There are many financial transactions exchanged between the member organizations of the National Academies. The NRC serves as the clearinghouse for these transactions. However, it is important to note that only the financial activity and results of the NAS, NAE, IOM, and NRC are included in these financial statements. The financial activity and results of the National Academy of Engineering Fund (NAEF) and The National Academies’ Corporation (TNAC) are audited and reported separately. Financial information for the NAEF is available on request from the NAE Finance Office; information for TNAC is available from the NAS Controller’s Office.

The results of operations, per the NAS Statements of Activities, are summarized as follows:

Each year, the overall financial condition of the NAS can be reviewed by taking into account the increase or decrease in the net assets of the organization. During calendar year 2008, the NAS suffered a decrease in its net assets resulting primarily from significant investment losses recorded in the endowment, trust, and other long-term investments pool.

The NRC continued to demonstrate financial strength and stability during 2008, with revenues projected to increase during 2009. The indirect expenses have been well-managed during the year. As is the case for all endowments, the stock market’s immense sell-off has had a serious impact on the value of the NAS endowment, trust, and other long-term investments pool. We are weathering this storm with careful spending decisions now and planned for the future. The Finance Committee has made some changes to the Endowment investments and will continue to work to strengthen the portfolio.

I would like to thank the Council, the Committee on Budget and Internal Affairs, the Finance Committee, and NRC management for their continued input and support. Also, thanks to the Controller’s Office for preparation of the financial statements and to all of the finance staff for maintaining strong financial controls and reporting.

Jeremiah P.Ostriker

Treasurer