THE DEPOSITORY TRUST COMPANY 1991 ANNUAL REPORT • THE DEPOSITORY TRUST COMPANY 1991 ANNUAL REPORT

2

HIGHUGHTS 3 A MESSAGE FROM MANAGEMENT 4 MISSION AND EVOLUTION 6 DTC SERVICE GROWTH 7 OWNERSHIP AND POUCIES 9 SERVICES 18

EUGIBLE ISSUES 20

MUNICIPAL SECURITIES PROGRAM 22

SAME-DAY FUNDS SETILEMENT SYSTEM 24 COMMERCIAL PAPER PROGRAM 26 SECURITIES IN BoOK-ENTRY-ONLY FORM 28 RECENT DTC GROWTH BY SECTOR IN SELECTED SERVICES 29 INSTITUTIONAL USE OF DTC 31 AUTOMATION OF DEPOSITORY SERVICES 33 THE NATIONAL CLEARANCE AND SETILEMENT

SYSTEM AND INTERNATIONAL LINKS 36 PROTECTION FOR PARTICIPANTS' SECURITIES 40 OFFICERS OF THE DEPOSITORY TRUST COMPANY 41 THE BOARD OF DIRECTORS 42 REpORT OF INDEPENDENT ACCOUNTANTS 50 PARTICIPANTS 56 DTC STOCKHOLDERS THE DEPOSITORY TRUST CoMPANY ••••••••••••••

Dhe Depository Trust Company, a service company owned by members of the financial industry, is a national clearinghouse for the settlement of trades in corporate and municipal securities. DTC also performs securities custody services for its participating banks and broker­ dealers. In 1991, those Participants delivered $13.9 trillion of securities through the depository's book-entry system, and securities in its custody reached $5.5 trillion at yearend.• DTC's primary mission is to reduce the cost of securities services offered to the public by its Participants. It does so through its automated systemS, its telecommunications links with about 550 Participants and others, and its relationships with the hundreds of firms that serve as transfer agents, paying agents, exchange agents, and redemption agents for securities issuers.

HIGHLIGHTS

Total for the Year 1991 1990

Book-entry deliveries Market value (In trillions) $13.9 $ 8.8 Number (In millions) 73.2 67.9 Cash dividend and interest payments (In billions) $267.4 $238.2 Reorganization, redemption, and maturity payments (In billions) $234.9 $196.7

At Yearend

Eligible securities issues 929,166 827,910 Value of securities on deposit (In trillions) $5.46 $4.10 Number of shares on deposit (In billions) 129.5 117.9 Principal amount of corporate debt on deposit (In trillions) $1.5 $1.2 Principal amount of municipal debt on deposit (In trillions) $1.01 $.86 Participants 548 568 Broker-dealers 360 379 Banks 180 181 Clearing agencies 8 8

• TWO THE DEPOSITORY TRUST COMPANY OO[!]OO[!]OOI!lOOI!lClO

A MESSAGE FROM MANAGEMENT

IaIreater equity trading and underwriting volumes transaction volumes, and provide other information in 1991, higher securities values, and the deposito­ of interest to those with securities in our custody. ry's growing commercial paper program combined We view this report as a document of record, for to make year-on-year gains even larger than usual. better or worse, which accounts for its ample supply Results in two key services are noteworthy: Book­ of numbers. entry deliveries reached almost $14 trillion and Let it be recorded also that 1991 was the year in securities in custody nearly $5.5 trillion at yearend. which Conrad E Ahrens retired at yearend upon Foreseeable increases in custody-related services reaching the mandatory retirement age of 65. Mr. and continuing expense control efforts allowed the Ahrens came to DTC in 1979 as President and depository once more to reduce its schedule of Chief Operating Officer, after more than 20 years service fees to users. Moreover, with trading-related in securities operations and administration at transactions higher than forecast, DTC was able to Citibank. From his Citibank post during the early make general refunds to users of almost $21 million 1970s, he played a key role in the Banking and in excess revenues. Securities Industry Committee effort to create In most respects during 1991, it was business as DTC and persuade banks to convert to its use. usual for the depository - delivering its menu of What he contributed to the depository then and services to Participants, introducing a host of service thereafter will not soon be forgotten. What his improvements, and determining user priorities for successor as President and Chief Operating Officer, service development over the long term. The latter William E Jaenike, will contribute is readily effort was aided by the issuance of one ofDTC's apparent to all who have known him during his periodic Program Agenda Proposals, a tool by which 18 years at DTC. management and the Board of Directors establish I know that Mr. Ahrens would wish to join me Participants' preferences for future services. in concluding with a sincere vote of thanks to the In the category of business not quite as usual, the many individuals and industry committees that depository's book-entry-only commercial paper advise DTC on service development, and to all program - with no certificates available to depository employees who make possible the high investors - completed its first full calendar year of level of service to users to which DTC aspires. operation. After processing $1.8 trillion in issuances during the year, DTC held commercial paper amounting to $177 billion at yearend. This was yp7~;fZ William T. Dentzer, Jr. 33% of total estimated commercial paper out­ Chairman and Chiif Executive Officer standings, despite restraints during the expansion on the number of eligible issuer programs. The pages that follow describe the range of DTC services, relate annual service activity and

o THREE THE DEPOSITORY TRUST CoMPANY ••••••••••••••

MISSION AND EVOLUTION mepository Trust's mission is to reduce the cost of physical exchange of certificates. At that time, securities processing by financial intermediaries DTC's intermediary role with issuers' agents was serving the public, while increasing accuracy, as a kind of central post office through which users security, and speed. To do this, DTC continually could route paper instructions, seeking newly makes more issues eligible for depository services­ registered certificates for customers, and receive to reduce the number of certificates the financial payments due. community handles-automates and standardizes the As the depository expanded, it sought ways to flow of information, achieves economies of scale, make it unnecessary for Participants to withdraw and acts as a central "switch" for the flow of data, certificates in order to present them for tender offers securities, and funds between its Participants and and other reorganization activity. This meant issuers' agents. establishing means for users to reach agents through DTC's services begin when participating banks DTC under procedures that, given the large sums and broker-dealers deposit securities with it, or involved, protected all concerned. when an underwriting is distributed through the In more recent years, after DTC took on more depository. Participants can then affect the resulting custody-related processing tasks for Participants, it securities positions through instructions to the added to user efficiencies by giving them on-line depository to perform various functions, such as access to DTC's data base, providing quick answers deliver securities to another party by book-entry on to their account activity queries.

DTC's records and collect payment for that delivery. In order to maximize its usefulness to The depository can best be understood as an Participants, DTC has continually sought to make agency with three functions: more securities issues, and more types of securities, • A custodian for the securities of its Participants- eligible for its services. Having begun with New $5.5 trillion at yearend 1991. York Stock Exchange-listed stocks, the depository .An accounting system whose books record all added stocks listed on the American Stock activity affecting the securities in its custody, such as Exchange, then over-the-counter and other equity deliveries between its users-$13. 9 trillion last year. issues, and then listed and unlisted corporate debt . • A group of communications systems for post­ In 1981, the depository began to make bearer trade processing used by its Participants to connect municipal bonds eligible for its services, followed by with DTC and through it to other depository registered municipal bonds. A number of types of users, transfer agents, and other agents acting for securities that settle only in same-day funds were securities issuers. added, beginning in 1987. That process is In the early 1970s, DTC's emphasis was on continuing, with commercial paper becoming adding banks to its original broker-dealer user base eligible in October 1990. With the addition of more in order to immobilize stock certificates held by than 100,000 municipal bond and other issues each banks and substitute book-entry deliveries for the year for the last seven years, more than 929,000

• FOUR ThE DEPOSITORY TRUST CoMPANY 00000000000000

security issues are now eligible for book-entry and instructions, comprising about 66% of its transfer other DTC services. volume, and helped make 39% of newly registered Another continuing DTC effort has been to certificates from agents available to users' clients by reduce paper instructions and reports to and from direct mail. Participants and to replace them with electronic At yearend 1991, the market value ofDTC communications. Beginning with the exchange of Participant bank and broker assets held at DTC, and magnetic tapes, migrating to dedicated and dial-in held for DTC's account by its depository counter­ telecommunications networks, and then to parts in Chicago and Philadelphia, amounted to ex<;hanging data computer-to-computer, each step $5.43 trillion, 98.6% of the total market value of was designed to help users reduce costs and errors securities held by all three depositories. wherever possible. The great bulk of depository More important, the depository's 548 services are now accessed and delivered through Participants, acting for themselves and almost DTC's Participant Terminal System of almost 1,400 4,700 bank and broker-dealer correspondents and terminals and printers across the country, as well as their customers, had immobilized virtually all computer-to-computer interfaces with more than institutionally owned eligible securities and a rising 350 Particil:'ants. percentage of retail investor-owned securities in a Since Participants' customers want several million system that could safely accommodate peak levels of newly registered certificates each year, DTC has trading volume.

continually sought to make the transfer process more While data for some types of securities are not efficient. DTC's role in this process was first spelled available, the depository now has in custody for its out to the industry in 1974: Where possible, DTC Participants approximately: would place securities held in its custody • 74% of the shares of companies represented in the with transfer agents under its Fast Automated Dow Jones Industrial Average, Securities Transfer (FAST) program; collect and • 67% of the shares of all NYSE-listed U.S. distribute transfer data in automated form, standard­ compames, izing them to meet agent requirements; and • 46% of the shares of NASDAQ- and 42% of encourage agents to mail new certificates to users' American Stock Exchange-listed U.S. companies, clients directly, with safeguards and necessary • 77% of the corporate debt listed on the NYSE, reporting to Participants. and Progress along those lines is continuing. As • 89% of the principal amount of outstanding 1991 closed, DTC had almost $2.4 trillion of municipal bonds.

securities with FAST agents, received over 99% of The nature ofDTC's growth can be seen in the

Participant transfer instructions in automated form, table on the following page, which shows activity in had 51 transfer agents accepting automated selected services at five-year intervals.

o F I V E THE DEPOSITORY TRUST CoMPANY ••••••••••••••

DYC SERVICE GROWTH*

Average Daily 1976 1981 1986 1991 NYSE shares traded (In millions) 21.2 46.9 141.0 178.9 NASDAQ shares traded (In millions) 6.7 30.9 113.6 163.3 AMEX shares traded (In millions) 2.6 5.3 11.8 13.3 ...... At Yearend Participants 258 374 533 548 Eligible issues 9,870 20,459 371,921 929,166 Market value on deposit (In billions) $111 $560 $2,547 $5,458 ...... Total for the Year Book-entry deliveries Value (In billions) $309 $1,650 $8,080 $13,853 Number (In millions) 16 34.2 63.8 73.2

Cash dividend & all interest payments Value (In billions) $3.5 $27.9 $120.7 $267.4 Payments to DTC (In thousands) NA 35 570 1,714 ...... Reorganization, redemption, & maturity payment value (In billions) NA NA NA $235 ...... Underwritings Value (In billions) NA $84 $382 $560 Number NA 1,099 15,745 17,709

Underwritings of book-entry-only issues Value (In billions) 0 0 $7+ $313 Number 0 0 131+ 10,915 ...... Institutional Delivery system Users (At yearend) 158 669 6,491 8,171 Total confinnations (In millions) .3 3.3 17.1 24.3 Total aflinnations (In millions) .1 1.0 10.0 14.8 Deliveries (In millions) • .04 .8 7.7 10.5

* Some figures rounded :j: Reflects only munidpal securities • Scheduled automatic deliveries only

DURING 1991, MERRILL LYNCH,

PIERCE, FENNER & SMITH USED PTS AND CCF TO SUBSTI­ TUTE AUTOMATED INQUIRIES FOR WRITTEN INQUIRIES TO DTC FOR ACCOUNT DATA, AND THUS REDUCE COSTS. FROM LEFT ARE ANTHONY MURATORE AND AI. HOWELL, BOTH OF MERRILL LYNCH,

AND RAYMOND BUDD OF DTC's RECONCILIATION DEPARTMENT.

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OWNERSHIP AND POLICIES

IJTC's governance is carefully framed to reflect the substantial portion ofDTC stock available to broker­ need for objectivity in serving diverse users in the dealer Participants therefore remains with the New financial community. The right to purchase DTC York Stock Exchange, the original owner of the capital stock is based on a formula that considers depository's stock, and other self-regulatory each Participant's use of the depository during the organizations that became owners in 1975. preceding calendar year: 80% on fees paid to DTC At yearend 1991, after retirement or merger of and 20% on the market value oflong securities various stockholders subsequent to the completion positions in DTC at the end of each month. of the 1991 stock reallocation, there were 142 DTC The amount of stock each Participant may stockholders: 50 broker-dealers, 86 banks, and six purchase is recalculated each year to reflect variations self-regulatory organizations and clearing agencies. in depository use. Participants may purchase some, Broker-dealer Participants owned 13.8% ofDTC all, or none of the stock to which they are entitled, stock, while bank Participants owned 42.3%. at a price based on the stock's yearend book value. Ownership interests of the self-regulatory Stock is reallocated before the annual organizations on behalf of broker-dealer Participants stockholders meeting in late March, so that were 34.7% for the New York Stock Exchange, stockholders may vote newly acquired shares toward 4.6% for the American Stock Exchange, and electing the Board of Directors at the meeting. 4.6% for the National Association of Securities Elections are conducted by cumulative voting so no Dealers. All current stockholders are listed on the combination of stockholders controlling a simple final page of this report. majority of stock can elect all Directors. Another basic policy ofDTC limits its annual DTC policy prohibits dividend payments to profit, so the depository returns to Participants stockholders, since DTC believes that ownership of revenues that the Board determines exceed the funds the depository's stock is not an investment vehicle, required for the depository's operation.

but a means for diverse users to encourage its As a registered clearing agency, DTC is responsiveness to their needs through exercise of regulated by the Securities and Exchange their cumulative voting rights to elect Directors. Commission under the Securities Exchange Act of Since DTC stock ownership offers no financial 1934, as amended. As a member of the Federal incentive and DTC's operation does not distinguish Reserve System and a New York State limited­ between stockholder and nonstockholder purpose trust company, DTC is also regulated by the Participants, many Participants have not exercised Board of Governors of the Federal Reserve System their annual entitlements to purchase DTC stock. A and the New York State Banking Department.

o SEVEN

THE DEPOSITORY TRUST CoMPANY OOIllOOI!lOOElCJOOClO

DTC's services are briefly described below, fol­ 87. The Federal Reserve Banks of Birmingham, lowed by selected 1991 depository service volumes. Boston, Kansas City, New York, Philadelphia, Richmond, and St. Louis accept pledges to their Deposits DTC accounts from member banks. These pledges Certificate deposits in eligible issues can be made at are to secure Treasury Tax and Loan accounts and DTC or at certain banks and clearing corporation deposits of public money, as well as advances at the offices elsewhere acting as DTC Depository discount window and intraday overdrafts. The Facilities. In 1991, 18.3 million certificates were Options Clearing Corporation (OCC) also accepts deposited with DTC. pledges to its DTC account. Total pledges outstand­ ing at yearend were $29.4 billion. Deliveries

Changes of securities ownership are made by book­ Underwriting Distributions entry delivery on DTC's accounting records. They Underwriters of new and secondary issues distribute may be made with or without an accompanying them by book-entry against payment, whether or money payment and are reported to Participants not certificates are available to investors. In 1991, daily. Deliveries against payment in 1991 were lead managers used DTC to distribute 17,709 new valued at $13.9 trillion. corporate and municipal underwritings valued at $560 billion. Pledges

Securities can be pledged by book-entry on DTC's Custody records to banks and other entities that agree to This service enables Participants to reduce their costs accept them as collateral. Banks participating in the of handling and safeguarding securities by leaving depository's pledge program at yearend numbered them with DTC, and to further reduce costs by

o N I N E THE DEPOSITORY TRUST CoMPANY ••••••••••••••

using other DTC custody-related services. interested customers without withdrawing them Participant securities valued at $5.5 trillion were held from DTC. In 1991, DRS included 368 plans by DTC at yearend. and facilitated reinvestment of$1.2 billion in dividend distributions. Dividends and Interest

DTC collects directly from many sources dividend Change Mode of Payment Service (CMOP) and interest payments for securities in its custody. In CMOP allows Participants to change by book­ 1991, DTC received 1. 7 million payments for entry the frequency (mode) of dividend payments Participants-nearly 128,000 on peak days-with on securities that permit such changes: unit corporate cash dividends and interest rising to investment trust (UIT) issues and variable mode $205.4 billion and municipal bond interest reaching preferred stock issues. $62 billion. At yearend, 8,637 UIT issues were eligible

Timeliness of corporate cash dividends and (nearly 24,000 CUSIPs) for CMOp, as well as 240 interest payments is high, with 99.5% of funds variable mode preferred stock issues (roughly 480 received on payable date, and 99.8% of their value in CUSIPs). DTC processed 10,821 instructions in same-day funds. DTC receives virtually all municipal UIT securities and 616 in variable mode preferred bond payments on payable date. stock issues during the year.

Dividend Reinvestment Voluntary Offerings

When permitted by an issuer's reinvestment plan, the Tender and Exchange Offirs: Participants may accept Dividend Reinvestment Service (DRS) allows tender and exchange offers for securities in their Participants to reinvest dividends on shares for accounts and deliver them to agents through

• TEN THE DEPOSITORY TRUsr CoMPANY 00000000000000

DTC. The value of such acceptances in 1991 was Repayment Option Procedures let Participants $21.6 billion. submit put instructions in eligible issues through DTC's Automated Tender Offer Program the depository. Those issues, totaling 5,141 (ATOP) enables Participants to send electronic in 1991, include many municipal and corporate acceptance instructions on tender and exchange issues, mortgage-backed bonds, and floating-rate offers over the Participant Terminal System (PTS) notes and securities with similar repayment for transmission to agents, replacing hard-copy options. Also in 1991, DTC received 21,948 instructions and reducing paper-related risks. ATOP instructions to exercise Participant puts and also lets agents review information about the receipt allocated $16.4 billion in payments. In addition, of instructions on an up-to-the-minute basis DTC processes optional repayments on certificates throughout the offering period. Of the 33,333 of deposit (CDs) and rollover instructions on Participant instructions received at DTC, 71% were Treasury bills. processed through ATOP. Units Conversions: Participants can instruct DTC to Participants can separate units---such as a share surrender convertible debt and preferred securities in and a warrant, or a bond and a put option-into their accounts to conversion agents by book-entry their components, or combine the components into for same-day credit in the underlying securities, units and deliver them through DTC by book­ usually common stock. Nearly 280 million shares resulted from these conversions in 1991. entry. DTC received 20,546 such instructions in 1991. Redemptions Warrant Subscriptions When a security in the depository's custody matures or is called by the issuer, DTC presents Warrants for common stock may be exercised by it for redemption and pays the proceeds to affected book-entry through DTC. Subscriptions numbering Participants. In 1991, DTC processed redemptions 12,674 in 125 warrant issues were processed in 1991, in 108,756 issues for a total dollar value 0£$195.6 resulting in the issuance of232 million shares. billion. These figures include 63,300 municipal Options maturities. In addition, DTC processed 25,853 Over 200 banks and broker-dealers used DTC partial municipal calls and 1,548 partial corporate to deposit securities to satisfY OCC margin or calls. DTC saw record-breaking call volumes in clearing fund requirements in 1991. The value 1991, receiving nearly 13,000 notices from 840 of these "pledged" securities totaled $7 billion agents, which generated nearly 43,000 redemptions. at yearend. Puts Through the Third-Party Pledge System, banks Put provisions allow holders to obtain payment, may pledge securities on deposit at DTC to OCC on demand, for their securities' principal value for broker-dealers to satisfY OCC requirements for on a predetermined number of days notice. DTC's call option writers. The system also allows a put

o ELEVEN THE DEPOSITORY TRUST CoMPANY ••••••••••••••

option writer to instruct its bank to move Treasury these instructions from DTC the next day. After bill positions to the depository and pledge them to rush reregistration by the agent and retrieval by OCC for the account of the OCC clearing member DTC, the depository notifies Participants that the carrying the writer's short position, reducing the securities are available. clearing member's margin requirements. Securities can be withdrawn quickly through the service because RWT instructions are segregated Withdrawals for priority treatment by DTC and the agent, and an Certificates can be withdrawn from the depository overnight express courier is used between DTC and in three ways: agents outside of New York City. Securities are Withdrawals-by- Tranifer (WTs): When a Participant's generally available within two days if the agent is customer wants a certificate registered in a particular located in New York City and within three if it is name, DTC arranges with the transfer agent for the outside New York City. certificate's issuance. In 1991, 5.3 million new certificates were created this way. Depending on the Fast Automated Securities Transfer (FAS71 issue, its agent, and the agent's location, newly Through FAST, DTC reduces certificate movement registered certificates are generally available one to by leaving a quantity of securities with transfer two weeks after DTC has received instructions for agents as balance certificates registered in its nominee these routine transfers. name, Cede & Co. Balance certificates are adjusted Urgent COD Withdrawals: Participants can obtain daily for DTC deposit and withdrawal activity. certificates quickly or "on demand" in certain issues. Agents can participate in the WT portion Urgent certificates-on-demand (CODs) are available of the program only, or they can also handle in full-Fast Automated Securities Transfer (FAS1) urgent COD withdrawals by taking part in the full­ securities and all municipal bond issues. FAST program. The Rush Withdrawal-by- Tranifer (RWT) Service: Direct-Mail Service RWT enables DTC to speed the processing of Participants' transfers when certificates are needed For WTs, Participants can speed newly registered urgently and CODs are unavailable. certificates to customers or third parties by having DTC gradually eliminated urgent COD transfer agents and DTC mail them directly, instead withdrawals in corporate debt and equity securities of returning them to Participant offices for mailing. not transferred by full-FAST agents since certificates Over two million certificates were handled this way were no longer widely needed by Participants to in 1991. complete deliveries-versus-payment (DVPs) outside When agents mail certificates, DTC first a securities depository. Urgent needs for such receives registration information from Participants securities are now handled through RWT. by automated means, reformats it if needed, and To use RWT, Participants send rush transfer forwards it to agents in machine-readable form. registration instructions to DTC over PTS. If the The agents issue certificates and return transaction issue is RWT-eligible, the transfer agent receives details to DTC for its records and for reporting to

• TWELVE ThE DEPOSITORY TRUST CoMPANY DDDDDDDDODODOD

Participants. When a Participant wishes trans­ underwritings rose 50% in number to 1,505 ferred certificates mailed, DTC assumes the respon­ with a value at issuance of$75.5 billion. In sibility whenever transfer agents do not provide addition, underwritings of asset-backed and direct mail service. mortgage-backed securities amounted to $50 billion and $38 billion, respectively. Total Training underwriting distributions through DTC for the The depository's training programs, given at year were valued at $560 billion. DTC and Participant sites, help Participants use • The largest rights offering processed through DTC automation to communicate with DTC in the -$2.3 billion-occurred in August, when most cost-effective way possible. In 1991, 3,150 Participants exercised 83% of the 34.5 million employees, representing 285 Participants, were Time Warner Inc. rights through DTC's Warrants instructed in the use ofDTC's Next-Day and Exercise Program. The rights were then delivered Same-Day Funds Settlement systems, PTS, and to agents by book-entry. Issues with step-up and Participant Operating Procedures (POP). A catalog oversubscription privileges cannot yet be handled describing these programs is available. by DTC; the depository is circulating for comment Also, Participants can have their PTS and POP a plan for a comprehensive rights exercise system to questions answered directly by calling (212) 709-1135 include these. (in New York State) or (800) 545-1276 (outside • Participants began sending put bond instructions to New York State). DTC over PTS, marking the end of strictly paper Developments in '91 processing for most kinds of put exercises.

• Underwriters distributed through DTC nearly • The liquidation and closing of Columbia Savings $240 billion in corporate debt-and equity issues, and Loan Association, which had issued DTC- and $203 billion in new municipal issues. Equity eligible certificates of deposit, resulted in DTC's

o THIRTEEN ThE DEPOSITORY TRUST CoMPANY ••••••••••••••

processing Resolution Trust Corporation (RTC) can request non-U.S. dollar income payments for cash payments of$2.4 billion in CDs. In all such selected foreign currency denominated issues, and RTC liquidations, DTC worked closely with it and declare tax exemption or entitlement to a others to standardize the handling of redemptions favorable rate as provided by treaty for certain and account transfers, often under urgent non-U.S. securities. time limitations. • Over PTS, Participants can now view the status of • Over PTS, Participants can now view headings and their aged WTs or WTs resubmitted to the agent. order printed copies oflega! notices and notices Likewise, they can view updated information on relating to the default and performance histories of deposits, and deposits held for investigation by the asset-backed securities. transfer agent. • A fail-tracking system began automating due- • DTC's Direct-Mail-by-the-Agent (DMA) bill settlement for overdue deliver orders by Program was made available to all transfer agents; comparing scheduled settlement dates provided previously, only agents participating in the Fast by delivering Participants with actual delivery Automated Securities Transfer (PAS}) program dates, then generating cash dividend or interest adjustments based on DTC's income could use DMA. announcement data base. Inquiry functions Also, DTC introduced the Direct Mail Service detailing pending and settled due bills are available Agreement for all DMA users, eliminating the need over PTS. for individual DMA contracts between Participants • DTC began accepting instructions over PTS and DMA transfer agents. By yearend, 13 DMA for certain elective dividend services. Participants agents and 38 Participants signed the agreement.

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SELECTED SERVICES STATISTICS

Deposits 1991 1990 Redemptions 1991 1990 (NDFS and SDFS) Daily Average Certificates For Registered Securities 59,500 62,500 Full Calls and Maturities 81,355 63,123 Total Registered Certificates Municipal Partial Calls 25,853 22,920 (In millions) 15.1 15.8 Corporate Partial Calls 1,548 1,560 Daily Average Certificates For Bearer Securities 12,800 20,200 Puts Total Bearer Certificates Eligible Issues 5,141 4,059 (In millions) 3.2 5.1 Instructions to Exercise 21,948 19,375 Total Value of Allocations Deliveries (In $ billions) 16.4 15.2 Number (In millions) 73.2 67.9 Value (In $ trillions) 13.9 8.8 Units Eligible Issues 619 699 Pledges (In $ billions) Instructions to Combine 4,999 5,205 To Banks 15.9 9.5 Instructions to Separate 15,547 11,584 To Options Clearing Corporation 7.0 5.6 Warrant Subscriptions To Federal Reserve District Banks 6.5 4.4 Eligible Issues 125 135 Total 29.4 19.5 Subscriptions Processed 12,674 2,889 Resulting Shares Custody (In millions) 232 60

Securities on Deposit Certificate Withdrawals (In $ trillions) 5.5 4.1 Daily Average Dividends and Interest Withdrawals-by-Transfer 19,100 19,600 Number of Payments Total New Registered Received (In millions) 1.71 1.51 Certificates (In millions) 5.3 5.4 Number of Paying Agents 2,610 2,611 Daily Average Total Corporate Cash Certificates-on-Demand Dividends and Interest For Registered Securities 740 840 (In $ billions) 205.4 183.2 Total Certificates Total Municipal Bond Withdrawn 214,000 255,000 Interest (In $ billions) 62.0 55.0 Daily Average Total Stock Dividends Certificates-on-Demand (In billions of shares) 3.8 4.9 For Bearer Securities 541 760 Total Certificates Change Mode of Payment Instructions Withdrawn (In millions) .8 1.02 In UIT Securities 10,821 10,689 Total Certificates In Variable Mode Withdrawn through Preferred Stock Issues 616 930 RWT Service 25,000 26,500

Tender and Exchange Offers Direct Mail Service Offers Processed and Number of Participants 119 108 Allocated 480 537 Participating Transfer Agents Involved 76 79 Agents 18 16 Value of Acceptances Certificates Mailed by (In $ billions) 21.6 24.1 Agents 871,623 720,005 Certificates Mailed by Conversions DTC 1,209,443 1,221,999 Eligible Issues 513 468 Total Certificates Mailed 2,081,066 1,942,004 Number of Resulting % of All WT Certificates Shares (In millions) 279.6 187 Sent by Direct Mail 39 36

o F 1FT E E N THE DEPOSITORY TRUST COMPANY ••••• 11 ••••••••

• S I X TEE N TIl ~ D I·POS1TORY Tlu ·,,] CO,\ll'A:-':Y ••••••••••••••

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ELIGIBLE ISSUES

an large part, DTC's usefulness to its Participants memorandum outlines criteria necessary to ensure a can be measured by the number of issues made new issue's eligibility for depository services. The eligible for depository services. arrangements, which include observance of DTC first made eligible listed equities, followed Securities and Exchange Commission-endorsed by over-the-counter (OTC) equities and listed and municipal bond call notification standards, aim to unlisted corporate debt. In 1981, DTC launched a maximize the number of eligible issues while broad municipal securities program, making bearer maintaining orderly processing and ensuring timely municipal bonds eligible for depository services. dividend, interest, principal, and redemption And six years later, with the beginning ofDTC's payments. DTC often helps investment bankers and Same-Day Funds Settlement system, certain their legal and operations staffS apply the securities settling in same-day funds became eligible. arrangements to new issues during structuring, During 1991, approximately 246,000 issues whether certificates are available to investors or an became DTC-eligible, lifting the total number to issue is in book-entry-only form. more than 929,000 by yearend-a net gain of12% Voting Rights over 1990. Of that gain, 100,600 were serial or term Registration of deposited securities in DTC's Cede issues of municipal bonds distributed through the & Co. nominee name enables DTC to: depository. And of the newly eligible issues, 59,000 • promptly determine whether certificates were securities that settle in same-day funds, many of are transferable; them issuances during the first full calendar year of • permit retransfer of certificates quickly and simply, DTC's commercial paper program. when necessary; New-Issue Eligibility • ensure receipt of dividends, distributions, and DTC's Operational Arrangements Jor Issue Eligibility voting rights to the depository for their allocation

• EIGHTEEN THE DEPOSITORY TRUST CoMPANY 00000000000000

to Participants properly and without delay. Although these reasons require it to be the SELECTED ELIGIBILITY STATISTICS owner of record, DTC's objective is to avoid ISSUES MADE ELIGIBLE IN 1991 obstructing corrununications between issuers and Equity 4,800 beneficial owners. Indeed, the existence of the Corporate Debt and Certificates depository in some cases may help a corporate Of Deposit 61,500 issuer keep up with changes in ownership of its Registered Municipal Securities 153,000 Bearer Municipal Bonds 26,400 voting stock. U.S. Treasury and Federal Agency 900 DTC's Omnibus Proxy lets Participants exercise their voting rights on securities in DTC custody. It Total 246,600 is, in effect, an assignment: Cede & Co., the holder TOTAL ELIGIBLE ISSUES * of record, assigns each Participant the voting rights Corporate on securities in that Participant's DTC account as of Listed Equity Issues 3,223 record date. OTC Equity Issues 25,101 DTC forwards the Proxy, with a list of Corporate Debt Securities 31,412 Participants, to the issuer. It also notifies affected Collateralized Mortgage Obligations 5,030 Participants that it has sent the Proxy and specifies Units 619 the quantity of securities the Participant can vote. Warrants 1,470 After DTC completes these steps-soon after American Depositary Receipts 918 record date-corrununication between issuers Unit Investment Trusts 20,547 and beneficial owners occurs as if the depository Certificates of Deposit 7,302 did not exist. Other 136

Other reports also serve issuers: Total Corporate 95,758 • The Security Position Listing shows the total amount Municipal of a security issue on deposit at DTC and each Registered Bonds 567,184 Participant's account number(s). Bearer or Interchangeable Each year, DTC sends the Listing to each equity Bonds 262,121 issuer, indicating Participant record-date positions Notes 1,222

for the issuer's annual meeting. Issuers may also Total Municipal 830,527 obtain daily, weekly, monthly, or dividend-record­ Government date listings, for a modest fee. U.S. Treasury and Federal • DTC's Participant Proxy Contact List specifies each Agency Issues 2,881 Participant's name and address for handling proxies, Total 929,166 and the name and phone number of a contact

there. The depository updates this list quarterly and * By CUSIP number, as of December 31, 1991. sends it to issuers.

o NINETEEN THE DEPOSITORY TRUST CoMPANY ••••••••••••••

MUNICIPAL SECURITIES PROGRAM

lIith 1991 marking the 10th anniversary of DTC custody reduces or eliminates problems and DTC's Municipal Bond Program, issuers, their losses arising from delayed or missed call underwriters, and other Participants are well aware notifications. of the advantages of using the depository for Full and partial call volumes increased to distribution and safekeeping of municipal securities. monthly record levels in 1991, especially toward Of the $217 billion total principal amount of yearend. For the year, DTC received nearly 13,000 municipal securities issued in the U.S. during 1991, call notices from 840 agents, which generated nearly 94'Y

New municipal bond issues distributed through Notes DTC in 1991 numbered 7,690 (100,616 CUSIPs), DTC's Municipal Note Program, which uses the with a principal amount 0£$159.6 billion. Same-Day Funds Settlement (SDFS) system, attracts According to data from the Public Securities issues of all sizes nationwide. For example, in 1991 Association (PSA) and other sources, they the issue roster included distributions as small as represented 78% of all new, long-term bond issues $50,000 of Town of Nantucket, Massachusetts, and 93% of their principal amount. Temporary Loan Notes, and as large as $3.9 billion In addition to the usual benefits of depository of State of New York Tax and Revenue services, use ofDTC is of special value because of Anticipation Notes. bond redemptions-particularly partial calls-since Issues numbering 1,181 with a total par value

• TWENTY ThE DEPOSITORY TRUST CoMPANY 00000000000000

of$34.3 billion were distributed through DTC's Municipal Note Program in 1991. These SELECTED DTC MUNICIPAL STATISTICS represented 34.5% of all such issues last year and 1991 1990 80.3% of their par value, based on PSA figures. Bonds Eligible Issues VRDOs (By CUSIP) 827,170 731,749 Principal Amount on Variable-rate demand obligations became eligible for Deposit (In $ billions) 953.2 824.2 DTC's Municipal Securities Program in SDFS during Underwritings Distributed Through DTC 7,690 5,961 1988, with 22 issues made eligible and distributed %BEO 40 33 through the system, for a total principal amount of Total Principal Amount $400 million. In 1991, 230 VRDO issues, totaling (In $ billions) 159.6 116.4 %BEO 63 54 $6.7 billion, were distributed through SDFS. Municipal Daily Average Book- note and VRDO activity is also found in the "Same­ Entry Deliveries 15,000 14,300 Partially Called Issues Day Funds Settlement System" section, page 22. With Lotteries 25,808 22,920 Resulting Call Proceeds Book-Entry-Only Issues (In $ billions) 5.3 4.4 New municipal issues distributed through DTC in Coupons Cut (In millions) 36.7 40.8 book-entry-only (BEO) form, with no certificates Notes available to investors, reduce underwriting and Eligible Issues ongoing costs to issuers. These securities are (By CUSIP) 1,222 728 reported in the table on this page and in the section Principal Amount on Deposit (In $ billions) 28.1 22.2 on "Securities in Book-Entry-Only Form," page 26. Issues Distributed (By CUSIP) 1,338 704 Exchange of Bearer Certificates %BEO 87 80 Total Principal Amount DTC's municipal bearer bond exchange program (In $ billions) 34.3 27.2 continues, with 2.5 million certificates exchanged in %BEO 95 94 1991. Here, DTC generally surrenders to exchange agents batches of bearer interchangeable certificates VRDOs for conversion into a 'Jumbo" registered certificate. Eligible Issues (By CUSIP) 2,135 1,036 Over the years, DTC has converted 19.8 million Principal Amount bearer certificates, at an estimated annual savings in On Deposit (In $ billions) 29.5 14.1 handling, storage, and other costs of 77 cents per Issues Distributed certificate. In addition to these savings for (By CUSIP) 316 155 Participants, registered certificates offer better call %BEO 90 79 Total Principal Amount notification, better interest payment collection, no (In $ billions) 6.7 3.1 risk of coupon theft or loss, and reduced risk of theft %BEO 93 84 or loss of easily negotiable certificates.

o TWENTY-ONE ThE DEPOSITORY TRUST CoMPANY ••••••••••••••

SAME-DAY FUNDS SETTLEMENT SYSTEM

BTC's Same-Day Funds Settlement (SDFS) system with floating interest payment dates were also offers depository services in certain types of processed through the system for the first time. securities that settle in same-day, or Federal, funds. Commercial paper began settling through Completing its fourth full year of operation, the SDFS in 1990, after the Federal Reserve System and system provides significant control features for trade the Securities and Exchange Commission approved settlement that place a limit (cap) on, and require DTC's commercial paper program. At yearend collateralization of, each Participant's intraday net 1991, $176.5 billion--or 33% of the estimated settlement debit. commercial paper outstanding-was on deposit In 1991, 213 Participants used SDFS at DTC. (See "Commercial Paper Program" directly, and 109 Participants with Next-Day section, page 24.) Funds Settlement accounts at DTC used it The largest principal amount on deposit of indirectly to settle their transactions, for $779.6 any Same-Day Funds Settlement system security billion in principal amount of securities on deposit type after commercial paper was in collateralized -an 80% increase over yearend 1990. This sharp mortgage obligations, which rose to $165.3 billion increase is partly attributable to 1991 being the from $124.3 billion in 1990. first full year that commercial paper was eligible Medium-term notes (MTNs) continued to for depository services. The number of climb as well, from $51.4 billion in 1990 to $106.2 underwritings distributed through SDFS grew billion on deposit at yearend. MTNs are corporate

179%, for a 75% increase in principal amount debt securities with maturities ranging from nine over the year before. months to 40 years, though they usually mature Two security types were added in 1991- between one and seven years. Shelf-registered and discount notes and municipal bonds; VRDOs continuously offered, the flexibility of MTNs

• TWENTY·TWO THE DEPOSITORY TRUST CoMPANY 00000000000000

permits issuers to match the funding of assets and liabilities. ELIGIBLE ISSUES BY SECURITY TYPE * During 1989, the first full year DTC had made Principal MTNs eligible, 136 MTN issuers had 2,003 Issues Amount (CUSIPs) On Deposit * * issuances distributed through the depository, for a Asset-Backed total distribution value of$15.6 billion. In 1991, the Securities 298 93.6 number of issuers climbed to 368. These had 7,531 Auction-Rate and issuances distributed through DTC for a total Tender-Rate distribution value of$66.5 billion. Preferred Participants also continued to either wholly or Stock and Notes 731 27.1 partially distribute book-entry-only (BEO) global Collateralized securities issues through PTC in 1991. Most of Mortgage these issues settled in same-day funds. DTC Obligations 4,070 165.3 Commercial Paper 6,248 176.5 processed a total of 60 new global issues in 1991, all Corporate Bonds 219 39.5 with no certificates available to u.s. investors, Corporate and compared with 13 in 1990. These BEO global Municipal securities are also eligible for settlement at the Variable-Mode international depositories Cedel and Euroclear. Obligations 60 1.5 Discount Notes 2 .1

SELECTED SD.S STATISTICS Government Agency Securities 789 23.0 Growth (yearend figures) 1991 1990 Government Trust Direct Participants 212 200 Certificates 326 14.6 Total Direct Accounts 430 386 Medium-Term Indirect Participants 173 183 Notes 12,660 106.2 Settling Banks 93 86 Eligible Issues Municipal Bonds 159 .7 (CUSIPs) 33,383 17,675 Municipal Notes 1,222 28.1 I Principal Amount Retail Certificates On Deposit Of Deposit 1,726 7.2 (In $ billions) 779.6 432.2 Variable-Rate Value of Transactions Settled Demand (In $ billions) 6,955.5 960.1 Obligations 2,135 29.5 Underwritings * 4,627 1,659 Zero Coupon Principal Amount* Bonds 2,738 66.7 (In $ billions) 180.7 103.2

* Does not include medium-term notes, commerdal paper, and * As ()[December 31, 1991 * * In $ billions certain insured munidpal and corporate bonds.

o TWE NTY·TH R EE THE. DEPOSITORY TRUST CoMPANY ••••••••••••••

Bollowing approval by the Federal Reserve System book-entry-only form, with no certificates available and the Securities and Exchange COnmllssion, to investors, and settles in DTC's Same-Day Funds DTC's commercial paper (CP) program began in Settlement system. Thirteen direct issuers began October 1990, with six issuing/paying agent (IPA) issuing their commercial paper through DTC in banks and four dealers participating in 13 programs 1991; in 1990, all DTC-eligible CP programs had of 11 issuers. dealers. Among the first and largest direct issuers DTC's planned gradual expansion of the CP were Exxon and General Motors Acceptance program continued in 1991. Despite deliberate Corporation. (A list ofDTC-eligible CP programs growth constraints, the number of participating IPA and their IPA banks and dealers appears in DTC's banks climbed to 16 by yearend, the number of monthly SDFS Eligible Securities book.) dealers reached 30, and 471 programs of 437 issuers DTC's program is designed for rapid-fire, were eligible. In addition, a total of$1.8 trillion- "hands-off," electronic CP issuance and settlement. 33% of the estimated current CP "universe"-was The process starts when an issuer, or dealer on on deposit at DTC (see table). behalf of an issuer, describes the commercial paper Commercial paper is unsecured short-term to be issued and delivered via computer to the promissory notes typically issued by leading U.S. issuer's IPA. The IPA's computer edits, adds to, and

corporations to reduce their financing costs, though reformats this description, and communicates it to issuers can also be non-U.S., municipal, or DTC's computer. marginally creditworthy. Once DTC's computer takes over, it interacts CP eligible for DTC's program is generally with the dealer's and custodian bank's computers to rated in one of the top two ratings categories by at arrange delivery and settlement. As an alternative to least one of the largest ratings agencies. It is issued in direct computer-to-computer links, IPAs, dealers,

• TWENTY-FOUR ThE DEPOSITORY TRUST CoMPANY 00000000000000

and custodians may communicate with DTC over SELECTED COMMERCIAL PAPER PROGRAM the Participant Terminal System. STAIISTICS

DTC sweeps maturing CP from Participant 12/90 3/91 6/91 9/91 12/91 Issuances accounts and initiates book-entry deliveries versus Daily Average payment to paying agent Participant accounts on Number 191 342 530 753 868 Daily Average maturity date for inclusion in that day's settlement. Face Amount (In $ billions) 2.4 4.3 6.7 9.0 10.9

Maturities Daily Average DEALERS USING DIC'S CP PROGRAM * Number 145 339 568 778 875 Daily Average BT Securities Corporation Face Amount Bank of America National Trust (In $ billions) 1.7 3.6 6.3 8.4 10.7 and Savings Association Barclays de Zoete Wedd Securities Issuers * 105 180 261 357 437 Bear, Steams & Co., Inc. Chase Securities, Inc. Programs * 118 195 281 382 471 Chemical Bank On Deposit * Citicorp Securities Markets, Inc. CUSIPs 1,274 3,124 4,389 5,544 6,248 Continental Bank, N.A. Face Amount Daiwa Securities America Inc. (In $ billions) 31 78 109 144 177 The First Boston Corporation Percentage First Interstate Bank of California Of Market (est.) 5.5 14 20 26.5 33 First National Bank of Chicago * At monthend Goldman Sachs Money Markets, L.P. Industrial Bank ofJapan, Ltd. Kidder, Peabody & Co. Incorporated

Lehman Brothers ISSUING/PAYING AGENTS USING DIC'S Merrill Lynch, Pierce, Fenner & Smith COMMERCIAL PAPER PROGRAM* Incorporated The Bank of New York Mitsubishi Bank Bank of Tokyo Trust Company Bankers Trust Company J.P. Morgan Securities Inc. ! The Chase Manhattan Bank, N.A. Morgan Stanley & Co. Incorporated Chemical Bank Nikko Securities Co. International, Inc. Citibank, N.A. The Dai-Ichi Kangyo Bank, Limited, Nomura Securities International, Inc. New York Branch Paine Webber Incorporated The First National Bank of Chicago RBC Dominion Securities Corporation The First National Bank of Chicago/Funding Support Societe Generale Securities Corp. The Fuji Bank and Trust Company Swiss Bank Corporation, New York Branch Hartis Trust & Savings Bank/Bank of Montreal Trust Company Toronto-Dominion Securities, USA, Inc. LTCB Trust Company Wood Gundy, Inc. Manufacturers Hanover Trust Company Yamaichi International (America), Inc. Morgan Guaranty Trust Company of New York Sanwa Bank Trust Company of New York Zions First National Bank Security Pacific National Bank/Trust Company, New York Branch * As of December 31, 1991 *As cfDecember 31, 1991

o TWENTY·FIVE THE DEPOSITORY TRUST CoMPANY ••••••••••••••

ahe issuance of debt securities in book-entry-only are available to investors, BEO is attractive to muni- (BEO) form continues to increase, as issuers reduce cipal and corporate debt issuers, who can completely expense and investors grow more comfortable own­ avoid the continuing cost of certificate issuance and ing securities without certificates. In 1991, BEO reissuance to investors. BEO also appeals to corpo­ securities valued at $2.2 trillion-the great bulk of rate issuers when their paper--such as commercial them debt securities-were distributed through DTC. paper-is bought almost entirely by institutional With book-entry-only, no certificates are avail­ investors. Many individual investors have also able to investors. Issuers authorize the deposit at accepted BEO because they can reduce or elirni- DTC of one "global" certificate for each issue (each nate the risk, expense, and inconvenience of maturity of a debt issue), which is issued in DTC's safekeeping certificates. nominee name and held by the depository or its cus­ The following corporate security types have todian bank for the issue's life. DTC records owner- been distributed in BEO form through DTC: ship changes by book-entry and, in turn, these American Depositary Receipts (ADRs) changes are reflected on the records of its Asset-Backed Securities Auction-Rate and Tender-Rate Participants and their customers. The records are Preferred Stock and Notes used to allocate income distributions and principal Certificates of Deposit redemptions. Investors receive transaction confirma- Commercial Paper Conventional Corporate Notes and Bonds tions and periodic statements from the bank or broker­ Medium-Term Notes dealer reporting activity and balances in their Mortgage-Backed Securities securities accounts. Warrants Linked to Currency Exchange Rates Since DTC often holds more than 80% of the Issuance of medium-term notes (MTNs) in principal amount of debt issues in which certificates BEO form has seen substantial growth in 1991:

• TWENTY-SIX THE DEPOSITORY TRUST CoMPANY 00000000000000

With over 2,200 issuances more than in 1990, the

principal amount ofMTNs distributed through the BOOK.ENTRY·ONLY ISSUANCE IN DTC depository reached $66.5 billion, compared with 1991 1990 $37.3 billion in 1990. Municipal Bonds DTC's commercial paper program, completing Issues Distributed 3,368 2,049 its first full year in 1991, saw 147, 250 issuan<;es dis- Their Principal Amount tributed with a combined principal amount of$1.8 (In $ billions) 109.3 65.7 ~ trillion. (See "Commercial Paper Program" section, As a % of Total Bond page 24.) Principal Amount ThroughDTC 64 52 - Equity securities issued in BEO form-ADRs

for shares in Rule 144A securities and auction- and Municipal Notes tender-rate preferred stock-are bought either solely Issues Distributed 1,015 542 or overwhelmingly by institutional investors. Their Principal Amount Book-Entry-Only in '91 (In $ billions) 32.7 25.6 As a % of Total Note • In 1991, nearly $110 billion of principal amount in Principal Amount municipal bonds-compared with $65.7 billion in ThroughDTC 95 94 1990--were distributed in BEO form through DTC, representing 64% of all municipal bond debt Corporate Securities MTN Issuances 7,531 5,280 distributed through the depository. Their Principal • Municipal notes also climbed to $32.7 billion in Amount principal amount, compared with $25.6 billion in (In $ billions) 66.5 37.3 1990, representing 95% of all municipal note debt CP Issuances 147,250 6,579* Their Principal distributed through DTC in BEO form. Amount (In $ billions) 1,804.7 76.8* Information Available Other Issues DTC has BEO publications and a video presentation Distributed 6,526 7,858 Their Principal designed for issuers and others, available on request. Amount (In $ billions) 170.1 120.8

* From October 1990

o TWENTY-SEVEN THE DEPOSITORY TRUST COMPANY ••••••••••••••

RECENT DTC GROWlH BY SECTOR IN SELECTED SERVICES

1991 1990 1989 Eligible Issues Equities 28,324 26,037 24,364 Corporate debt 31,412 21,859 16,269 Municipal debt 830,527 733,513 635,745 Other 38,903 46,501 47,461 Total 929,166 827,910 723,839

Selected Services

Value of securities on deposit (In trillions) Banks $4.13 $3.10 $3.06 Broker-dealers 1.30 .96 .93 Other depositories .03 .04 .03 Total $5.46 $4.10 $4.02 Shares on deposit (In billions) Banks 60.8 55.4 51.3 Broker-dealers 67.4 60.9 63.3 Other depositories 1.3 1.6 1.9 Total 129.5 117.9 116.5 Principal amount of corporate debt on deposit (In billions) Banks $1,229.3 $941.8 $804.0 Broker-dealers 298.2 243.3 203.7 Other depositories 17.5 15.3 10.1 Total $1,545.0 $1,200.4 $1,017.8 Principal amount of municipal debt on deposit (In billions) Banks $661.1 $613.7 $566.5 Broker-dealers 339.9 239.4 176.3 Other depositories 9.8 7.4 8.1 Total $1,010.8 $860.5 $750.9

Participation * DTC Participants 548 568 606 Broker-dealers 360 379 408 Banks 180 181 189 Clearing agencies 8 8 9

* Excludes indirect partidpation in DTC, includingfor 1991 nearly 1,300 banks and nearly 3,400 broker-dealers that are correspondents if Partidpants.

• TWENTY-EIGHT THE DEPOSITORY TRUST CoMPANY 00000000000000

INSTITUTIONAL USE OF DTC

Custody of Institutional Assets

Danks and their institutional customers adapted to date. If the security is not DTC-eligible, the deliver­ immobilization of their portfolio securities in a secu­ er and receiver settle the transaction outside ofDTC, rities depository some years ago. Now, a number of based on depository instructions that facilitate the DTC Participant banks hold in their accounts the delivery's completion.

depository-eligible securities of virtually all invest­ lOin '91 ment companies, most private and public pension • By yearend, the ID system expanded to include funds, and several hundred insurance companies. 8,171 institutions, broker-dealers, custodian banks, At yearend 1991, the market value of all assets and other agents. Average monthly ID confirma­ held by banks in DTC was $4.1 trillion, $2.2 trillion tion volume processed through the system was 2.2 in equity securities, and $1.9 trillion in corporate million for the fourth quarter, up 29% from the and municipal debt. comparable 1990 period. For the year, 49.5 million confirmations, affirmations, and prescheduled Institutional Delivery (/0) System deliveries were processed through ID, a 19% A mechanism for comparing and settling institution­ increase over 1990. al trades in u.s. securities, the ID system reduces • At yearend, the industry affirmation rate of trade costs and increases assurance of timely settlement. confirmations in DTC-eligible securities reported ID's chief benefit is its ability to coordinate through a by broker-dealers through the ID system was a central entity, DTC, and thereby simplify, all the record 94% for corporate debt and equity securi­ clearance and settlement functions for institutional ties, compared with 93% the year before, and 77% trades of broker-dealers, institutions, custodian for municipals, compared with 75% for 1990. banks, and other agents. • DTC recently proposed an expansion of the system Briefly, here is how the ID system works: A that would provide each user the option of using broker-dealer or dealer bank executing an institu­ ID in its current, successive, daily batch environ­ tional trade furnishes DTC with transaction details ment; interactively during the day; or, depending --such as price, quantity, and date--which it passes on circumstances, both ways. The interactive on as a legal trade confirmation to the institutional capability would permit the accomplishment of customer, the customer's agent, and any other desig­ trade confirmation data input and output, affirma­ nated parties. If the ID confirmation accurately tion, and issuance of settlement instructions reflects the institution's order, the institution sends an within hours. affirmation to DTC, which forwards settlement Proposed enhancements include options allow­ instructions to the agent and submitting broker­ ing broker-dealers to notify institutions of block dealer or dealer bank. If the security is DTC-eligible trade order execution, and allowing institutions to and the deliverer has sufficient securities in its DTC send block trade allocation instructions to executing account, the delivery can automatically be complet­ broker-dealers. ed by book-entry on the morning of settlement Also, institutions would be able to transmit to

o TWENTY-NINE ThE DEPOSITORY TRUST CoMPANY ••••••••••••••

broker-dealers an advice of correction--simplifYing IID enables intraday turnaround of confirma­ communication regarding cancellation and correc­ tions, affirmations, and deliver/receive instructions; tion of trade confirmations. investment managers can append funding instruc­ Moreover, the proposed system would permit tions for trade settlement at affirmation. In addition, two-sided input, matching trade confirmation data IID provides confirmation fields on items such as from both broker-dealers and institutions, allowing currency codes and alternate currency instructions, as well as International Standards Organization deliv­ DTC to distribute fully allocated and affirmed trade er/receive instruction formats. confirmations.

/lOin '91

10STAT1STICS 1991 1990 International ID, which was piloted in 1988

Average Monthly with a dozen users, expanded to 150 registered Confirmations (In millions) 2.0 1.65 users in 1990, and to 282 in 1991. However, system Total Confinnations, usage remained relatively flat at 1,500-3,000 Affinnations, And Prescheduled confirmations weekly, but is expected to grow as Deliveries (In millions) 49.5 41.6 users automate their internal procedures. As Industry Affinn Rate for with the gradual development of the ID system Corporate Debt and Equity Issues (%) 94 93 during the 1970s, this process has already begun Industry Affinn Rate for and is expected to accelerate. Municipal Issues (%) 77 75 • Wells Fargo Nikko was the first investment manager to fully automate its IID affirmation

International 10 System processing with DTC, using the Computer-to­ Computer Facility to authorize standardized DTC's International Institutional Delivery (IID) sys­ setdement instructions to its broker-dealers tem extends certain ID system benefits-trade con­ and custodians. firmations, affirmations, and deliver/receive instruc­ • Some 30 U.S. investment managers expressed tions-to trades executed outside the u.s. in their desire to about 200 broker-dealers in non-U.S. securities. the U.S. and 18 other countries that these The IID initiative stems from cross-border firms use IID to report trade executions for trade clearance and settlement problems in non-U.S. these managers. securities, which result in high costs for broker-deal­ • lID was enhanced to allow share quantities of ers, custodians, and investors. Since lID is used for up to 11 figures (mainly to accommodate yen issues that are not DTC-eligible, this service stops and lira trades). Market codes also were added to short ofDTC book-entry delivery and settlement. accommodate securities lending transactions and However, use of IID's standardized deliver/receive broker-to-broker confirmation and affirmation. instructions can assist the international broker and • The proposed enhancement of IID in the context global custodian in communicating setdement of the ID system expansion referred to above was instructions to local markets. recendy reported to users.

• THIRTY THE DEPOSITORY TRUST CoMPANY 00000000000000

Dncreasing the extent of automation of its opera­ work of nearly 1,400 computer terminals located tions and communications with Participants, transfer in Participant offices in the U.S. and Canada. agents, and others is a continuing DTC priority, to Participants use PTS to send instructions, inquiries, lower its own and users' operating costs. and other messages to DTC, and receive messages DTC has four principal vehicles for automated and reports. communication with users: PTSJr.

Computer-to-Computer Facility (CCF/CCF II) PTS Jr. is available to low-volume users as an CCF is used for direct computer-to-computer com­ alternative to PTS. It performs all PTS functions munication between DTC and user IBM main- at reduced cost, though at reduced speed. PTS Jr. frames, providing now more than 50 input and out­ requires only a user's compatible personal com­ put functions. puter, DTC-supplied software, a modem, and a tele­ CCF II serves the same purpose as CCF, but phone connection. can also conununicate with non-IBM user main- Mainframe Dual Host (MDH) frames. All output files available through CCF are available through CCF II. In 1991, DTC began pro- A computer-to-computer telecommunications sys- viding CCF users with compression software, which tem, MDH lets users send and receive DTC data in real-time, which suits the deliver order (DO) and can reduce transmission time for certain files by as payment order processing needs for certain users. much as 80%. Similar compression benefits are also Because DO activity notification is prompt and con­ available to CCF II users. tinuous, users can respond immediately to streamline Participant Terminal System (PTS) their processing by having MDH automatically Linked directly to DTC's computers, PTS is a net- match DO receives to their internal records.

o THIRTY·ONE ThE DEPOSITORY TRUST CoMPANY ••••••••••••••

CCF/CCF II in '91 include securities segregation and release, memo

.Participants began using CCF and CCF II to segregation, and securities pledges and releases for obtain reorganization notices from the depository. collateral loans. • Over CCF and CCF II, Participants began pledg­ • Receiving Participants also began authorizing ing and releasing securities for collateral loans. or canceling pending deliveries in same-day • Transfer agents in DTC's Fast Automated funds securities. Securities Transfer (FAST) program began using CCF to confirm securities deposits with DTC. SELECl'ED AUTOMATION SlATlmCS

PTS/PTS Jr. in '91 1991 1990

• Service enhancements included the Participant CCF Users 697 660 Legal Notice system, which allows users to access CCF II Users 262 188 ...... legal notice lists and to order hard copies of these Average Daily and other notices relating to the default and perfor­ Number of mance histories of asset-backed securities. CCF/CCF II Records* 8.1 6.8 ...... • DTC introduced a fail-tracking system to automat­ PTS Terminals 1,384 1,311 ically generate cash dividend payments or make Average Daily interest adjustments for overdue deliveries requiring Number of due bills. Participants can view all captured due bill PTS Transactions 827,500 736,800 transactions over PT5. PTS Jr. Users: • Participants began sending automated put Participants 176 162 bond instructions to DTC, marking the end of Pledgee Banks 14 18 strictly paper processing for most kinds of put Others 34 15 bond exercises. MDH Users 37 31

MDH in '91 * In millions; includes MDH. • As with CCF and CCF II, MDH functions now

• THIRTY TWO THE DEPOSITORY TRUST CoMPANY 00000000000000

IMI NATIONAL CLEAIIAJICI AND SETILEMINT SYSTEM AND INTERNATIONAL LINKS

IITC's interfaces with other U.S. clearing agencies customers by electronically linking users to NSCC's are a major part of the national securities clearance automated Fund/SERV program. and settlement system. A close working relationship The Interface lets users input purchase, redemp­ between DTC and the National Securities Clearing tion, and registration data, and receive output; it also Corporation (NSCC) permits hundreds of broker­ dispatches information from DTC to NSCC and dealers that participate in both NSCC and DTC to then to mutual funds, then returns trade confirmation conveniently use NSCC's trade comparison and information to users. Purchase and redemption trans­ clearing facilities and DTC's trade settlement and actions are settled by users in the depository's daily net securities custody services. settlement system. DTC, in turn, settles with NSCC. Interfaces between clearing corporations and Fund/SERV Interface volume nearly tripled in securities depositories enable users of any of them to 1991, with 17 Participants using the Interface to settle with users elsewhere, without shipping certifi­ send transactions to 49 fund groups. Total gross cates. These links also permit users of more than one settlement value of mutual fund orders processed depository-DTC, Midwest Securities Trust through the Interface reached $255.4 million­ Company, or Philadelphia Depository Trust $206.2 million of which were in purchases, and Company-to move securities positions between $49.2 million in redemptions. depositories. Moreover, DTC's Institutional Delivery Three no-load fund groups joined NSCC's system is used to process the institutional trade data Fund/SERV program in 1991: T. Rowe Price, reported to other depositories for clearance and Neuberger & Berman, and Trinity Capital. As a settlement through their systems. result, several banks-United Missouri Bank of

Fund/SERV Interface Kansas City, N.A., The Northern Trust Company,

DTC's Fund/SERV Interface facilitates users' pro­ and Comerica Bank-began using the Interface to cessing of mutual fund transactions for their electronically send no-load fund transactions.

o THIRTY-THREE ThE DEPOSITORyTRusr CoMPANY ••••••••••••••

Also, bank investment departments have begun Participants can input pledges of securities and using the Interface to transmit orders to load funds. release requests over DTC's Computer-to- The Trust Company Bank of Georgia now uses it to Computer Facility (CCF/CCF II) and Mainframe place orders with Alliance Fund Distributors, Inc. Dual Host (MDH). DTC began on-site training in 1991 to assist International Links Participants with the start-up of their new Fund/SERV Interface accounts. To support the long-standing participation of DTC is developing an Interface with NSCC's Canadian investors in US. securities markets and the Networking service, which will enable the settlement of trades involving Canadian broker­ electronic exchange of standardized non-trade data dealers, the National Securities Clearing between participating mutual funds and Networking Corporation sponsors DTC accounts for the users, and permit centralized distribution of mutual Canadian Depository for Securities Limited (CDS) fund dividend payments. and a number of Canadian broker-dealer members of CDS. This arrangement permits Canadian and counterparty broker-dealers to enjoy the benefits of FUND/SERV INTERFACE 51'AnmCS NSCC's Continuous Net Settlement and 1991 1990 Correspondent Clearing services and book-entry Total Users 17 7 delivery in DTC and CDS. Number of Transactions 19,506 6,679 DTC also operates a Tax Exempt Dividend

Total Settlement Value Service (TEDS) in cooperation with CDS. For (In $ millions) 255.4 85.6 Canadian dividend and interest payments to certain US., Canadian, and other tax-exempt beneficial owners whose securities are deposited with DTC,

The Options Clearing Corporation TEDS accommodates withholding exemptions at

A DTC account for The Options Clearing source; that is, it permits full payment of dividends Corporation (OCC) enables banks and brokers to without withholding. In 1991, this service was pledge securities to satisfy segregation and margin expanded to accommodate various levels of with­ requirements on put and call option contracts, as holding as appropriate for Participants' customers. well as their obligations to OCC's clearing fund. An NSCC subsidiary, the International This eliminates repeated paper movements between Securities Clearing Corporation, sponsors DTC parties to pledge transactions and is an alternative to accounts for the Central Depository (pte.) Ltd. of issuing escrow receipts. Singapore and the Japan Securities Clearing Corp. to Under the DTC Participant Terminal System support trade settlement of US. securities in (PTS) pledge/release program, Participants can input Singapore and Tokyo. OCC-related pledges of securities and release During 1991, DTC began an effort to obtain requests over their PTS terminals. In addition, clear legal authority to leave securities in the custody

• THIRTY·FOUR ThE DEPOSITORY TRUST CoMPANY 00000000000000

of recognized securities depositories in other that they can settle in DTC, Cedel, Euroclear, and countries. This would make possible book-entry elsewhere as provided. deliveries in DTC's system of non-US. securities Global securities are in book-entry-only held for DTC's account by such depositories. form for DTC, with no certificates available to Global securities made possible by interdeposi­ investors. DTC or one of its custodian banks holds tory links are a recent development for DTC. The a single global certificate representing all or DTC's first global issue distributed in part through DTC portion of each issue. Deliveries by DTC occurred in 1990, and 12 others followed that year. Participants to a participant in the international In 1991, 60 global equity and debt issues, with a depositories Cedel or Euroclear are made by book­ total value of$22.9 billion at issuance were made entry to the DTC accounts of Cedel's and eligible for depository services. Of these, 35 were Euroclear's US. depositary banks-or to the DTC eligible for resale as restricted securities to qualified accounts of banks that issue global certificates or institutional buyers within the US. under SEC Rule American Depositary Receipts. Cross-border 144A, and to non-US. investors under Regulation deliveries into DTC reverse this procedure. S. Issuers in the US. and a dozen other countries DTC's links with Cedel and Euroclear have were represented, with settlement possible at DTC, been in place for some years through the DTC Cedel, and Euroclear. The remaining 25 global accounts of Cedel's and Euroclear's depositary banks issues were warrants, asset-backed, and other debt in the US. to accommodate interdepository issues, no different from other such issues, except deliveries of Yankee bonds.

o THIRTY·FIVE THE DEPOSITORY TRUST CoMPANY ••••••••••••••

ahe Depository Trust Company-the world's securities into large denominations, making largest custodian of corporate and municipal unauthorized negotiation extremely difficult, as securities-has an elaborate safeguard system, widely well as conserving vault space. regarded as the most comprehensive for monitoring • Restrictive endorsements on the back of certain securities movement and custody. jumbo certificates help prevent unauth­ orized negotiation. Internal Controls • Registered certificates remain in non-negotiable DTC records the movement and location of each form while in DTC custody. certificate in its custody, which helps resolve • DTC microfilms registered and bearer certi­ processing errors and facilitates reconciliation ficates and related data that el).ter and leave and audits. its premises . • An automated certificate-number control system • Duplicate computer files of transactions, stored in cross-indexes certificates by issue, number, various locations, permit prompt file denomination, date of receipt, and-for bearer bonds-the depositor's identity. This lets DTC reconstruction if processing is interrupted. These control and rapidly reconstruct paper flow, and the microfilm records supplement regardless of volume. comprehensive files of original documents and • On receipt of registered certificates, quick transfer production reports.

into DTC's nominee name, Cede & Co., allows • Backup computer and communications for prompt validation of certificates and enhances arrangements help ensure DTC's data-processing timely dividend and interest collection and functions during an emergency. Periodic tests disbursement to Participants . of these contingency facilities are conducted • 'Jumbo" certificates are used to consolidate with Participants .

• THIRTY-SIX THE DEPOSITORY TRUST CoMPANY 00000000000000

Physical Security User Verification

DTC's physical security program combines an User verification ofDTC records (users compare extensive electronic security system with a their activity records with depository reports) helps thoroughly trained uniformed guard force. ensure the integrity of the depository's system and • The Controlled Access System restricts entry into encourages maximum operational cooperation. sensitive areas to authorized personnel, and is Each morning, Participants and pledgees receive a actively monitored by control room operators. DTC report that itemizes and summarizes their • A closed-circuit television system operates previous day's account activity. In addition, DTC throughout DTC, monitoring all securities sends daily reports of cash transactions and a handling areas, vaults, entry points, and monthly statement showing each Participant's and common hallways. pledgee's securities positions. • Alarm systems, which use motion and vibra­ DTC Rules require Participants to report tion sensors, as well as heat detectors, are differences between their records and DTC monitored locally and at a central station. Line statements; Participants and pledgees also encryption protects individual control panels must confirm the accuracy of their monthly from compromise. position statements. DTC's research staff helps • A professionally trained security force monitors the reconcile differences. many systems, and screens persons and packages Internal and External Audits entering and leaving restricted areas. DTC's internal auditors and its independent • Special wastepaper treatment and disposal methods accountant, Price Waterhouse, review help prevent unauthorized release or accidental internal controls. disposal of certificates. • The internal audit program is used to review • Deposited securities are stored in various and test controls in key operating areas locations, with special access requirements and and in automated systems (including those extensive controls. being developed). Certificates in selected • Registered securities are in non-negotiable form issues are counted daily through random when delivered to or from transfer agents and sampling techniques. other parties. • Price Waterhouse audits DTC's financial state- Recordkeeping Systems ments, and performs an annual study and evalua­ Double-entry recordkeeping systems help ensure tion of the internal accounting control system. that all Participant input is recorded, that the location Participants, pledgees, and their accountants may of underlying certificates is known, and that moneys request copies of Price Waterhouse's report from are properly transferred to and between Participants. the Secretary's office at DTC. DTC uses the recordkeeping systems to report to • The Audit Committee ofDTC's Board of Participants and to research differences detected by Directors oversees the General Auditor and the Participants or by DTC control mechanisms. Auditing Department. The Audit Committee

o THIRTY·SEVEN THE DEPOSITORY TRUST COMPANY ••••••••••••••

reviews the scope of the Price Waterhouse audits Other Protective Procedures

and meets with them periodically to discuss their Additional procedures protect Participants by findings. In addition, the Board of Directors receives minimizing the possibility ofloss from a Participant's results of the New York State Banking Department's unexpected insolvency. IfDTC learns of a possible and the Federal Reserve Bank of New York's operational or financial inadequacy, it monitors that annual regulatory examinations of the depository. Participant's activity and takes protective steps as

Participants Fund events warrant.

The Participants Fund exists to satisfY any uninsured Insurance Coverage loss or liability suffered by DTC. DTC's Rules DTC's insurance coverage program for securities provide that any such loss may be charged against is one of the most extensive programs for private undivided profits or retained earnings, or to the institutions in the financial industry. Through a Participants Fund, at the discretion of the combination of interlocking blanket bonds and Board of Directors. all-risk insurance policies involving the London Should DTC sustain a loss because of a and United States domestic insurance markets, Participant's failure to satisfY obligations to it related DTC's coverage provides: to the Next-Day Funds Settlement (NDFS) system • $250 million for loss of securities in transit; or the Same-Day Funds Settlement (SDFS) system, • $200 million for loss of securities on premises. DTC would first charge the loss to that Participant's In addition: deposit to the Fund. Should the loss exceed the • For any loss of non-negotiable securities deposit (or should it be sustained for reasons other being moved by certain modes of transpor­ than Participant failure), DTC might then charge tation, additional coverages are provided by (pro rata) the excess to all other Participants' deposits DTC's insurers. to the Fund. Should DTC make a charge against a Participant's deposit to the Fund (pro rata or other­ • For any loss of securities moving by armored car wise), the Participant must make an additional deposit carrier service, $500 million is provided by the to the Fund in an amount equal to the charge. armored car carrier's insurance. The Fund has two components. One, which • For any loss occurring in the mail, DTC's mail currently exceeds $200 million, is allocated to policy provides: DTC's NDFS system. The other component, which D $15 million in coverage for non-negotiable currently exceeds $400 million, is allocated to the securities sent by registered mail, express mail, or SDFS system, with a further allocation between express courier; commercial paper activity and activity of all other D $1 million for non-negotiable securities sent by issues settling in same-day funds. first -class mail;

There has never been a pro rata charge to the D $1 million for negotiable securities sent by Participants Fund. registered mail, express mail, or express courier.

• THIRTY-EIGHT

THE DEPOSITORY TRUST CoMPANY ••••••••••••••

OFFICERS OF THE DEPOSITORY TRUST COMPANY

VICE PRESIDENTS Michael A. Agnes Joseph J. Arney Nicholas J. Arrigan Joseph J. Bellantoni Neil F. Brander Ronald J. Burns John J. Colangelo Raymond R. DeCesare William T. Dentzer,Jr. Conrad F. Ahrens * William F. Jaenike* Thomas J. Lee Donald F. Donahue* Chairman and Chi,!! President and Chi'!! Executive Vice Executive Vice Stuart A. Fishbein Executive Officer Operating Officer President President Ronald A. Garguilo Bruce S. Garland CharlesJ. Horstmann James Koster Vincent A. Mauro Michael T. Mullen Richard J. O'Brien Frank Petrillo Lawrence W. Postel Joseph F. Reale James V. Reilly John L. Scheuermann Kenneth M. Scholl Larry E. Thompson Thomas C. Cardile Dennis J. Dirks * Michael Fedorochko Glenn E. Mangold CarlH. Urist Senior Vice President Senior Vice President Senior Vice President Senior Vice President Comptroller Gary J. LaCara

Treasurer Philip E. Plasencia

Assistant Secretary Jane C. Klueger

Assistant Treasurer Leonard A. Miele

COMMITIEES OF THE BOARD OF DIRECTORS

Nominating Committee Thomas C. Schneider, Richard B. Nesson Edward J. McGuire, Jr. Chairman Senior Vice President Secretary and General Counsel John F. Lee Richard S. Pechter H.J. Runnion, Jr.

Audit Committee C. Howell Scott, Chairman Edward L. Goldberg Sheldon Harrison

Ronald J. Y 00

Compensation Committee Richard S. Pechter, Chairman * Effective January 1, 1992, William F. Jaenike became President, Chiif Operating Qfficer Michael Minikes and a Director if DTC, replacing Conrad F. Ahrens, who retired at age 65. At the same time, Senior Vice President Dennis]. Dirks replaced Mr. Jaenike as executive vice president, Thomas C. Schneider and Vice President Donald F. Donahue replaced Mr. Dirks as senior vice president. C. Howell Scott

• FOR T Y THE DEPOSITORY TRUST CoMPANY [JQo[JElIOC[lJo[J[lJoom

THE BOARD OF DIRECTORS

William T. Dentzer,Jr. Conrad F. Ahrens William F. Aldinger Richard V. Fulp Edward L. Goldberg Chairman and Chief President and Chief Executive Vice Executive Vice Executive Vice Executive Officer Operating Officer President President President The Depository The Depository Wells Fargo Bank, Bank of America Merrill Lynch & Co. Trust Company Trust Company National Association NT&SA Inc.

Richard A. Grasso Sheldon Harrison C. RIchard Justice John F. Lee Michael Minikes Executive Vice Senior Executive Vice Executive Vice President Senior Managing Chairman, President President New York Clearing Director and President, and Chief The Bank of New Nanonal Association House Association Treasurer Operating Officer York of Securities Dealers, The Bear Steams New York Stock Inc. Companies Inc. Exchange, Inc.

Richard S. Pechter HJ. Runnion, Jr. ThomasC. C. Howell Scott Ronald J. Y 00 Chairman Director Schneider Executive Vice Vice Chairman and DLJ Financial Wachovia Bank of Executive Vice President Chief Administrative Services Group North Carolina President and Chief Bankers Trust Officer Financial Officer Company Shearson Lehman Dean Witter Brothers Inc. and Financial Services Shearson Lehman Group Inc. Brothers Holdings

Retiring from the Board On March 28, 1991, at the end of their terms, were Richard F. Morrison, Senior Executive Vice President, Shearson L£hman Brothers Inc.; and Du Wayne J. Peterson, Executive Vice President, Merrill Lynch & Co., Inc.

IJ FORTY-ONE THE DEPOSITORY TRUST CoMPANY ••••••••••••••

REPORT OF INDEPENDENT ACCOUNTANTS

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF THE DEPOSITORY TRUST COMPANY an our opinion, the accompanying statement of condition and the related statements of revenues and expenses and undivided profits and of cash flows present fairly, in all material respects, the financial position of The Depository Trust Company at December 31, 1991 and 1990, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the ac­ counting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.

153 East 53rd Street, New York, NY, February 14,1992

• FORTY-TWO

ThE DEPOSITORY TRUST CoMPANY ••••••••••••••

STATEMENT OF CONDITION

Dollars in thousands at December 31, 1991 1990

Assets Cash and money market accounts $ 60,657 $ 53,872 Repurchase agreements 1,822,385 2,025,327 Receivables: Participants: For settlements 25,797 25,598 For services 26,708 23,456 Dividends, interest, and other 130,227 183,028 Deferred income taxes 14,797 10,566 Prepaid expenses 5,051 3,643 Equipment and leasehold improvements, less accumulated depreciation of$68,418 in 1991 and $59,503 in 1990 44,305 49,201 Contributions to Participants Funds, callable on demand 445,027 447,370 ...... , .... ,., ...... " ...... , ... ,," , ...... " ...... ,,", .... $ 2,574,954 $ 2,822,061

Liabilities and stockholders' equity Liabilities: Drafts payable $ 1,207,627 $ 1,276,003 Accounts payable and accrued expenses 111,243 103,873 Payable to Participants: For refunds 15,567 16,101 For settlements 232,074 286,125 On receipt of securities 85,044 79,762 Dividends, interest, and other 259,383 394,459 Notes payable 13,177 18,363

1,924,115 2,174,686

Participants Funds: Deposits received 186,986 181,247 Contributions callable on demand 445,027 . 447,370.

, 632,013 628,617

Stockholders' equity: Capital stock-authorized, issued, and outstanding 18,500 shares of $100 par value 1,850 1,850 Surplus 950 950 Undivided profits 16,026 15,958

18,826 18,758

$ 2,574,954 $ 2,822,061

The accompanying notes are an integral part of the financial statements .

• FORTY·FOUR ThE DEPOSITORyTRUsr CoMPANY 00000000000000

STATEMENT OF REVENUES AND EXPENSES AND UNDIVIDED PROFITS

...... Dollars in thousands for the years ended December 31, 1991 1990 ......

Revenues Services to Participants $ 274,542 $ 252,218 Interest income 70,236 89,703

344,778 341,921

Less-Refunds to Participants 78,673 87,928 ...... 266,105 253,993

Expenses Employee costs 165,210 154,401 Rent, maintenance, and utilities 40,529 37,117 Data processing rentals and supplies 14,291 14,343 Professional and other services 14,759 14,371 Depreciation and amortization 9,144 9,322 Interest 1,583 1,989 Other expenses 20,521 21,189

" ...... 266,037 252,732

Excess of revenues over expenses and refunds 68 1,261 Undivided profits, beginning of year 15,958 14,697

Undivided profits, end of year $ 16,026 $ 15,958

The accompanying notes are an integral part ofthefinancial statements.

o FORTY· FIVE ThE DEPOSITORY TRUST CoMPANY ••••••••••••••

STATEMENT OF CASH FLOWS

Dollars in thousands for the years ended December 31, 1991 1990

Cash flows from operating activities:

Excess of revenues over expenses and refunds $ 68 $ 1,261

Adjustments to reconcile excess of revenues over expenses and refunds to net cash provided by (used in) operating activities: Depreciation and amortization 9,144 9,322 Pension and deferred compensation 4,464 3,576 Provision for uncollectible dividend receivables 308 (141) Provision for deferred taxes (4,231) (3,243) (Increase) decrease in receivables from Participants (3,451) 13,795 Decrease in dividends, interest, and other receivables 52,342 124,760 Increase in accounts payable, accrued expenses, and other, net 1,649 33,982 Increase in Participants Funds deposits received 5,739 60,572 Increase (decrease) in drafts payable (68,376) 81,638 Increase (decrease) in payables to Participants (184,379) 214,001

Total adjustments (186,791) 538,262

Net cash provided by (used in) operating activities (186,723) 539,523

Cash flows from investing -activities: Purchases of equipment and leasehold improvements (4,248) (2,039)

Cash flows from financing activities: Proceeds from borrowing 15,000 Principal payments on notes (5,186) (5,386)

Increase (decrease) in cash and cash equivalents (196,157) 547,098 Cash and cash equivalents, beginning of year 2,079,199 1,532,101

Cash and cash equivalents, end of year $1,883,042 $ 2,079,199

The accompanying notes are an integral part cif the financial statements .

• FORTY·SIX THE DEPOSITORY TRUST CoMPANY 00000000000000

NOTES TO FINANCIAL STATEMENTS

December 31, 1991 and 1990

Note 1-Business and Ownership: securities purchased under agreements to resell at The Company is a limited purpose trust predetermined prices, generally over periods of company providing central securities depository three days or less. These agreements, primarily and related services to the securities, banking, and with a small number of money center financial related industries. At December 31, 1991, the institutions, are recorded at cost and interest is New York Stock Exchange owned approximately accrued as earned. 34% of the capital stock of the Company, with the The Company invests available federal funds remainder owned by the American Stock in repurchase agreements and money market Exchange, National Association of Securities accounts and at the same time makes disburse­ Dealers, and a number of Participants or their ments to Participants in clearinghouse funds. The representatives. A Stockholders Agreement resulting book overdrafrs are included in drafrs provides for an annual reallocation of the entide­ payable and are eliminated the next business day ment to purchase outstanding capital stock by when the repurchase agreements and money eligible Participants or their representatives based market accounts are converted back to cash. on relative depository activity of Participants For cash flow reporting, cash and cash during the prior year. equivalents include cash, money market accounts, Pursuant to a policy adopted by the Board of and repurchase agreements. Directors, the Company does not pay dividends to C. Equipment and leasehold improvements: stockholders, but refunds to all of its Participants Equipment and leasehold improvements are each year revenues in excess of current and antici­ recorded at cost. Equipment is depreciated over pated needs. In 1991, this refund amounted \:0 estimated useful lives ranging from five to eight $20,700,000 (1990-$19,420,000). The Board of years, using principally accelerated methods. Directors also adopted an additional refund policy Leasehold improvements are amortized on the to provide for a monthly refund to Participants of straight-line method over the lives of the related income eamed from the overnight investment of leases or the useful lives of the improvements, cash dividend and corporate interest and reorgani­ whichever is less. zation payments to the Company for Participants, reduced by certain related expenses. Such net D. Income taxes: monthly refunds totaled $57,973,000 in 1991 Provision is made for deferred income taxes (1990-$68,508,000). applicable to revenues and expenses reported in the financial statements in periods which differ Note 2-Summary of Significant Accounting from those in which they are subject to taxation. Policies:

A. Securities on deposit: Note 3-Participants Funds: Securities held by the Company for Participants Participants in the depository are required to are not recorded in the accompanying financial deposit to one or both of two Participants Funds statements. Cash dividends and interest received or amounts which relate to their activity in the due on such securities and in process of distribu­ depository. The Funds are available to satisfY the tion or awaiting claim are recorded in the Participants' obligations to the Company, and to Statement of Condition. satisfY certain uninsured losses, if such should B. Cash, money market accounts, repurchase occur, of the Company. Required deposits are agreements, and cash flows: received in cash or in securities of the United Repurchase agreements represent U.S. States government, its agencies or instrumen­ Government and U.S. Government Agency talities, states and political subdivisions or certain

o FORTY·SEVEN THE DEPOSITORY TRUST CoMPANY ••••••••••••••

eligible nonconvertible registered corporate debt Dollars in thousands 1991 1990 securities, that are held by the Company or pledged to it and callable on demand. Plan assets at fair value, , primarily equity securities ,"

Note 4--Dividends and Interest on Securities on and deposits under group Deposit: annuity contracts $45,481 $38,205 The Company receives cash and stock dividends Accumulated benefit obliga­ and interest on securities registered in the name of tion for service rendered: VeSted 38,357 28,253 its nominee and interest on bearer securities which Nonvested 3,140 2,722 it distributes to its Participants for the owners of 30,975 the securities. Amounts received' on registered 41,497 securities withdrawn before the record date but Additional amounts not transferred from the name of the Company's related to projected com­ nominee cannot be distributed unless claimed by pensation increases 13,526 13,185 the owners of the securities through a Participant Projected benefit obligation or other financial institution. At December 31, for service rendered 55,023 44,160 ...... 1991, cash dividends and interest payable Projected benefit obligation amounted to $163,194,000, of which $58,577,000 in excess of plan assets (9,542) (5,955) was awaiting distribution to Participants and Unrecognized net asset $104,617,000 was held pending claim on behalf of remaining from the initial the record date owners of the applicable securities. application ofFAS No. 87 (8,033)' (8,837) Stock dividends payable and unclaimed are not Unrecognized net loss' from past experience recorded in the accompanying financial different from that assumed statements. Unclaimed cash and stock dividends and the effects of changes and interest on securities registered in the name of in assumptions 4,303 5,119 the Company's nominee and interest on beare~ Unfunded defined benefit securities are transferred to New York State when pension cost included in accounts' required by abandoned property laws. payable and accrued expenses ($13,272) ($ 9,673) Cash dividends and interest receivable at December 31,1991 amounted to $113,596,000 The discount rate used in determining the (1990-$124,410,000) before reduction by an actuarial present value of the projected benefit allowance of$475,000 (1990-$525,000) for obligation was 8.5% in 1991 and 1990. The possible losses. Stock dividends receivable are not assumed rate of future compensation levels was recorded in the accompanying financial statements. based on anticipated inflation and merit increases. The expected long-term rate of return on assets was 10% in 1991 and 1990. The unrecognized net Note 5-Pension and Other Retirement Benefits: asset that existed when Statement of Financial The Company has a noncontributory defined Accounting Standards No. 87 was adopted, as of benefit pension plan covering substantially all full­ January 1, 1986, is being amortized over 16 years. time employees. Plan benefits are based on a formula percentage of annual earnings for each Retirement benefits are also provided under year of continuous participation with vesting after supplemental nonqualified pension plans for five years. The Company's funding policy is to certain officers. The cost of these benefits is contribute annually the maximum amount that determined based on substantially the same can be deducted for federal income tax purposes. actuarial methods and economic assumptions as The following table sets forth the plan's those for the defined benefit pension plan. funded status as recognized in the Statement of Net pension costs for 1991 and 1990 Condition at December 31: Included the following components: .

• FORTY-EIGHT THE DEPOSITORY TRUST CoMPANY 00000000000000

1993, is not expected to have a material effect on the Dollars in thousands 1991 1990 Company's financial condition. Service cost-benefits eamed during the year $4,804 $4,288 Note 7-Notes Payable: Interest cost on proj ected The Company has notes payable totaling benefit obligation 3,929 3,308 $13,177,000, at a weighted annual rate of8.9% which Actual return on assets (7,978) (887) are being repaid in monthly installments. Interest paid Net amortization and deferral 3,384 (3,397) during 1991 totaled $1,532,000 (1990-$1,805,000). Aggregate maturities of notes payable as of Net pension cost $4,139 $3,312 December 31,1991 are summarized as follows: In addition to pension benefits, the Company provides certain health care and life insurance benefits Dollars in thousands for retired employees. The cost of these benefits is 1992 4,955 recognized when the insurance premiums are paid. 1993 4,393 The Financial Accountiryg Standards Board will 1994 3,521 require the recognition of the cost of such benefits 1995 308 under the accrual method in 1993 when Statement of Total notes payable $13,177 Financial Accounting Standards No. 106, "Employers'

Accounting for Postretirement Benefits Other Than The Company has a short-term line of credit of Pensions," is required to be adopted. The Company $5 million available with a commercial bank at a rate is in the process of evaluating the impact of this approximating the prime rate and a revolving credit standard. loan agreement of$150 million at the federal funds rate plus .375%. A commitment fee is required on Note 6-Income Taxes: the $150 million revolving credit loan agreement Income taxes are included in other expenses. which is available to support the Same-Day Funds The income tax provisions for 1991 and 1990 are Setdement system. These facilities were not utilized summarized as follows: during 1991.

Dollars in thousands 1991 1990 Note 8-Leases and Other Commitments:

Current provision: The Company has entered into operating leases for Federal $ 3,366 $ 3,298 office space and data processing and other equipment. State and local 817 684 The leases for office space provide for rent escalations Deferred (benefit): subsequent to 1991. Rent expense in 1991 was Federal (3,267) (2,589) $34,332,000 (1990-$30,972,000) for office space State and local (734) (654) and $13,033,000 (1990-$12,967,000) for data Net income tax expense $ 182 $ 739 processing and other equipment. Presented below are the future minimum pay­ The primary difference between pretax ments, by year and in the aggregate, under operating accounting income and taxable income relates to leases having noncancelable lease terms in excess of unfunded pension expense. one year as of December 31, 1991: Income taxes paid during 1991 totaled Dollars in thousands $4,503,000 (1990-$4,124,000 and refunds of ...... $433,000 from a reduction in the allocation of 1992 $ 41,323 income subject to local taxes). 1993 37,796 The Financial Accounting Standards Board 1994 35,305 recendy issued Statement of Financial Accounting 1995 35,259 1996 35,034 Standards No. 109, "Accounting for Income Thereafter 70,970 Taxes," which supersedes Standard No. 96. The adoption of this new standard, which is required by Total future minimum lease payments $ 255,687

o FORTY·NINE ThE DEPOSITORY TRUST CoMPANY ••••••••••••••

PARTICIPANTS t

Banks Daiwa Bank, Limited (The), New Lloyds Bank Pic AfIiliated National Bank-Denver York Agency M&I Marshall & Osley Bank Amalgamated Bank of Dominion Trust Company Manufacturers and Traders New York (The) Fidelity Bank, National Association Trust Company American National Bank & Trust Fiduciary Trust Company Manufacturers Hanover Trust Company of Chicago International Company AmeriTrust Company National Fiduciary Trust Company ofBoston Manufacturers National Bank Association Fifth Third Bank (The) of Detroit AmSouth Bank, N.A. First American Bank, N .A. Marine Midland Bank Bank IV Wichita, National First City, Texas-Houston, N.A. Mark Twain Bank Association First Fidelity Bank, National Marquette Bank Minneapolis, N.A. Bank of America NT & SA Association, New Jersey Mellon Bank, N.A. Bank of Bermuda International First Interstate Bank of Arizona, N.A. Mercantile Bank of St. Louis Limited First Interstate Bank of Califomia National Association Bank ofCalifomia (The) First Interstate Bank of Denver, N.A. Mercantile-Safe Deposit and Bank of New England, N.A. First Interstate Bank of Oregon, N.A. Trust Company Bank of New York (The) First Interstate Bank of Merchants National Bank & Trust Bank of Nova Scotia (The), New Washington N.A. Company of Indianapolis York Agency First National Bank and Trust Michigan National Bank- Bank ofOklahorna, N.A. Company of Tulsa (The) Grand Rapids Bank of St. Louis National Association First National Bank of Boston (The) Midlantic National Bank Bank of Tokyo Trust Company (The) First National Bank of Chicago (The) Morgan Guaranty Trust Company Bank One, Indianapolis, N.A. First National Bank of of New York Bank One Ohio Trust Maryland (The) Morgan Stanley Trust Company Company, N.A. First National Bank of Omaha NBD Bank, N.A. Bank One Wisconsin Trust First of America Bank-Illinois, N.A. NationsBank of Georgia, N.A. Company, N.A. First Tennessee Bank N.A. Memphis NationsBank of North Carolina, N.A. Bank South, N.A. First Trust Corporation NationsBank of Texas, National Bankers Trust Company First Trust National Association Association Barclays Bank PLC, New York First Union National Bank NationsBank of Virginia, N.A. Branch First Wisconsin Trust Company National City Bank Barnett Banks Trust Company, N.A. Fort Wayne National Bank National Westtninster Bank NJ. Bessemer Trust Company French American Banking National Westtninster Bank PLC Boattnen's National Bank Corporation National Westtninster Bank USA of St. Louis (The) Frost National Bank Nationar Boston Safe Deposit and Trust Fuji Bank & Trust Company (The) Nomura International Trust Company Guardian Trust Company Company Brown Brothers Harriman & Co. Goldman Sachs Trust Norstar Trust Company Capital Trust Company Company (The) Northern Trust Company (The) Central Bank of the South Harris Trust & Savings Bank Norwest Bank Minnesota, Central Fidelity Bank, N.A. Hibemia National Bank National Association Central Trust Bank (The) Huntington National Bank Old Kent Bank and Trust Company Chase Lincoln First Bank, N.A. illJ Schroder Bank & Trust Old Kent Bank-Chicago Chase Manhattan Bank, N.A. (The) Company Pacific Inland Bank Chemical Bank IDS Bank & Trust Pittsburgh National Bank Citibank, N.A. INB National Bank Provident Bank (The) Citizens Fidelity Bank and Trust Imperial Trust Company Provident National Bank Company Industrial Bank ofJapan Trust Republic National Bank City National Bank Company (The) of New York Cityttust Investors Bank and Trust Company Riggs National Bank of Comerica Bank Investors Fiduciary Trust Company Washington, D.C. (The) Commerce Bank of Kansas City, N.A. Kellogg--Citizens National Bank Royal Bank of Canada, Connecticut National Bank (The) Key Trust Company New York Branch Continental Bank, National LTCB Trust Company Santa Barbara Bank & Trust Association LaSalle National Bank Sanwa Bank California CoreStates Bank, N.A. Liberty National Bank and Trust Sanwa Bank Limited-N.Y. Branch Crestar Bank Company of Louisville Seattle-First National Bank Custodial Trust Company Liberty Street Trust Company Security Pacific Bank Dai-Ichi Kangyo Bank, Limited Lincoln National Bank & Trust Washington, N.A. (The), New York Branch Company of Fort Wayne Security Pacific National Bank

• F 1FT Y THE DEPOSITORY TRUST CoMPANY 00000000000000

Security Trust Company, N.A. 8rolters-Dealers # Cazenove Incorporated Seligman (J. & W.) Trust Company ABD Securities Corporation Chapdelaine & Co.* Shawmut Bank of Boston, N.A. Acorn Trading, Inc. Charles (J.W.) Securities, Inc. Signet Trust Company Adams-Fastnow Company Inc.* Charles Schwab & Co., Inc. Society Bank Adams, Harkness & Hill, Inc. Chase Securities, Inc. Society National Bank Adler, Coleman & Co., Inc. Chicago Corporation (The) Southeast Bank, N.A. Advest, Inc. Chicago Corporation (The)* SouthTrust Bank of Alabama, N.A. Affina Brokerage Services Inc. Childs (S.W.) Management Star Bank, National Association, Alexander (J.) Securities, Inc. * Corporation Cincinnati Alger (Fred) & Company, Citicorp Securities Markets, Inc. State Street Bank and Trust Incorporated Coast Options, Inc. * Company Allen & Company Incorporated Commerzbank Capital Markets Stock Yards Bank and Trust Alpine Associates Corporation Company American Enterprise Investment Connor, Clark & Co. Limited* Sumitomo Bank of Califomia Services Inc. * Coughlin and Company, Inc. * Sumitomo Trust & Banking American Securities Corporation County NatWest Securities Co. (USA) Arnhold and Bleichroeder (S.), Inc. Corporation USA Summit Bank Asiel& Co. Cowen&Co. Craig-Hallum, Inc. Swiss Bank Corporation BHC Securities Inc. Craigie Incorporated New York Branch BHF Securities Corporation Cresvale International, Limited Team Bank, N.A. BSE Specialist Account* Crews & Associates, Inc. Texas Commerce Bank BT Securities Corporation Crowell, Weedon & Co'* National Association Baer (Julius) Securities Inc. Baird (Robert W.) & Co. Incorporated Dain Bosworth Incorporated Toronto Dominion Bank Daiwa Securities America Inc. (The)-New York Branch Banc One Capital Corporation Barr Brothers & Co., Inc. Darier, Hentsch (Canada) Inc.* Toyo Trust Company of New York Baum (George K.) & Company Datek Securities Corporation Trust Company Bank Bear, Steams Securities Corp. Daugherty, Cole Inc.* Trust Services of America, Inc. Bernstein (Sanford C.) & Co., Inc. Davenport & Co. of Virginia, Inc. Trustrnark National Bank Bidwell & Company* Davidson (D.A.) & Co., Inc.* U.S. Bank of Washington, N.A. Blair (Charles M.) & Co., Inc.* Davis (Shelby Cullom) & Co. Union Bank Blair (William) & Company Deacon, Barclays, Dezoete, Union Bank of Switzerland Bodell, Overcash Anderson Wedd Limited* Union Planters National Bank & Co., Inc.* Deltec Securities Corporation* Union Trust Company Bradford (J.e.) & Co. Desjardins, Deragon, Langlois Ltd.* United Bank of Denver, Brawley Cathers Limited* Deutsche Bank Capital Corporation National Association Brounoff, Claire, & Co., Inc. Diamant Investment Corp.* United Jersey Bank Brown (Alex.) & Sons, Inc. Dillon, Read & Co. Inc. United Missouri Bank of Kansas Brown & Company Securities Disnat Investment Inc. * City,N.A. Corporation Doft & Co., Inc. United States National Bank Bunting Warburg Incorporated* Dominick & Dominick, Incorporated of Oregon Burke (p.R.) & Co., Inc. Donaldson, Lufkin &Jenrette United States Trust Company Bums Fry Hoare Govett Inc. Securities Corp.* of New York Bums Fry Limited* Donaldson, Lufkin & Jenrette Valley Bank of Nevada Bums, Pauli & Co., Inc. Securities Corporation Valley National Bank of Arizona Butler (K.R.), Inc.* Drexel Burnham Lambert Valley Trust Company Butler, Wick & Co., Inc. Incorporated A Wachovia Bank of Georgia, N.A. Campbell (D.A.) Co., Inc.* Dunhill Securities Wachovia Bank of North Campbell, Waterman, Inc.* Easton & Co. Carolina, N.A. Cantella & Co., Inc. Edwards (A.G.) & Sons, Inc. Wells Fargo Bank, National Cantor Fitzgerald & Co. Egan, Marrin & Rubano Inc. * Association Cantor Fitzgerald Fixed Income Einhorn&Co. Wells Fargo Institutional Brokers, Inc. Elwood (R.W.) & Co., Inc. Trust Company Cantor (S.B.) & Co., Inc.* Equity Securities Trading Co., Inc. * Wesbanco Bank Wheeling Capital Shares, Inc. * Ernst & Co. Wilmington Trust Company Carr Securities Corporation Exchange Services, Inc. * Women's Federal Savings Bank Carroll McEntee & McGinley Execution Services Incorporated Yasuda Bank and Trust Securities, Inc. Fagenson & Co., Inc. Company (U.S.A.) Carty & Company, Inc. Fahnestock & Co., Inc. Zions First National Bank Cassels Blaikie & Co., Inc. * Fechtor, Detwiler & Co., Inc. * t As rifDecember 31, 1991

o FIFTY-ONE ThE DEPOSITORY TRUST CoMPANY ••••••••••••••

Femandez, Bartsch & Mirra Jacobson (Benjamin) & Sons Merrill Lynch Specialists Inc.' First Alabama Investments, Inc. Janney Montgomery Scott Inc. Merrimack Valley Investment Inc.' First Albany Corporation Jefferies & Company, Inc. Mesirow Financial, Inc. First Boston Canada Limited' Jefferies & Company, Inc.* Midland Walwyn Capital Corp.' First Boston Corporation (The) Jones (Edward D.) & Co. Mitchum Securities, Inc. First Investors Corporation K.K. & Company' Montgomery Securities First Manhattan Co. Kalb, Voorhis & Co. Morgan (J.P.) Securities Inc. First Marathon Securities Limited' Kankaku Securities (America) Inc. Morgan, Keegan & Company, Inc. First of Michigan Corporation' Kawano (H.) & Co., Inc.' Morgan Stanley & Co. Incorporated First Options of Chicago, Inc.' Keeley (KJ) & Co., Inc.* Moss, Lawson & Co. Limited' First Southwest Company Kellner, Dileo & Co. Murphey, Marseilles, Smith Frank (Walter N.) & Co. Kemper Clearing Corp. & Nanunack Frankel (Wm. V.) & Co., Inc.' Kenny (JJ) Drake, Inc.' Murphy & Durieu Freeman Securities Company, Inc. Kessler Asher Clearing, Inc. N.B. Clearing Corporation Freeman Welwood & Co., Inc. Kidder, Peabody & Co. Incorporated National Financial Services Corp" Fried (Albert) & Co. King (C.L.) & Associates Inc. National Financial Services G.B. Securities, Inc.' Knox (W.L.) & Company Corporation Gage-Wiley & Company, Inc.' Koonce Securities, Inc.' Nesbitt Thomson Deacon Inc.' Gant (J.W.) & Associates, Inc.' LIT America Inc. Neuberger & Berman Garat& Co.' LIT America, Inc.' New Japan Securities Geldermann Securities Inc. L.O.M. Western Securities Ltd.' International, Inc. Gill Trading L.P.' LaBranche & Co. New Windsor Associates, L.P. Glickenhaus & Co. Lafferty, Harwood & Partners Ltd.* Newbridge Securities Inc. Gnubrokers of Corporates, Inc. Larkin (Emmett A.) & Co., Inc.' Newhard, Cook & Co. Incorporated D/B/A Fundamental Corporate Lashco, Inc.' Nikko Securities Co. Bond Brokers Lawrence (CJ) Inc. International, Inc. (The) Goldman Sachs Canada' Lawrence, O'Donnell, Marcus & Co. Nomura Securities International, Inc. Goldman, Sachs & Co. Lazard Freres & Co. Nuveen (John) & Co. Incorporated Goldman Sachs Money Markets, L.P. Legg Mason Wood Walker, Inc. O'Connor & Associates Gordon&Co. Lehman Special Securities Inc. Odlum Brown Limited' Gordon Capital Corporation' Lerner (David) Associates, Inc. Offerman & Co., Inc. * Gordon Capital Inc. Levesque, Beaubien Inc.* Olde Discount Corporation* Greenline Investor Services Inc.' Lewco Securities Corp. Olde Discount Corporation Greenwich Capital Markets, Inc. Loewen Ondaa~e, McCutcheon Oppenheimer & Co., Inc. Gruntal & Co. Incorporated & Company Ltd.' Pacific Brokerage Services, Inc. Gruss (Oscar) & Son Incorporated MKI Securities Corp. Pacific Post Partners, Ltd" Hamilton Investments, Inc. Mabon Securities Corp. Paine Webber Incorporated Hanauer (J.B.) & Co. MacAllaster Pitfield Mackay, Inc. Paine Webber Specialists Inc.' Hancock (John) Clearing Corporation MacDougall, MacDougall & Paribas Corporation Hanifen, Imhoff, Inc.' MacTier, Inc.' Payson (H.M.) & Co" Hartfield (J.F.) & Co., Inc.' Madoff(Bernard L.) Pflueger & Baerwald Inc.' Henderson Brothers, Inc. Manufacturers Hanover Securities Pforzheimer (Carl H.) & Co. Henry Krieger/DBI, L.P. Corporation Pictet (Canada) and Company, Herzog, Heine, Geduld, Inc. Marcus Schloss & Co., Inc. Limited' Hibbard Brown & Co., Inc. Mayer & Schweitzer, Inc. Piper, Jaftray & Hopwood Hill, Thompson, Magid & Co., Inc.' McCourtney-Breckenridge & Incorporated Hilliard (JJ.B.), Lyons (W.L.), Inc. Company' Porter, White & Yardley, Inc. Hopkins, Harbach & Co.' McDaniel Lewis & Co. Preferred Technology, Inc.* Hough (William R.) & Co. McDonald & Company Securities, Inc. Primevest Financial Services, Inc. Howard, Weil, Labouisse, Meehan (MJ) & Company Principal/Eppler, Guerin & Friedrichs Incorporated Melville (Ronald E.) Inc.* Turner, Inc. (The) Hull Trading Co. Mercator Partners Prudential Securities Incorporated Hummer (Wayne) & Co. Mericka & Co., Inc" RAF Financial Corporation* Hundeigh Securities Corporation Meridian Asset Management, Inc. RBC Dominion Securities Hutchinson, Shockey, Erley & Co. Meridian Securities International Ltd. ' Corporation !cahn & Co., Inc. Merit Investment Corporation* RBC Dominion Securities, Inc" Ingalls & Snyder Merrill Lynch Government RSF Partners Instinet Corporation Securities Inc. Ragen MacKenzie Incorporated Interstate/Johnson Lane Corporation Merrill Lynch, Pierce, Fenner & Rauscher Pierce RefSnes, Inc. InvestNet Corporation Smith Incorporated Raymond,Jarnes & Associates, Inc.

• FIFTY·TWO THE DEPOSITORY TRUST CoMPANY 1ll[3[l!"lD!H10DElIllDElD

Reaves (W.H.) & Co., Inc. Titus & Donnelly Inc. * Participant in the Same-Day Refco Securities, Inc. T ransat1antic Securities Company Funds Settlement System* Regional Clearing Corp. UBS Securities Inc. Adams, Harkness & Hill, Inc. Research Capital Corporation* U.S. Clearing Corp. Advest, Inc. Richardson Greenshields Universal Securities Corporation Amalgarnated Bank of New Securities, Inc. Vail Securities Investment, Inc. York (The) Rimson (M.) & Co., Inc. Van Kampen Metritt Inc. American National Bank & Trust Robb, Peck, McCooey Clearing W&D Securities Company of Chicago Corporation Wachovia Securities, Inc. AmeriTrust Company National Robertson, Stephens & Company WSI Stock Loan* Association Rodman & Renshaw, Inc. Wachtel & Co., Inc. Asiel& Co. Roney & Co. Wagner Stott Clearing Corp. BT Securities Corporation Roosevelt & Cross Inc. Wall Street Equities Incorporated* Baird (Robert W.) & Co. Incorporated Rothschild Inc. Walsh, Greenwood & Co. Banc One Capital Corporation Rothschild (L.F.) & Co. Incorporated Warburg (S.G.) & Co. Inc. Bank One Ohio Trust Roulston Research Corp. Waterhouse Securities Inc. Company, N.A. SBCI Swiss Bank Corporation Wechsler & Krumholz, Inc. Bank of America NT & SA Investment Banking Inc. Wedbush Morgan Securities Inc. * Bank of New England, N.A. Sage Clearing Corporation* Weeden & Co.* Bank of New York (The) Sage, Rutty & Co., Inc. Weiss, Peck & Greer Bank of Tokyo Trust Company (The) Bankers Trust Company Salomon Brothers Inc Wellington (H.G.) & Co. Inc. Baum (George K.) & Company Sanwa McCarthy Securities Limited* Wheat, First Securities, Inc. Schapiro (M.A.) & Co., Inc. Whitaker (Don C.) Inc.* Bear, Stearns Securities Corp. Bernstein (Sanford C.) & Co., Inc. ScotiaMcLeod Inc. * Wilshire Associates Incorporated* Blair (William) & Company ScotiaMcLeod (USA) Inc. Wilson (L.W.) & Co., Inc.* Boston Safe Deposit and Trust Scott & Stringfellow Investment Witter (Dean) Reynolds Inc. Company Corporation Wolfe & Hurst Bond Brokers, Inc. Bradford (J.C.) & Co. Seasongood & Mayer Wolfe & Hurst Bond Brokers, Inc. * Seattle-Northwest Securities Brown (Alex.) & Sons, Inc. Wood (ArthurW.) Company* Corporation Brown Brothers Harriman & Co. Wood Gundy Corp. Seidel (Morton) & Co. Inc.* Buder, Wick & Co., Inc. Wood Gundy Inc.* Seidler Amdec Securities Inc. * Central Bank of the South Yamaichi International (America), Inc. Shearson Lehman Brothers Inc. Central Fidelity Bank, N.A. Yamaichi International Shearson Lehman Brothers Inc. * Charles Schwab & Co., Inc. (America), Inc. * Smith Barney, Hartis Upham Chase Manhattan Bank, N.A. (The) Y orkton Securities Inc. * & Co. Incorporated Chase Securities, Inc. Ziegler (B.C.) and Company Smith, Moore & Co. * Chemical Bank Ziegler Thrift Trading, Inc.* Smith New Court, Carl Marks Inc. Chicago Corporation (The) Societe Generale Securities Citibank, N.A. Corporation Citicorp Securities Markets, Inc. Clearing Agencies Southwest Securities, Inc. Citizens Fidelity Bank and Trust Canadian Depository for Securities Spear, Leeds & Kellogg Company Spear Rees & Co.* Limited (The)* City National Bank Spectrum Trading Partners, L.P. Central Depository (pte.) Ltd. Connecticut National Bank (The) Steichen (RJ.) & Company* (Singapore)** Continental Bank, National Stephens, Inc. International Securities Clearing Association Stern & Kennedy Corporation CoreStates Bank, N.A. Stern (M.L.) & Co., Inc.* Japan Securities Clearing Corp.** Cowen & Co. Sterne, Agee & Leach, Inc. Midwest Securities Trust Company Craigie Incorporated Stifel, Nicolaus & Company National Securities Clearing Crestar Bank Incorporated Corporation Custodial Trust Company StockCross, Inc. * Options Clearing Corporation (The) Dai-Ichi Kangyo Bank, Limited Stoever, Glass & Co., Inc. Philadelphia Depository Trust (The), New York Branch Stokes, Hoyt & Co. Company Dain Bosworth Incorporated Stone & Y oungberg* Daiwa Bank, Limited (The), New Streicher (J.) & Co. # Excludes some firms with limited activity York Agency Swiss American Securities Inc. *National Securities Clearing Corporation Daiwa Securities America Inc. TCWInc.* Sponsored Aaount Davenport & Co. of Virginia, Inc. Thomson Kernaghan & Co., Ltd.* ** International Securities Clearing Davis (Shelby Cullom) & Co. T irnber Hill Inc. Corporation Sponsored Aaount Deutsche Bank Capital Corporation

[l FIFTY·THREE ThE DEPOSITORY TRUST CoMPANY ••••••••••••••

Dillon, Read & Co. Inc. Key Trust Company Northern Trust Company (The) Dominick & Dominick, Incorporated Kidder, Peabody & Co. Incorporated Norwest Bank Minnesota, Donaldson, Lufkin &Jenrette LaSalle National Bank National Association Securities Corporation Lazard Freres & Co. Nuveen Oohn) & Co. Incorporated Drexel Burnham Lambert Legg Mason Wood Walker, Inc. Old Kent Bank-Chicago Incorporated Lehman Special Securities Inc. aIde Discount Corporation Edwards (A.G.) & Sons, Inc. Lerner (David) Associates, Inc. Oppenheimer & Co., Inc. Fahnestock & Co., Inc. Lewco Securities Corp. Paine Webber Incorporated Fidelity Bank, National Association LTCB Trust Company Philadelphia Depository Trust Fiduciary Trust Company MKI Securities Corp. Company International Mabon Securities Corp. Piper,Jaffray & Hopwood Fifth Third Bank (The) Manufucturers and Traders Incorporated First Alabama Investments, Inc. Trust Company Pittsburgh National Bank First Albany Corporation Manufucturers Hanover Securities Principal/Eppler, Guerin & First American Bank, N .A. Corporation Turner, Inc. (The) First Boston Corporation (The) Manufacturers Hanover Provident Bank (The) First City, Texas-Houston, N.A. Trust Company Provident National Bank First Fidelity Bank, National Manufacturers National Bank Prudential Securities Incorporated Association, New Jersey of Detroit RBC Dominion Securities First Interstate Bank of California Marine Midland Bank Corporation First Interstate Bank of Denver, N.A. Marquette Bank Minneapolis, N.A. Rauscher Pierce RefSnes, Inc. First Interstate Bank of McDonald & Company Raymond, J~es & Associates, Inc. Washington N.A. Securities, Inc. Refco Securities, Inc. First National Bank ofBoston (The) Mellon Bank, N.A. Rodman & Renshaw, Inc. First National Bank of Chicago (The) Mercantile-Safe Deposit & Trust Roney & Co. First National Bank of Company SBCI Swiss Bank Corporation Maryland (The) Merchants National Bank & Trust Investment Banking Inc. First Tennessee Bank N.A. Memphis Company of Indianapolis Salomon Brothers Inc First Trust National Association Merrill Lynch, Govemment Sanwa Bank California First Wisconsin Trust Company Securities Inc. Sanwa Bank Limited-N.Y. Branch Freeman Welwood & Co., Inc. Merrill Lynch, Pierce, Fenner & Scotia McLeod (USA) Inc. Fried (Albert) & Co. Srnith Incorporated Scott & Stringfellow Investment Fuji Bank & Trust Company (The) Mesirow Financial Inc. Corporation Goldman, Sachs & Co. Midlantic National Bank Seattle-First National Bank Goldman Sachs Money Markets, L.P. Morgan Guaranty Trust Company Security Pacific Bank Goldman Sachs Trust Company of New York Washington, N.A. Greenwich Capital Markets, Inc. Morgan O.P.) Securities Inc. Security Pacific National Bank Gruntal & Co. Incorporated Morgan, Keegan & Company, Inc. Shawmut Bank of Boston, N.A. Hamilton Investments, Inc. Morgan Stanley & Co. Incorporated Shearson Lehman Brothers Inc. Hancock Oohn) Clearing Corporation N.B. Clearing Corporation Smith Bamey, Harris Upham & Harris Trust & Savings Bank NBD Bank, N.A. Co. Incorporated Herzog, Heine, Geduld, Inc. National City Bank Societe Generale Securities Hibernia National Bank National Financial Services Corporation Hilliard OJ-B.), Lyons (W.L.), Inc. Corporation Society National Bank Hough (William R.) & Co. National Westminster Bank NJ­ South Trust Bank of Alabama, N.A. Howard, Weil, Labouisse, National Westminster Bank USA Southwest Securities, Inc. Friedrichs Incorporated NationsBank of Georgia, N.A. State Street Bank and Trust Company Hummer (Wayne) & Co. NationsBank of North Carolina, N.A. Stephens, Inc. Huntington National Bank NationsBank of Texas, National Sterne, Agee & Leach, Inc. Hutchinson, Shockey, Erley & CO. Association Stifel, Nicolaus & Company IBJ Schroder Bank & Trust Company NationsBank of Virginia, N.A. Incorporated IDS Bank & Trust Nationar Swiss American Securities Inc. Interstate/Johnson Lane Corporation Neuberger & Berman Swiss Bank Corporation New Investors Bank & Trust Company New Japan Securities York Branch Janney Montgomery Scott Inc. International, Inc. Toronto-Dominion Bank (The) Jefferies & Company, Inc. Newbridge Securities Inc. Trust Company Bank Jones (Edward D.) & Co. Nikko Securities Co. International, UBS Securities Inc. Kellogg--Citizens National Bank Inc. (The) U.S. Clearing Corp. Kemper Clearing Corp. Nomura Securities International, Inc. Union Planters National Bank

• FIFTY·FOUR THE DEPOSITORY TRUST CoMPANY 00000000000000

United Bank of Denver, National Chapdelaine & Co. Mercantile Trust Co. Association Charles (JW) Securities, Inc. Mercantile Trust Company United Missouri Bank Chase Lincoln First Bank, N.A. National Association of Kansas City, N.A. Citytrust Michigan National Bank United States National Bank Comerica Bank Morgan Stanley Trust Company of Oregon Commerce Bank of Kansas Murphy, Marseilles, Smith United States Trust Company of City,N.A. & Narnrnack New York Commerzbank Capital Markets New Jersey National Bank Van Kampen Merritt Inc. Corporation Norstar Trust Company Wachovia Bank of Georgia, N.A. Craig-Hallum, Inc. Offerman & Co., Inc. Wachovia Bank of North Crews & Associates, Inc. Old Kent Bank and Trust Company Carolina, N.A. Daiwa Securities America Inc. Payson (H.M.) & Co. Wagner Stott Clearing Corp. Davidson (D.A.) & Co., Inc. RAF Financial Corporation Wall Street Investment Services Doft & Co., Inc. Ragen MacKenzie Incorporated Weiss, Peck & Greer Dominion Trust Company Republic National Bank Wells Fargo Bank, National Easton & Co. of New York Association Equity Securities Trading Co., Inc. Riggs National Bank of Wells Fargo Institutional Trust Ernst & Co. Washington, D.C. (The) Company FKT-First National Bank Robb, Peck, McCooey Wesbanco Bank Wheeling of Louisville Clearing Corporation Wheat, First Securities, Inc. Fiduciary Trust Company of Boston Royal Bank of Canada, Wilmington Trust Company First American Bank of Georgia New York Branch Witter (Dean) Reynolds Inc. First Interstate Bank of Arizona, N.A. Seattle-Northwest Securities Women's Federal Savings Bank First Manhattan Co. Corporation Yarnaichi International (America), Inc. First National Bank and Trust Signet Trust Company Ziegler (B.c.) and Company Company of Tulsa (The) Southeast Bank, N.A. Zions First National Bank First National Bank Chicago/First Star Bank, National Association Chicago Capital Markets, Inc. Steichen (RJ.) & Company *As rifDecember31, 1991 First National Bank of Omaha Stem (M.L.) & Co., Inc. First of Michigan Corporation Summit Bank First Southwest Company Sumitomo Bank of California Indirect SDFS Participation * ** First Trust Corporation Team Bank, N.A. ABD Securities Corporation First Union National Bank Texas Commerce Bank National Adler, Coleman & Co., Inc. First Wachovia Brokerage Service Association Afliliated National Bank-Denver Corporation Trustrnark National Bank American Securities Corporation Fort Wayne National Bank Trust Services of America, Inc. AmSouth Bank, N.A. Freeman Securities Company, Inc. Trustcorp Bank, Ohio BHF Securities Corporation Frost National Bank U.S. Bank of Washington, N.A. Baer (Julius) Securities Inc. Gnubrokers of Corporates, Inc. Union Bank Bank IV Wichita, National D/B/A Fundamental Corporate Union Bank of Switzerland Association Bond Brokers Union Trust Company Bank ofBerrnuda International Gruss (Oscar) & Son Incorporated Valley National Bank of Arizona Limited Hanifen, Imhoff, Inc. Valley Trust Company Bank of California (The) Imperial Trust Company Wedbush Securities, Inc. Bank of Montreal, New York Branch Indiana National Bank (The) Wellington (H.G.) & Co. Inc. Bank of Oklahoma, N.A. Kalb, Voorhis & Co. Wheeling Dollar Bank Bank One, Indianapolis, N.A. Kenny (J J.) Drake, Inc. Ziegler Thrift Trading, Inc. Bank One Wisconsin Trust King (C.L.) & Associates Inc. Company, N.A. Knox (W.L.) & Company * These firms are also dired Partiapants in Bank South, N.A. Larkin (Emmett A.) & Co., Inc. DTC's Next-Day Funds Settlement Barnett Banks Trust Company, N.A. Lawrence (CJ.) Inc. system. Bidwell & Company Legg Mason Wood Walker, Inc. **As rifDecember 31, 1991 Boatmen's First National Bank Lerner (David) Associates, Inc. of Oklahoma Liberty National Bank and Trust Boatmen's National Bank of Company of Louisville St. Louis (The) Lincoln National Bank & Trust Cantor Fitzgerald Fixed Income Company of Fort Wayne Brokers, Inc. Lloyds Bank Pic Central Trust Company M&I Marshall & Ilsley Bank

o FIFTY·FIVE THE DEPOSITORY TRUST CoMPANY ••••••••••••••

DlC nOCKHOLDER5*

Affiliated National Bank-Denver First Boston Corporation (The) NBD Bank, N.A. American Stock Exchange Clearing First City, Texas-Houston, New York Stock Exchange, Inc. Corporation NatiollaI Association Nikko Securities Co. American Stock Exchange Inc. First Fidelity Bank, National International, Inc. (The) AmeriTrust Company Association, New Jersey Nomura Securities International, Inc. AmSouth Bank, N.A. First Interstate Bank of Califomia Norstar Trust Company Arnhold and Bleichroeder (S.), Inc. First Interstate Bank of Denver, N.A. North;m Trust Company (The) BT Securities Corporation First Interstate Bank of Oregon, N.A. Norwest Bank Minnesota, Baer (Julius) Securities Inc. First Interstate Bank of National Association Bank of America NT & SA Washington N.A. Oppenheimer & Co., Inc. Bank ofCalifomia (The) First National Bank and Trust PaineWebber Incorporated Bank of New York (The) Company of Tulsa (The) Paribas Corporation Bank ofTokyo Trust Company (The) First National Bank of Boston (The) Pforzheimer (Carl H.) & Co. Bank One Ohio Trust First National Bank of Chicago (The) Reaves (W.H.) & Co., Inc. Company, N.A. First National Bank of Roosevelt & Cross Bankers Trust Company Maryland (The) SBCI Swiss Bank Corporation Barclays Bank PLC First Tennessee Bank N.A. Memphis Investment Banking Inc. Barnett Banks Trust Company, N.A. First Trust National Association Salomon Brothers Inc Bear, Stearns Securities Corp. Fort Wayne National Bank Santa Barbara Bank & Trust Boatmen's National Bank of Frost National Bank Sanwa Bank California St. Louis (The) Goldman Sachs Money Markets, L.P. Scott & Stringfellow Investment Boston Safe Deposit and Goldman, Sachs & Co. Corporation Trust Company Gruss (Oscar) & Son Incorporated Seattle-Northwest Securities Brouno£[, Claire, & Co., Inc. Hibbard Brown & Co., Inc. Corporation Brown (Alex.) & Sons, Inc. Hough (WilliamR.) & Co. Security Pacific National Bank Brown Brothers Harriman & Co. Huntington National Bank Security Trust Company, N.A. Carty & Company, Inc. IDS Bank & Trust Shawmut Bank of Boston, N.A. Cazenove Incorporated Imperial Trust Company Smith New Court, Carl Marks Inc. Central Bank of the South Investors Bank and Trust Company Star Bank, National Association, Central Trust Bank Key Trust Company Cincinnati Chase Lincoln First Bank, N.A. LaBranche & Co. State Street Bank and Trust Company Chase Manhattan Bank, N.A. (The) Lehman Special Securities Inc. Stock Clearing Corporation Chemical Bank Lewco Securities Corp. Stock Yards Bank and Trust Cincinnati Stock Exchange (The) MacAllaster Pitfield Mackay, Inc. Company Citibank, N.A. Manufacturers and Traders Swiss American Securities Inc. Citicorp Securities Markets, Inc. Trust Company Swiss Bank Corporation City National Bank Manufacturers Hanover Trust New York Branch Connecticut National Bank (The) Company Team Bank, N.A. Continental Bank, National Marcus Schloss & Co., Inc. Texas Commerce Bank Association Matine Midland Bank, N.A. National Association CoreStates Bank, N.A. Mayer & Schweitzer, Inc. Timber Hill Inc. County NatWest Securities Mellon Bank, N.A. Trust Company Bank Corporation USA Merchants National Bank & Trust United Missouri Bank of Craigie Incorporated Company of Indianapolis Kansas City, N.A. Crews & Associates, Inc. Merrill Lynch & Co., Inc. United States Trust Company Custodial Trust Company Michigan National Bank of New York Daiwa Securities America, Inc. Midlantic National Bank Valley Bank of Nevada Dominion Trust Company Morgan Guaranty Trust Company Valley National Bank of Arizona Donaldson, Lufkin & Jenrette of New York Van Kampen Metritt Inc. Securities Corporation Morgan Stanley & Co. Incorporated Wachovia Bank of North Edwards (A.G.) & Sons, Inc. National Association of Securities Carolina, N.A. Execution Services Incorporated Dealers, Inc. Waterhouse Securities Inc. Fagenson & Co., Inc. National City Bank Wechsler & Krumholz, Inc. Fahnestock & Co., Inc. National Westminster Bank NJ. Wells Fargo Bank, National Fidelity Bank, National Association National Westminster Bank PLC Association Fiduciary Trust Company National Westminster Bank USA Wilmington Trust Company International NationsBank of Georgia, N.A. Wood Gundy Corp. Fiduciaty Trust Company of Boston NationsBank of North Carolina, N.A. Zions First National Bank First Alabama Investments, Inc. NationsBank of Texas, N.A. First Albany Corporation NationsBank of Virginia, N.A. *As

DTC would like to thank The Pierpont Morgan Library in New York City, which provided the locationfor the photographs on pages 13, 14,20,33 and 35.

• FIFTY-SIX The Depository Trust Company 55 Water Street, New York, NY 10041 (212) 898-1200