Annual Report 1980

The Depository• Trust Company The ability of Depository Trust to conduct its activities rests largely on modern computer technology, reflecting a long chain of developments in several disciplines.

Automated calculating and recordkeeping are the essence of DTC's book-entry capability. Telecommunications devices facilitate the flow of information among Participants, transfer agents, and others throughout the financial community. The ability to utilize minute intervals of time permits computers to operate in billionths of a second.

The illustrations in this report depict historical developments in each of these disciplines.

The graphic theme and appearance of this Annual Report were conceived by David S. Jobrack, Executive Assistant to the Chairman, who also acted as Creative Director throughout the production process, and wrote, edited and/or compiled the text, illustrations and captions.

1980 Annual Report

Highlights. 2 Computer Communications A Message from Management...... 3 Facility (CCF) . 28 History, Ownership and Policies...... 4 Other Automation Developments .... 28 Growth in 1980 .... 6 Interfaces in a National Clearance and Settlement System ...... 30 Eligible Issues. .8 Municipal Bond Program ..... 8 Protection for Participants' Securities ..... 32 Outlook for Institutional Use. 10 Officers and Directors of The Institutional Delivery (ID) Depository Trust Company.. 38 System. 14 1980 in Retrospect . .40 Basic Services 16 Financial Statements...... 46 Fast Automated Securities Participants. 54 Transfer (FAST) .' 17 Stockholders...... 56 Ancillary Services. 20 Depository Facilities ... 56 ...... 20 Dividends Pledgees ...... 57 Voting Rights. 21 Banks Reported to be Participating in Other Ancillary Services. 22 the Depository on an Indirect Basis 57 The Automation of Depository Services. . 26 Investment Companies Reported Participant Terminal System (PTS). 26 to be Using Depository Services. . 59 Automated Participant Institutions Participating Fully in the Interface (API) 27 Institutional Delivery (ID) System. . .. 60

The Depository Trust Company, 55 Water Street, New York, New York 10041 212-558-8000 Highlights

At the End of the Year: 1980 1979 Participants 333 316 Broker-Dealers 249 236 Banks 78 74 Clearing Agencies 6 6 Pledgees 98 101 Depository Facilities 34 33 Eligible Security Issues 14,233 13,232

(In Billions) Value of Securities on Deposit $493 $305 Bank Deposi ts $358 $214 Broker-Dealer Deposits $135 $ 91 Number of Shares on Deposit 13.7 9.7 Bank Deposits 7.7 5.3 Broker-Dealer Deposits 6.0 4.4 Principal Amount of Debt Securities on Deposit $68.7 $41.0 Bank Deposits $60.0 $33.0 Broker-Dealer Deposits $ 8.7 $ 8.0

Value of Securities Pledged for Collateral Loans $ 6.7 $ 6.8

Value of FAST Balance Certificates at Transfer Agents $162.7 $79.8

Total for the Year: (In Billions) Market Value of Book-Entry Deliveries $1,260 $684 II] Cash Dividend and Interest Payments $19.3 $12.2 2 A French mantel clock, circa 1800. The main face has date and day indicators in addition to hour, minute, and second hands. Separate dials show the lunar date (top) and month of the year. Made of gilt bronze, pale marble and colored enamel, this clock typifies the richness of design characteristic of late 18th-century timepieces.

Front cover: Fashioned in Nuremberg, circa 1570, this table clock of gilt bronze with iron works is the oldest known clock with a second hand. Its various dials and indicators show the position of the sun in the zodiac, the day of the week, and the date of the month, against a richly decorated background designed to please the eye of the beholder.

Page 1: Dating back to the first half of the 15th century, this lavishly ornate table clock was made for Philip the Good of Burgundy. It is the oldest extant example of a spring-driven clock with a fusee-a device to regulate the power produced by the spring.

A Message from Management

While every year sees new records set customers-contributed greatly to the continue to stress use of the depository's at this still-early stage of Depository immobilization of certificates in the Institutional Delivery system. Trust's growth, the new peaks in 1980 depository and to the activity which As the year closed, DTC moved trading volumes experienced by the occurs thereafter. Bank Participants rose toward development of the next important nation's securities markets led to more to 78 this year, with more than 266 service it can render its Participants-a record-breaking highs this year than usual additional banks participating indirectly in major program to provide depository for DTC. Given the depository's role in DTC through correspondent relationships services for municipal bonds, some $350 the post-trade processing of corporate with a number of these direct bank billion of which are currently outstanding. securities transactions, this is not Participants. The securities of other You will hear more on this subject as surprising. The volumes were nonetheless institutional clients of these banks added 1981 unfolds. impressive. In 1980, for example: to these figures, as private pension funds, public retirement funds, investment We wish to thank the members of • computerized book-entry deliveries companies, and insurance companies DTC's staff for their outstanding effort of securities among Participants rose continued their gradual but ineluctable during 1980 to provide users with to almost $1.3 trillion, up 84% over movement toward depository usage. efficient, accurate and dependable service. 1979; Their professionalism evidenced the With 100 million share trading days principle on which this service • the value of securities in our custody commonly forecast to occur at some point organization is based. We wish also to rose to $493 billion at yearend, up in the months ahead, one can only hope express our appreciation to those officers 62% from one year earlier; that this broad institutional adaptation to of Participants and to industry committees a depository environment moves rapidly • shares of common stock on deposit whose contributions helped make the enough to avert significant operational rose to 13.7 billion, up by 4 billion quality and quantity of DTC's services to problems for the financial industry should shares from a year earlier; and users possible. such volumes occur on a sustained basis. • almost 51 million securities certificates Both institutional self-interest and the were deposited into and/or withdrawn common interest of the financial industry from DTC during the year. are at stake here: it is cost savings in trade ~::'nu~r;Z settlements which creates institutional self­ Chairman & Chief ExecutitJe Officer Yet it was not trading volume alone interest in DTC participation, and it is in which established these and other the common interest of all parties to processing records. Growing participation institutional transactions to bring about of banks in the depository-both for their conditions which reduce processing costs Conrad F. Ahrens own accounts and for their institutional and errors. Accordingly, we do and will President & Chief Operating Officer 3 -----History, Ownership and Policies

The Depository Trust Company (DTC) was born out of the securities industry's paperwork crisis in the late 1960s, when processing problems caused major disrup­ tion in the financial industry. Accordi'ngly, the depository's first and continuing mandate is to provide efficient, secure and accurate post-trade processing services for industry, particularly the bank sector. transactions in U.S. securities markets. The initial sale of DTC stock by the Three concepts underlie DTC's effort NYSE to DTC bank Participants and other to carry out this charge. First, the self-regulatory organizations representing immobilization of its user Participants' broker-dealer Participants occurred on securities in the depository reduces the October 31, 1975, after various state laws need for Participants to maintain their restricting depository ownership had been own certificate safekeeping facilities. amended. The stockholder base was Second, a computerized book-entry broadened in October 1976, when the system-in which changes of ownership NYSE acted to give broker-dealers the interest are recorded in the depository's right to own DTC stock directly. These records-replaces costly, problem-prone actions established the nature of the physical delivery of securities for depository as an organization owned by settlement. Third, the communications its users or their representatives. system through which DTC acts for its Participants with transfer agents across the country permits more efficient registration The Governance of certificates for those desiring them. of the Depository In 1968, these concepts were The procedures for the governance of implemented by the New York Stock Depository Trust are carefully framed to Exchange through that organization's reflect the need for objectivity in serving Central Certificate Service (CCS), a diverse users in the financial community. securities depository established to serve NYSE member firms. Pursuant to plans The right to purchase capital stock developed by the ad hoc Banking and of the depository is based on a formula Securities Industry Committee in 1970- which takes into account each 72, DTC was created in early 1973 to Participant's use of the depository during acquire the business of CCS and to the preceding calendar year. The expand the benefits of the depository calculation of use is based equally on llIJ approach to other areas of the financial fees paid to the depository during that 4 Even before the invention of the clock, it was possible to keep time with enough precision to meet the needs of the day-literally-with a sundial. Left: A silver equinoctial dial fashioned by Chapotot, a leading dialmaker of the late 17th century. The plate is inclined in the plane of the equator, while a fine thread stretched between the holes of the alidade casts the sun's shadow as a line across the appropriate marker on the face. Right: A small horizontal sundial, circa 1730, by the dialmaker Butterfield, who did most of his work at the court of Louis XIV. The compass in the bowl permits the user to align the dial with the earth's axis.

'ear and the market value of long stockholders to 59, comprising 30 broker­ they are stockholders, such revenues ecurities positions in DTC on the last dealers, 25 banks and 4 self-regulatory as the Board of Directors believes exceed ,usiness day of each month of the year. organizations and clearing agencies. The 30 the funds required for the depository's ~he purchase price of the DTC stock is broker-dealer stockholder Participants operation. Pursuant to this policy, DTC 'ased on its book value at yearend. owned approximately 11 % of DTC stock. refunded $12.1 million to users in 1980. The 25 bank Participants owned Each year, the amount of stock each The Depository Trust Company is approximately 35% of DTC stock. The 'articipant is entitled to purchase is regulated by the Securities and Exchange ownership interests of the self-regulatory ecalculated to reflect annual variations Commission under the Securities and organizations, which were required to sell tl usage. Participants may purchase any, Exchange Act of 1934, as amended. As a stock to accommodate Participant 11, or none of the stock to which they are member of the Federal Reserve System elections to purchase, declined to ntitled, as they see fit. and a New York State limited purpose approximately 42.8% for the New York trust company, it is also regulated by the The annual stock reallocation occurs Stock Exchange, 5.7% for the American Board of Governors of the Federal ,rior to the annual stockholders' meeting Stock Exchange, and 5.7% for the Reserve System and the New York State tl late March so that stockholders will be National Association of Securities Dealers. Banking Department. ble to vote newly acquired shares in the It is the depository's policy not to pay lection of the Board of Directors, which Total Securities on Deposit akes place at that meeting. Elections are dividends to stockholders. This policy (In Billions of Dollars) onducted under a system of cumulative is based on the belief that distribution oting which ensures that no group of depository ownership should not be ontro11ing more than 50% of the stock viewed as an investment vehicle, but an elect all Directors. Representation on rather as a means by which diverse users he Board is thereby made available to may encourage DTC's responsiveness to lsers from various sectors of the financial their needs through the exercise of their ommunity in proportion to their use of voting rights. The make-up of the he deposi tory. depository's Board of Directors reflects this effort to be, and to remain, At the conclusion of the annual responsive to user needs. 'ea11ocation of DTC stock entitlements n March 1980, elections to purchase It is a further policy of DTC to limit 1977 1978 1979 1980 :ntitlements increased the number of profits and return to users, whether or not 5 ...... ·~rowth in 1980

By virtually all standards, 1980 was a year of unprecedented activity for the nation's securities markets. The year was marked by a new high in average daily trading volume of almost 45 million shares on the New York Stock Exchange, and the breaking of the Dow Jones Industrial Average 1000 mark for the first time in years. Accordingly, the year brought record growth and activity for DTC as well, as the pages of this report attest. high of 39 million for 1979. Yet the numbers themselves tell only part of the story. • Approximately 51 million securities certificates entered and/or left the As recently as a few years ago, the depository during the year, up from 44 volumes experienced in 1980 were almost million in 1979. unthinkable, and the ability of the industry to process such volumes seemed • Cash dividends and interest paid to doubtful. Increasing automation and DTC on securities held for Participants management planning, however, have rose by more than 58% in 1980, to $19.3 substantially ttansformed the industry billion from $12.2 billion for 1979. since the hectic days of the late 1960s. • Volume records were established in The growth of the depository system has furnished a vital part of this capability. Securities on Deposit from Banks Thus, despite some strains, the industry (In Billions of Shares) coped well with the record processing 8 loads of 1980.

High trading volume and increased 6 institutional participation in DTC led to new highs in depository activity.

• During 1980, DTC processed over 49 4 million individual transactions in connection with its primary services - depOSits, deliveries, pledges and 2 withdrawals-for an average of over 197,000 transactions per business day in these services. This record volume 1977 1978 1979 1980 represented a 26% jump from the prior

6 Left: Diptych sundials used a thread srretched between the faces to cast a shadow on the appropriate time mark. The hinges between the faces allowed the user to adjust the angle to the earth's equatorial plane, while the compass in the bowl permirred alignment with the earth's axis. The upper face being free of dials and indicators, it was typically used for semi-practical embellishments. This 17th-century ivory specimen, made in Nuremberg, lists the latitudes of the local German towns where most of its use would occur. Right: Polyhedral sundials were among the most versatile, as well as beautiful, examples of the dialmaker's art. Each surface was used to indicate some bits of data, as determined by the sun's shadow. This specimen was designed by Oronce Fine, circa 1560, but was not actually fashioned until 1617, by N.M. Gumnor of Nuremberg.

a number of DTC's services. Net deposits and the District of Columbia. At the same DTC through the accounts of averaged $805 million per business day time, the number of banks understood correspondent broker-dealer Participants. for the month of December and $588 to be indirect users of DTC through Broker-dealer securities on deposit million per business day for all of 1980. correspondent relationships with direct included a record 6.0 billion shares, with Cash dividends and interest received for bank Participants grew to at least 266 a total (equity plus debt) value of $135 Participants hit a single-day peak of $887 from 170 in 1979. billion, up 36% and 48%, respectively, million in December. from the 4.4 billion and $91 billion of By yearend 1980, DTC's securities on yearend 1979. Of the direct broker-dealer deposit from banks had grown to include • The number of users of DTC's Participants, 145 had their principal bases Participant Terminal System (PTS)-a 7.7 billion shares, with a total (equity plus of operations in New York State; 104 cornerstone of the depository's debt) value of over $358 billion, up 45% were headquartered in 24 other states and telecommunications network-rose to and 67% from 5.3 billion and $214 the District of Columbia. 178, employing a total of 272 terminals in billion, respectively, a year earlier. Forty­ their various offices. The number of users two individual bank Participants each had and terminals rose from 140 and 188, more than $1 billion in securities on Securities on Deposit from respectively, at yearend 1979. deposit. Direct and indirect Participants Broker-Dealers included 34 of the top 50 u.s. banks, and (In Billions of Shares) • DTC's Institutional Delivery (ID) 70 of the top 100, measured by trust 6 system grew to include 424 full-user assets under management as reported by brokers, banks, and other institutions, the Federal Reserve. Another 14 of the up from 234 a year earlier. top 100 participated in four other 4 securities depositories. Bank participation remained a significant source of the depository's DTC's broker-dealer participation growth. The addition of 4 banks from also contributed to the year's record 2 3 states and the District of Columbia growth. At yearend 1980, there were 249 brought the number of direct bank broker-dealer Participants in DTC, as Participants to 78-24 headquartered in against 236 a year earlier. These firms are New York State and 54 in 24 other states augmented by a great many others that use 1977 1978 1979 1980 7 -----Eligible Issues

The number of issues eligible for DTC services rose to 14,233 by the end of 1980, an increase of 1,001 from the 13,232 of yearend 1979. The expansion was part of DTC's plan to bring the benefits of book-entry delivery and certificate immobilization to an increasing portion of the securities held by Participants.

The 14,233 issues eligible at the end of 1980 comprised 3,195 common and preferred stocks listed on the New York and American Stock Exchanges; 5,663 equity issues traded over-the-counter; 4,175 issues of listed and unlisted debt securities; 388 U.S. Treasury and Federal Agency issues; 170 warrants; 399 issues recognizes that custody and processing of represented by American Depositary Receipts; 45 municipal bond issues; and municipal securities in bearer form, 198 unit investment trusts. including coupon collection, present Equity Securities on Deposit (In Billions of Shares) Municipal Bond Program 14 In 1980, DTC actively began to plan for a a major municipal bond immobilization program in which the benefits of book­ entry and the Institutional Delivery (ID) system would be made available to broker­ dealers and institutions involved in the settlement of municipal securities transactions. Approximately 1.5 million municipal issues, valued at $350 billion, are currently outstanding-the great majority in bearer form. Depository Trust Participants underwrite and hold a high percentage of these amounts. The proposed program, outlined in 1977 1978 1979 1980 mid-October for industry comment,

8 The problem of telling time at night was solved by the device known as the "star dial," or "nocrurna\." The observer fixed his gaze on the North Star through the hole near the center of the disk and swiveled the movable arm until it was aligned with a reference point-usually the two "pointer" stars in the Big Dipper. The arm fell across the appropriate hour indicator, indented for identification by touch, since the instrument was designed for use in the dark. This 16th-century specimen, shown front and back, is of gilt copper, signed by D. Alcino Faelae of Verona and 10. Paulus Cimerlinus. Both craftsmen were probably monks.

problems quite different from those entry took place when E.F. Hutton & related to registered corporate securities. Company Inc. used DTC's underwriting Accordingly, DTC's proposal suggested distribution service for six new issues of the use of one or more banks in New tax-exempt floating rate environmental York and several other major cities across improvement revenue bonds. the U.S. as custodians for all DTC-eligible municipals in bearer form. DTC itself Debt Securities on Deposit would hold no bearer securities in its (In Billions of Dollars vault. Based on a strong favorable of Principal Amount) response from Participants, the depository proceeded to explore alternatives which 60 could lead to a major program late in 1981. 40 Throughout the year, DTC also continued its limited program in municipal bonds interchangeable between 20 bearer and registered forms, adding 15 issues and bringing the number of such issues eligible for DTC services to 39. At the same time, the first fully registered 1977 1978 1979 1980 municipal bond distributions by book-

9 -----OUtlOOk for Institutional Use

Institutional Market As banks have become more familiar with depository usage and book-entry operations, they have become increasingly active in encouraging their institutional customers to authorize the deposit of their assets into the system. At the same time, an increasing number of institutional investors have initiated the deposit of their assets by so instructing their custodian banks. eligible assets remains to be penetrated. The Accordingly, bank deposits of their own amount of institutional assets currently in and other institutional assets into DTC the depository system is estimated at $407 increased by over $144 billion in 1980, or billion, or about 59% of what is eligible for about 40% of the total of such assets deposit. These assets, over $358 billion of deposited in DTC since its inception. which are on deposit with DTC and the Further sharp growth is projected for the balance distributed throughout the rest of period ahead, augmented by an increased the depository system, are in the accounts number of banks participating in DTC's of approximately 371 U.S banks (84 of system. them among the top 100 in managed trust Seven major categories of institutional assets) that participate in depositories in vestors held $1.57 trillion in total assets directly or indirectly. at yearend 1979, up from $1.36 trillion at yearend 1978, according to the latest The nature of the effort required to estimates published by the Securities and bring more of the $695 billion into the Exchange Commission. DTC estimates the system varies from category to category. For depository-eligible portion of these assets at example, in the categories of life insurance $695 billion, or a little over 44% of the companies, property-liability insurance total. companies and state and local retirement As can be seen from the charts on pages funds (combined depository-eligible assets 11 and 12, the potential institutional of $235 billion), it is often necessary to deal depository market is a very large one, even with state laws and regulations which, without the certain future eligibility for having been developed long before there depository services of securities other than was such a thing as a depository system, corporate equity and debt issues. What contain provisions inconsistent with does not appear in the charts-but is on the effective depository usage by institutions minds of industry officials-is the extent to domiciled in those states. Various efforts which the $695 billion market in currently are under way to resolve these incon- 10 Early clocks relied heavily on religious themes for their aesthetics. Left: A 17th-century Augsburg creation in the form of a gilt bronze crucifix. The globe at the top rotates against a fixed pointer to show the hour. Right: An ebony, silver and partially gilt piece by Johannes Buschmann, also of Augsburg, circa 1624. The works drive a carved ivory figure of Death as a reminder of the mortality of all things.

gruities; it is expected that upwards of $170 nonexistent, calls for over $390 billion, or personnel with the benefits of depository billion from these categories will have been about 85% of the eligible total, on deposit participation-lower costs, reduced errors, placed in the depository system by 1985. by 1985. increased flexibility, and simplified The projection for the remaining categories, A major continuing need is to acquaint operations. DTC's efforts in this direction where regulatory problems are minor or the appropriate institutional and regulatory have been focused on three institutional categories in particular: pension funds, investment companies, and insurance Market Value of Depository-Eligible Assets in Billions of Dollars by Type of Institution companies, as described below. (Corporate Equity and Debt Securities) • Deposit of Pension Fund Assets

$150 Private noninsured pension funds hold some $225 billion in total assets, of which approximately $180 billion is invested in depository-eligible securities. DTC bank 100 Participants continued to deposit private pension fund assets into their accounts throughout 1980; it is believed that a large percentage of the $180 billion in private 50 pension fund assets has already been placed in the depository system by bank Participants. The situation is otherwise for state

PRIVATE INSURANCE PERSONAL INVESTMENT STATE FOUNDATIONS MUTUAL and municipal retirement systems, which NONINSURED COMPANIES COMMON COMPANIES AND LOCAL AND SAVINGS PENSION TRUST RETIREMENT EDUCATIONAL BANKS collectively hold total assets of about FUNDS FUNDS FUNDS ENDOWMENTS $179 billion, approximately $125 billion Source: Securities and Exchange Commission estirnates as of December 31, 1979 of which is invested in depository-eligible . securities. A major obstacle to depository 11 usage by state and municipal pension funds participation for state pension systems. arises from the fact that these pension funds There are currently 31 states that are state regulated, with each state imposing have no regulatory or statutory bars to th its own restrictions. Most of these use of book-entry systems and/or the restrictions were enacted long before the depository system by state pension funds. depository system was developed and have Indeed, 25 of these states are known to to be modified to permit depository usage. have all or part of their state pension fun( Significant strides were made in 1980 assets on deposit or in the process of to overcome these restrictions so that state being deposited at DTC, indirectly and municipal retirement system assets through their custodian banks. Another 8 can be placed in a depository, and a states and the District of Columbia permi number of states authorized the deposit of depository usage by state pension funds al their funds during the year. DTC is the discretion of appropriate officials. The continuing to acquaint appropriate state remaining 11 states require that pension personnel with the benefits of depository fund assets be physically domiciled within

Depository-Eligible Assets as a Percentage of Total Assets Held by Type of Institution 80

60

40

20

PRIVATE INSURANCE PERSONAL INVESTMENT STATE FOUNDATIONS MUTUAL ,NON INSURED COMPANIES COMMON COMPANIES AND LOCAL AND SAVINGS PENSION mUST RETIREMENT EDUCATIONAL BANKS FUNDS FUNDS FUNDS ENDOWMENTS

Source: Securities and Exchange Commission estimates as of December 31, 1979

12 By the early 19th century, clocks had begun to assume a recognizably modern shape. Left: This rraveling clock, by Abraham Louis Breguet, Paris, circa 1810, indicates the second, day, date, month, year, temperature, lunar date, and the equation of time, with a wake-up alarm as well. Right: Of similar shape but much more recent vintage, this 1925 "Mystery Clock," also of Parisian origin, features emeralds, rubies, cora\, diamonds, and pearls in place of the dials and indicators of its predecessor. It was created by Cartier.

their state boundaries or be kept in the the fact that $26 billion, or only 65%, states permit depository usage at the form of physical certificates wherever they of the $40 billion in depository-eligible discretion of the state insurance commis­ may be domiciled. DTC's efforts are directed assets held by investment companies sioners, but have not yet established at helping eliminate such restrictions. according to SEC estimates has thus far the necessary guidelines for supervisory been placed in the depository system-DTC review. In a number of other states the • Deposit of Investment Company Assets expects continued growth of mutual fund problem is statutory-frequently in the form deposits during the year ahead. of a requirement that the assets be physically During 1980, 44 additional mutual funds domiciled within the state, or that they A list of the mutual funds reported to deposited the eligible portions of their be kept in the form of physical certificates have authorized their custodian banks to portfolios into DTC through their custodian wherever domiciled. deposit eligible portions of their assets with banks, bringing to 120 the number of mutual DTC as of yearend 1980 appears elsewhere Recognizing that state barriers have funds reported to have done so and to $26 in this report. made the insurance sector of the financial billion the total value of the securities industry the slowest to adapt to believed to have been so deposited. These • Deposit of Insurance Company Assets depositories, the National Association of figures represent increases of 58% and 120%, Insurance Commissioners reactivated a respectively, from the comparable yearend The total value of insurance company special Task Force and established a new 1979 figures of 76 funds with a value of assets on deposit at DTC continued to Advisory Committee in 1978 to encourage $11.8 billion. Much of this growth is increase in 1980. Nevertheless, the dollar a resolution of the problem. Although believed to reflect the adoption of Rule 17f-4 value remains relatively small, both in progress in 1980 was slow, 232 insurers of the Securities and Exchange Commission, comparison to the assets on deposit from were reported to be using at least some under which a mutual fund's decision other sectors of the institutional market depository services indirectly through regarding depository usage should be made and in relation to the total value of their agent banks at yearend. versus a total by that fund's Board of Directors and depository-eligible securities held by of 128 at yearend 1979. Of these, some thereafter reviewed annually. insurance companies throughout the U.S. 172 companies have assets on deposit Pursuant to this rule, several additional As in the case of public pension totaling approximately $24.9 billion in funds laid the groundwork for 1981 funds, the major obstacle to depository market value, up from 94 companies with depository usage by preparing proposals custody of insurance company owned $13.7 billion a year earlier. The others are for action by their Boards of Directors. securities is the framework of statutes and participants in the depository's Institutional On the basis of these reported plans-and regulations in the various states. Many Delivery (ID) system.

13 a pension fund or other entity), in a form that is recognized as a legal confirmation. Institutional Delivery (ID) System (2) If the confirmation accurately reflects the institution's order, the institution DTC's Institutional Delivery (ID) system sends an acknowledgment to DTC. If the is a method for streamlining the delivery confirmation is faulty (i.e., does not agree of, and payment for, securities transactions with the institution's records of its order), by institutions and all of the many the institution can act early enough in the activities leading to the settlement of settlement cycle so that the broker can such transactions. Its most important enter the proper corrections into the ID features are that it introduces a single system. DTC will notify the broker of a entity to coordinate all of the settlement problem concerning the trade so that the activity among brokers, institutions and broker can contact the institution to custodian banks participating in the system, resolve it. and that it offers convenient electronic, automated methods to accomplish this. Institutional Delivery (ID) System Use • It coordinates the many steps that have (In Thousands of Items) to be taken by brokers, custodian banks 3,505 and investment managers from trade Confirms confirmation through final settlement, c:::J Acknowledgments _ Deliveries helping to insure that each party takes the right action at the right time.

• It can eliminate redundant paperwork 2,091 and the delivery "fails" that lead to repeat 2,3 paperwork.

• It is simple and inexpensive to phase 1,488 into, and even simpler and less expensive to use. 1,033 Briefly stated, the system works as follows:

(1) A broker executing an institutional trade furnishes DTC with the trade data (price, quantity, date, etc.), which the depository then passes on to the broker's customer, the institution (usually the 1977 1978 1979 1980 investment manager who places trades for 14 In the 17th century, long before scientific and applied business mathematics went their separate ways, "automatic" calculating machines began to flower. The machine at left was devised by Blaise Pascal-noted French mathematician-in 1642, when he was nineteen. The ratcheted wheels at the bottom enabled the operator to deal with numbers of up to eight digits, labeled in French in the center panel. Answers appeared in the spaces provided at the top.

(3) Upon receipt of the acknowledgment, and payment will be successfully completed eliminated, which not only reduces the DTC forwards deliver/receive instructions on the first attempt. costs, but also improves the quality of to both the custodian bank and broker to A primary goal of the ID system is to service ID users can offer their own schedule settlement. increase user efficiency by eliminating most customers. (4) If the deliverer has enough securities of the error and delay associated with For these reasons and others, over 600 in its DTC account, the depository will traditional settlement methods, thereby institutional investors, custodian banks automatically complete the delivery by reducing the personnel and time required and broker-dealers have begun full or partial book-entry on the morning of settlement by users to conduct their operations. use of the ID system and institutional date and process the related money • Institutions no longer need send investors increasingly require its use to settlement as directed. No physical delivery letters of instruction to their custodians to settle their securities transactions. activity by any party to the trade is required. authorize each trade for settlement. ID growth was substantial in 1980, The ID acknowledgment to one central though still well short of system potential. (5) If the deliverer does not have enough source-DTC-eliminates the time­ Average monthly volume of confirmations securities in its DTC account, it will be consuming effort of preparing individual processed through the system rose to notified by DTC early in the morning on authorizations and communicating them, 250,000 for the fourth quarter, up 81 % settlement date. The deliverer still has the through the mails or electronically from 138,000 for the comparable 1979 opportunity to provide securities for or both, to multiple custodians. (In some period. At the same time, the number of delivery later on settlement date. instances, custodians may require letters fully participating institutions increased (6) If the security is not DTC-eligible of instruction subsequently, for file copy 81 %-to 424 from 234-while the (i.e., one of the over 14,000 issues for purposes only.) number of confirms-only institutions rose which DTC provides book-entry services), 24% to 243 from 196. Fully participating • A greater certainty of trade settlement deliverer and receiver may use specially institutions are those that use ID to receive enables institutions and custodian banks prepared ID instructions to settle the confirmations from brokers, acknowledge to better manage their cash balances, transaction outside the depository system. them, and receive and deliver securities by providing early notice of funds needed and In such cases, though delivery must be by book-entry. Confirms-only institutions available. physical means rather than book-entry, are those that use the system only to DTC's role as a clearinghouse for • All of the labor associated with receive confirmations; this is usually the instructions can help insure that delivery reprocessing uncompleted deliveries is initial stage of their ID system participation. 15 -----Basic Services

There are four basic services Depository Trust performs for Participants:

• It accepts deposits of securities for custody;

• It makes computerized book-entry deliveries of securities which are immobilized in its custody; various banks across the country cooperating as DTC Depository Facilities. • It makes computerized book-entry During 1980, DTC processed daily pledges of securities in its custody; and an average of 28,700 deposits involving • It provides for withdrawals of 129,900 certificates, up from 24,300 securities on a routine or urgent basis. deposits and 118,400 certificates in 1979.

These services allow a Participant to place securities with DTC for safekeeping, deliver them conveniently to another party Deliveries on the books of the depository, collect Deliveries in the settlement of securities payment from the other party for transactions may be with or without the the securities delivered, and withdraw condition of money payment, depending certificates desired by any of its customers. upon the Participant's instructions. It is the massive use of these services In 1980, DTC processed more than 28 by Participants that creates the economies million computer book-entry deliveries of scale which offer low-cost processing and among Participants with a settlement value speed to users without sacrifice of almost $1.3 trillion, including deliveries of security and accuracy. Participants between brokers and clearing corporations. instructed DTC to execute 49 million This represented a substantial increase of these transactions in 1980, up from 39 from 1979, when about 25 million deliveries million in 1979. were processed with a value of about $684 billion. Increasingly, these instructions are in automated form, further reducing labor­ DTC provides for the sertlement of all intensive work both for Participants and for deliveries when payment is desired, as well DTC. as cash dividend and interest payments distributed to Participants and other Deposits payments, through its daily settlement' system. The basis of this system Deposits of certificates can be made in any is a DTC settlement statement which eligible security issue at DTC's offices or at shows each Participant's total money 16 The 19th century saw a flurry of patent applications from American inventors of business-oriented calculators. Left: Alonzo johnson's "Calculating Apparatus," Patent No. 85,229, December 22, 1868, an adding machine that kept track of the quantities already added even as it calculated the sum. Right: Gustavus Linderoos' "Improved Adding Machine," Patent No. 140,146, June 24,1873, boasted a limited ability to run subtotals while retaining the master total.

settlement activity by type of transaction 18 banks each had over $100 million in requiring 11.7 million certificates. During and summarizes all transactions securities pledged to them on DTC's the same period, the depository processed into a net dollar amount owed to DTC books among the 98 banks participating in an average of 8,400 urgent CODs per day, or to the Participant and paid daily. this program. These figures do not include for a total of 2.1 million requests satisfied some $2.3 billion in additional pledges to by about 4.1 million certificates. The Options Clearing Corporation Dollar Value of Deliveries DTC's Fast Automated Securities (In Billions of Dollars) by brokers and banks, primarily to meet Transfer (FAST) program provides collateralization requirements on CALL an alternative, more economical method of 1200 option sales. processing both types of certificate withdrawals. The FAST program is described 800 more fully in the section that follows. Certificate Withdrawals Certificate withdrawals from DTC can be Fast Au tOlna ted Securities 400 accomplished in either of two ways: Transfer (FAST)

(1) Withdrawal-by-Transfer (WT), in DTC initiated FAST to eliminate the cost of which securities are transferred routinely unnecessary creation, movement and storage 1977 1978 1979 1980 to the name of a Participant's customer, or of certificates needed for withdrawals. any other name. Normally, the newly Under the FAST program, DTC leaves registered certificates requested by securities with transfer agents in the form of Participants are available to them one balance certificates registered in the Redges week after DTC receives the withdrawal depository's nominee name-Cede & Co. instructions. This program allows Participants to make The balance certificates are adjusted daily book-entry pledges of securities on deposit (2) Urgent withdrawals of for DTC deposit and withdrawal activity. with DTC to banks and others who have Certificates-on-Demand (CODs), in which There are two parts to the FAST agreed to accept pledges through DTC certificates are released to the requesting program. The Withdrawal-by-Transfer CWT) as collateral for bank loans or to secure Participant in three hours. portion of the program is designed for routine letters of credit or for other purposes. In 1980, DTC processed an average of withdrawals; agents can fulfill Participant At yearend 1980, the value of 29,000 WTs per day, for total routine requests within normal transfer turnaround outstanding pledges totaled $6.7 billion; withdrawal instructions of 7.3 million, time, usually three business days. 17 requested by Participants available Number of FAST Transfer Agents to DTC overnight, and twice each business day on two hours' notice. Because it covers all types of withdrawals, this part of the program permits DTC to eliminate its entire vault supply of Cede & Co. certificates in the issues subject to the program. However, some Cede & Co. certificates in FAST issues must be retained by the depository for CODs when agents perform only routine FAST withdrawals in those issue

Number of FAST Issues 1977 1978 1979 1980 (In Thousands)

The Certificate-on-Demand (COD) portion of FAST is designed to include urgent withdrawals, as well as routine WTs. Transfer agents who subscribe to the COD part of FAST must make the COD certificates

Dollar Value of FAST Balance Certificates (In Billions of Dollars)

1977 1978 1979 1980

FAST confers a number of benefits on all parties involved in the issuance and transfer of securities. Transportation, handling and insurance costs are substantially reduced by the elimination of regular shipments of large-value certificates between transfer agents and DTC. The cost of researching dividend claims is also reduced, and proxy voting 1977 1978 1979 1980 made easier, by FAST CODs, since Cede JIJ & Co. certificates no longer must be 18 The 19th century also witnessed the development of "automatic" machine controls. The Jacquard loom, invented by Joseph Marie Jacquard in 1804, utilized punched paper cards to control a weaving loom-a technique still practiced in the textile industry.

issued and circulated throughout the Bankers Trust Company Connecticut Bank and Trust Company (The) financial industry. In addition, Chase Manhattan Bank, N.A. (The) Conoco Inc. corporations and transfer agents enjoy Citibank, N.A. Fidelity Union Trust Company reduced certificate issuance costs by the First Jersey National Bank First & Merchants National Bank elimination of hundreds, and sometimes Girard Bank First National Bank of Atlanta (The) thousands, of certificates for each issue Manufacturers Hanover Trust Company First National Bank of Boston (The) annually. Since the inception of the Marine Midland Bank First National Bank of Chicago (The) program, for example, the issuance of over Morgan Guaranty Trust First Pennsy lvania· Bank, N. A. 2.4 million Cede & Co. certificates which Company of New York First Union National Bank of North Carolina would have been required to replenish Registrar and Transfer Company GTE Shareholders Services, Inc. DTC's vault inventory was avoided. Schroder 0. Henry) Bank & Trust Co. Hartford National Bank and Trust Company Security Pacific National Bank Irving Trust Company At yearend 1980, 45 transfer agents Third National Bank in Nashville Litton Industries held balance certificates valued at $163 Maryland National Bank billion in 3,162 issues. The comparable The following 31 agents, participating National Bank of Detroit prior-year figures were 40 transfer agents on a WT-only basis, held $37 billion in New England Merchants National Bank holding 2,459 issues valued at $80 billion. 1,058 issues. North Carolina National Bank This growth means that FAST withdrawals Northwestern Trust Company are possible in about 22% of DTC-eligible American National Bank and Trust Company Riggs National Bank of Washington, D.C. issues. of Chicago (The) As of December 31, 1980 the following American Telephone & Telegraph Company Santa Fe Industries, Inc. 14 agents participated in the full FAST AmeriTrust Company State Street Bank and Trust Company program, holding $126 billion in 2,104 issues. Bank of America National Trust and United California Bank BankAmerica Securities Services Savings Association United Missouri Bank of Kansas City Company of New York Chemical Bank United States Trust Company of New York Bank of New York (The) Citizens and Southern National Bank (The) Wachovia Bank and Trust Company, N.A. 19 ----·~ncillarY Services

DTC's ancillary services flow out of its custody of securities for Participants. They are designed to permit the owners of securities to receive benefits and exercise rights of ownership despite immobilization of certificates and to diminish the need for Participants to handle physical certificates.

The most important of these services are dividend and interest collection, provision for voting rights, collateraliza­ tion of options, dividend reinvestment, multitude of checks, coming from many voluntary offerings, and distribution of points in the United States and Canada, underwritings. with all of the associated mail problems, These and other services are described underpayments and other discrepancies, more fully in the paragraphs that follow. complicated by the need to claim dividends from other parties and to undertake all of the communications, correspondence and Dividends follow-up expense associated with that task.

In 1980, DTC received over $19.3 billion Cash Dividends and Interest of cash dividend and interest payments for (In Billions of Dollars) credit to Participants' accounts. This 20 amount represented over 29,000 individual payments to DTC from approximately 900 bank and corporate paying agents. Applicable to most of the more than 14,000 securities issues eligible for deposit in DTC, these payments resulted in 1.6 million individual line items of credit to Participant accounts. Stock dividends received for Participants amounted to 936 million shares.

The ease with which DTC accomplished this volume of processing evidences the efficiency of the depository's highly automated system. The benefits of this system to DTC users are substantial. Organizations that do not use a depository 1977 1978 1979 1980 are faced with the prospect of handling a 20 The great bulk of computer telecommunications takes place through the telephone network that covers virtually the entire United States. Extensive as it is, this network is only a little over 100 years old. The first commercial telephone switchboard, shown here at left, went into operation in New Haven, Connecticut in 1878 to service 21 customers who were able to communicate with each other over a grand total of eight lines.

DTC's system spares Participants the and quickest manner possible. (3) To permit monthly or dividend-record-day basis, trouble of dealing with these tasks and the DTC to ensure the proper and timely upon request and for a modest fee. expense of maintaining the necessary allocation of dividends, distributions and DTC's Participant Proxy Contact List facilities for doing so. Surveys indicate that voting rights to depositors. specifies the name and address of each DTC Participants also tend to receive cash Given these reasons for holding Participant, together with the name and dividends and interest payments more securities in the depository's nominee telephone number of the individual respon­ quickly through DTC than if payments were name, one of DTC's primary objectives sible for handling proxies there. The Contact received directly from paying agents. The has been to avoid being a barrier to depository's successful effort in 1980 to List is updated and reprinted four times communications between issuers and a year and sent to issuers free of charge. increase the collection of such payments on beneficial owners. Indeed, in some cases, payable date is continuing in 1981. the existence of DTC may assist the DTC's Omnibus Proxy provides for corporate issuer in keeping up with the exercise of voting rights and for direct changes in the ownership of its voting communications between issuers and Voting Rights stock. The depository's Security Position Participants holding their voting securities. Listing Report lists the number of shares In effect, the Omnibus Proxy is an Depository Trust arranges for deposited of the issue on deposit with DTC itemized assignment-Cede & Co., the shareholder securities to be registered in the name of by Participant; prior to the existence of of record, assigns to each Participant the its nominee, Cede & Co., for three major the depository, many of the shares now voting rights associated with the shares in reasons: (1) To permit prompt determi­ included in this report would have been that Participant's DTC account as of nation of whether the deposited certificates represented by certificates that might have record date. DTC sends the Omnibus are indeed transferable, or whether circulated by endorsement for prolonged Proxy (together with a list identifying the they are subject to a "stop transfer" order, periods before being re-registered. Participant assignees) to the issuer after the counterfeit, or otherwise not negotiable. Security Position Listings are automatical­ record date for the shareholders' meeting at If such a problem is found to exist, DTC ly sent to each issuer, free of charge, once which the votes may be cast. At the same can quickly take the appropriate steps to each year, indicating Participant positions time, DTC notifies each shareholder obtain replacement securities from the as of the record date for the issuer's Participant that the Omnibus Proxy has been depositing Participant. (2) To permit annual meeting. Issuers may also obtain sent to the issuer and of the number of re-transfer, when necessary, in the simplest interim listings on a daily, weekly, shares the Participant is entitled to vote.

21 Upon completion of these steps­ book-entry securities conversions were which normally take place in a single day completed in 1980. soon after record date-DTC is removed • Exchange and Tender Offers from the chain of communications between In 1978, Depository Trust processed the issuer and beneficial owners. Each first tender offer which employed book­ Participant is able to ask the issuer or its entry procedures, passing through to agent directly for whatever quantity of Participants payments of almost $13 proxy material it needs to discharge its million for common stock that had been obligations to beneficial owners and each tendered to the offeror's agent bank issuer is able to contact Participants through DTC. directly. These communications occur in the same manner as if DTC did not exist. In 1980,38 offers were completed by book-entry, involving 24 agents from thirteen states. The 38 offers included Voluntary Offerings four in which the book-entry program was used to elect a payment option under a DTC offers several services related to mandatory reorganization plan. The voluntary offerings, each designed to keep handling of these 38 offers brought the securities immobilized in the depository value of offerings processed through the during periods when Participants have the program since its inception to $865 right to surrender them to agents for cash and/or other securities. Use of these Estimated Common Stock Value ($ Billions) From Conversions of services grew substantially in 1980. The Convertible Securities Through DTC services themselves are as follows. 2.5 • Conversions DTC's conversion procedures allow 2.0 Participants to use book-entry methods to surrender convertible debt and equity securities in their depository accounts for 1.5 same-day credit in the underlying

securities, usually common stock. 1.0 Participant processing expense is thereby reduced, while the costs of financing transactions during the interval when the .5 certificates would otherwise be at the conversion agent are eliminated. Almost 600 convertible issues are eligible for this ..1977 1978 1979 1980 service; approximately $2.5 billion of

22 The early history of the telephone was marked by a rapid series of advances. Left: The first long-distance transmitter, 1886. Center: The first dial telephone, 1919. Right: The first desk set with combined receiver-transmitter in a cradle, 1928.

million and the number of agents to 32. It services is not large, the services themselves is expected that these agents will use this are considered useful by Participants in that Number of Underwriting service again for future offers. they reduce the expense associated with Distributions Through DTC exception processing. The 38 offers processed in 1980 1000 constituted 17% of the total number of offers that could have been accepted by 800 book-entry procedures, up from the 6% of Distribution 1979. Nevertheless, 27 agents who could of U nderwritings 600 have used the service during 1980 failed The DTC service for the book-entry to do so. The loss caused by the lack of 400 distribution of and payment for securities provision for, or use of, the service is the offered in public underwritings showed cost created by the unnecessary 200 vigorous growth in 1980, its fifth full year withdrawal of securities from the book­ of operation. The service was used by 40 entry environment. Agents, issuers and managing underwriters to distribute $40 1977 1978 1979 1980 depository Participants thereby incur billion of the total value of 900 issues. In increased processing costs. In some cases, 1979, the service handled 342 issues for Participants also lose timely use of cash 32 managers with $17 billion distributed payments and, where acceptances are through DTC. The 1980 distributions prorated by agents, timely use of returned Options comprised 408 issues of debt and 492 of shares. Accordingly, DTC will continue its equity, with values of $24 billion and $16 Use of DTC's interface with The Options efforts to bring additional agents into the billion, respectively. Clearing Corporation (OCC) increased at program in 1981; support from more a rapid pace throughout 1980. By yearend, investment bankers at the planning stages DTC's underwriting distribution 54 banks and 36 broker-dealers had will assist these efforts. service is designed to benefit underwriters securities "pledged" to satisfy OCC and issuers, in addition to broker and bank requirements, as compared with 47 banks • Redemption of Floating Rate Notes Participants. Underwriters realize lower and 35 broker-dealers at the end of 1979. and Rollovers of Government Securities financing costs by the elimination of day The total value of securities pledged was DTC Participants may redeem floating rate loans and, in the case of distant closings, more than $2.3 billion, up 109% from the notes and other securities with similar overnight or weekend loans. Issuers are $1.1 billion of yearend 1979. repayment options by means of afforded substantial reductions in the instructions to the depository, the cash issuance and transfer of certificates. Bank • The "Third-Party Pledge System" proceeds being credited to their DTC and broker Participants receiving book-entry offered by DTC is an alternative to the settlement accounts. Participants with deliveries benefit through the elimination escrow receipt method, in which a bank maturing U.S. Treasury bills on deposit of the endorsement, microfilming, packaging, holds securities in an escrow account, can also use DTC to reinvest, or "rollover," delivery and receipt of certificates and issuing a receipt which can be used in lieu the proceeds into new bills issued on the associated documents, as well as the of the securities to satisfy segregation maturity date. Although the number of rapid delivery turnaround normally requirements for the writer's CALL transactions effected through these two associated with the use of book-entry. option. Under the Third-Party Pledge

23 System, banks may pledge to OCC to OCC for the account of the OCC securities on deposit at DTe. One major clearing member carrying the writer's short improvement over the escrow receipt position. OCC then reduces the clearing method is that changes in the quantity of member's margin requirements accordingly. shares pledged do not require release and • DTC's payment order service, re-issuance of escrow receipts, nor do which went into full operation early in changes in the option series to be 1979, enables banks and broker-dealers to collateralized. In the former case, the use DTC's settlement system to collect amount of shares pledged is simply option contract premiums from other increased or reduced, as required, while in Participants, whether such premiums are the latter the pledgor merely submits a related to third-party pledges, releases or "rollover" form supplied by OCC. In rollovers of collateral with OCe. The addition, processing is simplified because service is designed to contribute there are no repeated movements of paper significantly to user convenience in among the parties to the transaction. And, offering options services to clients. finally, since certain shareholders' equity limits of the escrow receipt method do not apply, any bank depository member may use the pledge method to the full extent Dividend that it has the securities to pledge. Reinvestment

In 1979, OCC began a major effort to DTC's Dividend Reinvestment Service persuade banks and broker-dealers to (DRS) completed its fourth full year of abandon the use of escrow receipts in favor operation in 1980. of the Third-Party Pledge System. By the Launched in December 1976 with a end of 1980, 76% of the value of securities single dividend reinvestment plan offered collateral with OCC from all sources by American Telephone & Telegraph was under the Third-Party Pledge System. Company, DRS had grown to include 63 In April 1980, the Securities and participating plans by yearend 1980. Exchange Commission approved a rule It helped generate almost $291 million of change proposed by OCC which new capital for participating issuers established a Third-Party Pledge System through dividend reinvestments in 1980, for PUTS. The rule provides for a situation up from 43 plans and $191 million in 1979 in which a PUT writer has deposited cash Almost $82 million of these dividends with a bank and the bank has invested the were reinvested during the fourth quarter cash in U.S. Treasury bills. Under these of 1980 alone, marking the fifteenth circumstances, the PUT writer may instruct consecutive quarter-to-quarter increase in the bank to deposit the T-bills with a Participant use of this service since its securities depository and then pledge them implementation, and capping the three years 24 With the advent of the space age, electronic common carriers literally took to the skies, affording users global communications capabilities by means of satellite relay. Shown here is one of the four satellites in Western Union's Tracking and Data Relay Satellite System, built by TRW Inc. The shared use of devices of this rype requires minutely precise computer timekeeping.

of extraordinary growth depicted in prior to record date those securities in the delays that brokers normally the accompanying chart. which dividends might be reinvested, experience when delivering physical even if a definite decision had not yet been securities to institutional customers The purpose of DRS is to allow those reached. In either case, the certificates around the country. This service, which is Participants who wish to reinvest all or involved would have to be handled on an known as Special Order-Out, permits the part of their dividends in a security that is exception basis and the benefits of certificate delivery of certificates on settlement day subject to an issuer's reinvesrment plan to immobilization through depository usage to institutions in 12 cities; another 12 do so by book-entry, without withdrawing would be partially defeated. In addition, cities will be added to the network in the the underlying shares from their DTC Participants themselves would have to near future. accounts. The advantages to Participants arrange for reinvestment of dividends are significant. Without DRS, a Participant Under the Special Order-Out service, through the various plan administrators, and would have to either refrain from brokers who are members of NSCC and then handle both the certificates for the depositing or withdraw from the depository DTC may use the depository's urgent stock thereby purchased and the checks for COD withdrawal procedure to order cash in lieu of fractional shares. With physical securities out of DTC on the DRS, these cumbersome and duplicative Dividends Reinvested Through DTC afternoon before settlement day, in tasks are eliminated as between Participant (In Millions of Dollars) anticipation of DTC book-entry receipt of and plan administrator, and replaced by a 300 those securities on settlement day. NSCC far more flexible and less costly set of then ships the certificates to the designated largely automated book-entry transactions cities for availability on settlement day with DTC. 200 if book-entry receipt at DTC has occurred as anticipated. Prior to the service, brokers had to wait until positions had been 100 Special Order.. Ou t established on the depository's books on settlement day before initiating the In 1979, with the cooperation of DTC, withdrawal for subsequent shipment via the National Securities Clearing courier to the remote city, thereby delaying ..1977 1978 1979 1980 Corporation (NSCC) developed a new delivery until the day after settlement service designed to substantially reduce day, at best.

25 -----=.E.e Automation of Depository Services

A continuing priority at DTC has been the Participants and the depository afforded automation of internal depository by PTS speeds and eases the operations and of the channels of communications process, replacing the communication which link DTC with preparation and delivery of hard-copy Participants, other users, and transfer instructions and reports. This is agents. Major emphasis has been given to particularly useful for Participants located automating the receipt and processing of outside New York City. Participant instructions and to DTC During 1980, the number of terminals reporting back to Participants. The in Participants' offices increased to 272 depository reduces its operating costs by from 188 a year earlier, while the average such means and, more important, daily number of total transactions­ Participants can reduce their own including inquiries and messages, as well processing costs; moreover, all parties gain as instructions for specific transactions­ through the reduction of errors caused by grew 91 % to almost 172,000 at yearend manual procedures. from over 90,000 a year earlier. (For the The systems DTC uses to full year, daily volume averaged 131,000, communicate with others fall into three up 85% from 71,000 a year earlier.) major categories-the Participant Terminal Among these types of transactions, the System (PTS), Automated Participant average daily number of Deliver Orders Interface (API), and Computer rose to 28,000 from 22,000, representing Communications Facility (CCF), each of about 65% of the depository's total which is described below. Deliver Order volume; the average daily number of COD urgent withdrawals increased to 6,800 from slightly under Participant 5,500, representing approximately 81 % of total COD volume; and pledges of Terminal System collateral averaged 660 per day at yearend, or some 26% of the depository's overall The depository's Participant Terminal pledge volume. Now that releases of System (PTS) is a network of computer collateral are provided for under a pilot terminal stations located in Participants' program, expansion of this program will offices throughout the United States and increase pledges of collateral by PTS. tied directly to DTC's computers. Participants use their terminals to The steady growth of PTS since its communicate instructions, inquiries and inception in 1975 reflects the many other messages to DTC and to receive benefits it accords its users. In addition to messages and reports from DTC via the its capabilities for processing instructions, printer with which each terminal is PTS facilitates improved money I1IJ equipped. The direct link between management by allowing the quick 26 /' -

Some of the disk drives for DTC's IBM 3033 computer. In the background, the mainframe itself, central processing unit of the depository's book-entry system .

turnaround or reclamation of deliveries. It • Magnetic Tape Transfer Instructions for transfer agents. In November 1979, is also a major aid in the prompt balancing two FAST transfer agents began using the Under this program, DTC is able to of settlement statements and-through the reformatted tapes-American Telephone (1) receive customer name Withdrawal­ capability it provides for the verification & Telegraph Company, which acts as its by-Transfer (WT) instructions from of CUSIP numbers, issue eligibility, own agent, and Citibank, N.A. Early in Participants in magnetic tape form, Participants' security positions at DTC 1980, another FAST agent, Manufacturers (2) process the tapes through its own and similar information-the avoidance of Hanover Trust Company, began to computers, and (3) deliver or transmit the costly errors. participate in the program. During the resulting DTC output tapes to transfer third quarter of 1980, the program was agents for automated processing through further augmented by the addition of a the transfer agents' computer systems. fourth agent-GTE Shareholders Services Automated Such a system offers substantial Incorporated (GTESS), a subsidiary of Participant Interface advantages to all concerned, replacing Qeneral Telephone and Electronics more costly and error-prone processing Corporation, which acts as its own FAST Many of DTC's Participants have large procedures. By yearend 1980, the number agent. volumes of depository activity for which of Participants submitting transfer input through PTS would not be instructions in magnetic tape form had economical. But the underlying data have • Magnetic Tape Deliver Orders grown to 64, accounting for approximately already been captured by their computers 72% of DTC's average daily transfer in a form readable by DTC's computers. Under the Deliver Order (DO) portion of volume of about 29,000 instructions for The Automated Participant Interface API, Participants can input delivery over 46,000 certificates. (API) allows DTC Participants or their instructions to DTC on magnetic tape for data processing service bureaus who are The ability to process incoming tapes either day- or night-cycle processing. Still able to produce depository instructions by through DTC's computers and deliver or relatively small, the program comprises computer to enter those instructions transmit the resulting output to transfer one bank, three broker-dealer Participants, directly into DTC's computer system by agents for automated processing dates and a service bureau that provides means of hand-delivered or transmitted back to 1979, when the depository recordkeeping services for brokers and magnetic tapes instead of by clerically developed an analytical program whi<;h other financial institutions. At yearend processed paper forms. API capabilities enabled its computers to accept 1980, the volume of regular delivery currently include magnetic tape nonstandard transfer data from instructions received on tape under this instructions for routine Withdrawals-by­ Participants and restructure the great program accounted for 6% of DTC's total Transfer, Deliver Orders, and Deposits. majority of them into a standard record DO volume. 27 • Magnetic Tape Deposits During 1980, CCF was developed to the point where some Participants' The most recent addition to API, the computers were able to request DTC's capability of accepting deposit instructions computers to identify DTC-eligible issues on magnetic tape, was developed to and depository Participants, and DTC's simplify the deposit process while computers were able to provide the reducing errors. Initiated as a pilot service information, through direct computer-to­ in 1979, it moved beyond the pilot stage computer exchanges. In addition, one in 1980, though usage is still relatively Participant-Bankers Trust Company­ low as a percentage of DTC's total deposit was able to submit Deliver Orders, and volume. Further growth is expected in DTC was able to process them during its 1981. day-cycle and report back automatically to the Participant's computer and PTS Computer terminal. Communica tions F acili ty DTC's plans call for significant development of CCF capabilities during Though use of magnetic tape substantially the year ahead. Early efforts will focus on reduces the manual processing and expanding the applications of CCF to associated costs of accepting Participants' other Participants and other depository instructions, it does not eliminate them services. Ultimately, DTC hopes to use entirely, since the tapes themselves must the same facility to communicate with be physically handled. Moreover, physical other entities in addition to Participants, delivery of tapes presents problems for such as other depositories, transfer agents Participants outside the New York City area. and Pledgees.

In order to deal with these problems and prepare the next steps in the automation of depository processing, DTC Other Automation has designed a Computer Communications Developments Facility (CCF) to be used for direct In addition to various developments in the computer-to-computer communications growth of DTC's automated services for between DTC and Participants. This Participants in 1980, other significant facility will allow for eventual developments occurred in the depository's transmission of instructions from automated capabilities. Participants' computers to DTC's computers and for transmission of certain • Computer Processing Power DTC data from DTC's computers to In mid-1980, DTC installed an IBM 3033 Participants' computers, making use of Central Processing Unit as its new primary DTC-supplied software. processing system, replacing an IBM 3032, 28 DTC maintains extensive capabilities for processing magnetic tape instructions for a variety of automated functions. Left, some of the tape drive units dedicated to this purpose.

which was used thereafter for testing and following an emergency without waiting backup. The new system approximately until its 55 Water Street facilities are doubles operational capacity; its repaired. availability goes a long way toward • Computer Output on Microfiche preparing DTC for the extremely large In 1979, DTC developed the capability for processing volumes widely expected to producing certain computer output reports occur during the early 1980s. on microfiche for distribution to • Disaster Recovery Planning Participants and for internal DTC use at In late 1980, DTC completed its significant savings in handling and record arrangements with a disaster recovery storage requirements. During 1980, DTC's center located in a city other than New microfiche output increased 62%. Growth York for an alternate site for the is expected to accelerate in 1981 and depository's computer operations in the beyond, as the number of reports DTC is event that the premises at 55 Water Street capable of producing in this form were to become unusable for any reason. continues to expand. Under the arrangement, the center will • Optical Scanning Capability make available enough compatible Substantial progress was registered during computer hardware to supply DTC's needs the year in the development of optical if the emergency is of a short-term nature, scanning equipment as an alternative to or a raised-floor, computer room shell in key-entering certain data, thereby which DTC can install its own hardware if permitting substantial cost savings. Newly the duration of the problem is longer-term. installed equipment was brought to an Taken together with the availability of acceptance recognition level of 96% of duplicate software and master files in a certain documents, and the volume of secure off-premises location, and other documents scanned rose to approximately steps to be completed soon, the new 37,000 daily at yearend. Based upon this arrangement will give DTC the capability success, additional applications will be of resuming data processing operations pursued in 1981. 29 -----Interfaces in a National Clearance and Settlement System

Depository Trust's interfaces with other clearing agencies-both clearing corporations and other securities depositories-constitute a major element in the national system for the clearance and settlement of securities transactions. These interfaces enable participants in various clearing agencies to use their securities positions in one location to settle transactions in other clearing corporations and with users of other depositories by book-entry deliveries. This arrangement eliminates the inter­ regional movement of securities certificates, thereby contributing to their further immobilization.

Depository Trust maintains a close interface with the National Securities Clearing Corporation (NSCC) in New York. Broker-dealer Participants in DTC may use their positions at DTC to settle with other broker-dealers whose transactions are cleared by NSCC.

DTC also has interfaces with Midwest Securities Trust Company, New England Securities Depository Trust Company, Pacific Securities DepositoryTrustCompany, and Philadelphia Depository Trust Company. An important facility made possible by these belong to both depositories in order to relationships is the "third-party" delivery effect such settlements. service which permits a sole member of anyone of these depositories to settle An additional interface-with transactions with any member of DTC, The Options Clearing Corporation-is eliminating the requirement that a member described elsewhere in this report. 30 Some of the test and monitoring equipment in DTC's telecommunications control area, nerve center of the Participant Terminal System (PTS), and the Computer Communications Facility (CCF). q

~T·"...... ~ 1:=.= ..:: -. :0;'... It """ ""."" ' ." t:'W "'...... ,,- .. *'!W, ...... """" ...... ~ ... ".

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31 -----etection for Participants' Securities

Depository Trust is the world's largest custodian of corporate stocks and bonds. Its record holdings and activity-and their steady growth-reflect the fact that the de­ pository's program of safeguards is widely regarded as the most comprehensive yet developed to monitor the movement and custody of securities. DTC's unique system rests upon the extensive internal controls, physical security, repeated internal and external audits, insurance coverage, multimillion-dollar protective Participants Fund, and other features • Automated certificate-number control described below. Its effectiveness is is DTC's single most important safeguard. perhaps best evidenced by three facts. A unique computerized record cross­ • In the 13 years since the inception of indexes each certificate by issue, number, the Depository Trust system, it has denomination and date of receipt, transferred ownership of securities worth permitting maintenance of control and approximately $4 trillion. rapid reconstruction of paperflow • There has never been a claim against regardless of volume. The data available the DTC Participants Fund. from this record provide an important • There has never been a claim against tool in reconciliation, research and the DTC or its insurers for the negotiation of collection of dividend and interest missing certificates. payments. Auditing is also facilitated, with the auditors accounting for certificates by denomination and certificate number, Internal Controls when comparing physical certificates to DTC's internal control system is designed computer-generated inventory listings. to record the movements and location of • Certificates deposited with DTC every individual certificate in DTC's normally are quickly transferred into the custody, from the time it is received, depository's nominee name, Cede & Co. through its processing to and from This step permits prompt determination of transfer agents, through its entry into and certificate validity, i.e. that the certificate delivery from the vault. The records is not subject to a "stop-transfer" order required by this system are also used to or otherwise defective. It also enhances resolve processing errors, facilitate control over the collection of dividends reconciliation and audits and for similar and interest. purposes. The key features are as follows. • Large denomination "jumbo" 32 It was through the instrument on the left that Alexander Graham Bell issued the first communication ever spoken by electric telephone, on March 10, 1876. His words, "Mr. Watson, come here; I want you," re­ emerged through the tuned-reed receiver at right.

certificates are used to consolidate many original documents and production exits is maintained. of the securities on deposit. Because of reports in addition to the duplicate • A surveillance system of closed circuit their high value, "jumbos" are extremely computer files and microfilm records. television cameras and video monitors difficult for unauthorized persons to Additionally, proposed significant provides complete coverage of the vault and negotiate, and the risk of loss is thereby changes to the internal control system are other securities processing areas. further reduced. tested by DTC's internal auditors and • A silent alarm system is strategically • DTC places restrictive endorsements independent accountants. located at points throughout the securities on the back of certain "jumbo" processing areas. Vibration alarms are certificates to further preclude their installed to signal any attempt to forcibly negotiation by unauthorized persons. Rysical Security penetrate the vault. A modern smoke and • Certificates remain in non-negotiable DTC's physical security system is an heat detection and fire control system form while in DTC's custody. extremely sophisticated one, encompassing protects the vault and computer sites. • Microfilm records of certificates and both electronic and physical devices, a Systems interruptions or malfunctions their related documentation are made large security force and other security themselves trigger independent malfunction upon receipt into or delivery out of the professionals. alarms that alert the Security Department. depository. The film is developed The salient features of the system • A security force monitors the on premises to ensure the capture of all include the following: television surveillance, access control, and information while the certificates are still • An access control mechanism, including fire control systems, screens all persons in the processing stream. floor-to-ceiling steel turnstiles, inhibits entering and leaving security areas, and • Duplicate computer files of all unauthorized entry into data processing determines the contents of all packages. transactions are maintained in separate areas. Entry is restricted to employees with • A modern underground vault on storage locations, including one remote specially encoded photo identification cards, DTC's premises contains most of the rural site, permitting prompt reconstruction who must also key in an individualized securities deposited with it. Other of files in the event that a processing numerical password to secure admission. securities are kept in the form of balance interruption were to occur. DTC also The turnstiles are monitored by closed certificates maintained by qualifying maintains comprehensive files of circuit television; a record of all entries and transfer agents.

33 • Registered securities delivered to or securities in that issue after accounting for received from transfer agents and other all transactions. Daily reports of cash parties are required to be in non­ transactions are also available. Under the negotiable form. depository's Rules, Participants are • Special waste paper treatment and required to report any differences between disposal methods help to prevent the escape their own records and the depository's of certificates or usable written information statements. DTC has a research staff to from secured processing areas. help reconcile any differences. In addition, each Participant and Pledge receives a monthly position statement Securi ties Recordkeeping showing the status of all of its securities DTC uses a double-entry recordkeeping positions, including those in which system to control securities positions. there may not have been any transactions. Every transaction in a Participant's account Participants and Pledgees are required is recorded and the physical location to confirm the accuracy of their monthly of underlying certificates-at DTC, position statements in writing, within with transfer agents, at other depositories, 10 business days after the statement has or in transit-is identified. These records been made available to them. Failure to are also used as a source for internal confirm can result in a fine under the depository's Rules. These continual reports and reports to Participants, confirmations protect the integrity of and by the depository's Reconciliation the DTC system and encourage a high Division to locate and correct any differences with Participant records. degree of cooperation at the operational level between the depository and its users.

User Verifications Internal and External Audit Among the most effective depository The securities records of Depository Trust safeguards is the continuous verification of are tested both by DTC's internal auditors DTC records by users, based on their own and by Price Waterhouse & Co., the records of activity with the depository. depository's independent accountants. Each morning, Participants and Pledgees Through their combined efforts, all receive a daily report itemizing and securities issues in DTC's vault are summarizing the previous day's activity in counted at least once a year. their accounts. These reports start with the opening balance of securities in each The internal audit program focuses on issue in which there was a transaction and DTC's certificate processing, data go on to list each transaction in that issue processing, and financial operations. on that day and the closing balance of Certificate inventory control includes 34 Mechanical planetariums were much in vogue toward the end of the 18th century when, at least until the discovery of Uranus in 1781, the solar system was generally supposed to consist of six planets. The specimen shown is of particular interest because of an error: the positions of Jupiter and Saturn are transposed, with Jupiter wrongly placed in the outermost orbit. Mercury, Venus, Earth, and Mars are in their correct positions.

daily counts of all certificates in selected securities, dividends, data processing, and Specifically, insurance is available in issues in the vault, so scheduled that each other depository operations; the follOWing amounts per event: issue will be counted at least once a year • issues a Report on Internal Accounting A. Losses Occurring on Premises: by DTC's internal or external auditors. Control, which is available to Participants, 1. $75 million coverage under Primary To ensure that issues are not selected for Pledgees, and their accountants, upon and Excess Blanket Bonds; plus counting in a predictable sequence, a request; and 2. $5 million Lost Instrument Bond random method of selection is used. Premium Policy, covering premiums for In addition, special counts of high-value • issues a Memorandum on Principal purchase of lost instrument bonds for certificates are conducted more frequently. Procedures and Internal Control securities losses in excess of $75 million. DTC's Auditor submits to the Audit Surrounding Securities Held for Others, Committee of the Board of Directors which is also available upon request, and is B. Losses Occurring in Transit by Messenger monthly reports which summarize the prepared especially for the use of or Armored Car Carrier: status of his work. The Committee consists Participants' independent accountants. 1. Primary coverage of of four Directors charged with the respon­ (a) $5 million under Air Courier DTC's Audit Committee also reviews sibility of supervising the Auditor and the Messenger Policy covering securities lost the scope of the auditing procedures of the Auditing Department and reviewing in transit via Brink's or Wells Fargo independent accountants, directly receiving and approving the internal audit program. Armored Service Corporation; and all reports issued by such accountants to the (b) $200 million In-Transit coverage During the course of the year, among depository, and meets with them periodically provided by the insurer of the armored other things, Price Waterhouse & Co. to discuss the results of their work. car carrier service used by DTC; and performs the following in connection with (c) $75 million under Primary and Excess its examination of DTC's financial statements: Insurance Blanket Bonds for securities lost while in the custody of messengers; • tests securities records and positions; The insurance coverage available for • tests all significant changes in internal securities deposited in DTC is among the controls and operating procedures; *The description of insurance protection set forth in this section most extensive of any private institution includes summaries of the terms of DTC's insurance policies and Rules and Procedures, to which reference should be made for • tests controls for the safeguarding of in the financial industry.* complete statements on these subjects. 35 2. Excess coverage of (a) $75 million under Primary and Excess Blanket Bonds for securities lost while in the custody of an armored carrier; (b) $20 million under Excess In-Transit Bond covering securities losses in excess of $75 million when securities are in the custody of messengers, and in excess of $275 million when securities are in the custody of an armored car carrier; (c) $5 million under Armored Car and Messenger Policy covering securities losses in excess of $95 million when securities are in the custody of messengers, and in excess of $295 million when securities are in the custody of an armored car carrier; (d) $5 million under Lost Instrument Bond Premium Policy covering premiums for the purchase of lost instrument bonds for securities losses in excess of $100 million when securities are in the custody their own standard blanket bond coverage, of messengers, and in excess of $300 in the form of riders to their policies million when securities are in the custody providing that such bonds will cover of an armored car carrier. securities held by DTC for the account of the Participant. A bank or broker-dealer C. Losses Occurring in the Mail: with such a rider to its blanket bond 1. $10 million under Mail Policy covering would be reimbursed by its own insurer securities lost after having been sent via (to the extent of the coverage provided by registered mail; the rider) for its pro rata share of 2. $10 million under Mail Policy covering uninsured securities losses by DTC in the securities lost after having been sent via unlikely event that such losses were to United States Postal Service Express Mail exceed DTC's insurance coverage. Service, Option 1 (Door-to-Door) and Post Office-to-Addressee service; 3. $250,000 under Mail Policy covering Participants Fund securities lost after having been sent via First Class Mail. The Participants Fund is a reserve fund Still more protection is available to contributed by Participants and bank and broker-dealer Participants with maintained by DTC to satisfy losses not 36 Left: This 17th-century sundial is set by turning the dragon until its tail extends over the current sign of the zodiac. The shadow then indicates time according to the raised scale on the side of the column. Right: P.M. Hahn, of Kornwestheim, constructed this astronomical clock in 1780. Hedging his bets, the craftsman included mechanical representations of both the Copernican and Ptolemaic views of the solar system. In the former (lower left face), the earth circles the sun and the moon circles the earth. In the latter (mounted on top of the clock), both sun and moon orbit an oversized earth, happily located at the center of the universe.

covered by DTC's insurance. DTC's Rules contribution to the Participants Fund inadequacy, or advice to that effect from provide that any such loss would normall y (whether pro Tata or otherwise), the self-regulatory organizations or others, be charged initially against undivided Participant is required to make an DTC carefully monitors that Participant's profits or retained earnings, but permit additional contribution to the Participants further activity, implementing such the Board of Directors instead to elect to Fund in an amount equal to the charge. protective remedies as events warrant. charge it to the Participants Fund. To date, no charges of any sort have ever Should a loss be suffered by DTC due been made to the Participants Fund of either to the failure of a Participant to satisfy its DTC or its predecessor organizations. Regulatory Examinations obligations to DTC, such loss would first be charged to that Participant's The Depository Trust Company is a contribution to the Participants Fund. If Protective Procedures limited purpose trust company organized the loss were in excess of that Participant's under the banking laws of New York State contribution.(or if the loss were sustained Other depository procedures are also and a member of the Federal Reserve for reasons other than a Participant's available to protect Participants. DTC's System. As such, DTC undergoes failure), the excess may then be charged to Rules provide a variety of remedies to unannounced annual examinations by the the contributions of other Participants to minimize the possibility of loss arising New York State Banking Department and the Participants Fund on a pro rata basis. from the unexpected insolvency of a the Federal Reserve Bank of New York, DTC's Rules provide that, in the Participant. In the event of signs of a which report their findings to DTC's event of any charge against a Participant's Participant's operational or financial Board of Directors. 37 7C -----Oficers of The Depository Trust Company

The senior officers of DTC: Arnold Fleisig (left), William F. Jaenike, Edward J. McGuire, Jr., John P. Crowley, Conrad F. Ahrens, Thomas J. Lee, William T. Dentzer,Jr. (seated).

William T. Dentzer, Jr. Secretary /Counsel Treasurer Chairman and Chief Edward J. McGuire, Jr. John P. Crowley Executive Officer Vice Presidents Auditor Conrad F. Ahrens Nicholas]. Arrigan Thomas F. Coleman Robert A. Dick President and Chief Director of Security Dennis J. Dirks Operating Officer Michael T. Mullen Michael Fedorochko Senior Vice Presidents Charles J. Horstmann Assistant Secretary John P. Crowley Joseph J. Marino Donna Grant Reilly Arnold Fleisig Frank Petrillo Assistant Treasurer William F. Jaenike James V. Reilly Leonard A. Miele Thomas J. Lee Nishan G. Vartabedian

Comptroller Michael A. Agnes

Committees of the Board of Directors

Nominating Committee Audit Committee Compensation Committee Jon A. Bulkley Joseph A. Vitanza Allan L. Sher Donald L. Calvin Frank E. Dominach, Jr. Richard B. Fisher Daniel P. Davison Benjamin L. Lubin Carl W. Klemme* ]1IJ Charles C. Smith 38 ::.r; I The Board of Directors

William T. Dentzer, Jr. Conrad F. Ahrens Thomas A. Bigelow Jon A. Bulkley Donald L. Calvin Chairman and Chief President and Chief Executive Vice President and Co-Chief Executive Vice President. Executive Officer, The Operating Officer, The President-Operations, Executi Ve Officer, Mose­ Market Development Depository Trust Depository Trust Wells Fargo Bank, ley, Hallgarten, Esta­ and Public Affairs, New Company Company National Association brook & Weeden Inc., York Stock Exchange and President, Securities Settlement Corporation

Daniel P. Davison Frank E. Dominach, Jr. William S. Edgerly Richard B. Fisher C. Richard Justice President and Chief Executive Vice President Chairman and Presi~ Managing Director Senior Vice President. Executive Officer, Uni­ and Director at Bache Ha isey dent, State Street Boston and member of the Management National Association of ted States Trust Com­ Stuart Shields Incorporated Corporation, State Committee of Morgan Stanley Securities Dealers. Inc. pany of New York Street Bank and Trust &.Co. Incorporated Company

Carl W. Klemme· Benjamin L. Lubin Allan 1.. Sher Charles C. Smith Joseph A. Vitanza Executive Vice President, Managing Partner, Executive Vice Presiden t, Executive Vice President, Senior Executive V ice Morgan Guaranty Trust Bruns, Nordeman, Rea &. Finance & Administra­ Administration, Bankers President, Drexel Burn­ Company of New York Co. tion, Merrill Lynch, Trust Company ham Lambert Incorporated Pierce, Fenner & Smith *Retired from the Board of Directors as of December 31, 1980 Incorporated 39 ----1980 In Retrospect

The full year's growth of DTC's various services is described elsewhere in this report. The particular events or activities mentioned below are some of the major milestones that the depository experienced in the year just ended.

DTC Activity Records Throughout DTC's operations, activity rose to record levels during 1980, reflecting both the extremely high trading volume that prevailed during the year and the continued growth of depository usage. On average, there were over 197,000 transactions processed in DTC's major services each business day of the year, with a peak daily average of just under for 1980 included 28,700 deposits, 220,000 transactions throughout the 124,900 book-entry deliveries, 29,000 fourth quarter. In 1979, the average daily Withdrawals-by-Transfer, 8,400 urgent number of transactions was 166,000. In COD withdrawals, 2,500 pledges of round numbers, the daily average figures collateral. and 4,400 releases of collateral.

Net Deposit Growth: A Full Month at $805 Million per Day

DTC's net deposit growth surged to a record 508 million shares for the month of December and 4 billion shares for all of 1980, far exceeding the prior record of 444 million shares for June 1979 and 2.8 Ushered by Howard Levison, DTC Director, billion shares for the full year. Systems and Computing (left), Raymond L. Braun, First Vice President, and Walter E. In addition, December 1980 deposits Lamb, Senior Vice President, both of Shearson included debt securities in the face Loeb Rhoades Inc., review the processing area for incoming magnetic tape deposit amount of approximately $2 billion, instructions. bringing the combined market value of 40 Reviewing operations in DTC's deposit section: Nishan G. Vartabedian, DTC Vice President, Participant Services (left), Theodore P. Klingos, Second Vice President, and William B. Aimetti, Vice President and Group Executive, both of The Chase Manhattan Bank, N.A., and Joseph J. Marino, DTC Vice President, Operations.

debt and equity net deposits to a record total of $17.7 billion for the month, or CaSh Dividends and Interest: $805 million per business day. The comparable figures for June 1979 $887 Million in a Single Day were $15.7 billion for the month, or $750 DTC's cash dividend and interest million per business day. processing operation posted a new single­ day high on December 10, 1980, when a record $887 million of dividends and interest was received and credited to Participants' accounts, far exceeding the prior record of $674 million set on December 10, 1979. For all of 1980, dividend and interest payments soared to $19.3 billion from $12.2 billion for 1979. Both sets of figures reflect the large increase in the number of shares and bonds on deposit with DTC during 1980.

Carmine D'Onofrio, Vice President, Citibank, At the same time, the percentages of N.A., viewing activity in DTC's Dividend De­ payments received on payable date and in partment, flanked by Valentine Stevens, Direc­ tor, Participant Services (left), and Frank Petrillo, immediately-available funds also improved. Vice President, Dividends, both of DTC. Of the value of all such payments received

41 from dividend disbursing agents in 1980, approximately 67% was received on payable date and approximately 76% was in immediately-available funds. Comparable 1979 figures were 58% and 68%, respectively. The improvement in dividend payment performance was especially marked toward the end of the year. For the month of December, on-time performance climbed to 76%, with 83% in immediately-available funds, from 70% and 80%, respectively, a year earlier.

A New Dividends Refund Policy DTC implemented a new policy commencing June 1, providing for monthly refunds to Participants of depository income from the overnight investment of cash dividend, interest, and reorganization payments ("dividends payments") to DTC. Under the old policy, DTC included such investment income with income from all other sources in determining total excess income subject to refunds to users at yearend, with the size of each refund payment based on the share of service fees paid by the user.

The growing amount of investment income from dividends payments Participant Terminal System (PTS) report! prompted the modification of DTC's are studied by Robert C. Saunoras, Vicf President, Stock Loan Representative (left), refund policy. The depository credits Richard W. Terrell, Vice President and dividends payments to Participants' Assistant Operations Manager, Michael R. accounts as part of its daily settlement Brennan, Vice President, Operations (seated, left), and Joseph R. Hruban, General Partner, activity, all of which is in clearinghouse all of Mesirow & Company, in the firm's (next-day) funds. Since it is not yet Chicago, Illinois headquarters. 42 New methods for handling future volumes of customer name withdrawals are considered by Dennis J. Dirks, DTC Vice President, Operations (left), Ralph S. Roth, Vice President, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Raymond J. Riley, Vice President, Manufacturers Hanover Trust Company, and Robert A. Dick, DTC Vice President, Applications Development.

practical for DTC to pay Participants in in immediately-available funds. Suspended sources in determining excess income federal (same-day) funds with the refunds are included with operating subject to DTC's general refund to dividends payments realized in income and investment income from other Participants. immediately-available funds the same day, the depository is doing the next best thing; it is passing on to its Participants A Record General Refund their pro rata shares, based on all DTC's refund of excess 1980 income to dividends payments to Participants each Participants climbed to a record $12.1 month, of depository income from the million for 1980, more than double the overnight investment of these payments. $5.8 million of 1979, and equal to approximately 23% of the service fees At yearend 1980, cumulative dividends paid to DTC by its users in 1980. The investment income refunds to Participants magnitude of the refund reflects a com­ totaled $4.4 million for the June­ bination of unprecedented high-activ- December period. ity volume and higher-than-anticipated In October, the depository began to A discwsion of PTS participation at the offices investment income. This general refund, suspend refunds of dividends investment of Lewco Securities Corp.: Leonard A. together with the monthly dividends income to Participants whose procedures Marotta, Senior Vice President of Lewco (left), investment income refunds to Participants James McGreevey, Senior Securities Officer at for paying dividends to DTC do not meet DTC, and Paul J. DiBenedetto, Assistant Vice of $4.4 million, brought total 1980 the standard of payment on payable date President of Lewco. refunds by DTC to users to $16.5 million.

43 Book~Entry Deliveries: A 4.5~Billion~Share Month

High volume in the nation's securities markets, increased institutional participation in the depository system, and an increase in the number of DTC-eligible issues to an all-time high of 14,233 propelled DTC's book-entry delivery volume to a new monthly record in December 1980. Average daily deliveries jumped to 14S,OOO-up 18% from the average for the first eleven months of 1980 and 46% from the 1979 daily average. At the same time, the average daily number of shares delivered rose to 205 million-up 27% from the previous eleven-month average and 106% from the 1979 average. Altogether, 4.5 billion shares were delivered through DTC in December and 41.4 billion, valued at $1.26 trillion, in all of 1980.

I D Task Force Established

The year's first peak in securities trading volume, which occurred during the first quarter, demonstrated more clearly than ever the efficacy of the Institutional Delivery (lD) system in reducing the occurrence of DK (Don't Know) rejected Institutional Delivery (ID) system activity is trades during periods of high activity. reviewed by J. Richard Clark, Operations Indeed, studies indicate that the DK rate Officer (left), Larry W. Rinne, Assistant Vice becomes disproportionate in tripartite President, and Henry R. Snyder, DTC Unit Supervisor (seated), all of Mellon Bank, N.A., trade setrlements-involving trading at the bank's terminal in its main offices in institution, clearing bank and executing Pittsburgh, Pennsylvania. 44 John M. Lanning, Jr., Director of Participant Services at DTC (left), Terence F. Cooke, Comptroller and Manager of Operations, and Richard L. Carpenter, Jr., Manager, Foreign Investment Department, both of Brown Brothers Harriman & Co., and Richard Porzio, Director and ID Product Manager of DTC, discuss Brown Brothers' experience with the transmission of Institutional Delivery (ID) system confirmations to overseas destinations.

broker-the very type of situation for proper usage and the full benefit of ID which the ID system was designed. use. Early targets for orientation include the top 200 money managers in the To encourage enhanced use of ID industry, comprising unaffiliated firms, throughout the investment community, broker-dealer-affiliated firms and bank DTC formed a special Task Force, with investment management departments. the cooperation of the Securities Operations Division of the Securities Industry Association, comprising both DTC employees and personnel temporarily assigned to the project from broker-dealer depository Participants. With training completed by the middle of the fourth quarter, the Task Force moved into full operation at the end of the year. In addition to a general effort to Reviewing DTC's Computer Communica­ familiarize potential users with the benefits tions Facility (CCF) program: Thomas J. Lee, of ID and encourage them to participate in Senior Vice President, Systems and Com­ the system, the Task Force also helps new puting, DTC (left), Thomas F. Price, Senior Vice President, Bankers Trust Company, and users through their start-up phase and as Nicholas J. Arrigan, Vice President, Technical long as necessary thereafter to insure both Support, DTC. 45 Report of Independent Accountants

To the Board of Directors of The Depository Trust Company In our opinion, the accompanying statement of condition and the related statements of revenues and expenses and undivided profits and of changes in financial position present fairly the financial position of The Depository Trust Company (the "Company") at December 31,1980 and 1979, and the results of its operations and the changes in its financial position for the years then ended, in conformity with generally accepted accounting principles consistently appli'ed, Our examinations of these statements were made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances, including the physical examination and confirmation of selected securities held for others by the Company,

153 EAST 53RD STREET NEW YORK, NEW YORK FEBRUARY 3, 1981 46 The Depository Trust Company Statement of Condition December 31, 1980 1979 Assets Cash $ 58,977,000 $ 16,883,000 Repurchase agreements (Note 1) 156,318,000 120,735,000 U.S. Government securities (Note 1) 6,176,000 6,182,000 Receivables:- Participants: For settlements 5,800,000 11,321,000 For services 5,729,000 3,675,000 Affiliates 323,000 458,000 Dividends, interest and other (Note 5) 5,789,000 5,679,000 Prepaid expenses and deposits 494,000 744,000 Equipment and leasehold improvements, less accumulated depreciation of $3,002,000 in 1980 and $2,259,000 in 1979 3,622,000 2,968,000 Leased property under capital leases, less accumulated amortization of $4,929,000 in 1980 and $3,567,000 in 1979 (Note 7) 8,178,000 6,511,000 Contributions to Participants Fund, callable on demand (Note 3) 208,565,000 106,488,000 $459,971,000 $281,644,000

Liabilities and stockholders' equity Liabilities:- Drafts payable (Note 1) $ 76,226,000 $ 58,359,000 Accounts payable and accrued expenses 6,070,000 4,508,000 Payable to Participants: On settlements 29,871,000 15,085,000 On receipt of securities 23,540,000 12,986,000 Dividends and interest received (Note 5) 97,665,000 68,464,000 Payable to affiliates 1,540,000 1,458,000 Obligations under capital leases, including $1,620,000 in 1980 and $1,275,000 in 1979 due within one year (Note 7) 7,922,000 6,344,000 242,834,000 167,204,000 Participants Fund (Note 3): Deposits received 4,170,000 3,829,000 Contributions callable on demand 208,565,000 106,488,000 212,735,000 110,317,000 Stockholders' equity: Capital stock-authorized, issued and outstanding, 18,500 shares of $100 par value 1,850,000 1,850,000 Surplus (Note 1) 555,000 528,000 Undivided profits 1,997,000 1,745,000 4,402,000 4,123,000 $459,971,000 $281,644,000

The accompanying notes are an integral part of the financial statements. 47 The Depository Trust Company Statement of Revenues and Expenses and Undivided Profits

For the years ended December 31 , 1980 1979 Revenues: Services to Participants (Note 4) $56,285,000 $44,546,000 Interest income 18,494,000 9,807,000 Services to affiliates (Note 4) 831,000 743,000 75,610,000 55,096,000 Less-Refunds to Participants (Note 2) 16,468,000 5,800,000 59,142,000 49,296,000 Expenses: Employee costs 35,296,000 29,221,000 Rent, maintenance and utilities 5,115,000 4,745,000 Data processing rentals and supplies 3,968,000 3,301,000 Charges from affiliates (Note 4) 3,899,000 3,150,000 Professional and other services 2,630,000 2,286,000 Amortization and interest on capital leases 2,050,000 1,528,000 Depreciation and amortization 796,000 571,000 Other expenses (Note 6) 5,109,000 4,136,000 58,863,000 48,938,000

Excess of revenues over expenses and refunds 279,000 358,000 Undivided profits, beginning of year 1,745,000 1,423,000 Transfer to surplus (Note 1) (27,000) (36,000) Undivided profits, end of year $ 1,997,000 $ 1,745,000

The accompanying notes are an integral part of the financial statements. 48 The Depository Trust Company Statement of Changes in Financial Position

For the years ended December 31, 1980 1979 Financial resources were provided by: Operations: Excess of revenues over expenses and refunds $ 279,000 $ 358,000 Noncash charges (credits) included in expenses- Depreciation and amortization 796,000 571,000 Amortization on capital leases 1,362,000 980,000 Other operating items, net ( 90,000) (103,000) Resources provided from operations 2,347,000 1,806,000

Increase in payable to Participants 54,541,000 27,168,000 Increase in drafts payable 17,867,000 50,871,000 Decrease in receivable from Participants 3,467,000 Capital lease obligations incurred 3,029,000 1,200,000 Increase in accounts payable and accrued expenses 1,564,000 955,000 Increase in cash contributions to Participants Fund 341,000 251,000 Decrease (increase) in receivable from affiliates 135,000 ( 115,000) Increase in payable to affiliates 82,000 281,000 Decrease in dividends, interest and other receivables 26,000 1,717,000 Other, net 221,000 36,000 83,620,000 84,170,000

Financial resources were used for: Additions to leased property under capital leases 3,029,000 1,200,000 Purchases of equipment and leasehold improvements 1,469,000 1,675,000 Capital lease payments 1,451,000 1,092,000 Increase in receivable from Participants 5,388,000 5,949,000 9,355,000

Net increase in cash, repurchase agreements and U.S. Government securities during the year 77,671,000 74,815,000 Cash, repurchase agreements and U.S. Government securities, beginning of year 143,800,000 68,985,000 Cash, repurchase agreements and U.S. Government securities, end of year $221,471,000 $143,800,000

The accompanying notes are an integral part of the financial statements. 49 principally data processing equipment and The Depository related facilities, is amortized on a Trust Company straight-line basis over the lease term and interest expense is accrued on the basis of the outstanding lease obligations. Notes to Financial Statements (d) Pension plan December 3 I, 1980 and 1979 The Company's eligible employees are included in the defined benefit pension plan of New York Stock Exchange, Inc. Note I-Summary of Significant Accoun ting Policies and its subsidiary companies. Pension costs charged to expense and paid to New (a) Securities on deposit York Stock Exchange, Inc. in 1980 for Securities held by the Company for funding were $1,159,000 (1979- Participants, which aggregated $979,000) and comprise normal costs and approximately 13.7 billion share units amortization over ten years of unfunded ($493 billion at market value) at prior service costs. The value of the assets December 31, 1980 and 9.7 billion share of the pension plan of New York Stock units ($305 billion at market value) at Exchange, Inc. at December 31, 1980 December 31,1979, are not recorded in exceeded the vested liability thereof. the accompanying financial statements. In 1980, the Financial Accounting Cash dividends and interest received or Standards Board issued Statement No. 36 due on such securities and in process of (FAS36), Disclosure of Pension distribution or awaiting claim are recorded Information, which requires financial in the statement of condition. statement disclosure of certain additional (b) Equipment and leasehold information relating to defined benefit improvements pension plans. Information required Equipment and leasehold improvements pursuant to FAS36 was not available for are recorded at cost. Equipment is 1980 on a separate company basis. depreciated over estimated useful lives (e) Marketable securities (generally eight years), principally on the Repurchase agreements represent U.S. sum-of-the-years-digits method. Leasehold Government and U.S. Government Agency improvements are amortized on a straight­ securities purchased under agreements to resel line method over the lives of the related at current prices, generally over periods of thn leases, which are less than the useful lives days or less. These agreements are recorded of the improvements. at cost and interest is accrued as earned. U.S. (c) Leases Government securities are recorded at amortize Leased property under capital leases, cost, which approximates market value. 50 •

The Company invests available federal Exchange, Inc. owned approximately 43% payments to the Company for funds in repurchase agreements and at the of the capital stock of the Company, with Participants. Such monthly refunds totaled same time makes disbursements against the remainder owned by the American $4,368,000 in 1980. Total refunds to such in clearinghouse funds. The resulting Stock Exchange, National Association of Participants amounted to $16,468,000 in drafts payable are eliminated the next Securities Dealers and certain Participants 1980 (1979-$5,800,000). business day when the repurchase or their representatives. A Stockholders Note 3-Participants Fund agreements are converted back to cash. Agreement provides for an annual reallocation of the entitlement to purchase Participants in the depository are required to (f) Income taxes outstanding capital stock by eligible contribute to the Participants Fund amounts Provision is made for income taxes Participants or their representatives based which relate to their activity in the depository. applicable to revenues and expenses on relative depository activity of The Fund is available to secure the Participants' reported in the financial statements in Participants during the prior year. obligations to the Company, and certain periods which differ from those in which uninsured losses, if such should occur, could they are subject to taxation. Investment Pursuant to a policy adopted by the be charged to the Fund. Required contributions tax credits on property acquired and Board of Directors in 1975, the Company are received in cash or are callable on demand leased are applied, when available, under does not pay dividends to stockholders, and secured by securities of the United States or the flow-through method as a reduction of but refunds to its Participants each year instrumentalities of the United States, the income tax provision when the revenues in excess of current needs. In states and political subdivisions and property is placed in service. addition, an agreement with New York certain eligible nonconvertible registered Stock Exchange, Inc. prior to the adoption (g) Surplus corporate debt securities. of this policy (see Note 4) precludes Transfers to surplus of 10% of excess of payment of cash dividends in any year in Note 4-Transactions with Affiliates revenues over expenses and refunds will be excess of 6% of stockholders' equity as at made annually until such time as surplus The Company is party to an agreement to the close of the preceding year until such equals 65% of capital stock as required purchase software and software related time as the Company satisfies its by the New York State Banking Law. improvements from New York Stock obligations under this agreement. Exchange, Inc. The terms of the agreement Note 2-0rganization and Ownership Effective June 1, 1980, the Board provide for the Company to pay 6.5% of The Company is a limited purpose trust modified the Company's general refund its gross revenues from services during the company providing central securities policy to provide also for a monthly period January 1, 1976 to June 30, 1983, depository and related services to the refund to Participants of income earned up to a maximum payment of securities, banking and related industries. from the overnight investment of cash $13,500,000. Amounts expensed, which At December 31,1980, New York Stock dividends, interest, and reorganization totaled $3,605,000 in 1980 (1979- 51 $2,856,000), are determined monthly and financial statements) totaled $57,055,000 paid quarterly. Through December 31, at market value, representing amounts 1980, $12,878,000 has been recorded received by the Company after June 30, with respect to such agreement, leaving a 1977. Unclaimed dividends received prior remaining payment of $622,000. to July 1, 1977 have been transferred to New York State in accordance with Revenues from Participants (net of abandoned property laws. refunds) for 1980 include $2,933,000 (1979-$3,237,000) received from Cash dividends and interest receivable National Securities Clearing Corporation, at December 31, 1980 amounted to an affiliate of New York Stock Exchange, $5,337,000 and have been reduced by Inc. Of this amount, $2,767,000 (1979- allowances of $154,000 for possible $3,200,000) was related to services for losses. Stock dividends receivable (which continuous net settlement deliveries. are not recorded in the accompanying Additionally, for certain clerical services, financial statements) amounted to the Company received $324,000 (1979- $52,835,000 at market value, of which $299,000) from National Securities $47,643,000 was collected by January 15, Clearing Corporation. 1981. An accrual of $31,000 has been established for estimated losses on such Note 5-Dividends and Interest on receivables. Securities on Deposit The Company receives cash and stock Note 6-Income Taxes dividends and interest on securities Income taxes are included in other registered in the name of its nominee expenses. The net income tax provision which it distributes to the owners of the for 1980 and 1979 is summarized as securities. Amounts received on securities follows: withdrawn before the record date but not transferred from the name of the 1980 1979 Company's nominee cannot be distributed Current: unless claimed by the owners of the Federal $ 3,000 $ 1,000 securities. At December 31,1980, cash Investment tax dividends and interest payable amounted credits (3,000) (1,0001 to $97,665,000, of which $43,217,000 State and local 8,000 8,000 was distributed to Participants on the next Deferred business day and $54,448,000 was held (State and local) 91,000 106,000 ------pending claim by the record date owners $99,000 $114,000 of the applicable securities; stock dividends payable and unclaimed (which At December 31, 1980, the Company has are not recorded in the accompanying available for federal income tax purposes 52 Watches made their appearance considerably later than clocks, but also stressed religious themes during their early history. Left: A Cross Watch by Conrad Kreizer, Strasbourg, circa 1600, with gold, enamel, and rock crystal for adornment. Right: A Necklace Watch of gold, enamel, rock crystal, and pearls, circa 1625, fashioned in the shape of a six-pointed star.

investment tax credit carryforwards of Operating leases-The Company leases $505,000, of which $23,000 expires in improved office space, substantially all of 1984, $121,000 expires in 1985, $174,000 which as a subtenant of New York Stock expires in 1986 and $187,000 expires in Exchange, Inc. These leases are accounted 1987, and a new jobs credit carryforward of for as operating leases and provide for base $40,000 which expires in 1985. rentals and escalations, plus increases in rental escalations subsequent to 1980. Note 7-Leases and Other Presented below are the future minimum Commitments rental payments required under operating Capital leases-See Note 1 regarding the leases having initial noncancellable lease treatment of capital leases. The following is terms in excess of one year as of December a schedule by year of future minimum lease 31,1980: payments under capital leases, together with Year ending December 31: the present value of the net minimum lease 1981 $ 3,047,000 payments as of December 31, 1980: 1982 3,047,000 Year ending December 31: 1983 2,954,000 1981 $2,377,000 1984 2,868,000 1982 2,289,000 1985 2,829,000 1983 2,047,000 1986-1988 3,828,000 1984 1,638,000 Total minimum 1985 794,000 payments required $18,573,000 1986-1989 960,000 Total minimum lease payments 10,105,000 Rent expense in 1980 was $3,215,000 Less-Amount representing (1979-$3,064,000) for office space and interest 2,183,000 $2,358,000 (1979-$2,071,000) for data processing equipment. Present value of net minimum lease payments (including current See Note 4 for the commitment under the installments of $1,620,0(0) $7,922,000 software package agreement. 53 Participants t Banks (78) AmeriTrust Company Company of Indianapolis BankAmerica Securities Services Michigan National Bank-Grand Rapids Company of New York Morgan Guaranty Trust Company of New Yorl Bank of America National Trust and Savings· National Bank of Australasia Limited (The), Association New York Agency Bank of New York (The) National Bank of Detroit Bank of Tokyo Trust Company (The) National Bank of North America Bankers Trust Company National Westminster Bank Limited Boston Safe Deposit and Trust Company New England Merchants National Bank Bradford Trust Company North Carolina National Bank Brown Brothers Harriman & Co. Northwestern National Bank of Minneapolis Central Fidelity Bank, N.A. Riggs National Bank of Washington, D.C. (Th, Central National Bank of Cleveland Shawmut Bank of Boston, N.A. Chase Manhattan Bank, N.A. (The) State Street Bank and Trust Company Chemical Bank Swiss Bank Corporation-New York Branch Citibank, N.A. Texas Commerce Bank, N.A. Citizens and Southern National Bank (The) Toledo Trust Company (The) Citizens Fidelity Bank and Trust Company Trust Company Bank Connecticut Bank and Trust Company (The) United Bank of Denver, National Association Daiwa Bank Limited (The), New York Agency United States Trust Company of New York Equitable Trust Company (The) United Virginia Bank European American Bank and Trust Company Wachovia Bank and Trust Company, N.A. Fidelity Bank (The) Wells Fargo Bank, National Association Fidelity Union Trust Company Zions First National Bank Fiduciary Trust Company of New York Fifth Third Bank (The) Broker-Dealers (247\) First American Bank, N.A. First-City National Bank of Binghamton, N.Y. ABD Securities Corporation First Jersey National Bank Adams, Harkness & Hill, Inc. First Kentucky Trust Company (The) Adler, Coleman & Co. First & Merchants National Bank Advest, Inc. First National Bank in Dallas AGAR,Inc.* First National Bank in Palm Beach Agora Securities, Inc. First National Bank in St. Louis Alger (Fred) & Company, Incorporated First National Bank of Atlanta (The) Allen & Company Incorporated First National Bank of Birmingham Alstead, Strangis & Dempsey Incorporated* First National Bank of Boston (The) American Securities Corporation First National Bank of Chicago Ames (A.E.) & Co., Incorporated* First National Bank of Colorado Springs Anderson & Strudwick, Incorporated * First National Bank of Maryland (The) Arnhold and S. Bleichroeder, Inc. First National Bank of Minneapolis Asiel & Co. First Pennsylvania Bank, N.A. Atlantic Capital Corporation First Tennessee Bank N.A. Memphis Bache Halsey Stuart Shields Incorporated First Union National Bank of North Carolina Bacon, Whipple & Co. Hartford National Bank and Trust Company Baird, Patrick & Co., Inc. Indiana National Bank (The) Baird (Robert W.) & Co. Incorporated Industrial National Bank of Rhode Island Battery Park Settlement Corporation Irving Trust Company Bear, Stearns & Co. Lincoln First Bank of Rochester Beauchamp & Co. Manufacturers Hanover Trust Company Becker (A.G.) Incorporated Manufacturers National Bank of Detroit Bedford Partners Manufacturers and Traders Trust Company Bell & Beckwith Marine Midland Bank Benton, Newman, Mosca & Co. Maryland National Bank Bernstein (Sanford C.) & Co., Inc. M&I Marshall & Usley Bank Blair (William) & Company Mellon Bank, N.A. Blunt Ellis & Loewi Incorporated Mercantile-Safe Deposit and Trust Company Boettcher & Company Merchants National Bank & Trust Bradford Broker Settlement, Inc. 54 Watches grew more sophisticated throughout the 18th and 19th centuries. Left: A pocket watch, by M. Marcou, Amsterdam, circa 1700. A hand indicates the minutes, while the hours are shown by a miniature sun traveling through the cutout during daytime, and a miniature moon at night. The date appears in the square at center bottom. Right: Fashioned by Abraham Louis Breguet, Paris, between 1820 and 1825, this gold and silver watch is shock-resistant, self-winding, and equipped with its own scale for checking spring tension. It shows the day of the week, the date, and the phase of the moon, each on its own dial, as well as the time of day.

3radford (J.C.) & Co. First Boston Corporation (The) Marks (Carl) & Co., Inc. 3ranch, Cabell & Co. First Jersey Securities, Inc. Masten (A.E.) & Co., Incorporated 3randt (Robert) & Co. First Manhattan Co. May & Gannon, Inc.* 3rown (Alex.) & Sons First Southwest Company Mayer & Schweitzer, Inc. 3rown & Company Securities Corporation* Foster & Marshall Inc. McCourtney-Breckenridge & Company* 3runs, Nordeman, Rea & Co. Frances (E.G.) Co., Inc. McDonald & Company 3urgess & Leith Incorporated Frank (Walter N.) & Co. Mcleod Young Weir Incorporated 3urns Fry and Timmins Inc. Frankel (Wm. V.) & Co., Inc.* Meehan (M.J.) & Company 3urns, Pauli & Co., Inc.* Freehling & Co. Merrill Lynch, Pierce, Fenner & Smith 2antor, Fitzgerald & Co. Fried (Albert) & Co. Incorporated 2antor (S.B.) & Co., Inc.* Gintel & Co. Mesirow & Company 2apital Shares, Inc.* Goldberg Securities Mitchel, Schreiber, Watts & Co., Inc. 2armcley Corporation Goldman, Sachs & Co. MKI Securities Corp. 2arolina Securities Corporation Gowell Securities Corp.* Montgomery Securities 2arr Securities Corporation Gradison & Company Incorporated Moore & Schley, Cameron & Co. 2arr & Thompson, Inc.* Granger & Company Morgan, Keegan & Company, Inc. :::artwright (L.) & Co.* Gruntal & Co. Morgan, Olmstead, Kennedy & Gardner, :::hicago Corporation (The) Gruss (Oscar) & Son Incorporated Incorporated :::hristopher (B.C.) & Company Haupt, Andrews, Fraiman & Hug Morgan Stanley & Co. Incorporated :::oburn & Meredith, Inc.* Hawthorne Securities Corporation* Muir (John) & Co. :::olin, Hochstin Co. Henderson Brothers, Inc. Muller & Company, Inc. :::onklin, Cahill & Co. Herzfeld & Stern Murphey, Marseilles & Smith :::onning & Co. Herzog, Heine, Geduld, Inc. Murphy, Durieu & Naddell :::Osentino & DeFelice, Inc. * Hill, Thompson, Magid & Co., Inc.* Neuberger & Berman :::OWen ~ Co. Hilliard (J.J.B.), Lyons (W.L.), Inc. New Japan Securities International, Inc. :::raig-HaIlum, Inc. Hirshon, Roth & Co. Newhard, Cook & Co. Incorporated )ain Bosworth Incorporated Howard, Wei!, Labouisse, Friedrichs Nick (J.F.) & Co. )ai wa Securities America, Inc. Incorporated Nomura Securities International, Inc. )avenport & Co. of Virginia, Inc. Hudson (R.S.) & Co., Inc.* Norris & Hirshberg, Inc.* )avis (Shelby Cullom) & Co. Hummer (Wayne) & Co. Oppenheimer & Co., Inc. fe Cordova, Cooper & Co. Hutton (E.F.) & Company Inc. Paine, Webber, Jackson & Curtis )e1tec Securities Corporation * Icahn & Co., Inc. Incorporated )enton & Company, Inc.* Illinois Company Incorporated (The) Parker, Weissenborn & Moynahan, Inc.* )iIIon, Read & Co. Inc. Ingalls & Snyder Pasternack Securities )oft & Co., Inc. Institutional Equity Corporation Pforzheimer (Carl H.) & Co. )ominick Investor Services Corporation Interstate Securities Corporation Piper, Jaffray & Hopwood, Incorporated )onaldson, Lufkin & Jenrette Securities Jacobson (Benjamin) & Sons Pitfield, Mackay & Co., Inc. Corporation Janney Montgomery Scott Inc. Prescott, Ball & T urben )rexel Burnham Lambert Incorporated Jefferies & Company, Inc. Purcell, Graham & Co., Inc. )rysdale Securities Corporation Jones (Edward D.) & Co. Q & R Clearing Corporation ~aston & Co. Josephthal & Co. Incorporated Quinn (E.].) & Co., Inc.* iberstadt (F.) & Co., Inc. Kalb, Voorhis & Co. Rauscher Pierce Refsnes, Inc. ~wards (A.G.) & Sons, Inc. Kaufmann, Alsberg & Co. Raymond, James & Associates, Inc. ~inhorn & Co. Kidder, Peabody & Co. Incorporated Reaves (W.H.) & Co., Inc. ~ngler & Budd Company* Kingsley, Boye & Southwood, Inc. Reich & Co., Inc. ~ppler, Guerin & Turner, Inc. Krieger (Henry) & Co. Rice Securities, Inc. ~uity Securities Trading Co., Inc.* LaBranche & Co. Richardson Securities, Inc. ~rnst & Co. Laidlaw Adams & Peck Inc. Riviere Securities Corporation* ~uroPartners Securities Corp. Lasker, Stone & Stern Robb, Peck, McCooey & Co., Inc. ~vans & Co., Inc. Lawrence (Cyrus J.) Incorporated Robertson, Colman, Stephens & Woodman ~xchange Services, Inc.* Lawrence, O'Donnell & Co. Robinson-Humphrey Company, Inc. (The) ~xecution Services Incorporated Lazard Freres & Co. Rodman & Renshaw, Inc. :agenson & Co., Inc. Lewco Securities Corp. Roney (Wm. C.) & Company :ahnestock & Co. Mabon, Nugenr & Co. :erris & Company, Incorporated* Madoff (Bernard L.) * NSCC Sponsored Accoun t :inancial America Securities, Inc.* Manley, Bennett, McDonald & Co. t As of December 31, 1980 :irst Albany Corporation Marcus & Company '\ Includes only those which have given permusion for :irst Birmingham Securities Corporation* Marcus Schloss & Co., Inc. use of their names. 55 Ross (Arthur H.), Inc. Wells Fargo Bank, National Association Rotan Mosie Inc. Marine Midland Bank Rothschild (L.F.), Umerberg, Towbin Goldman, Sachs & Co. Roulston and Company, Inc. Chemical Bank Rowland (R.) & Co., Incorporated Northwestern National Bank of Ryan Oohn J.) & Co.* Minneapolis Sade & Co. State Street Bank and Trust Company Salomon Brothers Salomon Brothers Schapiro (M.A.) & Co., Inc. A.G. Edwards & Sons, Inc. Scherck, Stein & Franc, Inc. * Mellon Bank, N.A. Seasongood & Mayer* The Citizens and Southern National Bank Securities Settlement Corporation Morgan Stanley & Co. Incorporated Seligman Securities, Inc. First & Merchants National Bank Shaine (H.B.) & Co., Inc. Lewco Securities Corp. Shearson Loeb Rhoades Inc. Donaldson, Lufkin & Jenrette Securities Simon (l.M.) & Co. Corporation Smith Barney, Harris Upham & Co., The First Boston Corporation Incorporated Alex. Brown & Sons Smith (E.H.) Jacobs & Co.* Edward A Viner & Co., Inc. Source Securities Corporation Hartford National Bank and Trust Company Southwest Securities, Inc. The Connecticut Bank and Trust Company Spear, Leeds & Kellogg Shawmut Bank of Boston, N.A Steichen (R.J.) & Company* Arnhold and S. Bleichroeder, Inc. Stern & Kennedy The Equitable Trust Company Sterne, Agee & Leach, Inc. Burgess & Leith Incorporated Stifel, Nicolaus & Company Incorporated F. Eberstadt & Co., Inc. Stillman, Maynard & Co. Maryland National Bank Stokes, Hoyt & Co. Wood Gundy Incorporated Streicher (J.) & Co. Whitney Goadby Inc. Stuart Brothers Bradford Trust Company Stubro, Incorporated First Wall Street Settlement Corporation Sutro & Co. Incorporated Oscar Gruss & Son Incorporated Swiss American Securities Inc. Kingsley, Boye & Southwood, Inc. Thomson McKinnon Securities Inc. First Jersey National Bank Thrift Trading, Incorporated* Carl Marks & Co., Inc. Tompane (AB.) & Co. Carl H. Pforzheimer & Co. Tucker, Anthony & Day (R.L.), Inc. LaBranche & Co. Tweedy Browne Clearing Corporation Boettcher & Company Vincent (Burton J .), Chesley & Co. Prescott, Ball & Turben Viner (Edward A) & Co., Inc. The Fidelity Bank Wagner, Stott & Co. Stillman, Maynard & Co. Weber, Hall, Sale & Associates, Inc. W.H. Reaves & Co., Inc. Wechsler & Krumholz, Inc. Pitfield, Mackay & Co., Inc. Weiss, Peck & Greer Fagenson & Co., Inc. Wellington & Co. J.F. Nick & Co. Wheat, First Securities, Inc. The First National Bank of Atlanta Whitney Goadby Inc. Stock Clearing Corporation Wien (M.S.) & Co., Inc. Mitchel, Schreiber, Watts & Co., Inc. Williams (Jerry), Inc.* Mayer & Schweitzer, Inc. Witter (Dean) Reynolds Inc. Wood Gundy Incorporated Wreszin, Prosser, Romano & Co. Depository Yamaichi International (America), Inc. Facilities(34t) Clearing Agencies (6) Atlanta, Georgia Midwest Securities Trust Company Citizens and Southern National Bank (The) National Securities Clearing Corporation First National Bank of Atlanta (The) New England Securities Depository Trust Baltimore, Maryland Company First National Bank of Maryland (The) Options Clearing Corporation (The) Birmingham, Alabama Pacific Securities Depository Trust First National Bank of Birmingham Company Boston, Massachusetts Philadelphia Depository Trust Company New England Securities Depository Trust Company Shawmut Bank of Boston, N.A. DTC Stockholders (59t) State Street Bank and Trust Company Charlotte, North Carolina The full list of 1980 DTC stock­ First Union National Bank of North Carolin holders, in order of their holdings, Cleveland, Ohio is as follows: AmeriTrust Company Dallas, Texas New York Stock Exchange, Inc. First National Bank in Dallas Bankers Trust Company Republic National Bank of Dallas Merrill Lynch & Co., Inc. Denver, Colorado Citibank, N .A. United Bank of Denver, National Associatiol American Stock Exchange, Inc. Hartford, Connecticut National Association of Securities Dealers, Inc. Connecticut Bank and Trust Company (The: The Chase Manhattan Bank, N.A. Hartford National Bank and Trust Company Manufacturers Hanover Trust Company Houston, Texas The Bank of New York Houston National Bank Morgan Guaranty Trust Company of New York Indianapolis, Indiana United States Trust Company of New York Merchants National Bank & Trust Irving Trust Company Company of Indianapolis

56 Left: This gilt brass nocturnal was dedicated to Albert, Archduke of Austria, in 1584. Right: An early 19th

fersey City, New Jersey Chase Manhattan Bank, N .A. (The) Provident National Bank First Jersey National Bank Chemical Bank Republic National Bank of Dallas Los Angeles, California Citibank, N.A. Republic National Bank of New York Security Pacific National Bank Citizens Fidelity Bank and Trust Company Royal Bank of Canada (The), New York Agency Wells Fargo Bank, National Association Citizens and Southern National Bank (The) Royal Bank & Trust Company (The) Louisville, Kentucky Connecticut Bank and Trust Company (The) Sanwa Bank Limited (The) Citizens Fidelity Bank & Trust Company Continental Illinois National Bank and Seattle First National Bank First Kentucky Trust Company (The) Trust Company of Chicago Security Pacific National Bank Milwaukee, Wisconsin Credit Lyonnais, New York Branch Shawmut Bank of Boston, N.A. First Wisconsin Trust Company Credito Italiano State Street Bank and Trust Company Minneapolis, Minnesota Crocker National Bank Sumitomo Trust & Banking Co., Ltd. (The) First National Bank of Minneapolis Daiwa Bank Limited (The), New York Agency Swiss Bank Corporation, New York Branch Northwestern National Bank of Minneapolis Detroit Bank & Trust Company (The) Swiss Credit Bank N ashville, Tennessee Equitable Trust Company (The) Texas Commerce Bank National Association United American Bank European-American Bank & Trust Company Toledo Trust Company (The) Philadelphia, Pennsylvania Fidelity Bank (The) Toronto-Dominion Bank (The) Fidelity Bank (The) First American Bank, National Union Bank of Switzerland, New York Branch Provident National Bank Association Union First National Bank of Washington Pittsburgh, Pennsylvania First Jersey National Bank United Bank of Denver, National Association Mellon Bank, N.A. First & Merchants National Bank United California Bank Providence, Rhode Island First National Bank in Dallas United Srates Trust Company of New York Industrial National Bank of Rhode Island First National Bank in St. Louis United Virginia Bank Richmond, Virginia First National Bank of Arizona Wachovia Bank and Trust Company, N.A. First & Merchants National Bank First National Bank of Atlanta (The) Wells Fargo Bank, National Association Rochester, New York First National Bank of Chicago Lincoln First Bank of Rochester First National Bank of Louisville St. Louis, Missouri First National Bank of Maryland (The) Banks Reported to be First National Bank in St. Louis First National Bank of Minneapolis Participating in the Depository Mercantile Trust Company National First National Bank of Oregon Association First Pennsylvania Bank, N.A. on an Indirect Basis (266t1I.) San Francisco, California First Union National Bank of North Carolina Alabama Wells Fargo Bank, National Association Fuji Bank and Trust Company (The) Central Bank of Birmingham Harris Trust and Savings Bank First Alabama Bank of Huntsville, N.A. Hartford National Bank and Trust Alaska Pledgees (98t) Company Alaska National Bank of the North, Fairbanks Algemene Bank Nederland N.V., New Houston National Bank Alaska Statebank, Anchorage York Branch Indiana National Bank (The) National Bank of Alaska, Anchorage Amalgamated Bank of New York (The) Irving Trust Company Arizona AmeriTrust Company (The) Lincoln First Bank of Rochester Harris Trust Company of Arizona, Scottsdale Arizona Bank (The) Lloyds Bank California Valley National Bank, Phoenix Banca Commerciale Italiana, Chicago Branch Manufacturers Hanover Trust Company California Bank Leumi Trust Company of New York Manufacturers National Bank of Detroit California Canadian Bank, San Francisco Bank of America, National Trust and Marine Midland Bank City National Bank, Beverly Hills Savings Association (Los Angeles) Maryland National Bank Lloyds Bank California, Los Angeles Bank of America National Trust and Mellon Bank, N.A. Mechanics Bank of Richmond Savings Association (San Francisco) Mercantile-Safe Deposit and Trust Company Trust Company of California (The), Los Angeles Bank of New York (The) Mercantile Trust Company National Association Trust Company of the West, Los Angeles Bank of N ova Scotia (The) Merchants National Bank & Trust Colorado Bank of Tokyo Trust Company (The) Company of Indianapolis Central Bank of Denver Bankers Trust Company Morgan Guaranty Trust Company of New York Colorado National Bank, Denver Banque de Paris et des Pays-Bas National Bank of Detroit First National Bank in Boulder Barclays Bank International Limited National Bank of North America First National Bank of Denver (The) Boatmen's National Bank of St. Louis (The) National Westminster Bank Limited First National Bank of Englewood (The) Bradford Trust Company New England Merchants National Bank First National Bank in Grand Junction Brown Brothers Harriman & Co. North Carolina National Bank • NSCC Sponsored Account California First Bank Northern Trust Company (The) t A. of December 31, 1980 Canadian Imperial Bank of Commerce Northwestern National Bank of Minneapolis \ Includes only thOle which have given permission for Central National Bank of Cleveland Pittsburgh National Bank Ule of their namel.

57 First National Bank in Loveland Sun First National Bank of Palm Beach Count> Greeley National Bank, Greeley Venice Nokomis Bank & Trust Company, Ver Connecticut Georgia Citytrust, Bridgeport Columbus Bank and Trust Company Connecticut National Bank (The), Bridgeport National Bank of Georgia, Atlanta New England Bank & Trust Company, Enfield Hawaii Putnam Trust Company of Greenwich Bishop Trust Company, Ltd., Honolulu State National Bank of Connecticut, Bridgeport First Hawaiian Bank, Honolulu Union Trust Company, New Haven Hawaiian Trust Company, Ltd., Honolulu Westport Bank & Trust Company Idaho Delaware Idaho Bank and Trust Company, Pocatello Bank of Delaware, Wilmington Idaho First National Bank (The), Boise Farmers Bank of the State of Delaware, Illinois Wilmington Pioneer Bank and Trust Company, Chicago Wilmington Trust Company Springfield Marine Bank District of Columbia Indiana American Security Bank, N.A. Anderson Banking Company, Anderson National Bank of Washington (The) Citizens National Bank of Evansville Florida First Bank and Trust Company of South Bend American Bank & Trust Company at First National Bank of Richmond (The) Fort Lauderdale Lincoln National Bank and Trust Company, Barnett Bank of Jacksonville, N.A. Fort Wayne Barnett Banks Trust Company, N.A., Peoples Bank and Trust Company, Indianapoli Jacksonville Peoples Trust Bank, Fort Wayne Century National Bank of Broward, Purdue National Bank of Lafayette Fort Lauderdale St. Joseph Bank and Trust Company, South Be Exchange Bank and Trust Company of Florida Iowa (The), Tampa Iowa-Des Moines National Bank First Bank and Trust Company of Boca Raton Merchants National Bank of Cedar Rapids (Th First Marine Bank and Trust Company Kansas of The Palm Beaches Brotherhood Bank and Trust Company, First National Bank of Florida, Tampa Kansas City First National Bank of Fort Myers Union National Bank of Wichita First National Bank of Venice Louisiana First National Bank and Trust Company Hibernia National Bank in New Orleans (The) of Naples Maine First National Bank and Trust Company of Canal National Bank, Portland Riviera Beach Casco Bank & Trust Company, Portland Flagship Bank of Tampa Maine National Bank, Portland Flagship National Bank of Miami Merchants National Bank of Bangor Florida Bank of Fort Lauderdale Massach use tts Florida Bank and Trust Company of Daytona Beach Arlington Trust Company, Lawrence Florida First National Bank of Jacksonville Berkshire Bank and Trust Company, Pittsfield Florida First National Bank of Ocala B.M.C. Durfee Trust Co., Fall River Florida First National Bank of Pensacola Cambridge Trust Company Florida First National Bank of Vero Beach First Agricultural Bank, Pittsfield Florida National Bank of Gainesville Framingham Trust Company Florida National Bank of Lakeland Guaranty Bank and Trust Company, Worcestet Florida National Bank of Miami Mechanics National Bank, Worcester Florida National Bank at Orlando Pacific National Bank of Nantucket Florida National Bank of Palm Beach County Plymouth Home National Bank, Brockton Florida National Bank of St. Petersburg South Shore National Bank, Quincy Gulfstream American Bank and Trust, Union National Bank, Lowell N .A., Fort Lauderdale United States Trust Company, Boston Gulfstream First Bank and Trust Michigan Company, N.A., Boca Raton American National Bank and Trust Landmark First National Bank Company of Michigan, Kalamazoo of Fort Lauderdale Ann Arbor Trust Company Lee County Bank, Fort Myers Commercial and Savings Bank of National Bank of Sarasota St. Clair County, St. Clair National Trust Company (The), Fort Myers Detroit Bank & Trust Peoples Bank of Lakeland First National Bank & Trust Company Royal Trust Bank of Miami of Michigan, Kalamazoo Southeast Bank of Broward National Bank of Jackson Southeast Bank of Jacksonville Minnesota Southeast Bank of New Smyrna IDS Benefit Trust Company, Minneapolis Southeast Banks Trust Company, N.A., Miami Marquette National Bank of Minneapolis (Thel Southeast First Bank of Largo Midland National Bank of Minneapolis, Minne: Southeast First National Bank of Miami Northwestern National Bank of St. Paul Southeast First National Bank of Sarasota Mississippi Southeast National Bank of Bradenton First National Bank of Jackson Southeast National Bank of Deerfield Missouri Southeast National Bank of Naples First National Bank of Kansas City Southeast National Bank of Orlando Guaranty Trust Company of Missouri Sun Bank of Miami (The), Dayton Sun Bank of Ocala St. Louis Union Trust Company Sun Bank of St. Lucie County Traders Bank, Kansas City Sun Bank of Volusia County United Missouri Bank of Kansas City, N.A. Sun Bank and Trust Company of St. Petersburg Montana Sun First National Bank of Dunedin Northwestern Bank of Helena Sun First National Bank of Lake County Nebraska Sun First National Bank of Orlando First National Bank and Trust Company of Lin,

58 Far larger than watches, automaton clocks offered craftsmen the room to engage in extremely intricate showmanship. "Diana on the Centaur," Augsburg, circa 1600, was made of silver and gilt fitted with gems and enamel. The clock rolls across the table on its ebony base when the hour strikes, and the centaur rolls his eyes and fires his bow, while Diana and the dogs nod approvingly.

First Northwestern Trust Company of Winters National Bank and Bank of the Southwest, Houston Nebraska, Omaha Trust Company, Dayton First Ciry &ink of Dallas National Bank of Commerce, Lincoln Oklahoma First Ciry National &ink of Houston Nevada Bank of Oklahoma, National Association, Tulsa First International &ink in Houston, N.A. First National Bank of Nevada, Reno F & M &ink & Trust Company (The), Tulsa First National Bank of Amarillo (The) Security National Bank of Nevada, Reno First National Bank and Trust Frost National Bank, San Antonio New Hampshire Company of Oklahoma Ciry (The) Houston National Bank Bank of New Hampshire First National Bank and Trust Company of Tulsa (The) Mercantile National Bank at Dallas National Association, Concord Liberry National &ink and Trust Republic National Bank of Dallas New Jersey Company of Oklahoma Ciry (The) Southern National Bank of Houston Citizens First National Bank of Ridgewood Utica National Bank & Trust Company, Tulsa Utah City Trust Services National Oregon Tracy-Collins Bank and Trust Company, Association, Elizabeth First National Bank of Oregon, Portland Salt Lake Ciry First National Bank of New Jersey, Totowa Oregon Bank (The), Portland Vermont First National Bank of Princeton (The) Pennsylvania First Vermont Bank and Trust Company, First National State Bank of New Jersey, American Bank and Trust Company of Brattleboro Newark Pennsylvania, Reading . Virginia National State Bank (The), Elizabeth Bank of Pennsylvania, Reading Bank of Virginia Trust Company, Richmond New Jersey Bank, N.A., Paterson Commonwealth National Bank (The), First American &ink of Virginia, McLean New Jersey National Bank, Trenton Harrisburg National Bank of Fairfax (The) Somerset Trust Company, Somerville Continental Bank, Norristown Virginia National Bank, Norfolk Summit and Elizabeth Trust Company, Summit Dauphin Deposit Bank & Trust Washington United Counties Trust, Elizabeth Company, Harrisburg Bellingham National Bank (The) United Jersey Bank, Hackensack Equibank, N.A., Pittsburgh Frank Russell Trust Company, Tacoma New Mexico First Seneca Bank and Trust Company, Oil Ciry Old National Bank of Washington, Spokane Bank of New Mexico (The), Albuquerque First Valley National Bank, Bethlehem Pacific National &ink of Washington, Seattle New York Frankford Trust Company, Philadelphia Peoples National Bank of Washington, Seattle Chemung Canal Trust Company, Elmira Hamilton Bank, Lancaster Seattle Trust & Savings Bank Empire National Bank, Middletown Marine National Bank, Erie West Virginia Key Trust Company, Albany McDowell National Bank of Sharon Charleston National Bank (The) Long Island Trust Company, Garden City Merchants National Bank of Allentown (The) Wisconsin Oneida National Bank and Trust Company Northeastern Bank of Pennsylvania Citizens Trust Company (The), Sheboygan of Central New York (The), Utica Northern Central Bank, Williamsport First National Bank and Trust Company Savings Banks Trust Company, New York Security Bank & Trust Company, Stroudsburg of Racine Securiry Trust Company, Rochester Security-Peoples Trust Company, Erie Kellogg-Citizens National Bank of Green Bay St. Lawrence National Bank (The), Canton Southeast National Bank of Pennsylvania, Marine Bank of Beaver Dam Tompkins County Trust Company, Ithaca West Chester Marine Bank of Madison North Carolina Third National Bank and Trust Marine National Bank of Neenah Bank of North Carolina, N.A., Jacksonville Company of Scranton Marine Trust Company (The), Milwaukee Carolina First National &ink, Lincolnton United Penn Bank, Wilkes-Barre Merchants & Savings Bank, Janesville Central Carolina Bank and Trust Company, Durham Union Bank and Trust Company of Eastern Peoples Marine Bank of Green Bay Independence National Bank, Gastonia Pennsylvania, Bethlehem Securiry Marine Bank of Madison Northwestern Bank (The), North Wilkesboro Union National Bank of Pittsburgh (The) Valley Trust Company, Appleton Southern National &ink of North Rhode Island West Bend Marine Bank Carolina, Lumberton New England Trust Company, Providence United Carolina Bank, Monroe Old Stone Bank Providence Investment Companies United Carolina Bank, Whiteville Washington Trust Company (The), Westerly North Dakota South Carolina Reported to be Using Bank of North Dakota, Bismarck Bankers Trust of South Carolina, Columbia Ohio Citizens and Southern National Bank Depository Services (118 t) BancOhio National &ink, Columbus of South Carolina, Columbia (Listed by Custodian Bank) Bank One of Columbus, N.A. First National Bank of South Carolina, Columbia Bank One Trust Company, N.A., Columbus Southern Bank and Trust Company, BANK OF NEW YORK (THE) First National &ink of Cincinnati (The) Greenville Adams Express Company First National &ink of Toledo Tennessee Alpha Fund, Inc. Huntington National &ink of Columbus (The) Park National Bank (The), Knoxville Charter Fund, Inc. Second National Bank of Warren (The) Union Planters National Bank of Memphis Third National Bank & Trust Texas t As of December 31,1980. Includes only those which Company (The), Dayton Austin National Bank have given permi8sion for use of their namel.

59 Drexel Burnham Fund (The) RIGGS NATIONAL BANK Fundamerica of Japan, Inc. OF WASHINGTON, D.C. (THE) General Electric S & S Program Mutual Fund Aetna Income Shares, Inc. Lehman Corporation (The) Aetna Variable Encore Fund, Inc Merrill Lynch Capital Fund, Inc. Aetna Variable Fund, Inc. Merrill Lynch Special Value Fund Washington Mutual Investors Fund, Inc. National Securities Balanced Fund N.A. National Securities Bond Fund SHAWMUT BANK OF BOSTON, National Securities Dividend Fund Directors Capital Fund, Inc. National Securities Growth Fund Energy Fund Incorporated National Securities Income Fund Fidelity Fund, Inc. National Securities Preferred Fund Gateway Option Income Fund National Securities Stock Fund Guardian Mutual Fund, Inc. Petroleum & Resources Corporation Partners Fund, Inc. (The) Unified Accumulation Fund STATE STREET Unified Growth Fund BANK AND TRUST COMPANY Unified Income Fund Explorer Fund, Inc. Unified Mutual Shares Federated Option Income Fund, Inc. BANKERS TRUST COMPANY Financial Bond Shares, Inc. Elfun Trusts Financial Daily Dividend Shares Financial Daily Income Shares, Inc. BOSTON SAFE DEPOSIT AND Financial Dynamics Fund, Inc. TRUST COMPANY Financial Industrial Fund, Inc. IPI-Income & Price Index Fund Financial Industrial Income Fund, Inc. Johnston Capital Appreciation Fund INA High Yield Investments, Inc. Johnston Income Fund Ivest Fund, Inc. CHASE MANHATTAN BANK, N.A. (THE) Massachusetrs Capital Development Fund, Inc. AMCAP Fund, Inc. Massachusetrs Financial Bond Fund, Inc. American Balanced Fund, Inc. Massachusetts Financial American Mutual Fund, Inc. Development Fund, Inc. Bond Fund of America, Inc. (The) Massachusetts Financial High Income Trust Bond Portfolio for Endowments, Inc. Massachusetts Income Development Fund, Inc. Endowments, Inc. Massachusetts Investors Growth Stock Fund, Inc. Growth Fund of America Massachusetts Investors Trust Income Fund of America Merrill Lynch High Income Fund, Inc. Investment Company of America (The) Morgan (W.L.) Growth Fund, Inc. New Perspective Fund, Inc. Price (T. Rowe) Growth Stock Fund, Inc. RCM Growth Equity Fund Price (Rowe) New Era Fund, Inc. Price (Rowe) New Horizons Fund, Inc. FIRST JERSEY Price (Rowe) New Income Fund, Inc. NATIONAL BANK Putnam Growth Fund Anchor Growth Fund, Inc. Putnam Option Income Trust Fundamental Investors, Inc. Qualified Dividend Portfolio I Merrill Lynch Basic Value Fund, Inc. Qualified Dividend Portfolio II Merrill Lynch Equi-Bond Fund, Inc. Scudder Common Stock Fund FIRST NATIONAL BANK TOP & L Investment Account A OF BOSTON (THE) Trustees' Commingled Equity Fund Beacon Growth Fund Vanguard Fixed Income Securities Colonial Fund (The) Fund, Inc. - High Yield Colonial Growth Shares Vanguard Fixed Income Securities Colonial Option Income Fund Fund, Inc. - Investment Grade Vanguard Index Trust, Inc. FIRST NATIONAL BANK OF Variable Stock Fund, Inc. MINNEAPOLIS Wellesley Income Fund, Inc. Common Stock Fund of State Bond & Wellington Fund, Inc. Mortgage Co. Diversified Fund of State Bond & Mortgage Co. TEXAS COMMERCE BANK, N.A. IDS Bond Fund, Inc. American National Bond Fund, Inc. IDS New Dimensions Fund, Inc. American National Growth Fund, Inc. Investors Variable Payment Fund, Inc. American National Income Fund, Inc. Investors Selective Fund, Inc. Commerce Income Shares, Inc. Progress Fund, Inc. Industries Trend Fund, Inc. Investment Quality Interest, Inc. HARTFORD NATIONAL Pilot Fund, Inc. BANK AND TRUST COMPANY Value Line Fund, Inc. (The) UNITED BANK OF DENVER, N.A. Value Line Income Fund, Inc. (The) Bank Stock Fund, Inc. Value Line Leveraged Growth Investors, Inc. Janus Fund, Inc. Value Line Special Situations Fund, Inc. (The) One Hundred Fund, Inc. (The) One Hundred and One Fund, (The) MERCHANTS NATIONAL BANK AND TRUST COMPANY OF INDIANAPOLIS Liquid Green Trust Institutions Particirating Full NEW ENGLAND in the Institutiona Delivery MERCHANTS NATIONAL BANK (ID) System (383t) American Dual Vest Fund Tudor Hedge Fund A. Sarasin & Cie, Banquiers (Basel, Switzerland) NORTHWESTERN NATIONAL Aetna Casualty and Surety Company (The) BANK OF MINNEAPOLIS (Hartford, Connecticut) IDS Growth Fund, Inc. Aetna Income Shares Inc. (Hartford, Connecticu IDS Progressive Fund, Inc. Aetna Life and Casualty Co. (The) Investors Stock Fund, Inc. (Hartford, Connecticut) 60 The "Lion" automaton of Augsburg, circa 1600, moves its eyes back and forth as the clock ticks, much as a pendulum swings in more commonplace models. The mouth moves when the hour strikes.

etna Life Insurance and Annuity Company Banque Fran~aise du Commerce Exterieur (Paris, Central National Bank of Cleveland (Cleveland, (Hartford, Connecticut) France) Ohio) etna Life Insurance Company (The) Banque Gutzwiller, Kurz, Bungener S.A. (Geneva, Century Capital Associates (New York, (Hartford, Connecticut) Switzerland) New York) etna Life Insurance - Separate Accounts Banque Internationale a Luxembourg Chase Manhattan Bank, N.A. (The) (New York, (Hartford, Connecticut) (Luxembourg) New York) etna Variable Encore Fund, Inc. (Hartford, Banque Keyser Ullman France (Paris, France) Chase Manhattan Bank (Switzerland) (New York, Connecticut) Banque Leu, Ltd. (Zurich, Switzerland) New York) etna Variable Fund, Inc. (Hartford, Connecticut) Banque Louis-Dreyfus (Paris, France) Chase Manhattan Index Fund (New York, kzona Pension Fund (Asheville, North Carolina) Banque Migros (Geneva, Switzerland) New York) laska National Bank of the North (Fairbanks, Banque Privee S.A. (Paris, France) Chemung Canal Trust Company (Elmira, Alaska) Banque Rothschild (Paris, France) New York) laska Statebank (Anchorage, Alaska) Banque Scandinave en Suisse (Geneva, Citibank, N.A. (New York, New York) merican Bank & Trust Company (Monroe, Switzerland) Citibank, N.A. - PPB Security Services (New York, North Carolina) Banque Vernes et Commerciale de Paris (Paris, New York) merican Bank and Trust Co. of Pa. (Reading, France) Citizens & Southern National Bank (Atlanta, Pennsylvania) Banque Worms (Paris, France) Georgia) merican National Bank & Trust Co. of Fort Barnett Banks Trust Company, N.A. (Jacksonville, Citizens & Southern National Bank of South Lauderdale (Fort Lauderdale, Florida) Florida) Carolina (Columbia, South Carolina) merican Security Bank, N.A. (Washington, Batterymarch Financial Management Corporation Citizens Fidelity Bank & Trust Company D.C.) (Boston, Massachusetts) (Louisville, Kentucky) meriTrust Company (Cleveland, Ohio) Bayerische Vereinsbank International S.A. Citizens First National Bank of New Jersey moskeag National Bank and Trust Company (Luxembourg) (Ridgewood, New Jersey) (Manchester, New Hampshire) Bellingham National Bank (The) (Bellingham, Citizens National Bank of Evansville (The) msterdamse Crediet - En Handelsbank N.V. Washington) (Evansville, Indiana) (Amsterdam, The Netherlands) Berliner Handels - Und Frankfurter Bank Citizens Trust Company (The) (Sheboygan, nderson Banking Company (Anderson, Indiana) (Frankfurt, West Germany) Wisconsin) ssociated Madison Companies, Inc. (New York, Bishop Trust Co. Ltd. (Honolulu, Hawaii) City National Bank (Beverly Hills, California) New York) Bordier & Cie (Geneva, Switzerland) Cityttust (Bridgeport, Connecticut) M.C. Durfee Trust Company (Fall River, Boston Safe Deposit and Trust Company (Boston, Colorado National Bank (Directed Accounts) Massachusetts) Massachusetts) (Denver, Colorado) mcOhio National Bank - Trust Department Bounty Management Corporation (Boston, Colorado National Bank (Trust Department) (Columbus, Ohio) Massachusetts) (Denver, Colorado) mk in Liechtenstein (Vaduz, Liechtenstein) Breisach Pinschoff Schoeller (Vienna, Austria) Columbus Bank and Trust Company - Trust mk Landau & Kimche AG. (Zurich, Switzerland) Brolliet & Cie (Geneva, Switzerland) Department (Columbus, Georgia) mk of Delaware (Wilmington, Delaware) Brotherhood Bank & Trust Company Commercial Loan Insurance Corp. TF Alaska mk of New Hampshire, National Association (Kansas City, Kansas) Director of Insurance Depository Account (Concord, New Hampshire) Buffalo Savings Bank (Buffalo, New York) (Milwaukee, Wisconsin) mk of New York (The) (New York, New York) Buffalo Savings Bank - Life Insurance (Buffalo, Connecticut National Bank (The) (Bridgeport, mk of Pennsylvania (Reading, Pennsylvania) New York) Connecticut) mk of Scotland (Edinburgh, Scotland) Bullock Fund (New York, New York) Conser vest Management Company (Boston, mk of Tokyo Trust Company (The) (New York, California Canadian Bank - Trust Department Massachusetts) New York) (San Francisco, California) Continental Bank (Norristown, Pennsylvania) mk of Virginia Trust Company (Richmond, Cambridge Trust Company (Cambridge, Credit Commercial de France (Paris, France) Virginia) Massachusetts) Cumberland Advisors, Pty. (Vineland, mk Von Ernst & Cie (Berne, Switzerland) Canadian Fund (New York, New York) New Jersey) mkers Trust - Passive Management (New York, Carolina First National Bank (Lincolnton, North Daiwa Bank Ltd. (The) (New York, New York) New York) Carolina) Darier & Cie (Geneva, Switzerland) mkers Trust - Personal Securities Services Casco Bank & Trust Company (Portland, Maine) Delbruck & Co., Privatbankiers (Cologne, (New York, New York) Case Western Reserve University/ AmeriTrust Germany) mkers Trust Company (Directed Accounts) Company of Cleveland (Cleveland, Ohio) Den Norske Creditbank (Oslo, Norway) (New York, New York) Case Western Reserve University/Central Deseret Trust Company (Salt Lake City, Utah) mkers Trust Company (Trust Department) National Bank of Cleveland (Cleveland, Ohio) Die Erste osterreichische Sparkasse (Vienna, (New York, New York) Case Western Reserve University/National City Austria) mkers Trust Company of South Carolina Bank of Cleveland (Cleveland, Ohio) (Columbia, South Carolina) Central Bank of Denver (Denver, Colorado) mkhaus Marcard (Hamburg, West Germany) Central Carolina Bank & Trust Company mque de la Mutuelle Industrielle (Paris, France) (Durham, North Carolina) t A. of December 31, 1980. Include. only tbooe which mque de L'Union Europl!enne (Paris, France) Central Fidelity Bank, N.A. (Richmond, Virginia) have given pennission for use of their namel. 61 Dividend Shares Inc. (New York. New York) Flagship Bank of Tampa (Tampa. Florida) Eagle Management and Trust Company (Houston. Flagship National Bank of Miami - Trust Texas) Department (Miami. Florida) Edinburgh American Assets Trust Ltd. FMR Investment Management Services. Inc. (Edinburgh. Scotland) (Boston. Massachusetts) Effectenbank-Warburg Aktiengesellschaft Frank Russell Trust Company (Tacoma. (Frankfurt. West Germany) Washington) Endowment Management & Research Franklin Management Corp. (Boston. Corporation (Boston. Massachusetts) Massach usetts) Equibank. N .A. (Pittsburgh. Pennsylvania) General Electric Pension Trust (Stamford. Equitable Life Assurance Society of the United Connecticut) States (New York. New York) Girozentrale und Bank der Osterreichischen Equitable Life Insurance Co. (McLean. Virginia) Sparkassen AG. (Vienna. Austria) Equitable Trust Company (Baltimore. Maryland) Grantham. Mayo. Van Otterloo & Co .• Inc. Exchange Bank & Trust Company of Florida (Boston. Massachusetts) (Tampa. Florida) Greenwell (W.) & Company (London. England Explorer Fund. Inc. (Valley Forge. Pennsylvania) Gulf Life Insurance Company (Jacksonville. Farmers Bank of the State of Delaware (Dover. Florida) Delaware) Gulfstream American Bank and Trust Co .• N.A Fidelity Bank Funds Management Clearing (Fort Lauderdale. Florida) (Philadelphia. Pennsylvania) Gulfstream First Bank and Trust Co .• N.A. Fidelity Bank Investment Advisory Service (Boca Raton. Florida) (Philadelphia. Pennsylvania) Guyerzeller Zurmont Bank AG. (Zurich. Fidelity Bank of Pennsylvania (Philadelphia. Switzerland) Pennsylvania) Hartford National Bank and Trust Company Fidelity Union Trust Company (Newark. (Hartford. Connecticut) New Jersey) Hartford Steam Boiler Inspection and Insurance Fifth Third Bank (The) (Cincinnati. Ohio) Company (Hartford. Connecticut) First Agricultural Bank (Pittsfield. Hentsch & Cie (Geneva. Switzerland) Massach usetts) Hibernia National Bank (New Orleans. Louisiar First Alabama Bank of Huntsville N.A. - Hill Samuel & Co. Limited (London. England) Trust Department (Huntsville. Alabama) Houston National Bank (Houston. Texas) First American Bank. N.A. (Washington. D.C.) Huntington National Bank of Columbus First Bank and Trust Company of Boca Raton. (The) (Columbus. Ohio) N.A. (Boca Raton. Florida) IBM Corp. Equity Investments (Armonk. First Bank and Trust Company of South Bend New York) (South Bend. Indiana) IDS Bond Fund. Inc. (Minneapolis. Minnesota) First City Bank of Dallas (Dallas. Texas) IDS Growth Fund. Inc. (Minneapolis. Minnesol First-City National Bank of Binghamton IDS New Dimensions Fund Inc. (Minneapolis. (Binghamton. New York) Minnesota) First International Bank in HO\lston (Houston. IDS Progressive Fund Inc. (Minneapolis. Minne Texas) Idaho First National Bank (The) (Boise. Idaho) First Kentucky Trust Company (Louisville. Indiana National Bank (Indianapolis. Indiana) Kentucky) Industrial National Bank of Rhode Island First Marine Bank and Trust Company (Lake (Providence. Rhode Island) Worth. Florida) International Brotherhood of Teamster Chauffe First Marine Bank and Trust Company Warehousemen and Helpers of America - (Riviera Beach. Florida) Defense Fund (Washington. D.C.) First & Merchants National Bank (Richmond. International Brotherhood of Teamster Chauffe Virginia) Warehousemen and Helpers of America - Ge First National Bank and Trust Company of Fund (Washington. D.C.) Oklahoma City (The) (Oklahoma City. Investors Selective Fund (Minneapolis. Minnes( Oklahoma) Investors Stock Fund Inc. (Minneapolis. Minne First National Bank and Trust of Racine (Racine. Investors Variable Payment Fund Inc. (Minnea~ Wisconsin) Minnesota) First National Bank in Dallas (Dallas. Texas) Iowa-Des Moines National Bank (Des Moines. I First National Bank in Palm Beach (Palm Beach. Irving Trust Company (New York. New York) Florida) Ivest Fund Inc. (Valley Forge. Pennsylvania) First National Bank of Birmingham (Birmingham. Jennison Associates (New York. New York) Alabama) John Hancock Mutual Life Insurance Company First National Bank of Boston (The) (Boston. (Boston. Massachusetts) Massachusetts) Kiirntner Sparkasse (Klagenfurt. Austria) First National Bank of Colorado Springs (The) Key Trust Company (Albany. New York) (Colorado Springs. Colorado) Laing & Cruickshank (London. England) First National Bank of Denver (The) (Denver. Landmark First National Bank of Fort Colorado) Lauderdale (Fort Lauderdale. Florida) First National Bank of Florida (Tampa. Florida) Lee County Bank (Fort Myers. Florida) First National Bank of Maryland (Baltimore. Lincoln First Bank of Rochester (Rochester. Maryland) New York) First National Bank of Minneapolis (Minneapolis. Lincoln National Bank and Trust Company (Fo Minnesota) Wayne. Indiana) First National Bank of New Jersey (Totowa. Liquid Green Trust (Indianapolis. Indiana) New Jersey) Lloyds Bank California (Pasadena. California) First National Bank of Richmond (The) Lloyds Bank International (France) Limited (Richmond. Indiana) (Paris. France) First National Bank of South Carolina (Columbia. Lloyds Bank International Limited (Geneva. South Carolina) Switzerland) First National Bank of Venice (Venice. Florida) Long Island Trust Company (Garden City. First Union National Bank of North Carolina New York) (Charlotte. North Carolina) MGIC Assurance General Custody (Milwaukee. First Valley Bank (Bethlehem. Pennsylvania) Wisconsin) Fisher Controls Company (Marshalltown. Iowa) MGIC Investment Corp. (Milwaukee. Wisconsi 62 Left: When the hour strikes on this late 16th

[&1 Marshall & I1sley Bank Metropolitan Bank and Trust Company (Greenwich, Connecticut) (Milwaukee, Wisconsin) (Tampa, Florida) Peoples Bank & Trust Company [anufacturers Hanover Trust Company Migros Bank Basel (Basel, Switzerland) (Indianapolis, Indiana) (New York, New York) Migros Bank Zurich (Zurich, Switzerland) Peoples Bank of Lakeland (Lakeland, Florida) [anufacturers National Bank of Detroit Monsanto Savings & Investment Plan Pictet & Cie. (Geneva, Switzerland) (Detroit, Michigan) (St. Louis, Missouri) Pierson, Heldring & Pierson N.V. lanufacturers and Traders Trust Company Monthly Income Shares (New York, New York) (Amsterdam, The Netherlands) (Buffalo, New York) Morgan (W.L.) Growth Fund, Inc. Pioneer Bank & Trust Company larine Bank (Erie, Pennsylvania) (Valley Forge, Pennsylvania) (Chicago, Illinois) larine Midland Bank (New York, New York) Morgan Guaranty Trust Company Plymouth Home National Bank larine Trust Company, N.A. (The) (New York, New York) (Brockton, Massachusetts) (Milwaukee, Wisconsin) Morgan Guaranty Trust Company (Trust and Premco-West Coast (Greenwich, Connecticut) larquette Nationa[ Bank of Minneapolis (The) Investment Division) (New York, New York) Prudential Insurance Company of America (Minneapolis, Minnesota) Mortgage Guaranty Insurance Corp. (Newark, New Jersey) laryland National Bank (Baltimore, Maryland) (Milwaukee, Wisconsin) Purdue National Bank of Lafayette laryland State Retirement Systems Mortgage Guaranty Insurance Corp. ITF (Lafayette, Indiana) (Baltimore, Maryland) Alaska Director of Insurance Account Putnam Advisory Company, Inc. (The) iassachusetts Capital Development Fund, Inc. (Milwaukee, Wisconsin) (Boston, Massachusetts) (Boston, Massachusetts) Nation-Wide Securities Co., Inc. Qualified Dividend Portfolio I iassachusetts Financial Bond Fund (New York, New York) (Valley Forge, Pennsylvania) (Boston, Massachusetts) National Bank of Alaska (Anchorage, Alaska) Qualified Dividend Portfolio II iassachusetts Financial Development Fund National Bank of Commerce (Lincoln, Nebraska) (Valley Forge, Pennsylvania) (Boston, Massachusetts) National Bank of Detroit - Bank Invesrment RCM Growth Equity Fund, Inc. iassachusetts Financial High Income Trust Division (Detroit, Michigan) (San Francisco, California) (Boston, Massachusetts) National Bank of Detroit - Trust Investment Republic National Bank of Dallas 1assachusetts Financial Services Company Department (Detroit, Michigan) (Dallas, Texas) (Boston, Massachusetts) National Bank of Fairfax (The) Retirement & Family Protection Plan, 1assachusetts Income Development Fund, Inc. (Burke, Virginia) International Brotherhood of Teamsters (Boston, Massachusetts) National Bank of Georgia (The) (Washington, D.C.) 1assachusetts Investors Growth Stock Fund, Inc. (Atlanta, Georgia) Riggs National Bank of Washington, D.C. (The) (Boston, Massachusetts) National Bank of Westchester (Washington, D.C.) 1assachusetts Investors Trust (Rochester, New York) Rothschild Bank A.G. (Zurich, Switzerland) (Boston, Massachusetts) National Central Bank (Lancaster, Royal Trust Bank of Miami, N.A. 1assachusetts Mutual Life Insurance Company Pennsylvania) (Miami, Florida) (Spri ngfieid, Ma ssach usetts) National Trust Company (The) Schoeller & Co. Bank Aktiengesellschaft 1assachusetts Mutual Life Insurance Company - (Fort Myers, Florida) (Vienna, Austria) Equities (Springfield, Massachusetts) New England Mutual Life Insurance Company Seattle Trust & Savings Bank 1cDowell National Bank of Sharon (Boston, Massachusetts) (Seattle, Washington) (Sharon, Pennsylvania) New England Trust Company Second National Bank of Richmond (The) 1echanics Bank of Richmond (The) (Providence, Rhode Island) (Richmond, Indiana) (Richmond, California) New Jersey Bank National Association Second National Bank of Warren (The) 1ellon Bank, N.A. (Pittsburgh, Pennsylvania) (Paterson, New Jersey) (Warren, Ohio) 1ercantile-Safe Deposit & Trust Company New Jersey National Bank Security Bank and Trust Company (Baltimore, Maryland) (Trenton, New Jersey) (Sttoudsburg, Pennsy lvania) tlercantile Trust Company, N.A. New York Venture Fund, Inc. Security Trust Company of Rochester (St. Louis, Missouri) (Santa Fe, New Mexico) (Rochester, New York) tlerchants & Savings Bank Nomura Securities International, Inc. Shawmut Bank of Boston, N.A. (Janesville, Wisconsin) (New York, New York) (Boston, Massachusetts) tlerchants National Bank & Trust Company North Carolina National Bank Societe Bancaire Barclays (Suisse) S.A. (Indianapolis, Indiana) (Charlotte, North Carolina) (Geneva, Switzerland) tlerchants National Bank & Trust Company Northeastern Bank of Pennsylvania South Shore National Bank (Security Custody Deparrment) (Scranton, Pennsylvania) (Quincy, Massachusetts) (Indianapolis, Indiana) Northern Central Bank (Williamsport, Southeast Banks Trust Company tlerchants National Bank of Allentown (The) Pennsylvania) (Miami, Florida) (Allentown, Pennsylvania) Northwestern National Bank of Minneapolis Southeast National Bank of Pennsylvania (The) !l.erchants National Bank of Bangor (Minneapolis, Minnesota) (West Chester, Pennsylvania) (Bangor, Maine) Oneida National Bank & Trust Company of Southern Bank & Trust Company A.erchants National Bank of Cedar Rapids Central New York (The) (Utica, New York) (Greenville, South Carolina) (The) - Trust Division Pacific National Bank of Nantucket Southern Methodist University Endowment Fund (Cedar Rapids, Iowa) (Nantucket, Massachusetts) (Dallas, Texas) A.essieurs Hottingeur & Cie (Paris, Fr~nce) Paul Revere Equity Management Company (The) Southern National Bank of North Carolina 63 (Lumberton, North Carolina) Wachovia Bank and Trust Company, N.A. St. Louis Union Trust Company (W inston-Salem, North Carolina) (St. Louis, Missouri) Washington State Accident Fund (Olympia, State National Bank of Connecticut Washington) (Bridgeport, Connecticut) Washington State Accident Reserve Fund State Street Bank and Trust Company (Olympia, Washington) (Trust Division) (Boston, Massachusetts) Washington State Agriculture College State Street Research & Management Company Permanent Fund (Olympia, Washington) (Boston, Massachusetts) Washington State Employees Retirement Strauss Turnbull & Co. (London, England) Fund (Olympia, Washington) Summit and Elizabeth Trust Company Washington State Judicial Retirement (Summit, New Jersey) Fund (Olympia, Washington) Swiss Bank Corporation (New York Branch) Washington State Law Enforcement Officers (New York, New York) and Fire Fighters Fund Swiss Volksbank, Geneva (Olympia, Washington) (Geneva, Switzerland) Washington State Medical Aid Fund Swiss Volksbank, Zurich (Olympia, Washington) (Zurich, Switzerland) Washington State Normal School Permanent Teachers Insurance & Annuity Fund (Olympia, Washington) •••••••••• Association (New York, New York) Washington State Patrol Retirement Fund Teamsters Affiliates Pension Plan (Olympia, Washington) (Washington, D.C.) Washington State Permanent Common School Third National Bank & Trust Company (Olympia, Washington) (Dayton, Ohio) Washington State Scientific School Third National Bank and Trust Company of Permanent Fund (Olympia, Washington) Scranton, Pennsylvania Washington State Teachers Pension Reserve Tompkins County Trust Company Fund (Olympia, Washington) (Ithaca, New York) Washington State Teachers Pension Reserve Tracy-Collins Bank and Trust Fund/613 (Olympia, Washington) (Salt Lake City, Utah) Washington State Teachers Retirement Fund Treasurer of the State of North Carolina (Olympia, Washington) (Raleigh, North Carolina) Washington State Teachers Retirement Trust Company Bank (Atlanta, Georgia) Fund/612 (Olympia, Washington) Trust Company of the West Washington State University Permanent (Los Angeles, California) Fund (Olympia, Washington) Trustees' Commingled Equity Fund Washington State Volunteer Fireman's Relief (Valley Forge, Pennsylvania) and Pension Fund (Olympia, Washington) Union Bank and Trust Company of Eastern Wellesley Income Fund, Inc. (Valley Forge, Pennsylvania (Lehigh Valley, Pennsylvania) Pennsylvania) Union Bank of Switzerland (Basel, Switzerland) Wellington Fund Inc. (Valley Forge, Union Bank of Switzerland (Berne, Switzerland) Pennsylvania) Union Bank of Switzerland (Chiasso, Switzerland) Wells Fargo Advisors (San Francisco, Union Bank of Switzerland (Geneva, Switzerland) California) Union Bank of Switzerland (Lausanne, Switzerland) Wells Fargo Bank, National Association Union Bank of Switzerland (Lugano, Switzerland) (San Francisco, California) Union Bank of Switzerland (Zurich, Switzerland) Wells Fargo Institutional Trust-Directed Union National Bank (Lowell, Massachusetts) (San Francisco, California) Union National of Wichita (Wichita, Kansas) Wells Fargo Personal Trust-Directed Union Trust Company (New Haven, Connecticut) (San Francisco, California) Union Trust Company (Stamford, Connecticut) Westport Bank & Trust Co. (The) United Bank of Denver, N.A. (Denver, Colorado) (Westport, Connecticut) United Carolina Bank - Whiteville Windsor Fund, Inc. (Valley Forge, (Whiteville, North Carolina) Pennsylvania) United Jersey Bank Winters National Bank and Trust Co. (Hackensack, New Jersey) (Dayton, Ohio) United States Trust Company of Boston (Boston, Massachusetts) United States Trust Company of New York (New York, New York) DTC is Indebted to the following individuals and United Virginia Bank (Richmond, Virginia) organizations for much of the material that appears in this University of Rochester (Rochester, New York) Annual RefX>rt. Utica National Bank & Trust Company Art Director: Mano Messina. line drawings: ElizaBeth (Tulsa, Oklahoma) Vahlsing, New YorL: City. EngraVing of the dies for the Valley Trust Company (Phoenix, Arizona) covers: Eugene ProhasL:e. Styleart Engraving Co., New YorL: City. flat stamping of covers: Larry FLScher, Fischer· Value Line Fund, Inc. (New York, Partelow, Inc., New YorL: City. DTC Photographs: Joyce Fay, New York) New York City. Value Line Income Fund, Inc. .Administrative Coordination: Susan Chase. Typography: (New York, New York) Nick Frankel, Dwight Dixon. Mechanical Art: Earl Zehner, Value Line Leverage Growth Fund, Inc. Sl(Jp flanagan, and Pat Mulvaney. Final proofing and administrative assistance: Daniel Farrell, Bonney Koumjian, (New York, New York) Lawrence Siegel. Historical Research: Catherine Temerson. Value Line Special Situations Fund, Inc. Printed by Raleigh Lithograph Corporation, New York City. (New York, New York) Bound by Sendor Bindery Inc., New York City. Special thanks w: Murry Abrams, Michael Mathews, Jean Rehak, Vanguard Fixed Income Securities and the many people at DTC who contributed their time and Fund, Inc. - High Yield (Valley effort to ensuring the accuracy of the report. Forge, Pennsylvania) Sources of illustrations: American Telephone and Telegraph Vanguard Fixed Income Securities Company (pp. 21, 23, 33); THE ART OF INVENTION, Fund, Inc. - Investment Grade Patent Models and Their Makers, by William and Marlys Ray, The Pyne Press. 1974 (p. 17); CLOCKS & WATCHES. (Valley Forge, Pennsylvania) by Johann Willsberger. The Dial Press. 1975. (front & back Vanguard Index Trust, Inc. covers. pp. 1.3,11 nght. 13.37 right. 53, 55, 57 right, 59. (Valley Forge, Pennsylvania) 61.63 right); MAN AND THE STARS. by Hanbury Brown. Oxford University Press. 1978, (p. 37 left); MORE ABOUT Venice Nokomis Bank & Trust Co. COMPUTERS, International Business Machines (Venice, Florida) Corporation. 1974 (pp. 15, 19); TIME & SPACE, Virginia National Bank (Norfolk; Virginia) Measuring Instruments from the 15th to the 19th Century, by Samuel Guye and Henri Michael, Praeger Publishers, II] Vontobel (J.) and Co. Bankiers (Zurich, 1971. (pp. 5.7.9.11 left. 35.57 left. 63 left); TRW Inc. Switzerland) (p.25); DTC photographs (pp. 27. 29. 31. 39-45). 64