National Securities Clearing Corporation

Annual Report 1987 Contents

Financial ChartS ...... 1 To Our Participants ...... 3 Financial Review ...... 5 Participating Organizations ...... 12 NSCC ...... 16 ISCC Board of Directors...... 19 GSCC Interim Board of Directors ...... 20 Financial Charts

PART ICIPATION

Fund/SERV Participants - Municipal Comparison Only - Full Service Participants - 750 600 450 300 150 0 77 78 79 80 81 82 83 84 85 86 87

AVERAGE DAlLY VOLUME Of T~'1SACTIONS PROCESSED (/n thousands)

Municipal Bonds & Orhers

OTC Srocks & Bonds - NYSE&Amex - 500 400 300 200 100 0 77 78 79 80 81 82 83 84 85 86 87

AVERAGE COST PER TRANSACTION (In dd/ars)

Orher Cosrs - Clearance Serrlement - Trade Processi ng - 1.0 0.8 0.6 0.4 0.2 0 77 78 79 80 81 82 83 84 85 87

AVERAGE DAlLY VALUE OF TRANSACTIONS SETTLED (/n billiollJ)

Balance Order & Other - Continuous et Serrlement (CNS) - 20 16 12 8 4 0 77 78 79 80 81 82 83 84 85 86 87 I

To Our Part C pants

The high volume and volatility that charac- Nineteen eighty-seven truly proved to be a challenge for NSCC and the securities industry with generally rising markets, high volumes and volatility capped by the terized the marketplaces in 1987 chal- unprecedented events in October. NSCC's processing volume in mid-October peaked at l. 7 million sides on October 20, nearly triple the daily average and lenged NSCC's systems to perform far almost double the highest previous single day. The foresight of those in the in­ dustry who encouraged and supported NSCC's programs for expanding capacity beyond what was anticipated. NSCC's and levels proved invaluable. The vast array of systems functioned quite well; however, the period caused NSCC to recognize that change of significant proportions lay SIAC's programs for expanding capacity ahead. In spite of lower volumes, restructuring and Cost-cutting programs throughout the broker/dealer community, NSCC must continue to be well pre­ levels proved invaluable and enabled the pared to handle peak volume periods. Many of us thought we had learned much about risk over the years, and that we vast array of systems to function quite well had done a good job of dealing with it. While events such as those that occurred in October had been chronicled before, few in the industry fully anticipated the given the stress of several consecutive far-reaching effects of such events. Those events have presented the industry and NSCC with an opportunity to forge change in systems and procedures which will days in which over 1.5 million sides increase efficiency and capacity and give us a better understanding of risk. Various industry committees have been established to provide the forum for processed. change where necessary. We are pleased to be a part of that self-regulatory process and are working closely with the NYSE, Amex, NASD and member firms toward improving the post-trade process. The interdependency among participants in the financial services industry was strongly reinforced and was more pronounced than ever in mid-October. Globalization of the markets for financial services was never more in evidence than in 1987. Our efforts have taught us much and have increased our under­ standing of the international clearance and settlement processes. However, much is to be done to resolve many of the issues resident in the less-than-efficient pro­ cesses which exist today. Consequently, we will pursue a course that will enable our markets and broker/dealers to process their transactions more efficiently. An annual letter would be remiss if it did not mention many of the accomplish­ ments of the past year and recognize the systems and services developed to meet the industry'S processing needs. In early 1987, NSCC established two new sub-accounts within the Continuous Net Settlement (CNS) System to allow the processing of securities undergoing corporate reorganizations. Initially limited to processing mandatory reorganizations, by June, participants were able to process voluntary tender and exchange offers as well. At year end, NSCC had processed 898 mandatory and 25 voluntary offers. Participants worked closely with NSCC in implementing the Reconfirmation and Pricing Service (RECAPS), a new service designed to help participants recon­ firm aged fails. Offered on a periodic basis, participants can submit equity, mu­ nicipal bond and zero coupon fails for comparison and settlement. Over 5,321 fails were compared in 1987 with a value of over $221 million. The Municipal Bond System was expanded through a pilot program for settling when-issued trades of book-entry only municipals through CNS. After reviewing I To Our Part c pants

In addition to achieving new processing the results of the initial pilot program, which showed that netting reduced the number of book-entry movements by 78%, NSCC expanded the pilot in 1988 records, NSee continued to respond to the to allow compared trades of all DTC book-entry only issues to settle in CNS. The interface between NSCC's Automated Customer Account Transfer (ACAT) industry's domestic and international Service and The Options Clearing Corporation (OCC) became fully operational in 1987 enabling participants of NSCC and OCC to transfer their options positions needs by implementing several new ser- through ACATs. NSCC also made the service available to participants of regional clearing corporations in 1987 through its Regional Interface Operation (RIO). vices, enhancing existing systems and FundlSERV, NSCC's mutual fund processing system, saw continued growth with 23 broker/dealers and 13 fund groups joining the system. NSCC received a supporting the work of its subsidiaries, record mutual fund settlement of $708 million in March, and order processing reached a record high on April 15 when 18,567 confirmed orders were processed. Isee and GSee. While NSCC implemented several system enhancements in 1987, perhaps the most significant development was NSCC's work with participants and The Invest­ ment Company Institute on the development of a networking system to allow the continuous flow of non-trade information between broker/dealers and funds. Membership continued to grow in 1987 when 32 brokerage firms, representing 90% of the Pacific Stock Exchange's trading volume, joined NSCC in August following the Exchange's decision to discontinue its clearing and depository opera­ tions. In September, 29 Specialist Firms representing 74 separate posts on the Pacific Stock Exchange made a smooth conversion to NSCC. To accommodate these new participants, NSCC opened its 13th full-service facility in Seattle in August. In 1987, NSCC continued its role in the development of services for new and growing markets. ISCC worked closely with The International Stock Exchange in London on the development and operational testing of the London-to-New York clearing link. In addition, ISCC pursued discussions with Singapore's Central Depository (Pte.) Ltd., Cedel and Japan Securities Clearing Corporation regarding clearing and custody links. GSCC completed several netting tests and installed the comparison software at several pilot firms with the goal of providing compari­ son and netting services to the government securities industry by the end of 1988. We are proud of our accomplishments and thankful to the many who have given their leadership, wisdom and support to us. We are especially grateful to the staff at NSCC and SIAC who are responsible for these accomplishments. The strong infrastructure of the industry served the markets well last year, particularly in October, and has given NSCC the confidence to continue its commitment to serve the industry through innovative system developments and services.

Raymond). Kalinowski President and Chief Executive Officer Chairman of the Board I F nancial Rev ew

Consolidated Balance Sheet ...... 6 Consolidated Statement of Income and Retained Earnings ...... 7 Consolidated Statement of Cash Flows ...... 8 Notes to Consolidated Financial Statements ...... 9 Report of Independent Accountants ...... 11 Consol dated Balance Sheet Nattonal Securities Clearing Corporation

December 31, (in thousands) 1987 1986 ASSETS Current Assets: Cash and cash equivalents $ 28,628 $ 9,086 Temporary investments at cost (approximates market) 108,996 119,750 Accounts receivable, net 5,767 5,066 Settlement accounts receivable 4,746 5,576 Other current assets 1,318 763 Total current assets 149,455 140,241 Clearing Fund 244,669 288,202 Fixed assets, less accumulated depreciation of $1,553 and $1,180 at December 31, 1987 and 1986 1,286 1,254 Deposits and other noncurrent assets 7,490 3,2l7 Total assets $402,900 $432,914

LIABILITIES AND SHA'REHOLDERS' EQUITY Current Liabilities: Accounts payable $ 7,440 $ 7,212 Settlement accounts payable 44,574 60,674 Accrued taxes and other expenses 6,967 3,976 Total current liabilities 58,981 7l,862 Clearing Fund: Participants' cash deposits 85,312 60,800 Balance of requirement 244,669 288,202 329,981 349,002 Notes payable 3,250 3,250 Commitments and Contingent Liabilities (See Note 5) Shareholders' Equity: Common stock authorized, issued and outstanding; 30,000 shares of $. 50 par value 15 15 Capital in excess of par 885 885 Retained earnings 9,788 7,900 10,688 8,800 Total liabilities and shareholders' equity $402,900 $432,914

The accompanying Notes to Consolidated Financial Statemems are an imegral part of this staremem.

I Consolidated Statement o f Income and Retained Earnings National Securities Clearing Corporation

For the year ended December 31, ( in thousands) 1987 1986 Revenue from clearing services $72,335 $62,316 Interest income 3,990 3,088 Total revenues 76,325 65,404 Expenses: Securities Industry Automation Corporation processing expenses 39,761 34,184 Regional facility fees 1,674 1,640 The Depository Trust Company fees 15,464 11,356 General and administrative 16,241 11,768 Total expenses 73,140 58,948 Income before income taxes 3,185 6,456 Provision for income taxes 1,297 3,056 Net income 1,888 3,400 Retained earnings, beginning of the year 7,900 4,500 Retained earnings, end of the year $ 9,788 $ 7,900

The accompanying Notes to Consolidated Financial Statements are an integral parr of this statement.

I Consol dated Statement of Cash Flows National SIX"rities Clearing Corporation

For the year ended December 31, ( in thollJands) 1987 1986 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash Flows from Operating Activities: Cash settlement received from participants $296,837,283 $234,880,926 Cash settlement paid to participants (296,852,535) (234,868,738) Clearing Fund cash received from participants 49,165 30,003 Clearing Fund cash refunded to participants (24,653) (13,155) Cash received from billings to participants 71,633 61,539 Cash paid to processing agents (54,689) (44,330) Cash paid to suppliers and employees (14,735) (11,644) Interest received 10,542 7,339 Interest remitted to participants (4,792) (3,948) Income taxes paid (4,103) (2,277) Cash rental concession received 1,203 Net cash provided by operating activities 14,319 35,715 Cash Flows from Investing Activities: Purchases of temporary investments (186,624) (229,248) Sales and redemptions of temporary investments 193,903 197,067 Purchases of software and fixed assets (2,056) (210) Net cash provided (used) by investing activities 5,223 (32,391) Cash Flows /rom Financing Activities: Proceeds from issuance of long-term debt 3,250 Net cash provided by financing activities 3,250 Net increase in cash and cash equivalents 19,542 6,574 Cash and cash equivalents at beginning of year 9,086 2,512 Cash and cash equivalents at end of year $ 28,628 $ 9,086

RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net income $ 1,888 $ 3,400 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and amortization 374 409 Increase in accrued interest receivable (262) (374) Amortization of premiums 2,022 677 Increase in accounts receivable (701) (777) Decrease in settlement accounts receivable 830 3,476 Increase in other current assets (555) (409) Increase in deferred taxes receivable (908) Increase in accounts payable 228 2,182 (Decrease) increase in settlement accounts payable (16,100) 8,712 Increase in accrued taxes and other expenses 2,991 1,571 Increase in Clearing Fund cash deposits 24,512 16,848 Net cash provided by operating activities $ 14,319 $ 35,715

The accompanying Notes to Consolidated Financial Statements are an Integral part of this statement.

II Notes to Consol dated F nan c al Statements National Semrities Clearing Corporation

NOTE 1 ORGANIZATION AND OPERATIONS: between the Company and participants and other registered clearing National Securities Clearing Corporation (NSCC - the Company), a agencies. The narure of the Company's business involves significant clearing agency registered with the Securities and Exchange Commis­ money transfers on a daily basis, certain of which are executed via sion (SEC), provides various services to the financial community, Federal Funds and given effect in the financial statements on the basis consisting principally of trade comparison, clearance and settlement. of one-day earlier Clearing House Funds. The Company's common stock is owned equally by the New York (e) Notes payable: Notes payable consist of $3, 250,000 of ten-year Stock Exchange, Inc. (NYSE), American Stock Exchange, Inc. Notes due June 15, 1996. The 9% per annum stated interest rate is (Amex) and the National Association of Securities Dealers, Inc. being amortized over a ten-year period resulting in an annual effective (NASD). The Company is controlled by an independent user rate of 8.1 %; the first interest payment is due June 15, 1988. De­ Board of Directors which is responsible for its policies, operations ferred interest payable, which is included in accrued taxes and other and financing. expenses, amounted to $406,000 and $143,000 at December 31, The Company is the sole shareholder of International Securities 1987 and 1986, respectively. Clearing Corporation (ISCC), which was established in late 1985 to (f) Income taxes: The Company and its wholly owned subsidiaries file support U.S. brokers, dealers and through bilateral linkages consolidated Federal, New York State and City income tax returns. with central clearing and depository organizations in other countries. The difference between the 40.7% effective tax rate for the year The Company is also currently the sole shareholder of Government ended December 31, 1987 (47.3% for the year ended December 31, Securities Clearing Corporation (GSCC), which was formed to pro­ 1986) and the 40.0% federal statutory tax rate (46.0% for the year vide automated comparison and netting services to brokers, dealers ended December 31, 1986) is primarily attributable to state and and banks trading in U.S. Government securities. GSCC operations local taxes. are currently being conducted on a pilot basis with certain selected (g) Statement of cash flows: In 1987, the Company adopted State­ participants, with the expectation of commencing operations in 1988 ment of Financial Accounting Standards No. 95, "Statement of for qualified organizations. The Company also plans to offer to sell Cash Flows," which calls for the presentation of a statement of cash approximately 80% of its ownership interest in GSCC during the flows in place of a statement of changes in financial position. The course of 1988. 1986 consolidated financial statements have been restated for The Board of Directors of the Company determines any additions comparative purposes. to retained earnings it wishes to establish in a given year, having NOTE 3 CLEARING FUND: due regard to current and anticipated needs. The Company does not The rules of the Company require certain participants to maintain plan to declare dividends to shareholders, but has provided rebates on minimum Clearing Fund deposits based on calculated requirements. its billings to participants of $lO,398,000 and $6,121,000 in 1987 The consolidated Clearing Fund balance includes the NSCC and and 1986, respectively. Revenue from clearing services is shown ISCC Clearing Funds, which are available to secure respective partici­ net of such rebates. pant obligations and certain liabilities of NSCC and ISCC, should NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: they occur. Aggregate Clearing Fund amounts at December 31, 1987, (a) Principles of consolidation: The consolidated financial statements of $329,981,000 ($349,002,000 at December 31, 1986) were met include the accounts of the Company and its wholly owned subsidi­ by deposits of $85 ,312,000 in cash, $59,881,000 in market value of aries. All significant intercompany accounts and transacrions are securities issued or guaranteed by the U.S. Government, its states eliminated in consolidation. and their political subdivisions, and $318,902,000 in Letters of Credit (b) Cash and cash equivalents: The Company expanded its invest­ issued by authorized banks; comparative amounts at December 31, ment policy in 1987 to include the use of overnight repurchase agree­ 1986 were $60,800,000, $53,045,000 and $275,595,000, respectively. ments. Such agreements provide for the delivery versus payment of NOTE 4 TRANSACTIONS WITH RELATED PARTIES: the underlying collateral of lO2% to an independent custodian desig­ NSCC collects regulatory fees on behalf ofNYSE, Amex and NASD. nated by the Company. Investments under repurchase agreements At December 31, 1987, amounts collected and not yet remitted were amounted to $25,000,000 at December 31, 1987. $1,707,000 due to NYSE and $173,000 due to NASD. At Decem­ (r) Temporary investments: Temporary investments consist of U.S. ber 31, 1986, amounts due to NYSE were $1,717,000 and amounts Treasury securities maturing primarily in less than one year, and are due to NASD were $145,000. carried at cost adjusted for amortization of premiums and accretion of Under the terms of an agreement, the Securities Industry Automa­ discounts. At December 31,1987, $29,972,000 of such investments tion Corporation (SIAC), an entity owned by NYSE and Amex, were held in an account for the exclusive benefit of participants to facilitate participants' compliance with the c~stomer segregation rules of the SEC ($50,986,000 at December 31, 1986). (d) Settlement accounts: Settlement accounts receivable and payable generally arise from one-day time lags in the cash settlement process I Notes to Consol dated F nan c al Statements N ationa! S{writtes Ctearing CorporatIOn

provides facilities, personnel and services in support of the Company's puter equipment leases in the amount of $5,964,000 at December operations. SIAC charges NSCC for these services based on its direct, 31, 1987. This contingent liability under the current agreement computer and overhead costs arising from providing such services. decreases to zero in 1991. The agreement has no expiration date and continues in effect unless Additionally, in connection with SIACs contemplated establish­ notice of cancellation is given by either party. ment of a dual processing site, the Company has entered into an Prior to May 1, 1987, the Company rented certain office space agreement indemnifying NYSE, the guarantor, for NSCCs propor­ from SIAC. Rental payments amounted to $203,000 and $602,000 tionate share of proposed long-term lease obligations. The terms, in 1987 and 1986, respectively. Effective May 1, 1987, the Company conditions and amounts of the leases have not yet been finalized. entered into a lease agreement directly with the landlord and subse­ At December 31, 1987, future minimum annual rental payments quently sublet a portion of the space to SIAC. Rental reimbursements under all noncancellable operating leases through 1992 amounted to amounted to $1,016,000 in 1987. $13,299,000, payable in amounts decreasing from $2,804,000 in NYSE, Amex and NASD own minority interests in The Deposi­ 1988 to $2,607,000 in 1992. Rental expense amounted to tory Trust Company (DTC), whose facilities are used by the Com­ $1,463,000 and $939,000, which is net of rental reimbursements of pany. DTC fees included $11,547,000 and $7,830,000, net of $1,145,000 and $10,000 in 1987 and 1986, respectively. rebates, in 1987 and 1986, respectively, relating to charges for NSCC NOTE 6 PENSION PLAN: participants which the Company sponsors at DTC. NSCC passes The Company has a trusteed noncontributory pension plan. Benefits through these charges to the sponsored participants. In addition, the under this plan are generally based on employees' years of service and Company rents certain office space from DTC. Rental payments compensation during the years immediately preceding retirement. In amounted to $651,000 in 1987 ($45,000 in 1986). 1987, the Company adopted Statement of Financial Accounting Amounts payable at December 31, 1987, to SIAC and DTC were Standards No. 87, "Employers' Accounting for Pensions." Pension $4,173,000 and $908,000, respectively ($3,768,000 and $778,000 cost for 1987 is summarized as follows: at December 31, 1986).

NOTE 5 COMMITMENTS AND CONTINGENT LIABILITIES: Service cost $ 295,256 On May 1, 1987, NSCC advanced the time at which its guarantee of Interest cost 176,494 Continuous Net Settlement (CNS) trades is effective. As a result, Actual return on investment (154,054) CNS transactions are guaranteed as of midnight on the day they are Amortization of transitional liability 57,146 reported as compared, or recorded in the case of trades entering CNS Total pension cost $ 374,842 from automated execution systems. Such transactions had previously The funded status of the defined benefit plan covering employees at been guaranteed on the day prior to settlement date. The basis upon December 31, 1987, was as follows: which participants' Clearing Fund requirements are calculated was correspondingly modified to compensate for changes in perceived Actuarial present value of benefit obligations: risk patterns. Vested benefit obligation $ (829,548) The failure of participants to deliver securities to the Company on Nonvested benefit obligation (145,338) settlement day, and the corresponding failure of the Company to Accumulated benefit obligation (974,886) redeliver such securities, results in open positions. Open positions are Effect of salary projections (1,206,240) marked-to-the-market daily, and such marks are debited or credited Projected benefit obligation (2,181,126) through the settlement process to participants involved. At the close Fair value of plan assets 1,823,521 of business on December 31, 1987, open positions due the Company Plan assets less than projected benefit obligation (357,605) approximated $727,000,000 ($963,000,000 at December 31, 1986), Unrecognized net gain (505,560) and the amounts due from the Company approximated $539,000,000 Unrecognized transitional liability 488,323 ($626,000,000 at December 31, 1986) for unsettled positions and Accrued pension cost $ (374,842) $188,000,000 ($337,000,000 at December 31, 1986) for securities The expected rate of return on plan assets was 8%. The discount rate borrowed through the Company's Stock Borrow Program. and rate of increase in future compensation levels used in determin­ In connection with an agreement ISCC has with The International ing the actuarial present value of accumulated benefit obligations at Stock Exchange (ISE) in London, ISCC guarantees the settlement December 31, 1987, were 9% and 8%, respectively. obligations of its members at ISE. ISCCs members collateralize such obligations by depositing Clearing Fund amounts with ISCC as required pursuant to the ISCC Member's Agreement. Under the terms of the agreement with SIAC noted above, the Company is contingently liable in the event of cancellation for com- I Report of Independent Accountants National SecuritIes Clearing Corporation

, 53 East 53rd Street Price JfUterhouse New York. NY 10022

February 29, 1988

To the Board of Directors and Shareholders of National Securities Clearing Corporation

In our opinion, the accompanying consolidated balance sheet and the principles consistently applied. Our examinations of these statements related consolidated statements of income and retained earnings and were made in accordance with generally accepted auditing standards of cash flows present fairly the financial position of National Securities and accordingly included such tests of the accounting records and Clearing Corporation and its subsidiaries at December 31, 1987 and such other auditing procedures as we considered necessary in the 1986, and the results of their operations and their cash flows for the circumstances. years then ended, in conformity with generally accepted accounting

II Par tic i pat i n 9 0 r 9 ani z a t ion S (as of December 1987~

ABD Securities Corporation Blackmore & Co., Inc. Campbell, Waterman, Inc. CitibanklIFI Custody Adams, Harkness & Hill, Inc. Charles M. Blair & Co., Inc. Canadian Depository for Securities Citibank, N.A. Adler, Coleman & Co., Inc. William Blair & Company Limited Simmons First National Advest, Inc. Blinder, Robinson & Co., Inc. Andras Research Capital Inc. Citibank - Private Banking Division Agora Securities, Inc. Bocklett & Co. Alfred Bunting & Company Ltd. Coast Options Inc. J. Alexander Securities, Inc. Boston Stock Exchange Clearing Corp. Burns Fry Limited Common Back Office Inc. Fred Alger & Company Incorporated Bodell Overcash Anderson & Co. , Connor, Clark & Company Ltd. Conklin, Cahill & Co. Allen & Company Incorporated Inc. Darier Canada Inc. The Connecticut Bank and Trust Alpine Associates Buell Securities Corp. Davidson Parrners Limited Company, N.A.lMunicipal Bond Amalgamated Bank of New York Cantella & Co. (Retail) Deacon, Morgan, McEwen, Dealer Department American Securities Corporation Robert C. Carr & Co., Inc. Easson Limited The Connecticut Bank and Trust, N. A. American Stock Exchange Clearing Clayton, Polleys & Co. Dean Witter Reynolds (Canada) Inc. Coughlin & Co., Inc. . Corporation Datek Securities Corp. Deragon Langlois Ltd. County Securities Corporation USA Arnhold and S. Bleichroeder, Inc. Diamant Investment Corp. Disnat Investment Inc. Cowen &Co. Asie1 & Co. F. W. Doyle & Co. Dominick & Dominick Craig-Hallum, Inc. BHF Securities Corporation Gage-Wiley & Co., Inc. Securities Inc. Craigie Incorporated B & S Financial Services Inc. Gowell Securities Corporation Dominion Securities Pitfie1d Lmited Cresvale International, Inc. BT Brokerage Corporation (Retail) First Canada Securities Corporation Crowell, Weedon & Co. Julius Baer Securities Inc. Instant Funds Incorporated First Marathon Securities Limited Custodial Trust Company (affiliate of B;ird, Patrick & Co., Inc. Investors Discount Corporation Gardiner Group Stockbrokers Inc. Bear, Stearns & Co., Inc.) Robert W. & Co., Incorporated Kimball & Cross Geoffrion, Leclerc & Co. Ltd. DLJ Fixed-Income Bank of Montreal , New York Branch Linsco Corp. Geoffrion, Leclerc Inc. Dain Bosworth Incorporated The Bank of New York Merrimack Valley Investment Inc. Gordon Capital Corporation Daiwa Securities America Inc. The Bank of New York - Brokers H.M. Payson & Co. Guardian Trust Company Daugherty, Cole Inc. Clearance Shelter Rock Securities Corp. Lafferty, Harwood & Partners Ltd. Davenport & Co. of , Inc. Bankers Trust Broker Clearing Unit Sunrise Capital Corporation Levesque, Beaubien Inc. D.A. Davidson & Co. Inc. Bankers Trust - Clearance Trusteed Funds, Inc. Loewen, Ondaatje, McCutcheon & Shelby Cullom Davis & Company Bankers Trust Company Arthur W. Wood Company Company, Ltd. Dean Witter Reynolds Inc. Adams, McEntee & Company Boston Stock Exchange Specialist MacDougall, MacDougall & deCordova, Cooper & Co. BGK Securities Co. Account MacTier Ltd. Deltec Securities CorPoration Buchanan & Co., Inc. ABD Securities Corp. McCarthy Securities Limited The Depository Trust Company Cantor, Fitzgerald & Co., Inc. - BHF Securities Corp. Mcleod Young Weir Limited The First National Bank of Retail Dealer Blodgett & Co., Inc. McNeil, Mantha, Inc. Cincinnati Citizens First National Bank of Cantella & Co. Merit Investment Corporation First National Bank of Louisville New Jersey The Chicago Corporation Lynch Canada Inc. Manufacturers National Bank of Citizens Trust Company Dean Witter Reynolds Inc. Midland Doherty Limited Detroit - Municipal Bond Dept. Langdon P. Cook Incorporated Dietrich & Company Odium Brown Limited Bank & Trust Company, Crestar Bank Feigelman Securities Osler Inc. N.A. Faherty, Aliaga & Co., Incorporated Gus N. Ganoudis Pemberton Willoughby Capital Corporation First Commercial Bank of Little Garden State Securities, Inc. Bell Gouin Lock Inc. Dillon, Read & Co. Inc. Rock Gowell Securities Corp. Pietet (Canada) and Company, Dillon Securities First Interstate Bank of Nevada, Hawthorne Securities Corporation Limited Doft & Co., Inc. N.A. K. and S., Inc. Richardson Greenshields of Canada Dominick Investor Services Corp. First Wisconsin NationafBank of King, Keller & Co. Limited Dominion Securities Pitfield Inc. Milwaukee Meadowbrook Securities Inc. Thomson Kernaghan & Co. Ltd. Drexel Burnham Lambert Incorporated Fleet National Bank Mermelstein & Co. Walwyn Stodgell Cochran Murray E. I. Loan Services Glickenhaus - LTG & Co. Merrill Lynch, Pierce, Fenner & Limited Easton & Co. Grigsby, Brandford & Co., Inc. Smith Inc. Wood Gundy Inc. Eberstadt Fleming Inc. The Leedy Corporation National Financial Services Corp. Yorkton Securities Inc. A.G. Edwards & Sons, Inc. Midland Montagu Securities Inc. Ocean Hill Equities Inc. Canadian Imperial Bank of Commerce Einhorn & Co. Midlantic National Bank Pershing Division of Donaldson Cantor, Fitzgerald & Co., Inc. Engler-Budd & Company, Inc. E.A. Moos & Co. Incorporated Lufkin & Jenrette Securities Cantor, Fitzgerald Corporate Brokers, Eppler, Guerin & Turner, Inc. National City Bank, Cleveland Corporation Inc. Equity Securities Trading Co., Inc. D.A. Pincus & Co., Inc. J. c. Bradford & Co. S.B. Cantor & Co., Inc. Ernst & Company Southeastern Municipal Bonds, Inc. Branch, Cabell & Co. Capital Shares, Inc. EuroPartners Securi ties Corporation Sterling, Grace Municipal Broadcort Capital Corporation Carolina Securities Corporation Evans & Co., Incorporated Securities Corporation Btokerage Clearance Services Inc. Carr Securities Corp. Exchange Services, Inc. Strahsmeier Securities Co. Brounoff, Claire & Co., Inc. Carr & Thompson, Inc. Execution Services Incorporated The Summit Trust Company Alex. Btown & Sons Incorporated Carroll McEntee & McGinley Fagenson & Company, Inc. Tollner & Bean, Inc. Brown Brothers Harriman & Co. Incorporated Fagenson & Company, Inc. - Retail Wheeler Municipals Corp. Brown & Company Securities Cenpac Securities Corporation Fahnestock & Co., Inc. Bankers Trust/Investment Services Corporation Challenge Securi ties, Inc. George R. Fairweather Securities, Inc. Bank International Limited Brown, Lisle/Cummings, Inc. J. W. Charles-Bush Securities Inc. Fechtor, Detwiler & Co., Inc. Barrett & Company P. R. Burke & Co. Chase Dealer & Investment Fernandez, Bartsch & Mirra George K. Baum & Co. Burns Fry & Timmins Inc. The Chase Manhattan Bank, N.A. Financial Clearing & Services Bear, Stearns & Co., Inc. Burns, Pauli & Co., Inc. Chase/Syndicate Corporation Bear, Stearns Specialist Cable, Howse & Ragen Chemical Bank Beauchamp & Co. D.A. Campbell Company, Inc. Chemical Bank - Municipal Dealer Beckman & Co., Inc. The Chicago Corporation Benton & Company The Cincinnati Stock Exchange Sanford C. Bernstein & Co., Inc. Citibank Dealer - Municipal Bidwell & Company Operations I First Albany Corporation Kavanewsky and Associates Marcus & Company Pacific Brokerage Services, Inc. First Birmingham Securities H. Kawano & Co., Inc. Marcus Schloss & Co., Inc. Pacific Stock Exchange Specialist Corporation Kellner, DiLeo & Co. Marine Midland Bank, N.A. - Accounr The First Boston Corporation ].J. Kenny Co., Inc. Capital Markets Clearance ABD Securities Corporation First Financial Group Kidder, Peabody & Co. Incorporated Marine Midland Bank - New York AGF Securities Inc. First Jersey National Bank CL. King & Associates, Inc. First National Bank of Toms Adams-Fasrnow Company, Inc. First Jersey Securities, Inc. Koonce Securities Inc. River, N.]. Bateman Eichler, Hill Richards First Manhattan Co. Henty Krieger & Co. Second National Bank of Saginaw Incorporated First of Michigan Corporation laBranche & Co. United Jersey Bank The Chicago Corporation First Options of Chicago, Inc. Lafer Amster & Co. Carl Marks & Co., Inc. Crowell, Weedon & Co. First Southwest Company Emmett A. Larkin Co., Inc. Mayer & Schweitzer, Inc. D.A. Davidson & Co. Inc. First Wachovia Brokerage Service Lashco, Inc. McCourtney-Breckenridge & Company Donaldson, Lufkin & Jenrette Corporation Lasker, Stone & Stern McDaniel Lewis & Co. Securities Corp. Fossett Corporation Laterman & Company McDonald & Company Securities, Inc. Easton & Co. Walter N. Frank & Co. Cyrus]. Lawrence Incorporated CL. McKinney & Co., Inc. Garat & Co. Wm. V. Frankel & Co., Inc. Lawrence, O'Donnell & Co. McLeod Young Weir Incorporated Goldberg Securities, Inc. Freeman Securities Company, Inc. Freres & Co. M.). Meehan & Co. Shiels Hoelscher & Co. Freeman Welwood & Co., Inc. Lewco Securities Corp. Mellon Securities Trust Co. Hopkins, Harbach & Co. French American Banking Corp. S.B. Lewis & Company Mercator Partners Jefferies & Company, Inc. Albert Fried & Company MKI Securities Corp. Mericka & Co., Inc. K.]. Keeley & Co. Inc. Fundamental Corporate Bond MN Services Merrill Lynch, Pierce, Fenner & Ronald E. Melville, Inc. Brokers, Inc. MS Securities Services Inc. Smith Inc. Merrill Lynch Specialists Inc. ].W. Gant & Associates, Inc. Mabon, Nugent & Co. Merrill Lynch, Pierce, Fenner & Mitchum Jones & Templeton Inc. Gintelco, Inc. MacAllaster Pit field Mackay Inc. Smith Inc. - Securities Lending PaineWebber Specialists Inc. Goldberg Securities, Inc. Bernard L. Madoff Mesirow and Company, Inc. Post 63 Partners Goldman, Sachs & Co. Manufacturers and Traders Trust Midland Doherty Inc. Seidler Amdec Securities Inc. Gordon & Co. Company Midwest Clearing Corporation Shearson Lehman Brothers, Inc. Gradison & Company Incorporated Manufacturers Correspondent Bartlett & Co. TCW Inc. Greenfield Partners Clearing Services Equitable Securities Corporation Wedbush Securities, Inc. Oscar Gruss & Son Incorporated Manufacturers Hanover Trust Company Howe, Barnes & Johnson, Inc. Weeden&Co. Halcyon Investments Alamo National Bank IK Securities, Ltd. Don C Whitaker Inc. Hanifen,ImhoffInc. Arizona National Bank Lomas Securities USA, Inc. L. W. Wilson & Co., Inc. ]. F. Hartfield & Co., Inc. Banco Popular de Puerto Rico The Milwaukee Company Yamaichi International (America), The Heitner Corporation BancOhio National Bank The Ohio Company Inc. Henderson Brothers, Inc. Bank ofVirgtnia PaineWebber Incorporated Herzog, Heine, Geduld, Inc. Bankers Trust of South Catolina Morgan Guaranty Trust Company of S.C Parker & Co., Inc. Hill, Thompson, Magid & Co., Inc. Boatmen·s National Bank of New York Pershing Division of Donaldson, ].].B. Hilliard, w.L. Lyons Inc. St. Louis Morgan Guaranty Trust Company of Lufkin & Jenrette Securities Hirshon, Roth & Co. Central Fidelity Bank New York - Muni Bond Dealer Corporation Hopper Soliday & Co., Inc. Central Fidelity Bank­ Morgan, Keegan & Company, Inc. Pflueger & Baerwald Inc. Howard, Weil, Labouisse, Friedrichs Investments Morgan, Olmstead, Kennedy & Carl H. Pforzheimer & Co. Incorporated Central Fidelity Bank Gardner Incorporated Piper, Jaffray & Hopwood Incorporated Wayne Hummer & Co. (Lynchburg, Va.) & Co. Incorporated Pittock Financial Corporation E.F. Hutton & Company Inc. Corpus Christi National Bank Muller and Company, Inc. Porter, White & Yardley, Inc. !BJ Schroder Bank & Trust Co. The Exchange National Bank of MuniciCorp of California Preferred Technology, Inc. INC Trading Corporation Chicago Murphey Favre, Inc. Prescott, Ball & Turben, Inc. !cahn & Co., Inc. The First National Bank of Murphey, Marseilles, Smith & Prudential-Bache Securities Inc. The Illinois Company Incorporated Shreveport Nammack, Inc. Purcell, Graham & Co. Ingalls & Snyder First National Bank of South Murphy & Durieu Q & R Clearing Corporation Interstate Securities Corporation Carolina NB Clearing Corporation E.]. Quinn & Co., Inc. InvestNet Corporation National Bank NASD Market Services Inc. F. P. Quinn & Co. Irving Trust Company Hibernia National Bank in National Financial Services Corporation R.F.G. Co. The First National Bank in New Orleans National Westminster Bank USA R.). Stock Lending Albuquerque Imperial Bank (Los Angeles) Neuberger & Berman RSF Partners Mitsui Manufacturers Bank Landmark First National Bank New Japan Securities International, T.J. Raney & Sons, Inc. United Bank of Arizona NCNB National Bank of North Inc. Rauscher Pierce Refsnes, Inc. Irving Trustllnvestment/Dealer Carolina Newbridge Securities Inc. Raymond, James & Associates, Inc. JMS Execution Services Old Stone Corporation Newhard, Cook & Co. Incorporated W.H. Reaves & Co., Inc. Benjamin Jacobson & Sons Pittsburgh National Bank The Nikko Securities Co. Refco Securities, Inc. Jamie Securities Co. NatIOnal Bank International, Inc. Refco Securities, Inc./Stock Loan Janney Montgomery Scott Inc. Southeast Bank, N.A. Nippon Kangyo Kakumaru Regional Clearing Corp. Jefferies & Co., Inc. Southtrust Bank of , N.A. International, Inc. Reich & Co. Inc. Jesup & Lamont Clearing Corp. Sovran Bank, N.A. International, Inc. Richardson Greenshields Securities Inc. Johnson, Lane, Space, Smith & Sovran Bank, N.A. - Trading The Northern Trust Company M. Rimson & Co., Inc. Co., Inc. Account John Nuveen & Co. Incorporated Robb, Peck, McCooey Clearing Johnston, Lemon & Co. Incorporated UntbancTrust O·Connor & Associates Corporation Edward D. Jones & Co. Unttcd Bank and Trust Company O·Connor Securities Robertson, Colman & Stephens Josephthal & Co. Incorporated Manufacturers Hanover Trust Offerman & Co., Inc. Rodman & Renshaw, Inc. S.A. Judah & Co., Inc. Company - Municipal Dealer Olde Discount Corporation Kalb, Voorhis & Co. Operations Oppenheimer & Co., Inc. Kaufmann, Alsberg & Co., Inc. Outwater & Wells, Inc. II Par tic i pat n 9 0 r 9 ani z a tiD n s (as of December 1987)

Roney & Co. Taylor Byrne Securities, Inc. Wagner Stott Clearing Corp. The Central Trust Co. N.A. Rose & Company Investment Townes & Co., Inc. Wall Street Clearing Company (Cincinnati) Brokers, Inc. United Capital Corporation Wall Street Equities, Incorporatedo Chapdelaine & Co. L.F. Rothschild and Co. Incorporated Vining-Sparks Securities, Inc. Wall Street Trust, A Bank of Citizens Fidelity Bank & Trust Roulston Research Corp. Michael A. Weisser, Inc. New York Division Company (Louisville, KY) R. Rowland & Co., Incorporated Westcap Securities, Inc. Jefferson Guaranty Bank The Citizens & Southern National Ryan, Beck & Co. A.H. Williams&Co., Inc. National Bank Bank - Dealer Account Sage Clearing Corporation B.C. Ziegler & Company NCNB National Bank of North City National Bank, Beverly Hills, Sage, Rutty & Co., Inc. Ziegler Securities, Inc. Carolina - alc Cape Securities California Salomon Brothers Inc Security Pacific Loan Group Walsh, Greenwood & Co. Colorado National Bank of M.A. Schapiro & Co., Inc. Morton Seidel & Co., Inc. S.G. Warburg & Co., Inc. Comerica Bank - Detroit Charles Schwab & Co., Inc. Seligman Securities, Inc. Weber, Hall, Sale & Associates, Inc. Commerce Bank of Kansas City, N.A. Scott & Stringfellow, Inc. Shatkin Investment Corp. Wechsler & Krumholz, Inc. Commerce Bank of St. Louis, N.A. Seasongood & Mayer Shatkin-Lee Clearance Wedbush Securities, Inc. of Peoria Allen Securities Corp. Shatkin-Lee Securities Co. Weiss, Peck & Greer Commonwealth Securities and Securities Settlement Corporation Shearson Lehman Brothers, Inc. H.G. Wellington & Co., Inc. Investments, Inc. Security Pacific Clearing & Services Sherwood Securities Corp. Bank, N.A. Connecticut National Bank - Corp. LM. Simon & Company, Inc. Wheat, First Securities, Inc. Investment Dealer Adams, Block & Coe Securities Smith Barney, Harris Upham & Co. Thomas F. White & Co., Inc. Conners & Company 'James Baker & Company Incorporated Williams Securities Group, Inc. National Bank & Berghoff, Marsh & Company Smith, Moore & Co. Wilshire Associates Trust Co. - Dealer Account A.F. Best Securities, Inc. Southwest Securities Incorporated Windsor Associates Coogan, Gilbert & Co., Inc. Bowman & Company, Incorporated Spear, Leeds & Kellogg Wolfe & Hurst Bond Brokers, Inc. R. W. Corby & Company, Inc. Bryan, Worley & Co., Inc. Spear Securities & Co., Inc. Wood Gundy Corp. Cotham & Co., Inc. Capitol Municipal Securities, Inc. State Street Bank and Trust Company, Yamaichi International (America), Inc. Countty Club Bank, Kansas City Carty & Company, Inc. N.A. Yamaichi International (America), R.L. Crary & Co., Inc. Chase Lincoln First Bank, N.A. R.J. Steichen & Co. Inc. (L.A.) Crews & Associates, Inc. Chilton & O'Connor, Inc. Stern & Kennedy Ziegler Thrift Trading, Inc. Cumberland Securities Company, Inc. Dayton, Kahn, Heppe, Hancock Sterne, Agee & Leach, Inc. Dahlke & Company, Inc. &Co. , Nicolaus & Company FOR MUNICIPAL COMPARISON ONLY: Denver National Bank - Investment Dolphin & Bradbury Incorporated Incorporated Dept. A. Webster Dougherty & Co. Stock Clearing Corporation of Acker, Wolman Securities Corp. Deposit Guaranty National Bank, Incorporated Philadelphia Allied Bank of Jackson, MS Drizos Investments, Inc. Butcher & Singer Inc. M.E. Allison & Co., Inc. ladd Dinkins & Company Duncan-Williams, Inc. StockCross, Inc. American Municipal Securities Inc. Discount Corporation of New York R. W. Ellwood & Co., Inc. Stokes, Hoyt & Co. American National Bank - St. Paul Municipals Emmet & Co., Inc. Stone & Youngberg American Security Bank, N.A. Doley Securities Inc. FinSer Investment Company J. Streicher & Co. (Washington, D.C.) Dominion Bank, N.A. (Roanoke, VA) First Eastern Bank, N.A. The Stuart-James Company, Inc. AmSouth Bank, N.A. Douglas & Co. Municipals, Inc. First Miami Securities Henry F. Swift & Co. A.E. Aub & Co. Harry Downs & Co., Inc. First St. Louis Securities, Inc. Swiss American Securities, Inc. BancTexas Dallas N.A. Clifford Drake & Company, Inc. Gibraltar Securities Co. Swiss Bank Corporation International Bank IV Topeka, N.A. Duke McElroy & Company, Inc. Griffin, Kubik, Stephens & Securities Inc. Bank IV Wichita, N.A. R.J. Edwards, Inc. Thompson, Inc. Thomson McKinnon Securities Inc. , BISD Egan, Marrin & Rubano, Inc. Hammond & Botzum, Incorporated Timber Hill, Inc. Dealer-Portfolio Ehrlich-Bober & Co., Inc. Henry/Kearns Municipals, Inc. The Toronto-Dominion Bank Bank of California Equibank, N.A. Horizon Securities, Inc. Transaction Services, Inc. Bank of Hawaii Essex Company A.D. Jack & Company Transatlantic Securities Company , N.A. Dealer W.N. Estes & Company, Inc. M.G. Lewis & Co., Inc. Tucker, Anthony & R. L. Day, Inc. Bank European American Bank Matthews & Wright Capital, Inc. UBS Securities Inc. Bank of Oklahoma, N.A. Fidelity Bank, N.A. Matthews & Wright, Inc. Underwood, Neuhaus & Co., Bank One, Indianapolis, N.A. The Fifth Third Bank McGowan, O'Meara & Company, Incorporated Bank South, N.A. () First Alabama Investments, Inc. Inc. United Missouri Bank of Bankers' Bank of Wisconsin First American National Bank - Meuse, Rinker, Chapman, Endres Kansas City, N.A. Bankers Trust Company - Investment Nashville & Brooks Trust Company of Dealer First Bank (N.A.) Milwaukee Mid-State Securities Corp. New York ofJacksonville, N.A. First Charlotte Corporation Municipal Securities, Inc. Universal Securities Corporation Barr Brothers & Co., Inc. First Citizens Bank & Trust Company National Bank of Commerce Vail Securi ties Investment, Inc. BayBank Boston, N.A. First City National Bank of Houston (Birmingham, Ala.) Van Kampen Merritt Inc. Birr, Wilson Securities, Inc. - Safekeeping National Bank of Commerce Vickers da Costa Securities Inc. Branch Banking & Trust Co. First Commercial Bank (Memphis, Tenn.) Edward J. Viner & Co., Inc. K. R. Butler, Inc. First Fidelity Bank, N.A., New Leo Oppenheim & Co., Inc. W & D Securities, Inc. Cain Brothers, Shattuck & Company Jersey Municipal Dealer Pacific Securities Inc. Wachtel & Co., Inc. Cal State Securities Corp. Plansmith Securities, Inc. Wagner, Stott & Co. Cantor, Fitzgerald Municipal R H Investment Corporation Brokers, Inc. RMG Capital L.P. Capital Markets Corporation Arch W. Roberts & Co. Carolan & Co., Inc. Russell, Rea & Zappala, Inc. Centerre Bank, N.A. St. Louis Scharff & Jones, Inc. Central Bank of Denver R. Seelaus & Co., Inc. Central Bank of the South Spelman & Co., Inc. I First Interregional Equity Corp. Liberty National Bank & Trust Scheetz, Smith & Company, Inc. First Albany Corporation First Interstate Bank of Arizona, N.A. Company Investment Dept. Schmidt Securities, Inc. Herzog, Heine, Geduld, Inc. First Interstate Bank of California (Oklahoma City, OK) Seattle First National Bank J.).B. Hilliard, W.L. Lyons Inc. . First Interstate Bank of Denver, N.A. MBank Austin N.A. Seattle Northwest Securities Howard, Weil, Labouisse, Friedrichs First Interstate Bank of Oklahoma MBank Houston, N.A. Corporation Incorporated City - Investment Division MCG Portfolio Management Corp. SecuriCorp, Inc. Interstate Securities Corporation First Interstate Bank of Oregon, N.A. M&I Marshall & Ilsley Bank Security Bank of Kansas City Johnson, Lane, Space, First Interstate Bank of Washington Manufacturers and Traders Trust Co. Security Pacific National Bank Smith & Co., Inc. - Bank Investment Department - Muni Trading & Safekeeping Shawmut Bank - Investment Division Edward D. Jones & Co. First Investment Securities, Inc. Manufacturers Hanover Securities Shawmut Worcester County Bank, Josephthal & Co. Incorporated First Missouri Bank & Trust Company Corporation N.A. Merrill Lynch, Pierce, Fenner & First National Bank in Palm Beach - Marcotte Hume & Associates Signet BanklVirginia Smith Inc. Bond Department Incorporated Herbert J. Sims & Co., Inc. Morgan, Keegan & Company, Inc. First National Bank of Atlanta Marine Bank, N.A. (Milwaukee) Sisung Securities, Inc. Newbridge Securities Inc. The First National Bank of Boston - Mark Twain National Bank R. W. Smith & Associates, Inc. Oppenheimer & Co., Inc. Dealer (St. Louis, MO) Society National Bank Piper, Jaffray & Hopwood First National Bank of Chicago Hugo Marx & Co., Inc. Sovran Bank/Central South Incorporated First National Bank of Commerce Masterson & Company J. W. Sparks Municipals, Inc. Prescott, Ball & Turben, Inc. (New Orleans) Mclaughlin, Piven, Vogel Inc. M.L. Stern & Co., Inc. Prudential-Bache Securities Inc. First National Bank of Maryland McLiney and Company Stoever, Glass & Co. Inc. Rauscher Pierce Refsnes, Inc. First National Bank of Minneapolis- Mellon Bank (East), N .A. Sun Bank, N.A. (Orlando, ) Raymond, James & Associates, Inc. Bond Dealer Mellon Bank, N.A. TMA Government Securities, Ltd. Regional Clearing Corp. First National Bank of Springfield Mercantile Bank, N.A. Texas American Bank/Fort Worth, Shearson Lehman Brothers, Inc. The First National Bank of St. Paul Merchants National Bank & Trust N.A. Smith Barney, Harris Upham & Co. The First National Bank & Trust Co. Company of Indianapolis Texas Commerce Bank - El Paso Incorporated of Tulsa - Investment Division Merit Financial Corporation Texas Commerce Bank, N.A. Thomson McKinnon Securities Inc. First of America Bank-Detroit, N.A. N.D. Meyer & Co., Inc. Texas Independent Bank Tucker, Anthony & R. L. Day, Inc. First Republic Bank Dallas of Detroit Texas State Securities, Inc. Wall Street Clearing Company First Southern Securities, Inc. Miller & Schroeder Financial Inc. Third National Bank in Nashville First Bank, N.A. Mountaineer Securities Co. Thorn, Alvis, WeIch, Inc., FOR FUND/SERV: First Union National Bank of Florida Municipal Investors Service, Inc. Investment Securities Funds (Jacksonville) NCNB National Bank of Florida Thornton, Farish & Gauntt Inc. Fox Reusch & Co., Inc. National Bank of Commerce Trust & Titus & Donnelly Inc. Alliance Fund Distributors, Inc. The Frazer Lanier Company Savings Association - Dealer Trust Company Bank - Investment American Capital Marketing Inc. Frost National Bank - Bond Dept. National Bank of Detroit Banking Division American Funds Distributors, Inc. O GIMB National Bank of - Dealer Trustmark National Bank Colonial Investors Service Center, Inc. Glickenhaus & Co. The National Bank of Washington UMIC, Inc. Criterion Distributors, Inc. A.F. Green & Co., Inc. Newman and Associates, Inc. Union Bank - Treasuty Department Eaton Vance Distributors, Inc. Halliburton & Associates, Inc. Norstar Bank, N.A.lBuffalo Union Planters Investment Bankers Franklin Distributors, Inc. Halpert, Oberst and Company Norstar Bank of Upstate New York Group GT Global Financial Services Harper, Mclean & Company (Albany) United Bank of Denver, N.A. Kemper Financial Services, Inc. Chester Harris & Co., Inc. Norwest Investment Services United States Bank ofOregoniDealer Keystone Massachusetts Harrier, Sanford & Reynoir O'Brien & Shepard, Inc. Valley National Bank of Arizona Distributors Inc. Frank Henjes & Company, Inc. Old National Bank of Washington St. Denis J. Villere & Co. Lord, Abbett & Co. William R. Hough & Co. Oregon Bank ).H. Wagner & Co. Inc. MFS Financial Services Company The Huntington National Bank ).A. Overton & Co. Wells Fargo Bank, N.A. - Funding MetLife State Street Investment Hutchinson, Shockey, Erley & Co. Park Investment Corporation Group Services, Inc. Independent State Bank of Minnesota Peoples National Bank of Washington Westpac Banking Corporation Nuveen Securities & Co. Incorporated Indiana National Bank R.W. Peters, Rickel & Co., Inc. R.D. White & Company Oppenheimer Fund Management, Inc. International Bank Philadelphia National Bank - Whitney National Bank of Phoenix Equity Planning Corporation JMC Securities, Inc. Corestates Capital Markets Group New Orleans The Pioneer Group, Inc. Johnston, Brown, Burnett Rainier National Bank Wolfe & Hurst Bond Brokers, Inc. - Plymouth Investments Division of & Knight, Inc. RepublicBank First National Muni Division Fidelity Distributors Corporation Lex Jolley & Co., Inc. Midland (TX) Worthen Bank & Trust Co., N.A., Putnam Investor Services, Inc. Joe Jolly & Co., Inc. Rhode Island Hospital Trust National (Little Rock, AR) RNClMidvale Securities Corp. KMS Corporate Brokers Bank A.W. Zucker & Co. Seligman Marketing, Inc. Kaiser & Company Rogers & Lamb Van Eck Securities Corporation Kansas State Bank & Trust Company Roosevelt & Cross, Incorporated Van Kampen Merritt Inc. (Wichita, KS) Ross Capital Group, Inc. FOR FUND/SERV: Keenan & Clarey, Inc. SSB - Bank Portfolio Brokers Kemper Sales Company Schaffer, Necker & Co. Kirchner, Moore & Company Bear, Stearns & Co., Inc. W.L. Knox & Company J.e. Bradford & Co. Landmark Bank of Fort Worth Branch, Cabell & Co. LaSalle National Bank/Dealer Alex. Brown & Sons Incorporated Operations ). W. Charles-Bush Securities Inc. Lebenthal & Co., Inc. Dain Bosworth Incorporated David Lerner Associates, Inc. Dean Wirrer Reynolds Inc. Liberty National Bank and Trust A.G. Edwards & Sons, Inc. Company (Louisville, KY) Eppler, Guerin & Turner, Inc. Ernst & Company II NSCC Board of D rectors

~ The Board of Directors guides NSCC As a user-driven cooperative, NSCC relies on the expertise of its Board of Directors whose members represent the broad diversity of the financial services industry and in its development and enhancement of bring a breadth of knowledge and experience to the Board's decision-making pro­ cesses. The Board works closely with NSCCs senior management to establish systems and services for financial instru- corporate goals and to guide NSCC in its development and enhancement of sys­ tems and services for financial instruments and marketplaces. ments and marketplaces to ensure that The Board is comprised of 17 members. Thirteen of these members, including Chairman of the Board Raymond J. Kalinowski, are elected from participant they address the needs of the industry and firms representing brokers, dealers and banks. The remaining members are NSCCs President and CEO, David M. Kelly, and three Shareholder Directors meet regulatory requirements. Board designated by the NYSE, Amex and NASD: Richard A. Grasso, Paul G. Stevens and C. Richard Justice, respectively. members are selected from participating In 1987, the Board maintained five standing committees whose members are selected from the Board because of their expertise in specific areas and are elected broker/dealers and banks because on an annual basis by a vote of the full Board of Directors. After reviewing suggestions from participants for prospective directors, the of their expertise in particular areas of Nominating Committee selected four candidates to serve three-year terms as Participant Directors. William P. Behrens, Ernst & Company; Gates H. Hawn, the financial securities industry. Donaldson, Lufkin & Jenrette Securities Corporation; David L. Roscoe III, Morgan Guaranty Trust Company of New York; and Fenton R. Talbott, The First Boston Corporation became Participant Directors at the Board's Annual Meeting in May 1988 replacing Jeremiah M. Callaghan, Raymond J. Kalinowski, Bruce T. Mud­ dell and Melvin B. Taub.

NSCC Board of Directors 6. Herbert I. Levitt 12. Jeremiah M. Callaghan General Partner Managing Director 1. Howard A. Shallcross Spear, Leeds & Kellogg Bear, Stearns & Co., Inc. Senior Vice President & 7. Bernard L. Madoff 13. Melvin B. Taub Director of Operations Sole ProprietOr Executive Vice President Merrill Lynch, Pierce, Bernard L. Madoff Shearson Lehman HuttOn Fenner & Smith Inc. Inc. 8. Raymond J. Kalinowski 2. Richard J. Stream Chairman of the Board 14. C. Richard Justice Managing Director Vice Chairman & Director Executive Vice President Piper, Jaffray & Hopwood, A.G. Edwards & Sons, Inc. National Association of Incorporated Securities Dealers, Inc. 9. David M. Kelly 3. Richard A. Grasso President & CEO 15. Leonard V. Haynes Executive Vice President National Securities Clearing Senior Executive Vice New York Stock Exchange, Corporation President Inc. Shearson Lehman Hutton 10. Ronald W. Readmond 4. Paul G. Stevens Inc. Managing Director Executive Vice President Alex. Brown & Sons 16. J. Kevin Kenny American Stock Exchange, Incorporated President & CEO Inc. Kenny Co., Inc. 11. Ronald D. Upton J.J. 5. Wilbert A. Thiel Executive Vice President Bruce T. Muddell* Executive Vice President & Irving Trust Company President & CEO Treasurer Chemical Bank (Delaware) The Chicago Corporation (1101 pictured) * Resiglled ill December 1<)87 I 2

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.... The ISCC Board of Directors is The ISCC Board is comprised of 14 senior executives representing participant firms involved in global securities markets. The ISCC user board is charged with guid­ responsible for guiding ISCC in its mission ing ISCC in its efforts to support international trading by U.S. brokers, dealers and banks through the establishment of bilateral clearing and custody links with to provide U.S. participants with locally central clearing and depository organizations in other countries. Gerard P. Lynch was elected Chairman of the Board to replace Roger E. Birk accessible clearing services for non-U.S. who resigned in November 1987 to become President of the Federal National Mortgage Association. securities, and to provide non-U.S. clearing In 1987, the Board supported ISCC in its continuing discussions with Cedel, a major clearing and safekeeping organization in Luxembourg, regarding the estab­ and depository organizations with links into lishment of a clearance and settlement link which would allow ISCC participants access to Cedel and all of its marketplaces and services. ISCC and Cedel signed a NSCC and The Depository Trust Company. contract in May 1988, and the link will become operational following approval by the Securities and Exchange Commission. The Board also continued to support ISCC throughout the second half of 1987 in the implementation of a securities custody service with Singapore's Central Depository (Pte.) Ltd. for the Stock Ex­ change of Singapore's new market-making system in NASDAQ issues. The service was implemented in early 1988. The clearing link with The International Stock Exchange in London is expected to become bilateral in 1988. ISCC also anticipates the establishment of a custody link with Japan Securities Clearing Corporation in 1988. With the help of its Board of Directors, ISCC will continue to work with clearing and depository organizations around the world to develop a standardized global clearance and settlement system.

ISCC Board of Directors 5. C. Robert P. Meyjes 11. Nicola L. Caporale Senior Vice President General Partner 1. Joseph Anastasio Citibank, N.A. Goldman, Sachs & Co. Director, International 6. Joseph L. Gitterman III 12. Stephen E.J. Raven Operations Managing Partner Managing Director Salomon Brothers Inc laBranche & Co. County Securities Limited 2. David M. Kelly 7. C. Richard Justice 13. Bernard L. Madoff President & CEO Executive Vice President Sole Proprietor International Securities National Association of Bernard L. Madoff Clearing Corporation Securi ties Dealers, Inc. Christopher Keith 3. Michael T. Reddy 8. Fenton R. Talbott Senior Vice President Senior Vice President Managing Director New York Stock Exchange, Merrill Lynch, Pierce, The First Boston Corporation Inc. Fenner & Smith Inc. (not plctllred) 9. Gerard P. Lynch 4. Mark T. Smith Chairman of the Board Vice President Managing Director American Stock Exchange, Morgan Stanley & Co. Inc. Incorporated

10. David L. Roscoe III Senior Vice President Morgan Guaranty Trust Company of New York

II GSCC Inter m Board of 0 rectors

The Interim Board of Directors ofGSCC, which was established by the NSCC Board of Directors in December 1986, maintained a close advisory relationship with GSCC's senior management and staff throughout the company's first full year of operation guiding GSCC in its efforts to establish an automated comparison and netting system for government securities. The Interim Board is comprised of Chairman William J. Tierney, Jr., Managing Director, Salomon Brothers Inc, and Charles A. Moran, President and COO, GSCC, as well as several members of NSCC's Government Securities Committee of the Board of Directors. In December 1987, the Interim Board approved GSCC's plan to issue a Private Placement Memorandum for subscription to purchase common stock in GSCc. This Memorandum, which described the common stock offering in GSCC, along with a Shareholder's Agreement, was subsequently sent to 60 brokers, primary dealers, aspiring primary dealers and clearing agent banks in early 1988. Closing on the offering took place in May. GSCC will shortly elect its first user board from 2 participant shareholders.

GSCC Interim Board 3. Herbert I. Levitt 7. Ronald W. Readmond of Directors General Parmer Managing DirectOr Spear, Leeds & Kellogg Alex. Brown & Sons 1. Howard A. Shallcross Incorporated 4. Ronald D. Upton Senior Vice President & Executive Vice President 8. William J. Tierney, Jr. DirectOr of Operations Irving Trust Company Chairman of the Board Merrill Lynch, Pierce, Managing DirectOr Fenner & Smith Inc. 5. Charles A. Moran Salomon Brothers Inc President & COO 2. Melvin B. Taub Government Securities Executive Vice President Clearing Corporation Shearson Lehman HuttOn Inc. 6. David M. Kelly Vice Chairman & CEO Government Securities Clearing Corporation

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NSCC OFFICERS ISCC OFFICERS NATIONAL SECURITIES CLEARING CORPORATION Bernard L. Madoff Gerard P. Lynch Chairman of the Board Chairman of the Board Corporate Office 55 Water Street David M. Kelly David M. Kelly New York, New York 10041 President and CEO President and CEO (212) 510-0400 Robert j. Woldow Richard W. Myers Boston Executive Vice President, Executive Vice President One Boston Place General Counsel and Secretary and COO Boston, Massachusetts 02108 Walter H. Cushman Mary Ann Callahan Chicago Senior Vice President Vice President 13 5 South LaSalle Street john F. Elberfeld john F. Elberfeld Chicago, IJIinois 60603 Senior Vice President Chief Financial Officer and Treasurer Dallas Armand Keim Robert). Woldow Plaza of the Americas­ Senior Vice President Secretary and General Counsel TCBTower Dallas, Texas 75201 Steve M. Labriola Senior Vice President Denver GSCC OFFICERS Dominion Plaza Robert A. Schultz William). Tierney,jr. 600 17 th Street Senior Vice President Chairman of the Interim Board Denver, Colorado 80202 Marvin B. Koehler David M. Kelly Detroit First Vice President Vice Chairman and CEO 3153 Penobscot Building Sandy Manata Charles A. Moran Detroit, Michigan 48226 First Vice President President and COO jersey City Henry). Belusa Thomas F. Costa One Exchange Place Vice President Jersey City, New Jersey 07302 -First Vice President Los Angeles Catherine A. Craig Frederick B. Roemer Vice President 727 West 7th Street First Vice President Los Angeles, California-90017 john D. Fitzgerald john F. Elberfeld Vice President Minneapolis Chief Financial Officer and Treasurer IDS Center Michael). Kelleher 80 South 8th Street Vice President Minneapolis, Minnesota 55402 john M. Lanning New York Vice President 55 Water Street Kevin F. Maloney New York, New York -10041 Vice President St. Louis Thomas K. McCarthy One Mercantile Tower Vice President St. Louis, Missouri 63101 Michael M. Molloy San Francisco Vice President 250 Montgomery Street San Francisco, California 94104 NeilOutcault Vice President Seattle Karen L. Saperstein 1525 Fourth Avenue Seattle, Washington 98101 Vice President and Associate General Counsel Toronto William H. Thomas Two First Canadian Place Toronto, Ontario, Canada-M5X 1A9 Vice President David F. Hoyt INTERNATIONAL SECURITIES Assistant Secretary CLEARING CORPORATION Corporate Office 55 Water Street New York, New York 10041

GOVERNMENT SECURITIES CLEARING CORPORATION

Design: Corporate Office Bloch Graulich Whelan Inc. 55 Water Street New York New York, New York 10041 National Securities Clearing Corporation 55 Water Street New York, New York 10041 (212) 510-0400