The securities certificates on deposit with DTC are symbols of value; their true significance lies in what they represent. But in times and places past, intrinsic and symbolic value were fused, the former stemming from the use of precious substances, and the latter from the artistry with which those substances were fashioned. The illustrations in this report depict some of those objects, the legacy of many cultures and epochs of civilized history.

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.

Highlights ...... 2 Interfaces in a National Clearance A Message from Management ...... 3 and Settlement System ...... 38 History, Ownership and Policies ...... 4 Protection for Participants' Securities ...... 40 Growth in 1981 ...... 6 Officers and Directors of The Eligible Issues ...... 8 Depository Trust Company ...... 46 Municipal Bond Program ...... 8 1981 in Retrospect ...... 48 Outlook for Institutional Use ...... 12 Financial Statements ...... 54 Institutional Delivery (ID) System ...... 16 Participants ...... 63 Basic Services ...... 20 Banks Reported to be Participating in Fast Automated Securities Transfer (FAST) .. 22 the Depository on an Indirect Basis ...... 66 Ancillary Services ...... 26 Stockholders ...... 69 Dividends ...... 26 Pledgees ...... 70 Voting Rights ...... 27 Depository Facilities ...... 71 Voluntary Offerings ...... 28 Investment Companies Reported Other Ancillary Services ...... 29 to be Using Depository Services ...... 71 The Automation of Depository Services ...... 34 Institutions Participating Fully in the Participant Terminal System (PTS) ...... 34 Institutional Delivery (ID) System ...... 73 Automated Participant Interface (API) ...... 35 Investment Managers Participating Fully Computer Communications Facility (CCF) .... 37 in the Institutional Delivery Other Automation Developments ...... 37 (ID) System ...... 79

The Depository Trust Company, 55 Water Street, New York, New York 10041 212-558-8000 Twenty-six pounds and four ounces of gold, this monstrance is studded with 6,222 diamonds. It was fashioned in Vienna in 1699 by the goldsmith KUhnischbauer and the jeweler Stegmayr after a design by lB. Fischer von Erlach. Front cover: As precious as gold and jewels, medieval books were the prizes of the rich until long after the 15th Century, when printing came to Europe. This French cuir-cisele leather binding for the Book of Psalms depicts King David in a scene from II Samuel 24, praying to the Lord to stay the hand of the Angel of Death from visiting a plague upon the people of Jerusalem. "It is I who have done wrong, the sin is mine; but these poor sheep, what have they done? Let thy hand fall upon me and upon my family."

Page 1: In 1535, Charles V, Holy Roman Emperor and King of Spain as Charles I, captured the city of Tunis, after passage of the Mediterranean in a fleet commanded by the Italian admiral Andrea Dorea. The battle-com­ memorated here in a lidded goblet of gilded silver fashioned in Niirnberg­ was part of a lifelong struggle against Suleiman I, the Magnificent, Sultan of the Ottoman Turks.

At the End of the Year: 1981 1980 Participants 374 333 Broker-Dealers 274 249 Banks 93 78 Clearing Agencies 7 6 Pledgees 103 98 Depository Facilities 33 34 Eligible Security Issues 20,459 14.233

(In Billions) Value of Securities on Deposit $560 $493 Bank Deposits $418 $358 Broker-Dealer Deposits $142 $135 Number of Shares on Deposit 19.0 13.6 Bank Deposits 11.0 7.7 Broker-Dealer Deposits 8.0 5.9 Principal Amount of Debt Securities on Deposit $111.3 $68.7 Bank Deposits $94.5 $60.0 Broker-Dealer Deposits $16.8 $8.7 Value of Securities Pledged for Collateral Loans $5.9 $6.7 Value of FAST Balanoe Certificates at Transfer Agents $205.5 $162.7 Total for the Year: (In Billions)

Market Value of Book-Entry Deliveries $1,650 $1.260 Cash Dividends and Interest Payments $27.9 $19.3

2 III]

While 1981 was another year of record-breaking the number of bank Participants rose to 93 from 78 a activity at Depository Trust, the year also was year earlier, while the number of banks known to be marked by significant developments in the participating indirectly in DTC as correspondents depository's ability to serve its users better in the of Participant banks advanced to 362 from 266. future. DTC services were made available for Other institutional clients of bank Participants municipal bonds in bearer form, opening the added their position to DTC's growth as private benefits of book-entry processing to a large new pension funds, public retirement funds, investment class of securities. By yearend, more than 3,700 companies, and insurance companies continued their municipal issues had been made depository-eligible, movement toward depository usage. and plans call for gradually increasing eligibility to We are pleased to report significant progress on at least 100,000 issues by 1985. Another important another front: the growth of DTC's Institutional development was the crystallization of industry Delivery system. This system vastly simplifies the backing for the Institutional Delivery system. post-trade clearance and settlement of institutional Several figures indicating 1981 volume and trades, virtually eliminating delivery "fails" and growth bear highlighting: trimming the cost and effort of processing such transactions. The number of fD users has now risen • computerized book-entry deliveries of to 282 broker-dealers and 967 institutions in the securities among Participants rose to almost $1.65 U.S. and Europe, and industry committees are hard trillion, up 31 % over 1980; at work to encourage much broader and more efficient use of the system in 1982. • the value of securities in our custody rose to We wish to thank the members of DTC's staff, $560 billion at yearend, up 14% from one year the officers of Participants, and the industry earlier despite general declines in stock and bond committees whose professionalism and interest made prices; possible the achievements of the depository in 1981 • shares of common stock on deposit rose to 19 and the promise of more to come in 1982. billion, up by 5.4 billion shares from a year earlier; and ?/'?~;(Z • approximately 50 million securities certificates were deposited into or withdrawn from DTC during William T. Dentzer, Jr. the year, with withdrawals declining somewhat as Chairman & Chief Executive Officer securities immobilization increased. ~ Once again, the year's processing data reflect a great deal mpre than the heavy trading volume that Conrad F. Ahrens occurred in the nation's securities markets during the President & Chief Operating Officer first part of the year. The participation of banks in the depository - both for their own accounts and for their institutional customers- continued to increase;

3 Scholars are still debating the origins of this gilded silver bowl and others like it, which have been found at several locations in the Mideast and variously dated at 1.000-700 B.C. What is agreed on, however, is that the embossed design shows a blend of Egyptian, Assyrian, and Phoenician influences.

The Depository Trust Company (DTC) was born In 1968, these concepts were implemented by out of the securities industry's paperwork crisis in the New York Stock Exchange through that the late 1960s, when processing problems caused organization's Central Certificate Service (CCS), a major disruption in the financial industry. securities depository established to serve NYSE Accordingly, the depository's first and continuing member firms. Pursuant to plans developed by the mandate is to provide efficient, secure and accurate od hoc Banking and Securities Industry Committee in post-trade processing services for transactions in 1970-72, DTC was created in early 1973 to acquire U.S. securities markets. the business of CCS and to expand the benefits of Three concepts underlie DTC's effort to carry the depository approach to other areas of the out this charge. First, the immobilization of its user financial industry, particularly the bank sector. Participants' securities in the depository reduces the The initial sale of DTC stock by the NYSE to need for Participants to maintain their own DTC bank Participants and other self-regulatory certificate safekeeping facilities. Second, a organizations representing broker-dealer computerized book-entry system- in which Participants occurred on October 31, 1975, after changes of ownership interest are recorded in the various state laws restricting depository ownership depository's records- replaces costly, problem­ had been amended. The stockholder base was prone physical delivery of securities for settlement. broadened in October 1976, when the NYSE acted Third, the communications system through which to give broker-dealers the right to own DTC stock DTC acts for its Participants with transfer directly. These actions established the nature of the agents across the country permits more efficient depository as an organization owned by its users or registration of certificates for those desiring them. their representatives.

4 which takes place at that meeting. Elections are The Governance conducted under a system of cumulative voting of the Depository which ensures that no group controlling more than 50% of the stock can elect all Directors. The procedures for. the governance of Depository Representation on the Board is thereby made Trust are carefully framed to reflect the need for available to users from various sectors of the financial objectivity in serving diverse users in the financial community in proportion to their use of the depository. community. At the conclusion of the annual reallocation of The right to purchase capital stock of the DTC stock entitlements in March 1981, elections depository is based on a formula which takes into to purchase entitlements increased the number of account each Participant's use of the depository stockholders to 60, comprising 31 broker-dealers, 25 during the preceding calendar year. The calculation banks and 4 self-regulatory organizations and of use is based on fees paid to the depository during clearing agencies. The 31 broker-dealer stockholder that year and the market value of long securities Participants owned approximately 12% of DTC positions in DTGThe purchase price of the DTC stock. The 25 bank Participants owned stock is based on its book value at yearend. approximately 35% of DTC stock. The ownership Each year, the amount of stock each Participant is interests of the self-regulatory organizations, which entitled to purchase is recalculated to reflect annual were required to sell stock to accommodate variations in usage. Participants may purchase any, Participant elections to purchase, declined to all, or none of the stock to which they are entitled, approximately 4l.9% for the New York Stock as they see fit. Exchange, 5.6% for the American Stock Exchange, and The annual stock reallocation occurs prior to the 5.6% for the National Association of Securities Dealers. annual stockholders' meeting in late March so that , It is the depository's policy not to pay dividends stockholders will be able to vote newly acquired to stockholders. This policy is based on the belief shares in the election of the Board of Directors, that distribution of depository ownership should not be viewed as an investment vehicle, but rather as a means by which diverse users may encourage Total Securities on Deposit DTC's responsiveness to their needs through the (In Billions of Dollars) exercise of their voting rights. The make-up of the 600 depository's Board of Directors reflects this effort to be, and to remain, responsive to user needs. It is a further policy of DTC to limit profits and return to users, whether or not they are stockholders, 400 such revenues as the Board of Directors believes exceed the funds required for the depository's operation. Pursuant to this policy, DTC refunded $5.6 million to users in 1981. The Depository Trust Company is regulated by 200 the Securities and Exchange Commission under the Securities and Exchange Act of 1934, as amended. As a member of the Federal Reserve System and a New York State limited purpose trust company, it is also regulated by the Board of Governors of the 1977 1978 1979 1980 1981 Federal Reserve System and the New York State Banking Department.

5 In the 17th Century, great silver trays a yard wide were common gifts to the Czars of Russia. Known as /Oinons, they were piled high with gifts and treasures and carried by staggering courtiers in the conspicuous displays of wealth so fa \'ored by the rulers of the day. This example, which depicts the mythical story of the Rape of Europa, was sent by the Hanseatic city-state of Hamburg to the second Romanov Czar, Alexis, who ruled from 1645 to 1676.

GrowtlhlUIl1l Jl9§Jl

Trading activity was heavy in the nation's • Cash dividends and interest paid to DTC on securities markets during the first part of 1981, securities held for Participants rose by more than leading to a new high in average daily trading 45% in 1981, to $27.9 billion from $19.3 billion for volume of almost 47 million shares on the New York 1980. Stock Exchange. This trading activity and increased institutional use of Depository Trust were the chief Securities on Deposit from Banks contributors to record activity for DTC as well. (In Billions of Shares) 12 • Despite a general decline in equity prices, the market value of securities on deposit at DTC rose 10 14% to $560 billion from $493 billion at yearend

1980. But the number of shares on deposit- a better 8 indicator of depository growth since it is not subject to fluctuations of equity prices- increased 40% to 6 19.0 billion from 13.6 billion.

• During 1981, DTC processed almost 52 million 4 individual transactions in connection with its primary services- deposits. deliveries, pledges and 2 withdrawals-for an average of over 207,000 transactions per business day in these services. This record volume represented a 6% rise from the prior 1977 1978 1979 1980 1981 high of 49 million for 1980.

6 • Volume records were established in other ways Reserve. Fifteen of the top 100 participated in three as well. Net deposits (deposits minus withdrawals) other securities depositories; 5 of them also averaged $650 million per business day for all of maintained accounts at DTC. 1981, up from $588 million for 1980. Cash DTC's broker-dealer participation also dividends and interest received for Participants contributed to the year's record activity. At yearend hit a single-day peak of $1.14 billion in December. 1981, there were 274 broker-dealer Participants in DTC, as against 249 a year earlier. These firms are • The number of users of DTC's Participant augmented by a great many others that use DTC Terminal System (PTS)-a cornerstone of the through the accounts of correspondent broker-dealer depository's telecommunications network- rose to Participants. Broker-dealer securities on deposit 220, employing a total of 386 terminals in their included a record 8.0 billion shares, with a total various offices, from 178 users and 272 terminals at (equity plus debt) value of $142 billion, up 36% and yearend 1980. 5%, respectively, from the 5.9 billion and $135 billion of yearend 1980. Of the direct broker-dealer • DTC's Institutional Delivery (ID) system grew Participants, 150 had their principal bases of operations to include 669 full users, up from 424 a year earlier. in New York State; 124 were headquartered Bank panicipation remained a significant source in 24 other states and the District of Columbia. of the depository's growth. The addition of 15 banks from 10 states and the District of Columbia Securities on Deposit from brought the number of direct bank Participants to Broker-Dealers 93-24 headquartered in New York State and 69 in (In Billions of Shares) 8 27 other states and the District of Columbia. At the same time, the number of banks understood to be indirect users of DTC through correspondent relationships with direct bank Participants grew to 6 at least 362 from 266 in 1980. By yearend 1981, DTC's securities on deposit hom banks had grown to include 11.0 billion shares, 4 with a total (equity plus debt) value of over $418 billion, up 43% and 17% from 7.7 billion and $358 billion, respectively, a year earlier. Forty-six 2 individual bank Participants each had more than $1 billion in securities on deposit. Direct and indirect Participants included 39 of the top 50 U.S. banks, and 81 of the top 100, measured by trust assets 1977 1978 1979 1980 1981 under management as reponed by the Federal

7 Another gift to Czar Alexis Romano,', this Mho" was made in Augsburg and depicts the Biblical scene, "The Reconciliation of Joseph and Jacob: It was presented by Queen Christina of Sweden in 1647.

The number of issues eligible for DTC services rose to 20,459 by the end of 1981, an increase of Municipal Bond Program 6,226 from the 14,233 of yearend 1980. The expansion was part of DTC's plan to bring the In 1981, DTC instituted a major municipal bond benefits of book-entry delivery and certificate immobilization program in which the benefits of immobilization to an increasing portion of the book-entry, depository custody and the Institutional securities held by Participants. Delivery (ID) system are made available to The 20,459 issues eligible at the end of 1981 broker-dealers, banks and institutions involved in comprised 3,331 common and preferred stocks listed the clearance and settlement of municipal securities on the New York, American and other stock transactions. Approximately 1.5 million municipal exchanges; 6,711 equity issues traded issues with assigned CUSIP numbers, valued at over-the-counter; 4,764 issues of listed and unlisted more than $350 billion, are currently corporate debt securities; 3,706 municipal bond outstanding - the great bulk in bearer form. issues; 437 U.S. Treasury and Federal Agency Depository Trust Participants underwrite and hold a issues; 338 warrants; 475 issues represented by high percentage of these amounts. American Depositary Receipts; 580 unit investment Under this program, the deposits and withdrawals trusts (UITs); and 117 unit issues. of bearer bonds are made directly at DTC, with the

8 securities eligible for all other depository services as Equity Securities on Deposit well. The program offers a number of attractive (In Billions of Shares) 18 benefits to users. • Book-entry delivery reduces fails and cuts delivery time. thereby trimming financing costs. • Depository eligibility allows the National 12 Secu6ties Clearing Corporation (NSCC) to include DTC-eligible munis in its continuous net settlement system. generating a number of efficiencies for users of that system. 6 • The risk of loss to Participants during the handling and shipping of bearer bonds is sharply diminished. • Labor-intensive operations of all types associated with the processing of munis are reduced. 1977 1978 1979 1980 1981 together with the costs related to those activities.

9 • Bonds can be immobilized substantially at tbe Puerto Rico; California leads in the number of outset when an underwriting is being effected. eligible issues, followed by New York and Texas in that order. Deposits reached a daily high of over $65 By yearend, 3,706 municipal issues had been million on December 15. Interest in the use of this made eligible and some $1.25 billion in face amount service will be further encouraged by the planned had been placed on deposit in tbe accounts of 38 addition of about 1,000 issues each month during broker-dealers and 8 bank Participants. These issues 1982. A minimum of 100,000 eligible issues is represent 36 states and the Commonwealth of projected by 1985.

Debt Securities on Deposit Depository Services for Units (In Billions of Dollars of Principal Amount) DTC's program to provide Participants with depository services for units got under way in August. A unit is a combination of two or more 100 component securities (such as a stock and a warrant) initially sold and transferred as though they 80 were one; after a period determined by the issuer and underwriters. the components can be sold and transferred separately. 60 By yearend. 134 Participants had submitted 2.201 Unit "Swingover" Instructions to combine 19.9 million component shares already on deposit in 40 their accounts into 7.5 million units and 633 instructions to separate 2.8 million units into 7.5 20 million component shares. The resulting units and components immediately became eligible for the full range of DTC book-entry services. the Institutional Delivery rID) system. and continuous net 1977 1978 1979 1980 1981 settlement. By the end of the year. 117 unit issues had been included in the program.

10 This scene, of cut leather, is the other half of the binding that appears on the front cover of this report. It shows the goddess Athena, identified with wisdom, probably as a compliment to the recipient, Alessandro Puccinelli, a professor at the University of Dale. The donor was Claude de Saint-Mauris.

11 Fashioned of silver, with horns, nose and forehead rosette of gold, this bull's head of circa 1600 B.c. was found in the tomb of five members of a Mycenaean royal family. Although the bull was not normally treated as a god in ancient civilizations, it was widely perceived as a symbol of male potency, counterpart of the female fertility goddesses so widely worshipped throughout the classical and pre-classical world.

billion, or a little over 40% of the total. The growth Institutional Market of this percentage should accelerate markedly over the next several years, with the continued As banks have become more familiar with expansion in the number of municipal bond issues depository usage and book-entry operations, they eligible for depository services. have become increasingly active in encouraging As can be seen from the charts on pages 13 and their institutional customers to authorize the deposit IS, the potential institutional depository market is a of their assets into the system. At the same time, an very large one. These charts raise the question of increasing number of institutional investors have the extent to which the $725 billion market in initiated the deposit of their assets by so instructing currently eligible assets remains to be penetrated. their custodian banks. Accordingly, bank deposits of The amount of such assets currently in the their own and other institutional assets into DTC depository system is estimated at $482 billion, or increased by $60 billion in 1981. Further growth is about 66% of what is eligible for deposit. These projected for the period ahead, augmented by an assets, over $418 billion of which are on deposit increased number of banks participating in DTC's with DTC and the balance distributed throughout system. the rest of the depository system, are in the accounts Seven major categories of institutional investors of approximately 480 U.S. banks (91 of them among held $1.8 trillion in total assets at yearend 1980, up the top 100 in managed trust assets) that participate from $1.57 trillion at yearend 1979, according to the in depositories directly or indirectly. latest estimates published by the Securities and The nature of the effort required to bring more of Exchange Commission. DTC estimates the the $725 billion into the system varies from category depository-eligible portion of these assets at $725 to category. For example, in the categories of life

12 Ill]

insurance companies, property-liability insurance for the remaining categories, where regulatory companies and state and local retirement funds problems are minor or nonexistent, calls for over (combined depository-eligible assets of $260 $400 billion, or about 86% of the eligible total, on billion), it is often necessary to deal with state laws deposit by 1985. and regulations which, having been developed long A major continuing need is to acquaint the before there was such a thing as a depository system, appropriate institutional and regulatory personnel contain provisions inconsistent with effective with the benefits of depository participation -lower depository usage by institutions domiciled in those costs, reduced errors, increased flexibility, and states. Various efforts are under way to resolve these simplified operations. DTC's efforts in this direction incongruities; it is expected that upwards of $200 have been focused on three institutional categories billion from these categories will have been placed in particular: pension funds, investment companies, in the depository system by 1985. The projection and insurance companies, as described below.

Market Value of Depository-Eligible Assets in Billions of Dollars by Type of Institution (Corporate Equity and Debt Securities)

$120

90

60

PRIVATE INSURANCE PERSONAL INVESTMENT STATE AND FOUNDATIONS MUTUAL NONINSURED OOMPANIES TRUST OOMPANIES LOCAL AND SAVINGS PENSION FUNDS RETIREMENT EDUCATIONAL BANKS FUNDS FUNDS ENDOWMENTS

13 Somewhat earlier than the bull's head in the preceding illustration, this golden Sumerian piece was originally attached to the sound box of a harp. It was recovered in 1934 from the royal cemetery of Ur and has been dated to the period 2685-2645 B.c., midway through the First Dynasty of Ur.

• Deposit of Pension Fund Assets There are currently 35 states that have no Private non insured pension funds hold some $297 regulatory or statutory bars to the use of book -entry billion in total assets, of which approximately $215 systems and/or the depository system by state billion is invested in depository-eligible securities. pension funds. Indeed, 28 of these states are known DTC bank Participants continued to deposit private to have all or part of the state pension fund assets on pension fund assets into their accounts throughout deposit or in the process of being deposited at DTC, 1981; it is believed that a large percentage of the indirectly through their custodian banks. Another 5 $215 billion in private pension fund assets has states and the District of Columbia permit already been placed in the depository system by depository usage by state pension funds at the bank Participants. discretion of appropriate officials. The remaining 10 The situation is otherwise for state and municipal states require that pension fund assets be physically retirement systems, which collectively hold total domiciled within their state boundaries or be kept in assets of about $193 billion, approximately $125 the form of physical certificates wherever they may billion of which is invested in depository-eligible be domiciled. DTC's efforts are directed at helping securities. A major obstacle to depository usage by eliminate such restrictions. state and municipal pension funds arises from the fact that these pension funds are state regulated, • Deposit of Investment Company Assets with each state imposing its own restrictions. Most During 1981, 80 additional mutual funds deposited of these restrictions were enacted long before the the eligible portions of their portfolios into DTC depository system was developed and have to be through their custodian banks, bringing to 200 the modified to permit depository usage. number of mutual funds reported to have done so Significant strides were made in 1981 to and to $28 billion the total value of the securities overcome these restrictions so that state and believed to have been so deposited. These figures municipal retirement system assets can be placed in represent increases of 67% and 8%, respectively, a depository, and a number of states authorized the from the comparable yearend 1980 figures of 120 deposit of their funds during the year. DTC is funds with a value of $26 billion. continuing to acquaint appropriate state personnel Several additional funds laid the groundwork for with the benefits of depository participation for state 1982 depository usage by preparing proposals for pension systems. action by their Boards of Directors. On the basis of

14 these reported plans - and the fact that $28 billion, growth of mutual fund deposits during the year or only 62% of the $45 billion in depository-eligible ahead. A list of the mutual funds reported to have assets held by investment companies according to authorized their custodian banks to deposit eligible SEC estimates, has thus far been placed in the portions of their assets with DTC as of yearend depository system - DTC expects continued 1981 appears elsewhere in this report.

Depository-Eligible Assets as a Percentage of Total Assets Held by Type of Institution (Corporate Equity and Debt Securities) %75

50

25

PRNATE INSURANCE PERSONAL INVESTMENT STATE AND FOUNDATIONS MUTUAL NONINSURED COMPANIES TRUST COMPANIES LOCAL AND SAVINGS PENSION FUNDS RETIREMENT EDUCATIONAL BANKS FUNDS FUNDS ENDOWMENTS

15 These three statues of gilded wood were recovered from the tomb of Tutankhamen, Pharaoh of Egypt in the late 14th Century B.C. On the right is Horus, son of Osiris, the Egyptian god of death; in a funerary context, Horus symbolized the hope of resurrection. At center is Sekhmet, a traditional goddess with the body of a human and the head of a lion, whose name means "Powerful One"; in the funerary context, she was the protectress of foreigners, many of whom settled in Egypt during this period. Mamu, on the left, was a god whose significance is not yet clear to scholars, except that he appears to have been associated with the nether world.

• Deposit of Insurance Company Assets these, some 224 companies have assets on deposit totaling approximately $32.1 billion in market The total value of insurance company assets on value, up from 172 companies with $24.9 billion a deposit at DTC continued to increase in 1981. year earlier. The others are participants in the Nevertheless, the dollar value remains relatively small, depository's Institutional Delivery (fD) system. both in comparison to the assets on deposit from other sectors of the institutional market and in relation to the total value of depository-eligible securities Institutional Delivery held by insurance companies throughout the U.S. (ID)System As in the case of public pension funds, the major The Institutional Delivery rID) system is a method obstacle to depository custody of insurance company for clearing and settling trades initiated by owned securities is the framework of statutes and institutions in a manner which reduces cost and regulations in the various states. Many states permit increases certainty of timely settlement. Its most depository usage at the discretion of the state important features are that it introduces a single insurance commissioners, but have not yet entity to coordinate all settlement activity among established the necessary guidelines for supervisory brokers, institutions and custodian banks, and that it review. In a number of other states the problem is offers convenient electronic, automated methods to statutory - frequently in the form of a requirement accomplish this. that the assets be physically domiciled within the state, or that they be kept in the form of physical • It coordinates the many steps that have to be certificates wherever domiciled. taken by brokers, custodian banks and investment State barriers have made the insurance sector of managers from trade confirmations through final the financial industry the slowest to adapt to settlement, helping to insure that each party takes depositories. Nevertheless, 315 insurers were the right action at the right time. reported to be using at least some depository services indirectly through their agent banks at • It can eliminate redundant paperwork and the yearend, versus a total of 232 at yearend 1980. Of delivery "fails" that lead to repeat paperwork.

16 • It is simple and inexpensive to phase into, and faulty (i .e., does not agree with the institution's even simpler and less expensive to use. records of its order), the institution can act early enough in the settlement cycle so that the broker Briefly stated, the system works as follows: can enter the proper corrections into the ID system. DTC will notify the broker of a problem (1) A broker executing an institutional trade furnishes DTC with the trade data (price, quantity, concerning the trade so that the broker can contact date, etc.), which the depository then passes on to the institution to resolve it. the broker's customer, the institution, in a form that (3) Upon receipt of the acknowledgment, DTC is recognized as a legal confirmation. forwards deliver/receive instructions to both the (2) If the confirmation accurately reflects the custodian bank and broker to schedule settlement. institution's order, the institution sends an (4) If the deliverer has enough securities in its acknowledgment to DTC. If the confirmation is DTC account, the depository will automatically complete the delivery by book-entry on the morning of settlement date and process the related Institutional Delivery (ID) System Use money se ttlement as directed. No plrysicol delivery (I n Thollsands of Items) activity by any party 10 the tradc is required. 5.181 (5) If the deliverer does not have enough securities in its DTC account, it will be notified by DTC _ Confirms early in the morning on settlement date. The _ Acknowledgments deliverer still has the opportunity to provide - Deliveries securities for delivery later on settlement date. 3.505 (6) If the security is not DTC-eligible (i.e., one of 3.324 over 20.400 for which DTC provides book-entry services), deliverer and receiver may use specially prepared ID instructions to settle the transaction outside the depository system. In such cases, though 2.09 1 2.350 delivery must be by physical means rather than book­ entry, DTC's role as a clearinghouse for instructions 1.488 can help insure that delivery and payment will be successfully completed on the first attempt.

A primary goal of the ID system is to increase user efficiency by eliminating most of the error and delay associated with traditional settlement methods, thereby reducing the personnel and time required by 1977 1978 1979 1980 1981 use rs to conduct their operations.

17 • Institutions may no longer have to send letters the number of confirms-only institutions rose 23% to of instruction to their custodians to authorize each 298 from 243. Fully participating institutions are trade for settlement. The ID acknowledgment to those that use ID to receive confirmations from one central source - DTC - eliminates the brokers, acknowledge them, and receive and deliver time-consuming effort of preparing individual securities by book-entry. Confirms-only institutions authorizations and communicating them, through are those that use the system only to receive the mails or electronically or both, to multiple confirmations; this is usually the initial stage of their custodians. (In some instances, custodians may ID system participation. require letters of instruction subsequently, for file The encouragement of greater and more copy purposes only.) widespread use of ID throughout the financial community continues to be one of DTC's top • A greater certainty of trade settlement enables priorities. In line with this emphasis, the ID Task institutions and custodian banks to better manage Force-initiated in 1980 with personnel "on loan" their cash balances, providing early notice of funds from DTC Participants-was made a regular part of needed and available. . DTC's operation in late 1981 for as long as necessary. • All of the labor associated with reprocessing Perhaps the most important aspect of IDs growth uncompleted deliveries can be eliminated, which in 1981 was the strong backing for system use not only reduces the costs, but also improves the provided by leading firms and groups in the quality of service ID users can offer their own securities industry. Most notable among their efforts customers. was an initiative of a subcommittee of the Securities Industry Association's Operations Committee, For these reasons and others, over 900 which proposed an amendment to the New York institutional investors, custodian banks and Stock Exchange's Rule 387 on "COD Orders," broker-dealers have begun full or partial use of the which was approved by the NYSE Board of ID system and institutional investors increasingly Directors on December 9. The proposed require its use to settle their securities transactions. amendment would deny the deliver-versus­ ID growth was substantial in 1981, though still payment privilege which brokers can extend well short of system potential. A verage monthly for settlement of trades of institutional customers volume of confirmations processed through the when the customer or its agent bank is a securities system rose to 306,500 for the fourth quarter, up depository user and the depository's facilities 23% from 250,000 for the comparable 1980 period. are available, but not used, for confirmation, At the same time, the number of fully participating acknowledgment and book-entry settlement institutions increased 58% to 669 from 424-while of the trade.

18 This gospel binding of gold set with precious stones and cameos was created in Bamberg for Otto III (983-1002). The fourth of the Saxon emperors who succeeded the East Frankish Carolingians, Otto ascended the throne at the age of 3, cast off his mother's and grandmother's control at the age of 16, and spent the rest of his brief life making and unmaking Popes in the pursuit of imperial politics and military adventure.

19 Established in the 6th Century B.c., Buddhism quickly flowered far beyond its point of origin in what is now India. And as it spread throughout Asia, it fused with indigenous artistic traditions to create a whole new genre of exquisitely crafted objects. This golden Buddha on a golden throne has been attributed to 14th or early 15th Century China, probably in the cultural ferment that followed the end of the Mongol Yuan Dynasty (]280-1368), which was replaced by the native Chinese Ming Dynasty (]368-1644).

There are four basic services Depository Trust which offer low-cost processing and speed to users performs for Participants: without sacrifice of security and accuracy. • It accepts deposits of securities for custody; Participants instructed DTC to execute 52 million of • It makes computerized book-entry deliveriesof these transactions in 1981, up from 49 million in 1980. securities which are immobilized in its custody; Increasingly, these instructions are in automated • It makes computerized book-entry pledges of form, further reducing labor-intensive work both for securities in its custody; and Participants and for DTC. • It provides for withdrowolsof securities on a routine or urgent basis. These services allow a Participant to place Deposits securities with DTC for safekeeping, deliver them conveniently to another party on the books of the Deposits of certificates can be made in any eligible depository, collect payment from the other party for security issue at DTC's offices or at various banks the securities delivered, and withdraw certificates across the country cooperating as DTC Depository desired by any of its customers. Facilities. During 1981, DTC processed daily an It is the massive use of these services by average of 27,100 deposits involving 122,400 Participants that creates the economies of scale certificates.

20 II]

increase from 1980, when about 28 million deliveries Deliveries were processed with a value of about $1.3 trillion. DTC provides for the settlement of all deliveries Deliveries in the settlement of securities transactions when payment is desired, as well as cash dividends may be with or without the condition of money and interest payments distributed to Participants payment, depending upon the Participant's and other payments, through its daily settlement instructions. In 1981, DTe processed more than 35 system. The basis of this system is a DTC settlement million computer book-entry deliveries among statement which shows each Participant's total money Participants with a settlement value of almost $1.7 settlement activity by type of transaction and trillion, including deliveries between brokers and summarizes all transactions into a net dollar amount clearing corporations. This represented a substantial owed to OTC or to the Participant and paid daily.

Dollar Value of Deliveries (In Billions of Dollars) Pledges This program allows Participants to make book-entry 1500 pledges of securities on deposit with OTC to banks and others who have agreed to accept pledges through DTC as collateral for bank loans or to secure letters of 1000 credit or for other purposes. At yearend 1981, the value of outstanding pledges totaled $5.9 billion; 15 banks each had over $100 million in securities pledged to them on DTC's books 500 among the 103 banks participating in this program. These figures do not include some $1.8 billion in additional pledges to The Options Clearing Corporation by brokers and banks, primarily to meet 1977 1978 1979 1980 1981 collateralization requirements on CALL option sales.

21 The Reliquary of the Magi was fashioned in Cologne, Germany between 1181 and 1230. Designed and executed by Nicholas of Verdun to hold relics of the three Magi and the remains of Gregory of Spoleto, Saint Nahor and Saint Felix, it boasts o,'er 300 gems and cameos and more than a thousand precious stones. Not surprisingly, it is the single most valuable extant piece of medie"al goldsmithery.

Fast Automated Securities Transfer (FAST) Certificate Withdrawals DTC initiated FASTto eliminate the cost of Certificate withdrawals from DTC can be unnecessary creation, movement and storage of accomplished in either of two ways: certificates needed for withdrawals. (1) Withdrawal-by-Transfer (WT), in which Under the FASTprogram, DTC leaves securities securities are transferred routinely to the name of a with transfer agents in the form of balance certificates Participant's customer, or any other name. Normally, the newly registered certificates requested by Participants are available to them one week after Number of FAST Issues (In Thousands) DTC receives the withdrawal instructions. (2) Urgent withdrawals of Certificates-on­ 4.0 Demand (COOs), in which certificates are released to the requesting Participant in three hours. In 1981, DTC processed an average of 27,500 3.0 WTs per day, for total routine withdrawal instructions of 6.9 million, requiring 10.6 million certificates.

During the same period, the depository processed an 2.0 average of 7,100 urgent COOs per day, for a total of 1.8 million requests satisfied by about 3.8 million certificates. DTC's Fast Automated Securities Transfer (FAST) 1.0 program provides an alternative, more economical method of processing both types of certificate withdrawals. The FAST program is described more 1977 1978 1979 1980 1981 fully in the section that follows.

22 registered in the depository's nominee name­ routine FASTwithdrawals in those issues. Cede & Co. The balance certificates are adjusted FASTconfers a number of benefits on all parties daily for DTC deposit and withdrawal activity. involved in the issuance and transfer of securities. There are two parts to the FASTprogram. The Transportation, handling and insurance costs are Withdrawal-by-Transfer (WT) portion of the substantially reduced by the elimination of regular program is designed for routine withdrawals; agents shipments of large-value certificates between can fulfill Participant requests within normal transfer transfer agents and DTC. The cost of researching turnaround time, usually three business days. dividend claims is also reduced, and proxy voting The Certificate-an-Demand (COD) portion of FAST is designed to include urgent withdrawals, as made easier, by FAST COOs, since Cede & Co. well as routine WTs. Transfer agents who subscribe certificates no longer must be issued and circulated to the COD part of FASTmust make the COD throughout the financial industry. In addition, certificates requested by Participants available to corporations and transfer agents enjoy reduced DTC overnight, and twice each business day on two certificate issuance costs by the elimination of hours' notice. Because it covers all types of withdrawals, hundreds, and sometimes thousands, of certificates this part of the program permits DTC to eliminate its for each issue annually. Since the inception of the entire vault supply of Cede & Co. certificates in the program, for example, the issuance of over 3.6 issues subject to the program. However, some Cede & million Cede & Co. certificates which would have Co. certificates in FAST issues must be retained been required to replenish DTC's vault inventory by the depository for COOs when agents perform only was avoided.

Dollar Value of FAST Number of FASTTransfer Agents Balance Certificates (In Billions of Dollars) 200

40 150

30

100 20

50 10

1977 1978197919801981 1977 1978 1979 1980 1981

23 At yearend 1981.47 transfer agents held balance American Telephone & Telegraph Company certificates valued at $206 billion in 4.044 issues. AmeriTrust Company The comparable prior-year figures were 45 transfer Bank of America National Trust and agents holding 3.162 issues valued at $163 billion. Savings Association This growth means that FASTwithdrawals are Chemical Bank possible in about 20% of DTC-eligible issues. Citizens and Southern National Bank (The) As of December 31. 1981 the following 16 agents Fidelity Union Bank participated in the full FASTprogram. holding $161 First Interstate Bank of California billion in 2.779 issues. First & Merchants National Bank BankAmerica Securities Services First National Bank of Atlanta (The) Company of New York First National Bank of Boston (The) Bank of New York (The) First National Bank of Chicago (The) Bankers Trust Company First Pennsylvania Bank. N.A. Chase Manhattan Bank. N.A. (The) First Union National Bank of North Carolina Citibank. N.A. GTE Shareholder Services. Inc. Connecticut Bank and Trust Harris Trust and Savings Bank Company (The) Hartford National Bank and Trust Company Firstlersey National Bank Lincoln First Bank. N.A. Girard Bank Litton Industries Irving Trust Company Maryland National Bank Manufacturers Hanover Trust Company National Bank of Detroit Marine Midland Bank New England Merchants National Bank Morgan Guaranty Trust Company North Carolina National Bank of New York Northern Trust Company (The) Northwestern Trust Company Schroder (J. Henry) Bank & Trust Co. Registrar and Transfer Company Security Pacific National Bank Riggs National Bank of Washington. D.C. (The) Third National Bank Santa Fe Industries. Inc. The following 31 agents. participating on a State Street Bank and Trust Company WT -only basis. held $45 billion in 1.265 issues. United Missouri Bank of Kansas City American National Bank and Trust Company United States Trust Company of New York of Chicago Wachovia Bank and Trust Company. N.A.

One of the advantages of DTC's Fast Automated Securities Transfer

1500 (FAST) system is the degree to which it eliminates the need for issuing many certificates. substituting instead 1200 a single balance certificate for the conventional certificates in whatever quantity required. Since the incep­ 900 tion of FASJ; DTC estimates that corporate issuers and agents have

600 been spared the necessity of issuing some 3.6 million certificates as a result of this feature. The enormous 300 savings this implies in printing, pro­ cessing, and auditing costs might best be visualized in the accompany­ ing chart. which depicts these certifi­ John Hanroclc Standard Oil Empire State World Trade Sears Tower. Certificates required Center. Chicago Bwlding,Chicago Building, New York Center, New York Chicago in the absence cates as if they had been issued and 1.127 ft. 1.136 ft. 1.250 ft. 1.350 ft. 1.454 ft. of FAST stacked 2,000 per foot. in comparison 1.800 ft. with the five tallest commercial buildings in the world.

24 This Scythian pectoral ornament of the 4th Century B.C. weighs in at over 40 ounces of solid gold. Probably created by a Greek goldsmith. it is unusual in that it depicts the lives of the Scythians at home and afield. It is adorned by 48 figures of humans and real and fanciful animals. with floral ornaments separating the domestic from the less peaceful scenes depicted.

25 This 3rd Century B.C. bangle for the upper ann shows two golden serpents entwined in the Heraclean knot, which was often used as an amulet to heal wounds and ward off evil in classical times. It was found in the region of Ethiopia known as Eritrea and shows the influence of Greek art, probably by way of the Ptolemaic successors of Alexander the Great in nearby Egypt.

DTC's ancillary services flow out of its custody of approximately 900 bank and corporate paying securities for Participants. They are designed to agents. Applicable to most of the more than 20,000 permit the owners of securities to receive benefits securities issues eligible for deposit in OTC, these and exercise rights of ownership despite payments resulted in 1.8 million individual line immobilization of certificates and to diminish the items of credit to Participant accounts. Stock need for Participants to handle physical certificates. dividends received for Participants amounted to The most important of these services are almost 1.6 billion shares. dividend and interest collection, provision for voting The ease with which OTC accomplished this rights, collateralization of options, dividend volume of processing evidences the efficiency of the reinvestment, voluntary offerings, and distribution depository's highly automated system. The benefits of underwritings. of this system to OTC users are substantial. These and other services are described more fully Organizations that do not use a depository are faced in the paragraphs that follow. with the prospect of handling a multitude of checks, coming from many points in the United States and Canada, with all of the associated mail problems, Dividends underpayments and other discrepancies, complicated by the need to claim dividends from other parties In 1981, OTC received over $27.9 billion of cash and to undertake all of the communications, dividends and interest payments for credit to correspondence and follow-up expense associated Participants' accounts. This amount represented with that task. over 34,900 individual payments to OTC from OTC's system spares Participants the trouble of

26 dealing with these tasks and the expense of maintaining the necessary facilities for doing so. Voting Rights Surveys indicate that Participants also tend to receive cash dividends and interest payments more Depository Trust arranges for deposited securities quickly through DTC than if payments were to be registered in the name of its nominee, Cede & Co., received directly from paying agents. The depository's for three major reasons: (1) To permit prompt successful effort in 1981 to increase the collection determination of whether the deposited certificates of such payments on payable date is continuing in 1982. are indeed transferable, or whether they are subject to a "stop transfer" order, counterfeit, or otherwise not negotiable. If such a problem is found to exist, DTC can quickly take the appropriate steps to Cash Dividends and Interest Paid obtain replacement securities from the depositing (In Billions of Dollars) Participant. (2) To permit re-transfer, when necessary, in the simplest and quickest manner possible. (3) To permit DTC to ensure the proper and timely allocation of dividends, distributions and voting rights to depositors. 24 Given these reasons for holding securities in the depository's nominee name, one of DTC's primary objectives has been to avoid being a barrier to 18 communications between issuers and beneficial owners. Indeed, in some cases, the existence of DTC may assist the corporate issuer in keeping up with changes in the ownership of its voting stock. The 12 depository's Security Position Listing Report lists the number of shares of the issue on deposit with DTC itemized by Participant; prior to the existence (, of the depository, many of the shares now included in this report would have been represented by certificates that might have circulated by endorsement for prolonged periods before being 1977 1978 1979 1980 1981 re-registered. Security Position Listings are automatically sent to each issuer, free of charge, once

27 Definitely in the Italian style of the 16th and 17th Centuries, this enameled silver fish may have been fashioned at the court of Rudolph II in Prague, to which a number of Italian artists had gravitated at about that time. It was probably meant to be worn as a pendant.

each year, indicating Participant positions as of the to ask the issuer or its agent directly for whatever record date for the issuer's annual meeting. Issuers quantity of proxy material it needs to discharge its may also obtain interim listings on a daily, weekly, obligations to beneficial owners and each issuer is monthly or dividend-record-date basis, upon request able to contact Participants directly. These and for a modest fee. communications occur in the same manner as if DTC DTC's Participant Proxy Contact List specifies did not exist. the name and address of each DTC Participant, together with the name and telephone number of the individual responsible for handling proxies there. V oluntary Offerings The Contact List is updated and reprinted four times DTC offers several services related to voluntary a year and sent to issuers free of charge. offerings, each designed to keep securities immobilized DTC's Omnibus Proxy provides for the exercise in the depository during periods when Participants of voting rights and for direct communications have the right to surrender them for cash and/or other between issuers and Participants holding their voting securities. Use of these services grew substantially in securities. In effect, the Omnibus Proxy is an 1981. The services themselves are as follows. assignment-Cede & Co., the shareholder of record, assigns to each Participant the voting rights o Tender and Exchange Offers associated with the shares in that Participant's DTC In 1981, Depository Trust processed 86 tender and account as of record date. DTC sends the Omnibus exchange offers by book-entry, involving 48 agents Proxy (together with a list identifying the Participant from 23 states. The 86 offers included 6 in which assignees) to the issuer after the record date for the the book-entry program was used to elect a payment shareholders' meeting at which the votes may be cast. option under a mandatory reorganization plan. At the same time, DTC notifies each shareholder The handling of these 86 offers brought the value of Participant that the Omnibus Proxy has been sent to offerings processed through the program since its the issuer and of the number of shares the Participant inception in 1978 to $2.71 billion and the number of is entitled to vote. agents to 63. Upon completion of these steps-which normally One notable 1981 offering, though actually take place in a single day soon after record date - DTC concluded in January 1982, illustrates this service: is removed from the chain of communications between United States Steel Corporation's tender offer for issuer and beneficial owners. Each Participant is able Marathon Oil Company. Based largely on plans

28 drawn up in December by depository employees accounts. Participants with maturing U.S. Treasury working with personnel from Bankers Trust bills on deposit can also use DTC to reinvest, or Company, the offeror's agent, and Goldman, Sachs "rollover," the proceeds into new bills issued on the & Co., the dealer manager, DTC was able to pro.cess maturity date. Although the number of transactions Participant acceptances of over 4.9 million shares effected through these two services is not large, by book-entry, the return of oversubscribed shares the services themselves are considered useful by by book-entry following proration, and payment Participants in that they reduce the expense for Participants from Bankers Trust of over $622 associated with exception processing. million in same-day funds on the first payment date. The 86 offers processed in 1981 constituted 27.2% of the total number of offers that could have Distribution been accepted in part by book-entry procedures, up of Underwritings from the 17% of 1980. Nevertheless, 59 agents who The DTC service for the book-entry distribution of could have used the service during 1981 failed to do and payment for securities offered in public so. The loss caused by the lack of provision for, or use underwritings showed vigorous growth in 1981. of, the service is the cost created by the unnecessary The service was used by 71 managing underwriters withdrawal of securities from the book-entry to distribute $83.5 billion of the total value of 1,099 environment. Agents, issuers and depository issues. In 1980, the service handled 900 issues for 40 Participants thereby incur increased processing costs. managers with $40 billion distributed through DTC. In some cases, Participants also lose timely use of cash The 1981 d'istributions comprised 739 issues of equity, payments and, where acceptances are prorated by 299 issues of corporate debt, and 61 municipal bond agents, timely use of returned shares. Accordingly, issues, with values of $53.1 billion, $29.9 billion, and DTC will continue its efforts to bring additional $521 million, respectively. agents into the program in 1982; support from more investment bankers at the planning stages will assist DTC's underwriting distribution service is these efforts. designed to benefit underwriters and issuers, in addition to broker and bank Participants. • Conversions DTC's conversion procedures allow Participants to use book-entry methods to surrender convertible debt Number of Underwriting and equity securities in their depository accounts for Distributions Through DTC same-day credit in the underlying securities, usually common stock. Participant processing expense is 1000 thereby reduced, while the costs of financing transactions during the interval when the certificates would 800 otherwise be at the conversion agent are eliminated. Almost 550 convertible issues are eligible for this 600 service; approximately $2.25 billion of book-entry securities conversions were completed in 1981. 400 • Redemption of Floating Rate Notes and Rollovers of Government Securities 200 DTC Participants may redeem floating rate notes and other securities with similar repayment options by means of instructions to the depository, the cash 1977 1978 1979 1980 1981 proceeds being credited to their DTC settlement

29 The Italian Renaissance featured. among other things. beautiful workmanship in semiprecious stones. This covered cup in the shape of Hydra was fashioned of jasper. probably by Michele Mazzafirri for Grand Duke Ferdinand I of Florence between 1570 and 1600. The gold statuette of Hercules on the lid stands poised to hurl the stone with which the hero kills the monster in the Greek myth. The heads and tail of the Hydra form the handles of the cup.

Underwriters realize lower financing costs by the to OCC securities on deposit at DTC. One major elimination of day loans and, in the case of distant improvement over the escrow receipt method is that closings, overnight or weekend loans. Issuers are changes in the quantity of shares pledged do not afforded substantial reductions in the issuance and require release and re-issuance of escrow receipts, transfer of certificates. Bank and broker Participants nor do changes in the option series to be collateralized. receiving book-entry deliveries benefit through the In the former case, the amount of shares pledged is elimination of the endorsement, microfilming, simply increased or reduced, as required, while in packaging, delivery and receipt of certificates and the latter the pledgor merely submits a "rollover" form associated documents, as well as the rapid delivery supplied by OCe. In addition, processing is simplified turnaround normally associated with the use of because there are no repeated movements of paper book-entry. among the parties to the transaction. And, finally, since certain shareholders' equity limits of the escrow receipt method do not apply, any bank depository Options member may use the pledge method to the full extent that it has the securities to pledge. Use of DTC's interface with The Options Clearing Early in 1981. DTC expanded its interface with Corporation (OCC) increased at a rapid pace OCC to establish a Third-Party Pledge System for throughout 1981. By yearend, 61 banks and 27 PUTS. This capability provides for a situation in broker-dealers had securities "pledged" to satisfy which a PUT writer has deposited cash with a bank OCC requirements, as compared with S4 banks and and the bank has invested the cash in U.S. Treasury 36 broker-dealers at the end of 1980. The total value bills. Under these circumstances, the PUT writer of securities pledged approximated $1.8 billion, or 8S% may instruct the bank to deposit the T -bills with a of the value of securities collateral with OCC from securities depository and then pledge them to OCC all sources, up from 76% at yearend 1980. for the account of the OCC clearing member carrying the writer's short position. OCC then reduces the • The "Third-Party Pledge System" clearing member's margin requirements accordingly. offered by DTC is an alternative to the escrow receipt method, in which a bank holds securities in an escrow account, issuing a receipt which can be Dividend Reinvestment used in lieu of the securities to satisfy segregation requirements for the writer's CALL option. Under Launched in December 1976 with a single dividend the Third-Party Pledge System, banks may pledge reinvestment plan offered by American Telephone

30 & Telegraph Company, DTC's Dividend definite decision had not yet been reached. In either Reinvestment Service (DRS) had grown to include case, the certificates involved would have to be 89 participating plans by yearend 1981. It helped handled on an exception basis and the benefits of generate almost $399 million of new capital for certificate immobilization through depository usage participating issuers through dividend reinvestments would be partially defeated. In addition, Participants in 1981, up from 63 plans and $291 million in 1980. themselves would have to arrange for reinvestment The fourth quarter of 1981 marked the nineteenth of dividends through the various plan administrators, consecutive quarter-to-quarter increase in Participant and then handle both the certificates for the stock use of this service since its implementation, capping thereby purchased and the checks for cash in lieu of the five years of extraordinary growth depicted fractional shares. With DRS, these cumbersome and in the accompanying chart. duplicative tasks are eliminated as between Participant The purpose of DRS is to allow those Participants and plan administrator, and replaced by a far more who wish to reinvest all or part of their dividends in flexible and less costly set of largely automated a security that is subject to an issuer's reinvestment book-entry transactions with DTC. plan to do so by book-entry, without withdrawing the underlying shares from their DTC accounts. The advantages to Participants are significant. Special Order-Out Without DRS, a Participant would have to either refrain from depositing or withdraw from the In 1978, with the cooperation of DTC, the National depository prior to record date those securities in Securities Clearing Corporation (NSCC) developed which dividends might be reinvested, even if a a new service designed to substantially reduce the delays that brokers normally experience when delivering physical securities to institutional customers Dividends Reinvested Through DTC around the country. This service, which is known as (In Millions of Dollars) Special Order-Out, permits the delivery of certificates on settlement day to institutions in 15 cities; another 400 5 cities will be added to the network in the near future. Under the Special Order-Out service, brokers who are members of NSCC and DTC may use the 300 depository's urgent COD withdrawal procedure to order physical securities out of DTC on the afternoon before settlement day, in anticipation of DTC book-entry receipt of those securities on 200 settlement day. NSCC then ships the certificates to the designated cities for availability on settlement day if book-entry receipt at DTC has occurred as 100 anticipated. Prior to the service, brokers had to wait until positions had been established on the depository's books on settlement day before initiating the withdrawal for subsequent shipment 1977 1978 1979 1980 1981 via courier to the remote city, thereby delaying - delivery until the day after settlement day, at best.

31 options contract premiums related to third-party Payment Orders deposits or releases of underlying securities into and out of the DTC account of The Options Clearing Corporation (known as the Premium Payment Order, DTC's Payment Order service, which was established or PPO, portion of the service). in 1979, accords Participants the opportunity to use Use of Payment Orders climbed sharply their DTC accounts to settle money payments that are throughout 1981, sparked by increased usage among associated with securities transactions that have taken a growing number of bank and broker-dealer place separately. Major applications of the service Participants. During the year, 49 banks and 74 include marks-to-the-market of stock loans previously broker-dealers used the service, up from 28 banks made (known as the Securities Payment Order, or and 51 broker-dealers for 1980, with a 120% SPO, portion of the service) and the collection of year-to-year rise in transaction volume.

PAYMENT ORDERS 1979-1981 1400 r--r-r-T--,--,--,--.--.-r-,...,....,.,--r-.--r".,...... -" ,r.-,...... -r,,-'--,r-r "....-r,,-'--,.....--r-T ,--,-, -- START OF SIGNIFICANT SPO VOLUME

PREMIUM 800 r-~~~~~~-+-+-+-+-+-r-+-r-r~1-1-1-~~~~+-+-+-+-+-r,~/~~~PAYMENT ORDERS /f/

600 / --I--

400 / '\/ / \ \11 \ / \ SECURITIES ~ PAYMENT ORDERS -f-~ / \11 200 I /

MAR JAN JAN DEC 1979 1980 1981 1981

Between March 1979 and December 1981, total same three years, the daily average value of all pay­ monthly volume in DTC's Payment Order service ment orders grew to $1.1 million from $96,000, grew to 1,138 orders from 113 in the month the ser­ while the number of users grew to 29 banks and 34 vice began. One major factor was the emergence of broker-dealers for PPOs and 26 banks and 61 significant SPO volume in April 1980. During the broker-dealers for SPOs.

32 The monogram RD and the bear-and-staff symbol indicate that this gold-stamped leather binding once covered a book belonging to Robert Dudley, Earl of Leicester. The Elizabethan bibliophile was rumored to have murdered his first wife, never to have actually married his second, and to have fallen victim to poison at the hands of his third. This particular book was a chivalric romance by the Italian poetess Tullia d'Aragona.

33 Another Italian Renaissance masterpiece. this vase was created in the 15th or 16th Century in Florence. It was fashioned for the Medici. who dominated that city from 1434 to 1494.

A continuing priority at DTC has been the automation of internal depository operations and of Participant the channels of communication which link DTC Terminal System with Participants, other users, and transfer agents. The depository's Participant Terminal System (PTS) Major emphasis has been given to automating the is a network of computer terminal stations located in receipt and processing of Participant instructions Participants' offices throughout the United States and and to DTC reporting back to Participants. The tied directly to DTC's computers. Participants use depository reduces its operating costs by such means their terminals to communicate instructions, inquiries and, more important, Participants can reduce their and other messages to DTC and to receive messages own processing costs; moreover, all parties gain through and reports from DTC via the printer with which each the reduction of errors caused by manual procedures. terminal is equipped. The direct link between The systems DTC uses to communicate with Participants and the depository afforded by PTS speeds others fall into three major categories- the Participant and eases the communications process, replacing the Terminal System (PTS), Automated Participant preparation and delivery of hard-copy instructions and Interface rAP!), and Computer Communications Facility reports. This is particularly useful for Participants (CCF), each of which is described below. located outside New York City.

34 II]

During 1981, the number of terminals in those instructions directly into DTC's computer Participants' offices increased to 386 from 272 a system by means of hand-delivered or transmitted year earlier, while the average daily number of total magnetic tapes instead of by clerically processed transactions- including inquiries and messages, as paper forms. API capabilities currently include well as instructions for specific transactions-grew magnetic tape instructions for routine Withdrawals­ 33% to almost 229,000 at yearend from over by-Transfer, Deliver Orders, and Deposits. 172,000 a year earlier. (For the full year, daily volume averaged 196,000, up 50% from 131,000 • Magnetic Tape Transfer Instructions a year earlier.) Among these types of transactions, the Under this program, DTC is able to (1) receive average daily number of Deliver Orders rose to customer name Withdrawal-by-Transfer (WT) 39,000 from 28,000, representing about 73% of the instructions from Participants in magnetic tape form, depository's total Deliver Order volume; the daily (2) process the tapes through its own computers, and number of COD urgent withdrawals averaged 6,300, (3) deliver or transmit the resulting DTC output representing approximately 89% of total COD tapes to transfer agents for automated processing volume; and pledges of collateral averaged 800 per through the transfer agents' computer systems. day at yearend, or some 36% of the depository's overall Such a system offers substantial advantages to all pledge volume. Releases of collateral may also be concerned, replacing more costly and error-prone effected by means of PTS. processing procedures. By yearend 1981, the The steady growth of PTS since its inception in number of Participants submitting transfer 1975 reflects the many benefits it accords its users. instructions in magnetic tape form had grown to 80, In addition to its capabilities for processing instructions, accounting for approximately 73% of DTC's PTSfacilitates improved money management by average daily transfer volume of about 27,500 allowing the quick turnaround or reclamation of instructions for over 42,000 certificates. deliveries. It is also a major aid in the prompt balancing The ability to process incoming tapes through of settlement statements and - through the capability DTC's computers and deliver or transmit the it provides for the verification of CUSIP numbers, resulting output to transfer agents for automated issue eligibility, Participants' security positions at DTC processing dates back to 1979, when the depository and similar information - the avoidance of costly errors. developed an analytical program 'which enabled its computers to accept nonstandard transfer data from Participants and restructure the great majority of Automated them into a standard record for transfer agents. In Participant Interface November 1981, The First National Bank of Boston became the sixth transfer agent to accept Many of DTC's Participants have large volumes of magnetic tape instructions for FAST WTs, adding depository activity for which input through PTS 165 issues to the program. Magnetic tape FAST WT would not be economical. But the underlying data instructions were already in use by American have already been captured by their computers in a Telephone & Telegraph Company (for 5 issues), form readable by DTC's computers. The Automated Citibank, N.A. (324 issues), GTE Shareholder Participant Interface UP/) allows DTC Participants Services, Inc. (one issue), Manufacturers Hanover or their data processing service bureaus who are able Trust Company (808 issues) and Morgan Guaranty to produce depository instructions by computer to enter Trust Company of New York (583 issues).

35 During the 16th Century, some Milanese and Florentine artisans worked in styles so similar that it is now almost impossible to distinguish them. This covered agate vase in bas-relief with handles of enameled gold and an enameled statuette of Hercules on the lid could have been from either city.

• Direct Mailing of Certificates DTC, in turn, passes the tape on to the Participant, Early in 1981, DTC launched a program to provide Merrill Lynch or Kidder, Peabody, to complete the an optional enhancement to its magnetic tape record updating process. transfer instruction service: the direct mailing of At yearend, some 40,500 certificates had been new certificates by transfer agents to the customers mailed by this method. On the basis of results, a of depository Participants. Conducted with the numbeLof other Participants and transfer agents participation of Manufacturers Hanover Trust have expressed strong interest in direct mail Company, the first transfer agent to offer this programs, and further growth of this service is service, and Merrill Lynch, Pierce, Fenner & Smith expected in 1982. Incorporated, the first Participant to program its daily magnetic tape transfer instructions to DTC to • Magnetic Tape Deliver Orders include the names and addresses of the customers to Under the Deliver Order (DO) portion of API, whom the certificates are to be mailed, the pilot was Participants can input delivery instructions to DTC undertaken with 20 issues. By yearend, it had been on magnetic tape for either day- or night-cycle expanded to include 808 securities issues, and GTE processing. Still relatively small, the program Shareholder Services, Inc. and Kidder, Peabody & comprises one bank, four broker-dealer Participants, Co., Incorporated had joined the pilot. three regional depositories and a service bureau that In its current phase, the program includes all of provides recordkeeping services for brokers and the issues for which Manufacturers Hanover acts as other financial institutions. At yearend 1981, the FASTtransfer agent plus General Telephone & volume of regular delivery instructions received on Electronics common stock. Upon receipt of tape under this program accounted for 14% of DTC's magnetic tape transfer instructions from Merrill total DO volume. Lynch or Kidder, Peabody, DTC passes the tape through its own analytic program, which reformats • Magnetic Tape Deposits the instructions so that they will be readable by the Another recent addition to API, the capability of transfer agent's computer. Upon receipt of the accepting deposit instructions on magnetic tape, was instructions, the transfer agent issues and mails the developed to simplify the deposit process while new certificates to the name and address indicated reducing errors. Initiated as a pilot service in 1979, by the Participant and sends a "return tape" to DTC its usage is still relatively low as a percentage of so that the depository may update its own records. DTC's total deposit volume.

36 other significant developments occurred in the Computer depository's automated capabilities. Communications Facility Though use of magnetic tape substantially reduces • Telecommunications Monitor During 1981, DTC made significant progress in the manual processing and associated costs of developing new internal computer systems to handle accepting Participants' instructions. it does not the anticipated growth of the 1980s - especially in such eliminate them entirely, since the tapes themselves areas as municipal bond services and the IDsystem- must be physically handled. Toward the end of as well as increased volume under existing services. eliminating such physical handling, DTC designed Toward the end of maintaining the speediest and most a Computer Communications Facility (CCF) to be efficient communications with depository users, a new used for direct computer-to-computer communications telecommunications monitor-Customer Information between DTC and Participants. Designed to allow the Control System (CICS) - was installed late in the year. transmission of instructions from Participants' computers Already capable of processing virtually all Participant­ to DTC's computers and for transmission of certain originated communications far more efficiently than DTC data from DTC's computers to Participants' past programs, the new monitor will eventually be used computers, making use of DTC-supplied software, to control communications throughout the entire CCF became operational in 1980.Throughout that PTS network. year, the number of CCF applications remained limited. In 1981, CCF use was expanded with the addition of five new capabilities beyond the identification • Computer Output on Microfiche of DTC-eligible issues and Participants: In 1979, DTC developed the capability for producing Withdrawals-by-Transfer, ID trade data, ID certain computer output reports on microfiche for confirmations. ID affirmations. and Participant daily distribution to Participants and for internal DTC activity and position balances. As a result of these use at significant savings in handling and record storage additions, the number of Participants using CCF for requirements. During 1981, DTC's microfiche output one or more capabilities rose to 12. increased 91 %. Further growth is expected in 1982 DTC's plans call for further development of CCF and beyond, as the number of reports DTC is capable during the year ahead. Efforts will focus on expanding of producing in this form continues to expand. the applications of CCF to other Participants and other depository services. Ultimately, DTC hopes to • Optical Scanning Capability use the same facility to communicate with other entities Continued progress was registered during the year in addition to Participants, such as other depositories in the development of optical scanning equipment and transfer agents. as an alternative to key-entering certain data, thereby permitting substantial cost savings. The equipment was Other Automation brought to an acceptance recognition level of 90% of certain documents. and the volume of documents Developments scanned, to approximately 28,000 daily at yearend. In addition to various developments in the growth of Based upon this success, additional applications will DTC's automated services for Participants in 1981, be pursued in 1982.

37 Some of the finest Italian Renaissance pieces were fashioned of rock crystal. This example, in the shape of an imaginary bird, dates to the second half of the 16th Century. The lower portion of the bowl is adorned with hunting scenes cut into the crystal.

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Depository Trust's interfaces with other clearing these depositories to settle transactions with any agencies - both clearing corporations and other member of DTC, eliminating the requirement that a securities depositories- constitute a major element member belong to both depositories in order to effect in the nation:!l system for the clearance and settlement such settlements. of securities transactions. These interfaces enable Throughout most of the year, a similar interface participants in various clearing agencies to use their was also maintained with the New England Securities securities positions in one location to settle transactions Depository Trust Company (NESDTC). In late in other clearing corporations and with users of other October, however, the Board of Governors of the depositories by book-entry deliveries. This Boston Stock Exchange and the Board of Directors arrangement eliminates the inter-regional movement of NESDTC voted to discontinue their existing of securities certificates, thereby contributing clearing and depository systems and to rely primarily to their further immobilization. on the systems at National Securities Clearing Depository Trust maintains an interface with the Corporation and DTC to provide them with National Securities Clearing Corporation (NSCC) in clearance, settlement and custodial services. By New York. Broker-dealer Participants in DTC may yearend, approximately $1 billion in market value of use their positions at DTC to settle with other broker­ dealers whose transactions are cleared by NSCC. 6,500 securities issues had been redeposited by DTC also has interfaces with Midwest Securities NESDTC with DTC, and the conversion to a new Trust Company, Pacific Securities Depository Trust operating format was well under way. Company and Philadelphia Depository Trust DTC also has interfaces with The Options Company. An important facility made possible by Clearing Corporation (described elsewhere in this these relationships is the "third-party" delivery report), The Canadian Depository for Securities, service which permits a sole member of anyone of and Trans Canada Options Inc.

38 This golden helmet was worn by Charles IX of France (1550-1574). King at ten under the regency of his mother, Catherine de M€dicis, Charles is perhaps best remembered for the massacre of 20,000 French Protestants on St. Bartholomew's Day, shortly before the end of his reign, in 1572.

39 In classical times, the term Scythia referred to all of the Eurasian land mass north of the Chinese, Persian and Roman Empires, from the Pacific Ocean to what is now eastern Germany. This ornamental pectoral of solid gold, from the 7th or 8th Century B.C., was recovered in the village of Ziwije, once part of the Persian Empire, in 1947.

Depository Trust is the world's largest custodian of corporate stocks and bonds and rapidly growing Internal Controls in importance as a custodian of municipal bonds. Its record holdings and activity-and their steady DTC's internal control system is designed to record growth - reflect the fact that the depository's program the movements and location of every individual of safeguards is widely regarded as the most certificate in DTC's custody, from the time it is comprehensive yet developed to monitor the received, through its processing to and from transfer movement and custody of securities. DTC's unique agents, through its entry into and delivery from the system rests upon the extensive internal controls, vault. The records required by this system are also physical security, repeated internal and external used to resolve processing errors, facilitate audits, insurance coverage, a multimillion-dollar reconciliation and audits and for similar purposes. protective Participants Fund, and other features The key features are as follows . described below. Its effectiveness is perhaps best • Automated certificate-number control is DTC's evidenced by three facts. single most important safeguard. A unique • In the 14 years since the inception of the computerized record cross-indexes each certificate Depository Trust system, it has transferred ownership by issue, number, denomination and date of receipt, of securities worth almost $5 trillion. permitting maintenance of control and rapid • There has never been a claim against the DTC reconstruction of paperflow regardless of volume. Participants Fund. The data available from this record provide an • There has never been a claim against DTC or important tool in reconciliation, research and the its insurers for the negotiation of missing certificates. collection of dividend and interest payments.

40 Auditing is also facilitated, with the auditors accounting for certificates by denomination and Physical Security certificate number, when comparing physical certificates to computer-generated inventory listings. DTC's physical security system is an extremely • Registered certificates deposited with DTC sophisticated one, encompassing both electronic and normally are quickly transferred into the depository's physical devices, a large security force and other nominee name, Cede & Co. This step permits prompt security professionals. determination of certificate validity, i.e., that the The salient features of the system include the certificate is not subject to a "stop transfer" order or following: otherwise defective. It also enhances control over the • An access control mechanism, including f1oor-to­ collection of dividends and interest. ceiling steel turnstiles, inhibits unauthorized entry into • Large denomination "jumbo" certificates are data processing areas. Entry is restricted to employees used to consolidate many of the securities on deposit. with specially encoded photo identification cards, who Because of their high value, "jumbos" are extremely must ~Iso key in an individualized numerical password difficult for unauthorized persons to negotiate, and to secure admission. The turnstiles are monitored by the risk of loss is thereby further reduced. closed circuit television; a record of all entries and • DTC places restrictive endorsements on the exits is maintained. back of certain "jumbo" certificates to further • A surveillance system of closed circuit television preclude their negotiation by unauthorized persons. cameras and video monitors provides complete coverage • Registered certificates remain in non-negotiable of the vault and other securities processing areas. Color form while in DTC's custody. video is used to monitor especially sensitive areas such • Microfilm records of certificates and their related as those in which coupon clipping and other processing documentation are made upon receipt into or delivery of bearer instruments are conducted. out of the depository. The film is developed on • A silent alarm system is strategically located at premises to ensure the capture of all information while points throughout the securities processing areas. the certificates are still in the processing stream. Vibration alarms are installed to signal any attempt to • Duplicate computer files of all transactions are forcibly penetrate the vault. A modern smoke and heat maintained in separate storage locations, including detection and fire control system protects the vault and one remote rural site, permitting prompt reconstruction computer sites. Systems interruptions or malfunctions of files in the event that a processing interruption themselves trigger independent malfunction alarms were to occur. DTC also maintains comprehensive that alert the Security Department. files of original documents and production reports • A security force monitors the television in addition to the duplicate computer files and surveillance, access control, and fire control systems, microfilm records. screens all persons entering and leaving security areas, Additionally, proposed significant changes to the and determines the contents of all packages. internal control system are tested by DTC's internal • A modern underground vault on DTC's auditors and independent accountants. premises contains most of the securities deposited

41 This helmet is one of the finest examples of Mesopotamian goldsmithery of the First Dynasty of U r (circa 2850-2450 B.c.). Created for an individual by name of Meskalam-dug, who was possibly a prince but certainly a man of great wealth, the helmet is of beaten gold in the form of a wig. The hair and braided headband are shown in exceptional detail; holes at the bottom were for laces that held a padded lining.

with it. To maximize security, the vault is divided into separate areas for bearer instruments, working User Verifications denominations of registered securities, and "jumbo· certificates of registered issues, each with its own Among the most effective depository safeguards is the access requirements and controls over personnel continuous verification of OTe records by users, based authorized to enter. Other securities are kept in the on their own records of activity with the depository. form of balance certificates maintained by qualifying Each morning, Participants and Pledgees receive transfer agents. a daily report itemizing and summarizing the previous • Registered securities delivered to or received from day's activity in their accounts. These reports start transfer agents and other parties are required to be in with the opening balance of securities in each issue in non-negotiable form. which there was a transaction and go on to list each • Special waste paper treatment and disposal methods transaction in that issue on that day and the closing help to prevent the escape of certificates or usable balance of securities in that issue after accounting for written information from secured processing areas. all transactions. Daily reports of cash transactions are also available. Under the depository's Rules, Participants Securities Recordkeeping are required to report any differences between their own records and the depository's statements. DTe has DTe uses a double-entry recordkeeping system to a research staff to help reconcile any differences. control securities positions. Every transaction in a In addition, each Participant and Pledgee receives Participant's account is recorded and the physical a monthly position statement showing the status of all location of underlying certificates-at DTe, with of its securities positions, including those in which there transfer agents, at other depositories, or in transit­ may not have been any transactions. Participants and is identified. These records are also used as a source Pledgees are required to confirm the accuracy of their for internal reports and reports to Participants, and monthly position statements in writing, within 10 by the depository's Reconciliation Division to locate business days after the statement has been made available and correct any differences with Participant records. to them. Failure to confirm can result in a fine under

42 the depository's Rules. These continual confirmations • tests controls for the safeguarding of securities. protect the integrity of the DTC system and encourage dividends, data processing. and other depository a high degree of cooperation at the operational level operations; between the depository and its users. • issues a Report on Internal Accounting Control, which is available to Participants, Pledgees. and their accountants. upon request; and Internal and External Audits • issues a Memorandum on Principal Procedures The securities records of Depository Trust are tested and Internal Controls Surrounding Securities Held both by DTC's internal auditors and by Price for Others. which is also available upon request. and Waterhouse, the depository's independent accountants. is prepared especially for the use of Participants' Through their combined efforts, all securities issues in independent accountants. DTC's vault are counted at least once a year. DTC's Audit Committee also reviews the scope The internal audit program focuses on DTC's of the auditing procedures of the independent certificate processing. data processing. and financial accountants. directly receiving all reports issued by operations. Certificate inventory control includes daily such accountants to the depository. and meets with counts of all certificates in selected issues in the vault. them periodically to discuss the results of their work. so scheduled that each issue will be counted at least once a year by DTC's internal or external auditors. To Insurance ensure that issues are not selected for counting in a predictable sequence. a random method of selection The insurance coverage available for securities is used. In addition. special counts of high-value deposited in DTC is among the most extensive of certificates are conducted more frequently. any private institution in the financial industry: DTC's Auditor submits to the Audit Committee of Specifically. insurance is available in the following the Board of Directors monthly reports which amounts per event: summarize the status of his work. The Committee consists of four Directors charged with the responsibility A. Losses Occuff;ng on Premises: of supervising the Auditor and the Auditing 1. $100 million coverage under Primary and Excess Department and reviewing and approving the internal Blanket Bonds; plus audit program. 2. $5 million Lost Instrument Bond Premium During the course of the year. among other things. Policy, covering premiums for purchase of lost Price Waterhouse performs the following in connection instrument bonds for securities losses in excess of with its examination of DTC's financial statements: $100 million. • tests securities records and positions; -The description of insurance protection set forth in this section includes • tests all significant changes in internal controls summaries of the terms of DTC's insurance policies and Rules and Proce­ dures, to which reference should be made for complete statements on these and operating procedures; subjects.

43 B. Losses Occurring in Transit by Messenger or Armored Car Carrier: Participants Fund 1. Primary coverage of (a) $5 million under Air Courier Messenger Policy The Participants Fund is a $200 million reserve covering securities lost in transit via Brink's or Wells fund contributed by Participants and maintained by Fargo Armored Service Corporation; and DTC to satisfy any losses not covered by DTC's (b) $250 million In-Transit coverage provided by insurance. DTC's Rules provide that any such loss the insurer of the armored car carrier service used by would normally be charged initially against DTC; and undivided profits or retained earnings, but permit (d $100 million under Primary and Excess Blanket the Board of Directors instead to elect to charge it to Bonds for securities lost while in the custody of the Participants Fund. messengers; Should a loss be suffered by DTC due to the 2. Excess coverage of failure of a Participant to satisfy its obligations to (a) $100 million under Primary and Excess Blanket DTC, such loss would first be charged to that Bonds for securities lost while in the custody of an Participant's contribution to the Participants Fund. armored carrier; If the loss were in excess of that Participant's (b) $20 million under Excess In-Transit Bond contribution (or if the loss were sustained for reasons covering securities losses in excess of $100 million other than a Participant's failure), the excess may then when securities are in the custody of messengers, be charged to the contributions of other Participants and in excess of $350 million when securities are in to the Participants Fund on a pro rata basis. the custody of an armored car carrier; DTC's Rules provide that, in the event of any (c) $5 million under Armored Car and Messenger charge against a Participant's contribution to the Policy covering securities losses in excess of $120 Participants Fund (whether pro rata or otherwise), million when securities are in the custody of the Participant is required to make an additional messengers, and in excess of $370 million when contribution to the Participants Fund in an amount securities are in the custody of an armored car carrier; equal to the charge. (d) $5 million under Lost Instrument Bond To date, no charges of any sort have ever been Premium Policy covering premiums for the purchase made to the Participants Fund of either DTC or its of lost instrument bonds for securities losses in excess predecessor organizations. of $125 million when securities are in the custody of messengers, and in excess of $375 million when Protective Procedures securities are in the custody of an armored car carrier. C. Losses Occurring in tile Mail: Other depository procedures are also available to 1. $15 million under Mail Policy covering securities protect Participants. DTC's Rules provide a variety lost after having been sent via registered mail; of remedies to minimize the possibility of loss arising 2. $15 million under Mail Policy covering securities from the unexpected insolvency of a Participant. In lost after having been sent via United States Postal the event of signs of a Participant's operational or Service Express Mail Service, Option 1 (Door-to­ financial inadequacy, or advice to that effect from Door) and Post Office-to-Addressee service; self-regulatory organizations or others, DTC carefully 3. $250,000 under Mail Policy covering securities monitors that Participant's further activity, implementing lost after having been sent via First Class Mail. such protective remedies as events warrant. Still more protection is available to bank and broker-dealer Participants with their own standard Regulatory Examinations blanket bond coverage, in the form of riders to their policies providing that such bonds will cover securities The Depository Trust Company is a limited purpose held by DTC for the account of the Participant. trust company organized under the banking laws of A bank or broker-dealer with such a rider to its New York State and a member of the Federal Reserve blanket bond would be reimbursed by its own insurer System. As such, DTC undergoes unannounced (to the extent of the coverage provided by the rider) annual examinations by the New York State Banking for its pro rata share of uninsured securities losses by Department and the Federal Reserve Bank of New DTC in the unlikely event that such losses were to York, which report their findings to DTC's Board exceed DTC's insurance coverage. of Directors.

44 This 21-inch-high drinking vessel was created in the form of a tower elephant in Niirnberg during the late 16th Century. The tower and elephant are hollow and the platform is removable to facilitate use of the vessel for the purpose for which it was intended. Fashioned by Urban Wolff, the piece is of gilded silver, mother-of-pearl, emeralds, rubies, sapphires, hyacinths and mOllntain crystals.

4S 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).

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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 Michael A. Agnes Thomas F. Coleman President and CHief Nicholasj. Arrigan Operating Officer joseph j. Bellantoni Director of Security Robert A. Dick Michael T. Mullen Senior Vice Presidents Dennis j. Dirks john P. Crowley Michael F edorochko Assistant Secretary Arnold Fleisig Charles j. Horstmann Donna Grant Reilly William F. jaenike joseph j. 1\-larino Thomas j. Lee Vincent A. Mauro Assistant Treasurer Richard j. O'Brien Leonard A. Miele Frank Petrillo James V. Reilly Nishan G. Vartabedian

Comptroller 1\-1 ichael A. Agnes

Committees of the Board of Directors

Audit Committee Nominating Committee Charles C. Smith. Chairman Compensation Committee jon A. Bulkley. Chairman Frank E. Dominach. j r. Richard B. Fisher. Chairman Donald L. Cal"in Stephen C. Eyre Peter A. Cohen Daniel P. Da"ison james F. Ganley Robert P. Rittereiser

46 William T. Dentzer,Jr. Conrad F. Ahrens Jon A. Bulkley Donald L. Calvin Peter A. Cohen Chairman and Chief President and Chief President and Co-Chief Execurive Vice Vice Chairman. Executive Officer. Operating Officer. Executi"e Officer. President.l'vlarket Shearson American The Depository The Depository Moseley. Hallgarten. Development and Express Trust Company Trust Company Estabrook & Weeden Puhlic Affairs. Inc .. and Chairman. New York Stock Securities Settlement Exchange. Inc. Corporation

Daniel P. Davison Frank E. Dominach, Jr. William S. Edgerly Stephen C. Eyre Richard B. Fisher President and Chief Executi,'e Vice President Chairman. President. Senior Vice President­ Managing Director and Execlitive Officer, and Director at Bache and Chief ExeclItive Secretary. Citicorp member of rhe l'\:lanage­ United States Trust Halsev Stuart Shields Officer. State Street ment Committee of Company of Incorporated Boston Corporation. Morgan Stanley & Co. New York State Street Bank Incorporated and "T'rust Company

James F. Ganley C. Richard Justice G. Christian Lantzsch Robert P. Rittereiser Charles C. Smith Executive Vice President. Senior Vice President. Vice Chairman. Executi,'e Vice President. Executive Vice President. Irving Trust Company National Association of Mellon Bank. N.A. Strategic Development. Administration. Bankers Securities Dealers. Inc. Merrill Lynch & Co .. Inc. Trust Company

47 An Institutional Delivery system communication is received through a Participant Terminal System terminal at DTC's telecommunications center. Observing are: Walter H. Cushman (left) and Barbara Douglas, Senior Vice President and Vice President, respectively, of The Bank of New York; Herbert Friedman, Vice President and Cashier, Salomon Brothers Inc; Charles M. Viviano, Vice President and Executive Cashier, Bache Halsey Stuart Shields Incorporated; and William F. Lackner, Director, ID Account Administration, DTC. DTC's Neil F. Brander, Director, Applications, explains how the telecommunications facility functions.

The full year's growth of DTC's various services is 1980 record of 508 million shares for December and described elsewhere in this report. The particular 4 billion shares for the full year. events or activities mentioned below are some of the In addition, June 1981 deposits included debt major milestones that the depository experienced in securities in the face amount of approximately $4.8 the year just ended. billion, bringing the combined market value of debt and equity net deposits to a record total of $32.8 DTC Activity Records billion for the month, or $1.5 billion per business day.

Total DTC activity rose to a record high during 1981, reflecting both the heavy trading volume during the first part of the year and the continued growth of depository usage. On average, there were over 207,000 transactions processed in DTC's major services each business day of the year, with a peak daily average of 223,000 transactions throughout the second quarter. In round numbers, the daily average figures for major services included 27,100 deposits, 139,100 deliveries, 27,500 Withdrawals- by-Transfer, 7,100 urgent COD withdrawals, and 6,100 pledges or releases of collateral.

Net Deposit Growth: A review of the benefits of depository usage from A Full Month at the standpoint of an insurance company: DTC's $1.5 Billion per Day Robert B. Beck, Director (left), and Marianne Adam, Senior Securities Officer, with Metropolitan DTC's net deposit growth-securities deposits Life Insurance Company's John Mallon, Manager, Bond and Stock Records, and Arthur G. Typer­ minus withdrawals-jumped to an unprecedented mass, Vice President and Treasurer, Corporate In­ high of 945 million shares for the month of June and vestments, at Met Life headquarters in New York 5.4 billion shares for all of 1981, far exceeding the City.

48 performance was especially marked toward the end of Dividends: 92% Payment the year. For the month of December, on-time payment Date Performance Yields performance value climbed to 84%, with 93% in $1.14 Billion, 99.9% in immediately-available funds. On December 10, the Same-Day Funds day on which the new record was set, the $1.14 billion received represented 92% of the payments DTC's cash dividends and interest processing due to DTC that day; of this amount, 99.9% was operation posted a new single-day high on December received in same-day funds. 10, 1981, when a record $1.14 billion of dividends and interest was received and credited to Participants' Reorganization Payments: accounts. For all of 1981, dividends and interest A $1.4 Billion Day payments rose to $27.9 billion from $19.3 billion for 1980. Both sets of figures reflect the large increase in On December 8, DTC received a record the number of shares and bonds on deposit with DTC reorganization payment of over $1.4 billion to be paid during 1981. to Participants in the mandatory merger of Santa Fe At the same time, the percentages of payments International Corp. into Kuwait Petroleum Corp. The received on payable date and in immediately-available payment was received on the first available payment date in same-day funds. DTC exchanged approximately 13 million shares with Bankers Trust Company for a payment of $662 million and 14.5 million shares with First Interstate Bank of California for a payment of $740 million. Reorganization payments represent funds received for Participants as a result of a corporate action, i.e. mandatory merger, tender or exchange offer or the redemption of an entire issue. The previous

DTC's Alan R. Hutton, Manager (left), and Brad­ ley P. Sweeny, New York office partner of Bacon, Whipple & Co., at DTC during The Rolfite Company underwriting for which Bacon, Whipple was the lead underwriter. Lawrence J. Gallaway, Vice President, Irving Trust Company (left), and Michael Fedorochko, funds also improved. Of the value of all such payments Vice President, Systems and Computing, DTC, received from dividends disbursing agents in 1981, share a light moment, while Robert Ross, Senior approximately 72% was received on payable date and Vice President, E.F. Hutton & Company Inc., and Vincent A. Mauro, Vice President, Reconciliation, approximately 86% was in immediately-available DTC, review output from DTC's optical scanning funds. Comparable 1980 figures were 67% and 76%, equipment, which reached an acceptance recogni­ respectively. The improvement in dividends payment tion level of 90% at yearend 1981.

49 DTC's Richard Porzio, Director & ID Product Manager, holds a presentation copy of one of a series of advertisements for DTC's Institutional Delivery system, to the obvious satisfaction of Edward E. Madden, Group Executive in charge of Master Trust/Master Custodial Services at The Chase Manhattan Bank, N.A., whose picture and quoted remarks appear in the ad. Flanking the pair are DTC's John M. Lanning, Director, ID Sales and Account Administration (left), and Chase's Edward H. Ahern, Vice President, Investment Manager and Operational Services Division.

single-day record payment was $330 million on Consolidated Edison facility plunged almost all of June 19, 1980. New York's financial district into its third major The transfer of certificates from, and the crediting blackout within the past decade and a half. Depository of payments to, Participants' accounts was handled personnel were able to bring the emergency generators entirely by book-entry at DTC. Interest income on the on-stream without significant delay - preserving all overnight investment of this and other reorganization payments received in December was refunded to the appropriate Participants after month-end. Investment income refunds to Participants involved in reorganizations are separate from the investment income refunds to Participants related to dividends and interest payments received through DTC.

Book-Entry Deliveries: A 5.4 Billion-Share Month

High volume in the nation's securities markets, increased institutional participation in the depository system, and a substantial increase in the number of DTC-eligible issues propelled DTC's book-entry Discussing DTC's new program to provide deposi­ delivery volume to a new monthly record in June 1981. tory services for units are Len Mayer, Vice Presi­ Average daily deliveries swelled to 150,600-up dent, Mayer & Schweitzer, Inc. (left), Herbert I. Levitt, General Partner of Operations, Spear, Leeds 21 % from the 1980 daily average. At the same time, & Kellogg, and Kenneth M. Scholl, Director, Reor­ the average daily number of shares delivered rose to ganization/Proxy Division at DTC, at the deposi­ 246 million - up 48% from the 1980 average. tory's headquarters in New York City. Altogether, 5.4 billion shares were delivered through DTC in June and 55.3 billion, valued at $1.65 trillion, electronic services, including the Participant Terminal in all of 1981. System, the Computer Communications Facility, and all book-entry functions-and without loss of data. DTC Power Back-Up Saves the Day Thus, all Participants whose own electronic equipment was still functioning- including those located outside On September 9, DTC's emergency power system of the blacked-out area and those with a back-up passed its first major test in a real emergency situation power supply-were able to maintain electronic with flying colors. At 3:23 p.m., an explosion at a interfaces with the depository.

50 Record Value in Underwriting Municipal Bond Program Begins Distribution In August, DTC inaugurated a broad new program On June 17, the bulk of American Telephone & to make state and local government bonds Telegraph Company's mammoth $1 billion plus (municipal bonds) eligible for depository services. common stock offering was distributed by Morgan DTC Participants widely viewed this action as the Stanley & Co. Incorporated, the lead underwriter, most important new service the depository could through DTC. Consisting of 18,150,000 shares with undertake to help them deal with this significant a value of $1.03 billion, the offering was the biggest problem area for securities industry processing. equity financing ever underwritten. The portion The aim of the program is gradually to make more distributed through DTC had a value of over $950 and more actively-traded municipal issues already million, or approximately 92% of the total. outstanding eligible for depository services and to In preparation for the closing, personnel from distribute as many new issues as possible through AT&T, Morgan Stanley and DTC prepackaged a DTC's underwriting service. total of only 1,500 certificates registered in DTC's nominee name (Cede & Co.), reflecting the fact that over 16 million shares were initially recorded in a balance certificate held by AT&T under DTC's FASTprogram. By contrast, 2,876 certificates were issued for the remaining 8% of the issue, physically distributed outside DTC. In addition to the AT &T offering, Morgan Stanley distributed five other offerings through DTC on the same day, with a combined value of approximately $361 million.

Joseph P. Markey, Vice President, Kidder, Peabody & Co. Incorporated (left), Donald B. Herterich, Senior Vice President, Manufacturers Hanover Trust Company, and OTC's Americo J. Porzio, Jr., Director, Transfer Agent Liaison, and Salvador Martinez Jr., Participant Services Representative, in OTC's data processing center, where tapes are being processed in connection with the deposi­ tory's program for the direct mailing of new certifi­ cates by transfer agents to the customers of OTC Examining a certificate from a unit investment Participants. trust in OTC's vault: Malcolm J. Hood (left) and Alexander V.R. Halsey, Senior Vice Presidents at By yearend, 3,706 municipal issues had been United States Trust Company of New York; John made eligible, 6 new issues had been distributed by C. Martin, Jr., Manager, Vault Operations, and Nishan G. Vartabedian, Vice President, both of underwriters, and some $1.25 billion in principal OTC; and H. William Stabenow, Vice President, amount of bonds had been deposited into DTC's John Nuveen & Co. Incorporated. custody. About 1,000 issues will be added monthly

51 during 1982. A minimum of 100,000 eligible issues single-day record of 122,180 as a result of the double is projected by 1985, under plans which call for the settlement day for trades effected on November 10 use of regional bank custodians later as the program and 11. The double settlement day occurred because expands. November 11 was a bank holiday but not a stock exchange holiday, or in other words, a trade day but not a settlement day. Since stock transactions customarily settle on the fifth settlement day following trade day. the trades of Tuesday. November 10 and Wednesday. November 11 - which represented 95.9 million shares on the New York Stock Exchange alone - both settled on November 18. In addition. November 18 deliveries included 71,320 Deliver Orders. representing 271 million shares. which brought the total number of book-entry deliveries on that date to 193,500.

Representatives of DTC and Morgan Guaranty Trust Company of New York, following a meeting on indirect depository participation through the ac­ counts of Participant banks, such as Morgan Guar­ anty. Left to right: Cheryl Lambert, Participant Services Representative, Albert M. Munson II, As­ sociate Counsel, and Patricia H. Trainor, Associate Counsel, all of DTC, and Peter D.S. Dale, Senior Vice President, Ralph M. Mastrangelo, Vice Presi­ dent, and William J. McGoldrick, Senior Vice Pres­ ident, all of Morgan Guaranty.

Single-Day Settlement Volume Tops Third-of-a-Billion Shares DTC's John J. O'Grady, Director, Participant Ser­ On Wednesday, November 18, DTC handled the vices (Jeft), concludes a visit at the headquarters of greatest single-day's book-entry delivery volume in Seattle-First National Bank in Seattle, Washington. Bidding him farewell are Donna J. Harms, Vice its history-366 million shares, versus a daily average President and Manager, Richard V. Fulp, Senior of 222 million shares for all of 1981. Vice President and Manager, and Wanda S. Continuous net settlement deliveries rose to a new Hanson, Vice President and Manager.

52 This gold-tooled classic facade covered a volume of Herodian's Roman History, translated from Greek into French by Jacques, Comte de Vintemille and published in 1522.

53 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. 1981 and 1980. 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 applied. 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.

1 S3 EAST S3RD STREET NEW YORK. NEW YORK FEBRUARY 3.1982

S4 The Depository Trust Company Statement of Condition December 31, 1981 1980 Assets Cash $ 30,406,000 $ 58,977,000 Repurchase agreements (Note 1) 152,772,000 156,318,000 U.S. Government securities (Note 1) 6,034,000 6,176,000 Receivables: - Participants: For settlements 43,028,000 5,800,000 F or services 5,301,000 5,729,000 Affiliates 672,000 323,000 Dividends, interest and other (Note 5) 5,938,000 5,789,000 Prepaid expenses and deposits 1,137,000 494,000 Equipment and leasehold improvements, less accumulated depreciation of $4,221 ,000 in 1981 and $3,002,000 in 1980 5,636,000 3,622,000 Leased property under capital leases, less accumulated amortization of $6,863,000 in 1981 and $4,929,000 in 1980 (Note 7) 6,801,000 8,178,000 Contributions to Participants Fund, callable on demand (Note 3) 193,973,000 208,565,000 $451,698,000 $459,971,000

Liabilities and stockholders' equity Liabilities: - Drafts payable (Note 1) $103,492,000 $ 76,226,000 Accounts payable and accrued expenses 10,412,000 6,070,000 Payable to Participants: On settlements 16,516,000 29,871,000 On receipt of securities 15,917,000 23,540,000 Dividends and interest received (Note 5) 92,476,000 97,665,000 Payable to affiliates 339,000 1,540,000 Obligations under capital leases, including $1,895,000 in 1981 and $1,620,000 in 1980 due within one year (Note 7) 6,808,000 7,922,000 245,960,000 242,834,000 Participants Fund (Note 3): Deposits received 5,150,000 4,170,000 Contributions callable on demand 193,973,000 208,565,000 199,123,000 212,735,000 Stockholders' equity: Capital stock-authorized, issued and outstanding, 18,500 shares of $100 par value 1,850,000 1,850,000 Surplus (Note 1) 776,000 555,000 Undivided profits 3,989,000 1,997,000 6,615,000 4,402,000 $451,698,000 $459,971,000

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

55 The Depository Trust Company Statement of Revenues and Expenses and Undivided Profits For the years ended December 31, 1981 1980 Revenues: Services to Participants (Note 4) $58,419,000 $ 56,285,000 Interest income 32,253,000 18,494,000 Services to affiliates (Note 4) 943,000 831,000 91,615,000 75,610,000 Less- Refunds to Participants (Note 2) 20,551,000 16,468,000 71,064,000 59,142,000 Expenses: Employee costs 42,988,000 35,296,000 Rent, maintenance and utilities 5,254,000 5,115,000 Data processing rentals and supplies 4,522,000 3,968,000 Professional and other services 3,582,000 2,630,000 Amortization and interest on capital leases 2,706,000 2,050,000 Depreciation and amortization 1,263,000 796,000 Charges from affiliates (Note 4) 903,000 3,899,000 Income taxes (Note 6) 790,000 99,000 Other expenses 6,843,000 5,010,000 68,851,000 58,863,000

Excess of revenues over expenses and refunds 2,213,000 279,000 Undivided profits, beginning of year 1,997,000 1,745,000 4,210,000 2,024,000 Transfer to surplus (Note 1) (221,000) (27,000)

Undivided profits, end of year $ 3,989,000 $ 1,997,000

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

56 The Depository Trust Company Statement of Changes in Financial Position For the years ended December 31, 1981 1980 Financial resources were provided by: Operations: Excess of revenues over expenses and refunds $ 2,213,000 $ 279,000 Noncash charges (credits) included in expenses- Depreciation and amortization 1,263,000 796,000 Amortization on capital leases 1,925,000 1,362,000 Other operating items, net 107,000 (90,000)

Resources provided from operations 5,508,000 2,347,000

Increase in drafts payable 27,266,000 17,867,000 Increase in accounts payable and accrued expenses 4,251,000 1,564,000 Increase in cash contributions to Participants Fund 980,000 341,000 Capital lease obligations incurred 548,000 3,029,000 Increase in payable to Participants 54,541,000 Decrease in receivable from Participants 3,467,000 38,553,000 83,156,000

Financial resources were used for: Increase in receivable from Participants 36,800,000 Decrease in payable to Participants 26,167,000 Purchases of equipment and leasehold improvements 3,367,000 1,469,000 Capital lease payments 1,662,000 1,451,000 Decrease (increase) in payable to affiliates 1,201,000 (82,000 ) Additions to leased property under capital leases 548,000 3,029,000 Increase (decrease) in receivable from affiliates 349,000 (135,000) Increase (decrease) in dividends, interest and other receivables 129,000 (26,000) Other, net 589,000 (221,000 ) 70,812,000 5,485,000

Net (decrease) increase in cash, repurchase agreements and U.S. Government securities during the year (32,259,000) 77,671,000 Cash, repurchase agreements and U.S. Government securities, beginning of year 221,471,000 143,800,000 Cash, repurchase agreements and U.S. Government securities, end of year $189,212,000 $221,471,000

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

57 The Depository Trust Company Notes to Financial Statements December 31, 1981 and 1980

Note 1 - Summary of Significant (d) Pension plan Accounting Policies The Company's eligible employees are included in the defined benefit pension plan of New York (a) Securities on deposit Stock Exchange, Inc. and its subsidiary companies. Securities held by the Company for Participants, Pension costs charged to expense and paid to New which aggregated approximately 19.0 billion shares York Stock Exchange, Inc. in 1981 for funding were and $111.3 billion in face value of debt securities $1,379,000 (1980-$1,159,000) and comprise ($560 billion at combined market value) at normal costs and amortization over ten years of December 31, 1981, and 13.6 billion shares and unfunded prior service costs. The value of the assets $68.7 billion in face value of debt securities ($493 of the pension plan of New York Stock Exchange, billion at combined market value) at December 31, Inc. at December 31, 1981 exceeded the vested 1980, are not recorded in the accompanying liability thereof. financial statements. Cash dividends and interest The Financial Accounting Standards Board received or due on such securities and in process of Statement No. 36 (FAS36), Disclosure of Pension distribution or awaiting claim are recorded in the Information, requires financial statement disclosure statement of condition. of certain additional information relating to defined benefit pension plans. Information required pursuant (b) Equipment and leasehold improvements to F AS36 was not available for 1981 on a separate Equipment and leasehold improvements are company basis. recorded at cost. Equipment is depreciated over estimated useful lives (generally five to eight years), (e) Marketable securities using principally accelerated methods. Leasehold Repurchase agreements represent U.S. Government improvements are amortized on the straight-line and U.S. Government Agency securities purchased method over the lives of the related leases, which under agreements to resell at current prices, are less than the useful lives of the improvements. generally over periods of three days or less. These (c) Leases agreements are recorded at cost and interest is accrued as earned. U.S. Government securities are Leased property under capital leases, principally recorded at amortized cost, which approximates data processing equipment and related facilities, is market value. amortized on the straight-line method over the lease term or asset life, as applicable, and interest expense The Company invests available federal funds in is accrued on the basis of the outstanding lease repurchase agreements and at the same time makes obligations. disbursements against such in clearinghouse funds.

58 The resulting drafts payable are eliminated the next Directors in 1975, the Company does not pay business day when the repurchase agreements are dividends to stockholders, but refunds to all of its converted back to cash. Participants each year revenues in excess of current needs. Effective June 1. 1980, the Board of (0 Income taxes Directors modified the Company's general refund Provision is made for income taxes applicable to policy to provide also for a monthly refund to revenues and expenses reported in the financial Participants of income earned from the overnight statements in periods which differ from those in investment of cash dividends, interest, and which they are subject to taxation. Investment tax reorganization payments to the Company for credits on property acquired and leased are applied, Participants. Such monthly refunds totaled when available, under the flow-through method as a $14,951,000 in 1981 (1980-$4,368,000). Total reduction of the income tax provision when the refunds to Participants amounted to $20,551,000 in property is placed in service. 1981 (1980-$16,468,000).

(g) Surplus Note 3 - Participants Fund Transfers to surplus of 10% of excess of revenues over expenses and refunds will be made annually Participants in the depository are required to until such time as surplus equals 65% of capital stock contribute to the Participants Fund amounts which as required by the New York State Banking Law. relate to their activity in the depository. The Fund is available to secure the Participants' obligations to Note 2 - Organization and Ownership the Company, and certain uninsured losses, if such should occur, could be charged to the Fund. The Company is a limited purpose trust company Required contributions are received in cash or are providing central securities depository and related callable on demand and secured by securities of the services to the securities, banking and related United States or instrumentalities of the United industries. At December 31,1981, New York Stock States, states and political subdivisions and certain Exchange, Inc. owned approximately 42% of the eligible nonconvertible registered corporate debt capital stock of the Company, with the remainder securities. owned by the American Stock Exchange, National Association of Securities Dealers and certain Effective February I, 1981, the Board of Participants or their representatives. A Stockholders Directors limited the aggregate amount of all Agreement provides for an annual reallocation of the contributions to the Fund to $200,000,000. entitlement to purchase outstanding capital stock by eligible Participants or their representatives based Note 4 - Transactions with Affiliates on relative depository activity of Participants during the prior year. The Company was party to an agreement to purchase software and software related Pursuant to a policy adopted by the Board of improvements from New York Stock Exchange,

59 II]

Inc. The terms of the agreement provided for the dividends receivable (which are not recorded in the Company to pay 6.5% of its gross revenues from accompanying financial statements) amounted to services during the period January I, 1976 to June $6,162,000 at market value. 30, 1983, up to a maximum payment of $13,500,000. The final payment was made in the first quarter of 1981. The amount expensed was Note 6 - Income Taxes $622,000 in 1981 (1980-$3,605,000). The net income tax provision for 1981 and 1980 is Revenues from Participants (net of refunds) for summarized as follows: 1981 include $1,429,000 (1980-$2,933,000) received from National Securities Clearing 1981 1980 Corporation, an affiliate of New York Stock Exchange, Inc. Of this amount, $1,267,000 Current: (1980-$2,767,000) was related to services for Federal $1,080,000 $ 3,000 continuous net settlement deliveries. Additionally, Investment tax credits (869,000) (3,000) for certain clerical services, the Company received Other tax credits (176,000) $354,000 (1980-$324,000) from National State and local 762,000 8,000 Securities Clearing Corporation. Deferred: Federal (12,000) 90,000 Note 5 - Dividends and Interest on Investment tax credits 41,000 (83,000) Securities on Deposit State and local (36,000) 84,000 $ 790,000 $ 99,000 The Company receives cash and stock dividends and interest on securities registered in the name of The following is a reconciliation between the its nominee which it distributes to the owners of the reported total income tax expense and the amount securities. Amounts received on securities computed by multiplying income before income tax withdrawn before the record date but not transferred by the applicable statutory income tax rate: from the name of the Company's nominee cannot be distributed unless claimed by the owners of the 1981 1980 securities. At December 31, 1981, cash dividends and interest payable amounted to $92,476,000, of U.S. Federal income tax rate 46.0% 46.0% which $25,085,000 was distributed to Participants Increases (reductions) in tax on the next business day and $67,391,000 was held rate resulting from: pending claim by the record date owners of the Investment tax credits (27.6) (22.8) applicable securities; stock dividends payable and State and local taxes, net unclaimed (which are not recorded in the of federal income taxes 13.1 13.2 accompanying financial statements) totaled Other (5.2) (10.2) $31,506,000 at market value, representing amounts Effective tax rate 26.3% 26.2% received by the Company after June 30, 1978. Unclaimed dividends received prior to July I, 1978 At December 31, 1981, the Company has available have been transferred to New York State in accordance with abandoned property laws. for federal income tax purposes investment tax credit carryforwards of $121,000, all of which expire Cash dividends and interest receivable at in 1996, and $61,000 for financial statemen t December 31, 1981 amounted to $4,405,000. Stock purposes.

60 An extraordinary example of baroque goldsmithery, this luxury pot was fashioned by Christoph Jamnitzer in Niirnberg during the early 17th Century. The craftsman's brother, Wenzel, is even better known as a goldsmith to collectors of the work of that period.

Note 7 - Leases and Other Commitments escalations subsequent to 1981. Presented below are the future minimum rental payments required under Capital leases-See Note 1 regarding the treatment operating leases having initial noncancellable lease of capital leases. The following is a schedule by year terms in excess of one year as of December 31, 1981: of future minimum lease payments under capital leases, together with the present value of the net Year ending December 31 : minimum lease payments as of December 31, 1981: 1982 $ 3,931,000 1983 3,901,000 Year ending December 31 : 1984 3,815,000 1982 $ 2,551,000 1985 3,775,000 1983 2,309,000 1986 3,787,000 1984 1,835,000 1987-1991 5,846,000 1985 794,000 Total minimum payments 1986 328,000 required $25,055,000 1987-1989 550,000 Total minimum lease Rent expense in 1981 was $3,438,000 (1980- payments 8,367,000 $3,215,000) for office space and $2,668,000 Less-Amount representing 0980-$2.358,000) for data processing equipment. interest 1,559,000

Present value of net minimum In 1981, the Company entered into a fifteen-year lease payments (including lease for additional office space which should current installments of become available for occupancy in mid-1983. The $1,895,000) $ 6,808,000 lease provides for annual rental payments of $6,646,000 over the first five years plus electricity Operating leases-The Company leases a major and escalations. Thereafter, rental payments are portion of its office space as a subtenant of New subject to adjustments based on the Consumer Price York Stock Exchange, Inc. These leases are Index for the New York region. These amounts are accounted for as operating leases and provide for not included in the above table of minimum rental base rentals and escalations, plus increases in rental payments.

61 This scene, depicting the Adoration of the Magi, is the other half of the binding that appears on the rear cover of this report. It too is panel-stamped in leather after a Pigouchet metalcut; it is exceptional for its wealth of background detail.

62 P.rticipantst

Banks (93) First Tennessee Bank N.A. Memphis AmeriTrust Company First Trust Company of Saint Paul BankAmerica Securities Services Company of New York First Union National Bank Bank of America National Trust and Savings Association Fourth National Bank & Trust Company of Wichita Bank of California (The) Hartford National Bank and Trust Company Bank of New York (The) Indiana National Bank (The) Bank of Tokyo Trust Company (The) Industrial National Bank of Rhode Island Bankers Trust Company Investors Bank and Trust Company Boston Safe Deposit and Trust Company Irving Trust Company Bradford Trust Company Lincoln First Bank. N.A. Brown Brothers Harriman & Co. Manufacturers HanO\'er Trust Company Centerre Bank. N.A. Manufacturers National Bank of Detroit Central Fidelity Bank. N.A. Manufacturers and Traders Trust Company Central National Bank of Cleveland Marine Midland Bank Chase Manhattan Bank. N.A. (The) Maryland National Bank Chemical Bank M&I Marshall & Iisley Bank Citibank. N.A. Mellon Bank. N.A. Citizens and Southern National Bank (The) Mercantile Trust Company National Association Citizens Fidelity Bank and Trust Company Mercantile-Safe Deposit and Trust Company Connecticut Bank and Trust Company (The) Merchants National Bank & Trust Company of Indianapolis Daiwa Bank. Limited (The). New York Agency Michigan National Bank-Grand Rapids Equitable Trust Company (The) Morgan Guaranty Trust Company of New York European American Bank and Trust Company N S & 'I' Bank. N.A. Fidelity Bank (The) National Bank of Australasia Limited (The). New York Agency Fidelity Union Bank National Bank of Detroit Fiduciary Trust Company of Boston National Bank of North America Fiduciary Trust Company of New York National Westminster Bank Limited Fifth Third Bank (The) New England Merchants National Bank First American Bank. N.A. North Carolina National Bank First-City National Bank of Binghamton. N.Y. Northwestern National Bank of Minneapolis FirsrJersey National Bank Old Kent Bank and Trust Company First Kentucky Trust Company (The) Philadelphia National Bank (The) First & Merchants National Bank Rhode Island Hospital Trust National Bank First National Bank in Dallas Riggs National Bank of Washington. D.C. (The) First National Bank in Palm Beach Seattle-First National Bank First National Bank of Atlanta (The) Security Pacific National Bank First National Bank of Birmingham Shawmut Bank of Boston. N.A. First National Bank of Boston (The) State Street Bank and Trust Company First National Bank of Chicago Swiss Bank Corporation-New York Branch First National Bank of Colorado Springs (The) Texas Commerce Bank. N.A. First National Bank of Maryland (The) Toledo Trust Company (The) First National Bank of Minneapolis Trust Company Bank First National Bank of St. Paul United Bank of Denver. National Association First National Bank of Topeka (The) First Pennsylvania Bank. N .A. t As of December 31. 1981

63 These specimens. of differing patterns. typify the Italian enamel tableware with chased handles of the 16th and 17th Centuries. Such handles were customarily adorned with enamel. reliefs and precious stones; blades were also often decorated with engravings or silver inlays.

United States Trust Company of New York Brown & Company Securities Corporation' United Virginia Bank Burgess & Leith Incorporated Valley National Bank of Arizona Burns Fry and Timmins Inc. Wacho\·ia Bank and Trust Company. N.k Burns. Pauli & Co .. Inc. Wells Fargo Bank. National Association Cantor. Firlgerald & Co. Zion First National Bank Cantor (S.BJ & Co .. Inc.' Capital Shares. Inc.' Carolina Securities Corporation Broker-Dealers (270§) Carr Securities Corporation ABD Securities Corporation Carr & Thompson. Inc.' Adams. Harkness & Hill. Inc. Carroll McEntee & McGinley Equity Corp. Adler. Coleman & Co. Cartwright (L) & Co.' Advest. Inc. Chicago Corporation (The) Agora Securities. Inc. Christopher (RG) & Company Alger (Fred) & Company. Incorporated Cleary & Co .. Inc. Allen & Company Incorporated Coburn & Meredith. Inc.' Alpine Associates Colin. Hochstin Co. Alstead. Strangis & Dempsey Incorporated' Conklin. Cahill & Co. American Securities Corporation Conklin. Cahill. Inc. Anderson & Strudwick. Incorporated' Conning & Co. Arnhold and S. Bleichroeder. Inc. Cosentino & DeFelice. Inc.' Aronson. W oolcott & Co .. Inc.' Coughlin and Company. Inc.' Asiel & Co. Countrywide Securities Corp. Atlantic Capital Corporation Cowen & Co. Bache Halsey Swart Shields Incorporated Craig-Hallum. Inc. Bacon. Whipple & Co. Dain Bosworth Incorporated Baird. Patrick & Co .. Inc. Daiwa Securities America. Inc. Baird (Robert W., & Co. Incorporated Davenport & Co. of Virginia. Inc. Barrett & Company Davis (Shelby Cullom) & Co. Battery Park Settlement Corporation de Cordova. Cooper & Co. Bear. Stearns & Co. Deltec Securities Corporation' Beare & Moynahan. Inc.' Denton & Company. Inc.' Beauchamp & Co. Dillon. Read & Co. Inc. Becker (kGJ Incorporated Doft & Co .. Inc. Bedford Partners Dominick Investor Services Corporation Bell & Beckwith Dominion Securities Ames Inc. Benton & Company Donald & Co. Securities. Inc.' Bernstein (Sanford CJ & Co .. Inc. Donaldson. Lufkin & Jenrette Securities Corporation Blair (William) & Company Drexel Burnham Lambert Incorporated Blunt Ellis & Loewi Incorporated Drysdale Securities Corporation Boettcher & Company Easton & Co. Bradford Broker Settlement. Inc. Eberstadt (FJ & Co .. Inc. Bradford (lCJ & Co. Edwards (kGJ & Sons. Inc. Branch. Cabell & Co. Einhorn & Co. Brandt (Robert) & Co. Engler & Budd Company' Brown (AlexJ & Sons Eppler. Guerin & Turner. Inc.

64 Equity Securities Trading Co., Inc.' McDonald & Company Ernst & Co. McLeod Young Weir Incorporated EuroPartners Securities Corp. Meehan (M.J.) & Company E"ans & Co., Inc. Merrill Lynch, Pierce, Fenner & Smith Incorporated Exchange Securities, Inc.' Mesirow & Company Execution Services Incorporated Mitchel, Schreiber. Watts & Co .. Inc. Fagenson & Co., Inc. 1\,1 KI Securities Corp. Fahnestock & Co. Montgomery Securities Ferris & Company, Incorporated' Moore & Schley. Cameron & Co. Financial America Securities, Inc.' 1\·loors & Cabot. Inc.' First Albany Corporation Morgan, Keegan & Company. Inc. First Birmingham Securities Corporation' I\'lorgan. Olmstead. Kennedy & Gardner, Incorporated First Boston Corporation (The) Morgan Stanley & Co. Incorporated First Jersey Securities, Inc. Muller & Company. Inc. First Manhattan Co. Murphey, Marseilles and Smith First Southwest Company Murphy & Durieu Foster & I\,,"rshall Inc. Neuherger & Berman Frances (E.G.) Co., Inc. New Japan Securities International, Inc. Frank (Walter N.) & Co. Newhard, Cook & Co. Incorporated Frankel (Wm. V.) & Co., Inc.' Nick (J.F') & Co. Freehling & Co. Nomura Securities International. Inc. Fried (Albert) & Co. Norhay Securities. Inc.' Gintel & Co. Norris & Hirshberg, Inc.' Goldberg Securities Nuveen (John) & Co. Incorporated Goldman, Sachs & Co. O'Connor & Associates Gowell Securities Corp.' O'Connor Securities Gradison & Company Incorporated Offerman & Co .. Inc.' Gruntal & Co. Olde & Co., Incorporated Gruss (Oscar) & Son Incorporated Oppenheimer & Co .. Inc. Hanifen, Imhoff, Inc.' OTC Net. Incorporated' Haupt, Andrews, Fraiman & Hug Paine. Webber, Jackson & Curtis Incorporated Hawthorne Securities Corporation' Parker (S.C') & Co .• Inc.' Henderson Brothers, Inc. Pasternak Securities Herzfeld & Stern Pforzheimer (Carl H.) & Co. Herzog, Heine, Geduld, Inc. Piper. Jaffray & Hopwood. Incorporated Hill, Thompson, Magid & Co., Inc.' Pitfield, Mackay & Co .. Inc. Hilliard (]'J.B.), Lyons (W.L.), Inc. Prescott. Ball & Turben Hirshon, Roth & Co. Purcell. Graham & Co., Inc. Howard, Weil, Labouisse, Friedrichs Incorporated Q & R Clearing Corporation Hudson (R.S.) & Co., Inc.' Quinn (E.j.) & Co., Inc.' Hummer (Wayne) & Co. Rauscher Pierce Refsnes. Inc. Hutton (E.F.) & Company Inc. Raymond. James & Associates. Inc. Ieahn & Co., Inc. Reaves (W.H.) & Co .. Inc. Illinois Company Incorporated (The) Reich & Co., Inc. Ingalls & Snyder Richardson Securities, Inc. Institutional Equity Corporation Riviere Securities Corporation' Interstate Securities Corporation Robb, Peck, McCooey & Co., Inc. Jacobson (Benjamin) & Sons Robertson. Colman, Stephens & Woodman Janney Montgomery Scott Inc. Robinson-Humphrey Company. Inc. (The) Jefferies & Company, Inc. Rodman & Renshaw. Inc. Johnston, Lemon & Co., Inc.' Roney (Wm. C.) & Company Jones (Edward 0.) & Co. Ross (Arthur H.), Inc. Josephthal & Co. Incorporated Rotan Mosie Inc. Kalb, Voorhis & Co. Rothschild (L.F.). Unterberg. Towbin Kaufmann. Alsberg & Co. Roulston Research Corp. Kidder, Peabody & Co. Incorporated Rowland Clearing Services. Inc. Koonce Securities, Inc.' Ryan Beck & Co.' Krieger (Henry) & Co. Sade & Co. LaBranche & Co. Sage, Rutty & Co., Inc. Laidlaw Adams & Peck Inc. Salomon Brothers Inc Lasker, Stone & Stern Schapiro (M.A.) & Co., Inc. Lawrence (Cyrus J') Incorporated Scherck, Stein & Franc. inc.' Lawrence. O'Donnell & Co. Schwab (Charles) & Co., Inc. Lazard Freres & Co. Scott & Stringfellow. Inc. Leonard (B.j.) and Company, Inc.' Seasongood & Mayer' Lewco Securities Corp. Securities Settlement Corporation Mabon. Nugent & Co. Seemala Corporation Madoff (Bernard L.) Seligman Securities. Inc. Manley. Bennett, McDonald & Co. Shaine (H.B.) & Co .• Inc. Marcus & Company Shearsonl American Express Inc. Marcus Schloss & Co., Inc. Sheppards and Chase (Overseas) Marks (Carl) & Co .. Inc. Simon (I.M.) & Co. Masten (A.E.) & Co .• Incorporated May & Gannon. Inc.' Mayer & Schweitzer. Inc. § Excludes some firms with limited activity. McCourtney-Breckenridge & Company' • NSCC Sponsored Account

65 This Mycenaean goblet of the 15th Century B.C. was one of a pair of solid gold goblets that were imported from Crete by a Peloponnesian prince or made for him locally in the Minoan style. The cups show the capture of two wild bulls, either to keep them from raiding domestic cattle or to provide animals for the Cretan bull games, during which athletic youths vaulted over the heads of wild bulls in a performance remotely reminiscent of the modern rodeo.

Smith Barney, Harris Upham & Co., Incorporated Philadelphia Depository Trust Company Smith (E.H.) jacobs & Co.' Smith, Moore & Co.' Banks Reported to be Southwest Securities, Inc. Participating in the Depository Spear, Leeds & Kellogg Steichen (R.j.) & Company' on an Indirect Basis (362t§) Stern & Kennedy Alabama Sterne, Agee & Leach, Inc. Central Bank of Birmingham Stifel, Nicolaus & Company Incorporated First Alabama Bank of Huntsville, N.A. Stillman, Maynard & Co. First National Bank of Mobile Stock Cross, Inc.' First National Bank of Tuskaloosa Stokes, Hoyt & Co. Merchants National Bank of Mobile Streicher (j.) & Co. Alaska Sutro & Co. Incorporated Alaska National Bank of the North, Fairbanks Swiss American Securities Inc. Alaska State bank, Anchorage Thomson McKinnon Securities Inc. National Bank of Alaska, Anchorage Tompane (A.B.) & Co. Arizona Transatlantic Securities Company First Interstate Bank of Arizona, N.A., Phoenix Tucker, Anthony & Day (R.L.), Inc. Great Western Bank and Trust, Phoenix Tweedy Browne Clearing Corporation Harris Trust Company of Arizona, Scottsdale Unified Securities Corporation California Vincent (Burton j.), Chesley & Co. Bank of A. Levy, Oxnard Viner (Edward A.) & Co .. Inc. California Canadian Bank, San Francisco Wagner. Stott & Co. City National Bank, Beverly Hills Wall Street Clearing Company Lloyds Bank California, Los Angeles Walsh, Greenwood, Wish & Co. Mechanics Bank of Richmond (The) Weber, Hall, Sale & Associates, Inc. San Diego Trust & Savings Bank Wechsler & Krumholz, Inc. Trust Company of California (The), Los Angeles Wedbush, Noble & Cooke, Inc.' Trust Company of the West, Los Angeles Weiss, Peck & Greer Colorado Wellington & Co. Central Bank of Denver Wheat, First Securities, Inc. Colorado National Bank, Denver Williams Gerry), Inc.' First National Bank in Boulder Witter (Dean) Reynolds Inc. First National Bank of Denver (The) Wittow & Company, Inc.' First National Bank of Englewood (The) Wood Gundy Incorporated First National Bank in Grand junction Wreszin, Prosser, Romano & Co. First National Bank in Loveland Yamaichi International (America), Inc. Greeley National Bank Ziegler Thrift Trading, Inc.' Connecticut Citytrust, Bridgeport Clearing Agencies (7) Connecticut National Bank (The), Bridgeport First Bank, New Haven Canadian Depository for Securities Limited (Thel Merchants Bank & Trust Company (The), Norwalk Midwest Securities Trust Company New England Bank & Trust Company, Enfield National Securities Clearing Corporation Putnam Trust Company of Greenwich New England Securities Depository Trust Company State National Bank of Connecticut, Bridgeport Options Clearing Corporation (The) Union Trust Company, New Haven Pacific Securities Depository Trust Company Westport Bank & Trust Co. (The)

66 Delaware Hawaii Bank of Delaware, Wilmington American Trust Company of Hawaii, Honolulu Delaware Trust Company, Wilmington Bishop Trust Company, Ltd., Honolulu Farmers Bank of the State of Delaware, Wilmington First Hawaiian Bank, Honolulu Wilmington Trust Company Hawaiian Trust Company, Ltd., Honolulu District of Columbia Idaho American Security Bank, N.A. First Interstate Bank of Idaho, N .A., Boise National Bank of Washington (The) First Security Bank of Idaho, Boise Florida Idaho Bank & Trust Co., Pocatello Bank of Palm Beach and Trust Company Idaho First National Bank (The), Boise Barne!! Bank of Jacksonville, N.A. II1inois Barne!! Banks Trust Company, N.A., Jacksonville Champaign National Bank (The) Century National Bank of Broward, Fort Lauderdale First National Bank and Trust Company, Evanston Ellis Bank & Trust Company, Sarasota Merchants National Bank of Aurora (The) Exchange Bank and Trust Company of Florida (The), Tampa Pioneer Bank & Trust Company, Chicago First Marine Bank and Trust Company of The Palm Beaches, Indiana Lake Worth Anderson Banking Company First National Bank of Florida, Tampa Citizens National Bank of Evansville First National Bank of Fort Myers First Bank and Trust Company of South Bend First National Bank of Mount Dora First National Bank of Richmond (The) First National Bank and Trust Company of Naples Floyd County Bank, New Albany First National Bank and Trust Company of Riviera Beach Irwin Union Bank and Trust Company, Columbus First National Bank & Trust Company of Stuart Lincoln National Bank and Trust Company, Fort Wayne First National Bank of Venice Merchants National Bank of Terre Haute Flagship Bank of jacksonville Peoples Bank & Trust Company,lndianapolis Flagship Bank of Tampa Peoples Trust Bank, Fort Wayne Flagship National Bank of Miami Purdue National Bank of Lafaye!!e Florida Bank of Fort Lauderdale SI. joseph Bank and Trust Company, South Bend Florida Bank and Trust Company of Daytona Beach Second National Bank of Richmond (The) Terre Haute First National Bank Florida First National Bank of jacksonville Iowa Florida First National Bank of Ocala Iowa-Des Moines National Bank Florida First National Bank of Pensacola Merchants National Bank of Cedar Rapids (The) Florida First National Bank of Vero Beach Kansas Florida National Bank of Gainesville Brotherhood Bank & Trust Company, Kansas City Florida National Bank of Lakeland Commerce Bank & Trust, Topeka Florida National Bank of Miami Union National Bank of Wichita Florida National Bank at Orlando Kentucky Florida National Bank of Palm Beach County Bank of Commerce and Trust Company, Lexington Florida National Bank of St. Petersburg Second National Bank & Trust Company (The), Lexington Gulfstream Bank, N.A., Boca Raton State National Bank of Maysville (The) Gulfstream Bank, N.A., Fort Lauderdale Third National Bank of Ashland (The) Landmark First National Bank of Fort Lauderdale Lee County Bank, Fort Myers Louisiana Hibernia National Bank, New Orleans Metropolitan Bank and Trust Company, Tampa National Bank of Sarasota Maine National Trust Company (The), Fort Myers Bar Harbor Banking and Trust Company Peoples Bank of Lakeland Canal National Bank, Portland Royal Trust Bank of Miami, N.A. Casco Bank & Trust Company, Portland Depositors Trust Company, Augusta Southeast Bank of Broward Southeast Bank of jacksonville Maine National Bank, Portland Southeast Bank of New Smyrna Merchants National Bank of Bangor Southeast Banks Trust Company, N.A., Miami Merrill Trust Company, Bangor Southeast First Bank of Largo Northeast Bank & Trust Company, Bangor Southeast First National Bank of Miami Massachusetts Southeast First National Bank of Sarasota Arlington Trust Company, Lawrence Southeast National Bank of Bradenton BayBank Harvard Trust Company, Cambridge Southeast National Bank of Deerfield Bay Bank Merchants, N.A., New Bedford Southeast National Bank of Naples Bay Bank Middlesex, N.A., Burlington Southeast National Bank of Orlando Bay Bank Norfolk County Trust Company, Dedham Bay Bank Valley Trust Company, Springfield Sun Bank of Miami Berkshire Bank and Trust Company, Pimfield Sun Bank of Ocala Sun Bank of St. Lucie County Cambridge Trust Company Sun Bank and Trust Company of St. Petersburg Durfee A!!leboro Bank, Fall River First Agricultural Bank, Pimfield Sun Bank of Volusia County First National Bank of Ipswich (The) Sun First National Bank of Dunedin Sun First National Bank of Lake County First Safety Fund National Bank, Fitchburg Sun First National Bank of Orlando Guaranty Bank and Trust Company, Worcester Sun First National Bank of Palm Beach County Guaranty-First Trust Company, Waltham Venice Nokomis Bank & Trust Company Mechanics National Bank, Worcester Georgia Pacific National Bank of Nantucket American National Bank of Brunswick Plymouth Home National Bank, Brockton Bank of the South, N.A., Atlanta Shawmut First Bank and Trust Company, Springfield Columbus Bank and Trust Company • NSCC Sponsored Account Georgia Bank (The), Macon t As of December 31,1981 National Bank of Georgia, Atlanta § Includes only those which have given permission for use of their names.

67 Pope Nicholas IV (J 288-1292) introduced a new style in papal chalices. Fashioned in 1290, this specimen incorporated a smaller cup, polygonal stem decorated with engravings or enamels, lobed base divided into compartments decorated with leafwork, each with an enameled medallion, and an overall look distinctly floral in effect.

South Shore Bank, Quincy Bank of New Hampshire National Association, Concord Union National Bank, Lowell First National Bank of Peterborough United States Trust Company of Boston Indian Head National Bank of Nashua Worcester County National Bank, Worcester Merchants National Bank of Manchester (The) Michigan New Jersey American National Bank and Trust Company of Michigan, Bank of New Jersey (The), Camden Kalamazoo Broadway Bank & Trust Company, Paterson Ann Arbor Bank and Trust Company Central Jersey Bank and Trust Company, Freehold Ann Arbor Trust Company Chatham Trust Company (The) City Bank & Trust Company, N.A., Jackson Citizens First National Bank of New Jersey, Ridgewood City National Bank, Detroit City Trust Services, N.A., Elizabeth Commercial Savings Bank of SI. Clair County, St. Clair First National Bank of New Jersey, Totowa Detroit Bank & Trust First National Bank of Princeton (The) Farmers & Merchants National Bank, Benton Harbor First National State Bank of New Jersey, Newark First National Bank & Trust Company of Kalamazoo, Interchange State Bank, Elmwood Park Michigan Maplewood Bank and Trust Company (The) National Bank of Jackson National State Bank (The), Elizabeth Pacesetter Bank & Trust, Grand Haven New Jersey Bank, N.A., Paterson Second National Bank of Saginaw, Michigan New Jersey National Bank, Trenton Minnesota Security National Bank of New Jersey, Newark American National Bank and Trus, Company, S,. Paul Somerset Trust Company. Somerville First National Bank of Duluth Summit and Elizabeth Trust Company, Summit IDS Benefit Trust Company, Minneapolis United Counties Trust, Elizabeth Marquette National Bank of Minneapolis (The) United Jersey Bank, Hackensack Midland National Bank of Minneapolis Urban National Bank, Franklin Lakes Northwestern National Bank of St. Paul New Mexico Mississippi First Interstate Bank of Albuquerque First National Bank of Jackson New York Missouri Chemung Canal Trust Company, Elmira Centerre Trust Company of SI. Louis Glens Falls National Bank & Trust Company First National Bank of Kansas City Key Trust Company, Albany Guaranty Trust Company of Missouri (The), Dayton Liberty National Bank and Trust Company, Buffalo Metro Trust Company. Clayton Long Island Trust Company, Garden City Pioneer Bank and Trust Company. SI. Louis Oneida National Bank and Trust Company of Central Traders Bank. Kansas City New York (The), Utica United Missouri Bank of Kansas City. N.A. St. Lawrence National Bank (The), Canton Montana Savings Bank Trust Company, New York Northwestern Bank of Helena Security Trust Company, Rochester Security Bank, NA. Billings Tompkins County Trust Company, Ithaca Nebraska Wilber National Bank, Oneonta First National Bank and Trust Company of Lincoln North Carolina First Northwestern Trust Company of Nebraska. Omaha Bank of North Catolina, N.A., Jacksonville National Bank of Commerce. Lincoln Branch Banking & Trust Company, Wilson Nevada Catolina First National Bank, Lincolnton First Interstate Bank of Nevada. N.A .. Reno Central Catolina Bank & Trust Company, Durham New Hampshire City National Bank, Charlotte Amoskeag National Bank & Trust Co .. Manchester Independence National Bank, Gastonia

68 Northwestern Bank (The). North Wilkesboro Texas Peoples Bank and Trust Company. Rocky Mount American National Bank of Austin (The) Southern National Bank of North Carolina. Lumberton Austin National Bank United Carolina Bank. Monroe Bank of the Southwest. Houston United Carolina Bank. Whiteville City National Bank in Wichita Falls North Dakota First City Bank of Dallas Bank of North Dakota. Bismarck First City National Bank of Houston Ohio First International Bank in Houston. N.A. BancOhio National Bank. Columbus First National Bank of Amarillo (The) Bank One of Columbus. N.A. First Security Bank of Beaumont. N.A. Bank One Trust Company. N.A., Columbus Frost National Bank. San Antonio First National Bank (The). Dayton Houston National Bank First National Bank of Cincinnati (The) Mercantile National Bank at Dallas First National Bank of Toledo National Bank of Commerce of Dallas Huntington National Bank of Columbus (The) RepuhlicBank Dallas. N.A. National City Bank. Cleveland River Oaks Bank & Trust Company. Houston Ohio Citizens Bank. Toledo Southern National Bank of Houston Second National Bank of Warren (The) Utah Third National Bank & Trust Company (The). Dayton First Security Bank of Utah. N.A .. Salt Lake City Winters National Bank and Trust Company. Dayton Tracy-Collins Bank and Trust Company. Salt Lake City Oklahoma Vermont Bank of Oklahoma. National Association. Tulsa Chittenden Trust Company. Burlington F&M Bank & Trust Company (The). Tulsa First Vermont Bank and Trust Company. Brattleboro First National Bank and Trust Company of Oklahoma City (The) Howard Bank (The). Burlington First National Bank and Trust Company of Tulsa (The) Virginia Liberty National Bank and Trust Company of Oklahoma City (The) Bank of Virginia Trust Company. Richmond Trust Company of Oklahoma. Tulsa Central Fidelity Bank. N .A .. Lynchburg Utica National Bank & Trust Company. Tulsa First American Bank of Virginia. McLean Oregon National Bank of Fairfax (The) First Interstate Bank of Oregon. N .A .. Portland Virginia National Bank. Norfolk Pennsylvania Washington American Bank and Trust Co. of Pa .. Reading Bellingham National Bank (The) Bank of Pennsylvania. Reading First Interstate Bank of Washington. Seattle Commonwealth National Bank (The). Harrisburg Frank Russell Trust Company. Tacoma Continental Bank. Norristown Old National Bank of Washington. Spokane Dauphin Deposit Bank & Trust Company. Harrisburg Peoples National Bank of Washington. Seattle Easton National Bank and Trust Company Seattle Trust & Savings Bank Equibank. N.A .. Pittsburgh West Virginia First-Eastern Bank. N .A .. Wilkes- Barre Charleston National Bank (The) First National Bank of Allentown (The) Wisconsin First Seneca Bank and Trust Company. Oil City Affiliated Bank of Hilldale. Madison First Valley Bank. Bethlehem Affiliated Bank of Madison Frankford Trust Company. Philadelphia Bank of Janesville Hamilton Bank. Lancaster Citizens Trust Company (The). Sheboygan Hazelton National Bank (The) First Bank N.A .. Milwaukee Marine Bank. Erie First National Bank and Trust Company of Racine McDowell National Bank of Sharon Kellogg-Citizens National Bank of Green Bay Merchants National Bank of Allentown (The) Marine Bank of Beaver Dam Northeastern Bank of Pennsylvania. Scranton Marine Bank of Madison Northern Central Bank. Williamsport Marine National Bank of Neenah Security Bank and Trust Company. Sttoudsburg Marine Trust Company N.A. (The). Milwaukee Security-Peoples Trust Company. Erie Merchants & Savings Bank. Janesville Southeast National Bank of Pennsylvania (The). West Chester Peoples Marine Bank of Green Bay Third National Bank and Trust Company of Scranton Security Marine Bank of Madison Union Bank and Trust Company of Eastern Pennsylvania. Valley Trust Company. Appleton Bethlehem West Bend Marine Bank Union National Bank of Pittsburgh (The) United Penn Bank. Wilkes-Barre Rhode Island DTC Stockholders (SSt) New England Trust Company. Ptovidence Old Stone Bank.. Providence The full list of 1981 DTC stock­ Pawtucket Trust Company holders. in order of their holdings. Washington Trust Company (The). Westerly is as follows: South Carolina New York Stock Exchange. Inc. Bankers Trust of South Carolina. Columbia Bankers Trust Company Citizens and Southern National Bank of South Carolina. Merrill Lynch & Co .. Inc. Columbia Citibank. N.A. First National Bank of South Carolina. Columbia American Stock Exchange. Inc. South Carolina National Bank. Columbia National Association of Securities Dealers. Inc. Southern Bank and Trust Company. Greenville The Chase Manhattan Bank. N.A. Tennessee Manufacturers Hanover Trust Company American National Bank and Trust Company. Chattanooga The Bank of New York Park National Bank (The). Knoxville Morgan Guaranty Trust Company of New York Third National Bank. Nashville Union Planters National Bank of Memphis Valley Fidelity Bank and Trust Company. Knoxville t AsofDecember31.1981

69 This enameled gold paten from the Chigi Chapel in the Cathedral of Siena was donated by Pope Alexander VII in 1658. It is typical of the gifts that Popes often used on suitable occasions to honor princes or towns that had won their fa \'or.

United States Trust Company of New York Pledgees (101 t§) Ir\'ing Trust Company Mellon Bank, N.A. Algemene Bank Nederland N.V .. New York Branch Wells Fargo Bank, National Association AmeriTrust Company Marine Midland Bank Arizona Bank (The) Goldman, Sachs & Co. Banca Catalana-New York Office Chemical Bank Bank of America, National Trust and Sa\'ings Association Northwestern National Bank of Minneapolis Bank Hapoalim, B.M. State Street Bank and Trust Company Bank Leumi Trust Company of New York Salomon Brothers Inc Bank of New York (The) A.G. Edwards & Sons, Inc. Bank of No\'a Scotia (The) Morgan Stanley & Co. Incorporated Bank of Tokyo Trust Company (The) The Citizens and Southern National Bank Bankers Trust Company Lewco Securities Corp. Banque de Paris et des Pays-Bas First & Merchants National Bank Barclays Bank International Limited Donaldson, Lufkin & Jenrette Securities Corporation Boarmen's National Bank of St. Louis (The) Hartford National Bank and Trust Company Bradford Trust Company Swiss American Securities Inc. Brown Brothers Harriman & Co. Shawmut Bank of Boston, N.A. California First Bank The First Boston Corporation Canadian Imperial Bank of Commerce Alex. Brown & Sons CCJ1tt::rre Bank. N.A. Edward A. Viner & Co., Inc. Central National Bank of Cle\'eland The Connecticut Bank and Trust Company Chase Manhattan Bank, N.A. (The) Wood Gundy Incorporated Chemical Bank Arnhold and S. Bleichroeder, Inc. Citibank, N.A. The Equitable Trust Company Citizens Fidelity Bank and Trust Company First Jersey National Bank Citizens and Southern National Bank (The) Burgess & Leith Incorporated Connecticut Bank and Trust Company (The) F. Eberstadt & Co., Inc. Continental Illinois National Bank and Trust Company Maryland National Bank of Chicago Bradford Trust Company Credit Lyonnais, New York Branch Execution Ser\'ices Incorporated Credito Italiano Mayer & Schweit?er, Inc. Crocker National Bank Oscar Gruss & Son Incorporated Daiwa Bank, Limited (The), New York Agency Carl i\'larks & Co., Inc. Detroit Bank & Trust Company (The) Carl H. Pforzheimer & Co. Equitable Trust Company (The) LaBranche & Co. European-American Bank & Trust Company Boettcher & Company Fidelity Bank (The) Prescott, Ball & Turben Fiduciary Trust Company of New York The Fidelity Bank Fifth Third Bank (The) Stillman, Maynard & Co. First American Bank, N.A. W.H. Rea\'es & Co., Inc. First Interstate Bank of California Pitfield, Mackay & Co., Inc. First Jersey National Bank Fagenson & Co., Inc. First & Merchants National Bank IF. Nick & Co. First National Bank of Arizona The First National Bank of Atlanta First National Bank of Atlanta (The) Stock Clearing Corporation First National Bank of Chicago Mitchel. Schreiber, Watts & Co., Inc. First National Bank in Dallas

70 First National Bank of Kansas Citv Republic National Bank of Dallas First National Bank of Louisville' DenL·er. Colorado First National Bank of Marvland (The) United Bank of Denver. National Association First National Bank of Min~eapolis Hartford. Connecticut First National Bank of Oregon Connecticut Bank and Trust Company (The) First National Bank and Trust Company of Tulsa (The) Hartford National Bank and Trust Company First Pennsvlvania Bank. N.A. Houston. Texos First Union' National Bank Houston National Bank Fuji Bank and Trust Company (The) Indianapolis. Indiana Harris Trust and Savings Bank Merchants National Bank & Trust Company of Indianapolis Hartford National Bank and Trust Company Los Angeles. California Houston National Bank Security Pacific National Bank Indiana National Bank (The) Wells Fargo Bank. National Association Investors Bank and Trust Company Louisville. Kentucky Irving Trust Company Citizens Fidelity Bank & Trust Company Lincoln First Bank. N.A. First Kentucky Trust Company (The) l\hnufactllrers Hanover Trust Company M i/fi.'Oukee. fI/isconsin Manufacturers National Bank of Detroit First Wisconsin Trust Company Marine Midland Bank Minneapolis. Minnesota Maryland National Bank First National Bank of Minneapolis Mellon Bank. N.A. Northwestern National Bank of Minneapolis Mercantile Trust Company National Association Noshville. Tennessee Mercantile-Safe Deposit and Trust Company United American Bank Merchants National Bank & Trust Company of Indianapolis Philodelphia. Pennsylvania Morgan Guaranty Trust Company of New York Fidelity Bank (The) National Bank of Detroit Ptovident National Bank National Bank of North America Pittsburgh. Pennsylvania National Westminster Bank Limited Mellon Bank. N.A. New England Merchants National Bank Providence. Rhode Island North Carolina National Bank Industrial National Bank of Rhode Island Northern Trust Company (The) Richmond. fiirginia Northwestern National Bank of Minneapolis First & Merchants National Bank Pittsburgh National Bank Rochester. New York Provident National Bank Lincoln First Bank. N.A. Republic National Bank of New York St. Louis. Missouri RepublicBank Dallas. N.A. Centerre Bank. N.A. Royal Bank of Canada (The). New York Agency Mercantile Trust Company National Association Royal Bank and Trust Company (The) San Froncisco. California Sanwa Bank Limited (The) Wells Fargo Bank. National Association Seattle-First National Bank Security Pacific National Bank Shawmut Bank of Boston. N.A. Investment Companies State Street Bank and Trust Company Reported to be Using Sumitomo Trust & Banking Co., Ltd. (The) Depository Services (201 t§) Swiss Bank Corporation-New York Branch (Listed by Custodian Bank) Swiss Credit Bank Texas Commerce Bank. N.A. BANK OF NEW YORK (THE) Toledo Trust Company (The) Adams Express Company Toronto-Dominion Bank (The) Alpha Fund. Inc. Union Bank of Switzerland. New York Branch Charter Fund. Inc. Union First National Bank of Washington Corporate Leaders Trust Fund Certificates Series A United Bank of Del1\·er. National Association Corporate Leaders Trust Fund Certificates Series B United States Trust Company of New York Drexel Burnham Fund (The) Uni[cd Virginia Rank Dreyfus Fund Incorporated (The) Wachovia Bank and Trust Company. N.A. Dreyfus Leverage Fund. Inc. (The) Wells Fargo Bank. National Association Fairfield Fund. Inc. 44 Wall Street Equity Fund. Inc. (The) 44 Wall Street Fund. Inc. (The) Depository Facilities (33t) General Electric S & S Program Mutual Fund Lehman Corporation (The) Atlanto. Georgio Merrill Lynch Capital Fund. Inc. Citizens and Southern National Bank (The) Merrill Lynch Special Value Fund. Inc. First National Bank of Atlanta (The) National Securities Balanced Fund Boltimore. Moryland National Securities Bond Fund First National Bank of Marvland (The) National Securities Dividend Fund Birminghom. Alobamo . National Securities Gtowth Fund First National Bank of Birmingham National Securities Income Fund Boston. Massochusetts National Securities Preferred Fund New England Securities Depository Trust Company National Securities Stock Fund Shawmut Bank of Boston. N.A. Over the Counter Securities Fund. Inc. State Street Bank and Trust Company Petroleum & Resources Corporation Chor/otte. North Corolino Quasar Associates. Inc. First Union National Bank Shearson Appreciation Fund. Inc. (The) Cleveland. Ohio AmeriTrust Company Dollos. Texos t As of December 31. 1981 First National Bank in Dallas § Includes only those which have given permission for use of their names.

71 The Reliquary of St. Louis of Toulouse was fashioned of rock crystal and gold filigree in 16th Century Venice. By this period of the Renaissance. crystal had become indispensable as an ornament of the rich. and gold filigree as an ornament on the crystal. Venice was one of the many centers of the art; religious applications quickly began to outdo pri"ate displays of luxury as targets of the artists' efforts.

Shearson Income Fund. Inc. FIRST NATIONAL BANK OF MINNEAPOLIS Shearson New Directions Fund. Inc. Common Srock Fund of State Bond & Mortgage Co. BOSTON SAFE DEPOSIT AND TRUST COMPANY lDS Bond Fund. Inc. IPI-Income & Price Index Fund ms ~-Iutual Fund. Inc. Johnston Capital Appreciation Fund IDS New Dimensions Fund. Inc. Johnston Income Fund Invesrors Selective Fund. Inc. Im'estors Variable Payment Fund. Inc. CHASE MANHATTAN BANK, N.A. (THE) North Star Bond Fund. Inc. AMCAP Fund. Inc. North Star Regional Fund. Inc. American Balanced Fund. Inc. North Star Stock Fund. Inc. American Mutual Fund. Inc. State Bond Di\'ersified Fund Bond Fund of America. Inc. (The) State Bond & Mortgage Progress Fund Bond Portfolio for Endowments. Inc. Endowments. Inc. HARTFORD NATIONAL BANK AND TRUST Foster & Marshall Growth Fund Inc. COMPANY Growth Fund of America. Inc. (The) Value Line Fund. Inc. (The) Income Fund of America. Inc. (The) Value Line Income Fund. Inc. (The) Investment Company of America (The) Value Line Leveraged Growth Fund. Inc. NML One Fund Value Line Special Situations Fund. Inc. (The) New Perspective Fund. Inc. INVESTORS BANK AND TRUST COMPANY RCM Growth Equity Fund. Inc. Earon & Howard Balanced Fund Sentry Fund. Inc. Earon & Howard Income Fund CITIBANK, N.A. Earon & Howard Srock Fund International Investors Incorporated Foursquare Fund Inc. Oppenheimer Fund. Inc. Planned Investment Fund Inc. Oppenheimer Income Fund of BaSIOn. Inc. S3\'ings Bank Investment Fund - Income Series Oppenheimer Special Fund. Inc. MANUFACTURERS HANOVER TRUST COMPANY CONNECTICUT BANK AND TRUST COMPANY Oppenheimer Directors Fund. Inc. (THE) Oppenheimer Time Fund. Inc. Phoenix Fund. Inc. MERCHANTS NATIONAL BANK & TRUST FIRST JERSEY NATIONAL BANK COMPANY OF INDIANAPOLIS Unified Accumulation Fund. Inc. Fundamental Investors. Inc. Unified Growth Fund. Inc. Merrill Lynch Basic Value Fund. Inc. Unified Income Fund. Inc. Merrill Lynch Equi Bond I Fund. Inc. Unified Mutual Shares. Inc. FIRST NATIONAL BANK OF BOSTON (THE) MORGAN GUARANTY TRUST COMPANY OF Beacon Growth Fund. Inc. NEW YORK Colonial Fund (The) Lord. Abbett Bond-Debenture Fund. Inc. Colonial Growth Shares. Inc. Lord. Abbett Developing Growth Fund. Inc. Colonial High Yield Securities. Inc. Colonial Income Fund. Inc. NEW ENGLAND MERCHANTS NATIONAL BANK Colonial Option Growth Trust American Dual Vest Fund Colonial Option Income Fund. Inc. Tudor Hedge Fund Colonial Qualified Dividend Trust NORTHWESTERN NATIONAL BANK OF Colonial Tax Managed Trust MINNEAPOLIS State Mutual Securities. Inc. IDS Growth Fund. Inc.

72 IDS Progressive Fund, Inc. Putnam Investors Fund, Inc. II1\'estor~ Stock Fund, Inc. Putnam Option Income Trust RIGGS NATIONAL BANK OF WASHINGTON, D,C, Putnam Vista Fund. Inc. (THE) Putnam Voyager Fund, Inc. Qualified Dividend Portfolio I, Inc. Aetna Income Shares, Inc. Aetna Variable Encore Fund, Inc. Qualified Di\'idend Portfolio II, Inc. Scudder Common Stock Fund, Inc. Aetna Variable Fund, Inc. Scudder Duo Vest, Inc. Washington Mutual Investors Fund, Inc. Scudder Duo Vest Exchange Fund, Inc. SHAWMUT BANK OF BOSTON, N.A. Scudder Income Fund, Inc. Directors Capital Fund, Inc. Scudder Special Fund, Inc. Eaton-Vance Tax "-lanaged Trust Source Capital Fund Energy Fund Incorporat~d Trustees' Commingled Equity Fund Evergreen Fund, Inc. (The) USAA Growth Fund ~\'ergreen Total Return, Inc. (The) USAA Income Fund Fidelity Contrafund, Inc. USAA Sunbelt Era Fund Fidelity Corporate Bond Fund, Inc. Vanguard Fixed Income Securities Fund Fidelity Fund, Inc. Vanguard Index Trust Fidelity High Income Fund Variable Stock Fund, Inc. Fidelity Integrity Fund Wellesley Income Fund, Inc. Fidelity Ma\'erick Fund Wellington Fund, Inc. Fidelity Puritan Fund, Inc. TEXAS COMMERCE BANK, N,A. Fidelity Qualified Dividend Fund American National Bond Fund, Inc. Fidelity Standish Fund American National Growth Fund, Inc. Fidelitv Triad Fund American National Income Fund, Inc. Gatew,;y Option Income Fund, Inc. Commerce Income Shares, Inc. Good and Bad Times Fund, Inc. Current Interest, Inc. Guardian Mutual Fund, Inc. Industries Trend Fund, Inc. & Pilot Fund Inc. New York Venture Fund, Inc. Investment Quality Interest, Inc. Partners Fund, Inc. (The) Sogen International Fund. Inc. UNITED BANK OF DENVER, N.A, Sun Growth Fund, Inc. Bank Stock Fund, Inc. United Sen'ices Fund, Inc. Janus Fund, Inc. Venture Income (+) Plus, Inc. One Hundred Fund, Inc. (The) STA TE STREET BANK AND TRUST COMPANY One Hundred and One Fund, Inc. (The) American General Capital Bond Fund, Inc. UNITED STATES TRUST COMPANY OF NEW YORK American General Convertible Fund Able Associates Fund Chancellor New Decade Growth Fund, Inc. Foundation Growth Stock Fund, Inc. Chancellor Tax-Exempt Daily Income Fund, Inc. Twentieth Century Investors, Inc. Explorer Fund, Inc. Federated Option Income Fund. Inc. Fidelity Destiny Fund Institutions Participating Fully Fidelity Trend Fund, Inc. in the Institutional Delivery Financial Bond Shares, Inc. (ID) System (547t§) Financial Dvnamics Fund, Inc. Financial Industrial Fund, Inc. A. Sarasin & Cie, Banquiers (Basel, Switzerland) Financial Industrial Income Fund, Inc. Aetna Casualty and Surety Company (The) (Hartford, INA High Yield Fund Connecticutl IN A I nvestment Securities, Inc. Aetna Income Shares Inc. (Hartford, Connecticut) Ivest Fund, Inc. Aetna Life Insurance and Annuity Company (Hartford, Massachusetts Capital Development Fund, Inc. Connecticut) Massachusetts Financial Bond Fund, Inc. Aetna Life Insurance Company (The) (Hartford, Connecticut) Massachusetts Financial Development Fund, Inc. Aetna Life Insurance - Separate Accounts (Hartford, Connecticut) !\.1assadlllsetts Financial Emerging Growth 'T'rust Aetna Varia hie Encore Fund, Inc. (Hartford, Connecticutl Massachusetts Financial High Income Trust Aetna Variable Fund, Inc. (Hartford, Connecticut) ~:lassad1Usetts Financial International 'Trust Bond Portfolio Affiliated FM Insurance Company Oohnston, Rhode Island) ~:lassa<.:hllse((s Income Dc\°elopment Fund. Inc. Akzona Pension Fund (Asheville, North Carolina) Massachusetts Investors Growth Stock Fund, Inc. Alaska National Bank of the North (Fairbanks, Alaska) ~vlassachusetts Investors Trust Alaska State bank (Anchorage, Alaska) Merrill Lynch Corporate Bond Fund, Inc. (High Income Portfolio) American Bank & Trust Company (Monroe, North Carolina) J\'lerrill Lynch Corporate Bond Fund, Inc. (High Quality Portfolio) American Bank and Trust Co. of Pa. (Reading, Pennsylvania) Merrill Lynch Corporate Bond Fund, Inc. (Intermediate Term American National Bank of Brunswick (Brunswick, Georgia) Portfolio) American National Bank and Trust Company (St. Paul, . Morgan (W.L.) Growth Fund, Inc. Minnesota) NEL Income Fund, Inc. American Security Bank, N.A. (Washington, D.C') PAC Development Fund American Trust Company of Hawaii (Honolulu, Hawaii) PAC Mariner Fund American United Life Insurance Company - Equity Fund Price ('I'. Rowel Growth Stock Fund, Inc. (Indianapolis, Indiana) Price (T. Rowe) New Era Fund, Inc. AmeriTrust Company (Cleveland, Ohio) Price (T. Rowe) New Horizons Fund, Inc. Amoskeag National Bank & Trust Co. (Manchester, New Hampshire) Price ('I'. Rowe) New Income Fund, Inc. Amsterdamse Crediet - En Handelsbank N.V. (Amsterdam, Putnam COI1\'ertihle Fund, Inc. The Netherlands) Putnam Duo Fund Anderson Banking Company (Anderson, Indiana) Putnam (Georgel Fund of Boston (The) Putnam Growth Fund (The) Putnam High Yield Trust t Asof December 31, 1981 Putnam Income Fund, Inc. (The) § Includes only those which have given permission for use of their names.

73 Only a small fraction of the gold work of pre-Columbian America sUf\'i\'ed the rapacity of the Conquistadors, but what has SUf\'i\'ed is of exquisite beauty. These 15th-16th Century Penl\,ian llamas were probably used as offerings to increase the fertility of the herds, Judging by the dates, they were probably among the last examples of the art, since local craftsmen were soon to be depri\'ed of precious materials and forced to turn to stone and other base substances for their future efforts,

Appalachian Insurance Company (johnston, Rhode Island) Banque Pariente «(;ene"a, Switzerland) Arizona State Retirement System (Phoenix, Arizona) Banque Pri,'ee de (;estion (Paris, France) Arlington Trust Company (Lawrence, Massachusetts) Banque Pri"ee S.A. (Paris, France) Associated Madison Companies, Inc. (New York, New York) Banque Rothschild (Paris, France> Austin National Rank (Austin, Texas) Banque Scandin3\T en Suisse (GenC\'a, Switzerland) Baldwin & Lyons, Inc. (Indianapolis, Indiana) Banque Vernes et Commerciale de Paris (Paris. France> Banca Del Ceresio (Lugano, Switzerland) Banquc de L'Union Europcenne (Paris, France) Banca Della Svizzera Italiana - A/C IBIS (Lugano, Switzerland) Banque Worms (Paris, France) Banca Della Svizzera Italiana - Lugano (Lugano, Switzerland) Barnett Banks Trust Company, N.A. (Jackson,·ilk. Florida) Banca Della Svizzera Italiana - Zurich (Zurich, Switzerland) Bayerische Vereinsbank International S.A. (Luxembourg) RancOhio National Rank - Trust Departmcnt (Columbus, Ohio) Bellingham National Bank (The) (Bellingham, Washington) Bank of A. Le,'y (Oxnard, California) Berliner Handels - Und Frankfurter Bank (Frankfurt. Bank of Bermuda Ltd. (The) (Hamilton, Bermuda) West German\,) Bank Cantrade A.G. (Zurich, Switzerland) Bingham, Dana' & (;ould (Boston, Massachusetts) Bank of Commerce and Trust Company (Lexington. Kentuckv) Birmingham Trust National Bank - Trust Department Rank of Delaware (Wilmington, Delaware) (Birmingham, Alabama) Bank & Finance Co., Inc. (Herne, Switzerland) Bishop T;ust Com pan\', Ltd. (Honolulu, Hawaii) Bank Landau & Kimche AG. (Zurich, Switzerland) Bordier & Cie (Gene,·a. Switzerland) Bank In Liechtenstein (Vadu7., Liechtenstein) Boston Safe Deposit and Trust Company (Boston, Massachusetts) Bank !Vlees & Hope NV (Amsterdam, Thc Netherlands) Bounty Management Corporation (Boston, Massachmetts) Bank of N.T. Butterfield & Son, Ltd. (The) (Hamilton, Branch Banking & Trust Company (Wilson, North Carolina) Bermuda) Brcisach Pinschoff Schoeller (Vienna, Austria) Bank of New Hampshire National Association (Concord, Brolliet & Cie (Geneva, Switzerland) New Hampshire) Brotherhood Bank & Trust Company (Kansas City, Kansas) Bank of New Jersey crhc) (~lorristown. New Jersey) Buckmaster & ~Ioon= Lrd. «.ondon. England) Rank of New York (The) (New York, Ncw York) Buffalo Savings Bank (Ruffalo, New York) Bank of Pennsyl\'ania (Reading, Pennsyl\'3nia) Buffalo S3\'ings Bank - Life Insurance (Buffalo, New York) Bank of Scotland (Edinburgh, Scotland) Bullock Fund (New York, New York) Bank of the South N, A, (Atlanta, Georgia) Cai!'ise de Depots ct Consignations (Paris. France) Bank of Tokyo Trust Company (The) (New York, Ncw York) California Canadian Bank - Trust Department (San Francisco. Bank of Virginia Trust Company (Richmond, Virginia) California) Bank Von Ernst & Cie (Berne, Switzerland) Cambridge Trust Company (Cambridge, Massachusetts) Bankers Trust Company (Directed Accounts) (New York, Canadian Fund (New York, New York) New York) Carolina First National Rank (Lincolnton, North Carolina) Bankers Trust Company (Trust Department) (New York, Casco Bank & Trust Company (Portland. Maine) New York) Case Western Resen'e University/ AmeriTrust Company of Bankers Trust - Passi,'e l\'!anagement (New York, New York) CIe\-e1and (CIe\'e1and. Ohio) Bankers Trust - Personal Securities Services (New York, Case Western Resen'e University/Central National Bank of New York) Clneland (Cleveland, Ohio) . Bankers Trust of South Carolina (Columbia, Case Westcrn Reserve Uni,'ersity/National City Bank of South Carolina) Cle\'eland (CIe\'e1and, Ohio) . . Bankhaus Marcard (Hamburg, West Germany) Centerre Trust Company of Sr. I,ouis (Sr. I ,ouis, Missouri) Bankhaus Schneider und Muenzing (Munich, Germany) Central Bank of Den,'er (Denver, Colorado) Banque Bruxelles Lambert S,A. (Brussels, Belgium) Central Carolina Bank & Trust Company (Durham, North Banque Francaise du Commerce Exterieur (Paris, France) Carolina) Banque Gutz~\'iller, Kurz, Bungener S,A. (Geneva, Switzerland) Central Fidelity Bank, N.A. (Richmond, Virginia) Banque Internationale :i Luxembourg (Luxembourg) Centur\, National Bank of Cln'eland (CIe,'eland, Ohio) Banque Keyser Ullman France (Paris, France) Chase Manhattan Bank, N.A. (The) (New York, New York) Banque Keyser Ullman en Suisse S.A. (Gene,'a, Switzerland) Chase Manhattan Bank (Switzerland) (New York, New York) Ranque Leu, Ltd. (Zurich, Switzerland) Chase Manhattan Index Fund (New York, New York) Banque Louis-Dreyfus (Paris, France) Chemical Bank - Equity Trading (New York, New York) Banquc Migros (Geneva, Switzerland) Chemung Canal Trust Company (Elmira, New York) Banque de la Mucuelle Industrielle (Paris, France) Citibank, N.A_ (New York, New York)

74 Citibank. N.A. - PPR Security Sernces (New York. New York) Fidelity Union Trust Company (Newark, New Jersey) Citizens Fidelity Bank and T;ust Company (Louisville. Fiduciary Trust Company of Boston (Boston, Massachusetts) Kentucky) Fifth Third Bank (The) (Cincinnati, Ohio) Citizens First National Bank of New Jersey (Ridgewood. Financial Bond Shares, Inc. (Den\'er, Colorado) New Jerse\') Financial Daily Income Shares, Inc, (Denver, Colorado) Citizens Na'tlOnal Rank of EvanS\'ille (b·anS\·ille. Indiana) Financial Dynamics Fund, Inc. (Denver, Colorado) Citizens and Southern National Bank (The) (Atlanta. (;eorgia) Financial Industrial Fund, Inc. (Denver, Colorado) Citlzcns and Southern National Bank of South Carolina Financial Industrial Income Fund, Inc. (Denver, Colorado) (Columbia. South Carolina) First Agricultural Bank (Pittsfield, Massachusetts) Citizens T""t Company (The) (Sheboygan. Wisconsin) FiN Alabama Bank of Huntsville, N.A. - Trust Department City National Bank (Beverly Hills. California) (HuntS\'ille, Alabama) Cit~, National Bank (Charlo~te. North Carolina) First American Rank, N.A. (Washington, D.C.) Cit~, National Bank in Wichita Falls (W,chita Falls. Texas) First Bank (New Haven, Connecticut) City Trust Company - Separate Funds Account (Bridgeport, FiN Bank and Trust Company of Boca Raton, N.A. Connecticut) (Boca Raton, Florida) C,ty Trust Sen' ices. N.A. (Elizabeth. New Jersey) First Rank and Trust Company of South Bend (South Rend, Citytrust (Bridgeport. Connecticutl Indiana) College Retirement Equities Fund (New York. New York) First Charlotte Assets Trust (Edinburgh, Scotland) Colorado National Bank (Directed Accounts) (Denver. First Citv Bank of Dallas (Dallas, Texas) Colorado) First Eas~ern Bank N.A. (Wilkes-Rarre, Pennsyh'ania) Colorado National Bank (Trust Department) (Denver. First Hawaiian Rank (Honolulu, Hawaii) Colorado) First Index Investment Trust, Inc. (Valley Forge, Pennsylvania) Columbus Hank and ~rrust Company - ~rrlls( Department First International Bank in Houston, N.A. (Houston, Texas) (Columbus. (;eorgla) First Interstate Bank of Arizona, N.A. (Phoenix, Arizona) Commerce Income Shares (Hou~t()ll, Texas) First Interstate Bank of Washington - Special Services Account Commercial Loan Insurance Corp. '1'1' Alaska Director of (Seattle, Washington) , Insurance Depository Account U\:lilwJukcc, \Vlsconsin) First Jersey National Bank (Jersey City, New Jersey) Condron (J.L.l & Co, «(;reenwich. Conneeticutl First Kentucky Trust Company (The) (Louis\'ille, Kentucky) Connecticut National Bank (The) (Bridgeport, Connecticut) First Marine Bank and Trust Company (Riviera Beach, Florida) C()n~cn'c~{ 7\:lanagcment Company (Boston. iV!Jssachusctts) First Marine Bank and Trust Company of The Palm Reaches Contint.:nral Bank (Norri!'otowl1. Pcnnsvh'ania) (Lake Worth, Florida) Coutts & Co "Robarts Office" (Lond,;n. England) First & Merchants National Bank (Richmond, Virginia) Cred,t Commercial de France (Pans. France) First National Bank (The) (Dayton, Ohio) Credit Industriel et Commercial (Paris, France) First National Rank of Allentown (The) (Allentown, Crown Agents for Overseas (;overnments (I.ondon. England) Pennsylnnia) Daiwa Bank. LImited (The) (New York. New York) First N~tional Bank of Birmingham (Birmingham, Alabama) Darier & Cie. «( 'eneY·a. Switzerland) First National Bank of Boston (The) (Boston, Massachusetts) Delbriick & Co .. I'ri\'atbanklers (Cologne. (,ermanY) First National Rank of Colorado Springs (The) Den Norske Creditbank (Oslo. Norway) , (Colorado Springs, Colorado) Deseret Trust Company (Salt Lake Ci;y. Utah) First National Rank in Dallas (Dallas, Texas) Di\'idend Shares Inc. (New York. New York) First National Rank of Denver (The) (Denver, Colorado) Durfee Attleboro Bank (Fall Ri\·er. Massachusetts) First National Bank of Florida (Tampa, Florida) Easton National Bank and Trust Company (Easton, First National Rank of Maryland (The) (Baltimore, Maryland) Pennsylvania) First National Bank of Min~eapolis (Minneapolis, Minnesota) Edinburgh American Assets Trust Ltd. (Edinburgh. Scotland) First National Bank of /-"!ount Dora (Mount Dora, Florida) Effectenbank-Warburg :\ktiengesellschaft (Frankfurt. First National Bank of New Jersey (Totowa, New Jersey) West (;ermany) , First National Bank in Palm Beach (Palm Beach, Florida) Ellis Bank & 'r'rust Company (Sarasota, Florida) First National Rank of Peterborough Equihank. N.A. (PlC[shurgh. Pennsylvania) (Peterborough. New Hampshire) Equitable Bank (The) (Baltimore, ~-laryland) First National Bank of Princeton (The) (Princeton, New Jersey) Equitable Life Insurance Co. (New York, New York) First National Bank of Richmond (The) (Richmond, Indiana) Erstt.: oc:-.tcrrcichische Sparkas'Ic (Die) (Vienna, Austria) First National Bank of South Carolina (Columbia, South Carolina) European 'T'rading Company (London. England) First National Bank of Toms River (The) (Toms River, Exchange Bank and Trust Company of Florida (The) (Tampa. New Jersey) Florida) First National Bank of Topeka (The)- Trust Department Explorer Fund, Inc. (Valley Forge, Pennsylvania) (Topeka, Kansas) Farmers Bank of the State of Delaware (Do\'er, Delaware) First National Rank and 'Trust Company of Kalamazoo, Fender Transport Corporation (Geneva. Switzerland) Michigan (Kalamazoo, Michigan) Ferrier, Lulhn & eie SA. (Geneva, Switzerland) FiN National Rank and Trust C:ompany of Oklahoma City (The) Fidelity Aggressive Equity Trust (Boston, r\"lassachusetts) (Oklahoma City, Oklahoma) Fidelity Asset In\'estment Trust (Boston, Massachusetts) FiN National R~nk and Trust Company of Racine (Racine, Fidelit)· Balanced Equity Trust (Boston, Massachusetts) Wisconsin) Fidelity Bank (The) (Philadelphia, Pennsylvania) First National Rank & Trust Company of Stuart (Stuart, Florida) Fidelity Bank Funds Management Clearing (Philadelphia, First National Bank of Venice (Venice, Florida) Pennsylvania) First Safety Fund National Bank (Fitchburg, Massachusetts) Fidelity Bank Investment Advisory Service (Phdadelphia, First Seneca Bank and Trust Company (Oil City, Pennsylvania) Pennsylvania) First Trust Company of Saint Paul (SI. Paul, Minnesota) Fidelit\, Cash Resen'es (Boston, Massachusetts) First Union Nationai Bank of North Carolina (Charlotte, Fidelit), Income /o.-1anaged Equity Trust (Boston. 1-.-lassachusetts) North Carolina) Fidelity International Equity Trust (Roston, Massachusetts) First United Life Insurance Company (Gary, Indiana) Fidelit\· Tax-Exempt tv'!oney Market Fund (Boston, First Valley Bank (Bethlehem, Pennsyh'ania) Massachusetts) First-City National Bank of Binghamton (Binghamton, New York)

7S These stylized Colombian animals of the 12th-16th Centuries feature a golden jaguar (top) and an anteater (bottom). The other animals. while they suggest a number of familiar forms. are difficult for urban eves to identify with confidence. .

First-City National Bank of Houston (Houston. Texas) Indianapolis Life Insurance Company (Indianapolis. Indiana) Fisher Controls Company (Marshalltown. Iowa) Industrial National Bank of Rhode Island (Prm·idence. Flagship Bank of Jacksom'ille Oacksonville. Florida) Rhode Island) Flagship Bank of Tampa (Tampa. Florida) International Brotherhood of Teamster Chauffeurs. Flagship National Bank of Miami - Trust Department (Miami. Warehousemen and Helpers of America - Defense Fund Florida) (Washington. D.C.) Floyd County Bank (New Albany. Indiana) International Brotherhood of Teamster Chauffeurs. Frank Russell Trust Company (Tacoma. Washington) Warehousemen and Helpers of America - (;eneral Fund Franklin i\-lanagement Corp. (Boston. Massachusetts) (Washington. D.C.) General Electric Pension Trust (Stamford. Connecticut) Im'estment Quality. Inc. (Houston. Texas) General Foods Index Fund/Chase (New York. New York) Investors Bank and Trust Company - Wright Banks (Boston. Genossenschaftliche Zentralbank (Vienna. Austria) Massachusetts) Girozentrale und Bank der ()sterreichischen Sparkassen A(;. Im'estor's Mutual, Inc. C'"linneapolis. Minnesota) (Vienna. Austria) Investors Sclecti"e Fund. Inc. (Minneapolis. Minnesota) Glens Falls National Bank & Trust Company (Glens Falls. Irl\'estors Stock Fund. Inc. (Minneapolis. Minnesota) New York) In"estors Variable Payment Fund. Inc. (Minneapolis. ,'"linnesota) Greenwell (W.) & Company (London. England) Iowa-Des Moines National Bank (Des Moines. Iowa) Guaranty-First Trust Company (Waltham. 'Massachusetts) Irving Trust Company (New York. New York) Gulf Life Insurance Company (Jacksom·ille. Florida) "'est Fund. Inc. (Valley Forge. Pennsyh'ania) Gulfstream Bank. N.A. (Boca Raton. Florida) Kaerntner Sparkassc (Klangenfurt. Austria) Gulfstream Bank. N.A. (Fort Lauderdale. Florida) Kev Trust Company (Albany. New York) Guyerzeller Zurmont Bank AG. (Zurich. Switzerland) Laing & Cruickshank (London. England) Harleysville Insurance Company (Harleysville. Pennsylvania) Landmark First National Bank of Fort Lauderd.ale Hartford National Bank and Trust Company (Hartford. (Fort Lauderdale. Florida) Connecticut) Lawrence Prust & Company (London. England) Hartford Steam Boiler Inspection and Insurance Company Lee County Bank (Fort Myers. Florida) (Hartford. Connecticut) Liberty Life Assurance Company of Roston (Bos(on. Hawaiian Trust Company. Ltd. (Honolulu. Hawaii) Massachusetts) Hazelton National Bank (The) (Hazelton. Pennsylvania) Liberty Life Assurance Company of Boston - Heil & Company (Valley Forge. Pennsylvania) Separate Account 'A' (Boston. Massachusetts) Hentsch & Cie (Geneva. Switzerland) Liberty Life Assurance Company of Boston - Hibernia National Bank (New Orleans. Louisiana) Separate Account 'B' (Boston. Massachusetts) Hill Samuel & Co. Limited (London. England) Liberty Mutual Fire Insurance Company (Boston. Home Savings Bank of Upstate New York (Albany. New York) Massachusetts) Hottinguer & Cie (Paris. France) Liberty National Bank and Trust Company (Buffalo. New York) Houston National Bank (Houston. Texas) Lincoln First Bank. N.A. (Rochester. New York) Howard Bank (The) (Burlington. Vermont) Lincoln National Bank and Trust Companv (Fort Wayne. Huntington National Bank of Columbus (The) (Columbus. Ohio) Indiana) IBM Corp. Equity Investments (Armonk. New York) Liquid Green Trust (Indianapolis. Indiana) IDS Bond Fund. Inc. (Minneapolis. Minnesota) Lloyds Bank California (Los Angeles. California) IDS Discovery Fund. Inc. (I'"linneapolis. Minnesota) Llovds Bank International (France) Limited (Paris. France) IDS Growth Fund. Inc. (Minneapolis. Minnesota) Llo~'ds Bank International Limited (Gene,·a. Switzerland) IDS New Dimensions Fund. Inc. (Minneapolis. Minnesota) LOI;g Island Trust Company (Garden City. New York) IDS Progressive Fund. Inc. (Minneapolis. Minnesota) Long Island Trust Company - Trust Department (Garden City. Idaho Bank & Trust Co. (Pocatello. Idaho) New York) Idaho First National Bank (The) (Boise. Idaho) Long Island Trust Company Customers Accounts (Garden City. Indian Head National Bank of Nashua (Nashua. New York) New Hampshire) Los Angeles County Retirement System (Los Angeles. Indiana National Bank (The) (Indianapolis. Indiana) California)

76 1'\'I&II'\'larshall & Iisiev Bank (1\'lilwaukee. Wisconsin) National Bank of Westchester (Rochester, New York) MGIC Assurance Gen~ral Custody (l'\'lilwaukee. Wisconsin) National Central Bank (Lancaster, Pennsylvania) MGIC Investment Corp. (Milwaukee. Wisconsin) National City Bank-Trust Department (Cleveland, Ohio) Manufacturers Hanover Trust Company (New York. New York) National Trust Company (The) (Fort Myers, Florida) ~"antJfacturers Life InsuralKc Company C)'oronto. Ontario, Nation-Wide Securities Co., Inc. (New York, New York) Canada) New England Trust Company (Providence, Rhode Island) ~lanllfactllrcrs l..ife Insurance Company-Investment New Jersey Bank, N.A. (Paterson, New Jersey) l\hnagement (Toronto. Ontario. Canada) New Jersey National Bank (Trenton. New Jersey) Manufacturers National Bank of Detroit (Detroit. Michigan) New Mexico Educational Retirement Board (Santa Fe, Manufacturers and Traders Trust Company (Buffalo. New York) New Mexico) Marine Bank (Erie. PennsYlvania) New York State Teachers Retirement System (Albany, Marine Midland Bank (N~w York. New York) New York) 1\hrine Trust Company. N.A. (The) (Milwaukee. Wisconsin) New York Venture Fund, Inc. (New York, New York) Marquette National Bank of Minneapolis (The) (Minneapolis. Nomura Securities International, Inc. (New York, New York) 1\·1 innesota) North Carolina National Bank (Charlotte, North Carolina) l\'larvland National Bank (Baltimore. l\-larvland) Northeast Bank & Trust Company (Bangor, Maine) Mar)'land National Bank/Directed (Balti~1Ore. Maryland) Northeastern Bank of Pennsylvania (Scranton, Pennsylvania) Maryland State Retirement Systems (Baltimore, Maryland) Northern Central Bank (Williamsport, Pennsylvania) r-.hssachusetts Capital De"e!opment Fund. Inc. (Boston. Northwestern Bank (The) (North Wilkesboro, North Carolina) Massachusetts) Northwestern Bank of Helena-Commercial (Helena, Montana) Massachusetts Financial Bond Fund, Inc. (Boston, Northwestern Mutual Life Insurance Company (Milwaukee, Massachusetts) Wisconsin) Massachusetts Financial Dn'elopment Fund. Inc. (Boston. Northwestern Mutual Life Insurance Company - Bond Fund Massachusetts) (Milwaukee, Wisconsin) Massachusetts Financial High Income Trust (Boston, Northwestern Mutual Life Insurance Company-Money Market Massachusetts) , Fund (Milwaukee. Wisconsin) Massachusetts Income De,'elopm"nt Fund. Inc. (Boston. Northwestern Mutual Life Insurance Company-Stock Fund Massachusetts) (Milwaukee, Wisconsin) Massachusetts Investors (;rowth Stock Fund. Inc. (Boston, Northwestern National Bank of Minneapolis (Minneapolis, Massachusetts) Minnesota) Massachusetts ;\·Iutual Lift Insurance Company - Equities Oneida National Bank and Trust Company of Central New York (Springfield. Massachusetts) (The) (Utica, New York) McDowell National Bank of Sharon (Sharon. Pennsylvania) Ontario Municipal Employees Retirement Board (Toronto, Mechanics Bank of Richmond (The) (Richmond. California) Ontario. Canada) Mellon Bank. N.A. (Pittsburgh. Pennsylvania) Pacific National Bank of Nantucket (Nantucket, Massachusetts) Mercantile Trust Company. National Association (S1. Louis. Paul Revere Equity Management Company (The) (Greenwich, i\'lissollri) Connecticut) Mercantile-Safe Deposit and Trust Company (Baltimore, Peoples Bank of Lakeland (Lakeland. Florida) Maryland) Peoples Bank & Trust Company (Indianapolis, Indiana) Merchants National Bank (Manchester, New Hampshire) People's Saving' Bank-Bridgeport (Bridgeport, Connecticut) Merchants National Bank of Allentown (The) (Allentown, Pictet & Cie. (Gene"a, Switzerland) Pcnnsv)\'Jni:.l) Pierson. Heldring & Pierson N.V, (Amsterdam, The Netherlands) Mercha'nts National Bank of Bangor (Bangor, Maine) Pilgrim Manage~,eIH Corporation-Magna Cap Fund, Inc. Merchants National Bank of Cedar Rapids (The) - Trust Division (Fort Lee, New Jersey) (Cedar Rapids. Iowa) Pilgrim Management Corporation - Magna Income Trust Merchants National Bank of Terre Haute (Terre Haute, Indiana) (Fort Lee, New Jersey) Merchants National Bank & Trust Company of Indianapolis Pilgrim Management Corporation - Pilgrim Fund, Inc. (Indianapolis. Indiana) (Fort Lee. New Jersey) Merchants National Bank & Trust Company of Indianapolis- Pilot Fund (Houston, Texas) Security Custody Department (Indianapolis, Indiana) Pioneer Bank & Trust Company (Chicago, Illinois) Merchants & Savings Bank (Janesville, Wisconsin) Plymouth I'lome National Bank (Brockto~, Massachusetts) Merck. Finck & Company (Dusseldorf. Germany) Premco-West Coast (Greenwich, Connecticut) Metro Trust Company (Clayton. Missouri) Presidential Life Insurance Company (Nyack. New York) Metropolitan Bank and Trust Company (Tampa. Florida) Protecti,'e Insurance Cnmpany (Indianapolis, Indiana) Migros Bank B,,,el (Basel, Switzerland) Provident Life & Accident Insurance (Chattanooga, --re;;nncssec) l\·Iigros Bank Zurich (Zurich. Switzerland) Prudentiallnsufance Company of America (Newark. New Jersey) Monsanto Savings & Investment Plan (S1. Louis. Missouri) Puhlic Employees Retirement Association of New l\'lexico Monthlv Income' Shares (New York. New York) (Santa Fe, New Mexico) Morgan' (W.L'> Growth Fund, Inc. (Valley Forge, PennsylYania) Purdue National Bank of Lafayette (Lafayette, Indiana) Morgan Guaranty Trust Company of New York (New York, Qualified Di"idend Portfolio I, Inc. (Valley Forge. Pennsylvania) New York) Qualified Di"idend Portfolio II, Inc. (Valley Forge. Mortgage Guaranty Insurance Corp. (Milwaukee, Wisconsin) Pennsylvania) , Mortgage Guaranty Insurance Corp. 1'1'1' Alaska Director of RCM Growth Equity Fund, Inc, (San Francisco, California) Insurance Account (Milwaukee. Wisconsin) Republic Narional Bank of Dallas (Dallas, Texas) Mutual Benefit Life Insurance Company (Newark, New Jersey) Retirement & Family Protection Plan, International Brotherhood Mutual Security Life Insurance Company (Fort Wayne, Indiana) of Teamsters (Washington, D.C.) N S & T Bank, N.A. (Washington, D.C.) Riggs National Bank of Washington, D.C. (The) N S & 'I' Bank, N.AJDirected (Washington, D.C.) (Washington, D.C.) National Bank of Alaska (Anchorage, Alaska) Rothschilcj Bank A.G. (Zurich, Switzerland) National Bank of Commerce (Lincoln, Nebraska) Royal Trust Bank of Miami, N.A. (Miami, Florida) National Bank of Detroit - Bank Investment Di"ision (Detroit, S1. Paul Fire & Marine Insurance Company Option Michigan) Account (S1. Paul, Minnesota) National Bank of Detroit - Trust Investment Department Savings Bank of Central Jersey (Plainfield, New Jersey) (Detroit, Michigan) Schoeller & Co. Bank Aktiengesellschaft (Vienna, Austria) National Bank of Fairfax (The) (Fairfax, Virginia) Schroeder, Munchmeyer, Hengst & Co. (Frankfurt, Germany) National Bank of Georgia (Atlanta, Georgia) Scottish Life Assurance Company (Edinhurgh, Scotland)

77 The golden shark was created in the 14th-15th Century in what was later to become Costa Rica. The gecko, turtlc, crocodile and frog are 11 th-16th Century figures from what was to become Panama. The frog, in particular, was a fertility symbol in southern Central America.

Scottish Pensions Annuity Company Ltd. (Edinburgh, Scotland) Swi" Volksbank, Zurich (Zurich. Switzerland) Seattle Trust & Savings Bank (Seattle, Washington) 'l'c.:i.lchers Insurance & Annuity Association (Ne\\ York. New York) Second National Bank of Richmond (The) (Richmond, Indiana) Teamsters Affiliates Pension Plan (Washington. D.C.) Second National Bank & Trust Company (The> (Lexington, Terre Haute First National Bank (Terre Haute. Indiana) Kentucky) Texas Commerce Bank, N.A. (Houston, Texas) Second National Bank of Warren (The) (Warren, Ohio) Texas Commerce Bank, N.A. - In"estment Management Security Bank, NA (Rillings, !'"lontana) (Houston, Texas) Security Bank and Trust Company (Stroudsburg, Pennsylvania) Third National Bank of Ashland (The) (Ashland. Sccurity First Bank & Trust Company (Grand Ha"en, Kentucky) Michigan) Third Na;ional Bank & Trust Company (The) (Dayton, Ohio) Security First National Bank (Sheboygan, Wisconsin) Third National Bank and Trust Company of Scranton Security Trust Company (Rochester, New York) (Scranton. PennsYlvania) Security-Peoples Trust Company (Eric, Pennsyh'ania) Tompkins Counthssachusetts) Tracy-Collins Bank and Trust Company (Salt Lake City. lJ tah) Shawmut First Bank and Trust Company (Springfield, Treasurer of the State of North Carolina (Raleigh, j\·lassachusetts) North Carolina) Societe Bancaire Barclays (Suisse) S.A. (Geneva, Switzerland) Trust Company Bank (Atlanta; (;eorgia) South Carolina National Bank-Pension Accounts Trust Company of Oklahoma (Tulsa. Oklahoma) (Charleston, South Carolina) Trust Compan,' of the West (Los Angeles. California) South Shore Bank (Quincy, Massachusetts) Trustees' Commingled Equity Fund (Valley Forge, Southeast Banks Trust Company (Miami, Florida) l'cnI1sv!,'ania) SOllthea~[ National Bank of Pcnnsyh'ania ('T'hc) (\Vest Chester. l:nificd' AccllmuLuion Fund. Inc. (Indi3napolis. Imji3na) Pennsyl"ania) Unified Growth Fund. Inc. (Indianapolis, Indiana) Southern Bank and Trust Company «(;reenville, South Carolina) Unified Income Fund, Inc, (Indianapolis, Indiana) Southern Methodist University Endowment Fund (Dallas, L'nified "Iutual Shares, Inc. (Indianapolis, Indiana) Texas) . Union Bank of Switzerland (Basel. Switzerland) Southern National Bank of North Carolina (Lumberton, l' nion Bank of Switzerland (Berne, Switzerland) North Carolina) L' nion Bank of Switzerland (Chiasso, Switzerland) Southern Ohio Bank (Cincinnati, Ohio) Union Bank of Switzerland (Gene"a, S'V1tzcrland) Springer In"estment and Securities Company, Inc. (Indianapolis, L'nion Bank of Switzerland (Lausanne, Switzerland) Indiana) Union Bank of Switzerland (Lugano, Switzerland) State Mutual Life Assurance Company of America (Worcester, Union Bank of Switzerland (Zu;ich, Switzerland) Massachusetts) l' nion Bank and Trust Company of Eastern Pennsyh'ania State National Bank of Connecticut (Bridgeport, Connecticut> (Bethlehem, PennsYlvania) State National Bank of Maysville (The) (MayS\'ille, Kentucky) L'nion National Bank (Lowell, Massachusetts) State Street Bank and Trust Company (Trust Di"ision) L' nion National Bank of Wichita (Wichita, Kansas) (Boston, Massachusetts) Union Trust Company (New I'la,'en, Connecticut) State of Wisconsin Investment Board (Madison, Wisconsin) lJnion Trust Company (Stamford, Connecticut) Stein Roe & Farnham Balanced Fund, Inc. (Chicago, Illinois) United Bank of Denl·er. National Association (Den,'er. Stein Roe & Farnham Stock Fund, Inc. (Chicago, Illinois) Colorado) Stein Roe Special Fund, Inc. (Chicago, Illinois) United Carolina Bank (White"ille, North Carolina) Steinroe Bond Fund, Inc. (Chicago, Illinois) United Farm Bureau Family Life Insurance Company Steinroe Tax-Exempt Bond Fund, Inc. (Chicago, Illinois) (Indianapolis, Indiana) Steinroe Universe Fund, Inc. (Chicago, Illinois) United jersey Bank (Hackensack. New jersey) Strauss Turnhull & Co. (London, England) United Penn Bank (Wilkes-Barre, Pennsyh'ania) Summit and Elizabeth Trust Compan)' (Summit, New jersey) U nitcd States Fire Insurance Company (The) (Morristown, Swiss Bank Corporation-New York Branch (New York, New York) New jersey) Swiss Volksbank, Geneva (Gene"a, Switzerland) United States Trust Company of Boston (Boston, Massachusetts)

78 l' nitcd States Trust Company of New York (New York. New York) Alliance Capitall\'lanagement Corporation (New York. l 'nited Virginia Bank (Richmond. Virginia) New York) l; ni \'crsiry ~)f Pcnnsyh'ania (Philadclp"hia. Pcnnsyhoania) American Asset i\.·lanagcmcnt Co. (New York, Nev,,' York) l'ni,'Crsit\' of Rochester (Rochester. New York) American l\'lanagemen't Enterprises (New York. New York) l'tica National Bank & Trust Company (Tulsa. Oklahoma) American Research & i\.·lan:Jgcmcnt Company (New York, Valley Trust Company (Phoelllx. Arizona) New York) Value Line Fund. Inc. (New York. New York) AmeriTrust Company (CIe,·eland. Ohio) Value Line Income Fund. Inc. (New York. New York) Atalanta Capital Corp. (New York. New York) Value Line Leverage (;rowth Fund. Inc. (New York. New York) Atlanta Capital i'\'lanagement (Atlanta. Georgia) Value Line Special'Situations Fund. Inc. (New York. New York) BA In"estment i'\'lanagement Corporation (San Francisco. Venice Nokomis Bank & Trust Company (Venice. Florida) California) Virginia National Bank (Norfolk. Virginia) BEA Associates. Inc. (New York. New York) Vontobel (j.) and Co. Bankiers (Zuri~h. Switzerland) Basle Securities Corp. (New York. New York) W. (;reenwell & Company (London. England) Batterymarch Financial Management (Haston. i'\'lassachusetts) WaelH"'ia Bank and Trust Company. N.A. (Winston-Salem. Bernstein-i\-lacaula\'. Inc. (New York. New York) North Carolina) Boston Company (;rhe) (Boston. Massachusetts) Washington State Accident Fund (Olympia. Washington) Boston Security Counsellors. Inc. (Boston. Massachusetts) Washington State Accident Reserve Fund (Olympia. Brown Brothers Harriman & Co. (New York. New York & Washington) Los Angeles. California) Washington State Agriculture College Permanent Fund Cannell (Peter B.) & Co .. Inc. (New York. New York) (Olympia. Washington) , Capital Guardian Trust Co. (Los Angeles. California) Washington State Employees Retirement Fund (Olympia. Carnegie Capital Ad"isors (New York. New York) Washington) Century Capital Associates (New York. New York) Washington State Judicial Retirement Fund (Olympia. Chase Investors J\'l:.lIlagcmcnt Corporation New York Washington) (New York. New York) Washington State Law Enforcement Officers and Fire Fighters Fund Chemical Bank (New York. New York) (Olympia. Washington) Citibank. N.A. Investment Advisors (New York. New York) Washington State i\'ledical Aid Fund (Olympia. Washington) Cole. Yeager & Wood. Inc. (New York. New York) Washington State Normal School Permanent Fund (Olympia. Colonial Management Associates. Inc. (Boston. Massachusetts) Washington) Connecticut (;eneral Investment Management Company Washlllgton State Patrol Retirement Fund (Olympia. (Hartford. Connecticut) Washington) Connecticut Mutual Life Insurance Company (Hartford. Washington State Permanent Common School Fund (Olympia. ConnecticlIt) Washington) Cumberland Advisors. Pty. (Vineland. New Jersey) Washington State Scientific School Permanent Fund (Olympia. Delaware Investment Advisors. Inc. (Philadelphia, Pennsylvania) Washington) Drexel. Burnham. Lambert Investment Advisors (New York. Washington State Teachers Pension Rese"'e Fund (Olympia. New York) Washington) Eagle Management and Trust Company (Houston. Texas) Washington State Teachers Pension Rese"'e Fund/612 Endowment Management & Research Corporation (Boston, (Ol\'mj,ia. Washington) Massachusetts) Washington State Teachers Pension Rese,,'e Fund/61.'I Equitable Life Assurance Society of the United (Olympia. Washington) States (New York. New York) Washington State Teachers I{etirement Fund (Ol\'mpia. FMR Investment Management Sen·ices. Inc. (Boston. Washington) Massachusetts) Washington State l 'ni,'Crsity Permanent Fund (Olympia. Fidelity Bank (Thel (Philadelphia. Pennsylvania) Washington) Fiduciary Trust Company of New York (New York. New York) Washington State Volunteer Fireman's Relief and Pension Fund Financial Trust Company (Englewood. Colorado) (Olymj,ia. Washington) First City National Bank of Houston (Houston. Texas) Wellesley Income Fund. Inc. (Valley Forge. Pennsyh'ania) First Interstate Bank of Oregon. N.A. (Portland. Oregon) Wellington Fund. Inc. (Valley Forge. Pennsylvania) First Trust Company of Saint Paul (St. Paul. 1'\'linnesota) Wells Fargo Bank. National Association (San Francisco. California) First Wisconsin Trust Company (Milwaukee. Wisconsin) Wells Fargo Institutional Trust - Directed (San Francisco. Forstmann-Lcff Associates (New York. New York) California) Fourth National Bank & Trust Company of Wichita \Vells Fargo Personal 'rrllst - Directed (San Francisco, C;llifornia) (Wichita. Kansas) Westfalenhank Aktiengesellschaft (Bochum. West Germany) Funds. Inc. (Houston. Texas) Westminster Bond Fund. Inc. (Valley Forge. Pennsyh'ania) General American Investors Company, Inc. (New York. \Vesrminsrcr High Yield Fund. Inc. (V:lllcy Forge. New York) Pennsyl"ania) General Electric Co. Trust Investment Operation Westport Bank & Trust Co. (Thel (Westport. Connecticut) (Stamford. Connecticut) Wholesale Door. Inc. - Profit Share Trust (Greenwich. [;Iickenhaus & Cu. Investment Managers (New York. ConnecticlIt) New York) Wilber National Bank (Oneonta. New York) Grantham. Mayo. Van Oterloo & Co .. Inc. Windsor Fund. Inc. (Valley Forge. Pennsyh'ania) (Boston. Massachusetts) Winters National Bank and Trust Company (Dayton. Ohio) Heritage Capital Management (Salem. Massachusetts) Worcester Count\' National Bank (Worcester. i\'lassachusetts) I'lutton Asset Management (New York. New York) Zentralsparkasse ;Ind Kommerzbank Wien (Vienna. Austria) IDS Advisory. Inc. (I'\'linneapolis. Minnesota) Investment Ad,·isors. Inc. (Minneapolis. Minnesota) John Hancock Advisors. Inc. (Boston. MassachusettS) Investment Managers Participating Fully in John Hancock Mutual Life Insurance Company the Institutional Delivery (ID) (Boston. Massachusetts) System (103t§) Kemper Financial Services. Inc. (Chicago. Illinois) Lehman Management Co .. Inc. (New York. New York) Aetna Life & Casualt\' Co. (Thel (Hartford. Connecticut) Lipton (Thomas j.) Inc. (Englewood. New Jersey) Alger (Fred) l\·lanage~,ent.lnc. (New York. New York) Allendale Mutual Life Insurance Company (Johnston. Rhode As of Decemhcr 31. 1981 Island) Includes only those which have given permission for use of their names.

79 This figurine \'essel was fashioned of gold on the Tiahuanaco Coast, Peru, between the 10th and 13th Centuries. A bird on the manikin's left shoulder is not \'isible from the angle of this drawing, but the monkey on its back suggests a timeliness all too familiar to modern viewers.

Back cover: When King David first glimpst:d Bathsht:ba bathing, he st:t in motion a train of e\'ents which led to the sct:ne depicted on the front CO\'er of this report. This Norman panel stamping in leather shows the moment when his lust was born; it was part of the CO\'er for the Royal Ordinances of Normandy, published circa 1519. Though the cover is signed Jehan des Jore, it is copied from .1 metalcut that appeared in Pigouchet's Book of Hours between 1496 and 1502.

Lord. Abbett & Co. (Ncw York. New York) Stcrling ;,\-lanagemcnt Company (Charlottc. North Carolina) Manufacturers Hanoyer Trust Company (New York. New York) Texas Commerce Bank. N.A. (Houston. Texas) ;"'Iassachusetts Financial Services Company (Boston. Thorndike. Doran. Paine & Lcwis (Boston. \lassachusetts) Massachusetts) Thorson. Brown. Inc. «('reenwich. Connecticut) Massadlllsetts 1'"lutual Life Insurancc Company (Springfield. Traincr. Wortham & Co .. Inc. (New York. New York) Massachusetts) Trust Compan\' of the West (Los Angeles, California) l\kCowan Associates. Inc. (New York, New York) l '.S. Fidelity & (,uaranty Corp. (Baltimore. Maryland) Mellon Bank. N.A. (Pittsburgh. I'ennsyh'ania) l'nited Statcs National Bank of Orcgon (Portland. Oregon) Mercantile Trust Company National Association (St. Louis, Wall. Panerson. i\kGrcw & Hamilton. Inc. (Atlanta. Georgia) Missouri) Wciss. Peck & Greer (Chicago. Illinois & New York. . Merrill Lynch Assct Management (New York. Ncw York) New York) . Mitchell In\'cstmcnt Management Co. (Cambridge. Whcat Advisor\'. Inc. (Richmond. Virginia) Massachusetts) Wright hwesto;s Service (Bridgcport. 'Connccticut) Montag & Caldwell, Inc. (Atlanta. (,eorgia) Morgan Guaranty Trust Company of New York· Trust &

IIl\'c~tlllent of International 'Tradc (New York. New York) Irl'{; i~ ilH.klHCd to rhe follc)\\'mg illdl\'idual.., :llld ()rg:llli/.aril1tl:- for much ()f Morgan Stanley Asset Managemcnt (New York. New York) the material that appc~lr:-. in dw~ Annual Hcport. Mutual Benefit Life Financial Services Company (Newark. New Jersey) :\n Director: ~l:iri() i\k .... ~ina. Linc J)r:I\\,lng~. ~likhad Ivclli[~kv & \b:\im Iq~ni[:,ky. :\cw York City. Engra\'ing of the dic:-. for £lH: 1'00'cr;: EU.f,!;cnc National Invcstmclu Ser\'ices of Amcrica, Inc. (i\:tilw<-1ukee, Proh:l~kc. Srylcan Engraving Co .. i\'C\\' York City. SUillplIlg :lIlJ Wisconsin) cll1h()~~lIlg of cO\'Cr~: Llrry Fi ... chcr. Fi .... chcr-I\mclow.lnc. New 'fork Neuberger & Bcrman Pension Management, Inc. (New York. City, DTC Ph()rogr.lph~: Joyce Fay. !':ew York Ciry New York) Noddings, Calamos & Associates. Inc. (Chicago. Illinois) :\dminj~[rari\"e (:oordinarlon: Su~an (:h:l~c, 'I'ypo~raphy: ()wi~hr Di:-..on. Oppenheimer Capital Corporation (New York. New York) 1}:lul \'an :-\n{\n:rp, ~lcchallical An: I':H ~llIh'ancy. ~11Ilo HirolllurJ, Pacific Inyestment Management Company (Newport Beach. Elcall()r ~ ylc. Jakr:1r:1t \·ccr:I .... arn. ArnalHhi 1-lul1lphrey. Fmal Ilroofing :Ind California) Admilli~{r:Hi\·e :\... ~i"'(:lIlcc: l>aniel Farrell. Bonney I\.ollllljian, ~Iichelc Sakedo. H i~rorical }{c~cardl: Catherine Telllcr~on. Primed hy Ra1t:igh Parmelee Managcment Corporation (New York. New York) I.irhograph Corpor:nion. i\:ew York City. Bound by Prinll.:r~ Bindery. Pilgrim Management Corporation (Fort Lee. Ncw Jcrscy) i\ew York (:ity. (:O\'cr Srock hy \Vhirman ProdUCb I ,rd" \V c~t \Varwick. Pricc ('I'. Rowe) Associates. Inc. (Baltimore. Mar\,land) Rhode bland, Special thank~ to: Dr. Robert S. Ihanchi. A ... ~oci:lre Curator. Putnam Advisory Company, Inc. (The) (Boston, \'lassachusetts) Dep:utment of Egyprian and Cla~!'>ical Art. The Brooklyn ~Iu~eum: Reimer & Koger Associates, Inc. (Shawnee Mission, Kansas) Torkolll Demirjian, Ariadne Galleric~: and ~Illrry Abr:lIlb, Alan \\"onh and Rockefeller &: Co., Inc. (New York, New York) the m~lIly people ~H DTC who contrihuted their time and effort to emllrin~ the :ICCur:K'y of this report. Rosenberg Capital Management (San Francisco, California)

Rothschild Co. (Thc) (Baltimore, Mar\,land) Source ... of illu~[ration~: (;OLD by Johanll \Vilbherger. Doubleday & Roulston & Company, Inc. (Cleveland: Ohio) (:ol11pany. Inc .. I 'iii, (pp. 1.2.4.12.14. J(,.I 9.20.22.2.i.26 . .l'i.40.42.45. Sass (M.D.) hwestors Sen'ices, Inc. (New York. New York) 6IN,,i4,ii>.7H.SO): r;REAT TREASl'RES OF THE "RE~IL1i' hy Scudder, Stevcns & Clark (Los Angeles. California. Ncw York. Dal'id Dougla, Duncan. Ahhenlle Pre;;. 1979 (pp. 6.S): ITA I.lAi' New York & San Francisco, Calif<~rnia) JEWELED ARTS hy Filippo Ro;si. I larry i'. Ahral11'. Inc .. 1954 (pp. Standish, Ayer & Wood. Inc. (Boston. Massachusetts) 28 . .10 ..H ..)(, ..lH.64/,8.70.72): TWEI. VE CEi'TL'RIES OF BOO"Bli'DIi'GS: 400·1600 hy Paul i'ccdl"'l11. The Pierpont ~lorgan Starwood Management Corporation (New York. New York) Lihrary. Oxford l'ni\'er~i(y Pre~~. t 1J7() (front & rear cO\·er~. pp, 1 1. 33. State Street Research & Management Company (Boston. 5:;. 62): DTC phorogr:.lplh (pp, --Ill-52>. Massachusctts)

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