

Endowment net assets, June 30, 2012 ...........

Fiscal year 2011 Endowment net assets, June 30, 2010 ..............

Investment return: Investment income ...........................

Net appreciation (realized and unrealized)

.........Total investment return ..........................

Contributions

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

Appropriation of endowment assets for expenditure...

$ 2,889,595 20,170 201,806 221,976$ 4,598,751

$ 2,365,228

$ 9,853,574 37,982 447,240 485,222 19,921 15,200 35,121 78,073 664,246 742,319 115,592-115,592 (142,780)

(312,757)(13,067) (468,604)3,627 30,785$ 3,003,203 (3,627)18,423$ 4,786,012 16,185$ 2,519,059 65,393$10,308,274

$ 2,498,428

$ 3,945,500

$ 2,019,530

$ 8,463,458 24,744 423,568 448,312 47,678 906,844 954,522 17,057 11,961 29,018 89,479 1,342,373 1,431,852 313,644-313,644 (134,428)

(300,831)(9,577) (444,836)Other changes: Underwater gain adjustment

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

Net asset reclassifications and transfers to create board-designated endowment funds ............

Endowment net assets, June 30, 2011 ...........

22,035 55,248$ 2,889,595 (22,035)21,595$ 4,598,751 12,613$ 2,365,228 89,456$ 9,853,574 NOTES TO FINANCIAL STATEMENTS 45 K. Components of Net Assets and Endowment (continued)

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 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 $10,970.0 million at June 30, 2012 and $10,041.1 million atJune 30, 2011. Pool A includes certain operating and life income funds totaling$1,246.5 million atJune 30, 2012 and $754.5 million atJune 30, 2011. Certain assets are also maintained in separately invested funds. Separately invested funds totaled $426.3 million as of June 30, 2012 and $424.4 million as of June 30, 2011.MIT has adopted endowment investment and spending policies designed to provide a predictable stream of funding to programs supported by its endowment while maintaining the purchasing power of endowment assets. An additional investment goal is to maximize return relative to appropriate risk such that performance exceeds appropriate benchmark returns at the total pool, asset class and individual manager levels.To achieve its long-term rate-of-return objectives, MIT relies on a total return strategy in which investment returns are realized through both capital appreciation (realized and unrealized gains) and current yield (interest and dividends).

MIT targets a diversified asset allocation that places greater emphasis on equity-based investments to achieve its long-term objectives within prudent risk constraints.

The Executive Committee of the Corporation votes to distribute funds for operational support from general investments.

In accordance with MIT's spending policy, these distributions are funded from both investment income and market appreciation.

The distribution rates were $58.73 and $56.75 per Pool A unit as of June 30, 2012 and 2011, respectively.

In 2012, the amount distributed for spending from Pool A and Pool C totaled $554.3 million, compared to $513.6 million distributed in the prior year. During 2012, distributions from separately invested funds were $13.1 million, compared to $10.5 million in 2011. The income earned in Pool C, or currently invested funds, was fully distributed.

In addition to the aforementioned distributions, there was also a special distribution of $17.7 million and$10.8 million from gains in Pool C in 2012 and 2011, respectively.

46 MIT REPORT OF THE TREASURER 2012

.L pwc Report of Independent Auditors To the Audit Committee of the Massachusetts Institute of Technology:

In our opinion, the accompanying consolidated statement of financial position and the related statement of activities and cash flows present fairly, in all material respects, the financial position of the Massachusetts Institute of Technology (the "Institute")

at June 30, 2012, and the changes in their net assets and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Institute's management.

Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived from the Institute's 2011 financial statements, and in our report dated September 15, 2011, we expressed an unqualified opinion on those financial statements.

We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for our opinion.September 14, 2012 PricewaterhouseCoopers LLP, 125 High Street, Boston, MA 02110 T: (617)530 50oo, F: (617)53o 5oo0, www.pwc.com/us REPORT OF INDEPENDENT AUDITORS 47 48 MIT REPORT OF THE TREASURER 2012 Massachusetts Institute of Technology Five-YearTrend Analysis -Financial Highlights (in thousands of dollars)2012 2011 2010 2009 2008 Financial Position: Investments, at fair value ...............

Land, buildings, and equipment, at cost less accumulated depreciation..

Borrowings

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

Total assets ..........................

Total liabilities

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

Unrestricted net assets ................

Temporarily restricted net assets .........Permanently restricted net assets ........Total net assets .......................

Total endowment funds before pledges ...Principal Sources of Revenue: Tuition and similar revenues ............

Research revenues: Campus direct ....................

Campus indirect ..................

Lincoln Laboratory direct ...........

Lincoln Laboratory indirect .........SM ART direct ....................

SMART indirect ..................

Gifts, bequests and pledges .............

Net gain (loss) on investments and other assets .Investment income and distributions

.....Principal Purposes of Expenditures:

Total operating expenditures

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

General and administrative

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

Instruction and unsponsored research ....Direct cost of sponsored research -current dollars ....................

Direct cost of sponsored research -constant dollars (2008 = 100) ........$12,847,866 2,497,711 2,460,002 16,787,098 3,987,754 4,888,952 5,297,554 2,612,838 12,799,344 10,149,564

$12,236,531 2,451,479 2,467,825 16,052,231 3,664,500 4,885,321 5,044,519 2,457,891 12,387,731 9,712,628$ 9,950,239 2,327,810 1,728,526 13,415,618 3,091,313 3,759,301 4,463,066 2,101,938 10,324,305 8,317,321$ 9,558,331 2,122,606 1,735,843 12,950,103 3,003,715 3,559,925 4,401,015 1,985,448 9,946,388 7,880,321$ 11,359,923 1,940,912 1,335,393 15,457,229 2,687,255 5,086,270 5,765,302 1,918,402 12,769,974 9,947,636$ 527,702 $ 493,777$ 468,570 $ 431,772$471,155 183,200 819,645 25,263 28,311 276 433,424 738,308 554,627 456,416 162,497 770,672 34,111 23,300 210 522,409 1,483,669 505,503 431,611 172,525 719,883 24,449 20,912 223 246,580 784,348 566,110 497,493 193,289 642,101 27,667 14,026 496 303,890 (1,854,380) 586,576$ 2,461,286 497,043 680,848 421,230 448,065 173,455 587,076 32,611 3,857 106 385,952 154,765 422,457$ 2,744,586 586,268 691,903$ 2,571,147 523,676 659,839$ 2,382,566 461,186 613,345$ 2,294,247 486,444 641,241 1,335,638 1,265,776 1,192,041 1,167,036 1,054,474 1,242,537 1,212,045 1,164,360 1,150,967 1,054,474 FIVE-YEAR TREND ANALYSIS 49 Massachusetts Institute of Technology Five-YearTrend Analysis -Financial Highlights (continued)(in thousands of dollars)2012 2011 2010 2009 2008 Research Revenues:(A)

Campus: Federal government sponsored:

Health and Human Services ............

Department of Defense ................

Department of Energy ................

National Science Foundation

...........

National Aeronautics and Space Administration

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

Other Federal .... ...................

Total Federal ........................

Non-Federally sponsored:

State/local/foreign governments

.........N on-profits

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

Industry ............................

Total non-Federal

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

Total Federal & non-Federal

...........

F&A and other adjustments

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

Total cam pus ........................

Lincoln Laboratory:

Federal government sponsored

..........

Non-Federally sponsored

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

F&A and other adjustments

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

Total Lincoln Laboratory

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

SMART.:(B)

Non-Federal sponsored

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

Total SM ART .......................

Total Research Revenues ............

$ 133,687 117,458 90,940 81,487 30,204 18,807 472,583 38,273 48,373 109,745 196,391 668,974 (14,619)654,355 844,202 2,023 (1,317)844,908 28,587 28,587$ 152,664 107,753 89,562 74,859 28,080 16,602 469,520 32,969 44,436 100,763 178,168 647,688 (28,775)618,913 803,599 2,511 (1,327)804,783 23,510 23,510$144,561 106,890 73,274 69,801 30,629 12,717 437,872 33,339 50,639 93,330 177,308 615,180 (11,044)604,136 749,974 3,068 (8,710)744,332 21,135 21,135$ 255,896 97,528 65,773 61,386 27,358 14,559 522,500 27,145 60,538 99,219 186,902 709,402 (18,620)690,782 675,329 2,989 (8,550)669,768 14,522 14,522$ 1,375,072$ 226,307 87,370 65,611 64,973 25,479 14,169 483,909 18,549 47,695 82,194 148,438 632,347 (10,827)621,520 606,850 3,602 9,235 619,687 3,963 3,963$1,245,170

$ 1,527,850

$ 1,447,206

$ 1,369,603 (A) The amounts in this table reflect revenues from the original source of funds and The Broad Institute.( The amounts represent research that has taken place in Singapore.

50 MIT REPORT OF THE TREASURER 2012 Massachusetts Institute of Technology Five-Year Trend Analysis -Financial Highlights (continued) 2012 2011 2010 2009 2008 Students: Undergraduate Full-tim e ........................

Part-tim e ........................

Undergraduate Applications Applicants

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

Accepted ........................

Acceptance rate ...................

Enrolled .........................

Y ield ............................

Freshmen ranking in the top 10%of their class ...................

Average SAT scores (math and verbal) ...............

Graduate Full-time

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

Part-tim e ........................

Graduate applications Applicants

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

Accepted ........................

Acceptance rate ...................

Enrolled .........................

Y ield ............................

Tuition (in dollars): Tuition and fees ......................

Average room and board ...............

Financial Assistance: (in thousands of dollars)Undergraduate tuition support ..........

Graduate tuition support ...............

Fellowship stipends ...................

Student loans ........................

Student employment

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

Total financial assistance

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

4,354 30 17,909 1,742 10%1,126 65%97%1,472 6,342 168 4,252 47 16,632 1,676 10%1,067 64%98%1,473 6,108 159 22,139 3,431 15%2,141 62%39,212 11,234 4,201 31 15,663 1,676 11%1,072 64%95%1,455 6,022 130 19,336 2,994 15%1,939 65%37,782 11,360 4,118 35 13,396 1,589 12%1,048 66%97%1,453 5,991 155 17,323 3,215 19%2,000 62%36,390 10,860 4,119 53 12,445 1,553 12%1,067 69%97%22,219 3,306 15%2,118 64%$ 40,732 11,775 1,458 5,837 211 16,208 3,058 19%1,823 60%34,986 10,400$$$$$ 102,081 215,702 33,263 9,556 90,135$ 450,737$ 92,060 201,995 30,435 9,968 85,335$ 419,793$ 89,813 195,178 28,104 9,641 84,304$ 407,040$ 78,534 187,732 27,509 9,641 82,287$ 385,703$ 70,157 174,847 25,647 8,766 78,892$ 358,309 Faculty and staff (including unpaid appointments):

Faculty .............................

Staff and fellows .....................

1,018 13,109 1,017 12,662 1,025 12,577 1,008 13,393 1,007 12,852 FIVE-YEAR TREND ANALYSIS 51

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