Remarketing - Not a New IssueBook-Entry Only

RemaRketing memoRandum no. 1Relating to

$75,000,000St. JoSeph County, indiana

VaRiable Rate eduCational FaCilitieS

ReVenue bondS, SeRieS 2007(uniVeRSity oF notRe dame du laC pRoJeCt)

CUSIP Number: 79061A BE6* Due: March 1, 2042

This Remarketing Memorandum No. 1 (this “Remarketing Memorandum”) supplements the Official Statement dated December 7, 2007 (the “Official Statement”), relating to the bonds described above (the “Series 2007 Bonds”). Unless otherwise indicated in this Remarketing Memorandum, the information set forth in the Official Statement has not been amended, modified, supplemented or updated since December 7, 2007. This Remarketing Memorandum may not be delivered to any person unless accompanied by the Official Statement, which is attached hereto as Appendix d, and should be read in conjunction therewith. Capitalized terms used herein and not otherwise defined herein have the meanings set forth in the Official Statement.

The Series 2007 Bonds are currently outstanding in the original aggregate principal amount of $75,000,000 and currently operate in the Weekly Rate Period. The Series 2007 Bonds were issued on December 14, 2007 pursuant to the Trust Indenture dated as of December 1, 2007 (the “Indenture”) between St. Joseph County, Indiana (the “Issuer”) and Wells Fargo Bank, N.A., as trustee. The proceeds from the sale of the Series 2007 Bonds were loaned by the Issuer to the University of Notre Dame du Lac (the “University”) pursuant to the Loan Agreement dated as of December 1, 2007, between the Issuer and the University.

This Remarketing Memorandum is being delivered in connection with the replacement of the liquidity facility (the “Existing Liquidity Facility”) currently supporting the Series 2007 Bonds, which is provided by Banco Bilbao Vizcaya Argentaria, S.A., acting through its New York Branch, with a new liquidity facility (the “BNY Liquidity Facility”) to be provided by The Bank of New York Mellon (the “New Liquidity Provider”) pursuant to the terms of the Standby Bond Purchase Agreement dated May 17, 2012 (the “Standby Agreement,” and, together with the BNY Liquidity Facility, the “New Liquidity Facility” between the University and the New Liquidity Provider. See “The New LiquidiTy Provider” in APPeNdix C hereto. The New Liquidity Facility will support the payment of the purchase price of Series 2007 Bonds tendered or required to be tendered for purchase, but for which remarketing proceeds are not available, subject to certain terms and conditions set forth therein and summarized herein. Under the New Liquidity Facility, the New Liquidity Provider will be under no obligation to provide funds to pay the purchase price of Series 2007 Bonds tendered or required to be tendered for purchase if a potential default related to the bankruptcy or insolvency of the University occurs or certain events of default occur under the New Liquidity Facility. The New Liquidity Facility has a stated termination date of May 17, 2015, and may be extended or terminated prior to its stated termination date in accordance with its term and as summarized herein. See “The New LiquidiTy FAciLiTy” herein.

In connection with the replacement of the Existing Liquidity Facility with the New Liquidity Facility on May 17, 2012, the Series 2007 Bonds will be mandatorily tendered for purchase and remarketed on May 16, 2012 (the “Mandatory Tender Date”). The New Liquidity Facility will be effective on May 17, 2012, which is the day after the Mandatory Tender Date. On and after May 17, 2012, payment of purchase price for the Series 2007 Bonds will be supported by the New Liquidity Facility. The Existing Liquidity Facility will terminate by its terms on May 18, 2012, the day following the effectiveness of the New Liquidity Facility.

The Series 2007 Bonds and the interest thereon do not constitute a debt, liability or a general obligation of the Issuer or the State of Indiana or any political subdivision thereof within the meaning of the Constitution or statutes of the State of Indiana, or a pledge of the faith and credit of the Issuer or the State of Indiana or any political subdivision thereof. The Series 2007 Bonds do not grant the owners thereof any right to have the Issuer levy any taxes or appropriate any funds for the payment of the principal of or interest on the Series 2007 Bonds.

goldman, SaChS & Co.Dated: May 9, 2012

* CUSIP® is a registered trademark of the American Bankers Association (“ABA”). The CUSIP number herein is provided by CUSIP Global Services, which is managed by Standard & Poor’s, a business unit of The McGraw-Hill Companies, Inc, on behalf of the ABA. The CUSIP number is provided for convenience of reference only. Neither the University, the Trustee nor the Remarketing Agent takes any responsibility for the accuracy of such number.

REGARDING USE OF THIS REMARKETING MEMORANDUM

No dealer, broker, salesman or other person has been authorized by the Issuer, the University, the New Liquidity Provider or the Remarketing Agent to give any information or to make any representations with respect to the Series 2007 Bonds, other than those contained in this Remarketing Memorandum, and if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Remarketing Memorandum does not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of, the Series 2007 Bonds by any persons in any jurisdiction in which it is unlawful to make such offer, solicitation or sale prior to registration or qualification under the securities laws of any such jurisdiction. This Remarketing Memorandum is not to be construed as a contract with the purchasers of the Series 2007 Bonds.

The information set forth in this Remarketing Memorandum has been obtained from the University, the New Liquidity Provider and other sources which are believed to be reliable. Statements contained in this Remarketing Memorandum which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. The information and expressions of opinion contained herein are subject to change without notice, and neither the delivery of this Remarketing Memorandum nor any sale made hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Issuer, the University or the New Liquidity Provider or that the information contained herein is correct at any time subsequent to the date hereof.

The Remarketing Agent has provided the information in this Remarketing Memorandum under the caption “THE REMARKETING AGENT” herein and has reviewed the information in this Remarketing Memorandum in accordance with, and as part of, its responsibilities to investors under federal securities laws as applied to the facts and circumstances of this transaction. However, the Remarketing Agent does not guarantee the accuracy or completeness of such other information.

IN CONNECTION WITH THE REOFFERING OF THE SERIES 2007 BONDS, THE REMARKETING

AGENT MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET

PRICES OF THE SERIES 2007 BONDS AT A LEVEL ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL

IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

THE SERIES 2007 BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND

EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THE

INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939 IN RELIANCE UPON

EXEMPTIONS CONTAINED IN SUCH ACTS. THE REGISTRATION OR QUALIFICATION OF THE SERIES

2007 BONDS IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF SECURITIES LAWS OF THE

STATES IN WHICH THE SERIES 2007 BONDS HAVE BEEN REGISTERED OR QUALIFIED AND THE

EXEMPTION FROM REGISTRATION OR QUALIFICATION IN OTHER STATES CANNOT BE REGARDED AS A

RECOMMENDATION THEREOF. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON

THEIR OWN EXAMINATION OF THE SERIES 2007 BONDS AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE SERIES 2007 BONDS HAVE NOT BEEN

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APPROVED OR DISAPPROVED BY ANY STATE OR FEDERAL SECURITIES COMMISSION OR OTHER

REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR

ENDORSED THE MERITS OF THE OFFERING OR THE ACCURACY OR ADEQUACY OF THIS REMARKETING

MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE.

Certain statements included or incorporated by reference in this Remarketing Memorandum constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “budget,” “intend,” “projection” or other similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information in APPENDIX A — “UNIVERSITY OF NOTRE DAME DU LAC” and APPENDIX B — “AUDITED

CONSOLIDATED FINANCIAL STATEMENTS OF THE UNIVERSITY AS OF JUNE 30, 2011 AND 2010 AND

FOR THE YEARS THEN ENDED.” A number of important factors, including factors affecting the University’s financial condition and factors which are otherwise unrelated thereto, could cause actual results to differ materially from those stated in such forward-looking statements. THE

UNIVERSITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING

STATEMENTS IF OR WHEN ITS EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON

WHICH SUCH STATEMENTS ARE BASED, OCCUR.

The CUSIP number included in this Remarketing Memorandum is for the convenience of the owners and the potential owners of the Series 2007 Bonds. No assurance can be given that the CUSIP number for the Series 2007 Bonds will remain the same after the date of this Remarketing Memorandum.

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TABLE OF CONTENTS

PAGE

INTRODUCTION .................................................................................................................................1

Purpose of this Remarketing Memorandum ...........................................................................1The Series 2007 Bonds ...........................................................................................................2University of Notre Dame du Lac...........................................................................................2Summaries...............................................................................................................................2

THE NEW LIQUIDITY FACILITY .........................................................................................................3

General....................................................................................................................................3Events of Default ....................................................................................................................4Remedies.................................................................................................................................6Certain Definitions..................................................................................................................7

THE REMARKETING AGENT ..............................................................................................................9

General....................................................................................................................................9Special Considerations Relating to Remarketing the Series 2007 Bonds.............................10Certain Activities of the Remarketing Agent and its Affiliates............................................11

RATINGS .........................................................................................................................................12

INDEPENDENT ACCOUNTANTS ........................................................................................................12

LEGAL MATTERS ............................................................................................................................12

CERTAIN RELATIONSHIPS ...............................................................................................................12

MISCELLANEOUS ............................................................................................................................13

APPENDIX A – University of Notre Dame du Lac APPENDIX B – Audited Consolidated Financial Statements of the University as of

June 30, 2011 and 2010 and for the Years Then Ended APPENDIX C – The New Liquidity Provider APPENDIX D – The Official Statement

REMARKETING MEMORANDUM NO. 1

RELATING TO

$75,000,000 ST. JOSEPH COUNTY, INDIANA

VARIABLE RATE EDUCATIONAL FACILITIES REVENUE BONDS, SERIES 2007

(UNIVERSITY OF NOTRE DAME DU LAC PROJECT)

INTRODUCTION

Purpose of this Remarketing Memorandum

This Remarketing Memorandum No. 1 (this “Remarketing Memorandum”) supplements the Official Statement dated December 7, 2007 (the “Official Statement”), relating to the bonds described above (the “Series 2007 Bonds”). Unless otherwise indicated in this Remarketing Memorandum, the information set forth in the Official Statement has not been amended, modified, supplemented or updated since December 7, 2007. Capitalized terms used herein and not otherwise defined herein have the meanings set forth in the Official Statement.

The information contained in this Remarketing Memorandum and in APPENDICES A, B and C attached hereto supersedes any inconsistent information contained in the Official Statement, a copy of which is attached hereto as APPENDIX D. This Remarketing Memorandum may not be delivered to any person unless accompanied by the Official Statement and should be read in conjunction therewith.

This Remarketing Memorandum is being delivered in connection with the replacement of the liquidity facility (the “Existing Liquidity Facility”) currently supporting the Series 2007 Bonds, which is provided by Banco Bilbao Vizcaya Argentaria, S.A., acting through its New York Branch, with a new liquidity facility (the “BNY Liquidity Facility”) to be provided by The Bank of New York Mellon (the “New Liquidity Provider”) pursuant to the terms of the Standby Bond Purchase Agreement dated May 17, 2012 (the “Standby Agreement,” and, together with the BNY Liquidity Facility, the “New Liquidity Facility” between the University and the New Liquidity Provider. See “THE NEW LIQUIDITY PROVIDER” in APPENDIX C hereto. The New Liquidity Facility will support the payment of the purchase price of Series 2007 Bonds tendered or required to be tendered for purchase, but for which remarketing proceeds are not available, subject to certain terms and conditions set forth therein and summarized herein. The Liquidity Facility constitutes an “Alternate Liquidity Facility” within the meaning of the Indenture (as hereinafter defined). The New Liquidity Facility has a stated termination date of May 17, 2015. See “THE NEW LIQUIDITY FACILITY” herein.

In connection with the replacement of the Existing Liquidity Facility with the New Liquidity Facility on May 17, 2012, the Series 2007 Bonds will be mandatorily tendered for purchase and remarketed on May 16, 2012 (the “Mandatory Tender Date”). The New Liquidity

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Facility will be effective on May 17, 2012, which is the day after the Mandatory Tender Date. On and after May 17, 2012, payment of purchase price for the Series 2007 Bonds will be supported by the New Liquidity Facility. The Existing Liquidity Facility will terminate by its terms on May 18, 2012, the day following the effectiveness of the New Liquidity Facility.

The Series 2007 Bonds

On December 14, 2007, St. Joseph County, Indiana (the “Issuer”) issued the Series 2007 Bonds under and pursuant to the terms of the Trust Indenture dated as of December 1, 2007 (the “Indenture”) between the Issuer and Wells Fargo Bank, N.A., as trustee, (the “Trustee”). The proceeds from the sale of the Series 2007 Bonds were loaned to the University of Notre Dame du Lac, a not-for-profit corporation chartered under Indiana law (the “University”), pursuant to the terms of the Loan Agreement dated as of December 1, 2007 (the “Loan Agreement”), between the Issuer and the University, for the purposes described in the Official Statement.

The Series 2007 Bonds and the interest thereon do not constitute a debt, liability or a general obligation of the Issuer or the State of Indiana or any political subdivision thereof within the meaning of the Constitution or statutes of the State of Indiana, or a pledge of the faith and credit of the Issuer or the State of Indiana or any political subdivision thereof. The Series 2007 Bonds do not grant the owners thereof any right to have the Issuer levy any taxes or appropriate any funds for the payment of the principal of or interest on the Series 2007 Bonds.

University of Notre Dame du Lac

The University of Notre Dame du Lac, founded in 1842 by a priest of the Congregation of Holy Cross, is an independent, national Catholic research university located just north of the City of South Bend, Indiana. The University offers undergraduate, graduate, and professional degree-granting programs, and enrolls approximately 11,860 students. The University is governed by a predominantly lay Board of Trustees which exercises power delegated to them by twelve Fellows, six of whom must be members of the Congregation of Holy Cross, United States Priests and Brothers.

The University is accredited by the North Central Association of Colleges and Schools. The last accreditation was granted in December, 2004 for a ten year period. Certain academic divisions are accredited by related discipline-specific organizations.

For further information relating to the University, see APPENDIX A to this Remarketing Memorandum. Audited consolidated financial statements of the University as of June 30, 2011 and 2010 and for the years then ended are included in APPENDIX B hereto.

Summaries

Descriptions of the University, the Issuer, the New Liquidity Provider and the Remarketing Agent and summaries of certain provisions of the Series 2007 Bonds, the Indenture, the Loan Agreement, the Remarketing Agreement and the New Liquidity Facility are included in

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this Remarketing Memorandum, including the Appendices attached hereto. Such information, summaries and descriptions do not purport to be comprehensive or definitive. All references in this Remarketing Memorandum to the specified documents are qualified in their entirety by reference to each such document, copies of which are available from the Trustee, and all references to the Series 2007 Bonds are qualified in their entirety by reference to the definitive forms thereof and the information with respect thereto included in the aforesaid documents.

THE NEW LIQUIDITY FACILITY

General

The New Liquidity Facility contains various provisions, covenants and conditions, certain of which are summarized below. Certain terms used in the following summary are defined therein or at the conclusion thereof. In addition, various other terms used in the following summary are defined in this Remarketing Memorandum, the Official Statement, the New Liquidity Facility and the Indenture, and reference thereto is made for full understanding of their import.

The New Liquidity Facility will become effective on May 17, 2012 (the “Effective Date”). Pursuant to the terms of the New Liquidity Facility, the New Liquidity Provider will make Loans (as defined below) to the University from time to time in an amount sufficient to pay the principal component of the purchase price of Series 2007 Bonds (other than Series 2007 Bonds bearing interest at the Fixed Rate, Series 2007 Bonds bearing interest at a Commercial Paper Rate during the Commercial Paper Rate Period and Series 2007 Bonds bearing interest at the Term Rate during a Term Rate Period that extends for more than twelve months) which are tendered or required to be tendered for purchase, but for which remarketing proceeds are not available, together with up to 34 days of accrued interest on such Series 2007 Bonds, calculated assuming such Series 2007 Bonds bear interest at a rate of 10% per annum and assuming a 360-day year; provided, however, that no Loans shall be used to pay the purchase price of University Bonds or Pledged Bonds (as such terms are defined below). The total amount of Loans that the New Liquidity Provider is obligated to make to the University under the New Liquidity Facility is limited to $75,708,334 (the “Commitment”), of which $75,000,000 is available to pay the principal component of the purchase price and $708,334 (representing 34 days’ accrued interest, assuming an interest rate of 10% per annum and a 360-day year) is available to pay the interest component of the purchase price.

The obligation of the New Liquidity Provider to make Loans shall be effective from the Effective Date to and including the earliest of (a) the Termination Date (as defined below), (b) immediately upon the occurrence of a Special Default, (c) the close of business on the twentieth (20th) day following the date on which a Notice of Termination of Commitment (as defined below) is received by the Trustee or, if such day is not a Business Day, the next following Business Day, and (d) the date on which pursuant to the terms of the New Liquidity Facility the Commitment (as defined below) has been reduced to zero or terminated in its entirety.

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On each Purchase Date (as defined below), if the proceeds available from the remarketing of the Series 2007 Bonds are not sufficient for the purchase of the Series 2007 Bonds, the Trustee will give notice by facsimile transmission to the New Liquidity Provider (a “Notice of Bank Purchase”), no later than 12:45 p.m., New York City time, on the Business Day on which Series 2007 Bonds are subject to an optional tender or mandatory tender. If the New Liquidity Provider receives a Notice of Bank Purchase as provided above, and subject, in each case, to the satisfaction of the conditions precedent set forth in the New Liquidity Facility, the New Liquidity Provider will transfer to the Tender Agent, not later than 2:00 p.m., New York City time, on such date (a “Purchase Date”), in immediately available funds, an amount equal to the aggregate Purchase Price of all or such portion of such Series 2007 Bonds as set forth in said Notice of Bank Purchase.

The obligation of the New Liquidity Provider to purchase Series 2007 Bonds pursuant to the terms of the New Liquidity Facility is subject to the conditions precedent that no Special Default shall have occurred and be continuing and that the New Liquidity Provider shall have received timely a Notice of Bank Purchase as described in the preceding paragraph. A Special Default (as defined below) will result in the immediate termination, without notice, of the New Liquidity Provider’s obligation to purchase Series 2007 Bonds, as more fully set forth in the section “Remedies” below. The New Liquidity Facility is not available to pay the principal, interest or premium, if any, payable on the Series 2007 Bonds.

Events of Default

Each of the following events constitutes an “Event of Default” under the New Liquidity Facility:

(A) (i) The University shall default in the payment when due of any principal of or interest on any Loan (as defined below) or any Series 2007 Bond (including any Pledged Bonds (as defined below)) whether on any regularly scheduled interest payment date, at maturity, upon redemption or acceleration (excluding, specifically, any acceleration of any such Loan for any reason other than non-payment by the University as provided above), or otherwise; or (ii) the University shall default in the payment when due on any other amount payable under the New Liquidity Facility or the fee agreement between the University and the New Liquidity Provider and such default continues for five (5) Business Days after written notice thereof from the New Liquidity Provider is received by the University; or

(B) Default in the due observance or performance by the University of certain covenants specified in the New Liquidity Facility; or

(C) Default in the due observance or performance by the University of any other term, covenant or agreement set forth (or incorporated by reference) in the New Liquidity Facility (other than as specified in clause (A) or (B) above) and the continuance of such default for thirty (30) days after the occurrence thereof; or

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(D) Any representation or warranty made or deemed made by the University in the New Liquidity Facility or any other Credit Document (as defined below), or any statement or representation made by or on behalf of the University in any document delivered thereunder, shall prove to have been incorrect or misleading in any material respect when made; or

(E) Any material provision related to payment of principal or interest with respect to any Loans or the Series 2007 Bonds shall for any reason cease to be valid and binding on the University, or an authorized officer of the University shall deny in writing that the University has any or further liability related to payment of principal or interest with respect to any Loans or the Series 2007 Bonds under the New Liquidity Agreement or the other Related Documents (other than the Purchase Contract and the Remarketing Agreement) (as such terms are defined below) or any court having jurisdiction shall find or rule that any material provision related to payment with respect to the Loans or the Series 2007 Bonds is not valid or binding on the University; or

(F) An involuntary proceeding is instituted in a court having jurisdiction in the premises seeking an order for relief, rehabilitation, reorganization, conservation, liquidation or dissolution in respect to the University or for any substantial part of its property under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee or sequestrator (or other similar official) and such proceeding is not terminated within sixty (60) days of commencement; or

(G) The court having jurisdiction in the premises enters an order granting the relief sought in a proceeding described in clause (F) above, or the University shall institute or take any corporate action for the purpose of instituting any proceeding described in clause (F) above, or the University shall become insolvent or unable to pay its debts as they mature, shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian or sequestrator (or other similar official) of the University or for any substantial part of its property, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action in furtherance of any of the foregoing; or

(H) (i) The University shall fail to pay any principal of or premium or interest on any Parity Debt (as hereinafter defined) aggregating in excess of $10,000,000 when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the greater of (1) the applicable grace period, if any, specified in the agreement or instrument relating to such Parity Debt and (2) 30 days (provided that such Parity Debt shall not constitute “Parity Debt” for purposes of this clause (H) if such Parity Debt is held by the provider or issuer of a liquidity, credit or other similar support facility in respect of such Parity Debt and such Parity Debt has been accelerated); or (ii) any other event shall occur

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or condition shall exist under any agreement or instrument relating to any Debt (as defined below) and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate the maturity of, or permit the holder to accelerate the maturity of, such Debt; or

(I) Final judgment or judgments for the payment of money in excess of an aggregate of $25,000,000 shall be rendered against the University and the same shall remain undischarged for a period of 60 consecutive days during which execution shall not be effectively stayed; or

(J) Certain events specified in the New Liquidity Facility concerning the University’s employee benefit plans shall occur; or

(K) (i) The rating on the Series 2007 Bonds is lowered below “Baa3” (or its equivalent) by the Rating Service (as defined in the Indenture), or (ii) the Rating Service shall suspend or withdraw such rating on the Series 2007 Bonds for credit-related reasons and the rating so suspended or withdrawn is not reinstated within thirty (30) days of the date of such suspension or withdrawal; or

(L) Any “event of default” described in subsections (a), (b), (c), (d), (e) or (f) of Section 7.01 of the Indenture (other than any failure to pay the purchase price of tendered Series 2007 Bonds as a result of a failure by the Bank to comply with its obligations under the New Liquidity Agreement) shall occur and be continuing; or

(M) Any “event of default” (except any such event of default described elsewhere in this “Events of Default” section) shall occur and be continuing under any of the Related Documents (as defined below); or

(N) (i) Any governmental authority having jurisdiction shall find or rule that any provision of the New Liquidity Facility, the Indenture, the Agreement (as defined in the Indenture) or the Series 2007 Bonds requiring the University to pay principal and interest is unenforceable, non-binding or invalid or (ii) the validity or enforceability of any provision of the New Liquidity Facility, the Indenture, the Agreement or the Series 2007 Bonds requiring the University to pay principal and interest shall be contested by the University in a legal or administrative proceeding or an authorized representative of the University shall deny in a legal or administrative proceeding that the University has any or further liability or obligation under any such document; or

(O) Interest on the Series 2007 Bonds shall be included in the gross income of the holders thereof for federal income tax purposes.

Remedies

Following the occurrence of any of the above-referenced Events of Default under the New Liquidity Facility, the following remedies shall be available to the New Liquidity Provider:

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(1) Upon the occurrence of any Special Default, the Commitment (as defined below) of the New Liquidity Provider to make Loans shall automatically terminate and all Obligations (as defined below) then outstanding under the New Liquidity Facility shall immediately become due and payable without any election or action on the part of the New Liquidity Provider. The New Liquidity Provider shall give prompt notice on the date of such termination to the University, the Remarketing Agent, the Trustee and the Rating Service of termination of the Commitment to make Loans under the New Liquidity Facility upon the occurrence of a Special Default, provided that the New Liquidity Provider shall incur no liability or responsibility whatsoever by reason of its failure to receive or give such notice and such failure shall in no way affect the termination of the Commitment and the New Liquidity Provider’s obligation to purchase Series 2007 Bonds pursuant to the New Liquidity Facility.

(2) Upon the occurrence and continuance of any Event of Default (other than a Special Default), the New Liquidity Provider may, upon giving written notice to the University and the Trustee (such notice, a “Notice of Termination of Commitment”), specify the date, which date shall be no sooner than 20 days after receipt of such notice by the Trustee (the “Notice Termination Date”) on which the Commitment shall terminate and/or may declare all Obligations then outstanding under the New Liquidity Facility immediately due and payable, and the same shall thereupon become due and payable without demand, presentment, protest or further notice of any kind, all of which are expressly waived by the University, and at the close of business on the Notice Termination Date the Commitment of the New Liquidity Provider to make Loans shall automatically terminate.

(3) Furthermore, upon the occurrence of any Event of Default, the New Liquidity Provider may pursue, exercise and enforce such further rights and remedies available under the Credit Documents and the Bond Documents (as defined below), or otherwise available pursuant to law or equity, and may, at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits at any time held and other indebtedness at any time owing by the New Liquidity Provider to or for the credit or the account of the University against any and all of the obligations of the University now or hereafter existing under the New Liquidity Facility and the other Credit Documents; provided that the New Liquidity Provider shall not have the right to terminate its obligation to purchase Series 2007 Bonds except as expressly provided in this “Remedies” section.

Certain Definitions

Set forth below are certain definitions of terms used in the New Liquidity Facility and not otherwise defined in this summary or the Official Statement.

“Bond Documents” means the Series 2007 Bonds (including the Pledged Bonds), the Indenture, the Loan Agreement, the Remarketing Agreement, the Purchase Contract and all other agreements or instruments relating to the issuance and sale of and security for the Series 2007

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Bonds, other than the Credit Documents, as the same may be amended or modified from time to time in accordance with their respective terms and the terms of the New Liquidity Facility.

“Commitment” means the obligation of the New Liquidity Provider to make Loans in an amount at any time outstanding not to exceed $75,708,334.00, as such amount may be reduced from time to time pursuant to the New Liquidity Facility.

“Credit Documents” means the New Liquidity Facility, the Pledge Agreement, the fee agreement between the University and the New Liquidity Provider and the Note as the same may be amended or modified from time to time in accordance with their respective terms and the terms hereof.

“Debt” of any person or entity means (i) indebtedness of such person or entity for borrowed money, (ii) obligations of such person or entity evidenced by bond debentures, notes or other similar instruments, (iii) obligations of such person or entity to pay the deferred purchase price of property or services, (iv) obligations of such person or entity as lessee under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases, (v) obligations of such person or entity under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (i) through (iv) above, (vi) indebtedness or obligations of others of the kinds referred to in clauses (i) through (v) above secured by any mortgage, deed of trust, lien, security interest or other charge or encumbrance of any nature, or any other type of preferential arrangement, upon or with respect to any properties of such person or entity and (vii) liabilities of such person or entity in respect of unfunded vested benefits under certain employee benefit plans.

“Loan” means a borrowing made by the New Liquidity Provider to the University pursuant to the New Liquidity Facility.

“Loan Agreement” means the Loan Agreement dated as of December 1, 2007 between the University and the Issuer, as it may from time to time be amended or supplemented.

“Note” means a promissory note duly executed and delivered to the New Liquidity Provider by the University and payable to the order of the New Liquidity Provider in the amount of the Commitment, including any amendment, modification, renewal or replacement of such promissory note.

“Obligations” means all obligations and liabilities of the University to the New Liquidity Provider arising under or in relation to the New Liquidity Facility or any of the other Credit Documents.

“Parity Debt” means unenhanced Debt evidenced by bond debentures, notes or other similar instruments that is payable on a parity basis with, or is senior to, the Series 2007 Bonds.

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“Pledge Agreement” means the Bond Pledge and Security Agreement among the University, the Trustee, as custodian, and the New Liquidity Provider as from time to time amended, supplemented or restated.

“Pledged Bond” means any Series 2007 Bond with respect to which a Loan has been made under the New Liquidity Facility to the extent such Series 2007 Bond has not been released from the pledge of the Pledge Agreement.

“Purchase Contract” means the Bond Purchase Agreement dated as of December 13, 2007 among the Issuer, the University and Goldman, Sachs & Co., as underwriter.

“Related Documents” means, collectively, the Credit Documents, the Bond Documents and any other agreement or document relating thereto or contemplated thereby.

“Remarketing Agreement” means the Remarketing Agreement dated as of December 1, 2007 between the University and Goldman, Sachs & Co., as remarketing agent.

“Special Default” means any of the Events of Default described in clause (A)(i), (E), (F), (G), (H)(i), (K) or (N) above.

“Tender Agent” means Wells Fargo Bank, N.A., and any successor Tender Agent as determined or designated under or pursuant to the Indenture.

“University Bonds” means (a) Series 2007 Bonds purchased with moneys provided to the Tender Agent for the account of the University or the Issuer, or (b) Series 2007 Bonds registered in the name of the University or Series 2007 Bonds designated as being held for the account of the University, in either case other than Pledged Bonds.

“Termination Date” means May 17, 2015, or such later date to which the Termination Date may be extended from time to time pursuant to the New Liquidity Facility.

THE REMARKETING AGENT

General

Goldman, Sachs & Co. (“Goldman Sachs”) and the University have entered into a Remarketing Agreement dated December 1, 2007 (the “Remarketing Agreement”) pursuant to which the University has appointed Goldman Sachs to serve as the Remarketing Agent for the Series 2007 Bonds for the purposes described in the Indenture and the Remarketing Agreement. The Remarketing Agent’s principal office is located at 200 West Street, New York, New York 10282.

The Remarketing Agent, under certain circumstances, determines the interest rates on the Series 2007 Bonds and uses its best efforts to remarket Series 2007 Bonds, all in accordance with the Indenture and the Remarketing Agreement. The University pays Goldman Sachs a fee for its services as Remarketing Agent.

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The Remarketing Agent may resign on 15 days’ prior notice to the Issuer, the University and the Trustee. The Remarketing Agent may be removed at any time upon 15 days’ prior written notice by the University by an instrument filed with the Issuer, the Remarketing Agent and the Trustee. The Trustee shall, within 30 days of the resignation or removal of the Remarketing Agent or the appointment of a successor remarketing agent, give notice thereof by registered or certified mail to the applicable Rating Service and to the registered owners of the Series 2007 Bonds.

Special Considerations Relating to Remarketing the Series 2007 Bonds

The Remarketing Agent is Paid by the University. The Remarketing Agent’s responsibilities include determining the interest rate on the Series 2007 Bonds from time to time and remarketing Series 2007 Bonds that are optionally or mandatorily tendered for purchase (subject, in each case, to the terms of the Indenture and the Remarketing Agreement), all as further described in the Official Statement. The Remarketing Agent is appointed by the University and is paid by the University for its services. As a result, the interests of the Remarketing Agent may differ from those of existing owners and potential purchasers of the Series 2007 Bonds.

The Remarketing Agent Routinely Purchases Bonds for Its Own Account. The Remarketing Agent acts as remarketing agent for a variety of variable rate demand obligations and, in its sole discretion, routinely purchases such obligations for its own account. The Remarketing Agent is permitted, but not obligated, to purchase tendered Series 2007 Bonds for its own account and, in its sole discretion, may routinely acquire such tendered Series 2007 Bonds in order to achieve a successful remarketing of the Series 2007 Bonds (i.e., because there otherwise are not enough buyers to purchase such Series 2007 Bonds) or for other reasons. However, the Remarketing Agent is not obligated to purchase Series 2007 Bonds and may cease doing so at any time without notice. The Remarketing Agent may also make a market in the Series 2007 Bonds by routinely purchasing and selling Series 2007 Bonds other than in connection with an optional or mandatory tender and remarketing. Such purchases and sales may be at or below par. However, the Remarketing Agent is not required to make a market in the Series 2007 Bonds. The Remarketing Agent may also sell any Series 2007 Bonds it has purchased to one or more affiliated investment vehicles for collective ownership or enter into derivative arrangements with affiliates or others in order to reduce its exposure to the Series 2007 Bonds. The purchase of Series 2007 Bonds by the Remarketing Agent may create the appearance that there is greater third party demand for the Series 2007 Bonds in the market than is actually the case. The practices described above also may result in fewer Series 2007 Bonds being tendered in a remarketing.

The Series 2007 Bonds May be Offered at Different Prices. Pursuant to the Indenture and the Remarketing Agreement, the Remarketing Agent is required to determine the applicable rate of interest that, in its judgment, is the lowest rate that would permit the sale of the Series 2007 Bonds bearing interest at par on and as of the first day of an interest rate period. The interest rate will reflect, among other factors, the level of market demand for such Series 2007 Bonds (including whether the Remarketing Agent is willing to purchase Series 2007 Bonds for its own account). There may or may not be Series 2007 Bonds tendered and remarketed on the

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first day of an interest rate period, the Remarketing Agent may or may not be able to remarket any Series 2007 Bonds tendered for purchase on such date at par. The Remarketing Agent is not obligated to advise purchasers in a remarketing if it does not have third party buyers for all of the Series 2007 Bonds at the remarketing price. In the event that the Remarketing Agent owns any Series 2007 Bonds for its own account, it may, in its sole discretion in a secondary market transaction outside the tender process, offer such Series 2007 Bonds on any date, including the first day of an interest rate period, at a discount to par to some investors.

The Ability to Sell Series 2007 Bonds Other than Through the Tender Process May be Limited. The Remarketing Agent may buy and sell Series 2007 Bonds other than through the tender process. However, the Remarketing Agent is not obligated to do so and may cease doing so at any time without notice. Thus, investors who purchase the Series 2007 Bonds, whether in a remarketing or otherwise, should not assume that they will be able to sell their Series 2007 Bonds other than by tendering the Series 2007 Bonds in accordance with the tender process.

Under Certain Circumstances the Remarketing Agent May be Removed, Resign or Cease Remarketing Series 2007 Bonds Without a Successor Being Named. Under certain circumstances, the Remarketing Agent may be removed or have the ability to resign or cease its remarketing efforts without a successor having been named, subject to the terms of the Remarketing Agreement. In the event there is no remarketing agent for the Series 2007 Bonds, the Indenture provides that the Trustee shall, until a successor is appointed, accept Series 2007 Bonds that have been tendered for purchase in accordance with the Indenture; provided, however, that the Trustee shall not be required to remarket the Series 2007 Bonds, determine the interest rate on the Series 2007 Bonds or assume any obligations of the former remarketing agent.

Certain Activities of the Remarketing Agent and its Affiliates

The Remarketing Agent and its affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. The Remarketing Agent and certain of its affiliates have provided, and may in the future provide, a variety of these services to the University and to persons and entities with relationships with the University, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the Remarketing Agent and its affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the University (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the University. The Remarketing Agent and its affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such

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assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

RATINGS

Moody’s Investors Service, Inc. (“Moody’s”) has assigned its municipal bond ratings of “Aaa/VMIG-1” to the Series 2007 Bonds. The short-term rating is based upon the credit of the New Liquidity Provider. The ratings assigned by Moody’s reflect only the view of Moody’s. Any explanation of the significance of such ratings may only be obtained from Moody’s. There is no assurance that the ratings mentioned above will remain in effect for any given period of time or that they might not be lowered or withdrawn entirely by Moody’s if, in its judgment, circumstances so warrant. Any such downward change in or withdrawal of such ratings may have an adverse effect on the market price of the Series 2007 Bonds.

INDEPENDENT ACCOUNTANTS

The consolidated financial statements as of June 30, 2011 and 2010 and for the years then ended, included in APPENDIX B to this Remarketing Memorandum, have been audited by PricewaterhouseCoopers LLP, independent accountants, as stated in their report appearing in APPENDIX B to this Remarketing Memorandum.

LEGAL MATTERS

In connection with delivery of the New Liquidity Facility, Barnes & Thornburg LLP, South Bend, Indiana, Bond Counsel, has delivered its opinion to the effect that the delivery of the New Liquidity Facility to the Trustee is authorized under and complies with the provisions of the Indenture, the Loan Agreement and the Act (as defined in the Indenture) and will not, in and of itself, adversely affect the exclusion from gross income of interest on the Series 2007 Bonds for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended and in effect on the date thereof. Certain legal matters will be passed upon for the New Liquidity Provider by its special counsel, Emmit, Marvin & Martin, LLP, New York, New York; for the University by its Vice President and General Counsel; for the Issuer by its counsel, Anthony M. Zappia, Esq., St. Joseph County (Indiana) Attorney; and for the Remarketing Agent by its special counsel, Chapman and Cutler LLP, Chicago, Illinois.

CERTAIN RELATIONSHIPS

Robert M. Conway, a member of the University’s Board of Trustees, is Senior Director of The Goldman Sachs Group Inc., the parent corporation of Goldman, Sachs & Co., the Remarketing Agent for the Series 2007 Bonds.

Wells Fargo Bank, N.A. is the Trustee for the Series 2007 Bonds. Enrique Hernandez, Jr., a member of the University’s Board of Trustees, serves on the Board of Directors for Wells Fargo & Company. Wells Fargo Bank, N.A. is a subsidiary of Wells Fargo & Company.

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MISCELLANEOUS

The descriptions herein, and in the Appendices attached hereto, of the Series 2007 Bonds, the Indenture, the Loan Agreement, the Remarketing Agreement and the New Liquidity Facility are brief summaries of certain provisions thereof and do not purport to be complete. Reference is made to the Series 2007 Bonds, the Indenture, the Loan Agreement, the Remarketing Agreement and the New Liquidity Facility for a full and complete statement of the provisions thereof. Copies of such documents are available from the Trustee.

The attached APPENDICES A, B, C and D are integral parts of this Remarketing Memorandum and should be read in their entirety together with all of the foregoing statements. THIS REMARKETING MEMORANDUM MAY NOT BE DISTRIBUTED SEPARATELY FROM THE OFFICIAL

STATEMENT.

The University has supplied and reviewed the information contained herein relating to the University and has approved all such information for use within this Remarketing Memorandum.

The execution and delivery of this Remarketing Memorandum has been duly authorized by the University.

UNIVERSITY OF NOTRE DAME DU LAC

By /s/ John A. Sejdinaj Vice President for Finance

[THIS PAGE INTENTIONALLY LEFT BLANK]

APPENDIX A

UNIVERSITY OF NOTRE DAME DU LAC

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UNIVERSITY OF NOTRE DAME DU LAC

TABLE OF CONTENTS

General Information .........................................................................................................................1 Governance ......................................................................................................................................1 Administration .................................................................................................................................7 Academic Accreditation and Memberships ...................................................................................10 Undergraduate Education ...............................................................................................................11 Graduate Education ........................................................................................................................11 Relationships with Other Institutions.............................................................................................12 Faculty and Employees ..................................................................................................................12 Retirement Plans ............................................................................................................................12 Student Enrollment ........................................................................................................................13 Student Recruitment.......................................................................................................................15 Tuition and Fees .............................................................................................................................18 Financial Aid ..................................................................................................................................18 Financial Information.....................................................................................................................20 Debt Outstanding ...........................................................................................................................23 Endowment and Split Interest Funds .............................................................................................24 Contributions..................................................................................................................................26 Grants and Contracts ......................................................................................................................27 Physical Facilities ..........................................................................................................................27 Insurance ........................................................................................................................................28

UNIVERSITY OF NOTRE DAME DU LAC

General Information

The University of Notre Dame du Lac (the “University”), founded in 1842 by Father Edward F. Sorin, a priest of the Congregation of Holy Cross, is a private, coeducational, national Catholic research university. Located in Notre Dame, Indiana, the University campus is adjacent to the City of South Bend and is approximately ninety miles southeast of Chicago.

The University maintains high academic standards and ranks annually among the most selective universities in the nation. Admission to the University is highly competitive, with approximately eight applicants for each freshman class position. In 2011, of the students for whom high school rank was known, approximately 89% were ranked in the top ten percent of their high school graduating class and 74% of those entering students ranked among the top five percent in their class.

The University is organized into the undergraduate colleges of Arts and Letters, Science, Engineering, Business, and the School of Architecture. Three advanced degree schools - the Law School, the Mendoza College of Business, and the Graduate School - complete the academic structure. The University also manages a number of major research institutes, several centers for advanced academic study, and various special programs.

Governance

The University was founded in 1842 and was officially chartered by a special act of the legislature of the State of Indiana in 1844. Until 1967, the University was governed by a self-perpetuating Board of Trustees (the “Board”) of six members of the Priests Society of the Congregation of Holy Cross. In 1967, the University became one of the first Catholic universities in the nation to transfer governance to a predominantly lay Board of Trustees.

Under the new structure, the former Board of Trustees was supplemented by the Fellows of the University (the “Fellows”), with a membership governing body of six clerical members of the Congregation of Holy Cross, United States Province of Priests and Brothers, and six lay persons. In addition, the Provincial of the Congregation of Holy Cross, United States Province of Priests and Brothers, the Religious Superior of the Holy Cross Religious at Notre Dame, the President of the University of Notre Dame, and the Chairman of the Board are all ex officio Fellows. The Fellows exercise all power and authority granted by the University’s charter, but have delegated the general powers of governance of the University to the Board, except for certain specifically reserved powers, including the power to elect the Trustees.

Trustees are elected by the Fellows for three-year terms of office. Prominent lay persons from the fields of education, business, and public service occupy the majority of seats on the Board. The Bylaws of the University provide that the Board shall have at least thirty, but no more than sixty, Trustees. The Board is required to hold three regular meetings during each academic year, with meetings typically occurring in the fall, winter, and spring.

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The Board has established several standing committees and, with certain exceptions, has vested the Executive Committee with all of the powers and functions of the Board for periods between meetings of the Board. Other standing committees of the Board are as follows: the Academic and Faculty Affairs Committee, the Investment Committee, the Finance Committee, the Student Affairs Committee, the University Relations/Public Affairs & Communications Committee, the Committee on Social Values and Responsibilities, the Audit Committee, the Committee on Athletic Affairs, the Governance and Nominating Committee, the Facilities and Campus Planning Committee, the Compensation Committee, and the International Facilities Committee.

Current Fellows of the University and members and officers of the Board of Trustees are as follows:

Name and Affiliation Name and Affiliation Dr. John F. Affleck-Graves* Executive Vice President University of Notre Dame

Rev. José E. Ahumada F., C.S.C. Rector St. George’s College, District of Chile

Rev. E. William Beauchamp, C.S.C.President University of Portland

Ms. Cathleen P. Black New York, New York

Mr. John J. Brennan Chairman Emeritus Vanguard

Mr. Stephen J. Brogan Managing Partner Jones Day

Dr. Thomas G. Burish* Provost University of Notre Dame

Mr. John P. Calcutt Partner Ernst & Young Foundation

Mr. Robert M. Conway Senior Director The Goldman Sachs Group Inc.

Mr. John P. Delaney, Jr. Deputy District Attorney Philadelphia, Pennsylvania

Mr. Drew W. DeWalt Atherton, California

Mr. James J. Dunne III Senior Managing Principal Sandler O’Neill Partners, LLP

Mr. José Enrique Fernández Chief Executive Officer and Chairman of the Board Omega Overseas Investments Corp.

Mr. James F. Flaherty III Chairman and Chief Executive Officer Health Care Property Investors

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Name and Affiliation Name and Affiliation Mr. W. Douglas Ford* Downers Grove, Illinois

Ms. Stephanie A. Gallo Vice President of Marketing E & J Gallo Winery

Mr. William M. Goodyear* Chairman and Chief Executive Officer Navigant Consulting, Inc.

Dr. Nancy M. HaegelProfessor, Department of Physics Naval Postgraduate School

Mr. Enrique Hernandez, Jr.* Chairman and Chief Executive Officer Inter-Con Security Systems, Inc.

Mrs. Carol Hank Hoffmann* Minnetonka, Minnesota

Mr. Douglas Tong Hsu Chairman and Chief Executive Officer Far Eastern New Century Corporation

Rev. John I. Jenkins, C.S.C.* President University of Notre Dame

Most Rev. Daniel R. Jenky, C.S.C. D. D.Bishop of Peoria The Catholic Diocese of Peoria, Illinois

Mr. John W. Jordan II Chairman and Chief Executive Officer Jordan Industries, Inc.

Rev. James B. King, C.S.C. Religious Superior Holy Cross Community at Notre Dame

The Honorable Diana Lewis Palm Beach County Courthouse

Ms. Kati S. Macaluso East Lansing, Michigan

Mr. Patrick F. McCartan Senior Partner Jones Day

Mr. Richard C. Notebaert* Chicago, Illinois

Mr. Richard A. Nussbaum II Partner Sopko, Nussbaum, Inabnit & Kaczmarek Attorneys at Law

Rev. Thomas J. O’Hara, C.S.C. Professor, King’s College

Mr. Joseph I. O’Neill III Managing Partner O’Neill Properties, Ltd.

Mr. Philip J. Purcell III Founder and President Continental Investors, LLC

Mr. J. Christopher Reyes Chairman Reyes Holdings, LLC

Mr. James E. Rohr Chairman & CEO PNC Financial Services Group

Mr. Phillip B. Rooney Chairman Claddagh Investments, LLC

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Name and Affiliation Name and Affiliation Mrs. Shayla Keough Rumely Atlanta, Georgia

Mr. John F. Sandner* Special Policy Advisor and Retired Chairman Board of Directors CME Group

Rev. Timothy R. Scully, C.S.C.Professor of Political Science and Director of the Institute for Educational Initiatives University of Notre Dame

Mr. William J. Shaw* Potomac, Maryland

Mr. Kenneth E. Stinson Chairman Peter Kiewit Sons’, Inc.

Mrs. Phyllis W. Stone Somerset, New Jersey

Ms. Anne Thompson Chief Environmental Correspondent NBC

Ms. Sara Martinez Tucker San Francisco, California

Rev. David T. Tyson, C.S.C.* Provincial Superior Congregation of Holy Cross, United States Province of Priests and Brothers

Mr. Roderick K. West Executive Vice President and Chief Administrative Officer Entergy New Orleans

The Honorable Ann Claire WilliamsUnited States Court of Appeals for the Seventh Circuit

____________________________ * Member of Executive Committee Fellow of the University

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The following individuals serve as Trustees Emeriti, non-voting members of the Board of Trustees:

Name and Affiliation Name and Affiliation Mrs. Kathleen W. Andrews Director Andrews McMeel Universal Foundation

Rev. Ernest Bartell, C.S.C. Faculty Fellow Helen Kellogg Institute for Intl. Studies University of Notre Dame

Mr. Robert F. Biolchini Partner Stuart, Biolchini & Turner Chief Executive Officer PennWell Corporation

Mr. Roger E. BirkTequesta, Florida

Rev. Thomas E. Blantz, C.S.C. Professor, Department of History University of Notre Dame

Dr. John BrademasPresident Emeritus New York University

Mr. John H. Burgee Burgee Architects

Mr. John B. CaronGreenwich, Connecticut

Mr. Arthur J. Decio Elkhart, Indiana

Mr. Alfred C. DeCrane, Jr. Greenwich, Connecticut

Mr. Fritz L. Duda Chief Executive Officer Genus Holdings Ltd.

Mr. Anthony F. Earley Garden City, New York

Rev. Carl F. Ebey, C.S.C. Procurator General and General Steward of the Congregation of Holy Cross, Rome, Italy

Dr. Philip J. Faccenda South Bend, Indiana

Mr. Charles K. Fischer, Sr. Chairman and Chief Executive Officer Harbison-Fischer Manufacturing Co.

Mr. F. Michael Geddes Chairman and President Geddes and Company

Mr. John W. Glynn, Jr. Founder and President Glynn Capital Management

Mr. Bernard J. Hank, Jr. Moline, Illinois

Mr. Philip M. Hawley Los Angeles, California

Rev. Theodore M. Hesburgh, C.S.C.President Emeritus University of Notre Dame

Mr. John A. Kaneb Chairman and Chief Executive Officer HP Hood, LLC

Mr. Donald R. Keough Chairman Allen & Company, Inc.

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Name and Affiliation Name and Affiliation Mr. Thomas E. Larkin, Jr. Vice Chairman The TCW Group, Inc.

The Honorable George N. Leighton Earl A. Neal and Associates

Mr. Ignacio E. Lozano, Jr. Newport Beach, California

Rev. Edward A. Malloy, C.S.C. President Emeritus University of Notre Dame

Mr. Donald J. Matthews Far Hills, New Jersey

Mr. Ted H. McCourtney General Partner Saw Mill Partners

Mr. Terrence J. McGlinn General Partner Walnut Street Associates

Mr. Andrew J. McKenna Chairman of Schwarz Supply Source Chairman of McDonald’s Corporation

Mr. Newton N. Minow Senior Counsel Sidley Austin LLP

Mr. Martin Naughton President Glen Dimplex

Prof. Timothy O’Meara Provost Emeritus University of Notre Dame

Dr. Anita M. Pampusch Lilydale, Minnesota

Mrs. Jane C. Pfeiffer Vero Beach, Florida

Dr. Percy A. PierreProfessor of Electrical and Computer Engineering Michigan State University

Mrs. Ernestine M. Raclin Chairman Emeritus 1st Source Corporation

Mrs. Shirley W. Ryan Chairman Pathways Awareness Foundation

Mr. John A. Schneider Greenwich, Connecticut

Mr. Arthur R. Velasquez Chairman Azteca Foods, Inc.

Rev. Richard V. Warner, C.S.C.Superior General Congregation of Holy Cross

Mr. William K. Warren, Jr. Chairman, President and Chief Executive Officer Warren American Oil Company

Mr. Robert J. Welsh Chesterton, Indiana

Mr. Robert K. Wilmouth Barrington, Illinois

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Administration

President’s Leadership Council The members of the President’s Leadership Council are collectively responsible for the management of the University. The President’s Leadership Council is composed of five University officers and 16 University administrators. The president of the University is the chief executive and is responsible for the general direction of its affairs. The Board elects the president, in accordance with the by-laws, from among the members of the Congregation of Holy Cross, United States Province of Priests and Brothers, and also elects the other officers of the University.

Set forth below are the members of the President’s Leadership Council:

Rev. John I. Jenkins, C.S.C. - President*

Thomas G. Burish - Provost*

John F. Affleck-Graves - Executive Vice President*

Robert J. Bernhard - Vice President for Research

Marianne Corr - Vice President and General Counsel*

Rev. Thomas P. Doyle, C.S.C. - Vice President for Student Affairs

J. Nicholas Entrikin - Vice President and Associate Provost for Internationalization

Ann Firth - Chief of Staff

Erin Hoffmann Harding - Associate Vice President for Strategic Planning

Rev. James B. King, C.S.C. - Religious Superior of Holy Cross Priests and Brothers at Notre Dame and Director of the Office of Campus Ministry

Ronald D. Kraemer - Vice President and Chief Information Officer

Rev. William M. Lies, C.S.C. - Vice President for Mission Engagement and Church Affairs

Scott C. Malpass - Vice President and Chief Investment Officer*

Christine Maziar - Vice President and Senior Associate Provost

Robert K. McQuade - Vice President for Human Resources

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Daniel J. Myers - Vice President and Associate Provost for Faculty Affairs

Louis M. Nanni - Vice President for University Relations

Donald B. Pope-Davis - Vice President and Associate Provost for Undergraduate Studies

John A. Sejdinaj - Vice President for Finance

Frances L. Shavers - Chief Diversity Officer and Advisor to the President

John B. Swarbrick Jr. - Vice President and Director of Athletics _____________________________ * Denotes Officer of the University.

Selected Biographies Set forth below are selected biographies for certain members of the President’s Leadership Council:

Rev. John I. Jenkins, C.S.C., President – Rev. John I. Jenkins, C.S.C., is in his second five-year term (which began in July, 2010) as the 17th president of the University of Notre Dame. His vision is for Notre Dame to be the Catholic research university for our time – an institution that unifies, enlightens and heals by engaging in scholarship of the first rank while maintaining its distinctive Catholic character and long-time excellence in undergraduate education. During his tenure, Notre Dame has made significant progress toward its research goal, including selection as the lead partner in the Midwest Institute for Nanoelectronics Discovery, the creation of the Innovation Park research facility, and the construction of Stinson Remick Hall of Engineering. His commitment to undergraduate education has been marked by the Notre Dame Forums, yearlong initiatives that have examined important issues such as religion and world conflict, global health, immigration and energy. The University’s Catholic identity has been strengthened during Father Jenkins’ tenure in multiple ways, including the appointment of a coordinator for University life initiatives and the construction of multimillion-dollar facilities for the Institute for Church Life, including the Center for Social Concerns, and the Institute for Educational Initiatives, which includes the Alliance for Catholic Education. Father Jenkins earned bachelor’s and master’s degrees in philosophy from Notre Dame in 1976 and 1978, respectively, and was ordained a priest of the Congregation of Holy Cross in 1983. He holds advanced degrees from Oxford and the Jesuit School of Theology. He is a professor of philosophy and the author of Knowledge and Faith in Thomas Aquinas.

Thomas G. Burish, Provost – Dr. Burish was elected to a five-year term as the University’s second-ranking officer by the Board of Trustees in July 2005 and re-elected to a second five-year term in February 2010. A 1972 Notre Dame graduate and distinguished scholar in the field of clinical psychology, he served as president of Washington and Lee University for three years before returning to his alma mater and was Vanderbilt University’s longest-serving provost from 1993 to 2002. He earned his master’s and doctoral degrees in psychology and clinical psychology from the University of Kansas in 1975 and 1976, respectively. In 1976, he joined Vanderbilt’s faculty as an assistant professor of psychology and remained there for

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26 years, establishing a prominent reputation in cancer research, receiving honors for excellence as an undergraduate teacher, and serving in numerous administrative positions including chair of the Department of Psychology from 1984 to 1986. Dr. Burish has been a member of the American Cancer Society’s national board of directors since 1991. He serves on numerous scientific advisory committees and is co-author or co-editor of four books.

John F. Affleck-Graves, Executive Vice President – Dr. Affleck-Graves was elected executive vice president on April 30, 2004, by the Board of Trustees. He was re-elected to another five-year term, effective July 1, 2009. Dr. Affleck-Graves holds the Notre Dame Chair in Finance and previously served for three years as vice president and associate provost. His responsibilities include administration of an annual budget of more than $1.2 billion and total investments of approximately $7.5 billion, as of June 30, 2011. He also oversees human resource activities for a work force of more than 4,000 employees and directs the University’s construction program. Dr. Affleck-Graves served on the University’s faculty from 1986 to 2000 – the final three years as chairman of the Department of Finance and Business Economics – and returned in 2001 after a year at Florida State University as the Patty Hill Smith Eminent Scholar in Finance. He previously taught from 1975 to 1986 at his alma mater, the University of Cape Town, where he earned bachelor’s, master’s and doctoral degrees. The author of more than 50 refereed publications, Dr. Affleck-Graves specializes in the study of initial public offerings, valuation and asset pricing models, and shareholder value-added methodology.

Marianne Corr, Vice President and General Counsel – Ms. Corr became vice president and general counsel on October 1, 2008. She oversees all University legal matters, including those related to human resources and employment policies, faculty, student policies and discipline, business negotiations and contracts, intellectual property, immigration, litigation and risk management. A 1978 Notre Dame graduate who holds law degrees from Duke University School of Law and Temple University Law School, Ms. Corr was an associate and then partner in the Jones Day international law firm and a partner in the Corr Law Offices, a general trial practice firm in Warminster, Pennsylvania. She joined Textron Inc., a Fortune 500 company, in 1996 and was appointed its vice president and deputy general counsel in 2002. In that position, she was responsible for all litigation involving Textron and its current and discontinued operations, including product liability, complex commercial matters, employment, environmental issues and intellectual property.

Scott C. Malpass, Vice President and Chief Investment Officer – Mr. Malpass has served as the University’s chief investment officer since 1989. He focuses on investment of the University’s endowment, working capital and pension assets, approximately $7.5 billion at June 30, 2011, with an endowment value of approximately $6.4 billion. The endowment was among the 14 largest in American higher education according to 2011 endowment data assimilated by the National Association of College and University Business Officers. He also serves as a concurrent assistant professor of finance and business economics. Mr. Malpass received his bachelor’s degree in 1984 and his master of business administration degree in 1986, both from the University. He returned to the University in 1988, coming from The Irving Trust Company.

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John A. Sejdinaj, Vice President for Finance – Mr. Sejdinaj became vice president for finance on January 2, 2003, after previously serving for four years as assistant vice president for finance and director of budget and planning, and from 1996 to 1999 as director of finance and budgeting. He came to the University in 1994 as director of fixed income and cash management in the investment office. Under Mr. Sejdinaj’s leadership as the initial director of the budget office, the office modernized budget models and processes and evolved into a service team that assists virtually all academic and administrative units on budgeting and other financial planning issues. As vice president for finance, Mr. Sejdinaj oversees and plays an integral part in directing the financial structure and debt offerings of the University. Mr. Sejdinaj earned a bachelor’s degree from Notre Dame in 1981 and a master of business administration degree from DePaul University in 1984. Prior to returning to the University, Mr. Sejdinaj enjoyed a successful career in the banking and investment banking fields.

Academic Deans An academic dean oversees each of the four colleges, the Law School, the Graduate School, the First Year of Studies program and the School of Architecture. The eight deans are:

John McGreevy - I.A. O’Shaughnessy Dean of the College of Arts and Letters

Roger D. Huang - Martin J. Gillen Interim Dean of the Mendoza College of Business

Gregory P. Crawford - W.K. Warren Foundation Dean of the College of Science

Peter Kilpatrick - Matthew H. McCloskey Dean of the College of Engineering

Nell Jessup Newton - Joseph A. Matson Dean of the Law School

Gregory E. Sterling - Dean of the Graduate School

Reverend Dr. Hugh R. Page Jr. - Dean of the First Year of Studies

Michael Lykoudis - Francis and Kathleen Rooney Dean of the School of Architecture

Academic Accreditation and Memberships

The University is accredited by the North Central Association of Colleges and Schools. The last accreditation was granted in December 2004, for a ten-year period. The next on-site review for accreditation will occur during the 2013-2014 academic year. Certain academic divisions are accredited by the following organizations: the American Bar Association (Law School), the National Architectural Accrediting Board (School of Architecture), the Association to Advance Collegiate Schools of Business (Mendoza College of Business), the American Psychological Association (Program in Clinical Psychology), the American Chemical Society (Department of Chemistry), the Engineering Accreditation Commission of the Accreditation Board for Engineering and Technology (Programs in Aerospace, Chemical, Civil, Electrical,

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Mechanical, and Computer Engineering as well as Computer Science), and the Association of Theological Schools (Program in Theology). Other departments, colleges, and programs of the University are accredited by relevant accrediting organizations.

The University is a member of the Association of Catholic Colleges and Universities, the International Federation of Catholic Universities, the American Council on Education, the National Association of Independent Colleges and Universities, Independent Colleges and Universities of Indiana, and the Association of American Colleges.

Undergraduate Education

The University’s academic programs at the undergraduate level are carried out through the University’s colleges of Arts and Letters, Science, Business, Engineering and the School of Architecture. The University utilizes the concept of a single faculty for both graduate and undergraduate education, thus enhancing the quality of undergraduate studies. Every undergraduate who enters the University is enrolled in the First Year of Studies program. The First Year of Studies is based on a one-year curriculum designed to give entering students a foundation of liberal education and an opportunity to sample various academic disciplines before declaring a major. The First Year of Studies consists of five academic courses and a physical education requirement or ROTC in each semester. Upon the successful completion of the First Year of Studies, the University student then enters one of the four undergraduate colleges or the School of Architecture.

The following bachelor’s degrees are offered through 63 programs of study: Bachelor of Arts, Bachelor of Fine Arts, Bachelor of Science, Bachelor of Architecture, and Bachelor of Business Administration.

Graduate Education

Post-baccalaureate programs are offered in the Graduate School, in the Law School, and in the Mendoza College of Business. The Graduate School provides programs of graduate studies leading to master’s degrees in 40 disciplines and doctoral degrees in approximately 25 disciplines through 26 University departments, schools and institutes comprising the divisions of humanities, social science, engineering and science, and the School of Architecture. Degrees are offered in the Law School (Masters of Laws, Juris Doctor, and Doctor of Juridical Science) and in the Mendoza College of Business (Master of Business Administration, Master of Nonprofit Administration, and Master of Science in Accountancy).

Over the last decade, the University has increased resources devoted to graduate education, research, and building a distinguished faculty. Through the generous benefactions of its donors, the University has 262 endowed chairs, 207 of which were funded and filled as of June 30, 2011. The University has also employed equally effective strategies to attract gifted junior faculty. The University is currently classified as a Doctoral/Research Universities-Extensive by the Carnegie Foundation.

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Relationships with Other Institutions

The University operates a co-exchange program with Saint Mary’s College (located adjacent to the University campus) whereby students at the University may enroll in courses offered at Saint Mary’s College, and students at Saint Mary’s College may enroll in courses offered at the University.

The University also provides a number of international educational and enrichment opportunities. Sophomores and juniors can spend a semester or year studying abroad, with programs in Australia, Brazil, Chile, China, Egypt, France, Germany, Greece, Ireland, Italy, Japan, Mexico, Russia, Senegal, Spain, Uganda and the United Kingdom. In addition, the University operates a program in Washington, D.C.

Faculty and Employees

The academic excellence of the University is based on 1,331 regular faculty members (as of the fall of 2011, which is the most current available information) who are supplemented by another approximately 233 non-regular faculty members (as of the fall of 2011). In addition, the University had 4,150 full-time staff employees, excluding students and non-regular employees as of the fall of 2011. Approximately 98% of the full-time instructional faculty is composed of lay persons, and approximately 90% of the full-time instructional faculty have doctoral or other terminal degrees. Of the full-time instructional faculty, 62% are tenured. The student to faculty ratio was approximately 11.2 to 1 in the 2011-12 academic year.

The following table sets forth the most currently available information regarding the University’s faculty, which is as of fall 2011:

REGULAR & NON-REGULAR FACULTY Teaching and Research ............................................................................... 875 Library ......................................................................................................... 59 Special Professional .................................................................................... 295 Special Research ......................................................................................... 100 Other ........................................................................................................... 2 Total Regular Faculty ................................................................................ 1,331 Non-Regular Faculty ................................................................................. 233 Total Faculty ......................................................................................... 1,564

None of the employees of the University are represented by a union. The University believes its employee relations are good.

Retirement Plans The University’s defined contribution retirement savings plan is operated under section 403(b) of the Internal Revenue Code. Faculty and certain administrative employees who have completed one year of service at the University make mandatory contributions to the plan and the University makes matching contributions. Upon meeting the one year eligibility period of employment, participants are immediately vested in the plan and may direct their contributions

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and the University’s contributions on their behalf to Teachers Insurance and Annuity Association, Fidelity Investments, or the Vanguard Group. All faculty, administrators and staff may also participate in the defined contribution retirement savings plan immediately upon hire by making voluntary contributions up to the annual limit established by the Internal Revenue Service. The University’s share of the cost of these benefits was $25,039,000 and $23,915,000 for the years ended June 30, 2011, and 2010, respectively. Retirement benefits are provided for University staff under a defined benefit pension plan, for which the University serves as trustee and administrator. This plan provides benefits for certain administrators and staff after one year of qualifying service. Retirement benefits are based on the employee’s total years of service and final average pay as defined by the plan. Plan participants are fully vested after five years of service. The University funds the plan with annual contributions that meet minimum requirements under the Employee Retirement Income Security Act of 1974. Other postretirement benefit plans offered by the University provide medical insurance benefits for retirees and their spouses. Employees are eligible for such benefits if they retire after attaining specified age and service requirements while employed by the University. The plans hold no assets and are funded by the University as claims are paid. During the year ended June 30, 2011, the University amended certain features of its postretirement benefits plans, replacing supplemental group medical insurance for Medicare-eligible retirees with Health Reimbursement Accounts upon which retirees may draw to purchase individual supplemental medical coverage. For additional information regarding benefit plans, see the University’s audited financial statements and the notes, specifically Note 13 thereto, as presented in APPENDIX B of this Remarketing Memorandum.

Student Enrollment

The University’s total enrollment has grown modestly over the past five years. Future growth is also expected to be moderate as current plans for the undergraduate, graduate and professional divisions do not call for large increases in enrollment.

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The following table, based on actual fall semester enrollment, shows the number of students in the various divisions of the University for the past five academic years:

ACTUAL FALL STUDENT ENROLLMENT*†

Academic Year

Undergraduate***

Graduate Division**

Professional Schools**

Total Headcount***

Total FTEs***

2011-12 8,452 2,146 1,275 12,004 11,863

2010-11 8,437 2,055 1,201 11,985 11,836

2009-10 8,372 2,075 1,277 11,816 11,732

2008-09 8,363 2,025 1,260 11,731 11,645

2007-08 8,371 1,991 1,287 11,733 11,650

__________________________________ * Some overlap exists in the headcount among these three divisions; however, there is no duplication in the totals. Included

in these totals are students enrolled in the University, but studying abroad. ** Includes dual degree seekers and excludes unclassified students and employees. The Graduate Division includes Master

of Education students. The Professional Schools include Graduate Business and Law School students. *** Excludes dual degree seekers and includes unclassified students and employees. † A system upgrade in late fall 2011 resulted in a recategorization of data that were previously reported.

Including cross-enrollment, enrollment by academic division for the fall 2011 semester is as follows:

ENROLLMENT BY ACADEMIC DIVISION*†

Academic Division

Enrollment

First Year of Studies 2,041 College of Arts and Letters 2,191 College of Science 1,239 College of Engineering 985 College of Business 1,894 Architecture** 164 Law School 587 Graduate Business 614 Graduate School 2,146 Total 11,861

__________________________________ * Includes dual-degree seekers and unclassified students but excludes employees. ** Includes only undergraduates. † A system upgrade in late fall 2011 resulted in a recategorization of data that were previously reported.

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While each College is an independent school which provides its own instruction, students are free to take courses in any of the Colleges. Undergraduates obtain bachelor degrees from their individual Colleges, or in combination programs with other Colleges within the University in integrated five-year programs.

Student Recruitment

The University conducts an intensive recruitment program, which places emphasis on maintaining the high academic quality of students entering the University. The recruitment process includes extensive admissions staff travel throughout the country, campus visits, and informational mailings to prospective students. In addition, the 270 Notre Dame clubs located throughout the country and overseas provide information through their alumni committee programs. The University’s strong academic programs and reputation for excellence allow it to attract many talented students as demonstrated in the following table:

FRESHMAN ADMISSION INFORMATION (Fall of Year)

2011 2010 2009 2008 2007 Completed Applications 16,548 14,521 14,357 13,945 14,508

Number of Students Accepted 4,019 4,177 4,113 3,727 3,548 Selectivity: Number of Students Accepted as Percent of Applicants 24% 29% 29% 27% 24% Number of Students Enrolled (headcount) 2,020 2,067 2,064 2,000 1,999 Matriculation: Number of Students Enrolled as Percent of Acceptances 50% 49% 50% 54% 56%

Percent of Enrolled Students in Top 10% of High School Class 89% 87% 89% 88% 86%

Mean Combined SAT Scores of Enrolled Class 1419 1410 1410 1405 1390

Qualified minority students comprised approximately 22% of the freshman class for 2011-12. Women, first admitted to undergraduate studies at the University in the fall of 1972, now account for approximately 46% of undergraduate enrollment.

Based on annual surveys, Boston College and Northwestern University are the two institutions most often listed as the University’s competitors for admitted students. However, it should also be noted that these students overwhelmingly choose to attend the University. The other universities with which the University most closely competes for admitted students can be divided into three groups: Catholic universities with strong regional and some national appeal (e.g., Georgetown University and Villanova University), public universities with strong regional appeal (e.g., University of Illinois, Purdue University, and University of Michigan), and private

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universities with strong national appeal (e.g., Duke University, Cornell University, Washington University, and Vanderbilt University).

The University is truly a national university, attracting students from around the nation and the world. The 2011 entering class was drawn from 47 states, as well as the District of Columbia, Puerto Rico, and 27 foreign countries. The table below displays the geographic distribution of entering freshmen for 2011 and 2006:

GEOGRAPHICAL DISTRIBUTION OF NEW STUDENTS (Fall of Year)

Region 2011 2006Midwest 41% 40%Northeast 23% 24%West 18% 20%South 13% 13%US Territories and Foreign 5% 3%

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The University’s post-baccalaureate studies are comprised of the Graduate School, Law School, and Graduate Business programs. Graduate School degrees are offered within the Colleges of Arts & Letters, Architecture, Engineering, and Science. The following table displays total student applications, acceptances and confirmations in the graduate programs over the past five years:

POST-BACCALAUREATE STUDIES SUMMARY OF APPLICATION STATISTICS*

(Fall of Year)

School and Year Total

Applicants

Acceptances

Confirms

Graduate School**

2011 4,695 16.4% 56.8% 2010 4,403 16.5% 62.7% 2009 4,072 18.6% 58.3% 2008 3,608 20.5% 50.0% 2007 4,200 18.2% 57.8%

Law School**

2011 3,191 21.2% 29.8% 2010 4,130 17.0% 27.6% 2009 3,312 26.7% 23.4% 2008 3,441 23.3% 25.3% 2007 3,647 19.8% 27.0%

Graduate, Business**

2011 1,640 43.4% 61.9% 2010 1,781 43.4% 64.8% 2009 1,783 47.3% 62.4% 2008 1,611 46.3% 65.1% 2007 1,521 49.8% 65.8%

__________________________________

* Historical information reflects variances from past years’ statistical data due to changes in the sources and timing by which the data was collected.

** The University believes that the nationwide economic environment and changes in immigration laws contributed significantly to the decline in applications in recent years.

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Tuition and Fees

The annual tuition and fees for an undergraduate in the 2011-12 academic year is $41,417; and with room and board, the total cost is $52,805. Since academic year 2007-08 tuition and fees have risen approximately 18% and tuition and fees, room and board combined have increased approximately 19%. The total cost of attending the University has risen at an average annual rate of approximately 4.4% over the last five years.

UNDERGRADUATE TUITION AND FEES, ROOM AND BOARD CHARGES

Academic Year

Tuition & Fees

Percent Increase

Room & Board

Percent Increase

Total

Percent Increase

2011-12 $41,417 3.75% $11,388 4.80% $52,805 3.98% 2010-11 $39,919 3.75% $10,866 4.80% $50,785 3.97% 2009-10 $38,477 4.42% $10,368 5.49% $48,845 4.65% 2008-09 $36,847 4.72% $9,828 5.79% $46,675 4.94% 2007-08 $35,187 5.33% $9,290 6.41% $44,477 5.55%

The amounts charged by the University for tuition and fees, and room and board are comparable to those of peer institutions according to an annual survey performed by U.S. News & World Report.

Financial Aid

The University subscribes to the principles of student financial aid administration as endorsed by the College Scholarship Service of the College Board and the National Association of Student Financial Aid Administrators. It also actively supports the “President’s 568 Group” effort with 30 other highly-selective private institutions seeking to bring consensus in addressing difficult issues related to need-based principles in needs analysis.

The University makes every effort to assist its students with their demonstrated financial needs by employing one or more forms of financial assistance. These resources include scholarships, grants, loans, and student employment. For the 2010-11 academic year, approximately 73% of the undergraduate students at the University received more than $200 million in undergraduate financial aid administered by the University.

The University uses endowment income and annual gifts as its primary source for funding undergraduate financial aid. While the University’s enrollment and selectivity standards are very positive, fully funding the unmet financial need of its student body has been and continues to be a top priority of the University. The Officers of the University approved an endowment-based solution in 1998 to meet the full unmet need of all undergraduate students. This goal was achieved for all freshmen in the 1999-00 school year and was achieved for all undergraduates in 2000-01. Moreover, a four-year plan to provide yet additional enhancements to financial aid policies, with University scholarship assistance, was expanded for a significant

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percentage of its entering freshmen classes beginning in 2001-02 thereby reducing the amount of expected student borrowing. From 2006-07 to 2010-11, total undergraduate scholarships provided by the University have increased approximately 43%. Total University scholarships have grown by an average annual increase of about 9.4% over that time.

The following table illustrates total financial assistance to undergraduate students at the University for the five most recent academic years for which such information is available:

UNDERGRADUATE FINANCIAL AID AWARDS (in 000's)

Academic Year

2010-11 2009-10 2008-09 2007-08 2006-07 Scholarships, Grants and Awards

University $127,877 $115,637 $101,506 $ 94,047 $ 89,478 Federally funded 6,899 6,524 4,604 4,570 4,162 State funded 400 467 902 902 787 ROTC 8,241 7,651 6,793 5,954 5,808 Other sources 9,221 9,153 8,898 9,139 8,622 Subtotal $152,638 $139,432 $122,703 $114,612 $108,857

Loans Federal $ 34,254 $ 33,412 $ 33,757 $ 33,964 $ 33,317 Other 7,794 11,005 12,665 13,300 13,244 Subtotal $ 42,048 $ 44,417 $ 46,422 $ 47,264 $ 46,561

Student Employment College work study $ 998 $ 1,089 $ 879 $ 941 $ 1,006 University 4,676 4,551 4,425 4,665 4,594

Subtotal $ 5,674 $ 5,640 $ 5,304 $ 5,606 $ 5,600

Total Aid $200,360 $189,489 $174,429 $167,482 $161,018

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Financial Information

Summary of Fiscal Years 2011, 2010, 2009, 2008, and 2007. The University provides certain summary financial information on the following pages, including Consolidated Statements of Financial Position as of June 30, 2011, 2010, 2009, 2008, and 2007, and Consolidated Statements of Changes in Unrestricted Net Assets for the fiscal years ended June 30, 2011, 2010, 2009, 2008, and 2007. The University’s Audited Consolidated Financial Statements and the Notes thereto for the fiscal years ended June 30, 2011 and 2010, which include the assets and operations of certain other entities under the financial control of the University, are presented in APPENDIX B of the Remarketing Memorandum and should be reviewed in conjunction with the following data.

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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in 000's)

As of June 30

20111 20101 2009 2008 2007

Assets

Cash and cash equivalents $ 90,006 $ 107,363 $ 127,648 $ 41,957 $ 55,616 Accounts receivable, net 26,851 24,730 23,540 34,811 33,499 Deferred charges and other assets 59,804 50,784 56,762 30,675 31,307 Contributions receivable, net 214,760 181,605 194,587 187,854 146,037 Notes receivable, net 86,275 46,000 32,891 31,346 29,586 Investments 7,456,204 6,189,177 5,640,727 7,233,718 6,723,863 Land, buildings and equipment, net of accumulated depreciation 1,204,412 1,154,018 1,053,919 907,400 851,571 Total assets $9,138,312 $7,753,677 $7,130,074 $8,467,761 $7,871,479

Liabilities Accounts payable $ 26,455 $ 31,177 $ 46,779 $ 12,965 $ 12,808 Short-term borrowing 100,060 140,094 75,036 94,810 40,000 Deferred revenue and refundable advances 78,790 87,094 81,624 81,495 93,960 Deposits and other liabilities 99,777 87,628 88,710 73,713 64,405 Liabilities associated with investments 316,507 258,688 216,820 196,011 148,792 Obligations under split-interest agreements 71,778 58,028 49,611 59,286 37,081 Bonds and notes payable 728,464 571,306 558,975 411,405 391,425 Conditional asset retirement obligations 22,118 22,243 21,131 21,031 20,280 Pension and other postretirement benefits 81,878 149,031 111,578 79,030 76,057 Government advances for student loans 29,582 30,118 29,771 29,391 28,905

Total liabilities 1,555,409 1,435,407 1,280,035 1,059,137 913,713

Net Assets Unrestricted: Funds functioning as endowment 2,426,132 1,996,082 1,854,566 2,451,064 3,032,314 Invested in land, buildings and equipment 754,792 698,698 595,386 489,797 451,746 Other unrestricted net assets 180,944 62,779 22,210 225,263 287,865 Total unrestricted 3,361,868 2,757,559 2,472,162 3,166,124 3,771,925

Temporarily restricted 2,834,319 2,266,694 2,156,661 3,074,151 2,150,191 Permanently restricted 1,386,716 1,294,017 1,221,216 1,168,349 1,035,650

Total net assets 7,582,903 6,318,270 5,850,039 7,408,624 6,957,766

Total liabilities and net assets $9,138,312 $7,753,677 $7,130,074 $8,467,761 $7,871,479

1 Please refer to the University’s Fiscal 2011 Consolidated Financial Statements located in Appendix B when reviewing this financial information.

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CONSOLIDATED STATEMENTS OF CHANGES IN UNRESTRICTED NET ASSETS

(in 000’s)

Fiscal Year Ended June 30

20111 20101 2009 2008 2007 Operating Revenues and Other Additions Tuition and fees $ 439,074 $ 419,271 $ 399,280 $ 382,132 $ 358,117 Less: Tuition scholarships and fellowships (174,078) (158,274) (141,483) (131,656) (122,803)

Net tuition and fees 264,996 260,997 257,797 250,476 235,314 Grants and contracts 103,731 85,671 77,230 76,681 75,413 Contributions 29,725 29,629 36,569 43,654 40,966 Accumulated investment return distributed 87,895 85,091 82,647 70,180 80,600 Sales and services of auxiliary enterprises 195,223 186,762 173,893 178,687 176,164 Other sources 36,408 34,288 33,114 44,410 43,163 Total operating revenues 717,978 682,438 661,250 664,088 651,620 Net assets released from restrictions 166,109 150,587 138,028 117,477 85,592 Total operating revenues and other additions

884,087

833,025

799,278

781,565

737,212

Operating Expenses Instruction 325,566 303,876 289,695 276,132 251,143 Research 105,885 83,194 74,820 69,673 65,494 Public service 20,650 20,513 23,307 16,175 14,329 Academic support 46,949 44,152 44,197 44,816 45,416 Student activities and services 33,918 32,881 32,160 28,934 27,508 General administration and support 189,003 166,614 148,886 149,531 136,515 Auxiliary enterprises 163,670 177,994 150,940 144,934 139,635 Total operating expenses 885,641 829,224 764,005 730,195 680,040 Increase/(decrease) in unrestricted net assets from operations

(1,554)

3,801

35,273

51,370

57,172

Non-Operating Changes in Unrestricted Net Assets

Contributions 4,906 1,232 956 8,997 2,974 Investment income 36,911 14,156 11,163 18,258 55,530 Net gain/(loss) on investments 543,749 275,463 (700,712) 140,125 664,923 Accumulated investment return distributed (87,895) (85,091) (82,647) (70,180) (80,600) Net gain/(loss) on debt-related derivative instruments 2,046 (20,083) 9,376 (12,350) (848) Net assets released from restrictions 42,314 125,198 65,279 6,461 129,657 Net pension and postretirement benefits-related changes other than net periodic benefits costs

62,128

(33,946)

(29,989)

1,227

-

Other non-operating changes 1,704 4,667 (2,661) 96 6,537 Increase/(decrease) in unrestricted net assets from non-operating activities

605,863

281,596

(729,235)

92,634

778,173

Increase/(decrease) in unrestricted net assets before effect of change in accounting principle

604,309

285,397

(693,962)

144,004

835,345

Effect of adopting ASC 958-205 Effect of adopting ASC 715 Increase/(decrease) in unrestricted net assets

- -

$ 604,309

- -

$ 285,397

- -

$ (693,962)

(749,805) -

$ (605,801)

- (21,776)

$ 813,569

1 Please refer to the University’s Fiscal 2011 Consolidated Financial Statements located in Appendix B when reviewing this financial information.

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Debt Outstanding

As of June 30, 2011, the University had tax-exempt bonds payable in the amount of $364,293,000 in St. Joseph County, Indiana, Educational Facilities Revenue Bonds, including Series 1996 bearing interest at a fixed rate of 6.50 percent, Series 2005 bearing interest at a fixed term rate of 3.875 percent, Series 2009 bearing interest at a fixed rate of 5.00 percent, and Series 2003 and Series 2007 bearing interest at variable rates. These bond issues represent general obligations of the University and are not collateralized by any facilities.

On January 29, 2009, the University issued $150,000,000 University of Notre Dame du Lac Taxable Fixed Rate Notes, Series 2009, which bear interest at a fixed rate of 4.141 percent and mature on September 1, 2013. The proceeds of the Series 2009 Taxable Fixed Rate Notes have been used to fund day-to-day working capital needs of the University, including but not limited to operating and capital costs.

On October 20, 2010, the University issued $160,000,000 University of Notre Dame du Lac Taxable Fixed Rate Bonds, Series 2010, which bear interest at a fixed rate of 4.90 percent. The proceeds of the Series 2010 Taxable Fixed Rate Bonds have been used for various University purposes.

The University expects to issue approximately $100,000,000 in taxable fixed rate bonds in June, 2012.

The University is the majority owner of an externally managed limited liability corporation, the activities of which are reflected within the University’s consolidated financial statements. The corporation’s assets consist primarily of real estate, the acquisition of which was financed in part with a $40,000,000 mortgage note payable bearing interest at 5.68 percent, due in 2016. The note is not a general obligation of the University but is fully collateralized by the property acquired. The mortgage note payable had an outstanding amount of $38,736,000 as of June 30, 2011.

In addition, mortgage notes in the amount of $15,435,000 at June 30, 2011, relate to the refinancing of facilities constructed for a not-for-profit organization consolidated by the University. These notes bear interest at a fixed rate of 1.103 percent and are due in 2042. These notes are collateralized by the facilities to which they relate.

As of June 30, 2011, the aggregate scheduled maturities of the notes and bonds described above are payable as follows, rounded to the nearest thousand: 2012 - $3,135,000; 2013 - $3,090,000; 2014 - $153,216,000; 2015 - $3,345,000; 2016 - $38,865,000; and $519,635,000 thereafter.

The University utilizes interest rate swaps as a strategy for managing interest rate risk associated with certain bond issues. The use of swap agreements is intended to decrease exposure to fluctuations in interest rates by effectively fixing the variable rates on the associated bonds. Under the terms of swap arrangements in effect as of June 30, 2011, the University pays

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fixed rates ranging from 2.01 percent to 4.97 percent and receives variable rates equal to either 67 percent or 70 percent of the one-month London Interbank Offered Rate (“LIBOR”) on total notional amounts of $124,715,000. An additional swap agreement under which the University would pay a fixed rate of 2.05 percent and receive 70 percent of the three-month LIBOR on a notional amount of $75,000,000 becomes effective in March 2012, concurrent with the end of the Series 2005 fixed term rate period. The estimated fair value of interest rate swaps, rounded to the nearest thousand, was a net unrealized gain position of $3,056,000 and a net unrealized loss position of $3,233,000 at June 30, 2011 and June 30, 2010, respectively. The University paid periodic net settlements, rounded to the nearest thousand, of $4,243,000 and $5,182,000 to counterparties pursuant to interest rate swaps during the years ended June 30, 2011 and 2010, respectively.

The University maintains a $200,000,000 commercial paper program under which it may issue either standard or extendible municipal commercial paper through St. Joseph County, Indiana on behalf of the University. Standard municipal commercial paper issues are supported by a $200,000,000 standby credit facility with a major commercial bank. Interest on commercial paper may be either taxable or tax-exempt to investors, depending on the University’s intended use of the proceeds. Standard taxable commercial paper in the amount of $100,060,000 and $115,094,000 was outstanding at June 30, 2011 and June 30, 2010, respectively.

As of June 30, 2011, the University maintains unsecured lines of credit with four commercial banks in the aggregate amount of $300,000,000 to be utilized primarily for working capital purposes. The University had no outstanding balances on lines of credit at June 30, 2011. Total such outstanding balances were $25,000,000 at June 30, 2010.

Endowment and Split Interest Funds

The fair value of endowment and funds functioning as endowment was $6.4 billion as of June 30, 2011. The endowment was among the 14 largest in American higher education according to 2011 endowment data assimilated by the National Association of College and University Business Officers. Nearly $232 million in earnings was distributed for the benefit of endowment programs and expenses in fiscal year 2011 to provide financial support to endowed chairs, undergraduate scholarships, graduate fellowships, libraries, various academic programs, and a variety of other endowed programs, as well as general University operations.

The market value of assets held in the Split Interest Fund as of June 30, 2011 was $108.11 million. Income on the Split Interest Fund is typically paid to the donor with the principal eventually available to the University upon the death of the donor. The Split Interest Fund and corresponding liabilities associated with these arrangements are discussed in Notes 1, 6, and 17 to the University’s audited consolidated financial statements. This arrangement is designed to encourage donations to the University by allowing for tax benefits that flow to the donor during their lifetime.

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The following table shows the market value of the Endowment and Split Interest Fund over the last five fiscal years for which audited financial statements are available:

ENDOWMENT AND SPLIT INTEREST FUND (Market Value in $000’s)

2011 2010 2009 2008 2007 Endowment Fund $6,383,344 $5,340,685 $4,920,742 $6,351,855 $6,066,310 Split Interest Fund $108,114 $86,320 $73,338 $89,262 $63,128

The purpose of the endowment is to provide a perpetual source of operating support to endowed programs. The University’s endowment spending policy allocates total earnings from the portfolio between current spending and reinvestment for future earnings, and has been designed with three objectives in mind: to provide programs with a predictable, stable stream of revenues; to ensure that purchasing power or real value of this revenue stream does not decline over time; and to ensure that the purchasing power or real value of endowment assets do not decline over time.

The University’s endowment is invested primarily in the Notre Dame Endowment Pool (the “Pool”). Investment policies and guidelines are established by a committee of the Board supported by the internal investment staff, which is headed by the chief investment officer. The Pool is a multi-asset portfolio with a long-term strategic allocation of 92.5% equity and 7.5% fixed income investments. The equity investments include domestic and international large and small capitalization stocks, real estate, venture capital, private equity, marketable alternatives, energy and commodities. The fixed income investments include domestic and international bonds with a wide range of maturities.

The Pool’s performance has exceeded its long-term objective of inflation plus 5.5% over the ten years ended June 30, 2011, with an annualized rate of return of 8.5%. Annualized returns for the Pool for the most recent five fiscal years for which audited financial statements are available are summarized as follows:

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POOL INVESTMENT PERFORMANCE

Fiscal Year Notre Dame

Actual1 Strategic Policy

Portfolio2 TUCS3 2010-11 21.5% 15.3% 20.8% 2009-10 11.1% 7.5% 13.5% 2008-09 -20.8%4 -19.5% -18.2% 2007-08 5.8% 0.8% -4.4% 2006-07 25.9% 21.5% 17.7%

Three Year Annualized Rate of Return as of June 30, 2011

2.3% 0.7% 3.9%

Five Year Annualized Rate of Return as of June 30, 2011

7.3% 3.8% 4.8%

_______________________ 1 Actual annualized returns are net of advisory fees. 2 The policy portfolio is a weighted average of market indices representing the major asset classes that comprise the Endowment portfolio. 3 Trust Universe Comparison Service Large Fund Median of institutional investors larger than $1 billion 4 The negative endowment return experienced in fiscal 2009 was largely due to the considerable decline in value experienced by markets

worldwide.

Contributions

Contributions include outright gifts, as well as unconditional promises to give that are recognized as revenues - either temporarily restricted or permanently restricted - in the period such promises are made by donors. Contributions recognized under such commitments during the year ended June 30, 2009 and subsequent periods are discounted at a risk-adjusted rate commensurate with the duration of the donor’s payment plan. Contributions recognized in prior periods under such commitments were recorded at a discount based on a U.S. Treasury rate. Amortization of the discounts is recorded as additional contribution revenue. Allowance is made for uncollectible contributions based upon management’s expectations regarding collection of outstanding promises to give and past collection experience. Conditional promises to give are recognized when the conditions on which they depend are substantially met. Contributions for the most recent five fiscal years are as follows:

CONTRIBUTIONS (in $000's)

Fiscal Year Ended June 30

2011 2010 2009 2008 2007

Unrestricted $ 34,631 $ 30,861 $ 37,525 $ 52,651 $ 43,940 Temporarily Restricted 86,765 74,770 60,266 80,983 77,506 Permanently Restricted 93,455 72,433 55,282 138,393 115,143 Totals $214,851 $ 178,064 $153,073 $ 272,027 $ 236,589

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The Sorin Society The membership requirement in the Sorin Society is an unrestricted annual contribution of $1,500. In 1991, the Founder’s Circle was established to recognize donors who make a minimum gift of $5,000. In 2003, Legacy membership was established to recognize donors who make a minimum gift of $10,000. The Sorin Society has 11,947 members. Contributions totaled approximately $19.8 million in fiscal year 2011.

The President’s Circle The President’s Circle recognizes nearly 260 donors who make annual unrestricted contributions of $25,000 or more to the University. Members contributed nearly $7.1 million during fiscal year 2011.

The Badin Guild Membership is offered to individuals who have made the University a primary beneficiary in their estate plans. The Badin Guild now has 1,150 members. Members contributed nearly $73.8 million in fiscal year 2011, which includes certain gifts that have been discounted for present value.

Alumni Contributions The University receives substantial financial support from its alumni, parents and friends, who provide a reliable base of annual donations. Over the last decade, the University has experienced a marked increase in total contributions, including an increase in alumni donations from approximately $55 million in fiscal year 2001 to over $105 million in fiscal year 2011. The University also recently completed its Spirit of Notre Dame campaign, which raised nearly $2.015 billion in a seven-year span that ended June 30, 2011. This final outcome far exceeded the original goal of $1.5 billion, and was the largest fund-raising effort in the history of Catholic higher education with nearly 70 percent alumni participation. In addition, Notre Dame became the first university without a medical school to surpass the $2 billion milestone within a traditional seven-year capital campaign.

Grants and Contracts

In fiscal year 2011, a total of nearly $104 million in grants and contracts revenues were recognized in conjunction with sponsored programs. This represents an increase of more than 107 percent from a decade ago. In this ten year time frame, the number of grant awards climbed from 450 to 555, while the portion of these revenues representing indirect costs recovered by the University rose from $8.4 million to $18.1 million.

Physical Facilities

The University is renowned both for the quality of its physical facilities and the beauty of its campus. The University’s approximately 1,200 acre campus encompasses two lakes, extensive wooded areas, tree-lined quadrangles, and 210 buildings with an aggregate area of 9,856,303 gross square feet. The Basilica of the Sacred Heart of Jesus, the 14-story Hesburgh Library with its 132 foot high mural depicting Christ the Teacher, and the University’s Main Building with its famed Golden Dome are among the most widely known university landmarks in the world. The University also owns a 7,000 acre undeveloped site at Land O’Lakes, Wisconsin which is used extensively for research and fieldwork, primarily in biological studies, and for University retreats. The University purchased the O’Connell House in Dublin, Ireland in

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the summer of 2002. This facility houses classrooms, offices, and residential space serving University programs in Irish Studies, ACE (Alliance for Catholic Education), and Campus Ministry. The University also acquired a facility in Rome, Italy in the spring of 2010 which will provide classroom and office space for the University’s Architecture and Arts and Letters programs. In addition, the acquisition in fall 2011 of Conway Hall, located near Waterloo Station in London, will provide housing to students in various University academic programs. The University continues to demonstrate its commitment to offering the best possible education to its students through its ongoing investment in the acquisition or construction of new facilities, and the renovation and upgrading of its existing facilities.

The book value, adjusted for depreciation, of the University’s land, buildings and equipment for the most recent five fiscal years is as follows (in 000’s):

Year Net Book Value 2011 $1,204,412 2010 $1,154,018 2009 $1,053,919 2008 $907,400 2007 $851,571

The University has plans for or is currently constructing various new physical facilities on or near its campus. New projects include the construction of (i) Stayer Center for Executive Education, the future home of the Mendoza College of Business Executive Education Program, and (ii) a Campus Wellness Center, a facility that will serve the wellness needs of the University’s faculty, staff, and graduate student families. Insurance

The University maintains comprehensive insurance coverage on its assets. Real and personal property are insured on a replacement value basis with a $500,000 deductible. For the 2011-12 policy year, campus properties were insured for an aggregate amount of approximately $1,500,000,000.

Business interruption insurance is included in the property insurance and is carried to protect the University against loss of income resulting from damage to real property and equipment. The approximately $1,500,000,000 aggregate limit also applies to any University business interruption loss.

Blanket crime insurance is carried to protect the University from theft, premise losses, transit losses and depositors’ forgery losses with a $5,000,000 limit and a $100,000 deductible.

General liability (bodily injury and property damage) and Directors and Officers (D&O) liability coverage is provided under a comprehensive self-insurance liability fund with loss limits of $1,000,000 per occurrence with a $2,000,000 aggregate for the General liability and a $3,000,000 aggregate for Directors and Officers coverage.

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The University also carries excess or umbrella coverage with a loss limit of $101,000,000.

The University provides coverage for worker’s compensation as required under the laws of the State of Indiana through a self-insurance fund with excess coverage provided by a commercial carrier. The University also provides, through a commercial carrier, statutory worker’s compensation insurance for employees working in certain other states outside of Indiana.

The University also maintains insurance coverage for automobile liability, professional liability, employment practices liability, travel accident and certain other risks of the type and in the amounts as are customary for institutions of similar size and scope of activities.

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APPENDIX B

AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE UNIVERSITY AS OF JUNE 30, 2011 AND 2010 AND FOR THE YEARS THEN ENDED

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University ofNotre Dame du LacConsolidated Financial Statementsfor the years endedJune 30, 2011 and 2010

Contents

Pages

Report of Independent Auditors 1

Consolidated Statements of Financial Position 2

Consolidated Statements of Changes in Unrestricted Net Assets 3

Consolidated Statements of Changes in Net Assets 4

Consolidated Statements of Cash Flows 5

Notes to Consolidated Financial Statements 6-36

University of Notre Dame du Lac

2

Consolidated Statements of Financial Position

(in thousands)As of June 30

2011 2010

AssetsCash and cash equivalents $ 90,006 $ 107,363Accounts receivable, net (Note 2) 26,851 24,730Deferred charges and other assets (Note 3) 59,804 50,784Contributions receivable, net (Note 4) 214,760 181,605Notes receivable, net (Note 5) 86,275 46,000Investments (Note 6) 7,456,204 6,189,177Land, buildings and equipment, net of accumulated depreciation (Note 7) 1,204,412 1,154,018

Total assets $ 9,138,312 $ 7,753,677

LiabilitiesAccounts payable (Note 7) $ 26,455 $ 31,177Short-term borrowing (Note 8) 100,060 140,094Deferred revenue and refundable advances (Note 9) 78,790 87,094Deposits and other liabilities (Note 10) 99,777 87,628Liabilities associated with investments (Note 6) 316,507 258,688Obligations under split-interest agreements (Note 17) 71,778 58,028Bonds and notes payable (Note 11) 728,464 571,306Conditional asset retirement obligations (Note 7) 22,118 22,243Pension and other postretirement benefit obligations (Note 13) 81,878 149,031Government advances for student loans (Note 5) 29,582 30,118

Total liabilities 1,555,409 1,435,407

Net AssetsUnrestricted:Funds functioning as endowment (Note 16) 2,426,132 1,996,082Invested in land, buildings and equipment 754,792 698,698Other unrestricted net assets 180,944 62,779

Total unrestricted 3,361,868 2,757,559Temporarily restricted (Note 14) 2,834,319 2,266,694Permanently restricted (Note 15) 1,386,716 1,294,017

Total net assets 7,582,903 6,318,270

Total liabilities and net assets $ 9,138,312 $ 7,753,677

See accompanying notes to consolidated financial statements.

University of Notre Dame du Lac

3

Consolidated Statements of Changes in Unrestricted Net Assets

(in thousands)Years ended June 30

2011 2010Operating Revenues and Other Additions

Tuition and fees $ 439,074 $ 419,271Less: Tuition scholarships and fellowships (174,078) (158,274)

Net tuition and fees 264,996 260,997Grants and contracts (Note 18) 103,731 85,671Contributions 29,725 29,629Accumulated investment return distributed (Note 6) 87,895 85,091Sales and services of auxiliary enterprises 195,223 186,762Other sources 36,408 34,288

Total operating revenues 717,978 682,438

Net assets released from restrictions (Note 14) 166,109 150,587

Total operating revenues and other additions 884,087 833,025

Operating ExpensesInstruction 325,566 303,876Research 105,885 83,194Public service 20,650 20,513Academic support 46,949 44,152Student activities and services 33,918 32,881General administration and support 189,003 166,614Auxiliary enterprises 163,670 177,994

Total operating expenses 885,641 829,224

Increase/(decrease) in unrestricted net assets from operations (1,554) 3,801

Non-Operating Changes in Unrestricted Net AssetsContributions 4,906 1,232Investment income (Note 6) 36,911 14,156Net gain on investments (Note 6) 543,749 275,463Accumulated investment return distributed (Note 6) (87,895) (85,091)Net gain/(loss) on debt-related derivative instruments (Note 12) 2,046 (20,083)Net assets released from restrictions (Note 14) 42,314 125,198Net pension and postretirement benefits-related changesother than net periodic benefits costs (Note 13) 62,128 (33,946)Other non-operating changes 1,704 4,667

Increase in unrestricted net assets fromnon-operating activities 605,863 281,596

Increase in unrestricted net assets $ 604,309 $ 285,397

See accompanying notes to consolidated financial statements.

University of Notre Dame du Lac

4

Consolidated Statements of Changes in Net Assets

(in thousands)Years ended June 30

2011 2010

Unrestricted Net AssetsOperating revenues and other additions $ 884,087 $ 833,025Operating expenses (885,641) (829,224)

Increase/(decrease) in unrestricted net assets from operations (1,554) 3,801

Increase in unrestricted net assets fromnon-operating activities 605,863 281,596

Increase in unrestricted net assets 604,309 285,397

Temporarily Restricted Net AssetsContributions 86,765 74,770Investment income (Note 6) 42,621 17,479Net gain on investments (Note 6) 633,415 288,764Change in value of split-interest agreements (Note 17) 3,938 698Net assets released from restrictions (Note 14) (208,423) (275,785)Other changes in temporarily restricted net assets 9,309 4,107

Increase in temporarily restricted net assets 567,625 110,033

Permanently Restricted Net AssetsContributions 93,455 72,433Investment income (Note 6) 2,045 860Net gain on investments (Note 6) 238 510Change in value of split-interest agreements (Note 17) 2,901 780Other changes in permanently restricted net assets (5,940) (1,782)

Increase in permanently restricted net assets 92,699 72,801

Increase in net assets 1,264,633 468,231

Net assets at beginning of year 6,318,270 5,850,039

Net assets at end of year $ 7,582,903 $ 6,318,270

See accompanying notes to consolidated financial statements.

University of Notre Dame du Lac

5

Consolidated Statements of Cash Flows

(in thousands) Years ended June 302011 2010

Cash Flows fromOperating ActivitiesIncrease in net assets $ 1,264,633 $ 468,231Adjustments to reconcile change in net assets tonet cash used by operating activities:Net gain on investments (1,177,402) (564,737)Investment income restricted for reinvestment (2,045) (860)Contributions for investments and physical facilities (82,644) (74,997)Contributed securities (40,904) (62,891)Depreciation 49,934 45,101Loss on disposal of land, buildings and equipment 1,080 2,391Change in obligations under split-interest agreements 13,750 8,417Change in conditional asset retirement obligations (125) 1,112Change in pension and other postretirement benefit obligations (67,153) 37,453Changes in operating assets and liabilities:Accounts receivable, deferred charges and other assets (11,141) 4,788Contributions receivable (33,155) 12,982Accounts payable, deferred revenue and refundableadvances, and deposits and other liabilities (877) (9,255)

Other, net (12,578) 5,350Net cash used by operating activities (98,627) (126,915)

Cash Flows from Investing ActivitiesProceeds from sales and maturities of investments 1,805,582 1,778,612Purchases of investments (1,785,328) (1,665,981)Purchases of land, buildings and equipment (102,715) (161,120)Student and other loans granted (44,958) (16,036)Student loans repaid 3,662 3,034

Net cash used by investing activities (123,757) (61,491)

Cash Flows from Financing ActivitiesInvestment income restricted for reinvestment 2,045 860Contributions for investments and physical facilities 82,644 74,997Proceeds from short-term borrowing 818,634 663,353Repayment of short-term borrowing (858,668) (598,295)Proceeds from bonds and notes issued 159,772 168,293Repayment of bonds and notes (3,787) (155,902)Government advances for student loans 465 347Net cash accepted for investment on behalf of religious affiliates 3,922 14,468

Net cash provided by financing activities 205,027 168,121

Net change in cash and cash equivalents (17,357) (20,285)Cash and cash equivalents at beginning of year 107,363 127,648

Cash and cash equivalents at end of year $ 90,006 $ 107,363

Supplemental DataInterest paid $ 22,761 $ 15,575

See accompanying notes to consolidated financial statements.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

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NOTE 1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBASIS OF PRESENTATION

The University of Notre Dame du Lac is a private, coeducational, national Catholic research university. The

accompanying consolidated financial statements include the assets and operations of certain other entities under the

financial control of the University of Notre Dame du Lac. The University of Notre Dame du Lac and entities

included herein are referred to individually and collectively as the “University.”

The accompanying consolidated financial statements have been prepared in accordance with accounting

principles generally accepted in the United States of America. The consolidated financial statements reflect the

activities of the University as a whole and present balances and transactions according to the existence or absence of

donor-imposed restrictions. Accordingly, net assets and changes therein are classified as follows:

Unrestricted Net Assets – Net assets not subject to donor-imposed restrictions and available for any purpose

consistent with the University’s mission. Revenues are generally reported as increases in unrestricted net assets

unless the use of the related assets is limited by donor-imposed restrictions. Investment returns generated by

unrestricted funds functioning as endowment and other sources are classified as changes in unrestricted net

assets. Operating expenses are reported as decreases in unrestricted net assets.

Temporarily Restricted Net Assets – Net assets subject to specific, donor-imposed restrictions that must be met

by actions of the University and/or passage of time. Contributed assets normally fund specific expenditures of

an operating or capital nature. Investment returns on donor-restricted endowment funds are classified as

changes in temporarily restricted net assets. Subject to the University’s endowment spending policy and any

restrictions on use imposed by donors, accumulated investment returns on donor-restricted endowments are

generally available for appropriation to support operational needs. Temporarily restricted contributions or

investment returns received and expended within the same fiscal period are reported as increases in temporarily

restricted net assets and net assets released from restrictions, respectively.

Permanently Restricted Net Assets – Net assets subject to donor-imposed restrictions requiring they be

maintained permanently. Permanently restricted net assets are generally restricted to long-term investment and

are comprised primarily of donor-restricted endowment funds. The University classifies the following portions

of donor-restricted endowment funds as permanently restricted net assets: (a) the original value of assets

contributed to permanent endowment funds, (b) subsequent contributions to such funds valued at the date of

contribution, and (c) reinvested earnings on permanent endowment when specified by the donor.

The University’s measure of operations presented in the consolidated statements of changes in unrestricted net

assets includes revenues from tuition and fees, grants and contracts, unrestricted contributions designated for

operations, accumulated investment return distributed under the University’s spending policy and revenues from

auxiliary enterprises and other sources, such as licensing and conferences. Other additions include net assets

released from restrictions based upon their expenditure in support of operations or net assets made available for

operations by virtue of the expiration of a term restriction. Operating expenses are reported by functional categories,

after allocating costs for operations and maintenance of plant, interest on indebtedness and depreciation.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

7

Non-operating activities presented in the consolidated statements of changes in unrestricted net assets include

unrestricted contributions designated by the University for endowment or investment in buildings and equipment,

investment return in excess of or less than the amount distributed for operations under the spending policy, any gains

or losses on debt-related derivative instruments, and certain net pension and postretirement benefits-related changes

in net assets. Other non-operating changes in unrestricted net assets includes the net activities of the consolidated

limited liability company described in Note 6 and Note 11, the effect of changes in donor intent with respect to

endowment and other funds, and other activities considered unusual or non-recurring in nature. Non-operating net

assets released from restrictions generally reflect the expenditure of net assets restricted to investment in land,

buildings and equipment.

GRANTS AND CONTRACTS

The University recognizes revenues on grants and contracts for research and other sponsored programs as the

awards for such programs are expended. Indirect cost recovery by the University on U.S. government grants and

contracts is based upon a predetermined negotiated rate and is recorded as unrestricted revenue. Advances from

granting agencies are generally considered refundable in the unlikely event specified services are not performed.

AUXILIARY ENTERPRISES

The University’s auxiliary enterprises exist primarily to furnish goods and services to students, faculty and staff.

Managed as essentially self-supporting activities, the University’s auxiliaries consist principally of residence and

dining halls, intercollegiate athletics, college stores and other campus retail operations. Auxiliary enterprise

revenues and related expenses are reported as changes in unrestricted net assets.

CASH AND CASH EQUIVALENTS

Resources invested in money market funds and in short-term investments with maturities at date of purchase of

three months or less are classified as cash equivalents, except that any such investments purchased by external

investment managers are classified as investments. Substantially all cash and cash equivalents are concentrated in

accounts in which balances exceed Federal Deposit Insurance Corporation limits.

ACCOUNTS RECEIVABLE

Accounts receivable are recorded at face value and typically have contractual maturities of less than one year.

CONTRIBUTIONS RECEIVABLE

Unconditional promises to give are recognized at fair value as contributions – either temporarily restricted or

permanently restricted – in the period such promises are made by donors. Contributions recognized as such during

the year ended June 30, 2009 and subsequent periods are discounted at a risk-adjusted rate commensurate with the

duration of the donor’s payment plan. Contributions recognized in prior periods under such commitments were

recorded at a discount based on a U.S. Treasury rate. Amortization of the discounts is recorded as additional

contribution revenue. Allowance is made for uncollectible contributions based upon management’s expectations

regarding collection of outstanding promises to give and past collection experience.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

8

NOTES RECEIVABLE

Notes receivable, which are recorded at face value, principally represent amounts due from students under

Perkins and other U.S. government sponsored loan programs. A general allowance is made for uncollectible student

loans after considering both long-term collection experience and current trends, such as recent default rates of

cohorts entering repayment status. Other notes receivable are evaluated individually for impairment, with

allowances recorded based on management’s expectations given facts and circumstances related to each note.

INVESTMENTS

Investments are stated at estimated fair value. The University measures the fair values of investments in

securities at the last sales price on the primary exchange where the security is traded. Non-exchange-traded

instruments and over-the-counter positions are primarily valued using independent pricing services, broker quotes or

models with externally verifiable inputs. The fair values of alternative investments (interests in private equity,

hedge, real estate and other similar funds) for which quoted market prices are not available are generally measured

based on reported partner’s capital or net asset value (“NAV”) provided by the associated external investment

managers. The reported partner’s capital or NAV is subject to management’s assessment that the valuation provided

is representative of fair value. The University exercises diligence in assessing the policies, procedures and controls

implemented by its external investment managers, and thus believes the carrying amount of these assets represents a

reasonable estimate of fair value. However, because alternative investments are generally not readily marketable,

their estimated value is subject to inherent uncertainty and therefore may differ from the value that would have been

used had a ready market for such investments existed.

As described in Note 12, the University utilizes certain derivative instruments to manage risks associated with

its investment portfolio. These instruments are stated at fair value. Open futures and options contracts are primarily

valued at the closing exchange quotations on the last business day of the fiscal year. The fair value of certain over-

the-counter contracts for which market quotations are not readily available is based upon independent pricing

services, broker quotes or models with externally verifiable inputs. When appropriate, independent appraisers may

also be engaged to assist in the valuation of such instruments. The fair value of forward currency exchange

contracts is estimated using quotes obtained from banks and foreign exchange dealers. Where management believes

a legal right of offset exists under an enforceable netting agreement, the fair value of these contracts is reported on a

net-by-counterparty basis. Gains or losses resulting from changes in the fair value of derivative instruments

associated with the investment portfolio or periodic net cash settlements with counterparties are recorded as gains or

losses on investments.

Investments Held on Behalf of Other Entities

The University serves as the trustee for its employees’ defined benefit pension plan and certain revocable

charitable trusts, managing the investment assets held within the plan and the trusts. The University also manages

investment assets on behalf of two religious affiliates that share the University’s Catholic ministry and educational

missions. Accordingly, the University reports an equal asset and liability in the consolidated statements of financial

position representing the fair value of investments managed on behalf of these entities.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

9

DEBT-RELATED DERIVATIVE INSTRUMENTS

The University utilizes derivative instruments in a limited manner outside of its investment portfolio. As

described in Notes 11 and 12, interest rate swap agreements are used to manage interest rate risk associated with

variable rate bond obligations. These instruments are reported in the consolidated statements of financial position at

fair value. Fair value is estimated based on pricing models that utilize significant observable inputs, such as relevant

interest rates, that reflect assumptions market participants would use in pricing the instruments. Any gains or losses

resulting from changes in the fair value of these instruments or periodic net cash settlements with counterparties,

including settlements related to the termination of such instruments, are recognized as non-operating changes in

unrestricted net assets.

LAND, BUILDINGS AND EQUIPMENT

Institutional properties are stated at cost or at estimated fair value if acquired by gift, less accumulated

depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets,

averaging 15 years for land improvements, 25-50 years for buildings and 5-25 years for equipment.

The University does not capitalize the cost of library books, nor the cost or fair value of its art collection. The

latter is held for exhibition and educational purposes only and not for financial gain.

Conditional Asset Retirement Obligations

The University recognizes asset retirement obligations when incurred. A discounting technique is used to

calculate the present value of the capitalized asset retirement costs and the related obligation. Asset retirement costs

are depreciated over the estimated remaining useful life of the related asset and the asset retirement obligation is

accreted annually to the current present value. Upon settlement of an obligation, any difference between the

retirement obligation and the cost to settle is recognized as a gain or loss in the consolidated statement of changes in

unrestricted net assets. The University’s conditional asset retirement obligations relate primarily to asbestos

remediation and will be settled upon undertaking associated renovation projects.

SPLIT-INTEREST AGREEMENTS

The University’s split-interest agreements consist principally of charitable gift annuities and irrevocable

charitable remainder trusts for which the University serves as trustee. Contribution revenue is recognized at the date

a gift annuity or trust is established after recording a liability at fair value of the estimated future payments to be

made to beneficiaries. Estimated future payments to beneficiaries are discounted at a risk-adjusted rate. Liabilities

are adjusted during the terms of the agreements to reflect payments to beneficiaries, returns on trust assets, accretion

of discounts and other considerations that affect the estimates of future payments. Net adjustments to the liabilities

are recorded as changes in the value of split-interest agreements.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

10

FAIR VALUEMEASUREMENTS

Fair value measurements reflected in the consolidated financial statements conceptually represent the price that

would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants

at the measurement date. Generally accepted accounting principles provide a hierarchy that prioritizes the inputs to

fair value measurements based on the extent to which inputs to valuation techniques are observable in the

marketplace. The hierarchy assigns a higher priority to observable inputs that reflect verifiable information obtained

from independent sources, and a lower priority to unobservable inputs that would reflect the University’s

assumptions about how market participants would value an asset or liability based on the best information available.

Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs.

The three levels of the hierarchy of inputs used to measure fair value are described briefly as follows:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that are available at the

measurement date.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,

either directly or indirectly.

Level 3 – Unobservable inputs for the asset or liability, used in situations in which little or no market activity

exists for the asset or liability at the measurement date.

The categorization of fair value measurements by level of the hierarchy is based upon the lowest level input

that is significant to the overall fair value measurement for a given asset or liability.

Fair value measurements of investment assets for which the measurement was based on NAV (or its equivalent)

as provided by an external manager are categorized within Level 2 to the extent such investments were redeemable

with the manager at the NAV (or its equivalent) at the reporting date or within the near term (defined by the

University as within approximately 90 days of the reporting date). Measurements of any such investments that were

not redeemable at the reporting date or within the near term, whether by nature of the investment or as a result of

unexpired terms or conditions restricting redemption at the reporting date, are categorized within Level 3.

In the event that changes in the inputs used in the fair value measurement of an asset or liability results in a

transfer of the fair value measurement in its entirety to a different categorization (e.g. from Level 3 to Level 2), such

transfers between fair value categories are recognized at the end of the reporting period.

USE OF ESTIMATES

The preparation of consolidated financial statements in accordance with accounting principles generally

accepted in the United States of America requires management to make estimates and assumptions that affect the

reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported

amounts of revenues and expenses during the period. Actual results could differ from those estimates.

SUBSEQUENT EVENTS

The University has evaluated subsequent events through November 16, 2011, the date the financial statements

were issued.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

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TAX STATUS

The University is exempt from federal income taxes under section 501(c)(3) of the Internal Revenue Code

(“IRC”), except to the extent the University generates unrelated business income.

RECLASSIFICATIONS

Certain amounts in the 2010 financial statements and notes were reclassified to conform to 2011 presentation.

NOTE 2.ACCOUNTS RECEIVABLE

Accounts receivable are summarized as follows at June 30:

2011 2010Research and other sponsored programs support $ 16,079 $ 14,344Student receivables 2,832 2,956Other receivables 8,580 8,094

27,491 25,394Less allowances for uncollectible amounts 640 664

$ 26,851 $ 24,730

NOTE 3.DEFERRED CHARGES AND OTHER ASSETS

Deferred charges and other assets are summarized as follows at June 30:

2011 2010Debt-related derivative instruments (Note 12) $ 16,726 $ 12,625Retail and other inventories 10,036 9,608Beneficial interests in perpetual trusts (Note 15) 4,826 4,143Prepaid rental expenses 16,482 14,295Other deferred charges and prepaid expenses 11,734 10,113

$ 59,804 $ 50,784

NOTE 4.CONTRIBUTIONS RECEIVABLE

Contributions receivable are summarized as follows at June 30:

2011 2010Unconditional promises expected to be collected in:

Less than one year $ 82,931 $ 53,235One year to five years 128,315 133,762More than five years 108,768 102,233

320,014 289,230Less:

Unamortized discounts 75,700 72,865Allowances for uncollectible amounts 29,554 34,760

105,254 107,625$ 214,760 $ 181,605

Contributions receivable are discounted at rates ranging from 0.62 percent to 6.91 percent and 0.77 percent to

6.91 percent at June 30, 2011 and 2010, respectively.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

12

Contributions receivable, net, are summarized by net asset classification as follows at June 30:

2011 2010Temporarily restricted for:

Operating purposes $ 38,228 $ 35,130Investment in land, buildings and equipment 52,787 40,631Funds functioning as endowment (Note 16) 5,301 6,657Total temporarily restricted (Note 14) 96,316 82,418

Permanently restricted for endowment (Notes 15 and 16) 118,444 99,187$ 214,760 $ 181,605

As of June 30, 2011, the University had received documented conditional pledges of $43,100, which are not

reflected in the accompanying consolidated financial statements. Conditional promises to give are recognized when

the conditions on which they depend are substantially met.

NOTE 5.NOTES RECEIVABLE

Notes receivable are summarized as follows at June 30:

2011 2010Student notes receivable, related to:

Government sponsored loan programs $ 34,203 $ 33,570Institutional student loans 951 1,110

35,154 34,680Less allowances for uncollectible student notes 2,083 1,103

33,071 33,577Other notes receivable 53,204 12,423

$ 86,275 $ 46,000

Government advances to the University for student loan funding, primarily under the Perkins Loan program,

totaled $29,582 and $30,118 at June 30, 2011 and 2010, respectively. Due to significant restrictions that apply to

government sponsored student loans, determining the fair value of student notes receivable is not practicable.

Total balances on student notes receivable in past due status were $3,497 and $4,090 at June 30, 2011 and 2010,

respectively. The delinquent portions of these balances were $1,084 and $1,005, respectively.

During the year ended June 30, 2011, the University made a loan of $39,753 to a property development firm in

conjunction with the renovation of a building in London that the University has contracted to purchase to support its

England-based international studies programs (also see Note 7). The estimated fair value of this and other non-

student notes receivable approximated the carrying amount at June 30, 2011 and 2010.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

13

NOTE 6.INVESTMENTS

Investments reflected in the consolidated statements of financial position are summarized as follows at June 30:

2011 2010Notre Dame Endowment Pool assets $ 7,250,586 $ 6,054,497Other investments, associated with:Endowment and funds functioning as endowment 38,633 28,026Working capital and other University designations 47,863 6,852Split-interest agreements (Note 17) 9,967 9,438Revocable charitable trusts 2,824 2,340Defined benefit pension plan (Note 13) 106,331 88,024

205,618 134,680$ 7,456,204 $ 6,189,177

Liabilities associated with investments include the following at June 30:

2011 2010Notre Dame Endowment Pool liabilities $ 999 $ 2,013Liabilities representing the fair value of investments held on behalf of:Religious affiliates 206,353 166,311Revocable charitable trusts 2,824 2,340Defined benefit pension plan (Note 13) 106,331 88,024

$ 316,507 $ 258,688

The Notre Dame Endowment Pool (“NDEP”) represents the University’s primary investment portfolio.

Certain investments, however, are held in specific instruments outside the NDEP to comply with donor requirements

or other considerations. The pooled assets and liabilities of the NDEP are summarized as follows at June 30:

2011 2010Investment assets $ 7,250,586 $ 6,054,497Liabilities associated with investments1 (Note 12) (999) (2,013)NDEP net assets reflected within the financial statements 7,249,587 6,052,484Equity interest in consolidated company2 15,500 17,154NDEP net assets unitized $ 7,265,087 $ 6,069,6381Represents the fair value of derivative instrument liabilities.2The University is the majority owner of an externally managed limited liability company, the assets and liabilities of which arereflected in the consolidated financial statements at cost. However, the estimated fair value of the University’s equity interest in thecompany, $15,500 and $17,154 at June 30, 2011 and 2010, respectively, is included in NDEP net assets for unitization purposes.

Transactions within participating funds that constitute additions to or withdrawals from the NDEP are unitized

on a quarterly basis. The unitized net assets of the NDEP were attributable to the following at June 30:

2011 2010Endowment and funds functioning as endowment $ 6,187,946 $ 5,177,776Working capital and other University designations 774,768 646,431Student loan funds 697 4,578Split-interest agreements (Note 17) 95,323 74,542Funds invested on behalf of religious affiliates 206,353 166,311

$ 7,265,087 $ 6,069,638

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

14

The NDEP is comprised primarily of endowment-related holdings. As such, its investment objectives seek to

preserve the real purchasing power of the endowment, while providing a stable source of financial support to its

beneficiary programs. To satisfy its long-term rate of return objectives, the NDEP relies on a total return strategy in

which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield

(interest and dividends). The NDEP maintains a diversified asset allocation that places a greater emphasis on

equity-based investments to achieve its long-term return objectives within prudent risk constraints.

Investment assets are summarized in the following tables by asset class at June 30, 2011 and 2010, respectively:

2011Other

NDEP Investments TotalShort-term investments $ 201,247 $ 35,158 $ 236,405Public equities 2,328,855 50,340 2,379,195Fixed income securities 335,332 13,200 348,532Marketable alternatives 931,530 481 932,011Private equity 2,133,017 - 2,133,017Real estate 547,745 108 547,853Other real assets 772,860 - 772,860

7,250,586 99,287 7,349,873Defined benefit pension plan investments (Note 13) - 106,331 106,331

$ 7,250,586 $ 205,618 $ 7,456,204

2010Other

NDEP Investments TotalShort-term investments $ 86,481 $ 1,662 $ 88,143Public equities 1,993,149 31,432 2,024,581Fixed income securities 266,976 13,191 280,167Marketable alternatives 970,473 291 970,764Private equity 1,728,428 - 1,728,428Real estate 392,507 80 392,587Other real assets 616,483 - 616,483

6,054,497 46,656 6,101,153Defined benefit pension plan investments (Note 13) - 88,024 88,024

$ 6,054,497 $ 134,680 $ 6,189,177

Short-term investments include cash and cash equivalents, money market funds, securities with short-term

maturities (such as commercial paper and government securities held either directly or via commingled pools with

daily liquidity) and the fair value of certain derivative instrument assets (see Note 12 for further information about

derivative instruments). Public equities investments cover the U.S. as well as both developed and emerging markets

overseas, and long/short hedge funds. Marketable alternatives encompass other hedge fund strategies less correlated

with broad equities markets. This includes credit-oriented strategies, multi-strategy funds where the manager has a

broad mandate to invest opportunistically, and event driven funds where managers seek opportunity in various forms

of arbitrage strategies as well as in corporate activities such as mergers and acquisitions. Private equity primarily

includes domestic and foreign buyout and venture capital funds. Other real assets represents investments in energy

and commodities.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

15

NDEP investments are primarily invested with external managers. The University is committed under contracts

with certain external managers to periodically advance additional funding as capital calls are exercised. Capital calls

are generally exercised over a period of years and are subject to fixed expiration dates or other means of termination.

Uncalled commitments related to NDEP investments are summarized by investment class as follows at June 30:

2011 2010Private equity $ 1,055,687 $ 1,042,506Real estate 261,402 314,716All other 284,302 234,168

$ 1,601,391 $ 1,591,390

The following tables reflect fair value measurements of investment assets (excluding defined benefit pension

plan assets) at June 30, 2011 and 2010, respectively, as categorized by level of the fair value hierarchy according to

the lowest level of inputs significant to each measurement:

2011Level 1 Level 2 Level 3 Total

Short-term investments $ 36,435 $ 199,970 $ - $ 236,405Public equities:U.S. 261,504 194,657 137,237 593,398Non-U.S. 85,604 651,414 172,357 909,375Long/short strategies - 446,458 429,964 876,422

Fixed income securities 96,449 252,083 - 348,532Marketable alternatives - 524,190 407,821 932,011Private equity - - 2,133,017 2,133,017Real estate 15,670 - 532,183 547,853Other real assets 130,016 85,580 557,264 772,860

$ 625,678 $ 2,354,352 $ 4,369,843 $ 7,349,873

2010Level 1 Level 2 Level 3 Total

Short-term investments $ 6,232 $ 81,911 $ - $ 88,143Public equities:U.S. 196,083 66,592 203,967 466,642Non-U.S. 105,007 273,886 308,060 686,953Long/short strategies - 404,410 466,576 870,986

Fixed income securities 71,465 208,702 - 280,167Marketable alternatives - 248,138 722,626 970,764Private equity - 54,256 1,674,172 1,728,428Real estate 80 - 392,507 392,587Other real assets 81,164 52,162 483,157 616,483

$ 460,031 $ 1,390,057 $ 4,251,065 $ 6,101,153

Certain short-term investments and fixed income securities categorized within Level 2 are not traded in active

markets but are measured using pricing sources such as broker quotes, or using models with externally verifiable

inputs, such as relevant interest or exchange rates. Investments with certain private equity funds were held for sale

at June 30, 2010. The fair value for these funds of $54,256, also reflected in Level 2, was measured based on the

proceeds actually received upon closing the sale subsequent to June 30, 2010.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

16

Other investments categorized within Levels 2 and 3 primarily reflect assets invested with external managers,

the fair value measurements for which are generally based on NAV (or the equivalent) as provided to the University

by the external managers. Investments in funds within public equities and marketable alternatives redeemable at

NAV (or its equivalent) at the measurement date or within the near term are reflected in Level 2, while funds that

are subject to restrictions that limit the University’s ability to withdraw capital within the near term are reflected in

Level 3. Redemption terms for these funds generally restrict withdrawals of capital for a defined “lock-up” period

after investment, and thereafter typically allow withdrawals on a quarterly or annual basis with notice periods

ranging from 30 to 180 days. Lock-up periods for funds reflected in Level 3 generally expire during the period from

six months to three years after the measurement date. In addition, investor capital in these funds attributable to

illiquid investments, often referred to as “side pockets,” generally is not available for redemption until the

investments are realized by the fund. Most funds within private equity, real estate and other real assets, as well as

certain marketable alternatives funds, are not redeemable at the direction of the investor and are reflected in Level 3.

These funds make distributions to investing partners as the underlying assets of the funds are liquidated. The

University expects the underlying assets of these funds to be substantially liquidated over the next five to ten years,

the timing of which would vary by fund and depend on market conditions as well as other factors.

Changes in investments (excluding defined benefit pension plan assets) for which fair value is measured based

on Level 3 inputs are summarized below for the year ended June 30, 2011:

Net Net realized/Beginning acquisitions/ unrealized Net transfers End ofof the year (dispositions) gains out of Level 3 the year

Public equities:U.S. $ 203,967 $ (6,829) $ 53,845 $ (113,746) $ 137,237Non-U.S. 308,060 83,327 80,164 (299,194) 172,357Long/short strategies 466,576 108,489 44,604 (189,705) 429,964

Marketable alternatives 722,626 (67,271) 87,649 (335,183) 407,821Private equity 1,674,172 5,114 453,731 - 2,133,017Real estate 392,507 91,015 48,661 - 532,183Other real assets 483,157 (23,181) 97,288 - 557,264

$ 4,251,065 $ 190,664 $ 865,942 $ (937,828) $ 4,369,843

During the year ended June 30, 2011, the University recognized net unrealized appreciation of $645,508 on

investments still held at June 30, 2011 for which fair value is measured using Level 3 inputs. Net transfers out of

Level 3 primarily reflect the migration to Level 2 of assets measured at fair value based on NAV (or its equivalent)

that were eligible for redemption at the reporting date or within the near term. Transfers between Levels 1 and 2

were insignificant during the year ended June 30, 2011.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

17

Changes in investments (excluding defined benefit pension plan assets) for which fair value is measured based

on Level 3 inputs are summarized below for the year ended June 30, 2010:

Net Net realized/Beginning acquisitions/ unrealized Net transfers End ofof the year (dispositions) gains/(losses) out of Level 3 the year

Public equities:U.S. $ 258,945 $ (35,275) $ 44,904 $ (64,607) $ 203,967Non-U.S. 488,950 (76,604) 107,378 (211,664) 308,060Long/short strategies 901,043 (69,355) 39,298 (404,410) 466,576

Fixed income securities 58,208 5,330 7,796 (71,334) -Marketable alternatives 848,606 (73,331) 195,489 (248,138) 722,626Private equity 1,420,074 132,089 176,265 (54,256) 1,674,172Real estate 402,944 83,147 (93,584) - 392,507Other real assets 510,151 (37,319) 62,486 (52,161) 483,157

$ 4,888,921 $ (71,318) $ 540,032 $ (1,106,570) $ 4,251,065

During the year ended June 30, 2010, the University recognized net unrealized appreciation of $266,818 on

investments still held at June 30, 2010 for which fair value is measured using Level 3 inputs. Net transfers out of

Level 3 primarily reflect the migration to Level 2 of assets measured at fair value based on NAV (or its equivalent)

that were eligible for redemption at the reporting date or within the near term. Transfers between Levels 1 and 2

were insignificant during the year ended June 30, 2010.

Due to the pooled nature of assets held in the NDEP, a portion of any unrealized gains or losses is attributed to

NDEP holdings of split-interest agreements and the University’s religious affiliates.

INVESTMENT RETURN

Investment return as reflected in the consolidated statements of changes in net assets is summarized as follows

for the years ended June 30:

2011 2010Investment income, net $ 81,577 $ 32,495Net gain on investments:Realized gains, net 297,628 125,539Unrealized gains, net 879,774 439,198

1,177,402 564,737$ 1,258,979 $ 597,232

Temporarily Permanently 2011 2010Unrestricted restricted restricted Total Total

Investment income, net $ 36,911 $ 42,621 $ 2,045 $ 81,577 $ 32,495Net gain on investments 543,749 633,415 238 1,177,402 564,737

$ 580,660 $ 676,036 $ 2,283 $ 1,258,979 $ 597,232

Investment income is reported net of related expenses of $24,294 and $17,243 for the years ended June 30,

2011 and 2010, respectively. Investment-related expenses consist of fees paid to external investment managers, as

well as expenses related to internal investment office operations.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

18

A portion of accumulated investment returns is distributed annually to beneficiary programs under the

University’s endowment spending policy. In addition, a portion of unrestricted returns accumulated on working

capital and other assets is distributed to supplement the University’s general operating needs and other initiatives.

Accumulated investment return distributed is summarized by source as follows for the years ended June 30:

Temporarily 2011 2010Unrestricted restricted Total Total

Endowment and funds functioningas endowment (Note 16) $ 79,410 $ 153,068 $ 232,478 $ 223,289Working capital and other sources 8,485 - 8,485 3,079

$ 87,895 $ 153,068 $ 240,963 $ 226,368

NOTE 7.LAND, BUILDINGS AND EQUIPMENT

The following is a summary of land, buildings and equipment at June 30:

2011 2010Land and land improvements $ 112,377 $ 109,833Buildings 1,270,790 1,222,321Equipment 214,437 213,572Construction in progress 88,815 59,993

1,686,419 1,605,719Less accumulated depreciation 482,007 451,701

$ 1,204,412 $ 1,154,018

Depreciation expense was $49,934 and $45,101 for the years ended June 30, 2011 and 2010, respectively.

The University recorded accounts payable associated with construction in progress costs of $9,038 and $11,766

at June 30, 2011 and 2010, respectively. The University also has commitments to expend approximately $38,209 to

complete various construction projects as of June 30, 2011. In addition, the University has entered into a contract to

purchase a building in London for approximately $58,800 to use in support of its international studies programs in

England.

Changes in conditional asset retirement obligations are summarized as follows for the years ended June 30:

2011 2010Beginning of year $ 22,243 $ 21,131New obligations recognized - 66Obligations settled (165) (507)Accretion expense 832 1,553Revisions in estimated cash flows (792) -

End of year $ 22,118 $ 22,243

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

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NOTE 8.SHORT-TERMBORROWING

The University maintains a $200,000 commercial paper program under which it may issue either standard or

extendible municipal commercial paper through St. Joseph County, Indiana on behalf of the University. Standard

municipal commercial paper issues are supported by a $200,000 standby credit facility with a major commercial

bank. Interest on commercial paper may be either taxable or tax-exempt to investors, depending on the University’s

intended use of the proceeds. Generally, tax-exempt commercial paper is issued to finance the purchase of

equipment and improvements to educational facilities, while taxable commercial paper is issued to provide funding

for general uses. Standard taxable commercial paper in the amount of $100,060 and $115,094 was outstanding at

June 30, 2011 and 2010, respectively.

The University also maintains unsecured lines of credit with commercial banks in the aggregate amount of

$300,000 to be utilized primarily for working capital purposes. Termination dates on lines of credit available at

June 30, 2011 ranged from January 31, 2012 to March 17, 2014. Total outstanding balances on lines of credit were

$25,000 at June 30, 2010. The University had no such balances outstanding at June 30, 2011.

Total interest costs incurred on short-term borrowing were approximately $301 and $253 for the years ended

June 30, 2011 and 2010, respectively.

NOTE 9.DEFERRED REVENUE AND REFUNDABLE ADVANCES

Deferred revenue and refundable advances are summarized as follows at June 30:

2011 2010Deferred ticket sales and other revenues from intercollegiate athletics $ 47,268 $ 55,545Deferred tuition and other student revenues 13,069 12,624Refundable advances for research and other sponsored programs 16,599 16,964Other deferred revenues 1,854 1,961

$ 78,790 $ 87,094

NOTE 10.DEPOSITS AND OTHER LIABILITIES

Deposits and other liabilities are summarized as follows at June 30:

2011 2010Debt-related derivative instruments (Note 12) $ 13,670 $ 15,858Accrued compensation and employee benefits 37,726 36,551Payroll and other taxes payable 10,165 10,253Accrued pension plan contribution (Note 13) 11,000 -Student organization funds and other deposits 7,325 7,205Self-insurance reserves 6,212 6,481Accrued interest expense, pledges payable and other liabilities 13,679 11,280

$ 99,777 $ 87,628

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

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NOTE 11.BONDS AND NOTES PAYABLE

Bonds and notes payable consist of the following at June 30:

2011 2010Obligations of the University:

St. Joseph County (Indiana) Educational Facilities Revenue Bonds1 $ 364,293 $ 366,828Series 2010 Taxable Fixed Rate Bonds 160,000 -Notre Dame du Lac Dormitory Refunding and Construction Bonds - 840Series 2009 Taxable Fixed Rate Notes 150,000 150,000Mortgage notes payable 15,435 14,340

689,728 532,008Obligations of consolidated company:

Mortgage note payable 38,736 39,298$ 728,464 $ 571,306

1Includes the unamortized Series 2009 bond premium of $7,178 and $7,328 at June 30, 2011 and 2010, respectively.

The fair value of bond and note obligations approximates the aggregate carrying value at June 30, 2011 and

2010. Fair value measurements of bonds and notes are based on observable interest rates and maturity schedules

that fall within Level 2 of the hierarchy of fair value inputs. The aggregate scheduled maturities of bonds and notes

payable are summarized as follows:

2012 $ 3,1352013 3,0902014 153,2162015 3,3452016 38,865Thereafter 519,635

$ 721,286

The Series 2010 Taxable Fixed Rate Bonds bear interest at a fixed rate of 4.90 percent and are due March 1,

2041. The bonds constitute unsecured general obligations of the University and the associated interest is taxable to

investors. Proceeds received were net of issuance costs of $1,323, which are reflected within operating expenses for

the year ended June 30, 2011. Interest costs of $5,466 were incurred during the year ended June 30, 2011.

Notre Dame du Lac Dormitory Refunding and Construction Bonds bearing interest at a fixed rate of 3.00

percent were retired during the year ended June 30, 2011. The University incurred interest costs of $19 and $27 on

these bonds during the years ended June 30, 2011 and 2010, respectively.

The Series 2009 Taxable Fixed Rate Notes bear interest at a fixed rate of 4.141 percent and are due

September 1, 2013. The notes constitute unsecured general obligations of the University and the associated interest

is taxable to investors. The University incurred $6,211 and $6,211 in interest costs on the notes during the years

ended June 30, 2011 and 2010, respectively.

Mortgage notes in the amount of $15,435 relate to the refinancing of facilities constructed for a not-for-profit

organization consolidated by the University. The notes bear interest at a fixed rate of 1.103 percent and are due on

July 1, 2042. These notes are collateralized by the facilities to which they relate. The University incurred interest

costs of $173 and $66 on the notes during the years ended June 30, 2011 and 2010, respectively.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

21

The University is the majority owner of an externally managed limited liability company, the activities of which

are reflected in the University’s consolidated financial statements. The company’s assets consist primarily of real

estate, the acquisition of which was financed in part with a note payable bearing interest at 5.68 percent, due on

February 1, 2016. The note is not a general obligation of the University and is fully collateralized by the property

acquired. Interest costs of $2,203 and $2,242 related to the note are reflected within non-operating changes in

unrestricted net assets for the years ended June 30, 2011 and 2010, respectively.

ST. JOSEPH COUNTY (INDIANA) EDUCATIONAL FACILITIES REVENUE BONDS

St. Joseph County (Indiana) Educational Facilities Revenue Bonds (“SJC bonds”) represent general obligations

of the University and are not collateralized by any facilities. The following issues were outstanding at June 30:

Outstanding Current ratethrough of interest1 2011 2010

Issues bearing variable rates:Series 2003 2038 0.140% $ 52,660 $ 55,045Series 2007 2042 0.090% 75,000 75,000

127,660 130,045Issues bearing fixed rates:

Series 1996 2026 6.500% 7,890 7,890Series 20052 2040 3.875% 75,000 75,000Series 20093 2036 5.000% 153,743 153,893

236,633 236,783$ 364,293 $ 366,828

1Variable rates reset weekly. Represents annual percentage rate in effect at June 30, 2011.2Rate is fixed through February 2012, variable thereafter.3Carrying amount includes the unamortized premium of $7,178 and $7,328 at June 30, 2011 and 2010, respectively.

The University maintains standby credit facilities with commercial banks to provide alternative liquidity to

support the repurchase of tendered variable rate SJC bonds in the event they are unable to be remarketed. Financing

obtained through standby credit facilities to fund the repurchase of such bonds would bear interest rates different

from those associated with the original bond issues, and mature over the five year period following repurchase. The

standby credit facilities in effect at June 30, 2011 expire in December 2014.

The University utilizes interest rate swap agreements as a strategy for managing interest rate risk associated

with variable rate SJC bond issues. Under the terms of swap agreements in effect at June 30, 2011, the University

pays fixed rates ranging from 2.01 percent to 4.97 percent and receives variable rates equal to 67 percent or 70

percent of the one-month London Interbank Offered Rate (“LIBOR”) on total notional amounts of $124,715. An

additional swap agreement under which the University would pay a fixed rate of 2.05 percent and receive 70 percent

of the three-month LIBOR on a notional amount of $75,000 becomes effective in March 2012, concurrent with the

end of the Series 2005 fixed term rate period. The estimated fair value of interest rate swaps was a net unrealized

gain position of $3,056 and a net unrealized loss position of $3,233 at June 30, 2011 and 2010, respectively. See

Note 12 for further information on the University’s interest rate swaps.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

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Interest costs incurred on SJC bonds and periodic net settlements paid to counterparties pursuant to associated

interest rate swaps are summarized below for the years ended June 30:

2011 2010Interest Net periodic Interest Net periodicexpense1 settlements expense1 settlements

Issues bearing variable rates $ 406 $ 4,243 $ 343 $ 5,182Issues bearing fixed rates 10,598 - 8,873 -

$ 11,004 $ 4,243 $ 9,216 $ 5,182

1Includes amortization of Series 2009 premium of $150 and $60 for the years ended June 30, 2011 and 2010, respectively. Thepremium is amortized using the effective interest method over the period the bonds are outstanding.

NOTE 12.DERIVATIVE INSTRUMENTS

The University utilizes a variety of derivative instruments within the NDEP, including certain options contracts,

forward currency contracts and futures contracts. As described in Note 11, the University also utilizes interest rate

swap agreements to manage interest rate risk associated with its variable rate bond obligations.

Derivative instruments by their nature bear, to varying degrees, elements of market risk and credit risk that are

not reflected in the amounts recorded in financial statements. Market risk in this context represents the potential for

changes in the value of derivative instruments due to levels of volatility and liquidity or other events affecting the

underlying asset, reference rate, or index, including those embodied in interest and foreign exchange rate

movements and fluctuations in commodity or security prices. Credit risk is the possibility that a loss may occur due

to the failure of a counterparty to perform according to the terms of a contract. The University’s risk of loss in the

event of counterparty default is typically limited to the amounts recognized in the consolidated statements of

financial position, not the notional amounts of the instruments, and is further limited by the collateral arrangements

as specified for specific instruments.

Collateral associated with NDEP derivatives is moved as required by market fluctuations, and is generally in the

form of cash or cash equivalents. Interest rate swaps associated with the University’s variable rate bonds have

credit-risk-related contingent features that could require the University to post collateral on instruments in net

liability positions in the event of a downgrade to the rating on the University’s debt. The aggregate fair value of

interest rate swaps with credit-risk-related contingent features that were in liability positions was $13,670 and

$15,858 at June 30, 2011 and 2010, respectively. If the credit-risk-related contingent features associated with these

instruments had been triggered, the University would have been required to post collateral to its counterparties in an

amount up to the full liability position of the instruments, depending on the level of the University’s credit rating.

Based on the quality of its credit rating, the University had posted no collateral associated with these instruments at

June 30, 2011.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

23

The estimated fair value of derivative instrument assets and liabilities, certain of which are reflected on a net-

by-counterparty basis within the consolidated statements of financial position, are summarized in the table below at

June 30, 2011, along with the net gains and losses for the year then ended:

Notionalamounts

Derivativeassets

Derivativeliabilities

Netgain/(loss)

NDEP derivatives:Options contracts1,2 $ 1,793,649 $ 27,671 $ - $ (8,391)Forward currency contracts2 $ 184,831 1,125 419 7,899Futures contracts3 $ 600,003 1,543 999 19,071Gross value 30,339 1,418 18,579Counterparty netting (419) (419) -Net by counterparty $ 29,920 $ 999 $ 18,579

Debt-related derivatives:Interest rate contracts2 $ 199,715 $ 16,726 $ 13,670 $ 2,046

1Includes interest rate and commodities options with notional amounts of $1,173,448 and $620,201 at June 30, 2011.2Fair value measurements of over-the-counter derivative instruments are based on observable inputs, such as relevant interest ratesand commodity prices, that fall within Level 2 of the hierarchy of fair value inputs.3Futures contracts are exchange-traded. Fair value is based on quoted prices that fall within Level 1 of the hierarchy of fair valueinputs. Notional amount on futures at June 30, 2011 reflect $667,963 and $67,960 in long and short exposures, respectively.

The estimated fair value of derivative instrument assets and liabilities, certain of which are reflected on a net-

by-counterparty basis within the consolidated statements of financial position, are summarized in the table below at

June 30, 2010, along with the net gains and losses for the year then ended:

Notionalamounts

Derivativeassets

Derivativeliabilities

Netgain/(loss)

NDEP derivatives:Options contracts4,5 $ 1,597,548 $ 19,302 $ - $ (15,531)Forward currency contracts5 $ 156,926 1,086 1,434 924Futures contracts6 $ 594,907 6,188 1,513 10,920Gross value 26,576 2,947 (3,687)Counterparty netting (934) (934) -Net by counterparty $ 25,642 $ 2,013 $ (3,687)

Debt-related derivatives:Interest rate contracts5 $ 203,130 $ 12,625 $ 15,858 $ (20,083)

4Represents interest rate options at June 30, 2010.5Fair value measurements of over-the-counter derivative instruments are based on observable inputs, such as relevant interest rates,that fall within Level 2 of the hierarchy of fair value inputs.6Futures contracts are exchange-traded. Fair value is based on quoted prices that fall within Level 1 of the hierarchy of fair valueinputs. Notional amount on futures at June 30, 2010 reflect $672,047 and $77,140 in long and short exposures, respectively.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

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Derivative instrument assets and liabilities are reflected within the following lines of the consolidated

statements of financial position at June 30:

2011 2010NDEP derivatives:Investments1 $ 29,920 $ 25,642Liabilities associated with investments (Note 6) $ 999 $ 2,013

Debt-related derivatives:Deferred charges and other assets (Note 3) $ 16,726 $ 12,625Deposits and other liabilities (Note 10) $ 13,670 $ 15,858

1Reflected within the “Short-term investments” investment class in Note 6.

Certain options contracts are employed within the NDEP as a strategy for protecting the investment portfolio

against significant fluctuations in interest rates and commodity prices. Options contracts held in the NDEP are fully

collateralized at June 30, 2011. Forward currency contracts are utilized to settle planned purchases or sales, for

investment purposes, and to mitigate the impact of exchange rate fluctuations on the U.S. dollar value of NDEP

international holdings. A variety of currency, interest rate, equity, bond and commodities futures contracts are also

employed in the NDEP to manage exposure to various financial markets.

Gains and losses on derivative instruments held in the NDEP are primarily included in the net gain or loss on

investments as reflected in the financial statements. However, due to the pooled nature of the NDEP, a minor

portion of these gains and losses is attributed to NDEP holdings of split-interest agreements and the University’s

religious affiliates. The net gain or loss on debt-related derivatives (interest rate swaps associated with the

University’s variable rate bonds) is reported as such within non-operating changes in unrestricted net assets.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

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NOTE 13.PENSION AND OTHER POSTRETIREMENT BENEFITSDEFINED CONTRIBUTION RETIREMENT SAVINGS PLANS

Faculty and certain administrative employees are eligible to participate in the defined contribution retirement

savings plan. The plan, operated under section 403(b) of the IRC, is funded by mandatory employee contributions

and University matching contributions. All faculty, administrators and staff may also participate in a supplemental

defined contribution retirement savings plan, under which participants may make additional contributions up to the

annual limit established by the Internal Revenue Service. Participants are immediately vested in the plans, and may

direct their contributions and the University’s contributions on their behalf to Teachers Insurance and Annuity

Association, Fidelity Investments or the Vanguard Group. The University’s share of the cost of these benefits was

$25,039 and $23,915 for the years ended June 30, 2011, and 2010, respectively.

DEFINEDBENEFIT PENSION PLAN ANDPOSTRETIREMENT MEDICAL INSURANCEBENEFITS

Retirement benefits are provided for University staff under a defined benefit pension plan, for which the

University serves as trustee and administrator. This plan provides benefits for certain administrators and staff after

one year of qualifying service. Retirement benefits are based on the employee’s total years of service and final

average pay as defined by the plan. Plan participants are fully vested after five years of service. The University

funds the plan with annual contributions that meet minimum requirements under the Employee Retirement Income

Security Act of 1974.

Other postretirement benefit plans offered by the University provide medical insurance benefits for retirees and

their spouses. Employees are eligible for such benefits if they retire after attaining specified age and service

requirements while employed by the University. The plans hold no assets and are funded by the University as

claims are paid. During the year ended June 30, 2011, the University amended certain features of its postretirement

benefit plans, replacing supplemental group medical insurance for Medicare-eligible retirees with Health

Reimbursement Accounts upon which retirees may draw to purchase individual supplemental medical coverage.

The University recognizes the full funded status of its defined benefit pension and other postretirement benefit

plans in the consolidated statements of financial position. Accordingly, the liability for pension benefits as

recognized in the statement of financial position represents the excess of the actuarially determined projected benefit

obligation (“PBO”) over the fair value of plan assets at year end. The liability for other postretirement benefits as

recognized in the consolidated statements of financial position represents the actuarially determined accumulated

postretirement benefit obligation (“APBO”) at year end. The following table summarizes the liabilities for pension

and other postretirement benefits reflected in the consolidated statements of financial position at June 30:

2011 2010Liability for pension benefits:PBO at end of year $ 167,512 $ 155,804Less: Fair value of plan assets at end of year (117,331) (88,024)

50,181 67,780Liability for other postretirement benefits (APBO at year end) 31,697 81,251

$ 81,878 $ 149,031

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

26

Changes in the actuarially determined benefit obligations are summarized below for the years ended June 30:

Other postretirementPension benefits (PBO) benefits (APBO)

2011 2010 2011 2010

Beginning of year $ 155,804 $ 127,378 $ 81,251 $ 62,027Service cost 6,063 4,811 3,992 3,689Interest cost 8,437 8,114 3,569 3,865Plan amendments - - (42,016) -Actuarial loss/(gain) 2,788 20,496 (14,032) 12,682Benefit payments (5,580) (4,995) (1,067) (1,012)

End of year $ 167,512 $ 155,804 $ 31,697 $ 81,251

The accumulated benefit obligation associated with pension benefits was $141,371 and $130,227 at June 30,

2011 and 2010, respectively.

The change in the fair value of pension plan assets is summarized below for the years ended June 30:

2011 2010

Fair value of plan assets at beginning of year $ 88,024 $ 77,827Actual return on plan assets 14,278 7,407Employer contributions 20,609 7,785Benefit payments (5,580) (4,995)

Fair value of plan assets at end of year $ 117,331 $ 88,024

The components of net periodic benefit cost recognized within operating expenses in the consolidated

statements of changes in unrestricted net assets are summarized as follows for the years ended June 30:

OtherPension benefits postretirement benefits2011 2010 2011 2010

Service cost $ 6,063 $ 4,811 $ 3,992 $ 3,689Interest cost 8,437 8,114 3,569 3,865Expected return on plan assets (7,417) (7,674) - -Amounts recognized previously asnon-operating changes in net assets:Amortization of net loss 2,968 185 1,129 1,404Amortization of prior service cost/(credit) 435 435 (2,525) (2,525)

3,403 620 (1,396) (1,121)$ 10,486 $ 5,871 $ 6,165 $ 6,433

The amortization of any prior service cost or credit is determined using straight-line amortization over the

average remaining service period of employees expected to receive benefits under the respective plans.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

27

Gains or losses and other changes in the actuarially determined benefit obligations arising in the current period,

but not included in net periodic benefit cost, are recognized as non-operating changes in the consolidated statements

of changes in unrestricted net assets. These changes are reflected net of a contra-expense adjustment for amounts

recognized previously, but included as components of net periodic benefit cost in the current period. Accordingly,

the net non-operating increase (decrease) in unrestricted net assets related to pension and other postretirement

benefits is summarized as follows for the years ended June 30:

OtherPension benefits postretirement benefits2011 2010 2011 2010

Net actuarial gain/(loss) $ 4,073 $ (20,763) $ 14,032 $ (12,682)Plan amendments - - 42,016 -Adjustment for components of net periodicbenefit cost recognized previously 3,403 620 (1,396) (1,121)

$ 7,476 $ (20,143) $ 54,652 $ (13,803)

Cumulative amounts recognized as non-operating changes in unrestricted net assets that had not yet been

reflected within net periodic benefit cost are summarized as follows at June 30:

OtherPension benefits postretirement benefits2011 2010 2011 2010

Net loss $ 41,240 $ 48,281 $ 19,001 $ 34,162Prior service cost/(credit) 3,993 4,428 (41,878) (2,387)

$ 45,233 $ 52,709 $ (22,877) $ 31,775

The University expects to amortize the following as components of net periodic benefit cost during the year

ending June 30, 2012:

Pensionbenefits

Otherpostretirementbenefits

Net loss $ 2,522 $ 1,522Prior service cost/(credit) $ 435 $ (7,648)

The following weighted-average assumptions were used in measuring the actuarially determined benefit

obligations (PBO for pension benefits and APBO for other postretirement benefits) at June 30:

OtherPension postretirementbenefits benefits

2011 2010 2011 2010Discount rate 5.50% 5.50% 5.50% 5.50%Rate of compensation increase 4.00% 4.00%Health care cost trend rate (grading to 5.00% in 2016) 7.50% 8.00%

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

28

The following weighted-average assumptions were used in measuring the actuarially determined net periodic

benefit costs for the years ended June 30:

OtherPension postretirementbenefits benefits

2011 2010 2011 2010Discount rate 5.50% 6.50% 5.50% 6.50%Expected long-term rate of return on plan assets 8.50% 8.50%Rate of compensation increase 4.00% 4.00%Health care cost trend rate (grading to 5.00% in 2016) 8.00% 8.50%

The expected long-term rate of return on pension plan assets is based on the consideration of both historical and

forecasted investment performance, given the targeted allocation of the plan’s assets to various investment classes.

A one-percentage-point increase in the assumed health care cost trend rate would have increased aggregate

service and interest costs and the APBO associated with postretirement medical benefits by approximately $1,743

and $4,034, respectively. A one-percentage-point decrease in the assumed health care cost trend rate would have

decreased aggregate service and interest costs and the APBO by approximately $1,363 and $3,411, respectively.

The projected payments to beneficiaries under the respective plans for each of the five fiscal years subsequent

to June 30, 2011 are as follows:

OtherPension postretirementbenefits benefits

2012 $ 5,982 $ 1,1292013 $ 6,461 $ 1,3052014 $ 6,969 $ 1,5172015 $ 7,515 $ 1,7572016 $ 8,157 $ 1,974

Projected aggregate payments for pension benefits and other postretirement benefits for the five year period

ending June 30, 2021 are $51,675 and $13,234, respectively. The University’s estimated contributions to the

defined benefit pension plan for the year subsequent to June 30, 2011 are $23,500, including the $11,000 accrued

contribution as reflected in Note 10.

DEFINEDBENEFIT PENSION PLAN ASSETS

The defined benefit pension plan’s assets are summarized as follows at June 30:

2011 2010Employer contributions receivable (Note 10) $ 11,000 $ -Investments (Note 6) 106,331 88,024

$ 117,331 $ 88,024

Contributions receivable from the University in the amount of $11,000 at June 30, 2011 were received on

September 29, 2011.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

29

The plan’s assets are invested in a manner that is intended to preserve the purchasing power of the plan’s assets

and provide payments to beneficiaries. Thus, a rate of return objective of inflation plus 5.0 percent is targeted.

The investment portfolio of the plan, which is invested with external investment managers, is diversified in a

manner that is intended to achieve the return objective and reduce the volatility of returns. The plan relies on a total

return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized)

and current yield (interest and dividends) over a long-term time horizon.

Actual and targeted allocations of the plan’s investments by asset class were as follows at June 30:

2011 2010 TargetShort-term investments 10.0% 6.6% 0.0%Public equities 46.3% 43.9% 50.0%Fixed income securities 16.4% 19.6% 17.5%Marketable alternatives 12.1% 14.5% 15.0%Private equity 7.9% 7.7% 7.5%Real assets 7.3% 7.7% 10.0%

100.0% 100.0% 100.0%

Asset allocation targets reflect the need for a modestly higher weighting in equity-based investments to achieve

the return objective. Decisions regarding allocations among asset classes are made when such actions are expected

to produce incremental return, reduce risk, or both. The investment characteristics of an asset class—including

expected return, risk, correlation, and its overall role in the portfolio—are analyzed when making such decisions.

The role of each asset class within the overall asset allocation of the plan is described as follows:

Public equities – Provides access to liquid markets and serves as a long-term hedge against inflation.

Fixed income securities – Provides a stable income stream and greater certainty of nominal cash flow relativeto the other asset classes. Given the low correlation to other asset classes, fixed income assets also enhancediversification and serve as a hedge against financial turmoil or periods of deflation.

Marketable alternatives – Enhances diversification and provides opportunities to benefit from short-terminefficiencies in global capital markets.

Private equity – Provides attractive long-term, risk-adjusted returns by investing in inefficient markets.

Real assets – Provides attractive return prospects, further diversification and a hedge against inflation.

Fair value measurements of plan investments at June 30, 2011 are categorized below by level of the fair value

hierarchy according to the lowest level of inputs significant to each measurement:

Level 1 Level 2 Level 3 TotalShort-term investments $ 5,006 $ 5,661 $ - $ 10,667Public equities:U.S. 7,308 8,580 - 15,888Non-U.S. 8,090 10,554 - 18,644Long/short strategies - 11,316 3,404 14,720

Fixed income securities 17,405 - - 17,405Marketable alternatives - 7,989 4,888 12,877Private equity - - 8,420 8,420Real assets 1,688 686 5,336 7,710

$ 39,497 $ 44,786 $ 22,048 $ 106,331

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

30

Fair value measurements of plan investments at June 30, 2010 are categorized below by level of the fair value

hierarchy according to the lowest level of inputs significant to each measurement:

Level 1 Level 2 Level 3 TotalShort-term investments $ - $ 5,803 $ - $ 5,803Public equities:U.S. - 10,099 - 10,099Non-U.S. 4,032 8,335 - 12,367Long/short strategies - 13,101 3,049 16,150

Fixed income securities 17,242 - - 17,242Marketable alternatives - 9,147 3,636 12,783Private equity - - 6,796 6,796Real assets 1,254 1,098 4,432 6,784

$ 22,528 $ 47,583 $ 17,913 $ 88,024

Changes in plan investments for which fair value is measured based on Level 3 inputs are summarized below

for the year ended June 30, 2011:

Net realized/Beginning Net unrealized Net transfers End ofof the year acquisitions gains1 out of Level 3 the year

Public equities:Long/short strategies $ 3,049 $ - $ 355 $ - $ 3,404

Marketable alternatives 3,636 602 650 - 4,888Private equity 6,796 137 1,487 - 8,420Real assets 4,432 852 739 (687) 5,336

$ 17,913 $ 1,591 $ 3,231 $ (687) $ 22,0481Included in the actual return on plan assets for the year ended June 30, 2011.

Changes in plan investments for which fair value is measured based on Level 3 inputs are summarized below

for the year ended June 30, 2010:

Net Net realized/Beginning acquisitions/ unrealized Net transfers End ofof the year (dispositions) gains/(losses)1 out of Level 3 the year

Public equities:Non-U.S. $ 1,165 $ (1,107) $ (4) $ (54) $ -Long/short strategies 15,287 - 863 (13,101) 3,049

Marketable alternatives 13,111 (2,238) 1,910 (9,147) 3,636Private equity 5,572 406 818 - 6,796Real assets 4,253 510 (331) - 4,432

$ 39,388 $ (2,429) $ 3,256 $ (22,302) $ 17,9131Included in the actual return on plan assets for the year ended June 30, 2010.

Net transfers out of Level 3 primarily reflect the migration to Level 2 of assets measured at fair value based on

NAV per share (or its equivalent) that were eligible for redemption at the reporting date or in the near term.

Transfers between Levels 1 and 2 were insignificant during the years ended June 30, 2011 and 2010, respectively.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

31

The plan is committed under contracts with certain investment managers to periodically advance additional

funding as capital calls are exercised. Capital calls are generally exercised over a period of years and are subject to

fixed expiration dates or other means of termination. Total commitments of $9,232 and $9,177 were uncalled at

June 30, 2011 and 2010, respectively.

NOTE 14.TEMPORARILY RESTRICTED NET ASSETS

Temporarily restricted net assets are summarized as follows at June 30:

2011 2010Expendable funds restricted for:Operating purposes $ 151,138 $ 129,537Investment in land, buildings and equipment 70,593 48,189

Split-interest agreements (Note 17) 20,656 15,947Endowment funds (Note 16):Accumulated appreciation and earnings on donor-restricted endowment 2,234,673 1,760,644Funds functioning as endowment 357,259 312,377

2,591,932 2,073,021$ 2,834,319 $ 2,266,694

As described in Note 4, temporarily restricted net assets include contributions receivable of $96,316 and

$82,418 at June 30, 2011 and 2010, respectively.

Net assets released from restrictions for operations are summarized below for the years ended June 30:

2011 2010Purpose restrictions satisfied:Scholarships and fellowships awarded $ 64,296 $ 59,024Expenditures for operating purposes 101,529 91,505

Term restrictions satisfied:Matured split-interest agreements available for operations (Note 17) 284 58

$ 166,109 $ 150,587

Non-operating net assets released from restrictions reflect expenditures for land, buildings and equipment of

$42,314 and $125,198 for the years ended June 30, 2011 and 2010, respectively.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

32

NOTE 15.PERMANENTLY RESTRICTED NET ASSETS

Permanently restricted net assets consist of the following at June 30:

2011 2010Endowment funds (Note 16) $ 1,365,280 $ 1,271,582Student loan funds 2,177 6,755Split-interest agreements (Note 17) 14,433 11,537Beneficial interests in perpetual trusts (Note 3) 4,826 4,143

$ 1,386,716 $ 1,294,017

As reflected in Notes 4 and 16, permanently restricted endowment funds include $118,444 and $99,187 in

contributions receivable at June 30, 2011 and 2010, respectively.

NOTE 16.ENDOWMENT

The University’s endowment consists of individual funds established for a variety of purposes. Net assets

associated with endowment funds, including funds functioning as endowment, are classified and reported in

accordance with any donor-imposed restrictions.

Endowment and funds functioning as endowment at June 30, 2011 are summarized below:

Temporarily Permanentlyrestricted restricted

Unrestricted (Note 14) (Note 15) TotalFunds established to support:Scholarships and fellowships $ 384,250 $ 939,779 $ 514,033 $ 1,838,062Faculty chairs 102,875 721,686 233,899 1,058,460Academic programs 173,230 351,383 207,922 732,535General operations 1,024,759 54,959 8,673 1,088,391Other 741,018 518,824 282,309 1,542,151

2,426,132 2,586,631 1,246,836 6,259,599Contributions receivable (Note 4) - 5,301 118,444 123,745

$ 2,426,132 $ 2,591,932 $ 1,365,280 $ 6,383,344

Temporarily PermanentlyUnrestricted restricted restricted Total

Donor-restricted funds $ (964) $ 2,586,631 $ 1,246,836 $ 3,832,503University-designated funds 2,427,096 - - 2,427,096

2,426,132 2,586,631 1,246,836 6,259,599Contributions receivable (Note 4) - 5,301 118,444 123,745

$ 2,426,132 $ 2,591,932 $ 1,365,280 $ 6,383,344

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

33

Endowment and funds functioning as endowment at June 30, 2010 are summarized below:

Temporarily Permanentlyrestricted restricted

Unrestricted (Note 14) (Note 15) TotalFunds established to support:Scholarships and fellowships $ 323,971 $ 744,405 $ 478,905 $ 1,547,281Faculty chairs 86,837 589,602 224,610 901,049Academic programs 137,788 274,787 195,480 608,055General operations 837,620 46,454 8,665 892,739Other 609,866 411,116 264,735 1,285,717

1,996,082 2,066,364 1,172,395 5,234,841Contributions receivable (Note 4) - 6,657 99,187 105,844

$ 1,996,082 $ 2,073,021 $ 1,271,582 $ 5,340,685

Temporarily PermanentlyUnrestricted restricted restricted Total

Donor-restricted funds $ (9,815) $ 2,066,364 $ 1,172,395 $ 3,228,944University-designated funds 2,005,897 - - 2,005,897

1,996,082 2,066,364 1,172,395 5,234,841Contributions receivable (Note 4) - 6,657 99,187 105,844

$ 1,996,082 $ 2,073,021 $ 1,271,582 $ 5,340,685

The fair value of assets associated with individual donor-restricted endowment funds may fall below the level

required by donor stipulations when the timing of contributions coincides with unfavorable market fluctuations.

Unrealized depreciation of this nature amounted to $964 and $9,815 at June 30, 2011 and 2010, respectively, as

reflected in the preceding tables.

Endowment and funds functioning as endowment are invested primarily in the NDEP, described in Note 6.

However, certain funds are invested outside of the NDEP in accordance with donor requirements and other

considerations.

Changes in endowment and funds functioning as endowment are summarized below for the year ended

June 30, 2011:

Temporarily PermanentlyUnrestricted restricted restricted Total

Beginning of the year $ 1,996,082 $ 2,073,021 $ 1,271,582 $ 5,340,685

Contributions 4,699 6,042 92,596 103,337Investment return:Investment income 27,488 41,757 2,010 71,255Net gain on investments 411,403 633,105 201 1,044,709Accumulated investmentreturn distributed (Note 6) (79,410) (153,068) - (232,478)Other changes, net 65,870 (8,925) (1,109) 55,836

$ 2,426,132 $ 2,591,932 $ 1,365,280 $ 6,383,344

During the year ended June 30, 2011, the University designated more than $60,000 in unrestricted net assets as

funds functioning as endowment for a variety of purposes.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

34

Changes in endowment and funds functioning as endowment are summarized below for the year ended

June 30, 2010:

Temporarily PermanentlyUnrestricted restricted restricted Total

Beginning of the year $ 1,854,566 $ 1,865,672 $ 1,200,504 $ 4,920,742

Contributions 430 30,824 71,647 102,901Investment return:Investment income 11,157 16,748 822 28,727Net gain on investments 210,328 286,758 72 497,158Accumulated investmentreturn distributed (Note 6) (82,012) (141,277) - (223,289)Other changes, net 1,613 14,296 (1,463) 14,446

$ 1,996,082 $ 2,073,021 $ 1,271,582 $ 5,340,685

The University has adopted an endowment spending policy that attempts to meet three objectives: (1) provide a

predictable, stable stream of earnings to fund participants; (2) ensure the purchasing power of this revenue stream

does not decline over time; and (3) ensure the purchasing power of the endowment assets does not decline over time.

Under this policy, as approved by the Board of Trustees, investment income, as well as a prudent portion of

appreciation, may be appropriated to support the operational needs of fund participants.

Accumulated investment return distributed (i.e. appropriated) under the University’s endowment spending

policy to meet operational needs is summarized below by the purposes associated with applicable funds for the years

ended June 30:

Temporarily 2011 2010Unrestricted restricted Total Total

Scholarships and fellowships $ 17,030 $ 63,164 $ 80,194 $ 75,825Faculty chairs 4,627 41,770 46,397 44,298Academic programs 733 24,014 24,747 23,444Libraries 337 7,005 7,342 7,014Other endowed programs 9,485 14,207 23,692 23,923General operations 47,198 2,908 50,106 48,785

$ 79,410 $ 153,068 $ 232,478 $ 223,289

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

35

NOTE 17.SPLIT-INTEREST AGREEMENTS

The University’s split-interest agreements consist principally of irrevocable charitable remainder trusts and

charitable gift annuities for which the University serves as trustee. Split-interest agreement net assets consisted of

the following at June 30:

Temporarily Permanentlyrestricted restricted 2011 2010

Unrestricted (Note 14) (Note 15) Total TotalCharitable trust assets, held in:NDEP (Note 6) $ - $ 52,960 $ 42,363 $ 95,323 $ 74,542Other investments (Note 6) - 6,453 3,514 9,967 9,438

- 59,413 45,877 105,290 83,980Less obligations1 associated with:Charitable trusts - 37,947 29,736 67,683 54,272Charitable gift annuities 1,577 810 1,708 4,095 3,756

1,577 38,757 31,444 71,778 58,028$ (1,577) $ 20,656 $ 14,433 $ 33,512 $ 25,952

1Represents the present value of estimated future payments to beneficiaries.

Assets contributed pursuant to the University’s charitable gift annuity program are not held in trust, and based

on the nature of the agreements, are designated as funds functioning as endowment. The aggregate fair value of

these assets was $13,730 and $10,610 at June 30, 2011 and 2010, respectively.

Changes in split-interest agreement net assets are summarized below for the years ended June 30:

Temporarily Permanently 2011 2010Unrestricted restricted restricted Total Total

Contributions:Assets received $ 165 $ 12,174 $ 2,884 $ 15,223 $ 9,978Discounts recognized1 (125) (6,152) (2,025) (8,302) (6,959)

40 6,022 859 6,921 3,019Change in value of agreements:Investment return, net - 10,013 8,257 18,270 8,416Payments to beneficiaries (228) (3,162) (2,741) (6,131) (5,347)Actuarial adjustments andother changes in obligations 80 (2,913) (2,615) (5,448) (1,458)

(148) 3,938 2,901 6,691 1,611Net assets released fromrestrictions (Note 14) - (284) - (284) (58)Transfers and other changes, net 63 (4,967) (864) (5,768) (244)

$ (45) $ 4,709 $ 2,896 $ 7,560 $ 4,3281Represents the present value of estimated future payments to beneficiaries.

University of Notre Dame du LacNotes to Consolidated Financial Statements(All amounts in thousands)

36

NOTE 18.GRANTS AND CONTRACTS

The University recognized operating revenues based on direct expenditures and related indirect costs funded by

grants and contracts as follows for the years ended June 30:

2011 2010Direct Indirect Total Total

Provided for:Research $ 77,425 $ 17,905 $ 95,330 $ 76,026Other sponsored programs 8,289 112 8,401 9,645

$ 85,714 $ 18,017 $ 103,731 $ 85,671

2011 2010Direct Indirect Total Total

Provided by:Federal agencies $ 68,176 $ 16,734 $ 84,910 $ 68,790State and local agencies 825 86 911 496Private organizations 16,713 1,197 17,910 16,385

$ 85,714 $ 18,017 $ 103,731 $ 85,671

Funding for federally sponsored research and other programs is received from the U.S. government, as well as

from other universities and private organizations that subcontract sponsored research to the University. The

University’s primary sources of federal research support are the Department of Health and Human Services and the

National Science Foundation.

The University also administers certain federally sponsored programs, primarily related to student financial aid,

for which it recognizes neither revenues nor expenses. Receipts and disbursements for such programs totaled

$13,742 and $11,976 for the years ended June 30, 2011 and 2010, respectively.

NOTE 19.CONTINGENCIES

The University is a defendant in various legal actions arising out of the normal course of its operations.

Although the final outcome of such actions cannot currently be determined, the University believes that eventual

liability, if any, will not have a material effect on the University’s financial position.

All funds expended in conjunction with government grants and contracts are subject to audit by government

agencies. In the opinion of management, any liability resulting from these audits will not have a material effect on

the University’s financial position.

APPENDIX C

THE NEW LIQUIDITY PROVIDER

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C-1

THE NEW LIQUIDITY PROVIDER

The Bank of New York Mellon, a New York state chartered bank (the “Bank”), is one of the two principal banking subsidiaries of The Bank of New York Mellon Corporation (NYSE: BK), a bank holding company and a financial holding company (“BNY Mellon”). BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 36 countries and serving more than 100 markets. BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, offering investment management and investment services through a worldwide team.

As of March 31, 2012, it had $26.6 trillion in assets under custody and administration, $1.3 trillion in assets under management, serviced $11.9 trillion in outstanding debt and processed global payments averaging $1.4 trillion per day. Additional information is available at www.bnymellon.com.

The Bank has long-term senior debt ratings of “Aa1”, “AA-”, “AA” and “AA” and short-term deposit ratings of “P1”, “A-1+”, “F1+” and “R-1 (high)” from Moody’s Investors Service, Inc., Standard & Poor’s Rating Services, Fitch Ratings and DBRS, respectively. A debt rating is not a recommendation to buy, sell or hold securities, and may be subject to revision or withdrawal at any time by the assigning rating organization. Each rating should be evaluated independently of any other rating..

BNY Mellon’s principal office is located at One Wall Street, New York, New York 10286. A copy of the most recent Annual Report on Form 10-K of BNY Mellon may be obtained from BNY Mellon’s Public Relations Department, One Wall Street, 31st Floor, (212) 635-1569.

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APPENDIX D

THE OFFICIAL STATEMENT

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EW IW SSUE — BOOK-ENTRY-ONLY RATRR INGS : (See “Ratings” Herein)Moody’s: Aaa/VMIG-1

In the opinion of Barnes & Thornburg LLP, South Bend, Indiana, Bond Counsel, under existing laws, interest on the Series 2007Bonds (as defined herein) is excludable from gross income for federal income tax purposes under Section 103 of the Internal RevenueCode of 1986, as amended and in effect on the date of issuance of the Series 2007 Bonds (the “Code”). Such exclusion is conditionedon continuing compliance with all requirements of the Code that must be satisfied subsequent to the issuance of the Series 2007Bonds. In the opinion of Barnes & Thornburg LLP, South Bend, Indiana, Bond Counsel, under existing laws, interest on the Series 2007 Bonds is exempt from income taxation in the State of Indiana for all purposes except the State financial institutions tax. See “TAXTT EX XEE EXX MPEE TIONTT ” herein.

$75,000,000St. Joseph County, Indiana

Variable Rate Educational Facilities Revenue Bonds, Series 2007(University of Notre Dame du Lac Project)

Dated: Date of Issuance Price: 100% Due: March 1, 2042

CUSIP Number: 79061A BE6

The Series 2007 B een St. Joseph County,Indiana (the “Issuer”) and Wells Fargo Bank, N.A., Indianapolis, Indiana, as trustee, paying agent and registrar (the “Trustee”). Proceedsfrom the sale of the Ser

The Series 2007 Bonds will be issued in book-entry-only form and will be registered in the name of Cede & Co., as nominee forThe Depository Trust Company, New York, New York (“DTC”). Purchasers of beneficial interests (“Beneficial Owners”) will not receivecertificates representin ed in the name of Cede & Co., as nominee of DTC, references herein to the owners shall mean Cede & Co., and shall not mean the Beneficial Owners of the Series 2007 Bonds.

Payments of the p to DTC or its nominee,Cede & Co., by the Trustee, so long as DTC or Cede & Co. is the sole registered owner. Disbursement of such payments to DTC’s Direct Participants is the responsibility of DTC, and disbursements of such payments to the Beneficial Owners is the responsibility of DTC’s DirectParticipants and the In

Each Series 2007 Bond may bear interest at a Daily, a Weekly, a Commercial Paper, a Term, a Fixed or an Auction Period Rate. While a Series 2007 Bond bears y Rate Period, a WeeklyRate Period, a Commercial Paper Rate Period, a Term Rate Period, a Fixed Rate Period or an ARS Rate Period, respectively. While anysingle Series 2007 Bond n different Rate Periodsat the same time. The described herein. THIS

OFFICIAL STATEMENT DOE AUCTION PERIOD RATRR E OR

THE ARS RATRR E PERIOD.

Initially, all of the eriod until converted toanother Rate Period as will be paid on the firstbusiness day of each m Weekly Rates for suchSeries 2007 Bonds may

Initially, the Serie ples of $5,000 in excessthereof. The Series 20 onds in a Daily, Weekly, Commercial Paper or Term Rate Period also are subject to optional and mandatory tender for purchase under certain circumstancesdescribed herein.

Initially, payment dered or required to be tendered for purchase for which remarketing proceeds are not available will be supported by a standby bond purchase agreement (the“Initial Liquidity Facility”) provided by Banco Bilbao Vizcaya Argentaria, S.A., acting through its New York Branch (“Initial LiquidityProvider”), subject to certain terms and conditions described therein and herein. Under the Initial Liquidity Facility, however, the InitialLiquidity Provider will be under no obligation to provide funds to pay the purchase price of Series 2007 Bonds tendered or required to betendered for purchase upon the occurrence of certain events of default under the Initial Liquidity Facility. The Initial Liquidity Facility has a stated termination da r to its respective statedtermination date in acc

The Series 2007 Bonds are limited obligations of the Issuer payable solely from and secured by payments to be made by the University pursuant to the Loan Agreement, as more fully described in this Official Statement. The Series 2007 Bondsand the interest and premium, if any, thereon shall not constitute a debt, liability or a general obligation of the Issuer orthe State of Indiana or any political subdivision within the meaning of the Constitution or statutes of the State of Indiana,or a pledge of the faith and credit of the Issuer or the State of Indiana or any political subdivision thereof. The Series 2007Bonds do not grant the owners or holders thereof any right to have the Issuer levy any taxes or appropriate any funds forthe payment of the p

The Series 2007 Bonds are offered when, as and if issued by the Issuer and received by the Underwriter, subject to withdrawal ormodification of the offering without notice, and subject to the approving opinion of Barnes & Thornburg LLP, South Bend, Indiana, Bond Counsel. Certain legal matters will be passed upon for the Issuer by its counsel, Zappia Zappia & Stipp, South Bend, Indiana; for the InitialLiquidity Provider by its United States counsel, Nixon Peabody LLP, New York, New York, and by its Spanish counsel, J & A Garrigues S.L., Madrid, Spain; for the University by its Vice President and General Counsel; and for the Underwriter by its counsel, Chapman and CutlerLLP, Chicago, Illinois. rk, through the facilitiesof DTC on or about December ,

Goldman, Sachs & Co.Dated: December 7, 2007

REGARDING USE OF THIS OFFICIAL STATEMENT

No dealer, broker, salesman or other person has been authorized by the Issuer, the University, the Initial Liquidity Provider, or the Underwriter to give any information or to make any representations with respect to the Series 2007 Bonds, other than those contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of the Series 2007 Bonds by any persons in any jurisdiction in which it is unlawful to make such offer, solicitation or sale prior to registration or qualification under the securities laws of any such jurisdiction. This Official Statement is not to be construed as a contract with the purchasers of the Series 2007 Bonds.

The information set forth in this Official Statement has been obtained from the Issuer, the University, the Initial Liquidity Provider, and other sources which are believed to be reliable. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. The information and expressions of opinion contained herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Issuer or the University or that the information contained herein is correct at any time subsequent to the date hereof.

IN CONNECTION WITH THE OFFERING OF THE SERIES 2007 BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT

TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE SERIES 2007 BONDS AT A LEVEL ABOVE THOSE WHICH

MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

THE SERIES 2007 BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER

THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THE INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF

1939 IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. THE REGISTRATION OR QUALIFICATION OF THE SERIES 2007BONDS IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF SECURITIES LAWS OF THE STATES IN WHICH THE SERIES 2007BONDS HAVE BEEN REGISTERED OR QUALIFIED AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN OTHER STATES

CANNOT BE REGARDED AS A RECOMMENDATION THEREOF. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR

OWN EXAMINATION OF THE SERIES 2007 BONDS AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE SERIES 2007 BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY STATE OR FEDERAL SECURITIES COMMISSION OR

OTHER REGULATORY ISSUER NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE

OFFERING OR THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A

CRIMINAL OFFENSE.

The CUSIP number included in this Official Statement is for the convenience of the Owners and the potential Owners of the Series 2007 Bonds. No assurance can be given that the CUSIP number for the Series 2007 Bonds will remain the same after the date of issuance and delivery of the Series 2007 Bonds.

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TABLE OF CONTENTS

PAGE

INTRODUCTION .................................................................................................................................1

Purpose of this Official Statement; Definitions ......................................................................1 The Series 2007 Bonds; the Trustee .......................................................................................1 Security for the Series 2007 Bonds.........................................................................................2 Book-Entry-Only System........................................................................................................4Summaries...............................................................................................................................4

UNIVERSITY OF NOTRE DAME DU LAC .............................................................................................4

PLAN OF FINANCE; ESTIMATED SOURCES AND USES ........................................................................5

Plan of Finance .......................................................................................................................5Additional Debt.......................................................................................................................6Estimated Sources and Uses ...................................................................................................7

THE SERIES 2007 BONDS ..................................................................................................................7

General....................................................................................................................................7Interest Rates and Rate Periods...............................................................................................8Conversion Between Interest Rate Periods...........................................................................12 Optional Tender ....................................................................................................................15Mandatory Tender.................................................................................................................16Delivery of Series 2007 Bonds .............................................................................................17 Payment of Purchase Price....................................................................................................17Remarketing..........................................................................................................................18Redemption...........................................................................................................................19Transfer and Exchange .........................................................................................................22

BOOK-ENTRY-ONLY SYSTEM .........................................................................................................22

SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2007 BONDS ............................................25

General..................................................................................................................................25The Loan Agreement and the Series 2007 Note ...................................................................25 Payment of Purchase Price; Alternate Liquidity Facility; Self Liquidity .............................26

INITIAL LIQUIDITY FACILITY ..........................................................................................................27

General..................................................................................................................................27Events of Default ..................................................................................................................28Remedies...............................................................................................................................31Certain Definitions................................................................................................................34

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ESTIMATED ANNUAL LONG-TERM DEBT SERVICE REQUIREMENTS................................................36

THE ISSUER.....................................................................................................................................37

TAX EXEMPTION.............................................................................................................................37

CERTAIN RELATIONSHIPS ...............................................................................................................38

LEGAL MATTERS ............................................................................................................................39

Legal Opinions......................................................................................................................39Enforceability Limitations ....................................................................................................39

LITIGATION.....................................................................................................................................39

The Issuer..............................................................................................................................39The University ......................................................................................................................40

UNDERWRITING ..............................................................................................................................40

RATINGS .........................................................................................................................................40

INDEPENDENT ACCOUNTANTS ........................................................................................................41

CONTINUING DISCLOSURE REQUIREMENT ......................................................................................41

MISCELLANEOUS ............................................................................................................................41

APPENDICES

APPENDIX A: University of Notre Dame du Lac........................................................................ A-1 APPENDIX B: Audited Consolidated Financial Statements of the University as of and for the

Years ended June 30, 2007 and 2006 ....................................................................B-1 APPENDIX C: Definitions and Summary of Bond Documents ....................................................C-1 APPENDIX D: The Initial Liquidity Provider .............................................................................. D-1 APPENDIX E: Proposed Form of Bond Counsel Opinion.............................................................E-1

OFFICIAL STATEMENT

$75,000,000ST. JOSEPH COUNTY, INDIANA

VARIABLE RATE EDUCATIONAL FACILITIES REVENUE BONDS, SERIES 2007 (UNIVERSITY OF NOTRE DAME DU LAC PROJECT)

INTRODUCTION

Purpose of this Official Statement; Definitions

The purpose of this Official Statement, which includes the cover page and appendices, is to set forth certain information concerning (i) St. Joseph County, Indiana (the “Issuer”), a political subdivision organized and existing under the Constitution and the laws of the State of Indiana (the “State” or “Indiana”), acting through its Board of County Commissioners, (ii) the Issuer’s $75,000,000 aggregate principal amount of Variable Rate Educational Facilities Revenue Bonds, Series 2007 (University of Notre Dame du Lac Project) (the “Series 2007 Bonds”) and (iii) the University of Notre Dame du Lac, a not-for-profit corporation chartered under Indiana law (the “University”).

Certain capitalized terms used in the forepart of this Official Statement and not otherwise defined herein are defined in APPENDIX C attached hereto.

The Series 2007 Bonds; the Trustee

Series 2007 Bonds. The Series 2007 Bonds will be issued pursuant to the Indiana Code, Title 36, Article 7, Chapters 11.9 and 12, as amended and Title 5, Article 1, Chapter 5 (collectively, the “Act”), in accordance with the provisions of a Trust Indenture dated as of December 1, 2007 (the “Indenture”), by and between the Issuer and Wells Fargo Bank, N.A., Indianapolis, Indiana, as trustee, paying agent and registrar (the “Trustee”). The proceeds from the sale of the Series 2007 Bonds will be loaned by the Issuer to the University pursuant to the Loan Agreement dated as of December 1, 2007 (the “Loan Agreement”), between the Issuer and the University and will be used by the University to (i) finance and reimburse a portion of the costs of acquiring, constructing, expanding, renovating, equipping and improving various educational facilities of the University, including capitalized interest, if any (collectively, the “Project”), (ii) currently refund all of the outstanding Indiana Educational Facilities Authority Educational Facilities Refunding Revenue Bonds, Series 1997 (University of Notre Dame du Lac Project), issued in the original aggregate principal amount of $23,645,000 (the “IEFA Series 1997 Bonds”), (iii) currently refund all of the outstanding St. Joseph County, Indiana Educational Facilities Revenue Bonds, Series 1997 (University of Notre Dame du Lac Project), issued in the original aggregate principal amount of $32,080,000 (the “Issuer Series 1997 Bonds” and collectively with the IEFA Series 1997 Bonds, the “Refunded Bonds”), and (iv) pay costs relating to the issuance of the Series 2007 Bonds and the refunding of the Refunded Bonds. See “PLAN OF FINANCE; ESTIMATED SOURCES AND USES.” To evidence its obligation under the Loan Agreement to make loan payments sufficient to pay principal of and premium, if any, and interest on the Series 2007 Bonds when due, the University will execute and deliver to the

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Trustee its promissory note, dated the date of issuance of the Series 2007 Bonds (the “Series 2007 Note”).

As described herein (except as noted below), each Series 2007 Bond may operate in one of six Rate Periods: a Daily, a Weekly, a Commercial Paper, a Term, a Fixed or an ARS Rate Period. Initially, all of the Series 2007 Bonds will operate in a Weekly Rate Period and will bear interest at a Weekly Rate established by Goldman, Sachs & Co., as remarketing agent for the Series 2007 Bonds (the “Remarketing Agent”).

THIS OFFICIAL STATEMENT DOES NOT PROVIDE ANY INFORMATION REGARDING THE

SERIES 2007 BONDS WHEN BEARING INTEREST AT AN AUCTION PERIOD RATE OR THE ARSRATE PERIOD.

The Series 2007 Bonds will be subject to redemption prior to maturity and to tender for purchase as described herein.

Security for the Series 2007 Bonds

General Obligation of University. The Loan Agreement is a general obligation of the University and requires the University to make payments on the related Series 2007 Note in amounts sufficient to pay when due (whether at maturity or by redemption or otherwise) principal of, premium, if any, and interest on the Series 2007 Bonds.

Limited Obligations of Issuer. The Series 2007 Bonds and the interest thereon are special and limited obligations of the Issuer payable solely out of amounts on deposit in the Bond Fund established under the Indenture, payments or prepayments to be made on the Series 2007 Note and from other payments made by the University under the Loan Agreement (other than fees and expenses payable to the Issuer and amounts payable pursuant to the Issuer’s right to indemnification in certain circumstances), and will be secured by a pledge and assignment of such amounts and such payments to the Trustee pursuant to the Indenture.

Liquidity Facilities; Self Liquidity. Payment of the purchase price for Series 2007 Bonds tendered for purchase in accordance with the Indenture will be made (in the order listed) (i) from remarketing proceeds, (ii) from, with respect to the interest component of the purchase price of Series 2007 Bonds bearing interest at Commercial Paper or Term Rates, moneys deposited by the University pursuant to the Loan Agreement (see APPENDIX C - “DEFINITIONS AND SUMMARY

OF BOND DOCUMENTS - LOAN AGREEMENT - Loan and Loan Payments”) in the special interest account established under the Indenture (the “Special Interest Account”) as a separate account within the bond fund established under the Indenture (the “Bond Fund”), (iii) from moneys made available under any liquidity facility then supporting such Series 2007 Bonds to the extent provided in such liquidity facility and (iv) from any other moneys made available by the University.

Initially, payment of the purchase price for the Series 2007 Bonds will be supported by funds made available by Banco Bilbao Vizcaya Argentaria, S.A., acting through its New York Branch (“Initial Liquidity Provider”), to the extent set forth in, and pursuant to the terms of, the Standby Bond Purchase Agreement, dated as of December 1, 2007 (the “Initial Liquidity

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Facility”), among, the University, Wells Fargo Bank, N.A., as tender agent (the “Tender Agent”), and the Initial Liquidity Provider. The Initial Liquidity Facility has a stated termination date of December 12, 2014. See “INITIAL LIQUIDITY FACILITY.” The Initial Liquidity Facility may be extended or terminated prior to its stated termination date in accordance with its terms. See “INITIAL LIQUIDITY FACILITY.”

Under the Initial Liquidity Facility, while the Series 2007 Bonds operate in the Daily Rate Period or the Weekly Rate Period, the Initial Liquidity Provider agrees to make funds available to pay the purchase price of Series 2007 Bonds that are tendered or required to be tendered for purchase for which remarketing proceeds are not available, equal to the aggregate principal amount of such Series 2007 Bonds and up to 35 days of accrued interest on such Series 2007 Bonds, calculated assuming a 365-day year and an interest rate on the Series 2007 Bonds of 10% per annum. See “INITIAL LIQUIDITY FACILITY.” Under certain circumstances described herein and in the Indenture and the Loan Agreement, the University may replace the Initial Liquidity Facility with one or more alternate liquidity facilities issued by one or more different liquidity providers.

Under the Initial Liquidity Facility, the Initial Liquidity Provider will be under no obligation to provide funds to pay the purchase price of Series 2007 Bonds tendered or required to be tendered for purchase upon the occurrence of certain events of default thereunder, including certain payment defaults, the invalidity or unenforceability of certain bond and credit documents, the bankruptcy or insolvency of the University, the decline in the University’s credit rating to below investment grade or the issuance of a final judgment or order against the University for the payment of money in excess of $10,000,000 for which adequate cash reserves or insurance proceeds are not available. See “INITIAL LIQUIDITY FACILITY.”

Under the terms of the Indenture and the Loan Agreement, the University may choose not to support the payment of the purchase price of any Series 2007 Bonds in any Rate Periods including the Daily Rate Period or the Weekly Rate Period, with any liquidity facility issued by a liquidity provider, but may instead choose to be solely responsible for the full payment of the purchase price for Series 2007 Bonds that are tendered or required to be tendered for purchase and are not remarketed, or for which remarketing proceeds are not delivered. The University covenants under the Loan Agreement to make all payments necessary to pay the purchase price of Series 2007 Bonds tendered or required to be tendered for purchase.

As used in this Official Statement, the obligation of a liquidity provider (including the Initial Liquidity Provider) to provide liquidity support for the payment of the purchase price for any of the Series 2007 Bonds to the extent set forth in, and pursuant to the terms of, a liquidity facility (including the Initial Liquidity Facility) or other document is referred to herein as a “Liquidity Facility” and, under such circumstances, such liquidity provider is referred to herein as the “Liquidity Provider.”

Series 2007 Bonds that have been converted to a Term Rate Period that has a duration in excess of twelve months, to a Fixed Rate Period or to an ARS Rate Period will not be supported by any Liquidity Facility.

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Book-Entry-Only System

The Series 2007 Bonds will be initially issued through a book-entry-only system maintained by The Depository Trust Company (“DTC”). The Series 2007 Bonds will be initially registered in the name of Cede & Co., as DTC’s nominee. See “BOOK-ENTRY-ONLY SYSTEM.”

Summaries

Descriptions of the University, the Issuer, the Series 2007 Bonds, and summaries of the Indenture, the Loan Agreement, the Remarketing Agreement and the Initial Liquidity Facility are included in this Official Statement, including the APPENDICES attached hereto. Such information, summaries and descriptions do not purport to be comprehensive or definitive. All references in this Official Statement to the specified documents are qualified in their entirety by reference to each such document, copies of which are available from the Trustee, and all references to the Series 2007 Bonds are qualified in their entirety by reference to the definitive forms thereof and the information with respect thereto included in the aforesaid documents. The information in this Official Statement concerning the University, the Issuer and the Initial Liquidity Provider has been supplied by the University, the Issuer and the Initial Liquidity Provider, respectively.

UNIVERSITY OF NOTRE DAME DU LAC

The University of Notre Dame du Lac, founded in 1842 by a priest of the Congregation of Holy Cross, is an independent, national Catholic research university located just north of the City of South Bend, Indiana. The University offers undergraduate, graduate, and professional degree-granting programs, and enrolls approximately 11,650 students. The University is governed by a predominantly lay Board of Trustees which exercises power delegated to them by twelve Fellows, six of whom must be members of the Priests Society of the Congregation of Holy Cross.

The University is accredited by the North Central Association of Colleges and Secondary Schools. The last accreditation was granted in December, 2004 for a ten year period. Certain academic divisions are accredited by the following organizations: the American Bar Association (Law School), the National Architectural Accrediting Board (School of Architecture), the Association to Advance Collegiate Schools of Business, the American Psychological Association (Program in Counseling Psychology), the American Chemical Society (Department of Chemistry), the Engineering Accreditation Commission of the Accreditation Board for Engineering and Technology (Programs in Aerospace, Chemical, Civil, Electrical, Mechanical, and Computer Engineering and Computer Science), and the Association of Theological Schools (Program in Theology). Other departments, colleges, and programs of the University are accredited by relevant accrediting organizations.

For further information relating to the University see APPENDIX A to this Official Statement. Audited consolidated financial statements of the University as of and for the years ended June 30, 2007 and 2006, are included in APPENDIX B hereto.

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PLAN OF FINANCE; ESTIMATED SOURCES AND USES

Plan of Finance

General. The proceeds of the Series 2007 Bonds, together with certain other funds, will be used by the University to (i) finance and reimburse a portion of the costs of the Project, including capitalized interest, if any, (ii) currently refund all of the Refunded Bonds and (iii) pay costs relating to the issuance of the Series 2007 Bonds and the refunding of the Refunded Bonds.

Project. The University will apply the Series 2007 proceeds to finance and reimburse a portion of the costs of various campus improvements. Those improvements include (i) the construction of an addition to the Mason Support Services Center, (ii) the renovation and improvements to laboratory facilities within Nieuwland Science Hall, (iii) general construction and renovation projects, including construction and/or renovation of and improvements to residence halls, athletic, academic, and student service facilities, security facilities, utility facilities and infrastructure, and improvements to roads, walkways and parking lots, including site improvements and landscaping, and (iv) the acquisition, construction, expansion, renovation or equipping of any other educational facilities for the University. All of the projects are or will be initially owned and/or operated by the University, St. Joseph County, Indiana, or the City of South Bend, Indiana.

The University will also apply a portion of the Series 2007 Bonds to finance a portion of the interest on the Series 2007 Bonds. See “PLAN OF FINANCE; ESTIMATED SOURCES AND USES”and “ESTIMATED ANNUAL DEBT SERVICE REQUIREMENTS.”

Refunding of Refunded Bonds. The IEFA Series 1997 Bonds were issued pursuant to the terms of the Trust Indenture dated as of October 1, 1997 (the “IEFA Series 1997 Indenture”), by and between the Indiana Finance Authority (as successor to the Indiana Educational Facilities Authority) and The Bank of New York Trust Company, N.A., as successor co-trustee, paying agent and registrar, and 1st Source Bank, South Bend, Indiana, as trustee. Proceeds from the sale of the IEFA Series 1997 Bonds were loaned to the University and used to (i) advance refund certain other then outstanding revenue bonds theretofore issued for the benefit of the University and (ii) pay costs of issuance of the IEFA Series 1997 Bonds.

The Issuer Series 1997 Bonds were issued pursuant to the terms of the Trust Indenture dated as of October 1, 1997 (the “Issuer Series 1997 Indenture”), by and between the Issuer and The Bank of New York Trust Company, N.A., as successor co-trustee, paying agent and registrar, and 1st Source Bank, South Bend, Indiana, as trustee. Proceeds from the sale of the Issuer Series 1997 Bonds were loaned to the University and used to (i) finance and reimburse a portion of the costs of acquiring, constructing, expanding, renovating, equipping and improving various educational facilities of the University (collectively, the “1997 Projects”), (ii) fund a portion of the interest on the Issuer Series 1997 Bonds during the period of completion of the 1997 Projects and (iii) pay costs of issuance of the Issuer Series 1997 Bonds.

Proceeds of the Series 2007 Bonds will be deposited in the Project Fund created under the Indenture. Immediately upon deposit in the Project Fund, the Trustee will transfer (a) a

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portion of the proceeds from the Project Fund to The Bank of New York Trust Company, N.A., as escrow agent (the “IEFA 1997 Escrow Agent”) under an Escrow Agreement between the University and the IEFA 1997 Escrow Agent pertaining to the refunding of the IEFA Series 1997 Bonds, to be used to redeem the IEFA Series 1997 Bonds on or about March 3, 2008; and (b) a portion of the proceeds from the Project Fund to The Bank of New York Trust Company, N.A., as escrow agent (the “Issuer 1997 Escrow Agent”) under an Escrow Agreement between the University and the Issuer 1997 Escrow Agent pertaining to the refunding of the Issuer Series 1997 Bonds, to be used to redeem the Issuer Series 1997 Bonds on or about March 3, 2008.

Moneys on deposit under each said Escrow Agreement will be used to purchase certain investments, the principal of and interest on which are expected to be sufficient to pay principal of and interest when due on the Refunded Bonds to and including March 3, 2008, and to redeem on March 3, 2008 all then outstanding Refunded Bonds that mature after March 1, 2008, at a redemption price equal to 100% of the principal amount thereof plus accrued interest thereon through but not including such redemption date. Although such provision for payment of the Refunded Bonds will be made, under the terms of the IEFA Series 1997 Indenture and the Issuer Series 1997 Indenture, the Refunded Bonds will not be deemed to be paid and will remain outstanding until redemption thereof on March 3, 2008, and the University will remain obligated to pay the principal of and interest on the Refunded Bonds until such redemption.

No moneys or securities on deposit under any such Escrow Agreement is security for or available for the payment of principal of, premium, if any, or interest on the Series 2007 Bonds.

Additional Debt

In conjunction with the issuance of the Series 2007 Bonds, the University has also requested that the Issuer provide for an increase in an existing commercial paper revenue note program previously established by the Issuer for the benefit of the University. Such program is designated as “St. Joseph County, Indiana Municipal Commercial Paper Notes (University of Notre Dame du Lac)” (the “Notes”). The Notes are issued from time to time pursuant to an Amended and Restated Trust Indenture dated as of December 1, 2007, amending and restating the Trust Indenture dated as of December 1, 2005, and an Amended and Restated Issuing and Paying Agency Agreement, dated as of December 1, 2007, amending and restating the Issuing and Paying Agency Agreement dated as of December 1, 2005, each among the Issuer, 1st Source Bank, as trustee, and Deutsche Bank National Trust Company, as co-trustee. The Notes include standard commercial paper notes (the “Standard Notes”) and extendable commercial paper notes and may be issued as taxable commercial paper notes or tax-exempt commercial paper notes. The Standard Notes will be secured by a standby liquidity facility provided by RBS Citizens, National Association. The aggregate principal amount of Notes that may be outstanding at any one time is being increased to not to exceed $200,000,000. The proceeds from the sale of the Notes will be used for various University purposes. As of December 1, 2007, no Notes were outstanding.

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Estimated Sources and Uses

The following table shows the estimated sources and uses of the Series 2007 Bond proceeds:

Estimated Sources of Funds

Principal Amount of Series 2007 Bonds $75,000,000Estimated Earnings(1) 1,185,733

Total Sources of Funds $76,185,733

Estimated Uses of Funds

Project Costs $24,007,354 Capitalized Interest(2) 1,200,963 Refund Refunded Bonds 50,700,465 Costs of Issuance(3) 276,951

Total Uses of Funds $76,185,733_______________________(1) Assumes an investment earnings rate of 3.5% per annum on amounts on deposit in the Project Fund

established under the Indenture and an investment earnings rate of 3.5% on amounts in the Escrow Agreements.

(2) Represents estimated interest on a portion of the Series 2007 Bonds at an assumed rate of 3.5% per annum through July, 2009.

(3) Includes Underwriter’s fee of $72,501 (including expenses) and other costs relating to the issuance of the Series 2007 Bonds.

THE SERIES 2007 BONDS

General

The Series 2007 Bonds will be issued as fully registered Series 2007 Bonds without coupons in denominations of $100,000 and integral multiples of $5,000 in excess thereof so long as the Series 2007 Bonds bear interest at a Daily Rate, a Weekly Rate, a Commercial Paper Rate or, a Term Rate for a Term Rate Period with a duration of twelve months; and in denominations of $5,000 or any integral multiple thereof if the Series 2007 Bonds bear interest at a Term Rate for a Term Rate Period that extends for more than twelve months or at a Fixed Rate. The Series 2007 Bonds will mature, subject to prior redemption, on March 1, 2042 (the “Maturity Date”). The Series 2007 Bonds will be initially dated as of the date of issuance.

The Series 2007 Bonds, when issued, will be registered in the name of Cede & Co., as nominee for DTC. Payment of the principal of, premium, if any, and interest on each issue of Series 2007 Bonds will be made directly to DTC or its nominee, Cede & Co., by the Trustee. See “BOOK-ENTRY-ONLY SYSTEM.”

At any given time, any Series 2007 Bond may operate in one of six Rate Periods: a Daily Rate Period, a Weekly Rate Period, a Commercial Paper Rate Period, a Term Rate Period, a Fixed Rate Period or an ARS Rate Period. While in any of those Rate Periods, such Series 2007 Bond will bear interest at a Daily Rate, a Weekly Rate, a Commercial Paper Rate, a Term Rate, a

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Fixed Rate or an Auction Period Rate, respectively. THIS OFFICIAL STATEMENT DOES NOT

PROVIDE ANY INFORMATION REGARDING THE SERIES 2007 BONDS WHEN BEARING INTEREST

AT AN AUCTION PERIOD RATE OR THE ARS RATE PERIOD.

At any given time the Series 2007 Bonds may operate in one or more Rate Periods, and while any single Series 2007 Bond may operate in only one Rate Period at one time, other Series 2007 Bonds may operate in different Rate Periods at the same time. The Rate Periods that the Series 2007 Bonds are operating in may be changed from time to time as described herein. Initially all of the Series 2007 Bonds will be issued in a Weekly Rate Period.

The Series 2007 Bonds are subject to optional and mandatory tender for purchase under certain circumstances as summarized herein under the captions “THE SERIES 2007 BONDS -Optional Tender - Mandatory Tender.” Payment of the purchase price for the Series 2007 Bonds (other than Pledged Bonds and University Bonds) that are tendered or required to be tendered for purchase initially will be supported by funds made available under the terms of the Initial Liquidity Facility to the extent described therein.

Interest Rates and Rate Periods

General. The Series 2007 Bonds will bear interest at a Daily, Weekly, Commercial Paper, Term or Fixed Rate. When the Series 2007 Bonds are in a Daily, Weekly, Commercial Paper or Term Rate Period, the interest rate on the Series 2007 Bonds will be determined by the Remarketing Agent as the lowest rate of interest which in its judgment will cause the Series 2007 Bonds to have a market value, as of the date of determination, equal to the principal amount of the Series 2007 Bonds, taking into account prevailing market conditions; provided that the interest rate borne by the Series 2007 Bonds in such Rate Periods as to which a Liquidity Facility is in effect may not exceed the per annum interest rate as to which interest coverage is provided in the Liquidity Facility. With respect to Commercial Paper Rates, the Remarketing Agent will determine the Commercial Paper Rate and the Commercial Paper Rate Period for each Series 2007 Bond at such rate and for such period as it deems advisable in order to minimize the net interest cost on the Series 2007 Bonds, taking into account prevailing market conditions. The interest rate on Series 2007 Bonds in the Fixed Rate Period will be established as hereinafter described under the caption “THE SERIES 2007 BONDS - Interest Rates and Rate Periods - Fixed Rate Period; Fixed Rate.”

Interest on the Series 2007 Bonds will be calculated on the basis of (i) a 365 or 366-day year, as appropriate, for the actual number of days elapsed while the Series 2007 Bonds bear interest at a Daily Rate, (ii) a 365 or 366-day year, as appropriate, for the actual number of days elapsed, based on the calendar year in which the Weekly Rate Period or the Commercial Paper Rate Period commences, while the Series 2007 Bonds bear interest at a Weekly Rate or a Commercial Paper Rate, and (iii) a 360-day year of twelve 30-day months while the Bonds bear interest at a Term or Fixed Rate.

Payment of principal of, premium, if any, and interest on the Series 2007 Bonds will be made directly to DTC or its nominee, Cede & Co., by the Trustee. See “BOOK-ENTRY-ONLY

SYSTEM.” In the event the Series 2007 Bonds are not in a book-entry-only system, payment of principal of, premium, if any, and interest on the Series 2007 Bonds will be made as described in

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the Indenture and summarized in APPENDIX C - “DEFINITIONS AND SUMMARY OF BOND

DOCUMENTS - INDENTURE - Payment of Series 2007 Bonds.”

Interest on the Series 2007 Bonds will be paid to the registered owners thereof with respect to (i) any particular Series 2007 Bond accruing interest at a Commercial Paper Rate, on the day after the last day of each Commercial Paper Rate Period applicable thereto; (ii) Series 2007 Bonds accruing interest at Daily or Weekly Rates, on the first Business Day of each calendar month following a month in which interest at such Rate has accrued and on any day which is a Conversion Date from a Daily Rate Period or a Weekly Rate Period, respectively; (iii) Series 2007 Bonds accruing interest at a Term Rate, each March 1 and September 1, commencing with the first of such dates after the date of a conversion to a Term Rate occurs, except that the last Interest Payment Date for any Term Rate Period will be the day after the last day of each Term Rate Period applicable thereto; (iv) Series 2007 Bonds accruing interest at a Fixed Rate, each March 1 and September 1, commencing with the first of such dates which is occurring after the date of a conversion to a Fixed Rate through and including the maturity date of the Series 2007 Bonds accruing interest at a Fixed Rate and (v) any Pledged Bonds, as set forth in the Liquidity Facility. The first Interest Payment Date for the Series 2007 Bonds will be the first Business Day of January, 2008, which is January 2, 2008.

Daily Rate Period; Daily Rate. A Daily Rate Period will commence on a Daily Rate Conversion Date, which will be a Business Day, and on each Business Day thereafter until the type of Rate Period applicable to all or a portion of the Series 2007 Bonds is converted to another type of Rate Period and will extend to, but not include, the next succeeding Business Day. Series 2007 Bonds in a Daily Rate Period will bear interest at a Daily Rate.

When interest on the Series 2007 Bonds is payable at a Daily Rate, the Remarketing Agent will set a Daily Rate on the first Business Day of the Daily Rate Period to which it relates and will provide the Daily Rate to the Trustee by telephonic or Electronic notice by 12:00 noon, New York City time, on that same day. The Daily Rate for each Daily Rate Period will be effective from and including the commencement date thereof to, but not including, the next succeeding Business Day.

Weekly Rate Period; Weekly Rate. A Weekly Rate Period will commence on the Closing Date with respect to all of the Series 2007 Bonds and end on the next Wednesday. Thereafter, a Weekly Rate Period will commence on a Thursday and end on Wednesday of the following week and each Weekly Rate Period will be followed by another Weekly Rate Period until the Rate Period applicable to all or a portion of the Series 2007 Bonds is converted to another type of Rate Period; provided that (i) in the case of a conversion to a Weekly Rate Period from a different Rate Period, the Weekly Rate Period will commence on the Weekly Rate Conversion Date and will end on Wednesday of the following week; (ii) in the case of a conversion from a Weekly Rate Period to a different Rate Period, the last Weekly Rate Period prior to a conversion will end on the day immediately preceding the Conversion Date to the new Rate Period; and (iii) the day of the week on which Weekly Rate Periods will commence may be changed by the Remarketing Agent, with the consent of the University, if the scheduled rate determination day becomes inappropriate (taking into account general market practice), as determined in the reasonable exercise of the Remarketing Agent’s judgment, upon notice to the Trustee and the Tender Agent not less than 14 days before the change, which notice will

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promptly be communicated by the Trustee, by first class mail, to the Holders of Bonds, provided, that such notice to the Trustee is accompanied by an opinion of nationally recognized bond counsel to the effect that the change will not adversely affect the exclusion from gross income on any Series 2007 Bonds for federal income tax purposes.

When interest on the Series 2007 Bonds is payable at a Weekly Rate, the Remarketing Agent will set a Weekly Rate on the commencement date of the Weekly Rate Period to which it relates and will provide the Weekly Rate to the Trustee by written, telephonic or Electronic notice by 12:00 noon, New York City time, on that same day or, if the commencement date of the Weekly Rate Period is not a Business Day, the Remarketing Agent will set the Weekly Rate on the next preceding Business Day and provide the Weekly Rate to the Trustee by written, telephonic or Electronic notice by 5:00 p.m., New York City time, on such preceding Business Day. For the first week, or portion thereof, that the Series 2007 Bonds bear interest at a Weekly Rate, the Weekly Rate will be effective from the first day the Series 2007 Bonds bear interest at the Weekly Rate through the immediately succeeding Wednesday. Thereafter, subject to the provisions of clause (iii) of the preceding paragraph, the Weekly Rate will be effective from each Thursday through the immediately succeeding Wednesday or, if earlier, the day before the effective date of a new method of determining the interest rate on the Series 2007 Bonds.

Commercial Paper Period; Commercial Paper Rate. Each Series 2007 Bond will bear interest during the Commercial Paper Rate Period for such Series 2007 Bond at the Commercial Paper Rate for such Series 2007 Bond. Different Commercial Paper Rate Periods may apply to different Series 2007 Bonds at any time and from time to time. The Commercial Paper Rate Period and Commercial Paper Rate for each Series 2007 Bond will be determined by the Remarketing Agent on the first Business Day of that Commercial Paper Rate Period and the Remarketing Agent will provide the Commercial Paper Rate to the Trustee by telephonic or Electronic notice by 1:00 p.m., New York City time, on that same day.

Each Commercial Paper Rate Period will be a period of not less than one day and not more than 365 days determined by the Remarketing Agent to be the period which will, in the judgment of the Remarketing Agent, produce the greatest likelihood of the lowest net interest cost during the term of the Series 2007 Bonds; provided that if the Remarketing Agent has given or received notice of any conversion to a different Rate Period, the Commercial Paper Rate Period for each Series 2007 Bond shall not be longer than the remaining number of days prior to the Conversion Date. Each Commercial Paper Rate Period will commence on a Business Day and end on either a day preceding a Business Day or on the day before the Maturity Date, and in any event shall end no later than the day preceding the Maturity Date.

The Remarketing Agent may, in the reasonable exercise of its judgment, (i) determine Commercial Paper Rate Periods that result in Commercial Paper Rates on the Series 2007 Bonds that are higher than would be borne by Series 2007 Bonds with shorter Commercial Paper Rate Periods in order to increase the likelihood of achieving the lowest net interest cost during the term of the Series 2007 Bonds by assuring the availability of such Commercial Paper Rates for the longer Commercial Paper Rate Periods, and (ii) in view of the uncertainties involved in anticipating Commercial Paper Rates, establish different Commercial Paper Rate Periods for Series 2007 Bonds on the same date in order to achieve an average of Commercial Paper Rate Periods that, in the reasonable exercise of its judgment, is most likely to achieve the lowest net

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interest cost during the term of the Bonds. In determining the number of days in each Commercial Paper Rate Period, the Remarketing Agent will take into account the relative market yields of the Series 2007 Bonds bearing interest at a Commercial Paper Rate and other securities that bear interest at a variable rate or at fixed rates that, in the reasonable exercise of the judgment of the Remarketing Agent, are otherwise comparable to the Series 2007 Bonds, or any fact or circumstance relating to the Series 2007 Bonds or affecting the market for the Series 2007 Bonds or affecting such other comparable securities in a manner that, in the reasonable exercise of the judgment of the Remarketing Agent, will affect the market for the Series 2007 Bonds. The Remarketing Agent, in its discretion, may consider such information and resources as it deems appropriate in making the determinations described in this paragraph, including consultations with the University, but the Remarketing Agent’s determination of the Commercial Paper Rate Period for each Series 2007 Bond will be based solely upon the reasonable exercise of the Remarketing Agent’s judgment.

Term Rate Period; Term Rate. A Term Rate Period will commence on each Term Rate Conversion Date and end on the day preceding either the commencement date of the following Term Rate Period or on the date of a conversion to a different rate period or the Maturity Date. The Remarketing Agent will determine a Term Rate on the Business Day immediately preceding the commencement of any period during which interest on any of the Series 2007 Bonds will be payable at a Term Rate and will provide the Term Rate to the Trustee by written, telephonic or Electronic notice by the close of business on such Business Day. Series 2007 Bonds bearing interest at a Term Rate for a Term Rate Period that extends more than twelve months will not be supported by a Liquidity Facility.

Fixed Rate Period; Fixed Rate. Fixed Rate Periods will commence on a Fixed Rate Conversion Date and will extend to the earlier of the date of redemption or the maturity date for each Series 2007 Bond accruing interest at a Fixed Rate. The Fixed Rate for each Series 2007 Bond accruing interest at a Fixed Rate will be established in accordance with the terms of the Indenture and summarized herein in APPENDIX C - DEFINITIONS AND SUMMARY OF BOND

DOCUMENTS - INDENTURE - Interest Rates and Rate Periods,” and will be set forth in the firm underwriting or purchase contract described under the caption “THE SERIES 2007 BONDS -Conversion Between Interest Rate Periods - Conversion to Fixed Rate Period.” Series 2007 Bonds bearing interest at a Fixed Rate will not be supported by a Liquidity Facility.

Failure of Remarketing Agent to Determine Interest Rates. In the event that the Remarketing Agent fails for any reason to determine the interest rate for any Rate Period, (i) for any Series 2007 Bond that accrues interest at a Daily Rate, the interest rate then in effect will remain in effect from day to day until the Trustee is notified of a new Daily Rate determined by the Remarketing Agent, (ii) for any Series 2007 Bond that accrues interest at a Weekly Rate, the interest rate then in effect will remain in effect from week to week until the Trustee is notified of a new Weekly Rate determined by the Remarketing Agent, (iii) for any Series 2007 Bond that accrues interest at a Commercial Paper Rate and for which a Commercial Paper Rate and Commercial Paper Rate Period is not determined, the interest rate in effect will be a Daily Rate equal to 100% of the commercial paper rate (30 days) for the most recent date shown in the table captioned “Short-Term Tax-Exempt Yields” in the edition of The Bond Buyer published on the day on which such rate is determined or, if such rate is not published on that day, the most recent publication of such rate, until the Trustee is notified of a new Commercial Paper Rate and

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Commercial Paper Rate Period determined for such Series 2007 Bond by the Remarketing Agent, and (iv) for any Series 2007 Bond that accrues interest at a Term Rate, the interest rate in effect will (A) be converted to a Commercial Paper Rate equal to 100% of the commercial paper rate (30 days) for the most recent date shown in the table captioned “Short-Term Tax-Exempt Yields” in the edition of The Bond Buyer published on the day on which such rate is determined or, if such rate is not published on that day, the most recent publication of such rate, with Commercial Paper Rate Periods of thirty (30) days, until the Trustee is notified of a new Commercial Paper Rate and Commercial Paper Rate Period determined for such Series 2007 Bond by the Remarketing Agent, but only if the University furnishes to the Trustee an opinion of nationally recognized bond counsel to the effect that conversion of the interest rate to a Commercial Paper Rate will not adversely affect the exclusion from gross income on any Series 2007 Bonds for federal income tax purposes, or (B) if the opinion described in clause (A) is not furnished, converted to a Term Rate for a Term Rate Period ending on the day prior to the next succeeding March 1 or September 1 which is at least 366 days later equal to seventy percent (70%) of the closing yield for one year Treasury Bills shown in The Wall Street Journal or other financial publication that contains that information published on the day on which such rate is determined, or if such rate is not published on that day, the most recent publication of such rate, until the Trustee is notified of a new Term Rate and Term Rate Period for such Series 2007 Bond.

Rates Binding. The setting of the rates and the calculation of interest payable on the Series 2007 Bonds as described above will be conclusive and binding on the Holders of the Series 2007 Bonds, the Issuer, the University, each Liquidity Provider, the Paying Agent and the Trustee. Each Interest Rate in effect for each Series 2007 Bonds will be available to the Holders of the Series 2007 Bonds on the date such Interest Rate is determined, between 1:00 p.m. and 5:00 p.m., New York City time, from the Remarketing Agent or the Trustee, upon its receipt from the Remarketing Agent, at their respective principal offices.

Conversion Between Interest Rate Periods

Conversion Dates. With the exception of any Series 2007 Bond bearing interest at a Term Rate that extends to the Maturity Date or at a Fixed Rate, the Rate Period in which a Series 2007 Bond operates may be changed from time to time as described in the Indenture and summarized herein under this subcaption. A Conversion Date for any Series 2007 Bond means the day on which a particular type of Interest Rate (Daily, Weekly, Commercial Paper, Term or Fixed Rate) becomes effective for a Series 2007 Bond which is not immediately preceded by a day on which such Series 2007 Bonds will have accrued interest at the same type of rate and, when used with respect to any Series 2007 Bond in a Term Rate Period, means the day after the end of such Term Rate Period. Each Conversion Date will be an Interest Payment Date for the Rate Period from which a Series 2007 Bond is being converted, which, with respect to conversion from a Term Rate Period, will be the last Interest Payment Date for the then current Term Rate Period, except that a Series 2007 Bond may be converted from a Daily or Weekly Rate Period on any Business Day.

Notice of Conversion by University. The University may elect to convert the Rate Periods on the Series 2007 Bonds by notifying the Trustee, each Liquidity Provider and the Remarketing Agent. Such notice must be given not fewer than seven Business Days prior to the

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date notice to affected Holders must be given of the proposed conversion from a Daily, Weekly, Commercial Paper or Term Rate Period. Series 2007 Bonds that are converted to the Fixed Rate Period cannot be converted into another Rate Period but will remain in the Fixed Rate Period until maturity or redemption prior to maturity.

Assignment to Remarketing Agent. Under the Indenture, the University may delegate and assign to the Remarketing Agent, and may likewise rescind such delegation and assignment, the University’s right to elect to convert any Series 2007 Bond from one type of Rate Period to another type of Rate Period (except to a Fixed Rate Period). In such a case, the Remarketing Agent will agree to carry out such conversion in the manner and at the times specified in the Indenture.

Notice of Conversion to Bondholders. When a conversion between Rate Periods is to be made, the Trustee is required to give notice by first class mail, of the proposed conversion to the affected Holders of Series 2007 Bonds bearing interest at Daily, Weekly, Commercial Paper or Term Rates not less than 15 days before the proposed Conversion Date. Among other requirements set forth in the Indenture, such notice must state the proposed Conversion Date, the aggregate principal amount of Series 2007 Bonds to be converted and that such Series 2007 Bonds will be subject to mandatory tender for purchase on the Conversion Date (except in the case of conversions between Daily and Weekly Rate Periods). When applicable, this notice may be combined with the notice of mandatory tender delivered by the Tender Agent as described herein under the caption “THE SERIES 2007 BONDS - Mandatory Tender - Notice by Tender Agent.”

Limitations on Conversions Between Rate Periods. No conversion of Rate Periods will become effective unless:

(i) If the conversion is from Commercial Paper Rate Periods, the Trustee shall have received, prior to the date on which notice of conversion is required to be given to the Holders, written confirmation from the Remarketing Agent that it has not established and will not establish any Commercial Paper Rate Periods with respect to such Series 2007 Bonds extending beyond the day before the Conversion Date; and

(ii) If the conversion is (A) from a Commercial Paper, Daily or Weekly Rate Period, or from a Term Rate Period of twelve months, to a Term Rate Period exceeding twelve months, or (B) from a Term Rate Period exceeding twelve months to a Commercial Paper, Daily or Weekly Rate Period, or a Term Rate Period of twelve months: the Trustee shall have been provided, no later than one Business Day before the Conversion Date, with an opinion of nationally recognized bond counsel to the effect that the conversion is authorized or permitted by the Indenture and the Act, and that such conversion will not adversely affect the exclusion from gross income of interest on any of the Series 2007 Bonds for federal income tax purposes;

(iii) If the conversion is to a Commercial Paper, a Daily or a Weekly Rate Period or to a Term Rate Period of twelve months, (i) the Trustee has been provided, no later than one day before the Conversion Date, with written evidence from the University that the Series 2007 Bonds to be converted will be covered by a Liquidity Facility from

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the date of such conversion, or (ii) if such Series 2007 Bonds will not be covered by a Liquidity Facility from the date of such conversion, the Trustee has been provided, no later than one Business Day before the Conversion Date, with written evidence from each Rating Service then rating the Series 2007 Bonds to the effect that such Rating Service has reviewed the proposed conversion, and stating that upon such conversion such Series 2007 Bonds will be rated in its highest short term rating category; and

(iv) If less than all of the Outstanding Series 2007 Bonds are being converted, the Trustee has been provided, no later than one Business Day before the Conversion Date, with written evidence from each Rating Service then rating the Series 2007 Bonds to the effect that such conversion will not cause the rating on any Outstanding Series 2007 Bonds not so converted to be reduced or withdrawn.

Conversion to Fixed Rate Period. The interest rate on any Series 2007 Bond will be converted to a Fixed Rate if the University notifies in writing the Trustee of its irrevocable election to effect such a conversion, specifying in the notice the identification of the Series 2007 Bonds to be converted and the Conversion Date on which the Fixed Rate Period is to commence, and delivering with such notice (i) an opinion of nationally recognized bond counsel (which opinion must be confirmed on the Fixed Rate Conversion Date) stating that such conversion is authorized or permitted by the Indenture and the Act, and that conversion will not adversely affect the exclusion from gross income on any Series 2007 Bonds for federal income tax purposes; and (ii) a firm underwriting or purchase contract from a recognized firm of bond Underwriter or recognized institutional investors, which can be the Remarketing Agent, to underwrite or purchase all Series 2007 Bonds that are to be converted to a Fixed Rate at a price of 100% of the principal amount thereof at an agreed upon interest rate for each Series 2007 Bond to be so converted which such underwriter or institutional investor certifies is the lowest rate that will permit such Series 2007 Bond to be sold at par on the first day of the Fixed Rate Period and containing a maturity schedule, and if applicable a mandatory sinking fund redemption schedule, prepared in accordance with the terms of the Indenture and summarized herein in APPENDIX C - “DEFINITIONS AND SUMMARY OF BOND DOCUMENTS — INDENTURE-Interest Rate and Rate Periods.” Upon receipt by the Trustee of such notice from the University, the Trustee will immediately cause the same information contained in such notice to be delivered to the Tender Agent, the Remarketing Agent and the Liquidity Provider, if any. The Fixed Rate Conversion Date will not be less than 17 days (unless the Trustee, the Tender Agent and the Remarketing Agent agree to a lesser number of days) succeeding receipt by the Trustee of the University’s irrevocable election.

Failure of Conditions to Conversion. In the event any condition precedent to a conversion is not fulfilled, any affected Series 2007 Bond will continue to be subject to mandatory tender on the proposed Conversion Date (except in the case of proposed conversions between Daily and Weekly Rate Periods) without regard to the failure to fulfill such condition, and any affected Series 2007 Bond will accrue interest at Weekly Rates for Weekly Rate Periods on and after the proposed Conversion Date, but only if the University furnishes the Trustee an opinion of nationally recognized bond counsel to the effect that such accrual of interest will not adversely affect the exclusion from gross income on any Series 2007 Bonds if the Rate Period in effect prior to the mandatory tender purchase date is a Term Rate Period that exceeded twelve months, and if any such required opinion is not delivered, at a Term Rate for a Term Rate Period

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ending on the day prior to the next succeeding March 1 or September 1 which is at least 366 days later. If the Remarketing Agent fails for any reason to determine any such Weekly Rate or Term Rate, the applicable Weekly Rate will be the rate determined on the basis of an index based upon the weekly interest rate resets of tax-exempt variable rate issues included in a database maintained by Municipal Market Data which meet specific criteria established by the Public Securities Association and effective for that date on which such rate is determined, and the applicable Term Rate will be equal to seventy percent (70%) of the closing yield for one year Treasury Bills shown in The Wall Street Journal or other financial publication that contains that information published on the day on which such rate is determined, or if such rate is not published on that day, the most recent publication of such rate.

Optional Tender

The Holders of any Series 2007 Bonds bearing interest at Daily or Weekly Rates may elect to have their Series 2007 Bonds (or portion thereof in an authorized denomination) purchased at a purchase price equal to 100% of the principal amount thereof plus accrued interest (“Purchase Price”) as described below:

Daily Rate Tender. Series 2007 Bonds bearing interest at Daily Rates may be tendered for purchase on any Business Day upon written or Electronic notice of tender given to the Tender Agent not later than 11:00 a.m., New York City time, on the date of purchase.

Weekly Rate Tender. Series 2007 Bonds bearing interest at Weekly Rates may be tendered for purchase on any Business Day upon written or Electronic notice of tender to the Tender Agent, not later than 5:00 p.m., New York City time, on a Business Day not fewer than seven days prior to the date of purchase.

Notice of Tender. Each notice of tender (i) must, in the case of a written notice, be delivered to the Tender Agent at its Notice Address (initially, Wells Fargo Bank, N.A., 230 West Monroe Street, Suite 2900, Chicago, Illinois 60606, Attention: Corporate Trust and Escrow Services) and be in form satisfactory to the Tender Agent; (ii) must state (A) the principal amount of Series 2007 Bonds to which the notice relates, (B) that the Holder irrevocably demands purchase of such Series 2007 Bonds or a specified portion thereof, (C) the date on which such Series 2007 Bonds or portion is to be purchased, and (D) payment instructions with respect to the Purchase Price; and (iii) will automatically constitute (A) an irrevocable offer to sell the Series 2007 Bonds (or portion thereof) to which the notice relates on the specified purchase date at the Purchase Price, (B) an irrevocable authorization and instruction to the Registrar to effect transfer of such Series 2007 Bonds (or portion thereof) upon payment of the Purchase Price to the Tender Agent on the purchase date, (C) an irrevocable authorization and instruction to the Tender Agent to effect the exchange of the Series 2007 Bonds to be purchased in whole or in part for other Series 2007 Bonds in an equal aggregate principal amount so as to facilitate the sale of such Series 2007 Bonds (or portion thereto to be purchased), and (D) an acknowledgment that such Holder will have no further rights with respect to such Series 2007 Bonds (or portion thereof) upon payment of the Purchase Price thereof to the Tender Agent on the purchase date, except for the right of such Holder to receive such Purchase Price upon delivery of such Series 2007 Bonds to the Tender Agent, and that after the purchase date such Holder will hold any undelivered certificate as agent for the Tender Agent. The determination of

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the Tender Agent as to whether a notice of tender has been properly delivered pursuant to the foregoing shall be conclusive and binding upon the Holder.

Mandatory Tender

The Series 2007 Bonds are subject to mandatory tender for purchase at the Purchase Price equal to 100% of the principal amount of the affected Series 2007 Bonds (or portion in an authorized denomination) plus accrued interest, if any, to the date of purchase, plus premium, if any, as described below, as follows:

Mandatory Tender on Each Interest Payment Date During Commercial Paper Rate Periods. Each Series 2007 Bond bearing interest at a Commercial Paper Rate will be subject to mandatory tender for purchase on each Interest Payment Date. The Holder of any Series 2007 Bond accruing interest at a Commercial Paper Rate must provide the Tender Agent with written payment instructions for the Purchase Price of its Series 2007 Bond on or before tender thereof to the Tender Agent.

Mandatory Tender upon Conversion between Certain Interest Rate Periods or to a New Term Rate Period. Series 2007 Bonds to be converted from one Rate Period to a different Rate Period (except conversions from the Daily Rate to the Weekly Rate or from the Weekly Rate to the Daily Rate) are subject to mandatory tender for purchase on the Conversion Date.

Mandatory Tender Prior to Termination of Any Liquidity Facility, Delivery of an Alternate Liquidity Facility and Upon Addition of a Liquidity Facility in Certain Cases in which No Liquidity Facility is in Effect. The Series 2007 Bonds which are supported by a Liquidity Facility are subject to mandatory tender for purchase on the Business Day preceding the earlier of (i) the Termination of Any Liquidity Facility, or (ii) the day on which an Alternate Liquidity Facility becomes effective. “Termination of Any Liquidity Facility” means the expiration or termination of the obligation of any Liquidity Provider under any then current Liquidity Facility (as the same may be extended or modified as permitted by the Indenture), including the substitution of an Alternate Liquidity Facility for any existing Liquidity Facility, to pay or provide funds to pay the Purchase Price of Series 2007 Bonds supported by its Liquidity Facility, except for the immediate termination of the Liquidity Facility resulting from the occurrence of certain events of default under the Liquidity Facility. See APPENDIX C - “DEFINITIONS AND

SUMMARY OF BOND DOCUMENTS - INDENTURE - Events of Defaults.” Series 2007 Bonds not supported by a Liquidity Facility are subject to mandatory tender for purchase on the Business Day preceding the day on which a Liquidity Facility becomes effective unless the written evidence from each Rating Service provided pursuant to the Indenture and described in APPENDIX C - “DEFINITIONS AND SUMMARY OF BOND DOCUMENTS - INDENTURE - Alternate Liquidity Facility” confirms that the effectiveness of such Liquidity Facility will not in and of itself result in a reduction or withdrawal of the rating that would otherwise apply to the Series 2007 Bonds if such Liquidity Facility were not to become effective.

Notice by Tender Agent. The Tender Agent will give notice of mandatory tender for purchase (other than a mandatory tender on an Interest Payment Date during a Commercial Paper Rate Period) to the affected Holders of Series 2007 Bonds by first class mail, not less than 15 days before the mandatory tender date. If the Series 2007 Bonds are in certificated form, such

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notice shall include information with respect to required delivery of Series 2007 Bond certificates and payment of the Purchase Price. When applicable, this notice may be combined with the notice of conversion of Rate Period delivered by the Trustee as described herein under the caption “THE SERIES 2007 BONDS - Conversion Between Interest Rate Periods - Notice of Conversion to Bondholders.”

Delivery of Series 2007 Bonds

A Holder of a Series 2007 Bond tendered or required to be tendered for purchase must deliver its Series 2007 Bond to the Tender Agent, or its designated agent in New York City, on the date of purchase by 3:00 p.m., New York City time. (Delivery of a beneficial owner’s interest in a Series 2007 Bond while Cede & Co. is the sole registered owner of the Series 2007 Bonds will occur when the ownership rights in such Bond are transferred by a Direct Participant on DTC’s records (as these terms are defined below) in accordance with DTC’s customary procedures.)

If a Holder has elected to tender any Series 2007 Bond for purchase, or if any Series 2007 Bond is subject to mandatory tender for purchase, and if, in either case, the Tender Agent is in receipt of an amount sufficient to pay the Purchase Price, then such Series 2007 Bond (or portion) will be deemed purchased on the Purchase Date, and ownership of such Series 2007 Bond (or portion) will be transferred to the purchaser thereof. Any Holder who fails to deliver such Series 2007 Bond for purchase will not be entitled to any payment other than the Purchase Price for such Series 2007 Bond upon surrender of such Series 2007 Bond to the Tender Agent, and such Series 2007 Bond will no longer be outstanding and entitled to the benefits of the Indenture, except for the payment of the Purchase Price of such Series 2007 Bond from moneys held by the Tender Agent for such payment upon presentation and surrender of the Series 2007 Bond. Moneys held by Tender Agent for the benefit of a Holder of untendered Series 2007 Bonds which remain unclaimed two years after the applicable Purchase Date will, at the written request of the University, if the University is not, at the time, based upon a certification of the University set forth in such request, in default with respect to any covenant in the Loan Agreement or the Series 2007 Bonds, be paid to the University, and the Holder of the Series 2007 Bonds for which the deposit was made will thereafter be limited to a claim against the University.

Payment of Purchase Price

Sources of Payment. Payment of the Purchase Price of Series 2007 Bonds to be purchased upon optional or mandatory tender as described herein will be made by the Tender Agent at or before 3:00 p.m., New York City time, on the date of purchase and upon receipt by the Tender Agent of 100% of the aggregate Purchase Price of the tendered Series 2007 Bonds, in immediately available funds. The Purchase Price of the Series 2007 Bonds tendered for purchase will be paid by the Tender Agent from the proceeds of the remarketing of such Series 2007 Bonds by the Remarketing Agent and, if such remarketing proceeds are insufficient, from, with respect to the interest component of the Purchase Price of Series 2007 Bonds bearing interest at Commercial Paper or Term Rates, moneys deposited by the University pursuant to the terms of the Loan Agreement (see APPENDIX C - “DEFINITIONS AND SUMMARY OF BOND

DOCUMENTS - LOAN AGREEMENT - Loan and Loan Payments”) in the Special Interest Account of

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the Bond Fund, and if such remarketing proceeds and moneys are insufficient, from moneys drawn by the Trustee under each Liquidity Facility or if no Liquidity Facility is then in effect for such Series 2007 Bonds, or if for whatever reason moneys are not made available under such Liquidity Facility, from other moneys made available by the University.

Procedure if Tender Agent Fails to Receive 100% of the Purchase Price. If the Tender Agent does not receive 100% of the aggregate Purchase Price of the tendered Series 2007 Bonds at or before 3:00 p.m. New York City time, on the Purchase Date for such tendered Series 2007 Bonds, the Tender Agent will immediately give notice by telephone, telegram, telecopy, Electronically or by other similar communication to the Trustee, the appropriate Liquidity Provider, the University and the Remarketing Agent that it has failed to receive 100% of the aggregate Purchase Price of such tendered Series 2007 Bonds. Thereafter, the Tender Agent will (i) provide each tendering Holder with notice that the Tender Agent has not been furnished with sufficient immediately available funds to purchase all of the Series 2007 Bonds or portions thereof for which notice of tender has been received or which are subject to mandatory tender, and therefor none of the tendered Series 2007 Bonds will be purchased; (ii) return the Purchase Price received from the purchasers of the tendered Series 2007 Bonds which were remarketed by the Remarketing Agent to the purchasers from whom such Purchase Price was received and/or to the other providers of such money including, without limitation, the appropriate Liquidity Provider and (iii) deliver any remaining funds held by the Tender Agent to purchase tendered Series 2007 Bonds to the Trustee, to be deposited into the Bond Fund.

Remarketing

Unless otherwise instructed by the University, the Remarketing Agent will offer for sale and use its best efforts to find purchasers for any Pledged Bonds and all Series 2007 Bonds or portions thereof for which notice of optional tender has been received or which are subject to mandatory tender. The terms of any sale by the Remarketing Agent will provide for the payment of the Purchase Price for tendered Series 2007 Bonds by the Remarketing Agent to the Tender Agent on the purchase date in immediately available funds at or before 12:00 noon, New York City time. The Remarketing Agent will not sell any Series 2007 Bond as to which a notice of conversion from one type of Rate Period to another type of Rate Period has been given by the Trustee, or as to which the Tender Agent has given a notice of mandatory tender for purchase as described above under the caption “THE SERIES 2007 BONDS - Mandatory Tender - Notice by Tender Agent,” unless the Remarketing Agent has advised the person to whom such sale is made of the proposed conversion or notice. Any purchaser so advised must deliver a notice to the Tender Agent stating that such purchaser will tender such Series 2007 Bonds for purchase on the related mandatory tender date. The Remarketing Agent will not remarket any Series 2007 Bond if an Event of Default (as defined in the Indenture and summarized herein in APPENDIX C -“DEFINITIONS AND SUMMARY OF BOND DOCUMENTS - INDENTURE - Events of Default”) has occurred and is continuing with respect to the Series 2007 Bonds.

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Redemption

The Series 2007 Bonds are subject to redemption at the option of the Issuer, at the direction of the University, as described below:

Optional Redemption During Daily, Weekly or Commercial Paper Rate Period. While the Series 2007 Bonds bear interest at Daily, Weekly or Commercial Paper Rates, the Series 2007 Bonds are subject to optional redemption in whole or in part, and if in part, at the lowest authorized denomination or any whole multiple thereof, (i) on the Interest Payment Date with respect to Series 2007 Bonds bearing interest at the Commercial Paper Rate and (ii) on any date with respect to Series 2007 Bonds bearing interest at Daily or Weekly Rates, at an optional redemption price equal to 100% of the principal amount thereof, together with interest accrued, if any, to the redemption date.

Optional Redemption During Term or Fixed Rate Period. Series 2007 Bonds that bear interest at a Term Rate are subject to optional redemption in whole or in part, and if in part, at the lowest authorized denomination or any whole multiple thereof, on the day after the end of each Term Rate Period at the redemption price equal to 100% of the principal amount thereof, together with interest accrued, if any, to the redemption date. Except as described in footnote (2) to the table below, Series 2007 Bonds that bear interest at a Term Rate or a Fixed Rate also are subject to optional redemption in whole or in part, and if in part, at the lowest authorized denomination or any whole multiple thereof, at any time after the No Call Period shown below and at the redemption price equal to 100% of the principal amount thereof, together with interest accrued, if any, to the redemption date.

Length ofRate Period(1) No Call Period(2)

11 Years or more 10 Years _______________________(1) In computing the length of the Term Rate Period, the Term Rate Period shall be measured from the Term Rate

Conversion Date and end on the last day of the Term Rate Period then in effect; and in computing the length of the Fixed Rate Period, the Fixed Rate Period shall be measured from the Fixed Rate Conversion Date and end on the latest maturity date of any Series 2007 Bonds converted to a Fixed Rate on such Fixed Rate Conversion Date.

(2) The Series 2007 Bonds will not be redeemable during the No Call Period shown above. The No Call Period begins on the first day of the Term Rate Period or the Fixed Rate Conversion Date, as the case may be. Series 2007 Bonds bearing interest at a Term Rate are not optionally redeemable if the length of the Term Rate Period then in effect measured from the related Term Rate Conversion Date is less than eleven years. Series 2007 Bonds bearing interest at a Fixed Rate are not optionally redeemable if the length of the period from the Fixed Rate Conversion Date to the latest maturity of any Series 2007 Bond converted to a Fixed Rate on such Fixed Rate Conversion Date is less than eleven years.

The optional redemption dates and redemption prices set forth above may be changed by a supplemental indenture approved by the University and filed with the Trustee, provided that any such supplemental indenture must be accompanied by a opinion of Bond Counsel to the

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effect that such change will not adversely affect the exclusion from gross income of interest on the Series 2007 Bonds for federal income tax purposes.

UNDER CERTAIN CIRCUMSTANCES, SERIES 2007 BONDS IN A TERM RATE PERIOD MAY BE

SUBJECT TO MANDATORY TENDER FOR PURCHASE AT 100% OF THE PRINCIPAL AMOUNT THEREOF,AND WITHOUT PREMIUM, ON ANY DATE, INCLUDING ANY DATE PRIOR TO THE DATE ON WHICH SUCH

SERIES 2007 BONDS COULD BE SUBJECT TO OPTIONAL REDEMPTION AT 100% OF THE PRINCIPAL

AMOUNT THEREOF, AND WITHOUT PREMIUM. SEE “THE SERIES 2007 BONDS—Mandatory Tender” above.

Extraordinary Optional Redemption. The Series 2007 Bonds are subject to optional redemption in whole but not in part, on any Business Day, at a redemption price equal to 100% of the principal amount being redeemed plus interest accrued, if any, to the redemption date, if:

(i) A substantial portion of the facilities of the University deemed by the University to be necessary for the efficient and economic operation of the University as described in the Loan Agreement (the “Key Facilities”) shall have been damaged or destroyed to such an extent that it is not practicable to rebuild, repair and restore the same and operate the University’s business in the general manner now operated; or

(ii) Condemnation of all or substantially all the Key Facilities or the taking by eminent domain of such use or control of the Key Facilities or other property of the University in connection with which the Key Facilities are used occurs so as to render the Key Facilities unsatisfactory to the University for their intended use.

Mandatory Sinking Fund Redemption. The Series 2007 Bonds are subject to mandatory sinking fund redemption in accordance with the schedule established at the time of conversion of such Series 2007 Bonds to a Fixed Rate Period. See APPENDIX C - “DEFINITIONS AND SUMMARY

OF BOND DOCUMENTS - INDENTURE - Interest Rates and Rate Periods.”

Pledged Bonds. Pledged Bonds may be optionally prepaid, and shall be mandatorily redeemed, in such amounts and by such means as are set forth in the Liquidity Facility.

Purchase of Series 2007 Bonds in Lieu of Redemption. When Series 2007 Bonds are called for optional redemption as described above under “THE SERIES 2007 BONDS - Redemption - Optional Redemption During Daily, Weekly or Commercial Paper Rate Period” and “- Optional Redemption During Term or Fixed Rate Period,” the University may purchase some of or all of the Series 2007 Bonds called for redemption if it (or the Remarketing Agent) gives a written notice by Electronic means to the Trustee, the Issuer, the University (if applicable) and the Remarketing Agent, not later than the three (3) Business Days before the redemption date that it wishes to purchase the Series 2007 Bonds the principal amount of which is specified in the notice at a Purchase Price equal to the redemption price and furnishes the Trustee sufficient Remarketing Proceeds (or other available moneys) in sufficient time for the Trustee to make payment of the purchase price on behalf of the University on the redemption date. Any such purchase of Series 2007 Bonds by the University shall not be deemed to be a payment or redemption of the Series 2007 Bonds or any portion thereof and such purchase shall not operate to extinguish or discharge the indebtedness evidenced by such Series 2007 Bonds.

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Notice of Redemption. The Trustee will mail by first class mail, postage prepaid, to the registered owners of all Series 2007 Bonds to be redeemed, at the registered addresses appearing in the registration books kept for such purpose on the day preceding such mailing, notice of redemption at least 15 days prior to the redemption date for Series 2007 Bonds accruing interest at Daily, Weekly and Commercial Paper Rates, and at least 30 days prior to the redemption date for Series 2007 Bond bearing interest at Term or Fixed Rates. Each notice of redemption of the Series 2007 Bond will identify the Series 2007 Bonds or portions thereof to be redeemed and will state, among other things, the redemption price, the redemption date, the place or places where amounts due upon redemption are payable and that on the redemption date the redemption price shall become due and payable on each such Series 2007 Bond or portion thereof called for redemption, and that interest thereon shall cease to accrue from and after such date. The failure of a Holder to receive notice by mailing or any defect in that notice regarding any Series 2007 Bond will not affect the validity of the proceedings for the redemption of any Series 2007 Bond.

In addition to the foregoing notice, further notice will be given by the Trustee to certain registered securities depositories and information services as provided in the Indenture, but no defect in said further notice nor any failure to give all or any portion of such further notice will in any manner defeat the effectiveness of a call for redemption if notice thereof is given as prescribed in the Indenture and summarized above in the preceding paragraph.

Selection of Series 2007 Bond to Be Redeemed; Partial Redemption. If fewer than all of the Series 2007 Bonds are to be redeemed, the Trustee, unless directed otherwise by the University in writing not less than three Business Days (or such shorter period of time agreed to by the University and the Trustee) prior to the date notice of redemption must be given by the Trustee to the Holders of the Series 2007 Bonds to be redeemed, will select the Series 2007 Bonds to be redeemed by lot, or in such other manner as the Trustee deems fair; provided, the Series 2007 Bonds that remain outstanding will be in minimum authorized denominations or integral multiples thereof. In the case of a partial redemption of Series 2007 Bonds by lot, each unit of face value of principal thereof equal to a minimum authorized denomination (a “Unit”) will be treated as though it were a separate Series 2007 Bond in the amount of such Unit. If it is determined that one or more, but not all of the Units represented by a Series 2007 Bond are to be called for redemption, then upon notice of redemption of a Unit or Units of Series 2007 Bonds, the Holder of that Series 2007 Bond must surrender the Series 2007 Bond to the Trustee (i) for payment of the redemption price of the Unit or Units of Series 2007 Bonds called for redemption, and (ii) for issuance, without charge to the Holder thereof, of a new Series 2007 Bond or Series 2007 Bonds of the minimum authorized denomination or integral multiple thereof, aggregating a principal amount equal to the unmatured and unredeemed portion of and in the same Rate Period and maturing on the same date as the Series 2007 Bond surrendered. If less than all of an outstanding Series 2007 Bond in a book-entry-only system is to be called for redemption, the Trustee will give notice to the Depository or the nominee of the Depository that is the Holder of such Series 2007 Bond, and the selection of the beneficial interests in that Series 2007 Bond to be redeemed will be at the sole discretion of the Depository and its participants and notation of partial redemption will be made in accordance with the customary procedures of the Depository and the Trustee. Notwithstanding the foregoing, Pledged Bonds and University Bonds (in that order of priority) will be redeemed prior to any other Series 2007 Bonds.

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Transfer and Exchange

The Series 2007 Bonds may be transferred upon surrender of the Series 2007 Bonds at the designated office of the Trustee, duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner or such owner’s duly authorized attorney. The Series 2007 Bonds may also be surrendered at the designated office of the Trustee and exchanged for other Series 2007 Bonds of any authorized denominations having the same form and terms as the Series 2007 Bonds being exchanged. A Series 2007 Bond may be exchanged without cost to the owner thereof, except for any tax or excise required to be paid with respect to the exchange; provided that there shall be no cost or charge to an owner for transfer or exchange caused by partial redemption of a single Series 2007 Bond and the authentication of a new Series 2007 Bond for the unredeemed portion. The Trustee will not be required to transfer or exchange any Series 2007 Bond selected for redemption.

The person in whose name any Series 2007 Bond is registered will be deemed and regarded as the absolute owner thereof for all purposes (subject to the provisions of the Indenture relating to the Record Date), and payment of principal of or interest thereon will be made only to or upon the order of the registered owner thereof or his or her legal representative. All such payments will be valid and effectual to satisfy and discharge the liability upon such Series 2007 Bond to the extent of the sum or sums so paid.

BOOK-ENTRY-ONLY SYSTEM

The information provided immediately below concerning DTC and the Book-Entry-Only System, as it currently exists, has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by, the Underwriter, the Issuer or the University.

General. When the Series 2007 Bonds are issued, ownership interests will be available to purchasers only through a book-entry-only system (the “Book-Entry-Only System”) maintained by DTC. DTC will act as securities depository for the Series 2007 Bonds. Initially, the Series 2007 Bonds will be issued as fully-registered bonds, registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered bond will be issued for the Series 2007 Bonds in each separate Rate Period in the aggregate principal amount of Series 2007 Bonds in such Rate Period and will be deposited with DTC. The following discussion will not apply to any Series 2007 Bonds issued in certificate form due to the discontinuance of the DTC Book-Entry-Only System, as described below.

DTC and its Participants. DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC’s participants (the “Direct Participants”) deposit with DTC.

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DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (the “Indirect Participants”). DTC has Standard & Poor’s highest rating: AAA. The DTC Rules applicable to its Direct and Indirect Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.

Purchase of Ownership Interests. Purchases of the Series 2007 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2007 Bonds on DTC’s records. The ownership interest of each actual purchaser of each Series 2007 Bond (the “Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2007 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Series 2007 Bonds, except in the event that use of the book-entry system for the Series 2007 Bonds is discontinued.

Transfers. To facilitate subsequent transfers, all Series 2007 Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2007 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2007 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2007 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Notices. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

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Beneficial Owners of the Series 2007 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2007 Bonds, such as redemptions, tenders, defaults and proposed amendments to the Indenture or Loan Agreement. For example, Beneficial Owners of Series 2007 Bonds may wish to ascertain that the nominee holding the Series 2007 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Series 2007 Bonds are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

Voting. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2007 Bonds unless authorized by a Direct Participant in accordance with DTC’s procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Series 2007 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Payments of Principal and Interest. Principal, premium, and interest payments on the Series 2007 Bond will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts, upon DTC’s receipt of funds and corresponding detail information from the Issuer, the Trustee or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC (or its nominee), the Trustee, the Trustee, the University or the Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, premium and interest payments on the Series 2007 Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer, the Trustee or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

Tenders for Purchase. A Beneficial Owner shall give notice to elect to have its Series 2007 Bonds purchased or tendered, through its Participant, to the Tender Agent, and shall effect delivery of such Series 2007 Bonds by causing the Direct Participant to transfer the Participant’s interest in the Series 2007 Bonds, on DTC’s records, to the Tender Agent. The requirement for physical delivery of the Series 2007 Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Series 2007 Bonds are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Series 2007 Bonds to the Tender Agent’s DTC account.

Discontinuation of Book-Entry-Only System. DTC may discontinue providing its services as securities depository with respect to the Series 2007 Bonds at any time by giving

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reasonable notice to the Issuer or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Series 2007 Bond certificates are required to be printed and delivered as described in the Indenture.

The Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository) as described in the Indenture. In that event, Series 2007 Bonds will be printed and delivered as described in the Indenture.

Neither the Issuer, the Underwriter, the Trustee nor the University will have any responsibility or obligations to any Direct Participants or Indirect Participants or the persons for whom they act with respect to (i) the accuracy of any records maintained by DTC or any such Direct Participant or Indirect Participant; (ii) the payment by any Participant of any amount due to any Beneficial Owner in respect of the principal of, premium, if any, or interest on the Series 2007 Bonds; (iii) the delivery by any such Direct Participant or Indirect Participant of any notice to any Beneficial Owner that is required or permitted under the terms of the Indenture to be given to Bondholders; (iv) the selection of the Beneficial Owners to receive payment in the event of any partial redemption of the Series 2007 Bonds; or (v) any consent given or other action taken by DTC as Bondholder.

SECURITY AND SOURCES OF PAYMENT

FOR THE SERIES 2007 BONDS

General

The Series 2007 Bonds and the interest payable thereon will be limited obligations of the Issuer payable solely from amounts on deposit in the Funds and Accounts established under the Indenture, other than the Rebate Fund and the Bond Purchase Fund, payments or prepayments to be made on the Series 2007 Note and from other payments made by the University under the Loan Agreement (other than fees and expenses payable to the Issuer and amounts payable pursuant to the Issuer’s right to indemnification in certain circumstances), and will be secured by a pledge and assignment of such amounts and such payments to the Trustee pursuant to the Indenture.

The Series 2007 Bonds and interest and premium, if any, payable thereon shall not constitute a debt, liability or a general obligation of the Issuer or the State of Indiana or any political subdivision thereof within the meaning of the Constitution or statutes of the State of Indiana, or a pledge of the faith and credit of the Issuer or the State of Indiana or any political subdivision thereof. The Series 2007 Bonds do not grant the owners or holders thereof any right to have the Issuer levy any taxes or appropriate any funds for the payment of the principal of or the interest or premium, if any, on the Series 2007 Bonds.

The Loan Agreement and the Series 2007 Note

The University will execute and deliver the Series 2007 Note to the Trustee in order to evidence and secure the obligation of the University to pay the principal of, premium, if any, and interest on the Series 2007 Bonds under the provisions of the Loan Agreement. The Loan

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Agreement requires the University to make payments on the Series 2007 Note directly to the Trustee in amounts sufficient to pay the principal of, premium, if any, and interest on the Series 2007 Bonds when due, whether as regularly scheduled interest or principal payments, at maturity, by optional, extraordinary or mandatory redemption, acceleration or otherwise, and to make certain other payments. The rights of the Issuer in and to the Series 2007 Note and under the Loan Agreement (except for the Issuer’s right to its fees and expenses and to be indemnified in certain circumstances) are assigned to the Trustee under the Indenture to secure payments on the Series 2007 Bonds. The obligations of the University under the Loan Agreement and the Series 2007 Note are absolute and unconditional and the University will not be entitled to any abatement or diminution thereof. The Loan Agreement and the Series 2007 Note are general obligations of the University. None of the Series 2007 Bonds, the Loan Agreement or the Series 2007 Note are secured by a mortgage, security interest or other lien on the University’s property, including, without limitation, the Project.

Payment of Purchase Price; Alternate Liquidity Facility; Self Liquidity

As described above, the payment of the Purchase Price of Series 2007 Bonds in the Daily Rate Period or the Weekly Rate Period (other than Pledged Bonds and University Bonds) tendered or required to be tendered for purchase, for which remarketing proceeds are not available, will be initially supported by the Initial Liquidity Facility to the extent provided for therein. Under the Initial Liquidity Facility, the Initial Liquidity Provider will be under no obligation to provide funds to pay the purchase price of Series 2007 Bonds tendered or required to be tendered for purchase upon the occurrence of certain events of default thereunder, including certain payment defaults, the invalidity or unenforceability of certain bond and credit documents, the bankruptcy or insolvency of the University, the decline in the University’s credit rating to below investment grade or the issuance of a final judgment or order against the University for the payment of money in excess of $10,000,000 for which adequate cash reserves or insurance proceeds are not available. See “INITIAL LIQUIDITY FACILITY.” The Indenture provides that the University may replace the then effective Liquidity Facility or Facilities with one or more Alternate Liquidity Facilities satisfying the terms of the Indenture. See APPENDIX C- “DEFINITIONS AND SUMMARY OF BOND DOCUMENTS - INDENTURE - Alternate Liquidity Facility.”

Under the Indenture, whenever the Liquidity Facility supporting any Series 2007 Bonds under the Indenture consists of two or more separate liquidity facilities (e.g., two or more bond purchase agreements, lines of credit, surety bonds, revolving credit facilities, bond insurance policies or other agreements or instruments or combinations thereof): (i) each Liquidity Facility is required to specify the amount that may be drawn thereunder to pay a portion of the Purchase Price of Series 2007 Bonds tendered or required to be tendered, and such amount will constitute the related Liquidity Provider’s pro-rata share (the “Pro-Rata Share”) of the total Purchase Price for such Series 2007 Bonds; and (ii) whenever the Trustee is required to make a demand for funds, it will simultaneously make a demand under each Liquidity Facility for the payment by the related Liquidity Provider of its Pro-Rata Share of the Purchase Price. Moreover, whenever a Liquidity Facility consists of two more liquidity facilities, all of the Liquidity Providers may, with written notice to the Trustee appoint an administrative agent (the “Agent”) to collectively represent their interests under the Indenture and to carry out their obligations under the Indenture. From and after the effective time of such appointment, the Trustee may recognize and

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treat the Agent, or its nominee, as the sole Liquidity Provider under the Indenture and related transaction documents for all purposes, to the extent directed, including giving of notices, making of demands, payment of amounts, registry of Pledged Bonds, and enforcement of remedies.

Under the Indenture and the Loan Agreement, the University also may choose not to support the payment of the Purchase Price of any Series 2007 Bonds in any Rate Period, including a Daily Rate Period and a Weekly Rate Period, with any Liquidity Facility, but may instead choose to be solely responsible for the full payment of the Purchase Price for Series 2007 Bonds that are tendered or required to be tendered for purchase and are not remarketed, or for which remarketing proceeds are not delivered.

Series 2007 Bonds that have been converted to a Term Rate Period that extends for more than twelve months, to the Fixed Rate Period or to an ARS Rate Period will not be supported by any Liquidity Facility.

See APPENDIX C - “DEFINITIONS AND SUMMARY OF BOND DOCUMENTS” herein for additional discussion of the security and sources of payment of the Series 2007 Bonds.

INITIAL LIQUIDITY FACILITY

General

The Initial Liquidity Facility contains various provisions, covenants and conditions, certain of which are summarized below. Certain terms used in the following summary are defined therein or at the conclusion thereof. In addition, various other terms used in the following summary are defined in this Official Statement, the Initial Liquidity Facility and the Indenture, and reference thereto is made for full understanding of their import.

The Initial Liquidity Facility will become effective on December 14, 2007 (the “Effective Date”). The Initial Liquidity Facility requires the Initial Liquidity Provider to provide funds for the purchase of the Series 2007 Bonds in the Daily Rate or the Weekly Rate (each a “Covered Rate”) that have been tendered and not remarketed subject to certain conditions described below. Series 2007 Bonds purchased and held by the Initial Liquidity Provider will bear interest at the rates of interest provided therefor in the Initial Liquidity Facility.

The Initial Liquidity Facility shall be effective from the Effective Date to and including the earliest of (a) the Scheduled Termination Date (as defined below), (b) the close of business on the Business Day immediately succeeding the date on which no Series 2007 Bonds bear interest at a Covered Rate or the date the Initial Liquidity Facility is replaced with an alternate liquidity facility, (c) the close of business on the thirtieth (30th) day following the date on which a Notice of Termination of Commitment to Purchase (as defined below) is received by the Tender Agent or, if such day is not a Business Day, the next following Business Day, and (d) except as set forth in clause (b) of this paragraph, the date on which pursuant to the terms of the Initial Liquidity Facility the Available Commitment (as defined below) has been reduced to zero or terminated in its entirety.

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On each Purchase Date (as defined below), if the proceeds available from the remarketing of the Series 2007 Bonds are not sufficient for the purchase of the Series 2007 Bonds, the Tender Agent will give notice by telecopier to the Initial Liquidity Provider, in the form Notice of Bank Purchase, as appropriate and completed in full, no later than 12:30 p.m., New York time, on the Business Day on which Series 2007 Bonds are subject to an optional tender or mandatory tender. If the Initial Liquidity Provider receives such notice as provided above, and subject, in each case, to the satisfaction of the conditions precedent set forth in the Initial Liquidity Facility, the Initial Liquidity Provider will transfer to the Tender Agent, not later than 2:30 p.m., New York time, on such date (a “Purchase Date”), in immediately available funds, an amount equal to the aggregate Purchase Price of all or such portion of such Eligible Bonds (as defined below) as set forth in said Notice of Bank Purchase.

The obligation of the Initial Liquidity Provider to purchase Series 2007 Bonds pursuant to the terms of the Initial Liquidity Facility is subject to the conditions precedent that no Special Event of Default or Suspension Event shall have occurred and be continuing and that the Initial Liquidity Provider shall have received timely a Notice of Bank Purchase as described in the preceding paragraph. A Special Event of Default or Suspension Event (as each such term is defined below) will result in the immediate termination or suspension, without notice, of the Initial Liquidity Provider’s obligation to purchase Series 2007 Bonds, as more fully set forth in the section “Remedies” below. The Initial Liquidity Facility is not available to pay the principal, interest or premium, if any, payable on the Series 2007 Bonds.

Events of Default

Each of the following events constitutes an “Event of Default” under the Initial Liquidity Facility:

(A) the University shall not pay when due (i) any principal of, or premium or interest on, any Series 2007 Bond, including any Bank Bond, or (ii) any fee, expense or other amount payable to the Initial Liquidity Provider pursuant to the terms of the Initial Liquidity Facility; or

(B) the University shall fail to pay within five (5) days after the same shall become due any other amount payable by it under the Initial Liquidity Facility (not otherwise referred to in clause (A) above; or

(C) any material representation or warranty made by or on behalf of the University in the Initial Liquidity Facility or in any certificate, document, instrument, opinion or financial or other statement contemplated by or made or delivered pursuant to or in connection with the Initial Liquidity Facility shall be incorrect or untrue in any material respect when made or deemed to have been made; or

(D) the University shall default in the due performance or observance of any of the covenants set forth in specified sections of the Initial Liquidity Facility; or

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(E) the University shall default in the due performance or observance of any other term, covenant or agreement contained or incorporated by reference in the Initial Liquidity Facility (other than those referred to in clauses (A), (B), (C) and (D) above) and such default shall remain unremedied for a period of thirty (30) days after the Liquidity Provider shall have given written notice thereof to the University; or

(F) the University shall fail to pay the principal, interest or premium, if any, when due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) on any Parity Debt (as defined below), and such failure shall continue beyond any applicable period of grace specified in any underlying resolution, indenture, contract or instrument providing for the creation of or concerning such Parity Debt or, pursuant to the provisions of any such resolution, indenture, contract or instrument, the maturity of any such Parity Debt, as a result of a payment default relating to payment of principal or interest on such Parity Debt, shall have been or may be accelerated or may be required to be prepaid prior to the stated maturity thereof; or

(G) (i) the University shall commence any case, proceeding or other action (a) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition, moratorium or other relief with respect to it or its debts, or (b) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets, or the University shall make a general assignment for the benefit of its creditors;

(ii) there shall be commenced against the University any case, proceeding or other action of a nature referred to in paragraph (A) above that (i) results in an order for such relief or in the appointment of a receiver or similar official or (ii) remains undismissed, undischarged or unbonded for a period of ninety (90) days;

(iii) there shall be commenced against the University any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets, which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within ninety (90) days from the entry thereof;

(iv) the University shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in subparagraphs (i), (ii) or (iii) above;

(v) the University shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or

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(vi) the University shall declare a moratorium with respect to the Series 2007 Bonds or any Parity Debt, or a debt moratorium or comparable restriction on repayment of debt applicable to the Series 2007 Bonds or any Parity Debt shall have been declared or imposed by a Governmental Authority (as defined below) with competent jurisdiction (whether or not in writing) with respect to the Series 2007 Bonds or any Parity Debt; or

(H) any “event of default” under the Indenture or any “event of default” which is not cured within any applicable cure period under any of the other Related Documents (as defined below) shall occur; or

(I) (i) any provision of the Initial Liquidity Facility, the Indenture, the Loan Agreement, the Series 2007 Note or the Series 2007 Bonds relating to the ability or obligation of the University to pay the principal of or interest on the Series 2007 Bonds (including any Bank Bonds) or the security therefor, shall at any time and for any reason cease to be valid and binding on the University as a result of (a) a finding or ruling, (b) enactment or adoption of legislation, (c) issuance of an executive order or (d) entry of a judgment or decree, in each instance, by a Governmental Authority having appropriate jurisdiction over the University that such a provision is null and void, invalid or unenforceable; or (ii) the University shall have taken or permitted to be taken any official action which would adversely affect the enforceability of the Initial Liquidity Facility, the Indenture, the Loan Agreement, the Series 2007 Note, the Series 2007 Bonds or any Parity Debt relating to the University’s ability or obligation to pay the principal or interest on the Series 2007 Bonds (including any Bank Bonds) or any Parity Debt, or the security therefor, or, by official action, the University repudiates its, or denies that it has any further, obligation to repay the principal or interest due on the Series 2007 Bonds (including any Bank Bonds) or any Parity Debt; or (iii) the University (a) challenges the validity or enforceability of any provision of the Initial Liquidity Facility, the Indenture, the Loan Agreement, the Series 2007 Note, the Series 2007 Bonds or any Parity Debt relating to or otherwise affecting the University’s ability or obligation to pay the principal of or interest on the Series 2007 Bonds, the Bank Bonds or any Parity Debt, or the security therefor, or (b) seeks an adjudication that any provision of the Initial Liquidity Facility, the Indenture, the Loan Agreement, the Series 2007 Note, the Series 2007 Bonds or any Parity Debt relating to or otherwise affecting the University’s ability or obligation to pay the principal of or interest on the Series 2007 Bonds, the Bank Bonds or any Parity Debt, or the security therefor, is not valid and binding; or

(J) (i) the long term rating of the Series 2007 Bonds or any Parity Debt assigned by Moody’s shall be reduced below “Aa3” by Moody’s, and said reduction shall remain in effect for a period of not less than ninety (90) days; or (ii) the long-term rating of the Series 2007 Bonds or any Parity Debt assigned by Moody’s shall be withdrawn or suspended for credit-related reasons or reduced below “Baa3” by Moody’s; provided, however, that any downgrade, withdrawal or suspension described in any of the specified provisions of the Initial Liquidity Facility shall not be deemed an Event of Default under the Initial Liquidity Facility if said downgrade, withdrawal or suspension, as the case may be, shall be attributable to the downgrade, withdrawal or suspension of the long-term ratings assigned to any third party credit enhancement provider; or

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(K) (i) a final, nonappealable judgment or order for the payment of money in excess of $10,000,000 in the aggregate shall be rendered against the University, which judgment or order is payable from the Series 2007 Note, the Revenues and the other funds and accounts pledged to secure the Series 2007 Bonds and, with respect to which judgment, neither adequate cash reserves have been established nor sufficient proceeds from an existing policy of insurance are available, and such judgment or order shall continue unsatisfied and unstayed for a period of ninety (90) days; or (ii) a ruling, assessment, notice of deficiency or technical advice by the Internal Revenue Service shall be rendered to the effect that interest on the Series 2007 Bonds is includable in the gross income of the holder(s) or owner(s) of such Series 2007 Bonds and either (a) the University, after it has been notified by the Internal Revenue Service, shall not challenge such ruling, assessment, notice or advice in a court of law during the period within which such challenge is permitted or (b) the University shall challenge such ruling, assessment, notice or advice and a court of law shall make a determination, not subject to appeal or review by another court of law, that such ruling, assessment, notice or advice is correctly rendered.

Remedies

Following the occurrence of any of the above-referenced Events of Default under the Initial Liquidity Facility, the following remedies shall be available to the Liquidity Provider:

(1) Upon the occurrence of an Event of Default under paragraph (A)(i) (but only so long as the Event of Default described in (A)(i) did not result solely from an acceleration of the Bank Bonds by the Initial Liquidity Provider or result from a purchase of Bank Bonds by the University pursuant to paragraph 4(b) below, (F), (G) (excluding a Default under (G)(ii) or (G)(iii) until the 90-day period described therein has elapsed thereby permitting exercise of the remedy described in this paragraph (1)), (I) (excluding an Event of Default under (I)(iii) until the cure period described in paragraph (2)(b) below has elapsed thereby permitting exercise of the remedy described in this paragraph (1)), (J)(ii) or (K)(i) above (each, a “Special Event of Default”), the Available Commitment (as defined below) shall immediately be reduced to zero, in which case, the obligations of the Initial Liquidity Provider under the terms of the Initial Liquidity Facility shall immediately terminate and expire without the requirement of notice by the Initial Liquidity Provider. After such termination or expiration, the Initial Liquidity Provider shall deliver, within two (2) Business Days, to the University, the Tender Agent, the Trustee and the Remarketing Agent written notice of such termination or expiration; provided, however, that failure to provide such written notice shall have no effect on the validity or enforceability of such termination or expiration.

(2) In the case of each Default or Event of Default described hereinbelow (each, a “Suspension Event”), the obligation of the Initial Liquidity Provider to purchase Eligible Bonds under the Initial Liquidity Facility shall be immediately suspended without notice or demand and, thereafter, the Initial Liquidity Provider shall be under no obligation to purchase Eligible Bonds until the Available Commitment for the Series 2007 Bonds is reinstated as described below. Promptly upon the occurrence of any such Suspension Event, the Initial Liquidity Provider shall give written notice of

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same to the University, the Tender Agent, the Trustee and the Remarketing Agent; provided, that the Initial Liquidity Provider shall incur no liability of any kind by reason of its failure to give such notice and such failure shall in no way affect the suspension of the Available Commitment for the Series 2007 Bonds or the suspension of its obligation to purchase Eligible Bonds pursuant to the Initial Liquidity Facility.

(a) Upon the occurrence of a Default described in paragraph (G)(ii) or (G)(iii) above, the Initial Liquidity Provider’s obligations to purchase Eligible Bonds shall remain suspended until the case, proceeding or other action referred to therein is either (i) terminated or (ii) ninety (90) days shall have elapsed from the commencement of such case, proceeding or action, whichever is the first to occur. In the event that said Suspension Event shall have been terminated within the ninety (90) day period described therein, then the Available Commitment (as defined below) and the obligation of the Initial Liquidity Provider to purchase Eligible Bonds shall be reinstated and the terms of the Initial Liquidity Facility shall continue in full force and effect (unless the Initial Liquidity Facility shall have otherwise expired or been terminated in accordance with its terms) as if there had been no such suspension. In the event that said Suspension Event shall not have been terminated within such ninety (90) day period, then the Available Commitment and the obligation of the Initial Liquidity Provider to purchase Eligible Bonds shall at such time terminate without notice or demand and, thereafter, the Initial Liquidity Provider shall be under no obligation to purchase Eligible Bonds.

(b) Upon the occurrence of an Event of Default described in paragraph (I)(iii) above, the Initial Liquidity Provider’s obligations to purchase Eligible Bonds under the Initial Liquidity Facility shall be suspended from the time of the occurrence of such Suspension Event and, in the event any provision relating to or otherwise affecting the ability or obligation of the University to pay the principal of or interest on the Series 2007 Bonds, the Bank Bonds or any Parity Debt, or security therefor, as set forth in the Initial Liquidity Facility, the Indenture, the Loan Agreement, the Series 2007 Note, the Series 2007 Bonds or any Parity Debt is declared to be invalid or unenforceable as described in paragraph (I)(iii)(a) above or not valid and binding on the University as described in paragraph (I)(iii)(b) above, in either case, by a court or other Governmental Authority with competent jurisdiction, then the obligations of the Initial Liquidity Provider under the Initial Liquidity Facility will terminate in accordance with paragraph (1) above; provided, however, that if such provisions are upheld in their entirety, the Available Commitment and the obligation of the Initial Liquidity Provider to purchase Eligible Bonds shall be reinstated and the terms of the Initial Liquidity Facility will continue in full force and effect (unless the Initial Liquidity Facility shall have otherwise expired or been terminated in accordance with its terms) as if there had been no such suspension. Notwithstanding the foregoing, if three (3) years after the effective date of the suspension of the obligations of the Initial Liquidity Provider pursuant to any Event of Default described in paragraph (I)(iii) above, litigation is still pending and a determination regarding same shall not have been rendered or otherwise made by a court or other

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Governmental Authority with competent jurisdiction pursuant to a final and non-appealable judgment, then the Available Commitment and the obligation of the Initial Liquidity Provider to purchase Eligible Bonds shall at such time terminate without notice or demand and, thereafter, the Initial Liquidity Provider shall be under no obligation to purchase Eligible Bonds.

In the case of each Suspension Event, the Tender Agent shall, upon receipt of notice from the University, immediately notify all Bondholders of the suspension and/or termination of both the Available Commitment and the obligation of the Initial Liquidity Provider to purchase Eligible Bonds. The University shall cause the Tender Agent to notify all Bondholders of the suspension and/or termination of the Available Commitment and of the suspension and/or termination of the obligation of the Initial Liquidity Provider to purchase the Eligible Bonds.

(3) Upon the occurrence of any Event of Default, the Initial Liquidity Provider may terminate the Available Commitment by giving written notice to the University, the Trustee and the Tender Agent of such Event of Default (a “Notice of Termination of Commitment to Purchase”) whereupon, at the close of business on the thirtieth (30th) day following the date such Notice of Termination of Commitment to Purchase is received by the Tender Agent, the Available Commitment shall be reduced to zero and the obligations of the Initial Liquidity Provider under the terms of the Initial Liquidity Facility shall terminate; provided, however, that prior to such termination, the Initial Liquidity Provider shall remain obligated to purchase Eligible Bonds in accordance with the terms of the Initial Liquidity Facility so long as no Special Event of Default or Suspension Event has occurred.

(4) In addition to the rights and remedies set forth in paragraphs (1), (2) and (3) above, upon the occurrence and continuance of an Event of Default, the Initial Liquidity Provider shall have all other remedies provided at law or equity, including, without limitation, specific performance; in addition, the Initial Liquidity Provider, in its sole discretion, may do one or more of the following: (a) declare all obligations of the University to the Initial Liquidity Provider under the Initial Liquidity Facility to be immediately due and payable, and the same shall thereupon become due and payable without demand, presentment, protest, notice of intent to accelerate, notice of acceleration or further notice of any kind, all of which are expressly waived; (b) require immediate purchase of Bank Bonds by the University; (c) exercise any right or remedy available to it under any other provision of the Initial Liquidity Facility; or (d) exercise any other rights or remedies available under any Related Document, any other agreement or at law or in equity; provided, however, that the Initial Liquidity Provider shall not have the right to terminate its obligation to purchase Bonds except as expressly provided in this “Remedies” section.

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Certain Definitions

Set forth below are certain definitions of terms used in the Initial Liquidity Facility and not otherwise defined in this summary or the Official Statement.

“Available Commitment” as of any day means the sum of the Available Principal Commitment and the Available Interest Commitment on such day.

“Available Interest Commitment” initially means $719,179, which initial amount equals 35 days’ interest on the initial amount of the Available Principal Commitment based upon an assumed rate of interest of ten percent (10%) per annum and a three hundred sixty-five (365) day year and, thereafter, means such initial amount adjusted from time to time as follows: (a) downward by an amount that bears the same proportion to such initial amount as the amount of any reduction in the Available Principal Commitment in accordance with clause (a) or (b) of the definition of “Available Principal Commitment” bears to the initial Available Principal Commitment and (b) upward by an amount that bears the same proportion to such initial amount as the amount of any increase in the Available Principal Commitment in accordance with clause (c) of the definition of “Available Principal Commitment” bears to the initial Available Principal Commitment.

“Available Principal Commitment” means initially the aggregate principal amount of the Series 2007 Bonds Outstanding, that is, $75,000,000 and, thereafter, means such initial amount adjusted from time to time as follows: (a) downward by the amount of any mandatory reduction of the Available Principal Commitment; (b) downward by the principal amount of any Bonds purchased by the Initial Liquidity Provider; and (c) upward by the principal amount of any Bonds theretofore purchased by the Initial Liquidity Provider which are remarketed by the Remarketing Agent; provided, however, that the sum of the Available Principal Commitment plus the aggregate principal amount of Bank Bonds shall never exceed $75,000,000. Any adjustments to the Available Principal Commitment pursuant to clause (a), (b) or (c) shall occur simultaneously with the occurrence of the events described in such clauses.

“Bank Bond” means each Series 2007 Bond purchased with funds provided under the Initial Liquidity Facility by the Initial Liquidity Provider, until remarketed or such Bank Bonds are no longer deemed Bank Bonds in accordance with the Initial Liquidity Facility. For all purposes of the Initial Liquidity Facility and the Indenture, the term “Bank Bond” is deemed to mean and include the term “Pledged Bond”, as such term is used and defined in the Indenture.

“Debt” of any Person means at any date, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (d) all obligations of such Person as lessee under capital leases, (e) all Debt of others secured by a lien on any asset of such Person, whether or not such Debt is assumed by such Person, and (f) all Guarantees by such Person of Debt of other Persons.

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“Eligible Bonds” means Series 2007 Bonds that bear interest at a Covered Rate and that are not Bank Bonds or Series 2007 Bonds owned by or on behalf of, or for the account of the University or any Related Person of the University.

“Governmental Authority” means any national, state or local government (whether domestic or foreign), any political subdivision thereof or any other governmental, quasi-governmental, judicial, public or statutory instrumentality, authority, body, agency, bureau or entity (including any zoning authority, the Federal Deposit Insurance Corporation or the Federal Reserve Board, any central bank or any comparable authority), or any arbitrator with authority to bind a party at law.

“Guarantee” by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement condition or otherwise) or (b) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part).

“Parity Debt” means any Debt (evidenced by bonds, debentures, notes or other similar securities) that (a) constitutes a general, unconditional and unsecured obligation of the University (exclusive of any credit enhancement applicable thereto) and (b) has been offered and sold either by means of a public offering or a private placement with institutional investors or other Persons that customarily purchase commercial paper or tax-exempt securities in large denominations.

“Person” means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity or organization, including a governmental or political subdivision or an agency or instrumentality thereof.

“Related Person” means any Person (whether for-profit or not-for-profit), which “controls”, or is “controlled” by, or is under common “control” with, the University or any Related Person. For purposes of this definition, a Person “controls” another Person when the first Person possesses or exercises directly, or indirectly through one or more other affiliates or related entities, the power to direct the management and policies of the other Person, whether through the ownership of voting rights, membership, the power to appoint members, trustees or directors, by contract or otherwise.

“Related Documents” means the Initial Liquidity Facility, the Series 2007 Bonds, the Remarketing Agreement, the Indenture, the Loan Agreement, the Series 2007 Note and any other document or instrument related thereto or issued thereunder.

“Scheduled Termination Date” means the later of (a) 5:00 p.m., New York time, on December 12, 2014 or, if such day is not a Business Day, the Business Day next preceding such day and (b) if such date has been extended, 5:00 p.m., New York time, on the date established by such extension or, if such date is not a Business Day, the Business Day next preceding such date.

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ESTIMATED ANNUAL LONG-TERM DEBT SERVICE REQUIREMENTS

The following table sets forth, for each 12-month period ending June 30, the estimated amount required in such year for the payment of principal of and interest on the Series 2007 Bonds and other long-term indebtedness of the University, after taking into account the application of the proceeds of the Series 2007 Bonds and the refunding and redemption of the Refunded Bonds. Series 2007 Bonds . Other University Debt

Fiscal Year

Ending June 30

Estimated Total Debt

Service(1)

Principal Payments

Interest Payments(1)

Total Other Debt

Service

Total Annual

Debt Service (1)

2008 $ 3,338,391 $ 5,595,000 $ 11,484,284 $ 17,079,284 $ 20,417,675 2009 3,324,647 2,260,000 11,251,640 13,511,640 16,836,287 2010 3,310,241 2,370,000 11,158,299 13,528,299 16,838,540 2011 3,295,100 2,475,000 11,060,364 13,535,364 16,830,464 2012 3,279,224 2,640,000 10,958,042 13,598,042 16,877,266 2013 3,262,539 2,560,000 10,848,946 13,408,946 16,671,485 2014 3,244,973 2,650,000 10,743,192 13,393,192 16,638,165 2015 3,226,451 2,750,000 10,633,679 13,383,679 16,610,130 2016 3,206,973 2,835,000 10,520,106 13,355,106 16,562,079 2017 3,186,467 2,910,000 10,402,983 13,312,983 16,499,450 2018 3,164,931 3,020,000 10,282,727 13,302,727 16,467,658 2019 2,982,578 2,210,000 10,157,994 12,367,994 15,350,572 2020 3,064,677 450,000 10,065,682 10,515,682 13,580,359 2021 3,000,585 500,000 10,046,885 10,546,885 13,547,470 2022 2,924,219 525,000 10,026,000 10,551,000 13,475,219 2023 2,848,734 560,000 10,004,071 10,564,071 13,412,805 2024 2,769,722 - 9,980,680 9,980,680 12,750,402 2025 2,684,241 - 9,980,680 9,980,680 12,664,921 2026 2,655,356 7,890,000 10,015,130 17,905,130 20,560,486 2027 2,625,000 - 9,158,000 9,158,000 11,783,000 2028 2,625,000 - 9,158,000 9,158,000 11,783,000 2029 2,625,000 - 9,158,000 9,158,000 11,783,000 2030 2,625,000 - 9,158,000 9,158,000 11,783,000 2031 2,625,000 - 9,158,000 9,158,000 11,783,000 2032 2,625,000 - 9,158,000 9,158,000 11,783,000 2033 2,625,000 43,000,000 9,023,000 52,023,000 54,648,000 2034 2,625,000 - 7,518,000 7,518,000 10,143,000 2035 2,625,000 - 7,518,000 7,518,000 10,143,000 2036 2,625,000 - 7,518,000 7,518,000 10,143,000 2037 2,625,000 140,000,000 7,518,000 147,518,000 150,143,000 2038 2,625,000 29,800,000 2,618,000 32,418,000 35,043,000 2039 2,625,000 - 1,575,000 1,575,000 4,200,000 2040 2,625,000 45,000,000 1,575,000 46,575,000 49,200,000 2041 2,625,000 - - - 2,625,000 2042 77,625,000 - - - 77,625,000 Total $175,770,049 $302,000,000 $299,432,384 $601,432,384 $777,202,433

_______________________ (1) The University has entered into several interest rate swap agreements whereby, as of various effective dates, the rate on

certain portions of the University’s variable rate debt has been synthetically converted to fixed rates ranging from 3.37% to 5.01%. Through such swap agreements, the University has effectively converted to a fixed rate $35,200,000 of its St. Joseph County, Indiana Variable Rate Educational Facilities Revenue Bonds, Series 2003 (University of Notre Dame du Lac Project) (the “Series 2003 Bonds”), $74,300,000 of its St. Joseph County, Indiana Variable Rate Educational Facilities Revenue Bonds, Series 2005 (University of Notre Dame du Lac Project) (the “Series 2005 Bonds”) and $48,530,000 (which amount under the related swap agreement amortizes down commencing March, 2008) of the Series 2007 Bonds. For purposes of this table, the University has assumed the applicable swap fixed rate in calculating the interest on such portions of the Series 2003 Bonds, the Series 2005 Bonds and the Series 2007 Bonds. With respect to all remaining outstanding variable rate indebtedness, the University has assumed for purposes of this table that such indebtedness will bear interest at the rate of 3.50% per annum. See also APPENDIX A- “Debt Outstanding.”

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THE ISSUER

The Issuer is a political subdivision organized and existing under the Constitution and the laws of the State of Indiana. The County seat of the Issuer is situated in South Bend, Indiana, which is approximately 100 miles east of Chicago along the Indiana Toll Road. The Issuer’s executive is the Board of County Commissioners, a three-person body elected by district for four-year terms. The Issuer’s legislature is vested in a nine-member County Council.

The University is the largest employer in St. Joseph County, Indiana. The employment base and tax base in St. Joseph County, Indiana, however, are diversified. Other substantial employers include hospitals, public entities (local government and public school systems), manufacturers, financial institutions and the U.S. Postal Service.

Pursuant to the Act, the Issuer is authorized to issue revenue bonds for the purposes of providing funds to finance the costs of economic development facilities. In accordance with the provisions of the Act, the St. Joseph County Economic Development Commission, an economic development commission organized and existing under the Act, held a public hearing regarding the issuance of the Series 2007 Bonds on behalf of itself and the Issuer. The County Council and the Board of County Commissioners authorized and approved the issuance of the Series 2007 Bonds by an ordinance adopted following such public hearing.

TAX EXEMPTION

In the opinion of Barnes & Thornburg LLP, South Bend, Indiana, Bond Counsel for the Series 2007 Bonds, under existing law, interest on the Series 2007 Bonds is excludable from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended and in effect on the date of issuance of the Series 2007 Bonds (the “Code”). The opinion of Barnes & Thornburg LLP is based on certain certifications, covenants and representations of the Issuer and the University and is conditioned on continuing compliance therewith. In the opinion of Barnes & Thornburg LLP, South Bend, Indiana, Bond Counsel, under existing law, interest on the Series 2007 Bonds is exempt from income taxation in the State of Indiana for all purposes except the State financial institutions tax. See APPENDIX E forthe proposed form of Bond Counsel opinion relating to the Series 2007 Bonds.

The Code imposes certain requirements which must be met subsequent to the issuance of the Series 2007 Bonds as a condition to the excludability of interest on the Series 2007 Bonds from gross income for federal income tax purposes. Noncompliance with such requirements may cause interest on the Series 2007 Bonds to be included in gross income for federal tax purposes retroactively to the date of issue, regardless of the date on which noncompliance occurs. Should any of the Series 2007 Bonds bear interest that is not excludable from gross income for federal income tax purposes, the market value of such Series 2007 Bonds would be materially and adversely affected. It is not an event of default under the Indenture if interest on the Series 2007 Bonds is not excludable from gross income for federal income tax purposes.

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The interest on the Series 2007 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes. However, interest on the Series 2007 Bonds is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations.

The Series 2007 Bonds are not qualified tax-exempt obligations for purposes of Section 265(b)(3) of the Code.

Indiana Code 6-5.5 imposes a franchise tax on certain taxpayers (as defined in Indiana Code 6-5.5) which, in general, include all corporations which are transacting the business of a financial institution in Indiana. The franchise tax is measured in part by interest excluded from gross income under Section 103 of the Code minus associated expenses disallowed under Section 265 of the Code.

Although Bond Counsel will render an opinion that interest on the Series 2007 Bonds is excludable from gross income for federal tax purposes and exempt from State income tax, the accrual or receipt of interest on the Series 2007 Bonds may otherwise affect an owner’s federal or state tax liability. The nature and extent of these other tax consequences will depend upon the owner’s particular tax status and the owner’s other items of income or deduction. Prospective purchasers of the Series 2007 Bonds should consult their own tax advisors with respect to the other tax consequences of owning such Series 2007 Bonds.

Under the terms of the Indenture, certain matters may not be undertaken without a confirming opinion of nationally recognized bond counsel to the effect such matters will not adversely affect the exclusion from gross income for purposes of federal income taxation of interest on the Bonds. For example, the interest rate on the Series 2007 Bonds may not be converted from one Rate Period to another Rate Period (other than from a Daily Rate Period to a Weekly Rate Period, or vice versa) nor may an Alternate Liquidity Facility be delivered to the Trustee unless the University furnishes the Trustee with an opinion of nationally recognized bond counsel to the effect such conversion of the Interest Rate or the delivery of such Alternate Liquidity Facility will not adversely affect the exclusion from gross income for purposes of federal income taxation of interest on the Series 2007 Bonds.

The foregoing does not purport to be a comprehensive description of all of the tax consequences of owning the Series 2007 Bonds. Prospective purchasers of the Series 2007 Bonds should consult their own tax advisors with respect to the foregoing and other tax consequences of owning the Series 2007 Bonds.

CERTAIN RELATIONSHIPS

Robert M. Conway, a member of the University’s Board of Trustees, is Senior Director of The Goldman Sachs Group Inc., the parent corporation of Goldman, Sachs & Co., the Underwriter and the Remarketing Agent for Series 2007 Bonds.

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LEGAL MATTERS

Legal Opinions

Legal matters incident to the authorization, issuance and sale of the Series 2007 Bonds are subject to the approving opinion of Barnes & Thornburg LLP, South Bend, Indiana, Bond Counsel. Certain legal matters will be passed upon for the University by its Vice President and General Counsel; for the Issuer by its counsel, Zappia Zappia & Stipp, South Bend, Indiana; for the Initial Liquidity Provider by its United States counsel, Nixon Peabody LLP, New York, New York, and by its Spanish counsel, J & A Garrigues S.L., Madrid, Spain; and for the Underwriter by its counsel, Chapman and Cutler LLP, Chicago, Illinois.

Enforceability Limitations

The enforceability of the rights and remedies of the Trustee or the Holders of the Series 2007 Bonds under the Indenture and the availability of remedies to any party seeking to enforce the Indenture are in many respects dependent upon judicial actions which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including specifically Title 11 of the United States Code (the federal bankruptcy code), the enforceability of the rights and remedies under the Indenture and the availability of remedies to any party seeking to enforce the security granted thereby may be limited.

The various legal opinions to be delivered concurrently with the delivery of the Series 2007 Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by the valid exercise of the constitutional powers of the State of Indiana and the United States of America and bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally, and by general principles of equity (regardless of whether such enforceability is considered in a preceding in equity or at law). These exceptions would encompass any exercise of federal, State of Indiana or local police powers (including the police powers of the State of Indiana), in a manner consistent with the public health and welfare. The enforceability of the Indenture and the availability of remedies to a party seeking to enforce a pledge of security under the Indenture in a situation where such enforcement or availability may adversely affect public health and welfare may be subject to these police powers.

LITIGATION

The Issuer

There is no pending, or to the Issuer’s knowledge threatened, litigation against the Issuer seeking to restrain or enjoin the issuance or delivery of the Series 2007 Bonds or questioning or affecting the validity of the Series 2007 Bonds or the proceedings and authority under which they are to be issued.

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The University

There is no litigation or proceeding pending or, to the University’s knowledge, threatened against the University which (i) seeks to restrain or enjoin the issuance or delivery of the Series 2007 Bonds or the execution or the performance by the University of its obligations under the Loan Agreement, the Remarketing Agreement or the Initial Liquidity Facility, (b) in any way contests or affects the issuance or the validity of the Series 2007 Bonds or the Loan Agreement, the Remarketing Agreement or the Initial Liquidity Facility, or (c) in any way contests the legal existence or powers of the University. There is no litigation or proceeding pending or, to the University’s knowledge, threatened against the University except for (i) litigation being defended by insurance carriers on behalf of the University, the claims in which are entirely within the insurance policy limits of the University, (ii) litigation in which the expected maximum aggregate recovery against the University could be satisfied from the self-insurance trust fund maintained by the University or (iii) claims for damages arising in the ordinary course of its operations, none of which are deemed to be material to the operation or condition, financed or otherwise, of the University.

UNDERWRITING

Goldman, Sachs & Co. (the “Underwriter”) agrees in the Bond Purchase Agreement to be executed by the Issuer, the University and the Underwriter (the “Bond Purchase Agreement”), subject to certain conditions, to purchase the Series 2007 Bonds from the Issuer at an aggregate purchase price of $75,000,000, there being no accrued interest. The Underwriter will receive an underwriting fee of $72,501 (including out of pocket expenses).

The Bond Purchase Agreement to be executed provides that the Underwriter will purchase all of the Series 2007 Bonds if any are purchased, and requires the University to indemnify such Underwriter and the Issuer against losses, claims, damages and liabilities to third parties arising out of any materially incorrect or incomplete statements or information contained in this Official Statement pertaining to the University. The Underwriter reserves the right to join with dealers and other underwriters in offering the Series 2007 Bonds to the public. The Underwriter may offer and sell the Series 2007 Bonds to certain dealers (including dealers depositing Series 2007 Bonds into investment trusts) and others at prices lower than the offering price set forth on the cover page of this Official Statement. In connection with each offering, the Underwriter may overallot or effect transactions that stabilize or maintain the market price of the Series 2007 Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time.

RATINGS

Moody’s Investors Service, Inc. (“Moody’s”) has assigned its municipal bond ratings of “Aaa/VMIG-1” to the Series 2007 Bonds. The short-term rating assigned by Moody’s to the Series 2007 Bonds is based upon the credit of the Initial Liquidity Provider. The ratings assigned by Moody’s reflect only the view of Moody’s. Any explanation of the significance of such ratings may only be obtained from Moody’s. There is no assurance that the ratings mentioned above will remain in effect for any given period of time or that they might not be

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lowered or withdrawn entirely by Moody’s if, in its judgment, circumstances so warrant. Any such downward change in or withdrawal of such ratings may have an adverse effect on the market price of the Series 2007 Bonds.

INDEPENDENT ACCOUNTANTS

The consolidated financial statements as of and for the years ended June 30, 2007 and 2006, included in APPENDIX B to this Official Statement, have been audited by PricewaterhouseCoopers LLP, independent accountants, as stated in their report appearing in APPENDIX B to this Official Statement.

CONTINUING DISCLOSURE REQUIREMENT

The Series 2007 Bonds are exempt from the continuing disclosure requirements of paragraph (b)(5) of Rule 15c2-12 (the “Rule”) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934 so long as all of the Series 2007 Bonds bear interest at a Daily Rate, a Weekly Rate or Commercial Paper Rates, and accordingly the University has not entered into an agreement to provide continuing disclosure for the benefit of the holders of the Series 2007 Bonds. If the University converts any Series 2007 Bonds to bear interest at a Term Rate, a Fixed Rate or an Auction Period Rate, such Series 2007 Bonds will become subject to the continuing disclosure requirements of the Rule and, in such event, the University has agreed to comply with the requirements of the Rule which include, among other things, entering into an undertaking to provide continuing information as required by the Rule.

MISCELLANEOUS

The references herein, and in the Appendices attached hereto, to the Indenture, the Loan Agreement, the Remarketing Agreement and the Initial Liquidity Facility are brief outlines of certain provisions thereof. Such outlines do not purport to be complete. For full and complete statements of such provisions, reference is made to such documents. Copies of the documents mentioned under this heading are on file at the office of the Issuer and following delivery of the Series 2007 Bonds will be on file at the designated corporate trust office of the Trustee.

The attached APPENDICES A, B, C, D and E are integral parts of this Official Statement and should be read in their entirety together with all foregoing statements.

The University has supplied and reviewed the information contained herein relating to the University and has approved all such information for use within this Official Statement. The Issuer has supplied the information about itself.

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The execution and delivery of this Official Statement have been duly authorized by the Issuer and the University.

ST. JOSEPH COUNTY, INDIANA UNIVERSITY OF NOTRE DAME DU LAC

By /s/ Steven Ross By /s/ John A. Sejdinaj County Commissioner, President of the

Board of Commissioners Vice President for Finance

By /s/ Mark A. Dobson County Commissioner, Vice President of

the Board of Commissioners

By /s/ Robert Kovach County Commissioner

APPENDIX A

UNIVERSITY OF NOTRE DAME DU LAC

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UNIVERSITY OF NOTRE DAME DU LAC

TABLE OF CONTENTS

General Information.................................................................................................................... 1

Governance ................................................................................................................................. 1

Administration ............................................................................................................................ 6

Academic Accreditation and Memberships .............................................................................. 11

Undergraduate Education ......................................................................................................... 11

Graduate Education................................................................................................................... 12

Relationships with Other Institutions ....................................................................................... 13

Faculty and Employees ............................................................................................................. 13

Student Enrollment ................................................................................................................... 14

Student Recruitment ................................................................................................................. 16

Tuition and Fees........................................................................................................................ 19

Financial Aid............................................................................................................................. 19

Financial Information ............................................................................................................... 21

Debt Outstanding ...................................................................................................................... 24

Endowment and Split Interest Funds ........................................................................................ 25

Contributions ............................................................................................................................ 27

Grants and Contracts................................................................................................................. 28

Physical Facilities ..................................................................................................................... 28

Insurance ................................................................................................................................... 29

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UNIVERSITY OF NOTRE DAME DU LAC

General Information

The University of Notre Dame du Lac (the “University”), founded in 1842 by Father Edward F. Sorin, a priest of the Congregation of Holy Cross, is a private, coeducational, national Catholic research university. Located at Notre Dame, Indiana, the University campus is adjacent to the City of South Bend and approximately ninety miles southeast of Chicago.

The University maintains high academic standards and ranks annually among the most selective universities in the nation. Admission to the University is highly competitive, with approximately seven applicants for each freshman class position. In 2007, of the students for whom high school rank was known, more than four out of every five entering students (approximately 86%) were ranked in the top ten percent of their high school graduating class and 71% of those entering students ranked among the top five percent in their class.

The University is organized into the undergraduate colleges of Arts and Letters, Science, Engineering, Business, and the School of Architecture. Three advanced degree schools - the Law School, the Mendoza College of Business, and the Graduate School - complete the academic structure. The University also manages a number of major research institutes, several centers for advanced academic study, and various special programs.

Governance

The University was founded in 1842 and was officially chartered by a special act of the legislature of the State of Indiana in 1844. Until 1967, the University was governed by a self-perpetuating Board of Trustees of six members of the Priests Society of the Congregation of Holy Cross. In 1967, the University became one of the first Catholic universities in the nation to transfer governance to a predominantly lay Board of Trustees.

Under the new structure, the former Board of Trustees was replaced by the Fellows of the University (the “Fellows”), with membership governing body of six priests of the Priests Society of the Congregation of Holy Cross and six lay persons. The Congregation of Holy Cross is a worldwide association of priests, brothers, and sisters divided into geographical provinces. In accordance with the University’s bylaws, six Holy Cross priests from the Indiana Province must at all times serve as Fellows. In addition, the Provincial of the Priests Society of the Congregation of Holy Cross, the Religious Superior of the Holy Cross Religious at Notre Dame, the President of the University of Notre Dame and the Chairman of the Board are all ex officio Fellows. The Fellows exercise all power and authority granted by the University’s charter, but have delegated the general powers of governance of the University to the Board, except for certain specifically reserved powers, including the power to elect the Trustees.

Trustees are elected by the Fellows for three-year terms of office. Prominent lay persons from the fields of education, business, and public service occupy the majority of seats on the Board. The Bylaws of the University provide that the Board shall have at least thirty, but no more than sixty,

Trustees. The Board is required to hold three regular meetings during each academic year, with meetings typically occurring in the fall, winter, and spring.

The Board has established several standing committees and, with certain exceptions, has vested the Executive Committee with all of the powers and functions of the Board for periods between meetings of the Board. Other standing committees of the Board are as follows: the Academic and Faculty Affairs Committee, the Investment Committee, the Finance Committee, the Student Affairs Committee, the University Relations/Public Affairs & Communications Committee, the Social Values and Responsibilities Committee, the Audit Committee, the Committee on Athletic Affairs, the Governance and Nominating Committee, the Facilities and Campus Planning Committee, the Compensation Committee, and the International Facilities Committee.

Current Fellows of the University and members and officers of the Board of Trustees are as follows:

Name and Affiliation Name and Affiliation

Dr. John F. Affleck-Graves* Executive Vice President University of Notre Dame

Rev. José E. Ahumada F., C.S.C. Rector, St. George’s College District of Chile

Rev. E. William Beauchamp, C.S.C.PresidentUniversity of Portland

Mr. Robert F. Biolchini PartnerStuart, Biolchini & Turner

Ms. Cathleen P. Black PresidentHearst Magazines

Mr. Stephen J. Brogan Managing Partner Jones Day

Dr. Thomas G. Burish* ProvostUniversity of Notre Dame

Mr. Raymond G. Chambers Founder and Chairman Amelior Foundation

Mr. Robert M. Conway#

Senior Director The Goldman Sachs Group Inc.

Mr. Fritz L. Duda PresidentFritz Duda Company

Mr. José Enrique Fernández Chairman and Chief Executive Officer Omega Overseas Investments, Corp.

Mr. James F. Flaherty, III Chairman and Chief Executive Officer Health Care Property Investors

Mr. W. Douglas Ford* Downers Grove, Illinois

Dr. Marye Anne Fox ChancellorUniversity of California at San Diego

Ms. Stephanie A. Gallo Director of Marketing E & J Gallo Winery

Mr. F. Michael Geddes Chairman and President Geddes and Company

Mr. John W. Glynn, Jr. Founder and President Glynn Capital Management

Mr. William M. Goodyear *Chairman and Chief Executive Officer Navigant Consulting, Inc.

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Name and Affiliation Name and Affiliation

Dr. Nancy M. Haegel Professor, Department of Physics Naval Postgraduate School

Mr. Enrique Hernandez, Jr.* Chairman and Chief Executive Officer Inter-Con Security Systems, Inc.

Mrs. Carol Hank Hoffmann* Minnetonka, Minn.

Mr. Douglas Tong Hsu Chairman and Chief Executive Officer Far Eastern Group

Rev. Peter A. Jarret, C.S.C.Religious Superior Holy Cross Community at Notre Dame

Rev. John I. Jenkins, C.S.C. * PresidentUniversity of Notre Dame

Most Rev. Daniel R. Jenky, C.S.C. D. D.Bishop of Peoria

Mr. John W. Jordan, II Chairman and Chief Executive Officer Jordan Industries, Inc.

Mr. Thomas E. Larkin, Jr. Vice Chairman The TCW Group, Inc.

The Honorable Diana Lewis Palm Beach County Courthouse

Mr. Patrick F. McCartan Senior Partner Jones Day

Mr. Ted H. McCourtney General Partner Saw Mill Partners

Mr. Terrence J. McGlinnGeneral Partner Walnut Street Associates

Mr. Andrew J. McKenna Chairman of Schwarz Supply Source Chairman of McDonald’s Corporation

Mr. Martin Naughton Chairman Glen Dimplex

Mr. Richard C. Notebaert *Chicago, Illinois Chairman

Mr. Richard A. Nussbaum, II PartnerSopko, Nussbaum, Inabnit & Kaczmarek

Mr. Joseph I. O’Neill, III Managing Partner O’Neill Properties, Ltd.

Mr. Antonio Ortiz Associate Principal Cristo Rey Jesuit High School

Ms. Keri O. Oxley Fremont, Ohio

Dr. Anita M. Pampusch PresidentThe Bush Foundation

Dr. Percy A. Pierre Vice President and Emeritus Professor of Electrical Engineering Michigan State University

Ms. Cecilia H. Prinster President and CEO Colorado Enterprise Fund

Mr. Philip J. Purcell, III Founder and President Continental Investors LLC

Mr. William F. Reilly Founder and CEO Summit Business Media

Mr. J. Christopher Reyes Chairman Reyes Holdings, LLC

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Name and Affiliation Name and Affiliation

Mr. Phillip B. Rooney Chairman Claddagh Investments LLC

Mrs. Shayla Keough Rumely Atlanta, Georgia

Mrs. Shirley W. RyanChairman Pathways Awareness Foundation

Mr. John F. Sandner* Special Policy Advisor and Former Chairman

Board of DirectorsChicago Mercantile Exchange

Rev. Timothy R. Scully, C.S.C.Professor of Political Science and Director of the Institute for Educational InitiativesUniversity of Notre Dame

Mr. William J. Shaw* President and Chief Operating Officer Marriott International, Inc.

Mr. Kenneth E. Stinson Chairman Peter Kiewit Sons’, Inc.

Mrs. Phyllis W. Stone Executive Director of Marketing Merck & Co., Inc.

Rev. David T. Tyson, C.S.C.*Provincial Superior Congregation of Holy Cross, Indiana Province

Mr. Arthur R. VelasquezChairman, President and Chief Executive Officer Azteca Foods, Inc.

The Honorable Ann Claire Williams United States Court of Appeals for the Seventh Circuit ______________________________* Member of Executive Committee

Fellow of the University # See “Certain Relationships” section of the Official Statement

The following individuals serve as Trustees Emeriti, non-voting members of the Board of Trustees:

Name and Affiliation Name and Affiliation

Mrs. Kathleen W. Andrews Vice Chairman of Andrews McMeel Universal

Rev. Ernest Bartell, C.S.C. Faculty Fellow Helen Kellogg Institute for International Studies University of Notre Dame

Mr. Roger E. Birk Tequesta, Florida

Rev. Thomas E. Blantz, C.S.C. Professor, Department of History University of Notre Dame

Dr. John Brademas President Emeritus New York University

Mr. John H. Burgee Johnson / Burgee Architects

Dr. Thomas P. Carney Chairman Emeritus Glenview, Illinois

Mr. John B. Caron Greenwich, Connecticut

Mr. Arthur J. Decio Chairman

Mr. Alfred C. DeCrane, Jr. Greenwich, Connecticut

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Name and Affiliation Name and Affiliation

Skyline Corporation

Mr Anthony F. Earley Garden City, NY

Rev. Carl F. Ebey, C.S.C. Procurator General and General Steward of the Congregation of Holy Cross, Rome, Italy

Mr. Philip J. Faccenda South Bend, Indiana

Mr. Charles K. Fischer, Sr. Chairman and Chief Executive Officer Harbison-Fischer Manufacturing Co.

Sister Alice Gallin, O.S.U. Ursuline Community New Rochelle, New York

Mr. Roland D. Grimm Key West, Florida

Mr. J. M. Haggar, Jr. J. M. Haggar, Jr. Investments Dallas, Texas

Mr. Bernard J. Hank, Jr. Moline, Illinois

Mr. Philip M. Hawley Los Angeles, California

Rev. Theodore M. Hesburgh, C.S.C. President Emeritus University of Notre Dame

Mr. John A. Kaneb Chairman and Chief Executive Officer HP Hood, LLC

Mr. Donald R. Keough Chairman Allen & Company Incorporated

The Honorable George N. Leighton Earl A. Neal and Associates

Mr. Ignacio E. Lozano, Jr. Newport Beach, California

Rev. Edward A. Malloy, C.S.C. President Emeritus University of Notre Dame

Mr. Donald J. Matthews Far Hills, NJ

Mr. Newton N. Minow Senior Counsel Sidley Austin LLP

Prof. Timothy O’Meara Provost Emeritus University of Notre Dame

Mrs. Jane C. Pfeiffer Vero Beach, Florida

Mrs. Ernestine M. Raclin Chairman Emeritus 1st Source Corporation

Mr. John M. Regan, Jr. Watch Hill, Rhode Island

Mr. John A. Schneider Greenwich, Connecticut

Rev. Richard V. Warner, C.S.C. Director of Campus Ministry University of Notre Dame

Mr. William K. Warren, Jr. Chairman Emeritus, VP of Research The William K. Warren Foundation

Mr. Robert J. Welsh Chesterton, Indiana

Mr. Robert K. Wilmouth Special Policy Advisor National Futures Association

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Administration

The administration of the University is responsible for the day-to-day operation of Notre Dame and the implementation of policies established by the Board. The president of the University is the chief executive and is responsible for the general direction of its affairs. The Board elects the president, in accordance with the by-laws, from among the members of the Priests Society of the Congregation of Holy Cross and also elects the other officers of the University. The officers of the University are as follows:

Rev. John I. Jenkins, C.S.C., President - Father Jenkins took office as the 17th president of the University on July 1, 2005. He was elected by the University’s Board of Trustees to a five-year term on April 30, 2004. A professor of philosophy and member of Notre Dame’s faculty since 1990, Father Jenkins had served from July 2000 until his election as president as vice president and associate provost at the University. Prior to his service in the provost’s office, Father Jenkins had been Religious Superior of the Holy Cross priests and brothers at Notre Dame for three years. Father Jenkins specializes in the areas of ancient philosophy, medieval philosophy and the philosophy of religion. He is author of “Knowledge and Faith in Thomas Aquinas”, published by Cambridge University Press in 1997. Father Jenkins earned two advanced degrees in Philosophy from Oxford University in 1987 and 1989. He earned his master of divinity degree and licentiate in sacred theology from the Jesuit School of Theology at Berkeley, Calif., in 1988. Prior to entering the Congregation of the Holy Cross, he earned bachelor’s and master’s degrees in philosophy from Notre Dame in 1976 and 1978, respectively. He was ordained a priest in Notre Dame’s Basilica of the Sacred Heart in 1983.

Thomas G. Burish, Provost – Dr. Burish was elected the University’s second-ranking officer by the Board of Trustees in July 2005. A 1972 Notre Dame graduate and distinguished scholar in the field of clinical psychology, he served as president of Washington and Lee University for three years before returning to his alma mater and was Vanderbilt University’s longest-serving provost from 1993 to 2002. He earned his master’s and doctoral degrees in psychology and clinical psychology from the University of Kansas in 1975 and 1976, respectively. In 1976, he joined Vanderbilt’s faculty as an assistant professor of psychology and remained there for 26 years, establishing a prominent reputation in cancer research, receiving honors for excellence as an undergraduate teacher, and serving in numerous administrative positions including chair of the department of Psychology from 1984 to 1986. A member of the American Cancer Society’s national board of directors since 1991, he became its chair in 2004. He serves on numerous scientific advisory committees and is co-author and co-editor of four books.

John Affleck-Graves, Executive Vice President - Dr. Affleck-Graves was elected executive vice president on April 30, 2004, by the Board of Trustees. He holds the Notre Dame Chair in Finance and previously served for three years as vice president and associate provost. Dr. Affleck-Graves’ responsibilities include administration of an annual operating budget of more than $875 million and an investment pool of approximately $6.5 billion. He also oversees human resource activities for a work force of more than 4,000 employees and directs the University’s construction program. Dr. Affleck-Graves served on the Notre Dame faculty from 1986 to 2000 – the final three years as chairman of the Department of Finance and Business Economics – and returned in 2001 after a year at Florida State University as the Patty Hill Smith Eminent Scholar in Finance. He previously taught from 1975 to 1986 at his alma mater, the University of Cape Town, where he earned bachelor’s, master’s and doctoral degrees. The author of more than 50 refereed publications, Dr. Affleck-Graves specializes in the study of initial public offerings, valuation and asset pricing models, and shareholder value added methodology.

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Christine Maziar, Vice President and Senior Associate Provost – Dr. Maziar was elected vice president and associate provost in summer 2004 after serving for two years as provost at the University of Minnesota. She was promoted to senior associate provost in 2007. Her responsibilities include administration of budgets, academic space management, and the implementation of the University’s academic strategic plan. As Minnesota’s chief academic officer she was directly responsible for all colleges and academic units on the Twin Cities campus, except those in the Academic Health Center. She also oversaw the University Libraries, and the Offices of Information Technologies, Admissions, Student Affairs, and Enrolled Student Services. Prior to her appointment as provost, Dr. Maziar served four years as vice president for research and dean of the Graduate School at Minnesota. She went to Minnesota from the University of Texas, where she served on the engineering faculty after earning her bachelor’s, master’s and doctoral degrees in electrical engineering from Purdue University.

Dennis Jacobs, Vice President and Associate Provost - A professor of chemistry and biochemistry at the University since 1988, Dr. Jacobs was elected vice president and associate provost in summer 2004. He oversees Notre Dame’s undergraduate education and the international studies program, both of which are rated among the best in American higher education. Other areas of responsibility include the Honor Code, major University institutes and centers and the ROTC programs. He was selected as the U.S. Professor of the Year in 2002 for his innovative efforts to help students learn chemistry in different classroom settings. Dr. Jacobs earned his doctorate in chemistry from Stanford University after receiving two bachelor’s degrees, in chemistry and physics, from the University of California at Irvine. His laboratory research involves the study of nonthermal processes at the gas/solid interface.

Don Pope-Davis, Vice President and Associate Provost - Dr. Pope-Davis was elected vice president and associate provost in July 2007. He is responsible for the University’s relationship with faculty, including recruitment and hiring, tenure and promotions procedures, and mentoring programs. He was assistant vice president of the Notre Dame Graduate School from 2002 to 2004 and associate vice president for the following two years. He served on an interim basis for the 2006-07 academic year as dean of the Graduate School. He has been coordinator of the University’s Multicultural Research Institute since 2000 and directs Notre Dame’s TRIO programs. In 2006 he was appointed chair of Notre Dame’s Faculty Board on Athletics and its NCAA faculty athletics representative. He earned his bachelor’s degree from Benedictine University and his doctoral degree in counseling psychology from Stanford University. He previously served on the faculties of the University of Maryland and the University of Iowa.

Robert Bernhard, Vice President for Research – Dr. Bernhard was appointed vice president for research at Notre Dame in May 2007. He addresses infrastructure and support of research and the competition for funding dollars, as well as support for the University’s technology transfer efforts. For the last three years he served as Purdue University’s associate vice president for research. He served for 25 years on the faculty of the School of Mechanical Engineering at Purdue. He had been affiliated with the Acoustics and Noise Control Research Program at the Ray W. Herrick Laboratories at Purdue, and served as its director from 1994 to 2004. He had been the director of the Institute for Safe, Quiet and Durable Highways since 1998. A graduate of Iowa State University, he earned his master’s degree in mechanical engineering from the University of Maryland and returned to Iowa State in 1977 to pursue his doctorate and to serve on the engineering faculty as an assistant professor of freshman engineering.

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Rev. Mark L. Poorman, C.S.C., Vice President for Student Affairs - Father Poorman was elected vice president for student affairs in April 1999 after serving the previous two years in the University's administration as executive assistant to the executive vice president and later the president. A native of Phoenix, Father Poorman earned his bachelor's degree from the University of Illinois in 1976, his master of divinity degree from Notre Dame in 1980, and his doctorate in theology from the Graduate Theological Union in Berkeley, California, in 1990. He was ordained a priest in the Congregation of Holy Cross in 1982. Father Poorman has been a member of the theology department faculty since 1990 and served from 1990 to 1999 as director of the department's master of divinity program.

Carol C. Kaesebier, Vice President and General Counsel - Ms. Kaesebier was appointed vice president and general counsel of the University in February 1995. She entered the counsel’s office as assistant general counsel in June 1988, became associate general counsel in July 1991, and was appointed associate vice president and counsel a year later. She graduated first in her class from the Valparaiso University School of Law in 1983 after having received her bachelor of science degree with high honors from the University of Illinois in 1971. She was an associate attorney of Barnes & Thornburg, South Bend, Indiana, from 1983 to 1992, and an associate professor in the Valparaiso School of Law from 1986 to 1988.

John A. Sejdinaj, Vice President for Finance – Mr. Sejdinaj became vice president for finance on January 2, 2003, after previously serving for four years as assistant vice president for finance and director of budget and planning, and from 1996 to 1999 as director of finance and budgeting. He came to Notre Dame in 1994 as director of fixed income and cash management in the investment office. Under Mr. Sejdinaj’s leadership as the initial director of the budget office, the office modernized budget models and processes and evolved into a service team that assists virtually all academic and administrative units on budgeting and other financial planning issues. Mr. Sejdinaj earned a bachelor’s degree from Notre Dame in 1981 and a master of business administration degree from DePaul University in 1984. Prior to returning to Notre Dame, Mr. Sejdinaj enjoyed a successful career in the banking and investment banking fields.

Scott C. Malpass, Vice President and Chief Investment Officer - Mr. Malpass became vice president and chief investment officer on January 2, 2003, after serving as vice president for finance since 1999 and chief investment officer since 1989. He focuses on investment of the University’s endowment, working capital and pension assets, approximately $6.5 billion at June 30, 2007 with an endowment value of $6.1 billion. As of June 30, 2006, the endowment was ranked among the 17th largest in American higher education as reported in the 2006 National Association of College and University Business Officers Endowment Study. He also serves as a concurrent assistant professor of finance and business economics. Mr. Malpass received his bachelor’s degree in 1984 and his master of business administration degree in 1986, both from Notre Dame. He returned to the University in 1988, coming from The Irving Trust Company.

James J. Lyphout, Vice President for Business Operations - Mr. Lyphout came to the University of Notre Dame from Northwestern University in 1984 as assistant vice president for business affairs. In 1990, he was promoted to associate vice president for business affairs, and in early 1996, he was promoted again to associate vice president for business operations. He was elevated to vice president in 1999. Mr. Lyphout oversees all campus construction projects and the management of several campus auxiliaries and operations such as Food Services, the Hammes Notre Dame Bookstore, the Morris Inn, the

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campus in-house licensing program, and the Department of Risk Management and Safety. A native of Moline, Illinois, he graduated from Western Illinois University with bachelor’s (1969) and master’s (1970) degrees in Business Administration.

Louis M. Nanni, Vice President for University Relations - Mr. Nanni was appointed vice president for university relations on July 1, 2002, after previously serving for one year as the University’s first vice president for public affairs and communication, and from 1999 to 2001 as executive assistant to the President. He oversees the University’s development activities, Alumni Association, and special events office. A 1984 graduate of Notre Dame, Mr. Nanni also earned a master’s degree in peace studies from the University. He became director of the world mission office of the Catholic Dioceses of Orlando, Florida, in 1988 and was elected to Notre Dame’s Board of Trustees as a three-year, young alumni member in 1990. Prior to his return to the University in 1999, Mr. Nanni served for eight years as executive director of the Center for the Homeless in South Bend, Indiana, where he established a national model for addressing homelessness.

Hilary Crnkovich, Vice President for Public Affairs and Communication – Ms. Crnkovich was appointed vice president for public affairs and communication at the University in February 2005. She oversees the offices of marketing, news and information, community relations, web and print design, photography, video, internal communications and Notre Dame Magazine. She came to Notre Dame after serving as an executive since 2002 in the Chicago office of public relations and public affairs firm Burson-Marsteller, where she had previously worked from 1989 to 1993. From 1993 to 2002, she was a partner in Chicago-based Designkitchen, an award-winning web site design firm. Earlier in her career, she served as senior account executive at the Earle Palmer Brown Companies of Bethesda, Md., and Philadelphia. Over the course of her career, she has worked on a global basis with clients ranging from entrepreneurial start-ups to Fortune 500 conglomerates. She earned her bachelor’s degree in political science from the University of Michigan in 1983 and later studied graphic design and fine arts at the Parsons School of Design in New York City.

A dean oversees each of the four colleges, the Law School, the Graduate School, and the First Year of Studies program. The seven deans are:

Mark W. Roche, Dean of the College of Arts and Letters - Dr. Roche, the Shuster Dean of the College of Arts and Letters at Notre Dame and the Joyce Professor of German Languages and Literatures, became dean of the College of Arts and Letters on July 1, 1997. He also is a concurrent professor of philosophy. A member of the Notre Dame faculty since 1996, Dr. Roche previously was an associate professor and chair of Germanic languages and literatures at The Ohio State University, where he was a member of the faculty for 12 years. Dr. Roche was graduated magna cum laude from Williams College in 1978 with majors in German letters and the history of ideas. He earned a master’s degree with majors in philosophy and German literature from Eberhard-Karls-Universitat Tubingen in Germany in 1980 and earned both a second master’s degree and his doctoral degree from Princeton University in 1982 and 1984, respectively.

Carolyn Y. Woo, Dean of the Mendoza College of Business - Dr. Woo became Gillen Dean of the Mendoza College of Business at Notre Dame in August 1997. She also holds the Siegfried Chair in Management. Dr. Woo came to Notre Dame from Purdue University, where she was associate executive vice president for academic affairs and professor of management. In the former role, she took part in

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strategic planning and coordinated the continuous improvement program for all schools and departments at Purdue. She is the holder of three degrees from Purdue, beginning with a bachelor of science degree in economics, conferred with honors and highest distinction in 1975. She was awarded a master of science in industrial administration degree and named a Krannert Scholar in 1976 and earned her doctorate, in strategic management, in 1979. Dr. Woo joined the Purdue faculty in 1981, earning promotion to associate professor in 1985 and to full professor in 1991.

Joseph P. Marino, Dean of the College of Science – Dr. Marino was appointed dean of the College of Science in the summer of 2002. An organic chemist, Dr. Marino came to Notre Dame from the University of Michigan, where he served as chair of the Department of Chemistry for five years. He joined the Michigan faculty in 1969 and served from 1994 to 1997 as an associate dean for research, computing and facilities in Michigan’s College of Literature, Science and the Arts. Dr. Marino’s research interests include new synthetic methods, total synthesis of natural products of medicinal interest, and biometric oxidative processes. Dr. Marino earned his bachelor’s degree from Pennsylvania State University in 1963 and his master’s and doctoral degrees from Harvard University in 1965 and 1967, respectively.

Peter Kilpatrick, Dean of the College of Engineering - Dr. Kilpatrick was appointed dean of the College of Engineering in July 2007. Previously the chair of chemical and biomolecular engineering at North Carolina State University, he also is a full professor in Notre Dame’s Department of Chemical Engineering. Kilpatrick served on the North Carolina State faculty for 25 years and was department chair for eight years. He conducts research in colloidal and interfacial science, with an emphasis on the colloidal and molecular properties of crude oil and on biological membranes. His work is leading to oil production and refining that is both more energy efficient and better for the environment. Among his accomplishments, Kilpatrick served as founding director of NCSU’s Biomanufacturing Training and Education Center, an institute that is dedicated to educating students about pilot-scale protein manufacturing, with the aim of providing exceptional training to the next generation of biomanufacturers. Kilpatrick earned his bachelor’s degree in chemistry from Occidental College in Los Angeles and his doctorate in chemical engineering from the University of Minnesota.

Patricia A. O’Hara, Matson Dean of the Law School - A native of San Francisco, Dean O’Hara received her bachelor’s degree from the University of Santa Clara. She was awarded a Kiley Fellowship to attend law school at the University of Notre Dame and graduated first in her class in 1974. Dean O’Hara practiced corporate law in San Francisco until 1981, when she returned to Notre Dame to join the faculty of the Law School, teaching corporate and securities law. In 1990, she was elected Vice President for Student Affairs, becoming the first woman to serve as an officer of the University and in 1999 was appointed dean of the Law School. She was the 1997 recipient of the Howard J. Kenna, C.S.C., Award for Outstanding Service to the Congregation of Holy Cross and Notre Dame.

Peter Holland, Acting Dean of the Graduate School - Dr. Holland, McMeel Family Professor in Shakespeare Studies at Notre Dame, is the acting dean of the University’s Graduate School. Notre Dame recently separated the leadership responsibilities for the Graduate School and for research activity. Robert Bernhard is the first vice president for research. A committee has been formed to search for a permanent dean of the Graduate School. An internationally renowned Shakespearean scholar, Holland holds concurrent appointments in the Department of Film, Television and Theatre and Department of English. He serves as academic director of Actors From The London Stage, the touring Shakespeare

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theater company that makes its U.S. home at Notre Dame. Holland, who earned his doctorate at the University of Cambridge, came to Notre Dame in 2002. He previously served as director of The Shakespeare Institute at Stratford-upon-Avon, England, and professor of Shakespeare Studies at the University of Birmingham. Acclaimed for his performance-oriented Shakespearean criticism, Holland currently is president of the Shakespeare Association of America and editor of Shakespeare Survey, one of the world’s leading journals in the field.

Reverend Dr. Hugh R. Page Jr., Dean of the First Year of Studies – The Walter Associate Professor of Theology, Dr. Page, was appointed dean of Notre Dame’s First Year of Studies (FYS) in February 2005. A member of the faculty since 1992, he has served most recently as associate dean and director of undergraduate studies in the College of Arts and Letters and director of the African and African-American Studies program. He is a graduate of Hampton University, and holds theological degrees from General Theological Seminary in New York and master’s and doctoral degrees in Near Eastern languages and civilizations from Harvard University. An Episcopal priest, Dr. Page has taught classes in biblical studies, Near Eastern languages, ancient myth and theology. His scholarly specialties include early Hebrew poetry, the cultural content of ancient epic, theories of myth, African-American biblical interpretation, poetry as a medium for theological expression, the use of religious traditions and sacred texts in the construction of individual and corporate identity in the Black community, and the role of mysticism and esoterism in African-American, Afro-Caribbean and Afro-Canadian spirituality.

Academic Accreditation and Memberships

The University is accredited by the North Central Association of Colleges and Schools. The last accreditation was granted in December 2004, for a ten-year period. The next on-site review for accreditation will occur during the 2013-2014 academic year. Certain academic divisions are accredited by the following organizations: the American Bar Association (Law School), the National Architectural Accrediting Board (School of Architecture), the Association to Advance Collegiate Schools of Business (Mendoza College of Business), the American Psychological Association (Program in Counseling Psychology), the American Chemical Society (Department of Chemistry), the Engineering Accreditation Commission of the Accreditation Board for Engineering and Technology (Programs in Aerospace, Chemical, Civil, Electrical, Mechanical, and Computer Engineering as well as Computer Science), and the Association of Theological Schools (Program in Theology). Other departments, colleges, and programs of the University are accredited by relevant accrediting organizations.

The University is a member of the Association of Catholic Colleges and Universities, the International Federation of Catholic Universities, the American Council on Education, the National Association of Independent Colleges and Universities, Independent Colleges and Universities of Indiana, and the Association of American Colleges.

Undergraduate Education

The University’s academic programs at the undergraduate level are carried out through the University’s colleges of Arts and Letters, Science, Business, Engineering and the School of Architecture. The University utilizes the concept of a single faculty for both graduate and undergraduate education, thus enhancing the quality of undergraduate studies. Every undergraduate who enters the University is

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enrolled in the First Year of Studies program. The First Year of Studies is based on a one-year curriculum designed to give entering students a foundation of liberal education and an opportunity to sample various academic disciplines before declaring a major. The First Year of Studies consists of five academic courses and a physical education requirement or ROTC in each semester. Upon the successful completion of the First Year of Studies, the Notre Dame student then enters one of the four undergraduate colleges or the School of Architecture.

The following bachelor’s degrees are offered through 62 programs of study: Bachelor of Arts, Bachelor of Fine Arts, Bachelor of Science, Bachelor of Architecture, and Bachelor of Business Administration.

Graduate Education

Post-baccalaureate programs are offered in the Graduate School, in the Law School, and in the Mendoza College of Business. The Graduate School provides programs of graduate studies leading to master’s degrees in 46 disciplines and doctoral degrees in approximately 25 disciplines through 31 University departments, schools and institutes comprising the divisions of humanities, social science, engineering and science, and the School of Architecture. The following master’s degrees are offered through 42 programs of study: Master of Architecture, Master of Arts, Master of Divinity, Master of Education, Master of Engineering (with J.D.), Master of Fine Arts, Master of Medieval Studies, Master of Sacred Music, Master of Science, Master of Science in Applied Mathematics and Master of Theological Studies. Degrees are offered in the Law School (Masters of Laws, Juris Doctor, and Doctor of Juridical Science) and in the Mendoza College of Business (Master of Business Administration, Master of Nonprofit Administration, and Master of Science in Accountancy).

Over the last decade, the University has increased the resources devoted to graduate education, research, and building a distinguished faculty. Through the generous benefactions of its donors, the University has an estimated 228 endowed chairs, approximately 189 of which are funded and filled. The University has also employed equally effective strategies to attract gifted junior faculty. The University is currently classified as a Doctoral/Research Universities-Extensive by the Carnegie Foundation.

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Relationships with Other Institutions

The University operates a co-exchange program with Saint Mary’s College (located adjacent to the Notre Dame campus) whereby students at the University may enroll in courses given at Saint Mary’s College and students at Saint Mary’s College may enroll in courses given at the University.

The University also offers a number of international opportunities. Sophomores and juniors can spend a semester or year studying abroad, with programs in Australia, Austria, Brazil, Chile, China, Egypt, France, Germany, Greece, Ireland, Italy, Japan, Mexico, Russia, Spain, Uganda and the United Kingdom.

Faculty and Employees

The academic excellence of the University is based on 1,152 regular faculty members (as of the fall of 2006) who are supplemented by another approximately 236 non-regular faculty members (as of the fall of 2006). In addition, the University estimates that for fall 2007, it had 3,215 full-time staff employees, excluding students and non-regular employees. Approximately, 96% of the full-time instructional faculty is composed of lay persons, and approximately 95% of the full-time instructional faculty has doctorates or other terminal degrees. Of the full-time instructional faculty, 69% are tenured. The student to faculty ratio was approximately 12.9 to 1 in the 2006-07 fiscal year.

The following table sets forth the most current available information regarding the University’s faculty as of fall 2006:

REGULAR & NON-REGULAR FACULTY

Teaching and Research ............................................................................... 790 Library......................................................................................................... 56 Special Professional .................................................................................... 256 Special Research and Other ........................................................................ 50Total Regular Faculty.................................................................................. 1,152 Non-Regular Faculty................................................................................... 236Total Faculty ............................................................................................... 1,388

Faculty and certain administrative employees who have completed one year of full-time service at the University are eligible to participate in a defined contribution retirement savings plan. Staff members participating in the plan have the option of directing their contributions and the University's contributions on their behalf to Teachers Insurance and Annuity Association, Fidelity Investments or the Vanguard Group. Participating staff are immediately vested in the plan. The University's share of the cost of these benefits was approximately $17.5 million and $17.1 million for the fiscal years 2007 and 2006, respectively.

Retirement benefits are provided for other employees under a defined benefit pension plan, for which the University serves as trustee and administrator. This plan provides benefits for certain administrators and staff after one year of qualifying service. Retirement benefits are based on the employee’s total years of service and average pay over the final five years of service. Plan participants

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are fully vested after five years of service. The University funds the plan with annual contributions that meet ERISA minimum requirements. For the 2007 fiscal year, the University made required contributions of $5.0 million to the retirement plan.

At June 30, 2007, the University adopted the provisions of SFAS 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Benefit Plans.” SFAS 158 requires the recognition of the full funded status of defined benefit pension plans in the statement of financial position. Accordingly, the plan’s actuarially determined benefit obligation recorded at June 30, 2007 fully reflects the excess of the projected benefit obligation over the fair value of plan assets.

None of the employees of the University are represented by a union. The University believes its employee relations are good.

Student Enrollment

The University’s total enrollment has grown modestly over the past five years. Future growth is also expected to be moderate as current plans for the undergraduate, graduate and professional divisions do not call for large increases in enrollment. The following table, based on actual fall semester enrollment, shows the number of students in the various divisions of the University for the past five academic years:

ACTUAL FALL STUDENT ENROLLMENT*

Academic Year Undergraduate**

Graduate Division**

Professional Schools**

TotalHeadcount***

Total FTEs***

2007-08 8,374 1,991 1,287 11,736 11,653

2006-07 8,352 1,843 1,305 11,603 11,486

2005-06 8,275 1,853 1,235 11,417 11,298

2004-05 8,332 1,779 1,297 11,479 11,291

2003-04 8,311 1,749 1,294 11,415 11,229

__________________________________ * Some overlap exists in the headcount among these three divisions; however, there is no duplication in the totals.

Included in these totals are students enrolled in the University, but studying abroad. ** Includes dual degree seekers and excludes unclassified students and employees. The Graduate Division includes Master

of Education students. The Professional Schools include Graduate Business and Law School students. *** Excludes dual degree seekers and includes unclassified students and employees.

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Including cross-enrollment, enrollment by academic division for the fall 2007 semester is as follows:

ENROLLMENT BY ACADEMIC DIVISION*

Academic Division EnrollmentFirst Year of Studies 2,069College of Arts and Letters 2,620College of Science 1,143College of Engineering 796College of Business 1,628Architecture 195Law School 589Graduate Business 698Graduate School 1,991Others 45

Total 11,774__________________________________ * Includes dual-degree seekers and unclassified students but excludes employees.

While each College is an independent school which provides its own instruction, students are free to take courses in any of the Colleges. Undergraduates obtain bachelor degrees from their individual Colleges, or in combination programs with other Colleges within the University in integrated five-year programs. In the 2006-07 academic year, 3,255 Bachelor’s Degrees were awarded.

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Student Recruitment

The University conducts an intensive recruitment program, which places emphasis on maintaining the high academic quality of students entering the University. The recruitment process includes extensive admissions staff travel throughout the country, campus visits, and informational mailings to prospective students. In addition, the 275 alumni clubs located throughout the country and overseas provide information through their alumni schools committee programs. The University’s strong academic programs and reputation for excellence allow it to attract many talented students as demonstrated in the following chart:

FRESHMAN ADMISSION INFORMATION(Fall of Year)

2007 2006 2005 2004 2003Completed Applications 14,503 12,798 11,316 11,490 12,095

Number of Students Accepted 3,549 3,492 3,581 3,488 3,524

Selectivity: Number of Students Accepted asPercent of Applicants 24% 27% 32% 30% 29%

Number of Students Enrolled (headcount) 1,991 2,039 1,966 1,985 1,996

Matriculation: Number of Students Enrolled asPercent of Acceptances 56% 58% 55% 57% 57%

Percent of EnrolledStudents in Top 10%of High School Class 86% 84% 86% 85% 83%

Mean Combined SAT Scores of Enrolled Class 1,390 1,378 1,383 1,369 1,360

Qualified minority students comprised approximately 22% of the freshman class for 2007-08. Women, first admitted to undergraduate studies at the University in the fall of 1972, now account for approximately 47% of the undergraduate enrollment.

Based on College Board data, Boston College and Northwestern University are among the University's strongest competitors for admitted students. The other universities with which the University most closely competes for admitted students can be divided into three groups: Catholic universities with strong regional and some national appeal (e.g., Georgetown University and Villanova), public universities with strong regional appeal (e.g., University of Illinois, Purdue University and University of Michigan),

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and private universities with strong national appeal (e.g., Duke University, Washington University, and Vanderbilt University).

Notre Dame is truly a national university, attracting students from around the nation and the world. The 2007 entering class was drawn from all 50 states, as well as the District of Columbia, Puerto Rico and 15 foreign countries. The table below displays the geographic distribution of entering freshmen for 2007, 2002 and 1997:

GEOGRAPHICAL DISTRIBUTION OF NEW STUDENTS(Fall of Year)

Region 2007 2002 1997Midwest 41% 43% 43% Northeast 22% 21% 25%West 13% 11% 9% Southeast 8% 9% 9%Southwest 12% 11% 12% US Territories and Foreign 4% 5% 2%

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The University’s post-baccalaureate studies are comprised of the Graduate School, Law School, and Graduate Business programs. Graduate School degrees are offered within the Colleges of Arts & Letters, Architecture, Engineering, and Science. The following table displays total student applications, acceptances and confirmations in the graduate programs over the past five years:

POST-BACCALAUREATE STUDIESSUMMARY OF APPLICATION STATISTICS*

(Fall of Year)

Schooland Year

TotalApplicants Acceptances Confirms

Graduate School**

2007 4,200 18.2% 57.8%

2006 4,098 18.8% 56.5%

2005 3,310 22.7% 61.1%

2004 3,408 23.7% 68.1%

2003 4,395 20.4% 63.6%

Law School**

2007 3,647 19.8% 27.0% 2006 3,632 24.6% 25.0% 2005 3,650 18.2% 29.4% 2004 3,913 14.0% 44.4% 2003 3,867 13.8% 46.2%

Graduate, Business**

2007 1,521 49.8% 65.8% 2006 1,395 54.3% 67.9% 2005 1,177 62.6% 62.6% 2004 1,350 55.0% 66.0% 2003 1,658 45.8% 66.2%

* Historical information reflects variances from past years’ statistical data due to changes in the sources and timing by

which the data was collected.

** The University believes that the nationwide economic environment and changes in immigration laws contributed

significantly to the decline in applications in recent years.

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Tuition and Fees

The annual tuition and fees for an undergraduate in the 2007-08 academic year is $35,178; and with room and board, the total cost is $44,468. As detailed in the following table, since fiscal year 2004 tuition and fees have risen approximately 27% and tuition and fees, room and board combined have increased approximately 29%. The total cost of attending the University has risen at an average annual rate of approximately 6.5% over the last five years.

UNDERGRADUATE TUITION AND FEES, ROOMAND BOARD CHARGES

Academic Year

Tuition & Fees

Percent Increase

Room & Board

Percent Increase Total

Percent Increase

2007-08 $35,178 5.3% $9,290 6.4% $44,468 5.5% 2006-07 $33,407 5.9% $8,730 9.0% $42,137 6.5% 2005-06 $31,542 6.9% $8,010 8.0% $39,552 7.1% 2004-05 $29,512 6.9% $7,418 7.0% $36,930 6.9% 2003-04 $27,612 6.8% $6,930 6.5% $34,542 6.7%

The amounts charged by the University for tuition and fees, and room and board are comparative to those of peer institutions according to an annual survey performed by Cambridge Associates.

Financial Aid

The University subscribes to the principles of student financial aid administration as endorsed by the College Scholarship Service of the College Board and the National Association of Student Financial Aid Administrators. It also actively supports the “President’s 568 Group” effort with 30 other highly-selective private institutions seeking to bring consensus in addressing difficult issues related to need-based principles in needs analysis.

The University makes every effort to assist its students with their demonstrated financial needs by employing one or more forms of financial assistance. These resources include scholarships, grants, loans, and student employment. For the 2006-07 academic year, approximately 79% of the undergraduate students at the University received $161 million in undergraduate financial aid administered by the University.

The University uses endowment income and annual gifts as its primary source for funding undergraduate financial aid. While the University’s enrollment and selectivity standards are very positive, fully funding the unmet financial need of its student body has been and continues to be a top priority of the University. The Officers of the University approved an endowment-based solution in 1998 to meet the full unmet need of all undergraduate students. This goal was achieved for all Freshmen in the 1999-00 school year and was achieved for all undergraduates in 2000-01. Moreover, a four-year plan to provide yet additional enhancements to financial aid policies, with University scholarship assistance, was expanded for a significant percentage of its entering Freshmen classes beginning in 2001-02 thereby reducing the amount of expected student borrowing. From 2002-03 to 2006-07, total undergraduate

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scholarships provided by the University have increased approximately 40%. Total University scholarships have grown by an average annual increase of about 8.8% over that time.

The following table illustrates total financial assistance to undergraduate students at the University for the five most recent academic years for which such information is available:

UNDERGRADUATE FINANCIAL AID AWARDS (in 000's)

Academic Year

2006-07 2005-06 2004-05 2003-04 2002-03

Scholarships, Grants and Awards

University $ 89,478 $ 84,189 $ 79,159 $ 71,892 $ 63,854 Federally funded 4,162 3,845 4,030 4,098 3,896 State funded 787 780 688 749 739 ROTC 5,808 6,197 6,796 6,926 6,805 Other sources 8,622 8,632 9,826 8,921 8,137

Subtotal $ 108,857 $ 103,643 $ 100,499 $ 92,586 $ 83,431

Loans Federal $ 33,317 $ 33,215 $ 32,547 $ 30,857 $ 27,105 Other 13,244 12,955 12,151 10,308 10,220

Subtotal $ 46,561 $ 46,170 $ 44,698 $ 41,165 $ 37,325

Student Employment College work study $ 1,006 $ 921 $ 1,147 $ 1,139 $ 1,235 University 4,594 4,494 4,275 4,031 4,002

Subtotal $ 5,600 $ 5,415 $ 5,422 $ 5,170 $ 5,237

Total Aid $ 161,018 $ 155,228 $ 150,619 $ 138,921 $ 125,993

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Financial Information

Summary of Fiscal Years 2007, 2006, 2005, 2004 and 2003. The University provides certain summary financial information on the following pages, including Consolidated Statements of Financial Position as of June 30, 2007, 2006, 2005, 2004 and 2003 and Consolidated Statements of Changes in Unrestricted Net Assets for the fiscal years ended June 30, 2007, 2006, 2005, 2004 and 2003. The University’s audited financial statements and the notes thereto for the fiscal years ended 2007 and 2006 are presented in APPENDIX B of the Official Statement and should be reviewed in conjunction with the following data.

The University became the majority owner of an externally managed limited liability corporation in fiscal 2006, the activities of which are reflected within the University’s consolidated financial statements for fiscal 2006 and 2007.

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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in 000's)

As of June 30

2007 2006 2005 2004 2003Assets Cash and cash equivalents $ 55,616 $ 38,291 $ 53,112 $ 75,976 $ 40,053 Accounts receivable, net 33,499 26,577 24,615 22,162 20,515 Deferred charges and other assets 31,307 27,604 23,020 17,071 13,961 Contributions receivable, net 146,037 107,330 78,329 60,303 72,776 Notes receivable, principally for student loans, net 29,586 30,066 35,370 31,926 31,859 Investments 6,723,863 5,307,413 4,303,483 3,701,554 3,100,747 Land, buildings and equipment, net of accumulated depreciation 851,571 836,393 737,511 702,582 693,284

Total assets $ 7,871,479 $ 6,373,674 $ 5,255,440 $ 4,611,574 $ 3,973,195

Liabilities Accounts payable $ 12,808 $ 15,731 $ 16,015 $ 16,985 $ 20,084 Commercial paper 40,000 21,000 - - - Refundable advances 18,853 16,891 19,967 13,123 14,430 Deferred revenue 75,107 51,705 42,918 46,529 41,932 Deposits and other liabilities 64,405 81,222 67,374 40,072 50,309 Liabilities associated with investments 148,792 102,890 76,983 69,633 67,175 Obligations under split-interest agreements 37,081 25,873 26,563 23,995 19,364 Bonds and notes payable 391,425 392,265 281,875 283,555 252,819 Conditional asset retirement obligations 20,280 19,481 - - - Pension and other postretirement benefits 76,057 51,748 61,610 43,925 43,565 Government advances for student loans 28,905 28,283 27,801 27,072 26,595

Total liabilities $ 913,713 $ 807,089 $ 621,106 $ 564,889 $ 536,273

Net Assets Unrestricted Undesignated $ 44,044 $ 293,051 $ 188,687 $ 120,846 $ 68,758 Designated for specific purposes 243,821 116,073 51,464 122,542 182,833 Invested in land, buildings and equipment 451,746 458,211 455,636 434,073 440,465 Funds functioning as endowment 3,032,314 2,091,021 1,665,249 1,383,030 1,042,912

Total unrestricted 3,771,925 2,958,356 2,361,036 2,060,491 1,734,968

Temporarily restricted 2,150,191 1,689,763 1,439,843 1,189,426 978,535 Permanently restricted 1,035,650 918,466 833,455 796,768 723,419

Total net assets 6,957,766 5,566,585 4,634,334 4,046,685 3,436,922

Total liabilities and net assets $ 7,871,479 $ 6,373,674 $ 5,255,440 $ 4,611,574 $ 3,973,195

Certain amounts for years prior to fiscal 2007 have been reclassified to conform to fiscal 2007 presentation.

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CONSOLIDATED STATEMENTS OF CHANGES IN UNRESTRICTED NET ASSETS

(in 000’s)

Fiscal Year Ended June 30 2007 2006 2005 2004 2003

Operating Revenues and Other Additions Tuition and fees $ 358,117 $ 331,849 $ 314,673 $ 295,401 $ 277,191

Less: Tuition scholarships and fellowships (122,803) (116,018) (108,652) (100,330) (90,677)

Net tuition and fees 235,314 215,831 206,021 195,071 186,514

Grants and contracts 75,413 78,833 68,589 68,190 60,732 Contributions 40,966 27,038 24,027 20,301 19,256 Investment return distributed 80,600 73,430 69,801 65,734 79,053 Sales and services of auxiliary enterprises 176,164 156,424 137,354 130,404 129,050 Other sources 43,163 30,639 24,571 22,483 22,144

Total operating revenues 651,620 582,195 530,363 502,183 496,749

Net assets released from restrictions for operations 85,592 80,043 72,737 76,524 74,574

Total operating revenues and other additions $ 737,212 $ 662,238 $ 603,100 $ 578,707 $ 571,323

Operating Expenses Instruction $ 251,143 $ 232,238 $ 219,480 $ 216,487 $ 205,360 Research 65,494 63,779 59,000 54,891 51,438 Public service 14,329 15,154 16,374 18,329 18,323 Academic support 45,416 42,966 40,291 37,718 38,520 Student activities and services 27,508 26,054 25,377 27,178 24,159 General administration and support 136,515 132,383 127,495 113,116 94,566 Auxiliary enterprises 139,635 131,311 127,821 117,044 120,097

Total operating expenses 680,040 643,885 $ 615,838 $ 584,763 $ 552,463

Increase/(Decrease) in unrestricted net assets from operations $ 57,172 $ 18,353 (12,738) (6,056) 18,860

Non-Operating Changes in Unrestricted Net Assets Contributions $ 2,974 $ 8,138 $ 6,246 $ 13,036 $ 5,609 Investment return: Investment income 55,530 49,744 55,396 24,715 18,914 Net gain/(loss) on investments 664,923 467,383 298,052 284,829 3,539 Less: Investment return distributed (80,600) (73,430) (69,801) (65,734) (79,053)

639,853 443,697 283,647 243,810 (56,600) Net gain/(loss) on other financial instruments (848) 12,020 (14,753) 7,848 (8,059) Net assets released from restrictions 129,657 112,513 49,313 50,329 42,756 Change in additional pension liability - 18,040 (11,170) 6,106 (12,976) Cumulative effect of change in accounting principle: Adoption of FASB Interpretation No. 47 - (17,683) - - - Adoption of FASB Statement No. 158 (21,776) - - - - Other non-operating changes 6,537 2,242 - 10,450 - Increase (decrease) in unrestricted net assets from non-operating activities 756,397 578,967 313,283 331,579 (29,270)

Increase (decrease) in unrestricted net assets $ 813,569 $ 597,320 $ 300,545 $ 325,523 $ (10,410)

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Debt Outstanding

As of June 30, 2007, bonds payable include $22,655,000 in Indiana Educational Facilities Authority Revenue Bonds, Series 1997, bearing interest at 5.25 percent. In addition, as of June 30, 2007, the University had bonds payable in the amount of $327,660,000 in St. Joseph County, Indiana, Educational Facilities Revenue Bonds, including Series 1996, Series 1997 and Series 2003 bearing interest rates ranging from 2.50 percent to 6.50 percent, and Series 1998 and Series 2005 at variable rates. These bond issues represent general obligations of the University and are not secured by any facilities of the University. Both issues of Series 1997 Bonds will be refunded with a portion of the Series 2007 Bonds.

Also outstanding are certain housing bonds referred to as the University of Notre Dame du Lac Dormitory Refunding and Construction Bonds of 1968 which bear interest at 3.00 percent, have a total outstanding principal amount of $1,110,000 as of June 30, 2007 and are payable to the United States Government under a Department of Education program and a mortgage corporation which purchased a portion of the debt from the Department of Education in 1989.

The University is the majority owner of an externally managed limited liability corporation, the activities of which are reflected within the University’s consolidated financial statements. The corporation’s assets consist primarily of real estate, the acquisition of which was financed in part with a $40 million note payable bearing interest at 5.68%, due in 2016. The note is not a general obligation of the University but is fully collateralized by the property acquired.

The University utilizes interest rate swaps as a strategy for managing interest rate risk associated with certain bond issues. Under the terms of swap arrangements that seek to effectively fix the variable rates associated with certain issues, the University pays fixed rates ranging from 3.37 percent to 5.01 percent and receives variable rates ranging from 67 percent to 70 percent of the London Interbank Offer Rate (LIBOR) on total notional amounts of $105,970,000. A separate swap arrangement seeks to convert the fixed rate on the Series 2003 Bonds to a variable rate through December 2, 2007. Under the terms of this swap, the University pays a variable rate equal to the Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Index and receives a fixed rate of 2.35 percent on a notional amount of $65,000,000. The estimated fair value of interest rate swaps was a net unrealized loss position of $3,256,000 and $4,077,000 at June 30, 2007 and 2006, respectively. The University paid periodic net settlements of $1,342,000 and $1,351,000 to counterparties pursuant to interest rate swaps during the years ended June 30, 2007 and 2006, respectively. The University has also entered into a swap arrangement effective March 1, 2008, which fixes the variable rate associated with a portion of the Series 2007 Bonds, whereby the University pays a fixed rate of 4.97 percent and receives a variable rate of 70 percent of LIBOR on a notional amount of $48,530,000.

As of June 30, 2007, the aggregate scheduled maturities of the notes and bonds described above are payable as follows: 2008 - $6,490,000; 2009 - $3,627,000; 2010 - $3,897,000; 2011 - $4,083,000; 2012 - $4,332,000; and $368,996,000 thereafter. The current fair value of the University’s note and bond obligation approximates the aggregate carrying value at June 30, 2007. See “ESTIMATED ANNUAL DEBT SERVICE REQUIREMENTS” in the forepart of this Official Statement.

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Endowment and Split Interest Funds

The fair value of endowment and funds functioning as endowment has grown from $1.52 billion as of June 30, 1997 to $6.07 billion as of June 30, 2007. As of June 30, 2006, the University’s endowment of $4.49 billion ranked among the 17th largest educational endowments in the country according to the 2006 National Association of College and University Business Officers Endowment Study. Nearly $136 million in earnings was distributed for the benefit of endowment programs and expenses in fiscal year 2007 to provide financial support to endowed chairs, undergraduate scholarships, graduate fellowships, libraries, various academic programs, and a variety of other endowed programs, as well as general University operations.

The market value of the Split Interest Fund as of June 30, 2007 was $63.13 million. Income on the Split Interest Fund is typically paid to the donor with the principal eventually available to the University upon the death of the donor. The Split Interest Fund and corresponding liabilities associated with these arrangements are discussed in Notes 1, 4, and 12 to the University’s audited consolidated financial statements. This arrangement is designed to encourage donations to the University by taking advantage of the tax benefits that flow to the donor during their lifetime.

The following table shows the market value of the Endowment and Split Interest Fund over the last five fiscal years:

ENDOWMENT AND SPLIT INTEREST FUND(Market Value in $000’s)

As of June 30

2007 2006 2005 2004 2003Endowment Fund $6,066,310 $4,487,838 $3,690,694 $3,123,454 $2,609,005Split Interest Fund 63,128 45,787 48,790 48,291 40,571Total $6,129,438 $4,533,625 $3,739,484 $3,171,745 $2,649,576

The purpose of the endowment is to provide a perpetual source of operating support to endowed programs. The University’s endowment spending policy allocates total earnings from the portfolio between current spending and reinvestment for future earnings, and has been designed with three objectives in mind: to provide programs with a predictable, stable stream of revenues; to ensure that purchasing power or real value of this revenue stream does not decline over time; and to ensure that the purchasing power or real value of the endowment assets does not decline over time.

The University’s endowment is invested primarily in the Notre Dame Endowment pool. Investment policies and guidelines are established by a committee of the Board supported by the internal investment staff, which is headed by the chief investment officer. The Notre Dame Endowment pool is a multi-asset portfolio with a long-term strategic allocation of 92.5% equity and 7.5% fixed income investments. The equity investments include domestic and international large and small capitalization stocks, real estate, venture capital, private equity, marketable alternatives, energy and commodities. The fixed income investments include domestic and international bonds with a wide range of maturities.

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The pool’s performance has exceeded its long-term objective of inflation plus 5.5% over the past ten years with an annualized real rate of return of 11.7%. In addition, the pool has outperformed the University's Strategic Policy Portfolio performance in nine of the last ten fiscal years. Annualized returns for the Notre Dame Endowment pool for the last five fiscal years are summarized as follows:

Fiscal Year Notre DameActual1Strategic Policy

Portfolio2* TUCS3**2006-07 25.9% 21.9% 17.7%

2005-06 19.4% 16.7% 10.8%

2004-05 19.1% 14.4% 10.5%

2003-04 20.0% 16.8% 16.2%

2002-03 2.4% (2.6%) 4.0%

Three Year Annualized Rate of Return

21.4% 17.7% 12.8%

Five Year Annualized Rate of Return

17.1% 13.2% 11.6%

_______________________1Actual annualized returns are net of advisory fees and operating expenses related to internal investment staff. 2 *The policy portfolio is a weighted average of passive market indices representing the major asset classes that comprise the Endowment

portfolio.3 **Trust Universe Comparison Service Large Fund Median of institutional investors larger than $1 billion

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Contributions

Contributions include unconditional promises to give that are recognized as revenues - either temporarily restricted or permanently restricted - in the period such commitments are received. Contributions to be received in future years are discounted at a U.S. Treasury rate commensurate with the payment plan. Amortization of the discount is recorded as additional contribution revenue and used in accordance with donor-imposed restrictions, if any, on the contributions. Allowance is made for uncollectible contributions based upon the institution’s collection experience. Contributions for the past five fiscal years are as follows:

CONTRIBUTIONS(in $000's)

Fiscal Year Ended June 30 2007 2006 2005 2004 2003

Unrestricted $ 43,940 $ 35,176 $ 30,273 $ 33,337 $ 24,865Temporarily Restricted 77,506 88,696 54,460 45,785 45,108Permanently Restricted 115,143 79,577 33,225 70,437 19,072

Totals $ 236,589 $ 203,449 $ 117,958 $ 149,559 $ 89,045

The Sorin Society: The membership requirement in the Sorin Society is an unrestricted annual contribution of $1,500. In 1991, the Founder’s Circle was established to recognize donors who make a minimum gift of $5,000. In 2003, Legacy membership was established to recognize donors who make a minimum gift of $10,000. The Sorin Society has over 12,000 members. Contributions have increased from $7.9 million in 1997 to over $21.3 million in 2006-07.

The President’s Circle: The President’s Circle recognizes nearly 150 donors who make annual unrestricted contributions of $25,000 or more to Notre Dame. Members contributed $3.9 million during fiscal 2006-07.

The Badin Guild: Membership is offered to individuals who have made the University a primary beneficiary in their estate plans. The Badin Guild now has more than 900 members with planned gift commitments totaling more than $431 million as of June 30, 2007.

Alumni Contributions: The University receives substantial financial support from its alumni, parents and friends, who provide a reliable base of annual donations. Over the last decade, the University has experienced a marked increase in total contributions, including an increase in alumni donations from approximately $54 million in the 1996-97 fiscal year to over $126 million in the 2006-07 fiscal year. Notre Dame has one of the highest alumni participation rates in the country, with 54% of undergraduate alumni contributing in 2006-07. The University hopes to further increase alumni participation via its current Spirit campaign. The Spirit Campaign’s goal is $1.5 billion, $1 billion of which has been raised as of August 2007.

A-27

Grants and Contracts

In fiscal year 1997, a total of over $26.2 million in grants and contracts revenues were recognized in conjunction with sponsored research programs. In fiscal year 2007, the comparable total was approximately $75.4 million. This represents an increase of more than 150 percent. In this time frame the number of grant awards climbed from 352 to 487, while the portion of these revenues representing indirect costs recovered by the University rose from $4.8 million to $14.4 million.

Physical Facilities

The University is renowned both for the quality of its physical facilities and the beauty of its campus. The University’s approximately 1,200 acre campus encompasses two lakes, extensive wooded areas, tree-lined quadrangles, and 178 buildings with an aggregate area of approximately 8,700,000 gross square feet. The Basilica of the Sacred Heart of Jesus, the 14-story Hesburgh Library with its 132 foot high mural depicting Christ the Teacher, and the University’s 128 year-old Main Building with its famed Golden Dome are among the most widely known university landmarks in the world. The University also owns a 7,000 acre undeveloped site at Land O’Lakes, Wisconsin which is used extensively for research and fieldwork, primarily in biological studies, and for University retreats. In addition, the University purchased the O’Connell House in Dublin, Ireland in the summer of 2002. This facility houses classrooms, offices, and residential space serving University programs in Irish Studies, ACE (Alliance for Catholic Education), and Campus Ministry. The University continues to demonstrate its commitment to offering the best possible education to its students through its ongoing investment in the construction of new facilities and the renovation and upgrading of existing facilities.

The book value, adjusted for depreciation, of the University’s land, buildings and equipment for the past five fiscal years ended June 30 is as follows (in 000’s):

Year Net Book Value2007 $851,5712006 $836,3932005 $737,5112004 $702,5822003 $693,283

A-28

Insurance

The University maintains comprehensive insurance coverage on its assets. Real and personal property are insured on a replacement value basis with $250,000 deductible. For the 2006-07 policy year, campus properties were insured for an aggregate amount of approximately $1,500,000,000.

Business interruption insurance is included in the property insurance and is carried to protect the University against loss of income resulting from damage to real property and equipment. The approximately $1,500,000,000 aggregate limit also applies to any University business interruption loss.

Blanket crime insurance is carried to protect the University from theft, premise losses, transit losses and depositors’ forgery losses with a $5,000,000 limit and a $100,000 deductible.

General liability (bodily injury and property damage) and Directors and Officers (D&O) liability coverage is provided under a comprehensive self-insurance liability fund with loss limits of $1 million per occurrence with a $2 million aggregate for the General liability and a $5 million aggregate for Directors and Officers coverage.

The University also carries excess or umbrella coverage with a loss limit of $100 million.

The University provides coverage for worker’s compensation as required under the laws of the State of Indiana through a self-insurance fund with excess coverage provided by a commercial carrier. The University also provides through a commercial carrier statutory coverage for worker’s compensation for certain other states in addition to Indiana.

The University also maintains insurance coverage for automobile liability, professional liability, travel accident and certain other risks of the type and in the amounts as are customary for institutions of similar size and scope of activities.

A-29

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APPENDIX B

AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE UNIVERSITY

AS OF AND FOR THE YEARS ENDED JUNE 30, 2007 AND 2006

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University of Notre Dame du Lac Consolidated Financial Statements for the years ended June 30, 2007 and 2006

Contents

Pages

Report of Independent Auditors 1

Consolidated Statements of Financial Position 2

Consolidated Statements of Changes in Unrestricted Net Assets 3

Consolidated Statements of Changes in Net Assets 4

Consolidated Statements of Cash Flows 5

Notes to Consolidated Financial Statements 6-25

University of Notre Dame du Lac

Consolidated Statements of Financial Position

(in thousands)

As of June 302007 2006

AssetsCash and cash equivalents $ 55,616 $ 38,291Accounts receivable, net 33,499 26,577Deferred charges and other assets 31,307 27,604Contributions receivable, net 146,037 107,330Notes receivable, principally for student loans, net 29,586 30,066Investments 6,723,863 5,307,413Land, buildings and equipment, net of accumulated depreciation 851,571 836,393

Total assets $ 7,871,479 $ 6,373,674

LiabilitiesAccounts payable $ 12,808 $ 15,731Commercial paper 40,000 21,000Refundable advances 18,853 16,891Deferred revenue 75,107 51,705Deposits and other liabilities 64,405 81,222Liabilities associated with investments 148,792 102,890Obligations under split-interest agreements 37,081 25,873Bonds and notes payable 391,425 392,265Conditional asset retirement obligations 20,280 19,481Pension and other postretirement benefits 76,057 51,748Government advances for student loans 28,905 28,283

Total liabilities 913,713 807,089

Net AssetsUnrestricted:

Undesignated 44,044 293,051Designated for specific purposes 243,821 116,073Invested in land, buildings and equipment 451,746 458,211Funds functioning as endowment 3,032,314 2,091,021

Total unrestricted 3,771,925 2,958,356Temporarily restricted 2,150,191 1,689,763Permanently restricted 1,035,650 918,466

Total net assets 6,957,766 5,566,585

Total liabilities and net assets $ 7,871,479 $ 6,373,674

See accompanying notes to consolidated financial statements.

2

University of Notre Dame du Lac

Consolidated Statements of Changes in Unrestricted Net Assets

(in thousands)

Years ended June 302007 2006

Operating Revenues and Other AdditionsTuition and fees $ 358,117 $ 331,849

Less: Tuition scholarships and fellowships (122,803) (116,018)

Net tuition and fees 235,314 215,831

Grants and contracts 75,413 78,833Contributions 40,966 27,038Investment return distributed 80,600 73,430Sales and services of auxiliary enterprises 176,164 156,424Other sources 43,163 30,639

Total operating revenues 651,620 582,195

Net assets released from restrictions 85,592 80,043

Total operating revenues and other additions 737,212 662,238

Operating ExpensesInstruction 251,143 232,238Research 65,494 63,779Public service 14,329 15,154Academic support 45,416 42,966Student activities and services 27,508 26,054General administration and support 136,515 132,383Auxiliary enterprises 139,635 131,311

Total operating expenses 680,040 643,885

Increase in unrestricted net assets from operations 57,172 18,353

Non-Operating Changes in Unrestricted Net AssetsContributions 2,974 8,138Investment return:

Investment income 55,530 49,744Net gain on investments 664,923 467,383Less: Investment return distributed (80,600) (73,430)

639,853 443,697

Net gain/(loss) on other financial instruments (848) 12,020Net assets released from restrictions 129,657 112,513Change in additional pension liability - 18,040Cumulative effect of change in accounting principle:

Adoption of FASB Interpretation No. 47 - (17,683)Adoption of FASB Statement No. 158 (21,776) -

Other non-operating changes 6,537 2,242

Increase in unrestricted net assets from non-operating activities 756,397 578,967

Increase in unrestricted net assets $ 813,569 $ 597,320

See accompanying notes to consolidated financial statements.

3

University of Notre Dame du Lac

Consolidated Statements of Changes in Net Assets

(in thousands)Years ended June 30

2007 2006

Unrestricted Net AssetsOperating revenues and other additions $ 737,212 $ 662,238Operating expenses (680,040) (643,885)

Increase in unrestricted net assets from operations 57,172 18,353

Increase in unrestricted net assets from non-operating activities 756,397 578,967

Increase in unrestricted net assets 813,569 597,320

Temporarily Restricted Net AssetsContributions 77,506 88,696Investment income 44,256 39,941Net gain on investments 547,271 320,307Change in value of split-interest agreements 1,700 894Net assets released from restrictions (215,249) (192,556)Other changes in temporarily restricted net assets 4,944 (7,362)

Increase in temporarily restricted net assets 460,428 249,920

Permanently Restricted Net AssetsContributions 115,143 79,577Investment income 2,214 2,094Net gain on investments 993 2,883Change in value of split-interest agreements 2,283 1,306Other changes in permanently restricted net assets (3,449) (849)

Increase in permanently restricted net assets 117,184 85,011

Increase in net assets 1,391,181 932,251

Net assets at beginning of year 5,566,585 4,634,334

Net assets at end of year $ 6,957,766 $ 5,566,585

See accompanying notes to consolidated financial statements.

4

University of Notre Dame du Lac

Consolidated Statements of Cash Flows(in thousands) Years ended June 30

2007 2006

Cash Flows from Operating ActivitiesIncrease in net assets $ 1,391,181 $ 932,251Adjustments to reconcile increase in net assets to net cash provided by operating activities:

Depreciation 37,042 34,485Cumulative effect of change in accounting principle 21,776 17,683Carrying value of disposed land, buildings and equipment 3,069 817Change in obligations under split-interest agreements 11,208 (690)Change in conditional asset retirement obligations 799 -Change in pension and other postretirement benefits 2,533 (9,862)Changes in operating assets and liabilities:

Accounts receivable, deferred charges and other assets (10,625) (6,546)Contributions receivable (38,707) (29,001)Accounts payable, refundable advances, deferred revenue, and deposits and other liabilities 5,624 19,275

Contributions for investments and physical facilities (125,893) (113,499)Investment income restricted for reinvestment (2,214) (2,094)Net gain on investments (1,213,187) (790,573)Other, net (8,253) (10,673)

Net cash provided by operating activities 74,353 41,573

Cash Flows from Investing ActivitiesProceeds from sales and maturities of investments 3,533,142 2,554,342Purchases of investments (3,727,756) (2,731,202)Purchases of land, buildings and equipment (55,306) (92,403)Student loans granted (5,852) (5,369)Student loans repaid 6,340 8,917Other changes in notes receivable (8) 1,756

Net cash used by investing activities (249,440) (263,959)

Cash Flows from Financing ActivitiesContributions for investments and physical facilities 125,893 113,499Investment income restricted for reinvestment 2,214 2,094Net proceeds from commercial paper issued 19,000 21,000Proceeds from bonds issued - 185,000Repayment of bonds and notes (940) (114,510)Government advances for student loans 622 482Cash accepted for investment on behalf of religious affiliate 45,623 -

Net cash provided by financing activities 192,412 207,565

Net change in cash and cash equivalents 17,325 (14,821)Cash and cash equivalents at beginning of year 38,291 53,112

Cash and cash equivalents at end of year $ 55,616 $ 38,291

Supplemental Data Interest paid $ 14,660 $ 12,285Noncash investing and financing activities:

Assets acquired with note payable $ 100 $ 39,900Contributed securities $ 9,008 $ 10,010

See accompanying notes to consolidated financial statements.

5

University of Notre Dame du Lac Notes to Consolidated Financial Statements

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The University of Notre Dame du Lac is a private, coeducational, national Catholic research university. The

accompanying consolidated financial statements include the assets and operations of certain other entities under the

financial control of the University of Notre Dame du Lac. The University of Notre Dame du Lac and entities

included herein are referred to individually and collectively as the “University.”

The accompanying consolidated financial statements have been prepared on the accrual basis of accounting and

in accordance with the reporting principles of not-for-profit accounting as defined by Statement of Financial

Accounting Standards (SFAS) 116 “Accounting for Contributions Received and Contributions Made,” and SFAS

117 “Financial Statements of Not-for-Profit Organizations.” SFAS 116 requires unconditional promises to give be

recorded as receivables and revenue within the appropriate net asset category. SFAS 117 establishes standards for

general-purpose external financial statements of not-for-profit organizations, including a statement of financial

position, a statement of changes in net assets and a statement of cash flows.

The accompanying consolidated financial statements have been prepared to focus on the University as a whole

and to present balances and transactions according to the existence or absence of donor-imposed restrictions.

Accordingly, net assets and changes therein are classified as follows:

Unrestricted Net Assets – Net assets not subject to donor-imposed restrictions and available for any purpose

consistent with the University’s mission.

Temporarily Restricted Net Assets – Net assets subject to specific, donor-imposed restrictions that must be met

by actions of the University and/or passage of time. Contributed assets normally fund specific expenditures of an

operating or capital nature. Earnings and appreciation on permanently restricted endowment funds are generally

recorded as increases in temporarily restricted net assets.

Permanently Restricted Net Assets – Net assets subject to donor-imposed restrictions requiring they be

maintained permanently by the University. Contributed assets are generally restricted to long-term investment, with

earnings and appreciation available for expenditure in accordance with donor specifications and University spending

policy. Permanently restricted net assets generally reflect the original value of contributed assets, as well as

reinvested earnings when specified by the donor.

Revenues are reported as increases in unrestricted net assets unless use of the related assets is limited by donor-

imposed restrictions. Expenses are reported as decreases in unrestricted net assets. Gains and losses on investments

are reported as increases or decreases in net assets consistent with the restrictions placed on their use either by the

donor or by law.

The University recognizes revenues on grants and contracts for research and other sponsored programs as the

awards for such programs are expended. Indirect cost recovery by the University on U.S. government grants and

contracts is based upon a predetermined negotiated rate and is recorded as unrestricted revenue. Advances from

granting agencies are generally considered refundable in the unlikely event specified services are not performed.

6

University of Notre Dame du Lac Notes to Consolidated Financial Statements

Net assets released from restrictions represents the portion of temporarily restricted net assets for which donor-

imposed restrictions were satisfied during the period, either by expenditure in accordance with the donor’s intended

purpose or by virtue of the expiration of a term of restriction. Restricted contributions or investment returns

received and expended within the same fiscal period are reported as increases in temporarily restricted net assets and

net assets released from restrictions, respectively, in the consolidated statements of changes in net assets.

The University’s measure of operations as presented in the consolidated statements of changes in unrestricted

net assets includes revenues from tuition and fees, grants and contracts, unrestricted contributions, investment return

distributed according to the University’s spending policy and revenues from auxiliary enterprises and other sources.

Other additions include net assets released from restrictions based upon their expenditure in support of operations or

net assets made available for operations by virtue of the expiration of a term of restriction. Operating expenses are

reported by functional categories, after allocating costs for operations and maintenance of plant, interest on

indebtedness and depreciation expense.

Non-operating activity presented in the consolidated statements of changes in unrestricted net assets includes

unrestricted contributions designated by the University for endowment or investment in buildings and equipment,

investment return in excess of or less than the amount distributed for operations under the spending policy, any gains

or losses on other financial instruments, net assets released from restrictions designated for non-operating purposes,

and other activities considered to be more of an unusual or non-recurring nature.

CONTRIBUTIONS RECEIVABLE

Contributions include unconditional promises to give that are recognized as revenues – either temporarily

restricted or permanently restricted – in the period such commitments are received. Conditional promises to give are

recognized when the conditions on which they depend are substantially met. Contributions to be received in future

years are discounted at a U.S. Treasury rate commensurate with the payment plan. Amortization of the discount is

recorded as additional contribution revenue. Allowance is made for uncollectible contributions based upon

management’s expectations regarding collection of outstanding promises to give and past collection experience.

AUXILIARY ENTERPRISES

The University’s auxiliary enterprises exist primarily to furnish goods and services to students, faculty and staff.

Managed as essentially self-supporting activities, the University’s auxiliaries consist principally of residence halls,

dining halls, intercollegiate athletics and college stores. Auxiliary enterprise revenues and fully-costed expenses are

reported as changes in unrestricted net assets.

CASH AND CASH EQUIVALENTS

Resources invested in money market funds and in short-term investments with maturities at date of purchase of

three months or less are classified as cash equivalents, except that any such investments purchased by external

investment managers are classified as investments. Substantially all cash and cash equivalents are concentrated in

accounts in which balances exceed FDIC insurance limits.

7

University of Notre Dame du Lac Notes to Consolidated Financial Statements

INVESTMENTS

Valuation

Investments are stated at fair value and are recorded on the trade or contract date. The fair value of investments

is based on quoted market prices, except for investments for which quoted market prices are not available. The fair

value of certain alternative investments, such as private equity interests, is estimated based on valuations provided

by the associated external investment managers. The University exercises diligence in assessing the policies,

procedures and controls implemented by its external investment managers, and believes the carrying amount of

these assets represents a reasonable estimate of fair value. However, because alternative investments are generally

not readily marketable, their estimated value is subject to inherent uncertainty and therefore may differ from the

value that would have been used had a ready market for such investments existed.

The University utilizes certain derivative instruments to manage risks associated with its investment portfolio.

These instruments are stated at fair value. Open futures and options contracts are primarily valued at the closing

exchange quotations on the last business day of the year. The fair value of credit default swaps and certain options

contracts for which market quotations are not readily available is based upon valuations provided by counterparties,

which represent the estimated amount the counterparties would receive or pay to terminate the contract at the

reporting date. When appropriate, independent appraisers may also be engaged to assist in the valuation of such

instruments. The fair value of forward foreign currency exchange contracts is estimated using quotes obtained from

banks and foreign exchange dealers. The fair value of these contracts is reported on a net-by-counterparty basis

where management believes a legal right of offset exists under an enforceable netting agreement. The change in the

fair value of derivative instruments associated with the investment portfolio is recorded as a gain or loss on

investments.

Investments Held on Behalf of Other Entities

The University serves as the trustee for its employees’ defined benefit pension plan and certain revocable

charitable trusts, managing the investment assets held within the plan and the trusts. The University also manages

investment assets on behalf of an affiliated religious organization integral to the University’s Catholic ministry and

educational missions. Accordingly, the University reports an equal asset and liability in the consolidated statements

of financial position representing the fair value of investments managed on behalf of these entities.

8

University of Notre Dame du Lac Notes to Consolidated Financial Statements

OTHER FINANCIAL INSTRUMENTS

The University utilizes derivative instruments in a limited manner outside of its investment portfolio to manage

interest rate risk associated with its long term debt. These instruments, primarily interest rate swap agreements, are

reported in the consolidated statements of financial position at fair value, which is based on valuations provided by

counterparty banks and represents the estimated amount that counterparties would receive or pay to terminate the

instrument at the reporting date. Any gains or losses resulting from changes in the fair value of these instruments or

periodic net cash settlements with counterparties are recognized currently as non-operating changes in unrestricted

net assets.

LAND, BUILDINGS AND EQUIPMENT

Institutional properties are stated at cost or at estimated fair value if acquired by gift, less accumulated

depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets,

averaging 15 years for land improvements, 25-50 years for buildings and 5-25 years for equipment.

The University does not capitalize the cost of library books, nor the cost or fair value of its art collection. The

latter is held for exhibition and educational purposes only and not for financial gain.

The University has applied the provisions of AICPA Statement of Position 98-1, “Accounting for the Costs of

Computer Software Developed or Obtained for Internal Use,” when accounting for costs related to the development

of software for internal use.

Conditional Asset Retirement Obligations

The University adopted FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement

Obligations” (FIN 47) as of June 30, 2006 and recognized the cumulative effect of the initial application as a change

in accounting principle.

The University recognizes asset retirement obligations when incurred. A discounting technique is used to

calculate the present value of the capitalized asset retirement costs and the related obligation. Asset retirement costs

are depreciated over the estimated remaining useful life of the related asset and the asset retirement obligation is

accreted annually to the current present value. Upon settlement of an obligation, any difference between the

retirement obligation and the cost to settle is recognized as a gain or loss in the consolidated statement of changes in

unrestricted net assets. The University’s conditional asset retirement obligations relate primarily to asbestos

remediation and will be settled upon undertaking associated renovation projects.

9

University of Notre Dame du Lac Notes to Consolidated Financial Statements

SPLIT-INTEREST AGREEMENTS

The University’s split-interest agreements consist principally of charitable gift annuities and irrevocable

charitable remainder trusts for which the University serves as trustee. Contributions revenue is recognized at the

date a gift annuity or trust is established after recording a liability for the present value of the estimated future

payments to be made to beneficiaries. Liabilities are adjusted during the terms of the agreements to reflect payments

to beneficiaries, returns on trust assets, accretion of discounts and other considerations that affect the estimates of

future payments. Net adjustments to the liabilities are recorded as changes in the value of split-interest agreements.

Discount rates used in estimating the present value of future payments are commensurate with Internal Revenue

Service guidelines.

USE OF ESTIMATES

The preparation of consolidated financial statements in accordance with accounting principles generally

accepted in the United States of America requires management to make estimates and assumptions that affect the

reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported

amounts of revenues and expenses during the period. Actual results could differ from those estimates.

TAX STATUS

The University is a qualified tax-exempt organization under section 501(c)(3) of the Internal Revenue Code.

RECLASSIFICATIONS

Certain amounts in the 2006 financial statements and footnotes have been reclassified to conform to the 2007

presentation.

NOTE 2. ACCOUNTS AND NOTES RECEIVABLE

At June 30, 2007, accounts and notes receivable are stated net of allowances of $672,000 and $1,117,000,

respectively. At June 30, 2006, these allowances were $668,000 and $1,117,000, respectively.

Notes receivable are principally amounts due from students under U.S. government sponsored loan programs,

which are subject to significant restrictions. As it is not practicable to determine the fair value of such amounts,

notes receivable are recorded at face value.

10

University of Notre Dame du Lac Notes to Consolidated Financial Statements

NOTE 3. CONTRIBUTIONS RECEIVABLE

Contributions receivable are summarized as follows at June 30 (in thousands):

2007 2006 Unconditional promises expected to be collected in:

Less than one year $ 50,380 $ 38,159 One year to five years 99,331 59,481 More than five years 81,600 76,391

231,311 174,031 Less:

Unamortized discount 57,916 48,910 Allowance for uncollectible amounts 27,358 17,791

85,274 66,701 $ 146,037 $ 107,330

Contributions receivable are distributed between net asset classifications as follows at June 30 (in thousands):

2007 2006 Temporarily restricted for:

Operating purposes $ 18,704 $ 15,320 Investment in land, buildings and equipment 38,116 40,796 Funds functioning as endowment 10,409 8,730

67,229 64,846 Permanently restricted for endowment 78,808 42,484

$ 146,037 $ 107,330

Contributions receivable are discounted at rates ranging from 2.06 percent to 6.59 percent at June 30, 2007.

At June 30, 2007, the University had received documented conditional pledges of $38.5 million which are not

reflected in the accompanying consolidated financial statements.

11

University of Notre Dame du Lac Notes to Consolidated Financial Statements

NOTE 4. INVESTMENTS

Investment holdings at fair value were comprised of the following at June 30 (in thousands):

UnitizedInvestment Other 2007 2006

Pool Investments Total Total

Endowment and funds functioning as endowment $ 5,839,894 $ 63,493 $ 5,903,387 $ 4,378,912 Working capital and other assets 591,377 19,504 610,881 798,720 Student loan funds 5,025 - 5,025 4,069 Split-interest agreements 44,971 14,193 59,164 41,034 Investments held on behalf of:

Defined benefit pension plan - 92,573 92,573 79,925 Revocable charitable trusts - 3,964 3,964 4,753 Religious affiliate 48,869 - 48,869 -

$ 6,530,136 $ 193,727 $ 6,723,863 $ 5,307,413

Investments totaling $6.5 billion at June 30, 2007, and $5.1 billion at June 30, 2006 are pooled on a market

value basis with each participating fund owning units in the pool. Transactions constituting additions or

withdrawals are unitized on a quarterly basis based on the estimated market value of the pooled investments.

Certain investments are held in specific instruments outside the unitized investment pool to comply with donor

requirements or other considerations.

The unitized investment pool is comprised primarily of endowment-related holdings. As such, the pool’s

investment objectives seek to preserve the real purchasing power of the endowment, while providing a stable source

of financial support to its beneficiary programs. To satisfy its long-term rate of return objectives, the pool relies on

a total return strategy in which investment returns are achieved through both capital appreciation (realized and

unrealized) and current yield (interest and dividends). The unitized investment pool targets a diversified asset

allocation that places a greater emphasis on equity-based investments to achieve its long-term return objectives

within prudent risk constraints.

Investment assets at fair value are summarized as follows at June 30 (in thousands):

UnitizedInvestment Other 2007 2006

Pool Investments Total Total

Short-term investments $ 251,959 $ 18,129 $ 270,088 $ 347,930 Public equities: U.S. 579,671 70,166 649,837 743,134 Non-U.S. 1,202,418 20,824 1,223,242 809,813 Long/short strategies 935,727 - 935,727 670,732 Fixed income securities 244,433 29,865 274,298 290,774 Marketable alternatives 1,047,666 40,504 1,088,170 846,584 Private equity 1,203,359 7,638 1,210,997 847,726 Real estate 414,599 743 415,342 301,359 Other real assets 650,304 5,858 656,162 449,361

$ 6,530,136 $ 193,727 $ 6,723,863 $ 5,307,413

12

University of Notre Dame du Lac Notes to Consolidated Financial Statements

Short-term investments held in the unitized investment pool consist primarily of cash equivalents held by

external investment managers. Short-term investments held outside the unitized investment pool include

$11,880,000 and $33,564,000 in unexpended proceeds from the Series 2005 St. Joseph County Educational

Facilities Revenue Bonds at June 30, 2007, and 2006, respectively.

The University is obligated under contracts with certain external managers, primarily those managing private

equity, real assets and marketable alternatives, to periodically advance additional capital up to contractual levels in

subsequent years. At June 30, 2007 such amounts approximated $2.17 billion.

OFF-BALANCE SHEET RISK

The University’s investment strategy incorporates the use of certain financial instruments that bear, to varying

degrees, elements of market risk and credit risk in excess of amounts recorded in the consolidated financial

statements. Market risk in this context represents the potential for changes in the value of financial instruments such

as forwards, futures and credit default swaps due to events affecting the value of the underlying assets, including

those embodied in interest and foreign exchange rate movements and fluctuations in commodity or security prices.

Market risk is directly impacted by the volatility and liquidity of the markets in which the related underlying assets

are traded. Credit risk is the possibility that a loss may occur due to the failure of a counterparty to perform

according to the terms of a contract. The University’s risk of loss in the event of counterparty default is typically

limited to the amounts recognized in the consolidated statements of financial position and is not represented by the

contract or notional amounts of the instruments.

The University also bears risk arising from unanticipated movements in the value of foreign currencies relative

to the U.S. dollar. To mitigate the impact of changing foreign currency exchange rates on the U.S. dollar value of its

international equity holdings, the University utilizes a dynamic currency overlay strategy. While operating within

specified risk parameters, the currency overlay manager is expected to outperform a specified hedged benchmark by

actively managing individual currency risks utilizing forward foreign currency exchange contracts.

INVESTMENT RETURN

Investment return for the years ended June 30, 2007, and 2006, comprises the following (in thousands):

2007 2006

Investment income, net $ 102,000 $ 91,779 Realized gains, net 468,954 518,920 Unrealized gains, net 744,233 271,653

$ 1,315,187 $ 882,352

Investment income is reported net of related expenses of $20,446,000 and $17,251,000 for the years ended

June 30, 2007, and 2006, respectively. Investment-related expenses consist primarily of fees from external

investment advisors, but also include operating expenses related to internal investment staff.

13

University of Notre Dame du Lac Notes to Consolidated Financial Statements

A portion of investment returns are distributed annually to beneficiary programs under the University’s

endowment spending policy. In addition, a portion of unrestricted returns on working capital and other assets is

distributed to supplement the University’s general operating needs and other initiatives. Investment return

distributed is summarized by source below for the years ended June 30 (in thousands):

Temporarily 2007 2006 Unrestricted Restricted Total Total

Endowment and funds functioning as endowment $ 62,189 $ 73,767 $ 135,956 $ 123,463 Working capital and other sources 18,411 - 18,411 18,681

$ 80,600 $ 73,767 $ 154,367 $ 142,144

LIABILITIES ASSOCIATED WITH INVESTMENTS

Liabilities associated with investments are comprised of the following at June 30 (in thousands):

2007 2006

Forward foreign exchange contracts payable $ 3,386 $ 18,212 Fair value of investments held on behalf of: Defined benefit pension plan 92,573 79,925 Revocable charitable trusts 3,964 4,753 Religious affiliate 48,869 -

145,406 84,678 $ 148,792 $ 102,890

NOTE 5. LAND, BUILDINGS AND EQUIPMENT

The following is a summary of land, buildings and equipment at June 30 (in thousands):

2007 2006

Land and land improvements $ 82,055 $ 56,559 Buildings 903,369 820,978 Equipment 195,783 193,296 Construction in progress 28,548 98,689

1,209,755 1,169,522 Less: Accumulated depreciation 358,184 333,129

$ 851,571 $ 836,393

Depreciation expense was $37,042,000 and $34,485,000 for the years ended June 30, 2007, and 2006,

respectively. The University has commitments to expend approximately $103 million to complete various

construction projects as of June 30, 2007.

The University recognized accretion expense of $799,000 associated with its conditional asset retirement

obligations for the year ended June 30, 2007.

14

University of Notre Dame du Lac Notes to Consolidated Financial Statements

NOTE 6. BONDS AND NOTES PAYABLE

Bonds and notes payable consist of the following at June 30 (in thousands):

2007 2006 Obligations of the University St. Joseph County, Indiana, Educational Facilities Revenue Bonds:

Series 2005, bearing interest at a variable rate (3.65 percent currently) through 2040 $ 185,000 $ 185,000

Series 2003, bearing interest at 2.5 percent through 2007, variable thereafter through 2038 65,000 65,000

Series 1998, bearing interest at a variable rate (3.69 percent currently) through 2033 43,000 43,000

Series 1997, bearing interest at 5.0 percent to 5.25 percent through 2027 26,770 27,540

Series 1996, bearing interest at 5.5 percent to 6.5 percent through 2026, partially refunded as part of the Series 2005 variable rate bonds 7,890 7,890

Indiana Educational Facilities Authority Revenue Bonds: Series 1997, bearing interest at 5.25 percent through 2025 22,655 22,745

Notre Dame du Lac Dormitory Refunding and Construction Bonds bearing interest at 3 percent through 2018 1,110 1,190

351,425 352,365 Obligation of majority-owned limited liability corporation Mortgage note payable, bearing interest

at 5.68 percent through 2016 40,000 39,900 $ 391,425 $ 392,265

The aggregate scheduled maturities of bonds and notes payable are summarized as follows (in thousands):

2008 $ 6,490 2009 3,627 2010 3,897 2011 4,083 2012 4,332 Thereafter 368,996

$ 391,425

Notre Dame du Lac Dormitory Refunding and Construction Bonds are collateralized by the facilities to which

they relate. The Indiana and St. Joseph County Educational Facilities Revenue Bonds represent general obligations

of the University and are not collateralized by the related facilities. Proceeds of $11,880,000 and $33,564,000 from

the Series 2005 St. Joseph County Educational Facilities Revenue Bonds were unexpended as of June 30, 2007 and

June 30, 2006, respectively.

15

University of Notre Dame du Lac Notes to Consolidated Financial Statements

The University is the majority owner of an externally managed limited liability corporation, the activities of

which are reflected within the University’s consolidated financial statements. The corporation’s assets consist

primarily of real estate, the acquisition of which was financed in part with a $40 million note payable bearing

interest at 5.68%, due in 2016. The note is not a general obligation of the University but is fully collateralized by

the property acquired.

The fair value of the University’s bond and note obligations approximates the aggregate carrying value at

June 30, 2007 and 2006.

The University utilizes interest rate swaps as a strategy for managing interest rate risk associated with certain

bond issues. Under the terms of swap arrangements that seek to effectively fix the variable rates associated with

certain issues, the University pays fixed rates ranging from 3.37 percent to 5.01 percent and receives variable rates

ranging from 67 percent to 70 percent of the London Interbank Offer Rate (LIBOR) on total notional amounts of

$105,970,000. A separate swap arrangement seeks to convert the fixed rate on the Series 2003 bonds to a variable

rate through December 2, 2007. Under the terms of this swap, the University pays a variable rate equal to the

Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Index and receives a fixed rate of

2.35 percent on a notional amount of $65,000,000. The estimated fair value of interest rate swaps was a net

unrealized loss position of $3,256,000 and $4,077,000 at June 30, 2007 and 2006, respectively. The University paid

periodic net settlements of $1,342,000 and $1,351,000 to counterparties pursuant to interest rate swaps during the

years ended June 30, 2007 and 2006, respectively.

In fiscal 2006, the University established a taxable and tax-exempt extendible municipal commercial paper

program issued by St. Joseph County, Indiana and the University of Notre Dame. The University may utilize tax-

exempt commercial paper to finance, reimburse, or refinance the cost of land, site improvements, buildings, and

equipment for educational facilities for the University. In addition, taxable commercial paper may be used to

finance working capital needs. Total outstanding issues are limited to $75 million. Outstanding issues totaled

$40,000,000 and $21,000,000 at June 30, 2007 and June 30, 2006, respectively.

Total interest costs incurred by the University were $14,172,000 and $11,731,000, respectively, for the years

ended June 30, 2007 and 2006, respectively.

The University maintains an unsecured line of credit in the amount of $50 million with a major commercial

bank to be used for working capital purposes. On February 21, 2007 the line of credit agreement was amended,

extending the termination date to March 28, 2008. The available line of credit was entirely unused at June 30, 2007

and 2006.

16

University of Notre Dame du Lac Notes to Consolidated Financial Statements

NOTE 7. PENSION AND OTHER RETIREMENT PLANS

DEFINED CONTRIBUTION RETIREMENT SAVINGS PLAN

Faculty and certain administrative employees who have completed one year of full-time service at the

University are eligible to participate in the defined contribution retirement savings plan. Staff members

participating in the plan have the option of directing their contributions and the University’s contributions on their

behalf to Teachers Insurance and Annuity Association, Fidelity Investments or the Vanguard Group. Participating

staff are immediately vested in the plan. The University’s share of the cost of these benefits was $17,523,000 and

$17,114,000 for the years ended June 30, 2007, and 2006, respectively.

DEFINED BENEFIT PENSION PLAN

Retirement benefits are provided for other employees under a defined benefit pension plan, for which the

University serves as trustee and administrator. This plan provides benefits for certain administrators and staff after

one year of qualifying service. Retirement benefits are based on the employee’s total years of service and average

pay over the final five years of service. Plan participants are fully vested after five years of service. The University

funds the plan with annual contributions that meet ERISA minimum requirements. The actuarially determined

benefit obligation is included in pension and other postretirement benefits in the consolidated statements of financial

position.

At June 30, 2007, the University adopted the provisions of SFAS 158 “Employers’ Accounting for Defined

Benefit Pension and Other Postretirement Benefit Plans.” SFAS 158 requires the recognition of the full funded

status of defined benefit pension plans in the statement of financial position. Accordingly, the plan’s actuarially

determined benefit obligation recorded at June 30, 2007 reflects the excess of the projected benefit obligation over

the fair value of plan assets. As a result of adopting SFAS 158, the University has recognized the $5,090,000

cumulative effect of the change in accounting principle in the consolidated statement of changes in unrestricted net

assets for the year ended June 30, 2007.

For the year ended June 30, 2006, an $18,040,000 decrease in the minimum pension liability adjustment

required under previous accounting guidance is reflected as a non-operating gain in the statements of changes in

unrestricted net assets.

The amortization of any prior service cost or credit is determined using straight-line amortization over the

average remaining service period of employees expected to receive the benefits under the plan.

17

University of Notre Dame du Lac Notes to Consolidated Financial Statements

The following tables set forth the funded status of the defined benefit pension plan as well as the components of

net periodic benefit cost and the weighted-average assumptions at June 30 (in thousands):

2007 2006 Change in Benefit Obligation Projected benefit obligation at beginning of year $ 110,915 $ 127,536 Service cost 4,614 6,031 Interest cost 6,504 6,149 Actuarial (gain)/loss (4,840) (25,049) Benefit payments (3,907) (3,752) Projected benefit obligation at end of year 113,286 110,915

Change in Plan Assets Fair value of plan assets at beginning of year 79,925 70,765 Actual return on plan assets 11,603 8,072 Employer contributions 4,952 4,840 Benefit payments (3,907) (3,752) Fair value of plan assets at end of year 92,573 79,925

Funded status (20,713) (30,990) Unrecognized net loss - 14,744 Unrecognized prior service costs - 200 Accrued liability for pension benefits $ (20,713) $ (16,046)

Components of Cumulative Effect of Change in Accounting Principle for Adoption of SFAS 158 Previously unrecognized net loss $ 4,982 Previously unrecognized prior service cost 108 Incremental increase in liability for pension benefits $ 5,090

Components of Net Periodic Benefit CostService cost $ 4,614 $ 6,031 Interest cost 6,504 6,149 Expected return on plan assets (6,710) (5,933) Amortization of:

Unrecognized net loss 30 2,494 Unrecognized prior service cost 92 92

Net periodic benefit cost $ 4,530 $ 8,833

Accumulated benefit obligation at end of year $ 89,613 $ 86,214

Weighted-Average Assumptions Discount rate 6.25% 6.25% Expected long-term rate of return on plan assets 8.50% 8.50% Rate of compensation increase 5.00% 5.00%

The University expects to recognize prior service costs of $92,000 within net periodic benefit cost during the

fiscal year ending June 30, 2008.

18

University of Notre Dame du Lac Notes to Consolidated Financial Statements

The projected payments to beneficiaries under the plan for each of the five fiscal years subsequent to June 30,

2007 are as follows (in thousands):

2008 $ 4,242 2009 $ 4,490 2010 $ 4,754 2011 $ 5,053 2012 $ 5,471

Projected aggregate benefit payments under the plan for the five year period ended June 30, 2017 are

$35,008,000.

The University’s estimated contributions to the plan for the year subsequent to June 30, 2007 are $5,500,000.

The assets of the defined benefit pension plan are invested in a manner that is intended to achieve a rate of

return of 8.5 percent, which is the plan’s assumed long-term rate of return. In order to preserve the purchasing

power of the plan and provide payments to beneficiaries, a rate of return objective of inflation plus 5.0 percent is

targeted.

The investment portfolio of the plan is diversified in a manner that is intended to achieve the return objective

and reduce the volatility of returns. The plan relies on a total return strategy in which investment returns are

achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends) over a

long-term time horizon. The plan’s assets are invested primarily with third party fund managers.

Actual and targeted allocations of the plan’s assets by investment category were as follows at June 30:

2007 2006 Target

Short-term investments 0.9% 0.6% 0.0% Public equities:

U.S. 18.5% 18.8% 17.5% Non-U.S. 19.0% 19.7% 17.5%

Fixed income securities 15.5% 17.3% 17.5% Marketable alternatives 31.0% 30.3% 30.0% Private equity 8.3% 8.5% 10.0% Real assets 6.8% 4.8% 7.5%

100.0% 100.0% 100.0%

NOTE 8. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The postretirement benefit plans offered by the University provide medical insurance benefits for retirees and

their spouses. Employees are eligible for such benefits if they retire after attaining specified age and service

requirements while employed by the University. The plans are funded as claims are paid.

During the year ended June 30, 2006, the University amended certain features of its postretirement benefit plans

as a result of consolidating several retiree medical plans. The effect of these amendments on the accumulated

postretirement benefit obligation (APBO) was a decrease of $14,730,000.

19

University of Notre Dame du Lac Notes to Consolidated Financial Statements

At June 30, 2007, the University adopted the provisions of SFAS 158 “Employers’ Accounting for Defined

Benefit Pension and Other Postretirement Benefit Plans.” SFAS 158 requires the recognition of the full funded

status of defined benefit postretirement benefit plans in the statement of financial position. Accordingly, the

actuarially determined benefit obligation for the University’s retiree medical insurance plans recorded at June 30,

2007 reflects the full APBO as of that date. As a result of adopting SFAS 158, the University has recognized the

$16,686,000 cumulative effect of the change in accounting principle in the consolidated statement of changes in

unrestricted net assets for the year ended June 30, 2007.

The amortization of any prior service cost or credit is determined using straight-line amortization over the

average remaining service period of employees expected to receive the benefits under the plan.

The following tables set forth the funded status of postretirement benefits as well as the components of net

periodic benefit cost and the weighted-average assumptions at June 30 (in thousands):

2007 2006 Change in Benefit Obligation Accumulated postretirement benefit obligation at beginning of year $ 50,153 $ 58,715 Service cost 3,399 3,859 Interest cost 3,008 2,586 Plan amendments - (14,730) Actuarial (gain)/loss (338) 607 Benefit payments (878) (884) Accumulated postretirement benefit obligation at end of year 55,344 50,153

Change in Plan Assets Fair value of plan assets at beginning of year - - Actual return on plan assets - - Employer contributions 878 884 Benefit payments (878) (884) Fair value of plan assets at end of year - -

Funded status (55,344) (50,153) Unrecognized net loss - 34,542 Unrecognized prior service credit - (20,091) Accrued liability for postretirement benefits $ (55,344) $ (35,702)

Components of Cumulative Effect of Change in Accounting Principle for Adoption of SFAS 158 Previously unrecognized net loss $ 31,815 Previously unrecognized prior service credit (15,129) Incremental increase in liability for postretirement benefits $ 16,686

Components of Net Periodic Benefit CostService cost $ 3,399 $ 3,859 Interest cost 3,008 2,586 Amortization of:

Unrecognized prior service credit (4,962) (4,096) Unrecognized net loss 2,389 2,721

Net periodic benefit cost $ 3,834 $ 5,070

Weighted-Average Assumptions Discount rate 6.25% 6.25% Health care cost trend rate (grading to 5.0 percent in 2013) 9.50% 10.00%

20

University of Notre Dame du Lac Notes to Consolidated Financial Statements

The University expects to recognize net losses and prior service credits of $2,650,000 and $4,962,000,

respectively, as components of net periodic benefit cost during the fiscal year ending June 30, 2008.

A one-percentage-point increase in the assumed health care cost trend rate would have increased aggregate

service and interest costs and the APBO by approximately $1,496,000 and $10,899,000, respectively. Likewise, a

one-percentage-point decrease in the assumed health care cost trend rate would have decreased aggregate service

and interest costs and the APBO by approximately $1,205,000 and $9,169,000, respectively.

The projected payments to beneficiaries for each of the five fiscal years subsequent to June 30, 2007 are as

follows (in thousands):

2008 $ 1,214 2009 $ 1,357 2010 $ 1,550 2011 $ 1,730 2012 $ 1,914

Projected aggregate postretirement benefit payments for the five year period ended June 30, 2017 are $13,455,000.

NOTE 9. TEMPORARILY RESTRICTED NET ASSETS

Temporarily restricted net assets are summarized as follows at June 30 (in thousands):

2007 2006

Contributions and investment return for operating purposes $ 77,191 $ 70,979 Contributions for investment in land, buildings and equipment 41,344 117,837 Split-interest agreements 12,087 7,703 Funds functioning as endowment 2,019,569 1,493,244

$ 2,150,191 $ 1,689,763

Temporarily restricted net assets include contributions receivable of $67,229,000 and $64,846,000 at

June 30, 2007 and 2006, respectively.

Net assets released from restrictions for operations are summarized below for the years ended June 30 (in

thousands):

2007 2006 Purpose restrictions satisfied:

Scholarships and fellowships awarded $ 29,940 $ 26,262 Expenditures for operating purposes 55,652 52,161

Term restrictions satisfied: Matured split-interest agreements made available for operations - 1,620

$ 85,592 $ 80,043

21

University of Notre Dame du Lac Notes to Consolidated Financial Statements

Non-operating net assets released from restrictions include the following for the years ended June 30 (in

thousands):

2007 2006

Reclassified endowment appreciation $ 56,876 $ 39,370 Expenditures for land, buildings and equipment 72,781 73,143

$ 129,657 $ 112,513

NOTE 10. PERMANENTLY RESTRICTED NET ASSETS

Permanently restricted net assets consist of the following at June 30 (in thousands):

2007 2006

Endowment funds $ 1,014,427 $ 903,573 Student loan funds 7,128 6,048 Split-interest agreements 11,463 8,845 Beneficial interests in perpetual trusts 2,632 -

$ 1,035,650 $ 918,466

Permanently restricted net assets include contributions receivable of $78,808,000 and $42,484,000 at

June 30, 2007 and 2006, respectively.

NOTE 11. ENDOWMENT

The University’s endowment consists of more than 4,500 individual funds established for a variety of purposes.

Net assets associated with endowment funds, including funds functioning as endowment, are classified and reported in

accordance with any donor-imposed restrictions.

Endowment and funds functioning as endowment are summarized below as of June 30 (in thousands):

Temporarily Permanently 2007 2006 Unrestricted Restricted Restricted Total Total

Funds established to support: Scholarships and fellowships $ 794,851 $ 580,010 $ 392,822 $ 1,767,683 $ 1,425,882 Faculty chairs 264,408 589,790 178,258 1,032,456 825,677 Academic programs 107,378 363,821 159,491 630,690 486,996 General operations 1,047,142 61 1,930 1,049,133 545,622 Other 818,535 475,478 203,118 1,497,131 1,152,447

3,032,314 2,009,160 935,619 5,977,093 4,436,624 Contributions receivable - 10,409 78,808 89,217 51,214

$ 3,032,314 $ 2,019,569 $ 1,014,427 $ 6,066,310 $ 4,487,838

22

University of Notre Dame du Lac Notes to Consolidated Financial Statements

The fair value of assets associated with individual endowment funds may fall below the level required by donor

stipulations when the timing of contributions coincide with unfavorable market fluctuations. Unrealized losses of this

nature were insignificant at June 30, 2007 and 2006, respectively.

Endowment and funds functioning as endowment are invested primarily in the University’s unitized investment

pool. Certain funds are invested in other instruments in accordance with donor requirements and other considerations.

Changes in the University’s endowment are summarized below for the years ended June 30 (in thousands):

Temporarily Permanently 2007 2006 Unrestricted Restricted Restricted Total Total

Beginning of the year $ 2,091,021 $ 1,493,244 $ 903,573 $ 4,487,838 $ 3,690,694

Contributions 2,376 39,368 111,209 152,953 114,503 Other changes, net 381,924 26,664 (2,482) 406,106 44,988 Investment return: Investment income 39,915 43,712 2,090 85,717 77,933 Net gain on investments 522,391 547,224 37 1,069,652 683,183 Less: Investment return distributed (62,189) (73,767) - (135,956) (123,463) Net assets released from restrictions 56,876 (56,876) - - -

$ 3,032,314 $ 2,019,569 $ 1,014,427 $ 6,066,310 $ 4,487,838

During the year ended June 30, 2007, the University formally designated $360,000,000 in unrestricted net assets

as funds functioning as endowment for the support of general University operations.

Unrestricted net assets expended for operational purposes consistent with donor-imposed restrictions on specific

endowment funds serves to release the restrictions on appreciation accumulated in those endowment funds. This

release of restrictions on endowment net assets is recognized in the period concurrent with the applicable underlying

expenditure of unrestricted net assets. In order to preserve the future spending power of the respective endowed

programs, the University establishes unrestricted funds functioning as endowment designated for programs

consistent with the original donor intent upon the release of restrictions.

Endowment net assets released from restrictions and reclassified to unrestricted funds functioning as

endowment are summarized below for the years ended June 30 (in thousands):

2007 2006

Scholarships and fellowships $ 34,978 $ 28,292 Faculty chairs 10,608 7,365 Libraries 3,196 2,172 Other 8,094 1,541

$ 56,876 $ 39,370

23

University of Notre Dame du Lac Notes to Consolidated Financial Statements

The University has adopted an endowment spending policy that attempts to meet three objectives: (1) provide a

predictable, stable stream of earnings to fund participants; (2) ensure the purchasing power of this revenue stream

does not decline over time; and (3) ensure the purchasing power of the endowment assets do not decline over time.

Under this policy as approved by the Board of Trustees, investment income, as well as a prudent portion of

appreciation, may be expended for the operational needs of fund participants.

Investment return distributed under the University’s endowment spending policy to meet operational needs is

summarized below by the purpose associated with the applicable funds for the years ended June 30 (in thousands):

Temporarily 2007 2006 Unrestricted Restricted Total Total

Scholarships and fellowships $ 22,534 $ 27,141 $ 49,675 $ 46,030 Faculty chairs 6,977 21,515 28,492 26,178 Academic programs 1,968 14,450 16,418 14,941 Libraries 2,072 2,751 4,823 4,530 Other endowed programs 9,437 7,910 17,347 15,498 General operations 19,201 - 19,201 16,286

$ 62,189 $ 73,767 $ 135,956 $ 123,463

NOTE 12. SPLIT-INTEREST AGREEMENTS

The University’s split-interest agreements consist principally of charitable gift annuities and irrevocable

charitable remainder trusts for which the University serves as trustee. The fair value of assets held in charitable

trusts was $59,164,000 and $41,034,000 at June 30, 2007 and 2006, respectively. Assets contributed pursuant to the

University’s charitable gift annuity program are not held in trust, and based on the nature of the agreements are

designated as funds functioning as endowment. The aggregate fair value of these assets was $8,797,000 and

$6,720,000 at June 30, 2007 and 2006, respectively.

Obligations under split-interest agreements are summarized below based on restrictions imposed by donors in

the respective agreements. The amounts represent the present value of estimated future payments to beneficiaries at

June 30 (in thousands):

Temporarily Permanently 2007 2006 Unrestricted Restricted Restricted Total Total

Charitable trusts $ - $ 16,420 $ 17,724 $ 34,144 $ 23,482 Charitable gift annuities 1,467 250 1,220 2,937 2,391

$ 1,467 $ 16,670 $ 18,944 $ 37,081 $ 25,873

24

University of Notre Dame du Lac Notes to Consolidated Financial Statements

NOTE 13. GRANTS AND CONTRACTS

The University recognized operating revenues based on direct expenditures and related indirect costs associated

with research and other grants and contracts as follows for the years ended June 30 (in thousands):

2007 2006 Direct Indirect Total Total

Government sources: Federal $ 46,859 $ 13,281 $ 60,140 $ 62,861 State 2,129 47 2,176 3,209

48,988 13,328 62,316 66,070 Private organizations 12,054 1,043 13,097 12,763

$ 61,042 $ 14,371 $ 75,413 $ 78,833

Funding for federally sponsored research and other programs is received from the U.S. government and from

institutions that subcontract sponsored research to the University. The University’s primary sources of federal

research support are the Department of Health and Human Services and the National Science Foundation.

The University also administers certain federally sponsored student aid programs for which it recognizes neither

revenues nor expenses. Receipts and disbursements for such programs totaled $7,276,000 and $5,227,000 for the

years ended June 30, 2007 and 2006, respectively.

NOTE 14. CONTINGENCIES

The University is a defendant in various legal actions arising out of the normal course of its operations.

Although the final outcome of such actions cannot currently be determined, the University believes that eventual

liability, if any, will not have a material effect on the University’s financial position.

All funds expended in conjunction with government grants and contracts are subject to audit by government

agencies. In the opinion of management, any liability resulting from these audits will not have a material effect on

the University’s financial position.

25

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APPENDIX C

DEFINITIONS AND SUMMARY OF BOND DOCUMENTS

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C-1

APPENDIX C

DEFINITIONS AND SUMMARY OF BOND DOCUMENTS DEFINITIONS

“Act” means Chapters 11.9 and 12 of Article 7 of Title 36, and Title 5, Article 1, Chapter 5, of the Indiana Code, as amended and supplemented from time to time.

“Agreement” means the Loan Agreement, dated as of December 1, 2007, between the Issuer and the University, as amended or supplemented from time to time.

“Alternate Liquidity Facility” means any bond purchase agreement, line of credit, surety bond, revolving credit facility, bond insurance policy or other agreement or instrument, or combination thereof, including any extensions thereof and any amendments or supplements thereto, under which any Person (other than the Issuer or the University) undertakes to pay or provide funds to pay, together with funds provided under any other outstanding liquidity facility, the aggregate purchase price of such Series 2007 Bonds tendered or required to be tendered for purchase pursuant to the Indenture that are not remarketed or are remarketed but for which payment is not received, other than the Initial Liquidity Facility; provided, that an Alternate Liquidity Facility need not apply to the purchase price of University Bonds or Pledged Bonds. Unless the context indicates otherwise, if there is more than one Alternate Liquidity Facility outstanding at the same time, any reference to Alternate Liquidity Facility shall be deemed to refer collectively to all of the outstanding alternate liquidity facilities.

“Authenticating Agent” means the Trustee and the Registrar for any Series 2007 Bonds and any bank, trust company or other Person designated as an Authenticating Agent for such Series 2007 Bonds by or in accordance with the Indenture, each of which shall be a transfer agent registered in accordance with Section 17A(c) of the Securities Exchange Act of 1934, as amended.

“Authorized University Representative” means the person at the time designated to act on behalf of the University by written certificate furnished to the Issuer and the Trustee, containing the specimen signature of that person and signed on behalf of the University by a duly authorized officer. That certificate may designate an alternate or alternates. If no such certificate is delivered, the Authorized University Representative shall be the President, Executive Vice President, or Vice President for Finance & Chief Investment Officer of the University.

“Bond Fund” means the Bond Fund created in the Indenture.

“Bond Legislation” means the ordinance of the Issuer authorizing the issuance of the Series 2007 Bonds and approving the Agreement, the Indenture and related matters.

“Bond Purchase Fund” means the Bond Purchase Fund created in the Indenture.

C-2

“Bond Service Charges” means, for any period or payable at any time, the principal of and premium, if any, and interest on Series 2007 Bonds (including interest on Pledged Bonds) for that period or payable at that time whether due at maturity or upon acceleration or redemption.

“Book Entry Form” or “Book Entry System” means, with respect to the Series 2007 Bonds, a form or system, as applicable, under which (i) the ownership of beneficial interests in Series 2007 Bonds and Bond Service Charges may be transferred only through a book entry and (ii) physical Series 2007 Bond certificates in fully registered form are registered only in the name of a Depository or its nominee as Holder, with the physical Series 2007 Bond certificates “immobilized” in the custody of the Depository. The Book Entry System maintained by and the responsibility of the Depository and not maintained by or the responsibility of the Issuer or the Trustee is the record that identifies, and records the transfer of the interests of, the owners of beneficial (book entry) interests in the Series 2007 Bonds.

“Business Day” means any day other than a Saturday, Sunday, or holiday or a day on which banks located in the city or cities in the United States in which the principal corporate trust offices of the Trustee, the principal office of the Remarketing Agent, or the office of any Liquidity Provider at which demands under its Liquidity Facility are to be honored are located are required or authorized to close or on which The New York Stock Exchange or the Federal Reserve Bank of New York is closed.

“Closing Date” means the date on which the Series 2007 Bonds are initially issued and delivered to the Underwriter.

“Code” means the Internal Revenue Code of 1986, as amended, the regulations (whether proposed, temporary or final) under that Code or the statutory predecessor of that Code, and any amendments of, or successor provisions to, the foregoing and any official rulings, announcements, notices, procedures and judicial determinations regarding any of the foregoing.

“Commercial Paper Rate” means the interest rate for each Series 2007 Bond as determined with respect to such Series 2007 Bond and described as the Commercial Paper Rate as provided in the Indenture.

“Commercial Paper Rate Period” means with respect to any Series 2007 Bond each period determined for such Series 2007 Bond and described as the Commercial Paper Rate Period as provided in the Indenture.

“Completion Date” means the date of completion of the New Money Project evidenced in accordance with the requirements of the Loan Agreement.

“Construction Period” means the period between the commencement of the New Money Project or the date on which the Series 2007 Bonds are issued, whichever is earlier, and the Completion Date.

C-3

“Conversion Date” means the day on which a particular type of Interest Rate (i.e. a Daily Rate, Commercial Paper Rate, Fixed Rate, Term Rate or Weekly Rate), becomes effective for Series 2007 Bonds which is not immediately preceded by a day on which such Series 2007 Bonds have accrued interest at the same type of rate and, when used with respect to any Term Rate Period, the day after the end of such Term Rate Period. Each Conversion Date shall be an Interest Payment Date for the Rate Period from which the Series 2007 Bonds are converted, which shall be the last Interest Payment Date for the then current Term Rate Period if the conversion is from a Term Rate Period, except that any Business Day may be a Conversion Date from a Daily or Weekly Rate Period.

“County Series 1997 Bonds” means all of those certain St. Joseph County, Indiana Educational Facilities Revenue Bonds, Series 1997 (University of Notre Dame du Lac Project) to be refunded with proceeds received from the sale of the Series 2007 Bonds.

“Daily Rate” means the interest rate to be determined for Series 2007 Bonds on each Business Day and described as the Daily Rate pursuant to the Indenture.

“Daily Rate Conversion Date” means the day on which Series 2007 Bonds accrue interest at a Daily Rate which is immediately preceded by a day on which such Series 2007 Bonds did not accrue interest at a Daily Rate.

“Daily Rate Period” means each period during which Series 2007 Bonds accrue interest at a Daily Rate.

“Depository” means any securities depository that is a clearing agency under federal law operating and maintaining, with its participants or otherwise, a Book Entry System to record ownership of book entry interests in Series 2007 Bonds, and effect transfers of book entry interests in Series 2007 Bonds in Book Entry Form, and includes and means initially The Depository Trust Company (a limited purpose trust company), New York, New York.

“Electronic” or “Electronically” with respect to a notice means notice, which is personally acknowledged, transmitted through a time-sharing terminal or facsimile machine, if operative as between any two parties, or if not operative, in writing or by telephone (promptly confirmed in writing).

“Eligible Investments” means any investments permitted the University by law and which are of a type permitted by the University’s then current investment policies and which mature or are otherwise available for payment as needed.

“Escrow Agents” mean the escrow agents, and any successor Escrow Agents under the Escrow Agreements, if any.

“Escrow Agreements” mean the Escrow Agreements, if any, pertaining to the refunding of the Refunded Bonds.

“Event of Default” means any of the events described as an Event of Default in the Indenture.

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“Extraordinary Services” and “Extraordinary Expenses” mean all services rendered and all reasonable expenses, including reasonable legal fees and expenses, properly incurred by the Trustee under the Indenture, other than Ordinary Services and Ordinary Expenses.

“Fixed Rate” means the interest rate per annum on a Series 2007 Bond described as a Fixed Rate and established in accordance with the Indenture.

“Fixed Rate Conversion Date” means the day on which Series 2007 Bonds accrue interest at a Fixed Rate which is immediately proceeded by a day on which such Series 2007 Bonds did not accrue interest at a Fixed Rate.

“Fixed Rate Period” means with respect to any Series 2007 Bond the period from the Fixed Rate Conversion Date for such Series 2007 Bond to the maturity date of the Series 2007 Bond, unless earlier redeemed.

“Government Obligations” means (a) direct obligations of the United States of America for the payment of which the full faith and credit of United States of America is pledged, (b) obligations issued by a person controlled or supervised by and acting as an instrumentality of the United States of America, the payment of the principal of, premium, if any, and interest on which is fully guaranteed as a full faith and credit obligation of the United States of America (including any securities described in (a) or (b) issued or held in book-entry form on the books of the Department of Treasury of the United States of America or Federal Reserve Bank), and (c) securities rated AAAm or AAAm-G or its equivalent by a Rating Service which represent an interest in obligations described in (a) and (b) above.

“Holder” or “Holder of a Bond” means any Person in whose name a Series 2007 Bond is registered on the Register.

“IEFA Series 1997 Bonds” means all of those certain Indiana Educational Facilities Authority Educational Facilities Refunding Revenue Bonds, Series 1997 (University of Notre Dame du Lac Project) to be refunded with proceeds received from the sale of the Series 2007 Bonds.

“Indenture” means the Trust Indenture, dated as of December 1, 2007, between the Issuer and the Trustee, as amended or supplemented from time to time.

“Initial Liquidity Facility” means, while the Bonds bear interest at a Daily, Weekly or Commercial Paper Rate or at a Term Rate for a Rate Period having a duration of twelve (12) months, that certain standby bond purchase agreement (as amended and supplemented from time to time) by and among the University, the Trustee and the Initial Liquidity Provider, dated as of December 1, 2007, pursuant to which the Liquidity Provider referred to therein shall provide funds to the Trustee in accordance with the terms thereof, up to an aggregate amount sufficient to pay the principal component and interest component of the purchase price of Bonds (other than Pledged Bonds or University Bonds) tendered or required to be tendered for purchase pursuant to the Indenture that are not remarketed or are remarketed but for which payment is not received.

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“Initial Liquidity Provider” means Banco Bilbao Vizcaya Argentaria S.A., acting through its New York Branch.

“Interest Payment Date” means (a) when used with respect to any particular Series 2007 Bond accruing interest at a Commercial Paper Rate, the day after the last day of each Commercial Paper Rate Period applicable thereto; (b) when used with respect to Series 2007 Bonds accruing interest at Daily Rates, the first Business Day of each calendar month following a month in which interest at such rate has accrued, and any day which is a Conversion Date from a Daily Rate Period; (c) when used with respect to Series 2007 Bonds accruing interest at Weekly Rates, the first Business Day of each calendar month following the Weekly Rate Period for which interest is payable, and any day which is a Conversion Date from a Weekly Rate Period; (d) when used with respect to Series 2007 Bonds accruing interest at a Term Rate, each March 1 and September 1 commencing with the first of such dates after the Term Rate Conversion Date, except that the last Interest Payment Date for any Term Rate Period shall be the day after the last day of each Term Rate Period applicable thereto; and (e) when used with respect to Series 2007 Bonds accruing interest at a Fixed Rate, each March 1 and September 1, commencing with the first of such dates after the Fixed Rate Conversion Date through and including the maturity date of a Series 2007 Bond accruing interest at a Fixed Rate; and (f) when used with respect to Pledged Bonds, it has the meaning set forth in the Liquidity Facility.

“Interest Rate” means a Commercial Paper, Daily, Fixed, Weekly or Term Rate.

“Interest Rate for Advances” means the floating rate per annum which is two percent (2%) in excess of that interest rate announced by the Trustee in its lending capacity as a bank as its “Prime Rate” or its “Base Rate”, to the extent lawfully chargeable, in whole or in part, with each change in the Prime Rate or Base Rate automatically changing the Interest Rate for Advances.

“Issuance Costs” means financing, financial, legal, accounting, rating agency, printing and engraving fees, charges and expenses, and all other such fees, charges and expenses incurred in connection with the authorization, sale, issuance and delivery of the Series 2007 Bonds.

“Legislative Body” means the legislative body of the Issuer, as prescribed by the laws of the State.

“Letter of Representations” means the Blanket Letter of Representations from the Issuer to the Depository in connection with the issuance of the Series 2007 Bonds in a Book Entry System, as supplemented and amended from time to time.

“Liquidity Facility” means the Initial Liquidity Facility and any Alternate Liquidity Facility then in effect, if any. Unless the context indicates otherwise, if there is more than one Liquidity Facility outstanding at the same time, any reference to Liquidity Facility shall be deemed to refer collectively to all of the outstanding liquidity facilities.

“Liquidity Providers” means the issuer of each Liquidity Facility, and their successor in such capacity and their assigns.

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“Loan” means the loan by the Issuer to the University of the proceeds received from the sale of the Series 2007 Bonds.

“Loan Agreement” means the Agreement.

“Loan Payments” means the amounts required to be paid by the University in repayment of the Loan pursuant to the provisions of the Series 2007 Note and the Loan Agreement.

“Maturity Date” means March 1, 2042.

“Minimum Authorized Denominations” means the minimum denominations for the Series 2007 Bonds as specified in the Indenture.

“Moody’s” means Moody’s Investors Service, Inc., a Delaware corporation, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency designated by the University with the consent of the Remarketing Agent.

“New Money Project” means (i) construction of an addition to the Mason Support Services Center, (ii) renovation and improvements to laboratory facilities within the Nieuwland Science Hall, (viii) general construction and renovation projects, including construction and/or renovation of and improvements to residence halls, athletic, academic, and student service facilities, security facilities, utility facilities and infrastructure, and improvements to roads, walkways and parking lots, including site improvements and landscaping, and (iv) the acquisition, construction, expansion, renovation or equipping of any other educational facilities for the University; but in all cases excluding any portion of a facility to be used as a chapel or other place of religious worship or by the government of the United States. All of the projects are or will be initially owned and/or operated by either the University, St. Joseph County, Indiana, or the City of South Bend, Indiana.

“Ordinary Services” and “Ordinary Expenses” mean those services normally rendered, and those expenses normally incurred, including normally incurred legal fees and expenses, by a trustee under instruments similar to the Indenture where no event of default has occurred or is threatened under the Indenture, the Agreement, or the Remarketing Agreement.

“Outstanding Bonds”, “Bonds outstanding,” “outstanding” or “Outstanding” as applied to Series 2007 Bonds mean, as of the applicable date, all Series 2007 Bonds which have been authenticated and delivered, or which are being delivered by the Trustee under the Indenture, except:

(a) Series 2007 Bonds canceled upon surrender, exchange or transfer, or canceled because of payment or redemption on or prior to that date;

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(b) Series 2007 Bonds, or the portion thereof, for the payment, redemption or purchase for cancellation of which sufficient money has been deposited and credited with the Trustee or any Paying Agent on or prior to that date for that purpose (whether upon or prior to the maturity or redemption date of those Series 2007 Bonds); provided that if any of those Series 2007 Bonds are to be redeemed prior to their maturity, notice of that redemption shall have been given or arrangements satisfactory to the Trustee shall have been made for giving notice of that redemption, or waiver by the affected Holders of that notice satisfactory in form to the Trustee shall have been filed with the Trustee;

(c) Except as provided in the immediately succeeding paragraph, Series 2007 Bonds, or the portion thereof, which are deemed to have been paid and discharged or caused to have been paid and discharged pursuant to the provisions of the Indenture; and

(d) Series 2007 Bonds in lieu of which others have been authenticated under the Indenture.

For purposes of approval of consent by the Holders, “Outstanding Bonds,” “Bonds outstanding” or “outstanding” as applied to Series 2007 Bonds, except as set forth in the following sentence, shall not include Series 2007 Bonds owned by the Issuer or the University. Bonds purchased by the Tender Agent on behalf of the University or by the University pursuant to optional or mandatory tenders (or in lieu of redemption where the University purchases Bonds as provided in the Indenture) will continue to be Outstanding until the University directs the Trustee in writing to cancel them.

“Paying Agent” means the Co-Trustee and any bank or trust company designated as a Paying Agent by or in accordance with the Indenture.

“Person” or words importing persons means firms, associations, partnerships (including without limitation, general and limited partnerships), joint ventures, societies, estates, trusts, corporations, limited liability companies, public or governmental bodies, other legal entities and natural persons.

“Pledged Bonds” means Series 2007 Bonds purchased with moneys provided to the Tender Agent through the Liquidity Facility.

“Predecessor Bond” of any particular Series 2007 Bond means every previous Series 2007 Bond evidencing all or a portion of the same debt as that evidenced by the particular Series 2007 Bond. For the purposes of this definition, any Series 2007 Bond authenticated and delivered in lieu of a lost, stolen or destroyed Series 2007 Bond shall, except as otherwise provided in the Indenture, be deemed to evidence the same debt as the lost, stolen or destroyed Series 2007 Bond.

“Prior Project” means the projects financed with the proceeds of the Refunded Bonds and to be refinanced with proceeds of the Series 2007 Bonds through the refunding of the Refunded Bonds.

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“Project” means, together, the Prior Project and the New Money Project.

“Project Costs” means, to the extent consistent with the Act, the following costs of the New Money Project: (a) costs incurred directly or indirectly for or in connection with the New Money Project, including costs incurred in respect of the New Money Project for preliminary planning and studies; architectural, legal, engineering, surveying, environmental testing, accounting, consulting, supervisory and other services related to the New Money Project; labor, services, materials and supplies related to the New Money Project; and recording of documents and title work related to the New Money Project; (b) premiums attributable to any surety bonds and insurance required to be taken out and maintained during the Construction Period with respect to the New Money Project; (c) taxes, assessments and other governmental charges in respect of the New Money Project that may accrue or become due and payable during the Construction Period; (d) costs incurred directly or indirectly in seeking to enforce any remedy against any contractor or subcontractor in respect of any actual or claimed default under any contract relating to the New Money Project; (e) Issuance Costs; (f) any other costs, expenses, fees and charges properly chargeable to the cost of the New Money Project; (g) payment of interest on the Series 2007 Bonds, fees for credit enhancement applicable to the Series 2007 Bonds to the extent such fees constitute a reasonable charge for the transfer of credit risk, and fees applicable to any interest rate swap, interest rate cap or similar contracts related to the Series 2007 Bonds; and (h) payments made to the Rebate Fund.

“Project Fund” means the Project Fund created in the Indenture.

“Pro-Rata Share” means the pro-rata share of the aggregate amount of the funds to be provided by each Liquidity Provider to the Trustee pursuant the Indenture;

“Purchase Date” means, with respect to each Series 2007 Bond, each day that such Series 2007 Bond is subject to optional or mandatory tender for purchase.

“Purchase Price” or “purchase price” for any Series 2007 Bond in connection with a purchase thereof pursuant to optional or mandatory tender for purchase means the amount equal to 100% of the principal amount of such Series 2007 Bond, plus accrued interest, if any.

“Rate Period” means a Commercial Paper Rate Period, Daily Rate Period, Fixed Rate Period, Term Rate Period or Weekly Rate Period, as the case may be, and references to a type of Rate Period refer to the period of time between Conversion Dates (or from a Conversion Date to maturity if there is no other Conversion Date prior to maturity) during which Series 2007 Bonds bear interest at a particular type of Interest Rate (i.e. Daily Rates, Commercial Rates, Fixed Rates, Term Rates or Weekly Rates).

“Rating Service” means Moody’s, if the Series 2007 Bonds are rated by Moody’s at the time, and S&P, if the Series 2007 Bonds are rated by S&P at the time.

“Refunded Bonds” means, collectively, the IEFA Series 1997 Bonds and the County Series 1997 Bonds.

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“Rebate Fund” means the Rebate Fund created in the Indenture.

“Register” means the books kept and maintained by the Registrar for registration and transfer of Series 2007 Bonds.

“Registrar” means, as to the Series 2007 Bonds, the Co-Trustee, until a successor Registrar shall have become such pursuant to applicable provisions of the Indenture.

“Regular Record Date” means the close of business on either (a) the last Business Day immediately preceding an Interest Payment Date in the case of Series 2007 Bonds accruing interest at Commercial Paper, Daily or Weekly Rates, or (b) the fifteenth day (whether or not a Business Day) of the calendar month immediately preceding the Interest Payment Date in the case of Series 2007 Bonds accruing interest at Fixed Rates or Term Rates.

“Remarketing Agent” means, initially, Goldman, Sachs & Co., New York, New York, and any Person meeting the qualifications of, and designated from time to time to act as, Remarketing Agent under the Indenture. Unless the context indicates otherwise, if more than one Person is serving simultaneously as Remarketing Agent under the Indenture, any reference to Remarketing Agent shall be deemed to refer collectively to all of the Persons then serving as Remarketing Agent under the Indenture.

“Remarketing Agreement” means the Remarketing Agreement between the University and the Remarketing Agent.

“Revenues” means all amounts payable to the Trustee with respect to the principal or redemption price of, or interest on Series 2007 Bonds (i) upon deposit in the Bond Fund from the proceeds of obligations of the Issuer issued to refund the Series 2007 Bonds; or (ii) by the University under the Loan Agreement.

“S&P” means Standard & Poor’s Ratings Services, its successors and assigns, and, if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “S&P” shall be deemed to refer to any other nationally recognized securities rating agency designated by the University with the consent of the Remarketing Agent.

“Series 2007 Note” means the non-negotiable promissory note of the University evidencing the obligation to repay the Loan.

“Special Record Date” means, with respect to any Series 2007 Bond, the date established by the Trustee in connection with the payment of overdue interest on such Series 2007 Bond pursuant to the Indenture.

“State” means the State of Indiana.

“Supplemental Indenture” means any indenture supplemental to the Indenture entered into between the Issuer and the Trustee in accordance with the Indenture.

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“Tax Exempt Bonds” means any Series 2007 Bonds subject to an opinion of nationally recognized bond counsel to the effect that interest thereon is excludable from gross income of the Holders thereof for federal income tax purposes under Section 103 of the Code.

“Tender Agent” means, initially, the Co-Trustee, and any successor Tender Agent as determined or designated under or pursuant to the Indenture.

“Termination of Any Liquidity Facility” means the expiration or termination of the obligation of any Liquidity Provider under any then current Liquidity Facility (as the same may be extended or modified as permitted by the Indenture), including the substitution of an Alternate Liquidity Facility for any existing Liquidity Facility, to pay or provide funds to pay the purchase price of Series 2007 Bonds supported by its Liquidity Facility except for any termination under the circumstance where the Trustee receives written notice from the Liquidity Provider of the occurrence under the Liquidity Facility of an event of default resulting from an act of bankruptcy or insolvency respecting the University, as more fully described in the Liquidity Facility, whereupon the Liquidity Provider has terminated its obligation under the Liquidity Facility to pay or provide funds to pay the purchase price of Series 2007 Bonds tendered or required to be tendered for purchase that are not remarketed or are remarketed but for which payment is not received. No “Termination of Any Liquidity Facility” with respect to a Series 2007 Bond shall be deemed to occur with respect to any Series 2007 Bond which is not subject to optional or mandatory tender for purchase pursuant to the Indenture.

“Term Rate” means the interest rate to be determined for Series 2007 Bonds for a term of at least twelve months and described as the Term Rate pursuant to the Indenture.

“Term Rate Conversion Date” means each day on which Series 2007 Bonds accrue interest at a Term Rate which is immediately preceded by a day on which such Series 2007 Bonds did not accrue interest at a Term Rate or accrued interest at a Term Rate during a different Term Rate Period.

“Term Rate Period” means each period during which Series 2007 Bonds accrue interest at a Term Rate.

“Trustee” means Wells Fargo Bank, N.A. and its successors permitted under the Indenture.

“Unassigned Issuer’s Rights” means all of the rights of the Issuer to receive certain of its costs and expenses, to be held harmless and indemnified under the Agreement, to be reimbursed for attorney’s fees and expenses under the Agreement, and to give or withhold consent to amendments, changes, modifications, alterations and termination of the Agreement.

“University Bonds” means (a) Series 2007 Bonds purchased with moneys provided to the Tender Agent for the account of the University or the Issuer, or (b) Series 2007 Bonds registered in the name of the University designated as being held for the account of the University, that are not Pledged Bonds.

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“Weekly Rate” means the interest rate to be determined for Series 2007 Bonds on a weekly basis and described as the Weekly Rate pursuant to the Indenture.

“Weekly Rate Conversion Date” means each day on which Series 2007 Bonds accrue interest at a Weekly Rate which is immediately preceded by a day on which such Series 2007 Bonds did not accrue interest at a Weekly Rate.

“Weekly Rate Period” means each period during which Series 2007 Bonds accrue interest at a Weekly Rate.

LOAN AGREEMENT

The following is a brief summary of certain provisions of the Loan Agreement. This summary does not purport to be comprehensive and reference is made to the Loan Agreement, copies of which are available for examination at the office of the Trustee.

Loan and Loan Payments

Under the Loan Agreement, the Issuer agrees to issue the Series 2007 Bonds and to loan the proceeds thereof to the University. The University agrees to repay the loan by making the Loan Payments. The University’s obligation to make such Loan Payments will be evidenced by the Series 2007 Note and will be absolute and unconditional. All Loan Payments by the University will be paid to the Trustee for the account of the Issuer in accordance with the Series 2007 Note.

The University has agreed to pay to the Issuer, as additional payments under the Loan Agreement, any and all costs and expenses incurred or to be paid by the Issuer in connection with the issuance and delivery of the Series 2007 Bonds. The University will pay to the Trustee, the Registrar, the Paying Agent, the Authenticating Agent, the Tender Agent, the Liquidity Provider and the Remarketing Agent, their fees and expenses for acting as such.

The University also has agreed to pay to the Tender Agent, at the times and in the amounts and manner therein specified, an amount equal to the amount required in order to purchase any Series 2007 Bonds tendered for purchase pursuant to the Indenture; provided, however, that the amount so required to be paid shall be reduced by an amount equal to the sum of the amounts made available for such purpose from the proceeds of the remarketing of such Series 2007 Bonds by the Remarketing Agent or through payments by the Liquidity Provider under the Liquidity Facility.

The University also has agreed to pay, during any time a Liquidity Facility is in effect, to the Trustee for deposit in a separate account of the Bond Fund, designated as the “Special Interest Account”, on the last business day of each month, an amount equal to the interest accrued or to accrue for that month with respect to any Series 2007 Bonds bearing interest at a Commercial Paper Rate or a Term Rate; provided, to the extent that the applicable Interest Rate for any portion of such month is not known, such Interest Rate shall be assumed to be the highest rate permitted by the Indenture; and provided further, the University shall be entitled to a credit

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against each such monthly obligation to the extent of investment earnings in the Special Interest Account and to the extent of excess deposits to the Special Interest Account resulting from the Interest Rate assumption described above.

Disbursements from Project Fund

Upon deposit in the Project Fund, the Trustee will immediately transfer such amounts to the Escrow Agents under the Escrow Agreements, together with other funds on hand with the Escrow Agents or the co-trustees of the Refunded Bonds, to refund the Refunded Bonds on or about March 3, 2008. The remaining amounts on deposit in the Project Fund will be applied only to pay, or to reimburse the University for, Project Costs.

Completion of Project

The University agrees to complete each component of the Project which it commences and for which it uses money in the Project Fund, and shall be obligated for all additional costs incident thereto.

Financial Statements

The University covenants that it will keep proper books of record and account in which full, true and correct entries will be made of all dealings or transactions of or in relation to the business and affairs of the University, in accordance with generally accepted accounting principles applicable to universities (unless the Board of Trustees otherwise elects in writing to the Trustee, in which case the deviation shall be consistent in the opinion of the Board of Trustees with prudent business practice), and will furnish to the Remarketing Agent (who shall not be obligated to take any action as a result of the receipt of such information)and the Trustee, within 183 days after the last day of each fiscal year of the University, the financial report of the University certified by an independent certified public accountant or a firm of independent certified public accountants selected by the University for such fiscal year, containing those financial statements customarily prescribed for colleges and universities.

Other Covenants

The University represents in the Loan Agreement that it has taken or caused to be taken, and agrees that it will take or cause to be taken, all actions that may be required of it for the interest on the Series 2007 Bonds and the Refunded Bonds to be and remain excluded from the gross income of the Holders for federal income tax purposes, and that it will not take, or permit to be taken on its behalf, any actions which would adversely affect such exclusion.

The University is authorized to lease, sell, or otherwise transfer or dispose of, or grant the right to occupy and use, the Project, in whole or in part, to others, provided that the University (i) provides to the Trustee an opinion of nationally recognized bond counsel to the effect that such transaction will not cause the interest on the Series 2007 Bonds or the Refunded Bonds to be included in the gross income of the Holders thereof for federal income tax purposes; (ii) the transaction shall not relieve the University from liability for all payments due under the Loan

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Agreement and the performance of all of its other obligations of the Loan Agreement and the Authorized University Representative determines that it will not adversely affect the ability of the University to make payments and perform such obligations; and (iii) the lessee, vendee, transferee or user shall covenant not to use the Project for sectarian instruction or study or as a place for devotional activities or workshops and also not to use the Project primarily in connection with any part of the program of a school or department of divinity for any religious denomination. Pursuant to the Loan Agreement, the University may (a) sell, transfer or otherwise dispose of all, or substantially all, of its assets, (b) consolidate with or merge into any other entity or (c) permit one or more other entities to consolidate with or merge into it, only if the surviving, resulting or succeeding entity expressly assumes in writing all the agreements, duties and obligations of the University contained in the Loan Agreement and will, in the judgment of the Authorized University Representative, have resources sufficient to make all required payments with respect to the Agreement, and the University provides an opinion of nationally recognized bond counsel to the effect that such transaction will not cause the interest on the Series 2007 Bonds or the Refunded Bonds to be included in the gross income of the Holders for federal income tax purposes.

The University agrees that it will not use the Project, or permit the Project to be used, in such a way as to subject the University to the tax imposed by Section 511 of the Code, on unrelated business taxable income, as defined in Section 512 thereof, unless such use will in no way adversely affect the status of the University as an organization described in Section 501(c)(3) of the Code or adversely affect the exclusion from gross income of the interest on the Series 2007 Bonds or the Refunded Bonds under the Code; nor will it use or permit the Project to be used by any non-exempt person in such manner as would result in the inclusion of interest on the Series 2007 Bonds or the Refunded Bonds in gross income for federal income tax purposes under Section 103 of the Code. The University further agrees that it will not use the Project or any part thereof for sectarian instruction or primarily as a place of religious worship or as a facility used primarily in connection with any part of the program of a school or department of divinity for any religious denomination or for the training of priests, ministers, rabbis or other similar persons in the field of religion.

The University also agrees to indemnify the Issuer, the Trustee the Co-Trustee, the Tender Agent, the Paying Agent and Registrar, any person who “controls” the Trustee, the Co-Trustee, the Tender Agent, the Paying Agent or the Registrar within the meaning of Section 15 of the Securities Act of 1933, as amended, and any member, officer, director, official and employee thereof, against certain liabilities, claims, costs and expenses, including actions taken under the Loan Agreement and related documents.

The University represents it has been accredited by a nationally recognized accreditation agency or association and covenants to use its best efforts (so long as the University reasonably believes that it is in the best interest of the University and the Holders) to maintain such accreditation. The University shall keep or cause to be kept the facilities of the University continuously insured against such risks and in such amounts with such deductible provisions as are customary in connection with the operation of facilities of the type and size comparable to the facilities of the University. The University may also satisfy these requirements through a

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program of self insurance if such program is reviewed at least biennially for actuarial soundness by an independent consultant.

Events of Default

The Loan Agreement provides that any of the following will be an “event of default” under the Loan Agreement:

(a) The University shall fail to pay any installment of principal of or interest or premium (if any) on the Series 2007 Note when the same shall become due and payable, whether at maturity or upon any date fixed for prepayment or by acceleration or otherwise;

(b) The University shall fail to pay any deposit to the Special Interest Account of the Bond Fund (see “Loan Agreement--Loan and Loan Payments”) within one (1) Business Day of when the same is required to be deposited;

(c) Failure by the University to observe and perform any agreement, term or condition contained in the Loan Agreement (other than non-payment as described in (a) or (b) above), and that failure continues for a period of 30 days after notice of that failure is given to the University by the Issuer or the Trustee, or for such longer period as the Issuer or the Trustee may agree to in writing; provided, that if the failure is other than the payment of money and is of such nature that it cannot be corrected within the applicable period, that failure will not constitute an Event of Default under the Loan Agreement so long as the University institutes curative action within the applicable period and diligently pursues that action to completion;

(d) The University: (i) admits in writing its inability to pay its debts generally as they become due; (ii) has an order for relief entered in any case commenced by or against it under the federal bankruptcy laws, as now or hereafter in effect; (iii) commences a proceeding under any other federal or state bankruptcy, insolvency, reorganization or similar law, or has such a proceeding commenced against it and either has an order of insolvency or reorganization entered against it or has the proceeding remain undismissed and unstayed for 90 days; (iv) makes an assignment for the benefit of credits; or (v) has a receiver or trustee appointed for it or for the whole or any substantial part of its property;

(e) Default of at least $5,000,000 in any payment of principal of, premium or interest on any other obligation of or guarantee by the University for borrowed money continuing beyond the expiration of the applicable grace period, if any, provided for therein or in the performance of any other agreement, term or condition contained in any agreement under which such obligation is created, which shall result in the declaring due and payable of such obligation prior to the date on which it would otherwise have become due and payable; provided, however, that if such default shall be remedied or cured by the University or be waived by the holders of such obligation, and any such

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declaration be rescinded or annulled, then the event of default hereunder by reason thereof shall be deemed to have been thereupon cured;

(f) Any judgment, writ or warrant of attachment or of any similar process in any amount in excess of $10,000,000 shall be entered or filed against the University or against any of its property and remains unvacated, unpaid, unbonded, unstayed, uncontested or unappealed in good faith for a period of 90 days, except to the extent adequately insured or reserved against by the University;

(g) The occurrence of an event of default under the Indenture (see “INDENTURE--Events of Default”); or

(h) Any representation or warranty made by the University in the Agreement proves to be untrue in any material respect when made.

Any declaration of an event of default described under paragraph (d) above, and the exercise of remedies upon any such declaration, will be subject to any applicable limitations of federal bankruptcy law affecting or precluding that declaration or exercise during the pendency of or immediately following any bankruptcy, liquidation or reorganization proceedings.

Remedies

If any event of default under the Loan Agreement occurs and is continuing, the Trustee will, if and only if the payment of the Series 2007 Bonds is accelerated pursuant to the Indenture, declare all Loan Payments and additional payments required to be paid by the University under the Loan Agreement to be immediately due and payable. In addition, the Issuer and the Trustee may have access to, inspect, examine and make copies of the books, records, accounts and financial data of the University pertaining to the Project and may pursue any remedies at law or in equity to collect all amounts then due and thereafter to become due under the Loan Agreement or the Series 2007 Note or to enforce the performance and observance of any other obligation or agreement of the University under the Agreement and Series 2007 Note.

Notwithstanding the above-described remedies, the Issuer is not obligated to take any action that in its opinion will, or might, cause it to expend time or money or otherwise incur liability unless and until a satisfactory indemnity bond has been furnished to the Issuer at no cost or expense to the Issuer. Any amounts collected as Loan Payments or applicable to Loan Payments and any other amounts that would be applicable to the payment of Bond Service Charges collected pursuant to action taken under the Loan Agreement will be paid into the Bond Fund and applied in accordance with the provisions of the Indenture (see “Indenture--Bond Fund”) or, if the outstanding Series 2007 Bonds have been paid and discharged in accordance with the provisions of the Indenture, will be paid to the University, as provided in the Indenture.

The remedies provided under the Loan Agreement are also subject to the further limitation that the rescission by the Trustee of its declaration that all of the Series 2007 Bonds are immediately due and payable also will constitute an annulment of any corresponding declaration made pursuant to the Loan Agreement and a waiver and rescission of the

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consequences of that declaration and of the event of default with respect to which that declaration has been made.

Amendments of Loan Agreement and Series 2007 Note

The Indenture provides that the Loan Agreement and the Series 2007 Note may be amended by the Issuer and the Trustee without the consent of or notice to the Holders of the Series 2007 Bonds as may be required: (i) by the provisions of the Agreement and the Indenture; (ii) for the purpose of curing any ambiguity, inconsistency or formal defect or omission in those documents; (iii) in connection with an amendment or to effect any purpose for which there could be an amendment of the Indenture without the consent of the Holders of the Series 2007 Bonds; or (iv) in connection with any other change therein that, in the judgment of the Trustee, is not to the prejudice of the Trustee or the Holders of the Series 2007 Bonds.

The Loan Agreement and the Series 2007 Note may be amended, but only with the consent of all Holders, to change the amount or time as of which Loan Payments are required to be paid. Any amendments to those documents, other than those described above, may be made only with the prior written consent of the Holders of not less than a majority in aggregate principal amount of the Series 2007 Bonds then Outstanding.

INDENTURE

The following is a brief summary of certain provisions of the Indenture. This summary does not purport to be comprehensive and reference is made to the Indenture, copies of which are available for examination at the office of the Trustee.

Assignment and Security Interest

The Indenture provides for the assignment by the Issuer to the Trustee for the benefit of the Holders of, except as limited in the Indenture, all right, title and interest of the Issuer in and to the Revenues and the Loan Agreement (except for the Unassigned Issuer’s Rights), and the Bond Fund and the Project Fund.

Payment of Series 2007 Bonds.

Bond Service Charges shall be payable in lawful money of the United States of America. Except as otherwise provided in the Liquidity Facility with respect to the Pledged Bonds, the principal of and any premium on any Series 2007 Bond shall be payable when due upon presentation and surrender of such Series 2007 Bond at the principal corporate trust office of the Trustee or at the office, designated by the Trustee, of any Paying Agent, and the interest on any Series 2007 Bond shall be paid on each Interest Payment Date for such Series 2007 Bond to the Person in whose name the Series 2007 Bond (or one or more Predecessor Bonds) is registered at the close of business on the Regular Record Date applicable to such Interest Payment Date on the Register at the address appearing therein by check or draft which the Trustee shall cause to be mailed on such Interest Payment Date. Notwithstanding the foregoing, all payments with respect to Series 2007 Bonds accruing interest at Daily, Weekly or Commercial Paper Rates shall be

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made in immediately available funds, and payments with respect to Series 2007 Bonds accruing interest at Fixed Rates or Term Rates shall also be made by wire transfer on the due date of such payment if such Series 2007 Bonds are held by a Depository, or if the Holder holds One Million Dollars ($1,000,000) or more aggregate principal amount of Series 2007 Bonds and gives the Trustee a prior written request at least five (5) Business Days prior to a payment date, but no later than a Regular Record Date for any interest payment, that all such payments be made by wire transfer. Except as otherwise provided in the Liquidity Facility with respect to the Pledged Bonds, interest accrued during any Commercial Paper Rate Period shall be paid only upon presentation and surrender of Series 2007 Bond.

If and to the extent, however, that the Issuer shall fail to make payment or provision for payment of interest on any Series 2007 Bond on any Interest Payment Date, such interest shall cease to be payable to the Person who was the Holder of the Bond (or of one or more Predecessor Bonds) as of the applicable Regular Record Date. When moneys become available for payment of the interest, (i) the Trustee shall establish a Special Record Date for the payment of such interest which shall be not more than fifteen (15) nor fewer than ten (10) days prior to the date of the proposed payment, and (ii) the Trustee shall cause notice of the proposed payment and of the Special Record Date to be mailed by first class mail, postage prepaid, to each Holder at its address as it appears on the Register not fewer than ten (10) days prior to the Special Record Date and, thereafter, the interest shall be payable to the Persons who are the Holders of the Bonds (or their respective Predecessor Bonds) at the close of business on the Special Record Date.

Interest Rates and Rate Periods

Each Series 2007 Bond may bear interest at a Daily, Weekly, Commercial Paper, Term or Fixed Rate. The interest rate on a Series 2007 Bonds in a Daily, Weekly, Commercial Paper or Term Rate Period will be established as described in the forepart of this Official Statement under the caption “THE SERIES 2007 BONDS - Interest Rates and Rate Periods.” All Pledged Bonds will bear interest at the rate or rates as provided in the Liquidity Facility, which interest will be due and payable to the Liquidity Provider as and when set forth in such Liquidity Facility. Series 2007 Bonds that operate in a Fixed Rate Period will mature and bear interest at a Fixed Rate in accordance with a schedule established at the time such Series 2007 Bonds are converted to a Fixed Rate Period. Upon conversion of the interest rate on any Series 2007 Bonds to a Fixed Rate, all such Series 2007 Bonds then being converted shall mature serially on March 1 of each year through and including the Maturity Date in accordance with the terms specified below. Upon conversion, the firm of bond underwriters or recognized institutional investors who agree to underwrite or purchase such Series 2007 Bonds shall deliver to the University and the Trustee a certificate that includes (a) a schedule specifying the principal amount of Series 2007 Bonds maturing or to be called for mandatory sinking fund redemption on March 1 of each year, commencing on the first March 1 occurring after the Fixed Rate Conversion Date, through and including the Maturity Date, and (b) a schedule specifying the interest on such Series 2007 Bonds to be paid on March 1 and September 1 of each year, commencing with the first March 1 or September 1 occurring after the Fixed Rate Conversion Date, through and including the Maturity Date. In determining the amount of interest and principal that shall be payable on such dates, such firm of bond underwriters or institutional investors shall use the following guidelines:

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(i) The interest rate on each Series 2007 Bond then being converted shall be the lowest interest rate that will enable such Series 2007 Bond upon conversion to be remarketed at par, assuming that all Series 2007 Bonds then being converted will mature serially on March 1 of each year, commencing on the first March 1 occurring after the Fixed Rate Conversion Date, through and including the Maturity Date, and taking into account the fact that such Series 2007 Bond shall mature on a particular March 1 through and including the Maturity Date in accordance with (ii) below, all Series 2007 Bonds shall pay interest semiannually on March 1 and September 1 of each year, commencing with the first March 1 or September 1 occurring after the Fixed Rate Conversion Date, all Series 2007 Bonds maturing on a particular March 1 shall bear interest at the same rate, and all such Series 2007 Bonds shall only be remarketed at par; and

(ii) The schedule of principal payments shall be set to achieve annual level debt service (including both principal and interest) for all remaining periods ending each year on March 1, commencing on the first March 1 occurring after the Fixed Rate Conversion Date, through and including the Maturity Date, and to the extent such annual level debt service cannot be exactly achieved due to the denomination of the Series 2007 Bonds then being converted, such annual level debt service shall be achieved by rounding down all principal amounts to the next $5,000 denomination or any integral multiple thereof, and rounding up the last principal payment.

Notwithstanding the foregoing, the schedule of principal payments for the Bonds then being converted in accordance with the above guidelines shall not result in an increase in the weighted average maturity (within the meaning of the Code) of the Series 2007 Bonds.

With respect to those Series 2007 Bonds, if any, that mature on or after the eleventh March 1 occurring after the Fixed Rate Conversion Date therefor, if, after establishing the interest rates and the schedule of principal payments for the Series 2007 Bonds then being converted in accordance with the above guidelines, Series 2007 Bonds maturing in three or more consecutive years bear interest at the same per annum interest rate, such Series 2007 Bonds shall no longer be deemed to mature serially but shall be deemed to mature on the March 1 of the last consecutive year that Series 2007 Bonds bearing such interest rate were to have matured serially and shall be subject to mandatory sinking fund redemption prior to maturity on March 1 in accordance with the principal payment schedule established therefor in accordance with the above guidelines.

If the designations referred to above cannot be made and the opinion of nationally recognized bond counsel described in the immediately succeeding paragraph has not otherwise been delivered to the Trustee and the Issuer by the University, then no conversion shall be effected.

The foregoing notwithstanding, another method of providing for payment of principal on the Series 2007 Bonds after the Fixed Rate Conversion Date may be established by the firm of bond underwriters or institutional investors underwriting or purchasing such Series 2007 Bonds if there is delivered to the Trustee and the Issuer by the University an opinion of nationally recognized bond counsel to the effect that utilization of such other method will not adversely

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affect the validity or enforceability in accordance with their terms of any Series 2007 Bonds or the exclusion from gross income on any Tax Exempt Bond for federal income tax purposes.

Project Fund

All proceeds from the sale of the Series 2007 Bonds will be deposited into the Project Fund and will be applied to the Project Costs, the refunding of the Refunded Bonds and paying Issuance Costs.

Bond Fund

The Indenture provides for the creation of a Bond Fund that is to be maintained by the Trustee. Deposits into the Bond Fund will consist of all Revenues, including the Loan Payments, and any other amounts which, under the terms of the Indenture, the Series 2007 Note, the Agreement or otherwise, are to be applied to the payment of Bond Service Charges or directed to be deposited in the Bond Fund. The Trustee shall deposit the payments to be made by the University to the Special Interest Account (see “Loan Agreement--Loan and Loan Payments”) to that Account. The Bond Fund (and accounts therein and the moneys and investments therein) shall be used solely and exclusively for the payment of the Bond Service Charges, provided, the Special Interest Account (pursuant to the requirements of the Loan Agreement for Series 2007 Bonds bearing interest at a Commercial Paper Rate or a Term Rate) shall be used solely and exclusively for the payment of interest on, or the interest portion of the Purchase Price of, Series 2007 Bonds with respect to which the deposits to the Special Interest Account were made.

Bond Purchase Fund

The Indenture creates with the Tender Agent a segregated trust fund to be designated the “Bond Purchase Fund”. The Bond Purchase Fund shall consist of the sub-accounts to be designated respectively the “Remarketing Account”, the “Liquidity Facility Purchase Account” and the “University Purchase Account”.

The Tender Agent shall deposit or cause to be deposited into the Remarketing Account, when and as received, all moneys delivered to the Tender Agent as and for the Purchase Price of remarketed Series 2007 Bonds by or on behalf of the Remarketing Agent. The Tender Agent shall disburse moneys from the Remarketing Account to pay the Purchase Price of Series 2007 Bonds properly tendered for purchase upon surrender of such Series 2007 Bonds (or to reimburse the Liquidity Provider or Liquidity Providers for amounts paid under the Liquidity Facility with respect to such Series 2007 Bonds).

The Trustee or Tender Agent, as the case may be, shall deposit or cause to be deposited into the appropriate sub-account of the Liquidity Facility Purchase Account, when and as received, all proceeds made available through the Liquidity Facility. The Tender Agent shall disburse moneys from the appropriate sub-account of the Liquidity Facility Purchase Account to pay the Purchase Price of the appropriate Series 2007 Bonds properly tendered for purchase upon surrender of such Series 2007 Bonds; provided that such proceeds shall not be applied to purchase Pledged Bonds or University Bonds.

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The Tender Agent shall deposit or cause to be deposited into the University Purchase Account, when and as received, all moneys delivered to the Tender Agent as and for the Purchase Price of Series 2007 Bonds by or for the account of the University. The Tender Agent shall disburse moneys from the University Purchase Account to pay the Purchase Price of Series 2007 Bonds properly tendered for purchase upon surrender of such Series 2007 Bonds; provided, that such proceeds shall not be applied to purchase University Bonds.

The funds held by the Tender Agent in the Bond Purchase Fund shall not be considered Revenues and shall not be subject to any lien of the Indenture. It shall be the duty of the Tender Agent to hold the moneys in the Bond Purchase Fund, without liability for interest thereon, for the benefit of the Holders of Series 2007 Bonds which have been properly tendered for purchase or deemed tendered on the Purchase Date, and if sufficient funds to pay the Purchase Price for such tendered Series 2007 Bonds shall be held by the Tender Agent in the Bond Purchase Fund for the benefit of the Holders thereof, each such Holder shall thereafter be restricted exclusively to the Bond Purchase Fund for any claim of whatever nature on such Holder’s part under the Indenture or on, or with respect to, such tendered Series 2007 Bond. Moneys in the Bond Purchase Fund which remain unclaimed two years after the applicable Purchase Date shall, at the written request of the University, and if the University is not, based upon a certification of the University set forth in such request, in default with respect to any covenant in the Agreement or the Series 2007 Bonds, be paid to the University, and the Holders of the Series 2007 Bonds for which the deposit was made shall thereafter be limited to a claim against the University.

Rebate Fund

The University has agreed to make such payments as are required of it to make rebate payments to the United States government of excess earnings on investments of the proceeds of the Series 2007 Bonds. All amounts credited to the Rebate Fund will be free and clear of any lien created by the Indenture.

Investment of Funds

Moneys in the Project Fund, the Bond Fund and the Rebate Fund shall be invested and reinvested by the Trustee in Eligible Investments, at the oral or written direction of the University; provided, funds held in the Special Interest Account of the Bond Fund shall be either not invested or invested in overnight obligations of the type described in clause (a) of the definition of “Government Obligations” set forth in this Appendix C under the caption “Definitions”. The Trustee may conclusively presume that any investment directed by an Authorized University Representative is an Eligible Investment. The Trustee shall not be liable for any losses pertaining to any investment executed at the direction of the Authorized University Representative pursuant to the Indenture.

Funds held in the Bond Purchase Fund for the benefit of Holders of untendered Series 2007 Bonds shall be held in trust and either not invested (if needed) or, excluding moneys received from any Liquidity Provider, invested in overnight direct obligations of the United

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States of America for the payment of which the full faith and credit of the United States of America is pledged.

An investment made from moneys credited to the Project Fund, Bond Fund or Rebate Fund or any account therein will constitute part of that respective Fund or account, and such Fund or account will be credited with all proceeds of sale and income from such investment.

Purchase of Tendered Series 2007 Bonds

The Remarketing Agent shall cause to be paid to the Tender Agent on the Purchase Date of tendered Series 2007 Bonds all amounts representing proceeds of the remarketing of such Series 2007 Bonds (the “Remarketing Proceeds”), in immediately available funds at or before 12:00 noon, New York City time. If the Remarketing Proceeds and available amounts in the Special Interest Account of the Bond Fund (pursuant to the requirements of the Loan Agreement for Bonds bearing interest at a Commercial Paper Rate or a Term Rate) will not be sufficient to pay the Purchase Price on the Purchase Date of Series 2007 Bonds supported by a Liquidity Facility (other than Pledged Bonds or University Bonds), the Tender Agent shall give notice to the appropriate Liquidity Provider (with a copy to the Trustee) by 12:30 p.m., New York City time, on the Purchase Date demanding payment under the Liquidity Facility in accordance with its terms, and the appropriate Liquidity Provider shall furnish immediately available funds by 2:30 p.m., New York City time on such Purchase Date, in an amount sufficient, together with the Remarketing Proceeds and amounts in the Special Interest Account of the Bond Fund (pursuant to the requirements of the Loan Agreement for Bonds bearing interest at a Commercial Paper Rate or a Term Rate) available for such purchase, to enable the Tender Agent to pay the Purchase Price of such Series 2007 Bonds to be purchased on such Purchase Date; provided, the Tender Agent shall not make any demand for payment under any Liquidity Facility with respect to University Bonds, Pledged Bonds, Series 2007 Bonds in a Term Rate Period that extends for more than twelve months, or Series 2007 Bonds bearing interest at a Fixed Rate. If the Remarketing Proceeds and available amounts in the Special Interest Account of the Bond Fund (pursuant to the requirements of the Loan Agreement for Bonds bearing interest at a Commercial Paper Rate or a Term Rate) will not be sufficient to pay the Purchase Price on the Purchase Date of Series 2007 Bonds not supported by a Liquidity Facility (other than Pledged Bonds or University Bonds), the Tender Agent shall give notice to the University by 12:30 p.m., New York City time, on the Purchase Date, to furnish immediately available funds to the Tender Agent by 2:30 p.m., New York City time, on such Purchase Date, in an amount sufficient, together with the Remarketing Proceeds and amounts in the Special Interest Account of the Bond Fund (pursuant to the requirements of the Loan Agreement for Bonds bearing interest at a Commercial Paper Rate or a Term Rate) available for such purchase, to enable the Tender Agent to pay the Purchase Price of such Series 2007 Bonds (other than Pledged Bonds or University Bonds) to be purchased on such Purchase Date. The University shall deliver, or cause to be delivered, such amounts by such time so that there will be delivered to the Tender Agent immediately available funds in an amount equal to any insufficiency in Remarketing Proceeds and available amounts in the Special Interest Account of the Bond Fund (pursuant to the requirements of the Loan Agreement for Bonds bearing interest at a Commercial Paper Rate or a Term Rate) with respect to the Purchase Price of such Series 2007 Bonds prior to 2:30 p.m., New York City time, on the Purchase Date.

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At or before 3:00 p.m., New York City time, on the Purchase Date for tendered Series 2007 Bonds and upon receipt by the Tender Agent of 100% of the aggregate Purchase Price of the tendered Series 2007 Bonds, the Tender Agent shall pay the Purchase Price of such Series 2007 Bonds to the Holders thereof. Such payments shall be made in immediately available funds. The Tender Agent shall apply in order (A) moneys paid to it by the Remarketing Agent as proceeds of the remarketing of such Series 2007 Bonds by the Remarketing Agent, (B) proceeds made available through the Liquidity Facility, and (C) other moneys made available by the University.

All Series 2007 Bonds to be purchased on any date shall be required to be delivered to the principal office of the Tender Agent or its designated agent in New York City at or before 3:00 p.m., New York City time, on the Purchase Date. If the Holder of any Series 2007 Bond (or portion thereof) in certificated form that is subject to optional or mandatory purchase pursuant to this Article fails to deliver such Series 2007 Bond to the Tender Agent for purchase on the Purchase Date, and if the Tender Agent is in receipt of the Purchase Price therefor, such Series 2007 Bond (or portion thereof) shall nevertheless be deemed purchased on the Purchase Date thereof and ownership of such Series 2007 Bond (or portion thereof) shall be transferred to the purchaser thereof. Any Holder who fails to deliver such Series 2007 Bond for purchase shall have no further rights thereunder except the right to receive the Purchase Price thereof upon presentation and surrender of said Series 2007 Bond to the Tender Agent. The Tender Agent shall, as to any tendered Series 2007 Bonds which have not been delivered to it (i) promptly notify the Remarketing Agent of such nondelivery, and (ii) place or cause to be placed a stop transfer against an appropriate amount of Series 2007 Bonds registered in the name of such Holder(s) on the bond registration books. Notwithstanding anything herein to the contrary, so long as the Series 2007 Bonds are held in a Book Entry System, Series 2007 Bonds will not be delivered as set forth above; rather, transfers of beneficial ownership of the Series 2007 Bonds to the person indicated above will be effected on the registration books of the Depository pursuant to its rules and procedures.

If the Tender Agent fails to receive 100% of the aggregate Purchase Price of the tendered Bonds at or before 3:00 p.m., New York City time, on the Purchase Date for tendered Bonds, the Tender Agent shall immediately give notice to the Trustee, the appropriate Liquidity Provider, the University and the Remarketing Agent that it has failed to receive 100% of the aggregate Purchase Price of the tendered Bonds. Thereafter, the Tender Agent shall: (A) provide each tendering Holder with notice that the Tender Agent has not been furnished with sufficient immediately available funds to purchase all of the Bonds or portions thereof for which notice of tender has been received or which are subject to mandatory tender, and therefor none of the tendered Bonds shall be purchased; (B) return the Purchase Price received from the purchasers of the tendered Bonds which were remarketed by the Remarketing Agent to the purchasers from whom such Purchase Price was received and/or to the other providers of such moneys including, without limitation, the appropriate Liquidity Provider; and (C) deliver any remaining funds held by the Tender Agent to purchase tendered Bonds to the Trustee, to be deposited in the Bond Fund.

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If any Series 2007 Bonds constitute Pledged Bonds or University Bonds due to a failure in remarketing such Series 2007 Bonds, the Remarketing Agent shall be entitled to determine a new Interest Rate with respect to such Series 2007 Bonds, as appropriate, effective on such date as the Remarketing Agent is able to remarket such Pledged Bonds or University Bonds in whole. Such new rate with respect to such Series 2007 Bonds shall be established by the Remarketing Agent in the manner described in the Indenture and summarized in the forepart of this Official Statement under the caption “The Series 2007 Bonds - Interest Rates and Rate Periods.”

Alternate Liquidity Facility

The University has the option from time to time to provide the Trustee with an Alternate Liquidity Facility, provided that the University delivers to the Issuer and the Trustee, not less than 45 days prior to the effective date of each such Alternate Liquidity Facility, (A) notice to the effect that such Alternate Liquidity Facility will be delivered, (B) the identity of the issuer of such Alternate Liquidity Facility, (C) a form thereof and (D) the date such Alternate Liquidity Facility will be delivered and be effective. Upon receipt of notice of the University’s intent to deliver an Alternate Liquidity Facility, the Trustee shall give prompt written notice to the Holders affected by such Alternate Liquidity Facility of such event. On or prior to the date on which the Trustee must give notice of mandatory tender for purchase on the Business Day preceding Termination of the Liquidity Facility, and prior to the effective date of any Alternate Liquidity Facility if no Liquidity Facility is in effect, the University shall deliver to the Trustee (A) an opinion of nationally recognized bond counsel stating that delivery of such Alternate Liquidity Facility to the Trustee is authorized under, and complies with the terms of, the Indenture, the Agreement and the Act and will not adversely affect the exclusion from gross income for purposes of federal income taxation of interest on the Series 2007 Bonds and (B) written evidence from each Rating Service to the effect that the Rating Service has reviewed the proposed Alternate Liquidity Facility and stating what rating the Series 2007 Bonds supported by the Liquidity Facility then in effect will bear after the effectiveness of the proposed Alternate Liquidity Facility and whether such rating constitutes a reduction or withdrawal of the then current rating on the Series 2007 Bonds. On or prior to the effective date of any Alternate Liquidity Facility to the Trustee, the University shall furnish to the Trustee an opinion of counsel to the issuer of such Alternate Liquidity Facility in form and substance reasonably acceptable to the Trustee to the effect that the Alternate Liquidity Facility is a valid and binding obligation of its Liquidity Provider enforceable in accordance with its terms.

If at any time there shall have been delivered to the Trustee an Alternate Liquidity Facility, together with the other documents and opinions described above, then the Trustee shall accept such Alternate Liquidity Facility and promptly give notice of termination of the previously held Liquidity Facility to the provider thereof, in accordance with the terms thereof. If at any time there shall cease to be any Outstanding Bonds to which a Liquidity Facility relates, or if a Liquidity Facility expires in accordance with its terms, the Trustee shall promptly give notice of termination of such Liquidity Facility to the provider thereof, in accordance with the terms thereof. The Trustee shall comply with the procedures set forth in a Liquidity Facility relating to the cancellation, expiration or termination thereof.

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Purchase of Bonds in Lieu of Redemption

When Bonds are called for redemption, the University may purchase some of or all of such Bonds, upon notice, and upon furnishing the Trustee with sufficient remarketing proceeds in sufficient time for the Trustee to make payment of the purchase price on behalf of the University on the redemption date. Any such purchase of Bonds by the University shall not be deemed to be a payment or redemption of such Bonds or any portion thereof and such purchase shall not operate to extinguish or discharge the indebtedness evidenced by such Bonds.

Events of Default

The Indenture provides that any of the following constitutes an “Event of Default” under the Indenture:

(a) Non-payment of any interest on any Series 2007 Bond when it becomes due and payable;

(b) Non-payment of the principal of or any premium on any Series 2007 Bond when such principal or premium becomes due and payable whether at stated maturity, by redemption, by acceleration or otherwise;

(c) Failure by the Issuer to observe or perform any other covenant, agreement or condition on its part to be observed or performed that is contained in the Indenture or in the Series 2007 Bonds, which failure has continued for a period of 60 days after notice, by registered or certified mail, to the Issuer and the University, specifying the failure and requiring the same to be remedied, which notice may be given by the Trustee in its discretion and must be given by the Trustee at the written request of the Holders of not less than 25% in aggregate principal amount of Series 2007 Bonds then outstanding;

(d) The occurrence and continuance of an event of default under the Loan Agreement (see “Loan Agreement--Events of Default”);

(e) Failure to pay amounts due to the Holder of any Series 2007 Bond who has delivered such Series 2007 Bond to the Tender Agent for purchase pursuant to the Indenture when such payment has become due and payable; or

(f) The occurrence under the Liquidity Facility of an event of default permitting such Liquidity Provider to immediately and automatically terminate its obligation under the Liquidity Facility to pay or provide funds to pay the purchase price of Bonds tendered or required to be tendered for purchase that are not remarketed or are remarketed but for which payment is not received.

Acceleration and Other Rights and Remedies

If an Event of Default under the Indenture occurs as described under paragraphs (a), (b), (e) or (f) above under the caption “Indenture - Events of Default”, or in subsection (b) of Section 7.1 of the Loan Agreement (summarized in this Appendix C under the caption “Loan Agreement

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- Events of Default”) which results in an Event of Default under paragraph (d) set forth above under the caption “Indenture - Events of Default,” the Trustee will declare the principal of all the Series 2007 Bonds then outstanding (if not then due and payable), together with interest accrued thereon, to be immediately due and payable. Upon the occurrence of an Event of Default described under paragraphs (c) or (d) (except as referred to in the preceding sentence) above under the caption “Indenture - Events of Default”, the Trustee may, and if requested to do so by the Holders of not less than 25% in aggregate principal amount of the Series 2007 Bonds then outstanding shall, declare the principal of all Series 2007 Bonds then outstanding (if not then due and payable), together with interest accrued thereon, to be due and payable immediately.

Pursuant to such declaration, interest on the Series 2007 Bonds, and to the extent permitted by law on overdue interest, will accrue to the date of payment.

The provisions of the preceding paragraph are subject, however, to the condition that if, any time after declaration of acceleration and prior to the entry of a judgment in a court for enforcement under the Indenture (after an opportunity for hearing by the Issuer and the University),

(a) all sums payable under the Indenture (except the principal of and interest on Series 2007 Bonds that have not reached their stated maturity dates, but which are due and payable solely by reason of that declaration of acceleration), plus interest to the extent permitted by law on any overdue installments of interest at the rate borne by the Series 2007 Bonds in respect of which the default occurred, have been duly paid or provision has been duly made therefor by deposit with the Trustee or any Paying Agents, and

(b) all existing Events of Default under the Indenture have been cured,

then, and in every case, the Trustee is required to waive the particular Event of Default and its consequences and will rescind and annul the declaration of acceleration.

In addition, upon the occurrence and continuance of an Event of Default under the Indenture and with or without an acceleration as described above, the Trustee may pursue any available remedy to enforce the payment of Bond Service Charges or the observance and performance of any other covenant, agreement or obligation under the Indenture, the Loan Agreement or the Series 2007 Note or any other instrument providing security, directly or indirectly, for the Series 2007 Bonds. If requested to do so by the Holders of at least 25% in aggregate principal amount of the Series 2007 Bonds outstanding and if indemnified as provided in the Indenture, the Trustee is required to exercise such of the rights and powers conferred upon it under the Indenture as the Trustee.

Right of Holders to Direct Proceedings

The Holders of a majority in aggregate principal amount of the Series 2007 Bonds then outstanding will have the right at any time to direct, by an instrument or document or instruments or documents in writing executed and delivered to the Trustee, the method and place of

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conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of the Indenture, or any other proceedings under the Indenture; provided that (i) any such direction is in accordance with the provisions of law and the Indenture, (ii) the Trustee may decline to follow any direction which in its judgment may be unduly prejudicial to the interests of the Holders not joining therein, (iii) the Trustee is indemnified as provided under the Indenture, and (iv) the Trustee may take any other action that it deems to be proper and that is not inconsistent with the direction.

Application of Moneys

After payment of any outstanding fees, costs, expenses, liabilities and advances paid, incurred or made by the Trustee in the collection of moneys pursuant to any right given or action taken under the Indenture, the Series 2007 Note or the Loan Agreement, all moneys received by the Trustee will be applied as follows:

(a) Unless the principal of all the Series 2007 Bonds has become, or has been declared to be, due and payable, all of those moneys will be deposited in the Bond Fund and will be applied:

FIRST: To the payment to the Holders entitled thereto of all installments of interest then due on the Series 2007 Bonds, in the order of the due dates of the installments of that interest (including interest due on Pledged Bonds in the amounts provided in the Liquidity Facility), beginning with the earliest due date and, if the amount available is not sufficient to pay in full any particular installment, then to the payment thereof ratably, according to the amounts due on that installment, to the Holders entitled thereto, without any discrimination or privilege, except as to any difference in the respective rates of interest specified in the Series 2007 Bonds; and

SECOND: To the payment to the Holders entitled thereto of the unpaid principal of any of the Series 2007 Bonds which have become due (other than Series 2007 Bonds previously called for redemption for the payment of which moneys are held pursuant to the provisions of the Indenture), whether at stated maturity or by redemption, in the order of their due dates, beginning with the earliest due date, and if the amount available is not sufficient to pay in full all Series 2007 Bonds due on any particular date, then to the payment thereof ratably, according to the amounts of principal due on that date, to the Holders entitled thereto, without any discrimination or privilege.

(b) If the principal of all of the Series 2007 Bonds has become due or has been declared to be due and payable pursuant to the Indenture, all of those moneys will be deposited into the Bond Fund and will be applied to the payment of the principal and interest then due and unpaid upon the Series 2007 Bonds (including interest due on Pledged Bonds in the amounts provided in the Liquidity Facility), without preference or priority of principal over interest, of interest over principal, of any installment of interest over any other installment of interest, or of any Series 2007 Bond or over any other Series 2007 Bond, ratably, according to the amounts due respectively for principal and

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interest, to the Holders entitled thereto, without any discrimination or privilege, except as to any difference in the respective rates of interest specified in the Series 2007 Bonds.

(c) If the principal of all of the Series 2007 Bonds has been declared to be due and payable pursuant to the Indenture and if that declaration thereafter has been rescinded and annulled, subject to the provisions of paragraph (b) above in the event that the principal of all of the Series 2007 Bonds becomes due and payable later, the moneys will be deposited in the Bond Fund and will be applied in accordance with the provisions of the Indenture.

Whenever moneys are to be applied as described above, those moneys will be applied at such times, and from time to time, as the Trustee determines, having due regard to the amount of moneys available for application and the likelihood of additional moneys becoming available for application in the future. Whenever the Trustee directs the application of those moneys, it is required to fix the date upon which the application is to be made. The Trustee will give notice of the deposit with it of any moneys and of the fixing of that date for the establishment of, and for giving notice with respect to, a Special Record Date for the payment of overdue interest on the Series 2007 Bonds. The Trustee is not required to make payment of principal of and any premium on a Series 2007 Bond to the Holder thereof, until the Series 2007 Bond is presented to the Trustee for appropriate endorsement or for cancellation if it is paid in full.

Rights and Remedies of Holders

The Holder of any Series 2007 Bond will not have the right to institute any suit, action or proceeding for the enforcement of the Indenture, for the execution of any trust under the Indenture or for the exercise of any other remedy under the Indenture, unless (i) an event of default under the Indenture occurs and is continuing, of which the Trustee has been notified or is deemed to have notice, (ii) the Holders of not less than 25% in aggregate principal amount of the Series 2007 Bonds then outstanding have made written request to the Trustee and have afforded the Trustee reasonable opportunity to proceed to exercise the remedies, rights and powers granted in the Indenture or to institute suit, action or proceeding in its own name and have offered to the Trustee indemnity as provided in the Indenture, and (iii) the Trustee fails or refuses to exercise its remedies, rights and powers granted under the Indenture or to institute such suit, action or proceeding in its own name.

Any such suit, action or proceeding instituted, had and maintained as described above must be for the benefit of the Holders of all the Series 2007 Bonds then outstanding.

Waivers of Events of Default

The Trustee may waive any event of default under the Indenture and its consequences and may rescind and annul any declaration of maturity of principal of the Series 2007 Bonds, and the Trustee must do so upon the written request of the Holders of (i) at least a majority in aggregate principal amount of all Series 2007 Bonds then outstanding in respect of which an event of default in the payment of Bond Service Charges exists or (ii) at least 25% in aggregate principal amount of all Series 2007 Bonds outstanding in the case of any other event of default.

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Notwithstanding the foregoing, the Trustee will not waive any Event of Default described in paragraphs (a), (b), (e) or (f) under “Events of Default” above or any such declaration in connection therewith rescinded unless payments of the amounts necessary for waiver of any acceleration of maturity described under “Acceleration and Other Rights and Remedies” above have been made or provision has been made therefor.

In the case of any waiver or rescission and annulment, or in case any suit, action or proceeding taken by the Trustee on account of any Event of Default under the Indenture has been discontinued, abandoned or determined adversely to it, the Issuer, the Trustee and the Holders will be restored to their former positions and rights under the Indenture.

Supplemental Indentures

The Issuer and the Trustee may enter into Supplemental Indentures, without the consent of or notice to any of the Holders of the Series 2007 Bonds, for any one or more of the following purposes:

(a) To cure any ambiguity, inconsistency or formal defect or omission in the Indenture;

(b) To grant to or confer upon the Trustee for the benefit of the Holders any additional rights, remedies, powers or Issuer that may lawfully be granted to or conferred upon the Holders or the Trustee;

(c) To assign additional revenues under the Indenture;

(d) To accept additional security and instruments and documents of further assurance with respect to the Project;

(e) To add to the covenants, agreements and obligations of the Issuer contained in the Indenture, other covenants, agreements and obligations to be observed for the protection of the Holders, or to surrender or limit any right, power or Issuer reserved to or conferred upon the Issuer in the Indenture;

(f) To evidence any succession to the Issuer and the assumption by its successor of the covenants, agreements and obligations of the Issuer contained in the Indenture, the Loan Agreement and the Series 2007 Bonds;

(g) To provide for the addition or substitution of an Alternate Liquidity Facility or the expiration or cancellation of any Liquidity Facility;

(h) To facilitate (i) the transfer of Series 2007 Bonds to a Depository or from one Depository to another, and the succession of depositories, or (ii) the withdrawal of Series 2007 Bonds issued to a Depository for use in a Book Entry System and the issuance of replacement Series 2007 Bonds in certificated, fully registered form to others than a Depository;

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(i) To permit the Trustee to comply with any obligations imposed upon it by law, including without limitation the Trust Indenture Act of 1939;

(j) To specify further the duties and responsibilities of, and to define further the relationship among, the Trustee, the Registrar and any Authenticating Agents or Paying Agents;

(k) To achieve compliance of the Indenture with any applicable federal securities or tax law;

(l) To make amendments to the provisions of the Indenture relating to arbitrage matters under Section 148 of the Code, if, in the opinion of nationally recognized bond counsel selected by the University and approved by the Trustee, those amendments would not cause the interest on any Tax Exempt Bonds to be included in gross income of the Holders for federal income tax purposes which amendments may, among other things, change the responsibility for making the relevant calculations;

(m) To evidence the appointment of a new Trustee, Remarketing Agent or Tender Agent, and in connection therewith to change any times of day specified in the Indenture by which any action must be taken;

(n) To make any amendments required to secure or maintain a rating on the Series 2007 Bonds from a Rating Service;

(o) To permit any other amendment which, in the judgment of the Trustee, is not to the prejudice of the Trustee or the Holders;

(p) To alter the manner in which the Remarketing Agent may, in the reasonable exercise of its judgment, act to increase the likelihood of achieving the lowest net interest cost during the term of the Series 2007 Bonds, but only if the University provides to the Trustee an opinion of nationally recognized bond counsel to the effect that the amendment will not adversely affect the exclusion from gross income on any Tax Exempt Bonds for federal income tax purposes;

(q) To alter, prior to the applicable Fixed Rate Conversion Date, the manner in which a schedule of principal payments and interest rates may be set pursuant to the Indenture, or the redemption provisions to be applicable to Series 2007 Bonds accruing interest at a Fixed Rate, but only if the University provides to the Trustee an opinion of nationally recognized bond counsel to the effect that the amendment will not adversely affect the exclusion from gross income on any Tax Exempt Bonds for federal income tax purposes;

(r) To provide for the addition of any interest rate mode, or to provide for the modification or deletion of any interest rate mode, as long as no Series 2007 Bonds will be operating in the interest rate mode when it is to be so modified or deleted, or to amend,

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modify or alter the interest rate setting provisions, tender provisions or conversion provisions for any then existing interest rate mode, as long as no Series 2007 Bonds will be operating in the interest rate mode when such provisions are to be so amended, modified or altered; provided that, in each case, there is delivered to the Trustee an opinion of nationally recognized bond counsel stating that any such addition, deletion, amendment, modification or alteration will not adversely affect any exclusion from gross income on any Tax-Exempt Bonds for federal income tax purposes; and

(s) To elaborate on any provisions necessary to exercise any conversion options provided in this Indenture, including without limitation better enabling different Series 2007 Bonds to be in different interest rate modes.

Exclusive of Supplemental Indentures for the purposes above summarized, the consent of the Holders of not less than a majority in aggregate principal amount of the Series 2007 Bonds then outstanding will be required to approve any indenture supplementing the Indenture; provided, that no Supplemental Indenture may permit (i) without the consent of the Holder of each Series 2007 Bond so affected, an extension of the maturity of the principal of or the interest on any Series 2007 Bond, or a reduction in the principal amount of any Series 2007 Bond or the rate of interest or premium on any Series 2007 Bond or (ii) without the consent of the Holders of all Series 2007 Bonds then outstanding, the creation of a privilege or priority of any Series 2007 Bond over any other Series 2007 Bond, or a reduction in the aggregate principal amount of the Series 2007 Bonds required for consent to such Supplemental Indenture, or (iii) without the consent of each Liquidity Provider so effected, any modification to any right, duty or obligation of said Liquidity Provider under the Indenture or the Loan Agreement, the Series 2007 Bonds or the related Liquidity Facility, except as otherwise provided in paragraph (g) under “Supplemental Indentures” above.

Notwithstanding the foregoing, no Supplemental Indenture will become effective unless and until the University consents in writing to the execution and delivery of such Supplemental Indenture. The Trustee shall inform the Tender Agent, the Remarketing Agent, each Liquidity Provider, the Registrar and any Paying Agent and Authenticating Agent of any amendment or supplement to the Indenture affecting the respective rights and obligations of such Person, and such amendment or supplement shall not become effective unless and until such Person shall have consented in writing to the provisions thereof which affect its rights and obligations.

Amendments to the Liquidity Facility

The Indenture provides that no Liquidity Facility may be modified other than to (a) correct any formal defects in such Liquidity Facility, (b) effect transfers thereof, (c) effect extensions thereof, (d) effect an increase in the stated amount of such Liquidity Facility, (e) effect reductions and reinstatements thereof, all in accordance with the terms of such Liquidity Facility as then in effect, (f) change the representations and warranties made therein by the University, (g) change the rate of interest payable by the University on Pledged Bonds or otherwise thereunder and any other compensation payable thereunder to other terms, (h) make any other change thereto that, in the judgment of the University, does not adversely affect the interests of the Holders, or (i) make any other change consistent with effecting the provisions of

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clauses (a) through (h) of this sentence, unless there is delivered to the Issuer and the Trustee an opinion of nationally recognized bond counsel to the effect that such modification will not adversely affect the exclusion from gross income for purposes of federal income taxation of interest on the Series 2007 Bonds. In addition, if any Series 2007 Bonds are then rated by a Rating Service, no modification of any Liquidity Facility shall be effected unless such Rating Service shall have confirmed in writing that such rating will not be reduced or withdrawn if such modification is effected.

Defeasance

When all Bond Service Charges on the Series 2007 Bonds that are due, or to become due, have been paid, or provision has been made for such payment, and provision has been made for payment of all sums due under the Indenture, the Loan Agreement, the Series 2007 Bonds, each Liquidity Facility and the Series 2007 Note, then the Indenture (except for certain provisions thereof which need to remain operative, such as those relating to the holding of funds for the benefit of particular Holders or for the University) will cease, determine and become null and void, and the covenants, agreements and other obligations of the Issuer thereunder will be released, discharged and satisfied. Thereupon, the Trustee will release the Indenture and the Series 2007 Note and execute and deliver to the Issuer such instruments or documents in writing as are required to evidence that release and discharge, or as may be reasonably requested by the Issuer.

All or any Series 2007 Bonds will be deemed paid and discharged under the Indenture if:

(a) the Trustee as paying agent and any Paying Agents shall have received, in trust for and irrevocably committed thereto, sufficient moneys, or

(b) the Trustee shall have received, in trust for and irrevocably committed thereto, (i) noncallable Government Obligations which are permitted as defeasance obligations under the laws of the State and which are certified by an independent public accounting firm to be of such maturities or redemption dates and interest payment dates, and to bear such interest, as will be sufficient together with any moneys to which reference is made in subparagraph (a) above, without further investment or reinvestment of either the principal amount thereof or the interest earnings therefrom (which earnings are to be held likewise in trust and so committed, except as provided in the Indenture), for the payment of all Bond Service Charges on those Series 2007 Bonds, at their maturity or redemption dates, as the case may be, or if a default in payment shall have occurred on any maturity or redemption date, then for the payment of all Bond Service Charges thereon to the date of the tender of payment; provided, that if any of those Series 2007 Bonds are to be redeemed prior to the maturity thereof, notice of that redemption shall have been duly given or irrevocable provision satisfactory to the Trustee shall have been duly made for the giving of that notice; and further provided that no Series 2007 Bonds, or any part thereof, shall be deemed to have been so paid and discharged if the Bonds bear interest at other than the Fixed Interest Rate, unless such Bonds are to be redeemed on or prior to the next date, if any, on which the interest rate payable on such Bonds may change to a different rate.

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Nothing above will limit or diminish the rights of the Holders of any Series 2007 Bonds to tender for purchase their Series 2007 Bonds in accordance with the terms of the Indenture.

Trustee

The Trustee, prior to the occurrence of an Event of Default under the Indenture of which it has been notified or is deemed to have notice, and after the cure or waiver of any event that, with the passage of time or giving of notice, or both, will become an Event of Default under the Indenture (a “default”), or any Event of Default under the Indenture that may have occurred, undertakes to perform only such duties and obligations that are specifically set forth in the Indenture. In case a default or an Event of Default under the Indenture has occurred and is continuing, the Trustee will exercise the rights and powers vested in it by the Indenture as a prudent man would exercise them in the conduct of his own affairs. The Indenture provides that the Trustee, in the absence of bad faith on its part, will be entitled to rely conclusively upon the truth of statements and the correctness of opinions expressed in certificates and opinions furnished to the Trustee that conform with the requirements of the Indenture; but in the case of any such certificates or opinions that are specifically required by the Indenture, the Trustee will be under a duty to examine the same to determine whether they conform to the requirements of the Indenture. In addition, the Indenture provides that the Trustee will be liable its own negligence or willful misconduct.

References to Liquidity Facility and Liquidity Provider Ineffective During Certain Periods

At any time when there is no Liquidity Facility in effect and there are no amounts due to a Liquidity Provider under a Liquidity Facility, or, any Liquidity Provider is in default under its Liquidity Facility, references to such Liquidity Provider and such Liquidity Facility shall be ineffective unless the context indicates otherwise.

APPENDIX D

THE INITIAL LIQUIDITY PROVIDER

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BANCO BILBAO VIZCAYA ARGENTARIA, S.A.

The information included herein relating to BBVA (as defined below) has been obtained from BBVA and is not guaranteed as to accuracy or completeness by the Issuer, the University, or the Underwriter, and is not to be construed as a representation by the Issuer, the University or the Underwriter. This information has not been independently verified by the Issuer, the University or the Underwriter. Neither the Issuer, the University nor the Underwriter make any representations as to the absence of material adverse changes subsequent to the dates covered by the financial information referenced above, or as to the ability of BBVA to fulfill its obligations pursuant to the Initial Liquidity Facility.

Banco Bilbao Vizcaya Argentaria, S.A. (“BBVA”) is a multinational financial services group. Its 7,971 branches and 111,409 employees provide banking and financial services solutions to a global customer base of 35 million customers in 32 countries. The financial services include corporate and consumer lending, credit card services, ATMs, telephone and Internet banking. Internationally, BBVA provides investment banking and brokerage services, venture capital, private banking and investment management.

As of the third quarter ended September 30, 2007, BBVA’s total assets were 492,674 million Euros and net attributed profit was 3,962 million Euros (excluding non-recurrent items).

The BBVA and its subsidiaries four business areas are:

Spain and Portugal: this includes Corporate Banking and Financial Services for individual customers, small companies and businesses in the domestic market, plus consumer finance provided by Finanzia and Uno-e, mutual and pension fund managers, the insurance business and BBVA Portugal.

Global Businesses: this area consists of SMEs, large companies and global institutions. Global Businesses covers the global customer unit, investment banking, treasury management, private banking and distribution. The area also services business and real estate projects.

Mexico and the United States: this area includes the banking, insurance and pension businesses in Mexico and the United States (including Puerto Rico).

South America: this consists of banking, insurance and pension businesses in Argentina, Chile, Colombia, Panama, Paraguay, Peru, Uruguay and Venezuela.

For further information log on to www.bbva.com

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APPENDIX E

PROPOSED FORM OF BOND COUNSEL OPINION

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APPENDIX E

PROPOSED FORM OF BOND COUNSEL OPINION

[To Be Dated Date of Closing]

St. Joseph County, Indiana South Bend, Indiana

Goldman, Sachs & Co. New York, New York

University of Notre Dame du Lac Notre Dame, Indiana

Banco Bilbao Vizcaya Argentaria, S.A., acting through its New York Branch New York, New York

Wells Fargo Bank, N.A., as Trustee Indianapolis, Indiana

Re: $75,000,000 St. Joseph County, Indiana Variable Rate Educational Facilities Revenue Bonds, Series 2007

(University of Notre Dame du Lac Project)

Ladies and Gentlemen:

We have acted as bond counsel in connection with the issuance by St. Joseph County, Indiana (the “Issuer”) of $75,000,000 aggregate principal amount of the above-referenced bonds (the “Bonds”), dated December __, 2007, pursuant to Indiana Code 36-7-12, and an ordinance adopted by the Issuer on November 13, 2007 (the “Ordinance”) and a Trust Indenture between the Issuer and Wells Fargo Bank, N.A., Indianapolis, Indiana, as trustee, dated as of December 1, 2007 (the “Indenture”), to fund a loan to University of Notre Dame du Lac (the “University”) pursuant to a Loan Agreement between the Issuer and the University, dated as of December 1, 2007. In such capacity, we have examined such law and such certified proceedings, certifications and other documents as we have deemed necessary to render this opinion.

Regarding questions of fact material to our opinion, we have relied on representations of the Issuer and the University contained in the Ordinance, Indenture and Loan Agreement, the certified proceedings and other certifications of public officials furnished to us, and certifications, representations and other information furnished to us by or on behalf of the Issuer, the University and others, including, without limitation, certifications contained in the tax and arbitrage certificate of the Issuer and the University dated the date hereof, without undertaking to verify the same by independent investigation. We have relied upon the legal opinion of Carol C. Kaesebier, Vice President and General Counsel of the University, dated the date hereof, and the legal opinion of Zappia Zappia & Stipp, counsel to the Issuer, dated the date hereof, as to the matters set forth therein.

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Based upon the foregoing, we are of the opinion that, under existing law:

1. The Issuer is a political subdivision, validly existing under the laws of the State of Indiana (the “State”), with the corporate power to adopt the Ordinance and enter into the Indenture and perform its obligations thereunder and to issue the Bonds.

2. The Bonds have been duly authorized, executed and delivered by the Issuer, and are valid and binding limited, special obligations of the Issuer, payable solely from the sources provided therefor in the Ordinance and Indenture and enforceable against the Issuer in accordance with their terms.

3. The Ordinance has been duly adopted, and the Indenture and Loan Agreement have been duly authorized, executed and delivered by the Issuer and are valid and binding obligations of the Issuer, enforceable against the Issuer in accordance with their terms.

4. Under Section 103 of the Internal Revenue Code of 1986, as amended and in effect on this date (the “Code”), the interest on the Bonds is excludable from gross income for federal income tax purposes. The opinion set forth in this paragraph is subject to the condition that the Issuer and the University comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes, including without limitation the $150,000,000 limitation set forth in Section 145(b) of the Code. The Issuer and the University have covenanted or represented that they will comply with such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. By the terms of the Indenture, the Loan Agreement and other relevant documents, the Interest Rate (as defined in the Indenture) for the Bonds may be changed and certain actions may be taken under the circumstances and subject to the terms and conditions set forth in such documents upon the advice or with an approving opinion of nationally recognized bond counsel. No opinion is expressed herein as to the effect upon any Bond or the interest thereon resulting from any such change or action. Except for the opinions expressed in paragraph 5 hereof, we express no opinion regarding any other federal tax consequences arising with respect to the Bonds.

5. Interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, such interest is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes).

6. Interest on the Bonds is exempt from income taxation in the State for all purposes except the State financial institutions tax.

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We express no opinion herein as to the accuracy, adequacy or completeness of any statements contained in the Official Statement dated December 7, 2007, relating to the Bonds.

We express no opinion regarding any tax consequences arising with respect to the Bonds, other than as expressly set forth herein.

With respect to the enforceability of any document or instrument, this opinion is subject to the qualifications that: (i) enforceability of such document or instrument may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent conveyance and similar laws relating to or affecting the enforcement of creditors’ rights; (ii) the enforceability of equitable rights and remedies provided for in such document or instrument is subject to judicial discretion, and the enforceability of such document or instrument may be limited by general principles of equity; (iii) the enforceability of such document or instrument may be limited by public policy; and (iv) the enforceability of such document or instrument may be limited by applicable laws which may render certain of the remedies or waivers of such document or instrument unenforceable, provided, however, that in our opinion, the unenforceability of those provisions would not, subject to the other qualifications set forth herein, affect the validity of such document or instrument or prevent the practical realization of the benefits thereof.

We express no opinion with respect to the validity, creditworthiness or enforceability of the Standby Bond Purchase Agreement dated as of December 1, 2007 among the University, Wells Fargo Bank, N.A., as tender agent, and Banco Bilbao Vizcaya Argentaria, S.A., acting through its New York Branch.

This opinion is given only as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur.

Very truly yours,

BARNES & THORNBURG LLP

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