• THlE DlEPOSITORY TRUST COMPANY

CONTENTS

Highlights 2

A Message from Management 3 Mission and Evolution 4 DTC Service Growth 6 Ownership and Policies 7

Services 9 Eligible Issues 18 Municipal Securities Program 20 Same-Day Funds Settlement System 22 Program 23 Securities in Book-Entry-Only Form 25 Recent DTC Growth by Sector In Selected Services 26 Instirutional Use of DTC 27 Automation of Depository Services 29 The National Clearance and Settlcment System and I nrcrnational Links 31 Protection for Participants' Securities 33 Officers of The Depository Trust Company 36 The Board of Directors 37

Report ofIndependent Accountants 38

Participants 46

DTC Stockholders 51 , 1111 ' he D'1>ository Trust Compan)! a service company owned by members = =ofthe financial industry, is a national clearinghouse for the settlement . oftrades in corporate and municipal securities. D TC also performs securities custody services for its participating and broker-dealers. In 1990, those Participants delivered $8. 8 trillion ofsecurities through the depository's book-entry system, and securities in its custody reached $4.1 trillion at yearend DTC's primary mission is to reduce the cost ofsecurities services offired to the public by its Participants. It does so through its automated systems, its telecommunications links with more than 550 Participants and others, and its relationships with the hundreds offirms that serve as transfer agents, paying agents, exchange agents, and redemption agents for securities issuers.

HIGHLIGHTS

TOTAL FOR 1HE YEAR 1990 1989 Book-entry deliveries Market value (In trillions) $8.8 $9.2 Number (In millions) 72.6 73.9 Cash dividend and interest payments (In billions) $238.2 $207.7 Reorganization, redemption, and - payments (In billions) $196.7 $229.3

ATYFAREND Eligible securities issues 827,910 723,839 Value of securities on deposit (In trillions) $4.10 $4.02 Number of shares on deposit (In billions) 117.9 116.5 Principal amount of corporate debt on deposit (In trillions) $1.2 $1.0 Principal amount of municipal debt on deposit (In billions) $860.5 $750.9 Participants 568 606 Broker-dealers 379 408 Banks 181 189 Clearing agencies 8 9

page :? A MESSAGE FROM MANAGEMENT

~I~ 0' the ,,,,mitie, indumy, 1990 may go At least two other areas of depository activiry in into the records as the most difficult of 1990 merit attention. One was the role played by _ __several difficult years immediately DTC in the U.S. Working Committee of The _ _following the 1987 market break, with Group of Thirry, to encourage careful industry transactions and profitabiliry down in many consideration of recommendations to convert the business lines. The weakness in trading volume was five-day trade settlement cycle soon to three days, mirrored in several DTC services over the year, and to settle all trades in same-day, instead of next­ though it was mitigated by the effect of making day, funds. The industry has enough information more issues eligible for DTC services and comple­ now to decide the settlement cycle issue, and DTC mented by frequent double-digit percentage has undertaken to help develop a same-day funds increases in the depository's custody-related services. settlement proposal for industry evaluation in 1991. This overall transaction growth helps explain why Noteworthy also was DTC's review of its future 1990 was the fourth consecutive year in which DTC role in the settlement of international trades. Part of did not have to raise fees to Participants-indeed the impetus for that review was the issuance of could slightly reduce them-and why its financial several global debt issues in book-entry-only form, plan for 1991 repeats that performance. with no certificates for investors; these issues can be Among the issues made eligible beginning in held entirely or partly at DTC and setrled in DTC, October commercial paper (CP) issues, upon and in CEDEL and Euroclear, international inauguration of the depository's commercial paper securities depositories located in Europe. The program. The product of more than two years of greater impetus, however, came from the steadily study and interaction with Participants and an expert increasing appetite of U.S. investors for foreign industry committee, this program, when hilly securities, an appetite that seems certain to grow expanded, could add over $50 billion a day to a despite associated costs and problems. At yearend, DTC daily settlement volume that averaged approx­ DTC announced its intention to explore with imately $35 billion a day during 1990. The cost­ national depositories in major foreign markets saving efficiencies of a book-entry-only commercial the considerations involved in future inter­ paper program, with no paper available to investors depository linkages. to create processing risks and costs, had long been No reference to DTC's annual activiry would be attractive to the industry, but risk-management complete without acknowledging the countless controls had to be ,identified and installed before industry officers and committees that helped shape DTC, market participants, and regulatory DTC's progran1ming efforts. The Public Securities authorities were willing to sign off on the program. Association Task Force on Commercial Paper merits At the other end of DTC's service delivery special mention. spectrum, though lacking the single identiry and We express our gratitude also to all of the men billion-dollar numbers associated with the CP and women of DTC who make possible the program, was a plethora of small operational efficiency of the depository's efforrs to serve its changes that allows Participants to process trans­ Participants across the country. You give meaning actions through DTC with less time, effort, and and expression to DTC's corporate culture: to offer internal cost. Typically, these changes give users an qualiry service to its users. automated way to direct the disposition of their securities positions at DTC and gain access to DTC's extensive on-line data base of their accounts' :r;:~;Z activity history. When taken together, the total of Chainnan and ChiefExecutive Officer such changes during any year provides value to ~ DTC users at least equal to the introduction of any Conrad F. Ahrens major new depository service. President and Chief Operating Officer

page] MISSION AND EVOLUTION

epository Trust's mission is to reduce the receive payments due from paying agents. . . cost of securities processing by financial As the depository expanded, it sought ways to . intermediaries serving the public while make it unnecessary for Participants to withdraw I~_ increasing accuracy, , and speed. certificates from DTC in order to present them to DTC accomplishes this by continually making more agents for tender offers and other reorganization issues eligible for depositoty services in order to activity. This meant establishing means for users to reduce the number of certificates handled within the reach those agents through DTC under procedures financial community; automating and standardizing that protected all concerned, given the large the flow of information; achieving economies of sums involved. scale; and acting as a central "switch" for the flow of In more recent years, afTer DTC took on more data, securities, and funds between its Participants such custody-related processing tasks for Participants, and agents for issuers of those securities. the depository added to user efficiencies by giving DTC's services begin when participating banks them on-line access to DTC's data base for quick and broker-dealers deposit securities with it, or answers to queries about their account activity. when an underwriting is distributed through the In order to maximize its utility to Participants, depository. Participants can then affect the resulting DTC continually has sought to make more securities positions through instructions to the securities issues, and more types of securities, eligible depository to perform various functions, such as for its services. Having begun initially with NYSE­ deliver securities to another party by book-entry on listed stocks, the depository added stocks listed on DTC's records and collect payment for that delivery. the American Stock Exchange, then over-the­ The deposirory can best be understood as counter and other equity issues, and then listed and performing three functions: unlisted corporate debt. o It is a custodian for the securities of its In 1981, the depository began to make bearer Participants-$4.1 trillion at yearend 1990. municipal bonds eligible for its services, followed by o It is an accounting system whose books record all registered municipal bonds. A number of types of activity affecting the securities in its custody, such as securities that settle only in same-day (rather than deliveries between its users-$8.8 trillion in 199(}---­ next-day) funds were added, beginning in 1987. and the collection of cash dividends and interest­ That process is continuing, with commercial paper over $238 billion last year resulting in more than becoming eligible in October 1990. With the 14.3 million disbursements to users. addition of more than 100,000 municipal and o It is a group of communications systems for post­ other issues each year for the last six years, more trade processing through which its Participants reach than 825,000 security issues are now eligible for and can be reached by DTC, other depository users, book-entry and other DTC services. transfer agents, and other agents acting for securities Another continuing DTC effort has been to Issuers. reduce paper instructions and reports to and from In the early 1970s, DTC's emphasis was on Participants and to replace them with electronic adding banks to its original broker-dealer base in communications. Beginning with the exchange of order to immobilize stock certificates held by banks magnetic tapes, migrating to dedicated and dial-in and substitute book-entry deliveries for the physical telecommunications networks, and then exchanging exchange of certificates. At that time, DTC's data computer-to-computer, each step was designed intermediary role with issuers' agents was as a kind to help users reduce costs and errors wherever of central post office through which users could possible. The great bulk of depository services are route paper instructions seeking newly registered now accessed and delivered through DTC's certificates from transfer agents for customers, and Participant Terminal System of more than 1,300

page'!. terminals and printers across the country and DTC, the depository now holds for its Participants computer-to-computer interfaces with almost 300 approximately: Participants. • 73% of the shares of companies represented in With Participants' customers wanting several the Dow Jones Industrial Average, million newly registered certificates each year, • 66% of the shares of all NYSE-listed bringing efficiencies to the transfer process has been u.S. companies, a continuing DTC priority. The means of achieving • 41 % of the shares of NASDAQ and 43% of those efficiencies were first spelled out by DTC to American Stock Exchange-listed U.S. companies, the industry in 1974: Where possible, DTC would • 77% of the corporate debt listed on the place securities in its custody with their transfer NYSE, and agents under its Fast Automated Securities Transfer • 87% of the principal amoUnt of outstanding (FAST) program; collect transfer data from municipal bonds. Participants in automated form and distribute them The table on the following page indicates DTC's to transfer agents in similar form, with analytical growth since 1975 as seen by activity in selected programs at DTC standardizing these data to meet services at five-year intervals. transfer agent requirements; and encourage agents to mail new certificates to users' clients directly, with safeguards and necessary reporting to Participants. Progress along those lines is continuing. As 1990 NYSE, NASDAQ, AND AMEX SHARES TRADED (In millions) closed, DTC had almost $1.8 trillion of securities with FAST agents, received over 99% of Participant transfer instructions in automated form, had 41 transfer agents accepting automated instructions comprising about 66% of its transfer volume, and helped make 36% of newly registered certificates from agents available to users' clients by direct mail. As a result of the growth described above, at yearend 1990 the market value ofDTC Participant and broker assets held at DTC, and held for DTC's account by its depository counterparts in 75 80 85 90 Chicago and Philadelphia, amounted to $4.06 DTC-ELIGIBLE ISSUES (In thousands) trillion, 98% of the total market value of securities 900 held by all three depositories.

More important, the depository's 568 Participants, 675 acting for themselves and almost 4,000 bank and broker-dealer correspondents and their customers, 450 had immobilized virtually all institutionally owned eligible securities and a rising percentage ofsecurities owned by retail investors in a system that could 225 safely accommodate peak levels of trading volume. While data are not available on the extent to which some types of securities are immobilized in 75 80 85 90

page 2. DTC SERVICE GROWTH*

1975 1980 1985 1990

AVERAGE DAILY

NYSE shares traded (In miUiom) 18.6 44.9 109.2 156.8 NASDAQ shares traded (In miUiom) 5.6 26.5 82.1 131.9 AMEX shares traded (In miUiom) 2.1 6.4 8.3 13.1

AT YEAREND Partici pants 255 333 521 568 Eligible issues 8,165 14,233 262,081 827,910 Market value on deposit (In biUiom) $60 $493 $2,010 $4,097

TOTAL FOR TIIE YEAR Book-entry deliveries Value (In billiom) $210 $1,260 $5,460 $8,822 Number (In miUiom) 14 28 56 73 Cash dividend & all interest payments Value (In billiom) $2.1 $19.3 $95.2 $238.2 Payments to DTC (In thousands) 18 29 250 1,509 Reorganization, redemption, & maturity payment value (In billiom) NA NA NA $197 Total underwritings Value (In biUiom) NA $40 $291 $354 Number NA 900 9,871 15,981 Underwritings of book-entry-only issues Value (In biUiom) 0 0 $2.6 $212 Number 0 0 55 10,449 Institutional delivery system Users (at yearend) 67 424 6,520 7,790 Total confirmations (In milliom) :j: 2.4 14.0 19.8 Total affirmations (In milliom) :j: .7 8.0 12.5 Deliveries (In milliom) 0 :j: .5 6.4 9.2

* Some figures rounded :j: Pilot program only o Scheduled automatic deliveries only

page 6 OWNERSHIP AND POLICIES

- overnance o/the Depository DTC policy also limits its annual profit, so the . DTC's governance is carefully !Tamed depository returns to Participants revenues that the _ _ __ [ to r~flect .the need fo~ objectivity in Board determines exceed the funds required for the __ _ servll1g dIverse users ll1 the financial depository's operation. ~ As a registered clearing agency, DTC is regulated community. The right to purchase DTC capital stock is based on a formula that considers each by the Securities and Exchange Commission under Participant's use of the depository during the pre­ the Securities Exchange Act of 1934, as amended. ceding calendar year: 80% on fees paid to DTC As a member of the System and a and 20% on the market value oflong securities New York State limited-purpose trust company, positions in DTC at the end of each month. DTC is also regulated by the Board of Governors of The amount of stock each Participant may the Federal Reserve System and the New York State purchase is recalculated each year to reflect variations Banking Department. in depository usage. Participants may purchase any, all, or none of the stock to which they are entitled, at a price based on the stock's yearend book value. Stock is reallocated before the annual stock­ holders meeting in late March, so stockholders may THE DTC MA'ITERS vote newl y acquired shares toward electing the COMMITTEE OF TilE Nr,w YORK Board of Directors at that meeting. Elections are CLEARING Hou.sl~ AsSOCIATION'.; SJoClJRITIES conducted by cumulative voting, so no combination COMMnThh, AI"l ".11. MEI,IING of stockholders controlling a simple majority of WrJ Il DTC\ GI.I,NN E. stock can elect all Directors. Board representation is MANGOLD, CI ()CII.""W[.sI~ ! ROM thereby available to users from various sectors of the FRONrCENTER: FRANK M. financial community in proportion to their use of FARSI, JR., MARINE MIPIA:-;n the depository. BANK, N.A.; $U'iAN B. PAGE,

At yearend 1990, after retirement or merger of UNITED STA"IIS TRUS'! various stockholders subsequent to the completion COMPANY ()F NEW YOHK; of the 1990 stock reallocation, there were 140 DTC RICHARD M. DIMAIO, stockholders: 49 broker-dealers, 85 banks, and six CnIBANK, N.A.: ANGEI() self-regulatory organizations and clearing agencies. VAILN II:, MANUh\GrURER~

Broker-dealer Participants owned 14.5% of DTC HANOVJo.R TRu.H COMPANY; stock, while bank Participants owned 42.0%. JOliN DI\.~I[NEJ{, BANKhR.~ Ownership interests of the self-regulatory organi- TRUS I' C(IMI'ANY; j():o.1!1'11 7Altions on behalf of broker-dealer Participants

TRUST CO:-'II'ANY; Gl.hNN were 34.5% for the New York Stock Exchanae0' 4.5% for the American Stock Exchange, and 4.5% MANGOLD; M]CIIAhl. ANDLR!>U:-J, TilE BA:-JK OF NI:\'(' for the National Association of Securities Dealers. YORK; BRUCh BU!>KARll DTC policy prohibits dividend payments to (COMMITlI'.E CIIAIRHAN), stockholders, since DTC believes that depository MAR]:-JE MlIlI.At-:1l BANK, N.A.; ownership is not an investment vehicle, bur a means DO.\tlNICK FRA(~A].A, CIIA"" for diverse users to encourage DTC's responsiveness to their needs through exercise of their cumulative ANGU rNA MAllhR,\, CIIL\lICAL voting rights to elect Directors. BANK.

page z:

SERVICES

DTe's NEIL BRANDER,

VICE PRESIDE;-""T~

FLANKED BY ROUIN S

MIDKIFF, PRESIDENT OF

THE TRUST & CUSTODY

GROUP OF WELLS FARCO

INSTITUTiONAL TRUST

COMPANY, ANI) DTC's

RUSSELL FERRO,

DIRECTOR-REVIEW liD

ACTIVITY STATISTICS

FOR 1990.

he services provided by the depository are numbered 92 at yearend. In addition, the Federal briefly described below, followed Reserve Banks of Birmingham, , Kansas by a listing of 1990 volumes in selected City, New York, Philadelphia, Richmond, and servIces. St. Louis accept pledges to their DTC accounts from member banks to secure Treasury Tax and Deposits Loan accounts and deposits of public money, as Certificate deposits in eligible securities issues can well as advances at the and be made at the depository or at various banks intraday overdrafts. In addition, the Options and clearing corporation offices nationwide that Clearing Corporation (OCC) accepts pledges to cooperate with DTC as Depository Facilities. its DTC account. Total pledges outstanding at Nearly 21 million certificates were deposited with yearend were $19.5 billion. DTC in 1990. Underwriting Distributions Deliveries Underwriters of new and secondary issues distribute them by book-entry against payment, whether or Changes of securities ownership are made by book­ not certificates are available to investors. Last year, entry deliveries on DTC's accounting records. They 372 lead managers used DTC to distribute nearly may be with or without an accompanying money 16,000 new corporate and municipal underwritings payment and are reported to Participants daily. valued at $354 billion. Deliveries against payment in 1990 were valued at $8.8 trillion. Custody This service enables Participants to reduce their Pledges costs of handling and safeguarding securities by Securities may be pledged by book-entry on DTC's leaving them with DTC, and to further reduce accounting records to banks and other entities that costs by using other DTC custody-related services have agreed to accept them as collateral. Banks described here. At yearend, DTC held Participant participating in the depository's pledge program securities valued at $4.1 trillion.

prlgeZ Dividends and Interest Voluntary Offerings This service eliminates the need for Participants to Tender and Exchange Offirs: Participants may accept collect dividend and interest payments directly from tender and exchange offers for securities in their many sources by allowing DTC to do so for all accounts and deliver them to agents through DTC. securities in its custody. In 1990, DTC received The value of such acceptances in 1990 was 1.5 million payments for Participants-nearly $24.1 billion. 116,000 on peak days-with corporate cash DTC's Automated Tender Offer Program dividends and interest reaching $183.2 billion and (ATOP) enables Participants to send electronic interest reaching $55.0 billion. acceptance instructions on tender and exchange The timeliness of corporate cash dividends and offers over the Participant Terminal System (PTS) interest payments remained strong, with 99.1 % of for transmission to tender and exchange agents, these funds received on payable date, and 99% of streamlining the process by replacing hard-copy their value in same-day funds. With municipal instructions and reducing paper-related risks. bonds, DTC receives virtually all payments on ATOP also lets agents review information about the payable date. receipt of instructions, on an up-to-the-minute basis, throughout the offering period--enabling Dividend Reinvestment them to better serve offerors. ATOP processed When permitted by an issuer's reinvestment plan, 45% of the approximately 62,000 Participant the Dividend Reinvestment Service (DRS) allows instructions received in 1990. Participants, for interested customers, to reinvest Conversions: Participants may instruct DTC to dividends on some or all shares without with­ surrender convertible debt and equity securities in drawing them from DTC. In 1990, DRS included their accounts to conversion agents by book-entry 305 participating plans and helped reinvest for same-day credit in the underlying securities, $1.4 billion of dividend distributions. usually common stock. Approximately 187 million shares resulted from such conversions in 1990. DIVIDENDS REINVESTED THROUGH DRS (In $ Billions) Redemptions 1990 ======:::J1.4 When a security in the depository's custody matures 1989 ======d.2 or is fully or partially called by the issuer, DTC

1988 C'======1].0 presents it for redemption and pays the proceeds to 1987 ======1].0 affected Participants. With more issues DTC­ eligible, the number of issues in which DTC 1986 C'======,0.9 processed redemptions grew 28% in 1990, to over 87,600, while the dollar value redeemed rose 13%, Change Mode ofPayment Service to almost $151 billion. These figures include DTC's Change Mode of Payment (CMOP) service maturities of municipal issues, which reached over enables Participants to change by book-entry the 47,000. In addition, partial calls in municipals frequency (mode) of dividend payments on securities increased to 22,920 and partial calls in corporates that permit such changes: unit investment trust climbed to almost 1,600. (UIT) issues and variable mode preferred stock issues. At yearend, 7,651 UIT issues (nearly 21,000 Puts CUSIPs) were eligible for CMOp, as well as 240 "Put" provisions allow holders to obtain, on variable mode preferred stock issues (roughly 480 demand, payment for the principal value of their CUSIPs). DTC processed 10,689 CMOP securities on a predetermined number of days' instructions in UIT securities and 930 in variable notice. DTC's Repayment Option Procedures mode preferred stock issues during the year. enable Participants to submit put instructions

page f2 through the depository in eligible issues. Those Options issues totaled 4,059 in 1990 and include many More than 200 banks and broker-dealers used municipal and corporate issues, mortgage-backed DTC to deposit securities to satisfY OCC margin bonds, and floating-rate notes and securities with or clearing fund requirements in 1990. The value similar repayment options. In 1990, DTC received of these "pledged" securities totaled $5.6 billion 19,375 instructions to exercise Participant puts at yearend. and allocated $10.7 billion in next-day-funds Through the Third-Party Pledge System, payments and $4.5 billion in same-day-funds banks may pledge securities on deposit at DTC payments. In addition, DTC processes optional to the Options Clearing Corporation on behalf repayments on certificates of deposit and rollover of a broker-dealer to satisfY OCC requirements instructions on T-bills. for a call option writer. The system also allows Units a put option writer to instruct its bank to move Treasury bill positions to the depository and Participants can separate units-such as a share and pledge them to OCC for the account of the a warrant, or a bond and a put option-into their OCC clearing member carrying the writer's components, or combine the components into units short position, reducing the clearing member's and deliver them through DTC by book-entry. margin requirements. DTC received 16,789 such instructions in 1990. Withdrawals Warrant Subscriptions Certificates can be withdrawn from DTC custody Warrants for common stock may be exercised by in three ways: book-entry through DTC. Almost 2,900 subscrip­ tions in 135 eligible warrant issues were processed in Withdrawals-by.:rransfir (WTs): When a Participant's 1990, resulting in the issuance of 60 million shares. customer desires a certificate registered in any

UNITED STATES TRUST

COMPANY OF NEW YORK

VICE PrU:SJDE:-..'TS WILLIAM

\X'ALSII A;-..'D SUf"-AX:-"'E

Wl="TERJ01:--' DTC's

CO:"'NIECilE'<,

!v1Al\.'AGI:R-SYSTEMS AND

COMI'U'II:"'C; (SEATE!J),

TO VIEWT!lE

NEW ViS "LENP"

IUNCrJO:--", WHIG! IS

REPL\CINC 'I! IE

DlS'I RIBlJTIO:--"

OF HARD-COI'Y

LEGAL NO rICFS.

page !.!... particular name, DTC arranges with the segregated for priority treatment by DTC and the appropriate transfer agent for its issuance. In 1990, agent, and an overnight express courier service is 5.4 million new certificates were created this way. used between DTC and agents outside of New York Depending on the issue, its transfer agent, and the City. Securities are generally available within two agent's location, newly registered certificates are days if the agent is located in and generally available one to two weeks after DTC has within three days if the instructions are sent to an received instructions for these routine transfers. agent outside of New York City.

Urgent COD Withdrawals: In many issues, Fast Automated Securities Transfer (FAST) Participants can obtain certificates quickly and Through the FAST program, DTC reduces directly from the depository. Urgent certificates-on­ certificate movement by leaving some securities demand (COOs) are available from DTC in all full­ with transfer agents as balance certificates registered Fast Automated Securities Transfer (FAST) in its nominee name, Cede & Co. Balance securities, all corporate debt securities eligible for certificates are adjusted daily for DTC deposit and DTC's Same-Day Funds Settlement system, and withdrawal activity. all registered and bearer municipal issues. Agents can participate in the WT portion of The Rush Withdrawal-by- Transfer (RWT) Service: the program only, or they can also handle urgent RWT enables DTC ro expedite the processing of COD withdrawals by taking part in the full­ Participants' transfers when certificates are needed FAST program. urgently and COOs are not available. In recent years, DTC has been gradually Direct Mail Service eliminating urgent COD withdrawals in corporate A Participant can speed newly registered certificates debt and equity securities eligible for its Next-Day to its customers or third parties by having transfer Funds Settlement system. Participants used to need agents or DTC mail them directly, rather than these urgent withdrawals primarily to complete returning them to its offices before mailing. More deliveries-versus-payment (DVPs) not settling in a than 1.9 million certificates were handled this way book-entry environment. This need diminished, in 1990. however, as book-entry delivery grew and rules of When agents mail certificates, DTC first receives self-regulatory organizations were amended to registration information from Participants by mandate book-entry settlement of DVPs in automated means, reformats it if needed, and corporate securities. forwards it to agents in machine-readable form. The As a result, in July 1989 DTC generally began agents then issue certificates and return transaction eliminating its urgent COD withdrawal service for details to DTC for its records and for reporting corporate securities settling in next-day funds. These to Participants. When a Participant wishes all securities are now handled through RWT. transferred certificates mailed, DTC assumes the To use RWT, Participants submit rush transfer responsibility whenever transfer agents do not registration instructions to DTC via the Participant provide direct mail service. Terminal System. If the issue is RWT-eligible, the transfer agent receives these instructions from Training DTC the next day. After rush reregistration by Training for Participant employees has grown in the agent and retrieval by DTC, the depository importance as more issues with special features promptly notifies the Participant that the securities become eligible and exception processing becomes are available. more complex. The depository's training programs, Participants can withdraw securities quickly given at both DTC and Participant sites, are through the service because RWT instructions are designed to help Participants communicate with

pageJ.l A PARTICIPANT

TRAINI:-:C

VlUEO

I'RO[)UCTlON

SHOOT 1:-.:

PROGRESS AT

DTC.

DTC in the most effective and cost-efficient Rule 144A securities. manner. In 1990, nearly 3,000 employees, The first PO RTAL offering under Rule 144A representing over 300 Participants, were instructed was delivered in book-entry-only (BEO) form in the use ofDTe's Next-Day and Same-Day through DTC in June. By yearend, there were five Funds Settlement systems, FTS, and Participant such issuances, all American Depositary Receipts Operating Procedures (POP). A catalogue representing foreign ordinary shares and all settling describing these programs is available. in DTC In addition, two telephone numbers have been At yearend, the depository was awaiting SEC established to help with FTS or POP questions­ action on a rule filing it made in April 1990, which in New York State: (212) 709-1135; outside of would allow DTC to make eligible any new New York State: (800) 545-1276. domestic or foreign issue of Rule 144A securities. The depository also would be able to settle trades in Developments in '90 NYSE System 144A under a pending rule filing by .. Certain Rule 144A securities became eligible for the . DTC services when, in April, the Securities and " DTe's Automated Tender Offer Program (ATOP) Exchange Commission (SEC) adopted Rule 144A, processed its largest completed tender offer, in which provides an exemption from the application 1990: Matsushita Electric Industrial Co., Ltd.'s, of the registration requirements of the Securities $3.9 billion offer for MCA INC Participants Act of 1933 for sales of certain securities to tendered some 60 million of the 92 million "qualified institutional buyers." In a related action, outstanding shares, with 1,245 instructions the SEC approved the National Association of received at DTC Securities Dealers, Inc.'s, electronic trading and In addition, DTC enhanced ATOP to handle comparison system-PORTAl-for primary Participant requests for withdrawal of some or placements and secondary-market trading of all securities previously tendered; process offers

pagel] involving securities with associated "poison pill" c DTC introduced the first phase of its Participant rights; and offer an agent-side capability for use by Exchange Service (PEX), which enables Participants lower-volume tender agents for which the expense to send and respond to buy-in notices over PTS, of a hard-wired PTS terminal is not justifiable. replacing hard copy. c The liquidation and closing of some savings and PEX provides pre-formatted screens for loan institutions that had issued DTC-eligible Participants to send original NASD and NSCC certificates of deposit (CDs) resulted in DTC's (Balance Order) buy-in notices via PTS to processing redemptions and other activities relating Participants that have not delivered a security by to 14 CD issuers totaling $1.8 billion. a prescribed time. The receiver, in rurn, can The sudden increase in this type of activity­ retransmit the notice to another Participant that due to action by the Resolution Trust Corporation owes it the security. Participants reconcile the buy-in (RTC)-required DTC to work with the RTC and themselves, outside of DTC; therefore, notices others to standardize handling of these redemptions, involving DTC-eligible and -ineligible securities often under urgent time limitations. may be sent over PEX. c DTC began a pilot program that will make its c The first rights offerings were exercised through DTC-rights for the purchase of American Direct-Mail-by-the-Agent service available to Depositary Receipts of Attwoods PLC in July and transfer agents that do not participate in the American Depositary Shares of Elan Corporation in Fast Automated Securities Transfer program. November. In both cases, DTC modified existing procedures to accommodate the offerings. A formal rights exercise system is planned. c Information on all reorganization and redemption functions (except put bonds, scheduled to be added in mid-1991) became available over the Computer­ to-Computer Facility (CCF) and over PTS through the RIPS (Reorganization Inquiry for Participants System) function. c DTC developed a repurchase agreement (repo) tracking system, which enables Participants to track their future principal and interest entitlements on certain securities (in 1990, collateralized mortgage obligations and medium-term notes eligible in the Same-Day Funds Setdement system). With repo tracking, Participants selling securities under a repurchase agreement enter their repo transactions via PTS and have DTC track their original ownership interest, although the securities are not in their DTC accounts on record date. The seller instructs DTC to transfer the securities by book-entry and credit to it all future distributions.

GEORGE ZEL'vll:H, VICE PRESIDE"'']', LTCH THUS'! COM(,,\~) (Sf<.. XI (-:D);

,\;\'f) PAliL FALA:-:<..;A, VICE PRES[J)E;\,'], RA:-':KERS TRU:-.T CO,\1f'A;-;Y.

DUHL'i{; A DTC f'ARTICII'A;\"[ '[ RAJ;\,!:-.;'C SF.\llNAR.

page 1j SELECTED 1990 SERVICE STATISTICS

Deposits (Total for the Year) Redemptions Daily Average Certificates Full Calls and Maturities 63,123 For Registered Securities 62,500 Municipal Partial Calls 22,920 Total Registered Certificates 15.8 million Corporate Partial Calls 1,560 Daily Average Certificates For Bearer Securities 20,200 Puts Total Bearer Certificates 5.1 million Eligible Issues 4,059 Instructions to Exercise 19,375 Deliveries (For the Year) Total Value of Allocations $15.2 billion Number 72.6 million Value $8.8 trillion Units Eligible Issues 699 Pledges Vlt Yearend) Instructions to Combine 5,205 To Banks $9.5 billion Combining 522 million components into To Options Clearing Corporation $5.6 billion 134 million units To Federal Reserve District Banks $4.4 billion Instructions to Separate 11,584 Total $19.5 billion Separating 123 million units into 520 million components Underwriting Distributions Number of Underwritings 15,981 Warrant Subscriptions Number of Issues (by CUSIP) 92,130 Eligible Issues 135 Total Value $354 billion Subscriptions Processed 2,889 Resulting Shares 60 million Dividends and Interest Number of Payments Received 1,509,000 Certificate Withdrawals Number of Paying Agents 2,611 Daily Average Withdraw:lls-by-Transfer 19,600 Total Corporate Cash Dividends Total New Registered Certificates 5.4 million And Interest $183.2 billion Daily Average Certiflcates-on-Demand lotal Municipal Bond Interest $55 billion For Registered Securities 840 Total Stock Dividends 4.9 billion shares Total Certificates Withdrawn 255,000 Daily Average Certiflcates-on-Demand Change Mode of Payment Instructions For Bearer Securities 760 In UTT Securities 10,689 'lotal Certificates Withdrawn 1,025,000 In Variable Mode Preferred Stock Issues 930 "[0 tal Certificates Withdrawn through RWT Service 26,500 Tender and Exchange Offers Offers Processed and Allocated 537 Direct Mail Service Agents Involved 79 Number of Participants 108 Value of Acceptances $24.1 billion Participating Transfer Agents 16 Certificates Mailed by Agents 720,005 Conversions Certificates Mailed by DTC 1,221,999 Eligible Issues 468 'Iotal Certificates Mailed 1,942,004 Number of Resulting Shares 187 million % of All WI' Certificates Sent by Direct Mail 36

page !2 CHART 1 CHART 2 CHART 3 CHART 4

Market Value of Equity Securities Corporate Debt Municipal Honds Securities on Deposit On Depostt Securities on Depostt On Deposit (In $ trillions) (In billions ofshares) (In $ billionslprincipal amount) (In $ billionslprincipal amount)

120 ------1200 -----n 900

1000 4 90 675

SOO

3

60 600 450

2

400

30 225

200

86 87 88 89 90 86 87 88 89 90 86 87 88 89 90 86 87 88 89 90

CHARTS CHART 6 CHART 7 CHARTS

Hook-Entry Deliveries Hook-Entry-On/y Tender and t.xchange Withdrawals-by- Transftr Municipal Bond Issuance Offirs Processed so----- 10.0 2000----- 70 600 80 10------10

1600 -----I 56 8+---+--- 8 60 7.5 450 60

1200 ----+--1 42 6 6

40 5.0 300 40

SOO 28 4 4

20 2.5 150 20

400 14 2 2

86 87 88 89 90 86 87 88 89 90 86 87 88 89 90 86 87 88 89 90

o Number (In millions) D Number of New ls~uc-" o Number of OfTer'> o Instrucriom (In mdllOnsJ o Value (In $ tnl/lons) o PrinCIpal Amount (In $ btl/tOns) o Value of Acccprances (In $ btllions) o CCrtlfiCHe~ Obrained (In mdljow)

pageI!' CHART 9 CHART 10 CHART II CHART 12

Urgent COD Withdrawals Underwriting Cash Dividends and Municipal Bond In Registered Issues Distributions (In thousands) Interest Receilied for Interest ReceIVed for (In rntlltons) Participants (In $ billions) Participants (In $ billions)

.8 20 250 60

200

.6 15 45

150

.4 10 30

100

.2 5 15 50

86 87 88 89 90 86 87 88 89 90 86 87 88 89 90 86 87 88 89 90

CHART 13 CHART 14 CHART 15 CHART 16

Value of Outstanding Corporate Call Lotteries Lotteries for Partial Maturzties and Pledges (In $ bdlionslyearend) (In thousands) Municipal RedemptIOns Full Redemptions OfMuntcipal Securities

30 2.0 25 10 60 60

24 20 -----f1--l 8 1.5 45 ----1---1 45

18 15 6

1.0 30 30

12 10 4

.5 15 15 6 5 2

86 87 88 89 90 86 87 88 89 90 86 87 88 89 90 86 87 88 89 90

o Number of b~lle:, Called (III thousands) o Nllmhcr of J.<,~LlC\ (In thous{lnds) o Value of Rcdempnon::. (In $ bdllOns) o Value of Redempnons (In $ bdflOns)

page !Z ELIGIBLE ISSUES

.~.~ he more issues made eligible for DTC Eligibility for New Issues -- . -- services, the more useful the depository is DTC's Operational Arrangements for Issue Eligibility =. = to its Participants. DTC originally made memorandum outlines criteria that must be met to __ . __ American- and NewYork Stock Exchange­ ensure a new issue's eligibility for depository services. listed equities eligible, then over-the-counter (OTC) The arrangements, which include observance of equities, and listed and unlisted corporate debt. Securities and Exchange Commission-endorsed call Municipal securities followed in 1981 with the notification standards for municipal bonds, aim to start-up ofDTC's municipal securities progran1. maximize the number of eligible issues while And in 1987, DTC began its Same-Day Funds maintaining orderly processing and ensuring timely Settlement (SDFS) system, in order to increasingly dividend, interest, principal, and redemption make eligible those types of securities that settle in payments. DTC internal planning consultants often same-day funds. help investment bankers and their legal and During 1990, DTC made almost 187,000 issues operations staffs apply the arrangements to new eligible, bringing the total number of issues to issues during structuring, whether certificates are 827,910 by yearend, a 14% increase over 1989. available to investors or an issue is in book-entry­ Of that gain, 80,444 were in serial or term issues only (BEO) form. of municipal bonds distributed by underwriters through the depository. Of the newly eligible issues, ISSUES MADE ELIGIBLE IN 0 10,178 were securities that settle in same-day funds. 199 The following table shows the number of eligible Equity 5,200 issues by security type: Corporate Debt and Certificates of Deposit 18,100 ELIGIBLE ISSUES' Registered Municipal Securities 96,300 Bearer Municipal Bonds 66,400 CORPORATE U.S. Treasury and Federal Agency 700 Listed Equity Issues 3,]30 Total 186,700 OTC Equity Issues 22,907 Corporate Debt Securities 2],816 Collateralized Mortgage Obligations 3,976 Voting Rights Units 699 The registration of deposited securities in DTC's Warrants ],588 Cede & Co. nominee name gives the depository American Depositaq Receipts 863 the ability to: Unit Investment Trusts 20,575 " promptly determine whether certificates are Certificates of Deposit 16,147 transferable; Other 167 Total Corporate 9],868 " permit reuansfer of certificates quickly and simply, when necessary; MUNICIPAL " ensure receipt of dividends, distributions, and Registered Bonds 448,3]6 voting rights to the depository for their allocation to Bearer or Interchangeable Bonds 284,469 Participants properly and without delay. Nores 728 Total Municipal 733,513 Although these reasons require it to be the owner of record, DTC's objective is to avoid being a barrier GOVERl'lMENT to communications between issuers and beneficial U.S. Treasury and Federal Agency Issues 2,529 owners. Indeed, the existence of the depository in Total 827,910 some cases may assist a corporate issuer in keeping * By CUSfP number, as ofDecember 3 f, f 990 up with changes in ownership of its voting stock.

page If3 The Omnibus Proxy enables Participants to exercise voting rights of their securities on deposit at the depository. It is, in effect, an assignment: Cede & Co., the holder of record, assigns each Participant the voting rights on securities in that Participant's DTC account as of record date. The depository forwards the Proxy, with a Iisr of Participants, to the issuer, while notifYing each Participant listed there rhat it has sent the Proxy and specifYing the quantiry of securities the Participant is entitled to vote. After DTC completes these steps-soon after record date-communication between issuers and beneficial owners occurs as if the depository did not exist.

Other reports also serve issuers:

51 The Security Position Listing shows the toral amount of a security issue on deposir at DTC and each Participant's account number(s). DTC sends rhis report to each equity issuer annually, indicaring Participant record-dare positions for the issuer's annual meering. Issuers may also obtain daily, weekly, monthly, or dividend­ record-date listings, for a modest fee.

D DTC's Participant Proxy Contact List specifies each Participant's n~une and address for purposes of handling proxies, ,md the n,une and phone number of a contact person there. The depository updates this list quarterly and sends it to issuers. In addition, DTC's brochure Shareholder Communications and The DepositOlJ Ti'ust Company is available on requesL

DTC-ELIGII3LE ISSUES (000,)

1990 ======'828 19H9 ======'724

1988 c'======'()09

1987 c'======,491

1986 c'======'572

FROM LEFT: DTC's VINCE:-"T MAURO, VICE PRESIDEN r-SE1TLL\1ENT,

WITH LEHMAN BROTHERS\' DOROTHY MELARAGNO, VICE PRFSlJ)ENT,

AND MICHAEL BREN;-,'A:'\." FIRST VICE PRESIDENT-BOTH OF THE

MUNICIPAL BOND DEI'ARTMEN'i. MUNICIPAL SECURITIES PROGRAM

FROM LEFI: DTC's

KATHRYN CAZIARC,

SUPJ:RVlSOR-

REORGA~'IZATION;

AGOSTT:-':O M. RICCI,

VICE PRESlDE:-.IT

OF PRUDENTIAL

SECURlTIES

INCORPORATED AND

PRESIDENT OF THE SIA's

REORGA.'JlZATI00.'

DrVTSIO;\j, A.~D DTC's

WILUA.\-1 HODASH,

DIRECTOR-

REORGANlZATIO~,

REVIEW A PARTICiPANT

TENDERS TRAINING AID

OVER PT:i

-]"'- ssuers, their underwriters, and other (PSA) and other sources, they represent 75% of all =•= Participants are by now well aware of the new, long-term bond issues last year and 94% of _ " _ advantages of using DTC for municipal their principal amount. _ " _ securities. The volume of municipal bond, DTCs municipal note program, which uses its note, and variable-rate demand obligation (VRDO) Same-Day Funds Settlement (SDFS) system, has underwritings distributed through the depository in attracted all sizes of municipal note issues nation­ 1990 increased 10%, to nearly $147 billion, out of wide. For example, in 1990 issues ranged from $162 billion of municipal securities issued last year. distributions of $200,000 (one each for Lowell, The principal amount of municipal securities on Massachusetts; Revere, Massachusetts; and deposit at DTC was nearly $861 billion-15% Claremont, New York) to a $4.1 billion New York above the 1989 figure. State offering. In addition to the usual benefits of depository Four hundred sixteen issuers used DTCs muni services, use of DTC is of special value for bond note program in 1990, up from approximately 130 redemptions-particularly for partial calls-to in 1989. They distributed 704 issues, with a par reduce or eliminate problems and losses from value of $27.2 billion, representing 21 % of all such delayed or missing call notifications. The problems issues last year and 78% of their par value, based on such redemptions present for the industry and PSA figures. Ninety-four percent of the par value of investors where issues are not depository-eligible note issues through DTC was in book-entry-only should diminish as future underwritings are (BEO) form. distributed through DTC, as more bearer bond VRDOs became eligible for DTCs municipal issues become depository-eligible, and as older progran1 in SDFS during 1988. Twenty-two issues mature. VRDO issues were distributed through the system Last year, 5,961 new issues of municipal bonds- that year, with a total principal amount of more 80,444 CUSIP numbers-with a principal amount than $400 million. Last year, 155 issues totaling of $116 billion were distributed through DTC. $3.1 billion were distributed through the system. Based on data from the Public Securities Association Municipal note and VRDO activity may also be

page 2!l found in the "Same-Day Funds Settlement System" DTC's municipal bearer bond exchange program section, page 22. continues, with 3 million certificates exchanged in New issues distributed in BEO form, with 1990, approximately 10% more than in 1989. no certificates available to investors, reduce Here, DTC surrenders to exchange agents batches underwriting and ongoing costs to issuers. In 1990, of bearer interchangeable certificates and, generally, of new municipal bond issues distributed through converts the certificates into a "jumbo" DTC, 33°;() of the issues and 54% of their principal registered certificate. amount-$62.7 billion-were distributed in BEO Over the years, DTC has converted 17.3 million form. For municipal notes, the corresponding bearer certificates, at an estimated annual savings in figures for BEO were 80% and 94%, or handling, storage, and other costs of 77 cents per $25.6 billion, while VRDOs distributed BEO certificate. In addition to these savings for accounted for 76% of the issues and 84% of their Participants, registered certificates offer better call principal amount-$2.6 billion. Municipal securities notification, better interest-payment collection, no in BEO form are also discussed in the "Securities in risk of theft or loss, and reduced risk of Book-Entry-Only Form" section, page 25. certificate theft or loss.

MUNICIPAL STATISTICS

1990 I989 BONDS Principal Amount of Municipal Bonds on Deposit (III fli!!ww) $824.2 $723.8 Municipal Bond Underwritings Distributed through DTC 5,961 6,454 Total Principal Amount (In BiI!ions) $116.4 $113.1 Eligible Municipal Bonds (by CUSIP Number) 731,749 634,528 Daily Average Municipal Bond Book-Entry Deliveries 14,300 13,300 Municipal Bond Issues with Partial Redemptions For Which Lotteries Were Run 22,920 20,156 Resulting Call Proceeds (III fldllOm) $4.4 $3.9 Bond Coupons Cut (In Millzum) 40.8 4l.2

NOTES Municipal Note Issues Distributed through OTC (By CUSIP Number) 704 436 Total Principal Amount (III Hi/110m) $27.2 $19.8 Eligible Municipal Note Issues at Yearend (by CUSIP Number) 728 425 Principal Amount on Deposi t (In BillIOns) $22.2 $17.4

VRDOs VRDO Issues Distributed through OTC (by CUSIP Number) 155 98 Total Principal Amount (In BIllIOns) $3.1 $1.4 Eligible VRDO Issues (by CUSIP Number) 1,036 792 Principal Amount on Deposit (III Hii/iollJ) $14.1 $9.7

page?! SAME-DAY FUNDS SETTLEMENT SYSTEM

'l~ TC's Same-Day Funds Settlement SDFS GROWTH ~ --- (SDFS) system offers depository services _ to certain types of securities that settle Direct Participants 200 181 . _ in same-day, or Federal, funds. Indirect Participants 183 189 Inaugurated in 1987, the system provides Settling Banks 86 73 significant control features for trade settlement that Total SOFS Accounrs 386 321 place a limit (cap) on and require collateralization Principal Amounr of SOFS of each Participant's intra-day net settlement debit. Securities on Deposit (In BilliollS) $432.2 $245.6 In 1990, the system grew to 383 direct and SOFS-Eligible Issues (CUSIPs) 17,675 9,746 indirect Participants and $432.2 billion in principal Value of Transactions amount of securities on deposit at yearend-a 76% Setried (III BilliollS) $960.1 $429.2 increase over yearend 1989. The number of SDFS Underwritings 1,659 616 underwritings distributed through the same-day Their Total Principal funds system rose 169%. Amount (III BdllOllS) $103.2 $54.7 Three security types were added in 1990-retail certificates of deposit, corporate bonds, and SDFS-ELIGIBLE ISSUES' commercial paper. Commercial paper canle on board in October, Principal Issues Amount after the Federal Reserve System and the Securities Securi ty Type (CUSIPs) On Deposit" and Exchange Commission approved the depository's commercial paper program. Five Asset-Backed Securities 116 43.4 months later, $78 billion--Dr 14% of the estimated Auction-Rate and commercial paper outstanding-was already on Tender-Rate Preferred deposit at DTC. (See "Commercial Paper Progranl" Srock and Notes 630 26.6 section, page 23.) Collateralized Mortgage The largest principal amount on deposit of any Obligations 3.028 124.3 Same-Day Funds Settlement system security type Commercial Paper 1,274 30.8 was represented by collateralized mortgage Corporate Bonds 72 12.4 obligations, which rose from $67 billion at yearend Corporate and Municipal 1989 to $124 billion at yearend 1990. Short- and Variable-Mode medium-term notes also increased significantly, Obligations 35 1.2 from $16 billion to more than $51 billion over the Governmenr Agency same period. In addition, medium-term-note issuers Securities 565 23.2 numbered 225 at yearend 1990, compared with Government Trust 136 at yearend 1989. Certi ficates 301 14.5 The year also had the first distributions of book­ Municipal Notes 728 22.2 entry-only (BEO) global debt issues wholly or Municipal Variable-Rate Demand Obligations 1,036 14.1 partially through DTC, beginning with Citicorp's Retail Certificates of Deposit 327 2.0 $1.4 billion issue in June. By yearend, 11 such issues, Short- and all with no certificates available to investors, had Medium-Term Notes 6,670 51.4 been processed through the system. These BEO Zero Coupon Bonds 2,893 66.2 global debt issues are also eligible for settlement at the international depositories CEDEL and Euroclear. • As ojIJemn/m 31, 1990 "III S billiollS

page ?l.

------COMMERCIAL PAPER PROGRAM

-J~TC'S commercial paper (CP) program Once OTC's computer takes over, it interacts - --- began on October 5, following its with the dealer's and custodian bank's computers _ . approval by the Federal Reserve System to complete the delivery and settlement parts of _ _ and the Securities and Exchange the process. As an alternative to direct computer­ Commission. CP is unsecured, unregistered, short­ to-computer links, IPAs, dealers, and custodians term promissory notes typically issued by leading may communicate with OTC over its Participant U.S. corporations to reduce their financing costs, Terminal System. though issuers can also be foreign, municipal, and OTC sweeps maturing CP from Participant marginally creditworthy. CP eligible for OTC's accounts and initiates book-entry deliveries versus program is generally rated in one of the top two payment to paying agent Participant accounts on ratings categories by at least one of the largest maturity date for inclusion in that day's regular . . ratings agenCles. settlement. Initially, OTC's program had six issuing/paying agent (IPA) banks and four dealers participating, ISSUING/PAYING AGENTS USING DTC'S CP PROGRAM' and 13 programs representing 11 issuers. A~ of March 31, 1991, nine IPA banks and 17 dealers The Bank of New York B~mkers Trust Company were participating, with 195 programs representing The Chase Manhattan Bank, N.A. 180 issuers. A total of $78 billion was on deposit­ ] 4% of the estimated CP outstanding. Citibank, N.A. With the addition of programs came steady The Dai-Ichi Kangyo Bank, Limited, . . New York Branch lIlcreases 1Il: The First National Bank of Chicago .. daily average CP issuances through OTC (see chart); Manufacturers Hanover Trust Company .. daily average presentments of maturing CI~ as Morgan Guaranty Trust Company of New York more CP was issued through OTC (see chart); * A, of March 31,1991 "the face anlount ofCP on deposit (see chart). The gradual expansion of the CP program is expected to continue throughout 1991, under DEALERS USING DTC'S CP PROGRAM' deliberate constraints on its growth. OTC-e1igible BT Securities Corporation CP is issued in book-entry-only form, with no NT & SA certificates available to investors, and settles in the Bear, Stearns & Co., Inc. Same-Day Funds Settlement system. (For a current Chemical Bank Citicorp Securities Markets, Inc. list ofOTC-eligible CP programs and their IPA Continental Bank, N.A. banks and dealers, refer to the depository's monthly Daiwa Securities America Inc. SDr--.s Eligible Securities book.) The Corporation OTC's program was developed with a task force First National Bank of Chicago formed by the Committee of the Goldman Sachs Money Markets Kidder, Peabody & Co. Incorporated Public Securities Association. It is designed for Leh man Brothers rapid-fire, "hands-off," electronic CP issuance and Lynch, Pierce, Fenner settlement. The process starts with an issuer's (or & Smith Incorporated dealer's) compurer describing to the computer of the J.P. Morgan Securities Inc. issuer's IPA the commercial paper to be issued and & Co. Incorporated delivered. The IPA's computer edits, adds to, and Nikko Securities Co. -Dominion Securities, USA, Inc. reformats those instructions, and communicates with DTC's computer. * As of March 31. 1991

page~ COMMERCIAL PAPER PROGRAM GROWTH

ro/31/90 11/30 /90 12/31/90 1/31/91 2/28/91 3/31/91 ISSUANCES Diy. Av. No. 27 114 191 290 325 342 DIy. Av. Face Arnt. (In billions) $.3 $1.2 $2.4 $3.7 $3.9 $4.3

MATURITIES Diy. Av. No. 6 46 145 235 302 339 Dly.Av. Face Arnt. (In billions) $.04 $.5 $1.7 $2.6 $3.2 $3.6

ISSUERS 28 72 105 135 159 180

PROGRAMS 33 82 118 148 ]74 195

ON DEPOSIT CUSIPs 184 886 1,274 2,172 2,766 3,124 Face Arnt. (In billIOns) $4 $19 $31 $53 $65 $78 Percentage Of Market 0.7 3.4 5.5 9.4 11.6 14.0

FROM LEFT: ROBERT L.

WELLS, J R , MA:-JAGER-

BA:-':Kli'.'G, WESTINGHOUSE

ELECTRIC CORPORATION;

AND JP MORGAi'/S CARL

W. DESCH, JR., VICE

PRESIDEN'r, AND

S. MICHAEL BAR...-":ES,

VICE PRESIDE:-.'T,

DISCUSS THE

DEVELOPMENT Or

DTc's COMMERCIAL

PAPER PROGRAM:.

page2j SECURITIES IN BOOK-ENTRY-ONLY FORM

he issuance of debt securities in book­ Municipal Notes entry-only (BEO) form continues to =• = II 94% of the principal amount of all note issues __ . __ increase as issuers reduce expenses and distributed through DTC in 1990-$25.6 billion­ ~~__ . __ investors grow more comfortable owning was BEO. This accounted for 73% of the principal securities without holding certificates. In 1990, an10unt of all new muni notes issued in the U.S. issuers distributed BEO securities valued at last year, compared with 66% in BEO form $325.6 billion through DTC, the great bulk of during 1989. them being debt securities. With book-entry-only, issuers authorize the Corporate Securities deposit at DTC of a single "global" certificate for Corporate security types distributed BEO through each issue (each maturity of a debt issue). This DTCare: certificate is issued in DTC's nominee name and American Depositary Receipts held by the depository or its custodian bank for the Asset-Backed Securities issue's life. Changes in ownership are recorded by Auction-Rate and Tender-Rate Preferred Stock book-entry at DTC and, in turn, reflected on the and Notes records of its Participants and their customers. Certificates of Deposit These records are used to allocate income distribu­ Commercial Paper tions and principal redemptions. Investors receive Conventional Corporate Notes transaction confirmations and periodic statements Medium-Term Notes from the bank or broker-dealer reporting activity Mortgage-Backed Securities and balances in their securities accounts. W ..'lfrants Linked to Currency Exchange Rates Since DTC often holds more than 80% of the principal amount of debt issues in which certificates The great bulk of these securities are debt securities. are available to investors, BEO is attractive to muni­ The equity securities issued in book-entry-only cipal issuers, who can completely avoid the contin­ form are bought overwhelmingly by institutional uing cost of certificate issuance and reissuance to investors-ADRs for shares in Rule 144A securities investors. It is attractive also to corporate issuers and auction- and tender-rate preferred stock. when their paper-such as commercial paper-is Ii At yearend, 225 issuers had used DTC's medium­ bought almost entirely by institutional investors. term note (MTN) program, compared with 136 BEO is acceptable as well to many individual issuers at yearend 1989. MTNs are corporate debt investors, who reduce or eliminate the risk, expense, securities with maturities that range from nine and inconvenience of safekeeping their certificates. months to 40 years, but are usually between one and seven years. Shelf-registered and continuously Book-Entry-Only in '90: offered, MTNs have a flexibility that permits issuers to match the fi.ll1ding of assets and liabilities. More Municipal Bonds than $51 billion in MTNs (face value) was on deposit at yearend. II 48% of the principal amount of all new municipal bond issues in the U.S. during 1990 was distributed Information Available through DTC in BEO form, up from 40% in 1989 . .. 54% of the total principal amount of all new muni DTC has book-entry-only publications and a bonds distributed through DTC in 1990-$62.7 video presentation designed for issuers available billion-was in BEO form, up from 47% in 1989. on request.

page ?J RECENT DTC GROWTH BY SECTOR IN SELECTED SERVICES

ELIGIBLE ISSUES 1990 1989 I9 88 Equities 28,488 28,726 24,125 Corporate debt 25,792 21 ,097 16,152 Municipal debt 733,513 635,745 532,979 Other 40,117 38,271 35,660 Total 827,910 723,839 608,916

SELECTED SERVICES

Value of securities on deposit (In trillIOns) Banks $3.10 $3.06 $2.49 Broker-dealers .96 .93 .76 Other depositories .04 .03 .03 Total $4.10 $4.02 $3.28

Shares on deposit (In billions) Banks 55.4 51.3 44.6 Broker-dealers 60.9 63.3 61.0 Other depositories 1.6 1.9 1.0 Total 117.9 116.5 106.6

Principal amount of corporate debt on deposit (In bi/llOm) Banks $ 941.8 $ 804.0 $663.0 Broker-dealers 243.3 203.7 170.4 Other depositories 15.3 10.1 11.4 Total $1,200.4 $1,017.8 $844.8

Principal amount of municipal debt on deposit (In bdllOm) Banks $613.7 $566.5 $471.0 Broker-dealers 239.4 176.3 144.0 Other depositories 7.4 8.1 8.8 Total $860.5 $750.9 $623.8

PARTICIPATION' DTC Participants 568 606 607 Broker-dealers 379 408 415 Banks 181 189 183 Clearing agencies 8 9 9

, Excludes indirect participation in DTC, includingfor 1990 1,275 banks and approximately 2,500 broker-dealers that are correspondents ofParticip,mts.

page ?§ INSTITUTIONAL USE OF DTC

ustody ofInstitutionalAssets can deposit eligible instruments such as medium­ Banks and their institutional customers term notes, variable-rate demand obligations, and continued to take advantage of depository mortgage- and other asset-backed securities that __ _ services in 1990, with equity assets on settle in sanle-day funds. ~ % deposit climbing 8 -to 55.4 billion shares valued Institutional Delivery (ID) System at $1.5 trillion-and debt assets climbing 13.1 %, to The ID system, a method for reporting and settling $1.55 trillion of principal amount. institutional trades in U.S. securities, reduces costs Pension Fund Assets and increases assurance of timely settlement. It Bank Participants continued to deposit private introduces a single, automated entity-DTC-to pension fund assets into their DTC accounts in coordinate all clearance and settlement activity of 1990, though most assets had been previously broker-dealers, institutions, and their agents. placed in the depository. Briefly, here's how the lD system works: A Growth also continued in the deposit of state broker-dealer or dealer bank executing an insti­ and municipal retirement system assets. Historically, tutional trade furnishes DTC with transaction state and municipal pension fimd assets were details-such as price, quantity, and date-which sometimes required to be kept in state by state laws the depo~itory passes on as a legal trade confirmation or regulations-most of which were enacted long to the broker's institutional customer, the customer's before the development of the depository system. agent, and otl1er interested parties. If the ID Following a wave oflegislation aimed at bringing confirmation accurately reflects the institution's state laws in line with modern financial practices, order, the institution sends an affirmation to DTC all states and the District of Columbia now permit which forwards settlement instructions to the agent their state and municipal pension fund assets to be and submitting broker. If the security is DTC­ placed in a depository. At yearend 1990, 49 states eligible and the deliverer has sufficient securities in and the District of Columbia had all or pan of their its DTC account, the depository can automatically pension fund assets in eligible securities on deposit complete delivery by book-entry on the morning of at DTC through custodian banks. settlement date. If the security is not DTC-eligible, the deliverer and receiver settle the transaction Insurance Company Assets outside DTC based on depository instructions Through custodian banks, several hundred that facilitate the delivery's completion on insurance companies have their securities on deposit settlement date. at DTC As with public pension funds, many states ID in '90 in the past restricted depository custody of insurance­ .. The lD system expanded by yearend to include company-owned securities. Typically, a statute 7,790 institutions, broker-dealers, custodian banks, required that assets be physically kept within and other agents. Average monthly volume of ID the state. confirmations processed through the system was At yearend 1990, the District of Columbia and 1.7 million for the fourth quarter, up 6% ftom the all states but Wyoming permitted their domestic comparable 1989 period. For the year, 41.6 million insurance companies to deposit their assets out of confirmations, affirmations, and prescheduled state and at DTC deliveries were processed through ID, a 6% increase from 1989. Investment Company Assets .. At yearend, the industry affirmation rate of trade Virtually 100% ofDTC-eligible investment confirmations in DTC-eligible securities reported company assets are on deposit. In addition, as more by broker-dealers through the ID system was 93% securities become DTC-eligible, custodian banks for corporate debt and equity securities, compared

page ?Z with 92% the year before; and 75% for municipals, of data-processing resources of Participants that will compared with 73% for 1989. be among the system's largest users.

II DTC completed the conversion of more than ., While use of lID is not mandated, as is the 1,400 ID dial-in users to a personal computer domestic ID system, 1990 saw a growing number (PC) environment through EZTym, a new software of U.S. investment managers send letters of support communications package. EZTym extends the for liD to broker-dealers. More than 20 investment benefits of DTC's Participant Terminal System managers, in fact, formed a group called the (PTS), including new ID fUnctions and PTS Investment Managers For the Development of screen formats, to ID dial-in users that use an IBM International ID to advocate use of lID. This or IBM-compatible Pc. initiative is expected to grow in 1991.

International ID System " During 1990, lID processed its first securities DTC's International Institutional Delivery (lID) transactions from brokers in the u.K., involving system extends certain ID system benefits-trade investment managers in the U.S. and U.K. and confirmations, affirmations, and receive/deliver global custodians in Luxembourg, the U.K., instructions-to trades executed outside the U.S. and the U.S. in non-U.S. securities. "The number of trade confirmations processed per The "International ID" initiative stems from week grew by a factor of five, to roughly 1,000. cross-border trade clearance and setdement problems in non-U.S. securities, which result in high costs for broker-dealers, custodians, and investors. Since ffD I is used for issues that are not DTC-e1igibIe, this service stops short of DTC book-entry delivery and setdement. However, use of lID's standardized receive/ deliver instructions can assist the international broker and global custodian in commw1icating setdement instructions to local markets. liD enables intra-day curnaround of confirmations, affirmations, and receive/deliver instructions; investment managers can append funding instructions for trade settlement at the time of affirmation. In addition, confirmation fields on items such as currency codes and alternate currency instructions, as well as International Standards Organization receive/deliver instruction formats, are provided.

110 in '90 International ID began as a pilot program in 1988 with a dozen users, expanded to 68 users in 1989, and to 150 in 1990. With an increasing number of major firms serving the international market adapting to its use, International ID is positioned for continued growth in 1991 and beyond. This interest is apparent from widened systems testing efforts of broker-dealers, global custodians, and investment managers, as well as by the commitment

FRO:-'I LEFT: DIA:\'E M. BUILEH, ISVEST.\IE.sT CO:'lI'A~'Y is!'ITtllJlh; GORDO;-.;' M.

'\lARCHA!"D (GOVJ..R:-':OR, I"'\'E~ t \11'':-': I COUSSEL A.'>.'>oClA'nos OJ A.\IJ-.RICA. ,,,,c.),

Y~.AGJ-.R, \X'OOD &. ,\tAR:-'l!J\1 L I:-

page ?Ii AUTOMATION OF DEPOSITORY SERVICES

1~ Ulmmr;ng d,po,;rory operat;on, ",d computer that another DTC system, Dual Host =-_--= communications links with Participants, PTS, requires. MDH reduces costs and potential __. _ _ transfer agents, and other users remains a hardware problems and will replace Dual Host PT5. __ high priority at DTC. By continuing to expand the capabilities of its computer systems, the Automated Participant Inteiface depository reduces its operating costs and, more The Automated Participant Interface (API) allows important, makes it possible for Participants to Participants or their data-processing service bureaus reduce their processing costs. to enter instructions directly into DTC's computer DTC has five principal means of automated system by hand-delivered or electronically communications with Participants: transmitted magnetic tape. API capabilities include magnetic tape instructions for routine withdrawals­ Computer-to-Computer Facility by-transfer, Institutional Delivery (lD) system trade The Computer-to-Computer Facility (CCF) is used confirmations, and / D affirmations. Because for direct computer-to-computer communication Participants are migrating to other, more efficient between DTC and user IBM mainframes. CCF means of transmitting data, DTC expects to provides about 50 input and output functions, with discontinue this service in the near hlture. others to be added. CCF II serves the same purpose and can communicate with non-IBM user Automation in '90 mainfranles, as well. All output files available Computer-to-Computer Facility through CCF are available through CCF II, which " Participants can now access notices of reorganiza­ also allows mainframe users to transmit highly tion activity over CCF and CCF II, as well as compressed data in much less time. information about issues for which certificates are Participant Terminal System available only in restricted denominations. ,. Participants can now send issuance instructions for Linked directly to DTC's computers, the Participant commercial paper over CCF and CCF II. Terminal System (PTS) is a network of over 1,300 computer terminals in Participant offices e CCF and CCF II now enable commercial paper throughout the U.S. and Canada. Participants use paying agents to receive their end-of-day PTS to send instructions, inquiries, and other commercial paper maturity obligation balances. messages to DTC, and to receive depository Identified in this transmission are all commercial messages and reports. paper CUSIPs that affect paying agents' maturity obligation accounts at DTC. PTSjr. Mainframe Dual Host An alternative to FTS, FTS Jr. is available to low­ volume users-195 at yearend 1990. It performs all " Participants and their service bureaus that are PTS functions at lower cost, though at reduced line MDH users can obtain updated notifications from speed. PTS Jr. requires only a user's compatible DTC of data transmitted from and received by personal computer, DTC-supplied software, a service bureaus acting on behalf of Participants. modem, and a telephone connection. " Issuing agents of commercial paper can now submit issuance instructions for discount Mainframe Dual Host commercial paper, or commercial paper issued at Mainframe Dual Host (MDH), a mainframe-to­ face value with interest to be added at maturity. mainframe communications system, enables users "MDH also allows Participants to process dealer­ to transmit and receive deliver order (DO), night submitted commercial paper deliver orders, and deliver order, and payment order instructions in forwards maturity presentment deliver orders "real-time" for quick turnaround and automated initiated by the depository. matching of deliver order receives. MDH DOs can settle in same-day, as well as next-day, funds. Participant Terminal System

MDH users can send and receive machine­ Il A new repurchase agreement (repo) system enables readable data, eliminating the intermediate mini- Participants to enter repo DO transactions for same-

page?} day funds securities and have DTC track the thus more quickly resolved. transferers, even though the securities are not in Last year, DTC added another PTS application, their DTC accounts on record date. Selling the FAST Reject and Confirmation System, Participants instruct DTC to transfer the securities through which agents electronically report the by book-entry and credit them all future completion of individual transfers the same day they distributions on the securities. are processed. Notification of transfers that cannot " Participants can now send instructions to DTC to be completed and are being returned to DTC is also receive interest payments in the foreign currency in transmitted and passed on to Participants. The which a security issue is denominated. transmission of completed and rejected transfers " Participants can view called certificates by accessing immediately updates DTC's Securities Transfer DTC's Automated Called Lottery data bases. System. Twenty-four of the 45 agents participating " DTC enhanced PTS for Participants to review in FAST are using one or both of these applications. past and present reorganization activities by means of a series of inquiries. Also, Participants can now AUTOMATION STATISTICS 1990 1989 withdraw previously sent instructions to tender securities, and tender agents can accept or reject Number of CCF Users 660 662 withdrawal requests. Shares with associated (poison Number of CCF II Users 188 170 pill) rights can now be tendered through PTS 's Average Daily Number of Automated Tender Offer Program. CCF/CCF II Records* 6.8 4.4 Number of PTS Terminals 1,311 1,281 Securities Transfer System (STS) Average Daily Number To help speed securities transfer and quickly resolve Of PTS Transactions 736,800 749,200 problems that arise in the transfer process, DTC has PTS Jr. Users: expanded its PTS network to include applications Participants 162 160 for transfer agents in DTC's Fast Automated Pledgee Banks 18 21 Securities Transfer (FAST) program. One PTS Others 15 8 application, the Fast Balance Confirmation System, MDH Users 31 19 enables agents ro immediately confirm daily FAST Dual Host PTS Users 2 5 balances to DTC, eliminating the expense and delay of balancing by hard-copy reports. Imbalances are * In millions; includes MDH.

DTC

MONITORS

PARTICIPANT

TERMINAL

SYS'!EM

TRANSMISSIONS

FROM ITS

NETWORK

Ol'ERATIO:-:S

DEPARTMENT.

page~ THE NATIONAL CLEARANCE AND SETTLEMENT SYSTEM AND INTERNATIONAL LINKS

TC'S inter[1.ces with other u.s. clearing fund groups. These modest volumes are expected . agencies are a major part of the national to increase once no-load fund groups begin using . ___ securities clearance and settlement NSCC's Fund/SERV program. __ system. They are based on the close I~ The Options Clearing Corporation working relationship between DTC and the National Securities Clearing Corporation (NSCC), A DTC account for the Options Clearing which permits hundreds of broker-dealers that Corporation (OCC) enables banks and brokers to participate in both NSCC and DTC to pledge securities to satisfY segregation and margin conveniently use NSCC's trade comparison and requirements on put and call option contracts, as clearing facilities and DTC's trade settlement ,md well as their obligations to OCC's clearing flll1d. securities custody services. This eliminates repeated paper movements between Through interfaces between clearing parries to pledge transactions and provides an corporations and securities deposirories, users of alternative to issuing escrow receipts. Under the any of them can settle with users elsewhere, without OCClDTC Participant Terminal System shipping certificates. These links also permit users pledge/release program, Participants can input of more than one depository-DTC, Midwest pledges of securities and release requests over their Securities lrust Company, or Philadelphia PTS terminals. Depository -Irust Company-to move securities International Links positions between depositories. Moreover, DTC The Canadian Depository for Securities Limited uses its Institutional Delivery system to process the (CDS), NSCC, and DTC maintain an interface to institutional trade data reported to other assist Canadian broker-dealers that participate in depositories for clearance and settlement through DTC In addition, CDS operates a Tax Exempt their systems. Dividend Service (TEDS), in cooperation with Fund/SERV Inteiface DTC, which accommodates withholding DTC's efforts to facilitate Participant processing exemptions at source-that is, permits full payment of mutual fund transactions for their customers of dividends without withholding--on Canadian produced the depository's Fund/SERV Interface in dividend and interest payments for certain U.S., 1989, which electronically links Participants directly Canadian, and other tax-exempt beneficial owners to NSCC's automated Fund/SERV progr,un. whose securities are deposited with DTC In 1990, This service enables Participants to input Participants presented instructions on 970 million purchase, redemption, and registration data, and shares to avoid reclaiming withholding taxes of receive output; dispatches information from DTC $30.9 million on $576.6 million of dividends on to NSCC and then to the mutual funds; and Cmadian shares. returns trade confirmation information to An NSCC subsidiary, the International Securities Participants. Purchase and redemption transactions Clearing Corporation, sponsors accounts in DTC are settled by Participants in DTC's daily net for the Central Depository (Pte.) Ltd. of Singapore settlement system. DTC, in turn, settles and the Japan Securities Clearing Corp. to support with NSCC the settlement of trades in U.S. securities in In 1990, DTC enhanced the Fund/SERV Singapore and Tokyo. Inter[1.ce so that confirmed order and settlement Developments in 1990 expanded DTC's ability tickets may be printed at one of several Participant to serve its Participants in certain cross-border Terminal System (PTS) locations in a Participant's transactions. In June, the depository processed its offices. Participants executed 6,679 transactions first book-entry-only (BEO) global debt issuance­ through the Fund/SERV Interface in 1990 to 25 Citicorp's $1.4 billion Standard Credit Card Trust 1990-5 Participation Certificates. The issue DTC's links with CEDEL and Euroclear had was eligible for settlement at DTC, and at been in place to accommodate interdepository CEDEL and Euroclear. By yearend, 11 BEO deliveries of Yankee bonds over the years through global debt issues, with a total principal amount the DTC accounts ofCEDEL's and Euroclear's of $9.4 billion, had been distributed wholly or depositary banks in the U.S. partially through DTC, Also in 1990, $50 million of a New Zealand With BEO global debt issues, no certificates are dollar-denominated World Bank bond issue was available to investors. DTC or its custodian bank distributed through DTC. DTC's custodian bank holds a single global certificate representing all or a holds one global certificate representing a portion portion of each issue. Deliveries by DTC of the issue; the Reserve Bank of New Zealand holds Participants to a participant in CEDEL or Euroclear the other global certificate, representing CEDELS are made by book-entry to the DTC accounts of and Euroclear's positions, as well as those of New CEDEL's and Euroclear's U.S. depositary banks­ Zealand investors. adding to their long positions at DTC and allowing As the year ended, DTC announced its intention them to hold those positions for CEDEL and to explore with established national depositories in Euroclear in support of book-entry deliveries in major markets during 1991 the operational and those systems. Cross-border deliveries into DTC other considerations involved in future inter­ reverse this procedure. depository linkages.

CLOCKWISE FROM LOWER

LEFT: DAVID TRUBICA,

SENIOR VICE PRESIDENT,

WACHOVlA BAl~K OF

NORTH CAROLINA, N.A.;

BRUCE GARTAND, VICE

PRESIDENT, DTC; VINCENT

GRIPPA, PRESIDENT, STATE

STREET BANK A...'10 TRUST

COMPANY, N.A.; A;-"'D

JOSEPH A."l"ASTASIO,

:MA.""IAGING DIRECTOR,

SALOMON BROTHERS INC.

AT THE INDIA HOUSE IN

NEW¥ORK.

pr/geE PROTECTION FOR PARTICIPANTS' SECURITIES

he Depository Trust Company-the .. Backup computer and communications = =world's largest custodian of corporate arrangements help ensure DTCs data-processing __ __ equity and debt securities and municipal functions throughout an emergency. Periodic tests __~~ . __ securities-has an elaborate safeguard of these contingency facilities are conducted with system widely regarded as the most comprehensive Participants. for monitoring securities movement and custody. Physical Security Internal Controls DTCs physical security program combines an The depository records the movement and loca­ extensive electronic security system with a tion of each certificate in its custody, helping to thoroughly trained uniformed guard force. resolve processing errors and facilitate reconciliation "The Controlled Access System restricts entry into and audits. sensirive areas to authorized personnel and is actively "An automated certificate-number control sys­ monitored by control room operators. tem cross-indexes certificates by issue, number, £! A closed circuit television system operates through­ denomination, date of receipt, and-for bearer out DTC, monitoring all securities handling areas, bonds-the depositor's identity. This lets DTC vaults, entry points, and common hallways. control and rapidly reconstruct paper flow, "Alarm systems, which use motion and vibration regardless of volume. sensors, as well as heat detectors, are monitored locally and at a central station. Line encryption D On receipt of registered certificates, quick transfer protects individual control panels from compromise. into DTCs nominee name, Cede & Co., allows for prompt validation of certificates and enhances [] A professionally trained security force monitors the timely dividend and interest collection and many systems, and screens persons and packages disbursement to Participants. entering and leaving restricted areas. "Special wastepaper treatment and disposal methods ""Jumbo" certificates are used to consolidate help prevent unauthorized release or accidental securities into large denominations, making disposal of certificates. unauthorized negotiation extremely difficult, as £! Deposited securities are stored in various locations, well as conserving vault space. with special access requirements and extensive "Restrictive endorsements on the back of certain controls. jumbo certificates help prevent unauthorized "Registered securities are in non-negotiable form negotiation. when delivered to or from transfer agents and

m Registered certificates remain in non-negotiable other parties. fDrm while in DTC custody. Recordkeeping Systems IlIThe depository microfilms registered and bearer Double-enny recordkeeping systems help ensure certificates and related data that enter and leave . . that all Participant input is recorded, that the Its premIses. location of underlying certificates is known, and

m Duplicate computer files of transactions, stored thar moneys are properly transferred to and between in various locations, permit prompt fIle reconstruc­ Participants. DTC uses the recordkeeping systems tion if processing is interrupted. These and the to report to Participants and to research differences microfilm records supplement comprehensive files detected by Participants or by DTC control of original documents and production repons. mechanisms. User Verification Participants Fund User verification of DTC records (users compare The Participants Fund exists to satisfY any unin­ their activity records with depository reports) helps sured loss or liability suffered by DTC. DTCs ensure the integrity of the depository's system and Rules provide that any such loss may be charged encourages maximum operational cooperation. against undivided profits or retained earnings, or to Each morning, Participants and pledgees receive a the Participants Fund, at the discretion of the Board DTC report, which itemizes and summarizes their of Directors. previous day's account activity. In addition, DTC Should DTC sustain a loss because of a sends daily reports of cash transactions and a Participant's failure to satisfY obligations to the monthly statement showing each Participant's and depository related to the Next-Day Funds pledgee's securities positions. Settlement (NDFS) system or the Same-Day Funds DTC Rules require Participants to report Settlement (SDFS) system, DTC would first charge differences between their records and DTC the loss to that Participant's deposit to the Fund. statements; Participants and pledgees also must Should the loss exceed the deposit (or should it be confirm the accuracy of their monthly position sustained for reasons other than Participant failure), statements. DTCs research staff helps reconcile DTC might then charge (pro rata) the excess to all differences. other Participants' deposits to the Fund. Should DTC make a charge against a Participant's deposit Internal and External Audits to the Fund (pro rata or otherwise), the Participant DTCs internal auditors and its independent must make an additional deposit to the Fund in an accountant, Price Waterhouse, review internal amount equal to the charge. controls. The Fund has two components. One "The internal audit program is used to review and component, which currently exceeds $200 million, test controls in key operating areas and in automated is allocated to DTCs NDFS system. The other systems (including those being developed). Certificates in selected issues are counted daily through random sampling techniques. c Price Waterhouse examines DTCs financial statements, and performs an annual study and evaluation of the internal accounting control system. Participants, pledgees, and their accountants may request copies of Price Waterhouse's report on the system. cThe Audit Committee of DTCs Board of Directors oversees the General Auditor and the Auditing Department. The Audit Committee reviews the scope of the Price Waterhouse audits and meets with them periodically to discuss their findings. In addition, the Board of Directors receives results of the New York State Banking Department's and the of New York's annual regulatory examinations of the depository.

SAMUEL COOPER IS PART OF DTC's SECURITY FORCE

page :3j component of the Fund, which currently exceeds $400 million, is allocated to the SDFS system, with a further allocation between commercial paper activity and activity of all other issues settling in same-day funds. There has never been a pro rata charge to the Participants Fund.

Other Protective Procedures Additional procedures protect Participants by minimizing the possibility ofl055 from a Participant's unexpected insolvency. IfDTC learns of a possible operational or financial inadequacy, it carefully monitors that Participant's activity and takes protective steps as events warrant.

Insurance Coverages DTC's insurance coverage program for securities is one of the most extensive programs for private institutions in the financial indusny. Through a combination of interlocking blanket bonds and all­ risk insurance policies involving both the London and domestic insurance markets, DTC's coverage provides: "$250 million for loss of securities in transit; .. $200 million for loss of securities on premises. In addition: "For any loss of non-negotiable securities being moved by certain modes of transportation, additional coverages are provided by DTC's II1surers.

II For any loss of securities moving by armored car carrier service, $500 million is provided by the armored car carrier's insurance. "For any loss occurring in the mail, DTC's mail policy provides: -$15 million in coverage for non-negotiable securities sent by registered mail, express mail, or express COlmer; -$1 million for non-negotiable securities sent by first-cl~L's mail; -$1 million for negotiable securities sent by registered mail, express mail, or express courier.

THe I~N I R,\NCE '1 () DTC's fl.1U""lIClI'AI VAUL'] ]:--J GARIlJ:N CITY.

P{/gc1J OFFICERS OF THE DEPOSITORY TRUST COMPANY

Vice Presidents Michael A. Agnes Joseph J. Arney Nicholas J. Arrigan Joseph J. Bellantoni Neil F. Brander Ronald J. Burns John J. Colangelo Raymond R. DeCesare Donald F. Donahue Stuart A. Fishbein William T. Denrzer,Jr. Conrad F. Ahrens William F. Jaenike Thomas J. Lee Ronald A. Garguilo Chairman and Chief President and Chief Executive Vice E'(ecutive Vice Bruce S. Garland Executive Officer Operating Officer President President Charles J. Horstmann W. Win Hubley James Koster Vincent A. Mauro Michael T. Mullen Richard J. O'Brien Frank Petrillo Lawrence W. Postel Joseph F. Reale James V. Reilly John L. Scheuermann Kenneth M. Scholl Comptroller Gary J. LaCara Treasurer Philip E. Plasencia Thomas C. Cardile Dennis]. Dirks Michael Fedorochko Glenn E. Mangold Assistant Secretary Senior Vice President Senior Vice President Senior Vice President Senior Vice President Jane C. Klueger Assistant Treasurer Leonard A. Miele

Committees of the Board of Directors Nominating Committee Thomils C. Schneider, Chairmiln John F. Lee Richard S. Pechter H.J. Runnion, Jr. Audit Committee C. Howell Scott, Chairman Sheldon Harrison Richard B. Nes.<;()n Edward J. McGuire, Jr. Richard F. Morrison Senior Vice Presidellt Seaetllly DuWayne J. Peterson and Geneml Counsel Compensation Committee Richard S. Pechter, Chairman Michael Minikes Thomas C. Schneider C. Howell Scott

page ,2() THE BOARD OF DIRECTORS

WiliiamT Dermer,Jr, Conrad F. Ahrens William F. Aldinger Richard V. Fulp Richard A. Grasso Chainl/lIl/ IIl/d Chill I'resident tll/d Chill J~vclllive Vice /:.\"ccwilJe Vice Ext'ClItilJe Vice b-eclltiut OjJieer, Opemtmg OjJicer, I'resident, l'Veils I·ingo Presidmt, Balik ChainnrlJl, President, ll}e Depositm), The DepoSItor)' Btlllk Natiolltl/ o{/jllterica tllld ChiefOperatilig Tmst COlIIptll/)' Trust COJJljJmq Association ArT 0" SA Officer, New York Stock E"'hallge, Illc.

Sheldon Harrison C. Richard JUSt ice John F. Lee Michael Minikes Richard F. i\'iorrison Senior EW'tlllillf Vict' Execurillf Vict' President, lVew Vork Senior k/flJltlgiJlg Senior Ex(cutilJ( Presidellt, lilt Btlllk j'reSlt/ellt, lVa/jolla! Ofrll1l1g HOllse Director IIl1d li-fflsllrer, Vict' j)resltlelll, of New York Associ/ulon (1' ,/l;t Hl'lIr Stearm 51){'iliJOJlI.('iJJJlflll el,'omtifs Dm/I"", Illc. Gmtp"l/il's Ille. I:!rothl'lJ 111(.

Richard S. Pechter Du\V'ame J. I'elel;on H.J. Runnion, J r. Thomas C. Schneidel C. Howell Scorr Chtlll7l1t1l/, DI) I:':\'ccutive Vice Direc/or, \Vild]()fJia J~w'n(/;{J{' Vice j;:W(!1I i 0(' \Ift(' Fiwl/Ici{dS('rf)icrs I'reslt/mt, AII'm/! NflJlJ' crTnlJ! j)r('siril.'JII Il}Id Chirj' j)r{'sirit'J/I, B/lJlkeJ:~ GrollI' L),lIch 0" Co., Ilic. Gllllpmt)', NA. /-IwlI/cill/ Officer, . TrIlst C()mp/lJ~)r DI'tllI 110ftl'r Fillallcill/ Sen/jet'S Group IJ/c.

Retiringji'Oln the Board during 1990, at tbe end oftbeir tel7l1S, fUerc Robert A. Fliedmall, Partncr, Goldmall, Stui}s & (il., alld Peter E MacUlm, /'resident and Chi'fOpel'fltillg Officer, State Street /iI/ilk find Trust Company.

page 37 REPORT OF INDEPENDENT ACCOUNTANTS

To the Board ofDirectors And Stockholders of The Depository Trust Company

n our opinion, the accompanying statement of condition and ----1-(- the related statements of revenues ,1Ild expenses and undivided profits and of cash flows present t:lirly, in all material respects, the financial position of The Depository Tmst Company at December 31, 1990 and 1989, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accow1ting ptinciples. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these fin,lIlcial statements based on our audits. \Ve conducted our audits of these statement'> in accordance with generally accepted ,luditing standards which require that we plan and perfonn the audit to obtain reasonable ,lssurance about whether the tlnancial statement" are free of materi,ll misstatement. An audit includes examining, on a test basis, evidence supporting the amount'! and disclosures in the financial statement,>, assessing the ,lccounting principles used and sif,'nificant estimates made by management, and evaluating the overall financial statement presentation. \Ve believe that our audits provide a reasonable basis for the opinion expressed above.

153 East 53rd Street, New York, NY, February I, 1991

December 31, Statement of Condition 1990 1989

(Dollars ill thousands) Assets Cash and money market accounts $ 53,872 $ 5,778 Repurchase agreements 2,025,327 1,526,323 Receivables: Participants: For settlements 25,598 40,146 For services 23,456 22,703 Dividends, interest and other 183,028 307,787 Deferred income taxes 10,566 7,323 Prepaid expenses 3,643 2,721 Equipment and leasehold improvements, less accumulated depreciation of $59,503,000 in 1990 and $50,974,000 in 1989 49,201 56,484 Contributions to Participants Funds, callable on demand 447,370 351,085 $2,822,061 $2,320,350 Liabilities and stockholders' equity Liabilities: Drafts payable $1,276,003 $1,194,365 Accounts payable and accrued expenses 103,873 65,533 Payable to Participants: For refunds 16,101 30,134 On settlements 286,125 1,742 On receipt of securities 79,762 87,989 Dividends, interest and other 394,459 442,581 Notes payable, including $5,178,000 in 1990 and $3,004,000 in 1989 due within one year 18,363 8,749

2,174,686 1,831,Q93 Participants Funds: Deposits received 181,247 120,675 Contributions callable on demand 447,370 351,085

628,617 471,760 Stockholders' equity: Capital stock-18,500 shares authorized, issued and outstanding 1,850 1,850 Surplus 950 950 Undivided profits 15,958 14,697 18,758 17,497

$2,822,061 $2,320,350

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

page 40 For tlu! yenrs ended December 37, Statement of Revenues And Expenses and 1990 1989 Undivided Profits (Dollars ill thousands) Revenues Services to Participants $252,218 $241,856 Interest income 89,703 127,199

341,921 369,055

Less-Refunds to Participants 87,928 121,253

253,993 247,802

Expenses Employee costs 154,401 148,371 Rent, maintenance and utilities 37,117 37,475 Data processing rentals and supplies 14,343 15,637 Professional and other services 14,371 12,576 Depreciation and amortization 9,322 9,480 Interest 1,989 966 Other expenses 21,189 22,004

252,732 246,509

Excess of revenues over expenses and refunds 1,261 1,293 Undivided profits, beginning of year 14,697 13,404

Undivided profits, end of year $ 15,958 $ 14,697

The accolllpallying lIoles are all inlegral part of the fillancial slalelllCllts.

pageii For the yenrs ended December 31, Statement of Cash Flows 1990 1989

Cash flows from operating activities (Dol/ars ill thousallds) Excess of revenues over expenses and refunds $ 1,261 $ 1,293

Adjustments to reconcile excess of revenues over expenses and refunds to net cash provided by operating activities: Depreciation and amortization 9,322 9,480 Pension and deferred compensation 3,576 2,602 Provision for uncollectible dividend receivables (141) 305 Provision for deferred taxes (3,243) (875) Decrease in receivables from Participants 13,795 17,633 (Increase) decrease in dividends, interest and other receivables 124,760 (250,108) Increase (decrease) in accounts payable, accmed expenses and other, net 33,982 (7,634) Increase in Participants Funds deposits received 60,572 40,734 Increase in drafts payable 81,638 318,799 Increase in payables to Participants 214,001 49,111

Total adjustments 538,262 180,047

Net cash provided by operating activities 539,523 181,340

Cash flows from investing activities Purchases of equipment and leasehold improvements (2,039) (9,707)

Cash flows from financing activities Proceeds from borrowing 15,000 Principal payments on notes (5,386) (2,886)

Increase in cash and cash equivalents 547,098 168,747 Cash and cash equivalents, beginning of year 1,532,101 1,363,354

Cash and cash equivalents, end of year $2,079,199 $ 1,532,101

The accompallyillg lIotes arc all illtegral part of the fillnllcinl statements.

page£? Notes to Note I-Business and Ownership: disbursements to Participants in clearinghouse Financial Statements The Company is a limited purpose tmst funds. The resulting book overdrafts are December 31,1990 mzd 1989 company providing central securities depository included in drafts payable and are eliminated the and related services to the securities, banking next business day when the repurchase and related industries. At December 31,1990, the agreements and money market accounts are New York Stock Exchange owned approxi­ converted back to cash. mately 34% of the capital stock of the Company, For cash flow reporting, cash and cash with the remainder owned by the American equivalents include cash on hand, money market Stock Exchange, National Association of accounts and repurchase agreements. Securities Dealers and a number of Participants or their representatives. A Stockholders C. Eqlliplllent alld leasehold ill1provelllellts: Agreement provides for an annual reallocation of Equipment and leasehold improvements are the entitlement to purchase outstanding capital recorded at cost. Equipment is depreciated over stock by eligible Participants or their estimated useful lives ranging from five to eight representatives based on relative depository years, using principally accelerated methods. activity of Participants during the prior year. Leasehold improvements are amortized on the straight-line method over the lives of the related Pursuant to a policy adopted by the Board of leases or the useful lives of the improvements, Directors, the Company does not pay dividends whichever is less. to stockholders, but refunds to all of its Participants each year revenues in excess of D. Illcollle taxes: current and anticipated needs. [n 1990, this Provision is made for deferred income taxes refund amounted to $19,420,0000989- applicable to revenues and expenses reported in $21,840,000). The Board of Directors also adopted the financial statements in periods which differ an additional refund policy to provide for a from those in which they are subject to taxation. monthly refund to Participants of income earned from the overnight investment of cash dividend Note 3-Participants Funds: and corporate interest and reorganization Participants in the depository are required to payments to the Company for Participants, deposit to one or both of two Participants Funds reduced by certain related expenses. Such net amounts which relate to their activity in the monthly refunds totaled 568,508,000 in 1990 depository. The Funds are available to satisfy the (1989-$99,413,000). Participants' obligations to the Company. and to satisfy certain uninsured losses, if such should Note 2-SummanJ of Sigl1ifiwl1t Accounting occur, of the Company. Required deposits are Policies: received in cash or in securities of the United A. SeClirities on deposit: States Government, its agencies or Securities held by the Company for Participants instmmentalities, states and political are not recorded in the accompanying financial subdivisions or certain eligible nonconvertible statements. Cash dividends and interest received registered corporate debt securities, that are held or due on such securities and in process of by the Company or pledged to it and callable on distribution or awaiting claim are recorded in the demand. statement of cond ition. Note 4--Dividends and Interest on Securities on Deposit: B. Cash, short-terlll illvestlllellts alld CIlsh flows: The Company receives cash and stock dividends Repurchase agreements represent US. and interest on securities registered in the name Government and U.S. Government Agency of its nominee and interest on bearer securities securities purchased under agreements to resell which it distributes to its Participants for the at predetermined prices, generally over periods owners of the securities. Amounts received on of three days or less. These agreements, registered securities withdrawn before the record primarily with a small number of money center date but not transferred from the name of the financial institutions, are recorded at cost and Company's nominee cannot be distributed interest is accmed as earned. unless claimed by the owners of the securities The Company invests available in through a Participant or other financial repurchase agreements and money market institution. At December 31,1990, cash accounts and at the same time makes dividends and interest payable amounted to

pflge41 $245,748,000, of which $151,935,000 was awaiting distribution to Participants and $93,813,000 was 1990 1989 held pending claim on behalf of the record date (Ool/ars ill (hol/sal/(is) owners of the applicable securities. Stock Plan assets at fair value, dividends payable and unclaimed are not primarily equity secu- recorded in the accompanying financial rities and deposits statements. Unclaimed cash and stock dividends under group annuity and interest on securities registered in the name contracts $38,205 $37,630 of the Company's nominee and interest on bearer securities are transferred to New York Accumulated benefit State when required by abandoned property obligation for service laws. rendered: Vested 28,253 23,391 Cash dividends and interest receivable at Non-Vested 2,722 2,592 December 31,1990 amounted to $124,410,000 (1989-$288,815,000) before reduction by an 30,975 25,983 allowance of $525,000 (1989-$1,035,000) for Additional amounts possible losses. Stock dividends receivable are related to projected com- not recorded in the accompanying financial pensation increases 13,185 11,247 statements. Projected benefit

Note ~Pension Plan: obligation for service rendered 44,160 37,230 The Company has a noncontributory defined benefit pension plan covering substantially all Plan assets (less than) in full-time employees. Plan benefits are based on a excess of the projected formula percentage of annual earnings for each benefit obligation (5,955) 400 year of continuous participation with vesting Unrecognized net asset after five years. The Company's funding policy is remaining from the to contribute annually the maximum amount initial application of that can be deducted for federal income tax FAS No. 87 (8,837) (9,640) purposes. Unrecognized net loss Net pension costs for 1990 and 1989 included the from past experience following components: different from that as- sumed and the effects of 1990 1989 changes in assumptions 5,119 2,282 (Ool/ars ill tlwl/sallds) Unfunded accmed pen- Service cost-benefits sion cost included in earned during the year $4,139 $3,509 accounts payable and Interest cost on projected accmed expenses ($ 9,673) ($ 6,958) benefit obligation 3,157 2,651 Actual return on assets (887) (5,200) The discount rate used in determining the Net amortization and actuarial present value of the projected benefit deferral (3,490) 1,207 obligation was 8.5% (1989-8.75%). The assumed rate of future compensation levels was based on Net periodic pension cost $2,919 $2,167 anticipated inflation and merit increases. The expected long-term rate of return on assets was 10% (1989-10%). The unrecognized net asset The following table sets forth the plan's funded that existed when Statement of Financial status and amounts recognized in the Statement Accounting Standards No. 87 was adopted, as of of Condition at December 31: January 1, 1986, is being amortized over 16 years. The Company has available with commercial Note 6--Income Taxes: banks two short-term lines of credit of $5 million Income taxes are included in other expenses. each at rates approximating the prime rate, and a The income tax provisions for 1990 and 1989 are revolving credit loan agreement of $50 million at summarized as follows: the plus .375%. A commitment fee of .125% is required on the $50 million 1990 1989 revolving credit loan agreement which is (Dol/ors ill tl/OJ/solIds) available to support the Same-Day Funds Current provision: Federal $3,298 $1,431 Settlement system. These facilities were not State and local 684 502 utilized during 1990. Deferred (benefit): Federal (2,589) (912) Note 8--Leases and Other Commitments: State and local (654) (314) The Company has entered into leases for office $ 739 $ 707 space and data processing and other equipment. Leases for office space and various data processing and other equipment are classified as operating leases. The leases for office space The primary difference between pretax provide for rent escalations subsequent to 1990. accounting income and taxable income relates to Rent expense in 1990 was $30,972,000 (1989- unfunded pension expense. $29,826,000) for office space and $12,967,000 Income taxes paid during 1990 totaled $4,124,000 (1989-$13,702,000) for data processing and (1989-$2,240,000). The Company also received other equipment. refunds of $433,000 in 1990 reflecting a reduction Presented below are the future minimum pay­ in the allocation of income subject to local taxes ments, by year and in the aggregate, under oper­ (1989-$1,109,000 from the utilization of net ating leases having noncancelable lease terms in operating loss carrybacks). excess of one year as of December 31, 1990: A recent decision by the Financial Accounting (Dol/ors ill t!1OJ/solIds) Standards Board would modify Statement of Financial Accounting Standards No. 96, 1991 $ 33,061 "Accounting for Income Taxes," and require its 1992 33,261 adoption by 1993. The adoption of this standard 1993 32,821 is not expected to have a material effect on the 1994 32,781 Company's financial condition. 1995 32,825 Thereafter 95,705 Note 7-Notes Payable: Total future minimum lease payments $260,454 The Company has notes payable totaling $18,363,000 at a weighted annual rate of 8.9%. The notes are being repaid in monthly installments. Interest paid during '1990 totaled $1,805,000 (1989-$987,000).

Aggregate maturities of notes payable as of December 31, 1990 are summarized as follows:

(Ool/ars in tlw//sflllds)

1991 $ 5,178 1992 4,964 1993 4,393 1994 3,521 1995 307

Total notes payable $18,363

jJage45 PARTICIPANTSt

Banks Amalgamated Bank of New York (The) First National Bank of Sanwa Bank American National Bank & Trust Company First National Bank of Boston (The) Seattle-First National Bank of Chicago First National Bank of Chicago (The) Washington, N.A. AmeriTrust Company National Association First National Bank of (The) Security Pacific National Bank AmSouth Bank, N.A. First National Bank of Omaha Security Trust Company, N.A. Bank IV Wichita, National Association First of America Bank-Illinois, N.A. Seligman 0. & W.) Trust Company Bank of America NT & SA First Bank N.A. Memphis Shawmut Bank of Boston, N.A. Bank of Bermuda International Limited First Trust Corpora tion Signet Trust Company Bank of California (The) First Trust National Association Society Bank Bank of Montreat New York Branch First Union National Bank Society National Bank , N.A. First Wisconsin Trust Company Southeast Bank, N.A. Bank of New York (The) Fort Wayne National Bank SouthTrust Bank of Alabama, N.A. Bank of Nova Scotia (The), New York Agency French American Banking Corporation , N.A. Bank of Oklahoma, N.A. Frost National Bank Star Bank, National Association, Cincinnati Bank of St. Louis National Association Fuji Bank & Trust Company (The) State Street Bank and Trust Company Bank of Tokyo Trust Company (The) Harris Trust & Savings Bank Stock Yards Bank and Trust Company Bank One Trust Company, N.A. Hibernia National Bank Sumitomo Bank of California Bank One Wisconsin Trust Company, N.A. Huntington National Bank Sumitomo Trust & Banking Co. (USA) Bank South, N.A. lBJ Schroder Bank & Trust Company Summit Bank Bankers Trust Company IDS Bank & Trust Summit Trust Company (The) Barclays Bank PLC New York Branch INB National Bank New York Branch Barnett Banks Trust Company, N.A. Imperial Trust Company National Association Bessemer Trust Company Industrial Bank of Japan Trust Company (The) Toronto Dominion Bank (The)- Boatmen's National Bank of St. Louis (The) Investors Bank and Trust Company New York Branch Boston Safe Deposit and Trust Company Investors Fiduciary Trust Company Toyo Trust Company of New York Brown Brothers Harriman & Co. Kellogg-Citizens National Bank Trust Company Bank Canadian Imperial Bank of Commerce-- Key Trust Company Trust Services of America, Inc. N.Y. Agency Key Trust Company of the Northwest Trustmark National Bank Capital Trust Company LTCB Trust Company U.s. Bank of Washington, N.A. Central Bimk of LaSalle National Bank Union Bank Central Bank of the South Liberty National Bank and Trust Company Union Bank of Central Fidelity Bank, N.A. of Louisville Union Planters National Bank Central Trust Bank (The) Liberty Street Trust Company Union Trust Company Chase Lincoln First Bank, N.A. Lincoln National Bank & Trust Company United Bank of Denver, National Association Chase Manhattan Bank, N.A. (The) of Fort Wavne United Jersey Bank Chemical Bank Lloyds Bank "l'Ie United Missouri Bank of Kansas City, N.A. Citibank, N.A. M&I Marshall & llsley Bank United States National Bank of Oregon Citizens and Southern National Bank (The) Manufacturers and Traders Trust Company United States Trust Company of New York Citizens Fidelity Bank and Trust Company Manufacturers Hanover Trust Company Valley Bank of Nevada Citv National Bank Manufacturers National Bank of Valley National Bank of Arizona Cit~trust Marine Midland Bank Valley Trust Company CO~lerica Bank-Detroit Marquette Bank Minneapolis, N.A. Wachovia Bank & Trust Company, N.A. Commerce Bank of Kansas City, N.A. Mellon Bank, N.A. Wells Fargo Bank, National Association Connecticut Bank and Trust Company (The) Mercantile-Safe Deposit and Trust Company Wheeling Dollar Bank Connecticut National Bank (The) Merchants National Bank & Trust Company Wilmington Trust Company Continental Bank, National Association of Women's Federal Savings Bank CoreStates Bank, N.A. National Bank Wyoming National Bank Casper Crestar Bank Midlantic National Bank Yasuda Bank and Trust Company (U.S.A.) Custodial Trust Company Morgan Guaranty Trust Company of New York Zions First National Bank Dai-Ichi Kangyo Bank, Limited (The), Morgan Stanley Trust COlllp£lny New York Branch NBD Bank, N.A. t As of Decelllber 3"1, 199U Daiwa Bank, Limited (The), New York Agency NCNB National Bank of North Carolina Denver National Bank NCNB Texas National Bank Dominion Trust Company National City Bank Fidelitv Bank, National Association National Westminster Bank N.J. Fiduci~ry Trust Company International National Westminster Bank PLC Fiduciary Trust Company of Boston National Westminster Bank USA (The) Nationar First American Bank, N.A. Norstar Trust Company First City, Texas-Houston, N.A. Northern Trust Company (The) First Fidelity Bank, National Association, Norwest Bank Minnesota, National Association New Jersey Old Kent Bank and Trust Company First Interstate Bank of Arizona, N.A. Old Kent Bank-Chicago First Interstate Bank of California Pittsburgh National Bank First Interstate Bank of Denver, N.A. I'rovident Bank (The) First Interstate Bank of Oregon, N.A. Provident National Bank First Interstate Bank of Washington N.A. Republic National Bank of New York First Trust Company (The) Riggs National Bank of Washington, D.C. (The) First National Bank and Trust Company Roval Bank of Canada (The) of Tulsa (The) Sal;ta Barbara Bank & Trust

page 1§ Broker-Dealers # ABO Securities* Commerzbank Capital Markets Corporation Go[dman Sachs Money Markets, Inc. ABO Securities Corporation Connor, Clark & Co. Limited* Gordon &Co. AGF Securities Inc* Coughlin and Company, [nc.* Gordon Capital Corporation Acorn Trading, Inc. County NatWest Securities Corporation USA Gradison & Company Incorporated Adams-Fastnow Company Inc.* Cowen & Co. Greenline Investor Services Inc.* Adams, Harkness & Hill, Inc. Craig-Hallum, Inc. Greenwich Capital Markets, Inc. Adler, Coleman & Co., Inc. Craigie Incorporated Gruss (Oscar) & Son Incorporated Advest, Inc. Cresva[e [nternational, Limited Guardian Trust Company* Affina Brokerage Services Inc. Crews & Associates, Inc. Hamilton Investments, Inc. Alexander (J.) Securities, Inc.* Crowell, Weedon & Co.* Hanauer (J.B.) & Co. Alger (Fred) & Company, Incorporated Dain Bosworth Incorporated Hancock (John) Clearing Corporation Allen & Company Incorporated Daiwa Securities America Inc. Hanifen, Imhoff, Inc.* Alpine Associates Darier Canada Inc.* Hartfield (J.F.) & Co., Inc.* American Enterprise Investment Services Inc.* Datek Securities Corporation Heitner Corporation (The)* American Securities Corporation Daugherty, Cole Inc.* Henderson Brothers, Inc. Arnhold and Bleichroeder (S.), Inc. Davenport & Co. of , Inc. Henry Krieger /DBI, L.P. Asiel & Co. Davidson (D.A.) & Co., Inc.* Herzog, Heine, Gedu[d, Inc. BHC Securities Inc. Davis (Shelby Cullom) & Co. Hibbard Brown & Co., Inc. BHF Securities Corporation Deacon, Barclays, Dezoete, Wedd Limited* Hill, Thompson, Magid & Co., Inc.* BSE Specialist Account* Deltec Securities Corporation* Hilliard (J.).B.), Lyons (W.L.), Inc. BT Securities Corporation Desjardins, Deragon, Lang[ois Ltd.* Hoelscher (Shiels) & Co.* Baer (Julius) Securities Inc. Deutsche Bank Capital Corporation Hopkins, Harbach & Co.* Baird, Patrick & Co., Inc. Diamant Investment Corp.* Hough (William R.) & Co. Baird (Robert W.) & Co. Incorporated Dillon, Read & Co. Inc. Howard, Weil, Labouisse, Friedrichs Banc One Capital Corporation Disnat Investment Inc.* Incorporated Bankers Systems Brokerage Services, Inc. Doft & Co., Inc. Hummer (Wayne) & Co. Barr Brothers & Co., Inc. Dominick & Dominick, Incorporated Huntleigh Securities Corporation Baum (George K.) & Company Donaldson, Lufkin & Jenrette Securities Corp.* Hutchinson, Shockey, Erley & Co. Bear, Stearns & Co. Inc. Donaldson, Lufkin & Jenrette Securities Icahn & Co., Inc. Bernstein (Sanford C) & Co., Inc. Corporation Ingalls & Snyder Bidwell & Company* Drexel Burnham Lambert Incorporated Instant Funds Incorporated* Blair (Charles M.) & Co., Inc.* Easton & Co. Instinet Corporation Blair (William) & Company Edwards (A.G.) & Sons, Inc. Interstate/Johnson Lane Corporation Bodell, Overcash Anderson & Co., [nc.* Egan, Marrin & Rubano [nc.* [nvestNet Corporation Bradford (J,C) & Co. Einhorn & Co. Jacobson (Benjamin) & Sons Brault, Guy, O'Brien [nc.* Elwood (R.W.) & Co., Inc. Janney Montgomery Scott Inc. Brawley Cathers Limited* Equity Securities Trading Co., Inc.* Jefferies & Company, Inc. Brounoff, Claire, & Co., Inc. Ernst & Co. Jefferies & Company, Inc.* Brown (A[ex.) & Sons, Inc. Exchange Services, [nc.* Jesup Josephthal & Co., Inc. Brown & Company Securities Corporation Execution Services Incorporated Jones (Edward D.) & Co. Brown, Lis[e/Cummings, Inc. Fagenson & Co., Inc. Josephthal & Co. Incorporated Bunting Warburg Incorporated* Fahnestock & Co., Inc. Judah (S.A.) & Co., Inc.* Burke (P.R.) & Co., Inc. Fechtor, Detwiler & Co., Inc.* K.K. & Company* Burns Fry Hoare Govett Inc. Fernandez, Bartsch & Mirra Kalb, Voorhis & Co. Burns Fry Limited* First Alabama Investments, Inc. Kankaku Securities (America) Inc. Burns, Pauli & Co., Inc. First Albany Corporation Kawano (H.) & Co., Inc.* Butler (K.R.), Inc.* First Boston Canada Limited* Keeley (K.J.) & Co., Inc.* Butler, Wick & Co., Inc. First Boston Corporation (The) Kellner, DiLeo & Co. Campbell (D.A.) Co., [nc.* First Investors Corporation Kemper Clearing Corp. Campbell, Waterman, [nc.* First Manhattan Co. Kenny (J.j.) Drake, Inc.* Cantella & Co., Inc. First Marathon Securities Limited* Kessler Asher Clearing, Inc. Cantor Fitzgerald & Co. First of Michigan Corporation* Kidder, Peabody & Co. Incorporated Cantor Fitzgera[d Corporate Brokers, Inc. First Options of Chicago, [nc.* Kimball & Cross* Cantor (S.B.) & Co., Inc.* First Southwest Company King (CL.) & Associates Inc. Capital Group Securities Limited* First Wachovia Brokerage Service Knox (W.L.) & Company Capital Shares, Inc.* Corporation Koonce Securities, Inc.* Carr Securities Corporation Frank (Walter N.) & Co. LIT America Inc. Carroll McEntee & McGinley Securities, Inc. Frankel (Wm. V.) & Co., Inc.* L.O.M. Western Securities Ltd.* Carty & Company, Inc. Freeman Securities Company, Inc. LaBranche & Co. Cassels B1aikie & Co., [nc.* Freeman WeI wood & Co., Inc. Lafferty, Harwood & Partners Ltd* Incorporated Fried (Albert) & Co. Larkin (Emmett A.) & Co., Inc.* Chapdelaine & Co.* Fundamental Brokers, Inc. Lasker, Stone & Stern Charles-Bush (JW) Securities, Inc. Gage-Wiley & Company, [nc.* Lawrence (Cn, Morgan Grenfell, Inc. Charles Schwab & Co., Inc. Gant (J.W.) & Associates, Inc.* Lawrence, O'Donnell, Marcus & Co. Chase Securities, Inc. Garat & Co.* Lazard Frcres & Co. Chicago Corporation (The) Geldermann Securities Inc. Legg Mason Wood Walker, Inc. Chicago Corporation (The)* Glickenhaus & Co. Lehman Special Securities Inc. Childs (S.W.) Management Corporation Goldberg Securities, Inc.* Lerner (David) Associates, Inc. Citicorp Securities Markets, Inc. Goldman Sachs Canada* Levesque, Beaubien Inc.* Coast Options, Inc.* Goldman, Sachs & Co. Lewco Securities Corp.

page iZ Loewen Ondaatje, McCutcheon & RSF Partners W&D Securities Company Ltd.* Ragen MacKenzie Incorporated WSI Stock Loan* MKI Securities Corp. Rauscher Pierce Refsnes, Inc. Wachtel & Co., Inc. Mabon, Nugent & Co. Raymond, James & Associates, Inc. Wagner Stott & Co. MacAllaster Pitfield Mackay, Inc. Reaves (W.H.) & Co., Inc. Wagner Stott Clearing Corp. MacDougall, MacDougall & MacTier, Inc.* Refco Securities, Inc. Wall Street Investment Services Madoff (Bernard L.) Regional Clearing Corp. Wall Street Equities Incorporated* Manufacturers Hanover Securities Corporation Research Capital Corporation* Walsh, Greenwood & Co. Marcus Schloss & Co., Inc. Richardson Greenshields of Canada, Ltd.* Warburg (S.G.) & Co. Inc. Mayer & Schweitzer, Inc. Richardson Greenshields Securities, Inc. Waterhouse Securities Inc. McCourtney-Breckenridge & Company* Rimson (M.) & Co., Inc. Weber, Hall, Sale & Associates, Inc. McDaniel Lewis & Co. Robb, Peck, McCooey Clearing Corporation Wechsler & Krumholz, Inc. McDonald & Company Securities, Inc. Robertson, Stephens & Company Wedbush Morgan Securities Inc.* McNeil Mantha Inc.* Rodman & Renshaw, Inc. Weeden & Co.* Meehan (M.].) & Company Roney &Co. Weiss, Peck & Greer Melville (Ronald E.) Inc.* Roosevelt & Cross Inc. Wellington (H.G.) & Co. Inc. Mercator Partners Rothschild Inc. Wheat, First Securities, Inc. Mericka & Co., Inc.* Rothschild (L.F.) & Co. Incorporated Whitaker (Don C) Inc.* Meridian Asset Management, Inc. Roulston Research Corp. White (Thomas F.) & Co., Inc.* Meridian Securities International Ltd.* SBCI Swiss Bank Corporation Investment Williams Securities Group, Inc.* Merit Investment Corporation* Banking Inc. Wilshire Associates Incorporated* Merrill Lynch, Pierce, Fenner & Smith SLS Securities Limited Partnership Wilson (L.W.) & Co., Inc.* Incorporated Sage Clearing Corporation* Witter (Dean) Reynolds (Canada) Inc.* Merrill Lynch Specialists Inc.* Sage Clearing/Executions* Witter (Dean) Reynolds Inc. Merrimack Valley Investment Inc.* Sage, Rutty & Co., Inc. Wolfe & Hurst Bond Brokers, Inc. Mesirow Capital, Inc.* Salomon Brothers Inc Wolfe & Hurst Bond Brokers, Inc.* Mesirow Capital, Inc. Sanwa McCarthy Securities Limited* Wood (Arthur W.) Company* Midland Walwyn Capital Corporation Schapiro (M.A.) & Co., Inc. Wood Gundy Corp. Midland Walwyn Capital Corp.* ScotiaMcLeod Inc.* Wood Gundy Inc.* Mitchum, Jones & Templeton, Inc.* Scotia McLeod (USA) Inc. Yamaichi International (America), Inc. Scott & Stringfellow Investment Corporation Yamaichi International (America), Inc.* Morgan (J.P.) Securities Inc. Seasongood & Mayer Yorkton Securities Inc.* Morgan, Keegan & Company, Inc. Seattle-Northwest Securities Corporation Ziegler (B.C) and Company Morgan Stanley & Co. Incorporated Seidel (Morton) & Co. Inc.* Ziegler Thrift Trading, Inc.* Murphey, Marseilles, Smith & Nammack Seidler Amdec Securities Inc.* Murphy & Durieu Shearson Lehman Brothers Inc. N.B. Clearing Corporation Shearson Lehman Brothers Inc.* National Corporation Shelter Rock Securities Corporation* Clearing Agencies Smith Barney, Harris Upham & Co. Nesbitt Thomson Deacon Inc.* Canadian DepOSitory for Securities Neuberger & Berman Incorporated Limited (The)* Smith, Moore & Co.* New Japan Securities International, Inc. Central Depository (Pte.) Ltd. (Singapore)** Smith New Court, Carl Marks Inc. New Windsor Associates, L.P. International Securities Clearing Corporation Societe Generale Securities Corporation Newbridge Securities Inc. Japan Securities Clearing Corp.** Southwest Securities, Inc. Newhard, Cook & Co. Incorporated Midwest Securities Trust Company Spear, Leeds & Kellogg Nikko Securities Co. International, Inc. (The) National Securities Clearing Corporation Spear Securities, Inc.* Nomura Securities International, Inc. Options Clearing Corporation (The) Steichen (R.I.) & Company* Nuveen (John) & Co. Incorporated Philadelphia Depository Trust Company O'Connor & Associates Stephens, Inc. Odium Brown Limited* Stern & Kennedy Offerman & Co., Inc.* Stern (M.L.) & Co., Inc.* # Excludes some firms willi limited activity Olde Discount Corporation Sterne, Agee & Leach, Inc. * National Securities Clearing Corporation Oppenheimer & Co., Inc. Stifel, Nicolaus & Company Incorporated Sponsored Account Pacific Brokerage Services, Inc. StockCross, Inc. * ** International Securities Clearing Corporatioll Incorporated Stoever, Glass & Co., Inc. Sponsored Account Paine Webber Specialists Inc.* Stokes, Hoyt & Co. Parker (S.C) & Co., Inc.* Stone & Youngberg* Payson (H.M.) & Co.* Streicher (J.) & Co. Pflueger & Baerwald Inc.* Swift (Henry F.) & Co.* Pforzheimer (Carl H.) & Co. Swiss American Securities Inc. Pictet (Canada) and Company, Limited* TCW Inc.* Piper, Jaffray & Hopwood Incorporated Thomson Kernaghan & Co., Ltd.* Porter, White & Yardley, Inc. Timber Hill Inc. Preferred Technology, Inc.* Titus & Donnelly lnc.* Principal/Eppler, Guerin & Turner, Inc. (The) Transatlantic Securities Company Prudential Bache Securities Canada Ltd.* Trust La Laurentienne du Canada* Prudential-Bache Securities Inc. UBS Securities Inc. Quinn (E.J.) & Co., Inc.* U.S. Clearing Corp. RAF Financial Corporation* Universal Securities Corporation RBC Dominion Securities Corporation Vail Securities Investment, Inc. RBC Dominion Securities, Inc' Van Kampen Merritt Inc.

page 4!i Participants in the Same-Day Funds Settlement System § Adams, Harkness & Hill, Inc. First National Bank of Atlanta Nationar Advest, Inc. First National Bank of Boston (The) Neuberger & Berman Amalgamated Bank of New York (The) First National Bank of Chicago (The) New Japan Securities International, Inc. American National Bank & Trust First National Bank of Maryland (The) Newbridge Securities Inc. Company of Chicago First Tennessee Bank N.A Memphis Nikko Securities Co. International, Inc. (The) AmeriTrust Company National Association First Trust National Association Nomura Securities International, Inc. Asiel & Co. Freeman Welwood & Co., Inc. Northern Trust Company (The) BT Securities Corporation Fried (Albert) & Co. Norwest Bank Minnesota, National Baird, Patrick & Co., Inc. Fuji Bank & Trust Company (The) Association Baird (Robert W.) & Co. Incorporated Goldman, Sachs & Co. Nuveen (john) & Co. Incorporated Banc One Capital Corporation Goldman Sachs Money Markets, Inc. Old Kent Bank-Chicago Bank of America NT & SA Gradison & Company Incorporated Olde Discount Corporation Bank of New England, N.A Greenwich Capital Markets, Inc. Oppenheimer & Co., Inc. Bank of New York (The) Gruntal & Co. Incorporated Paine Webber Incorporated Bank of Tokyo Trust Company (The) Hamilton Investments, Inc. Philadelphia Depository Trust Company Bankers Trust Company Hancock (john) Clearing Corporation Piper, Jaffray & Hopwood Incorporated Baum (George K.) & Company Hurris Trust & Savings Bank Pittsburgh National Bank Bear, Stearns & Co. Inc. Herzog, Heine, Geduld, Inc. Principal/Eppler, Guerin & Turner, Inc. (The) Blair (William) & Company Hibernia National Bank Provident Bank (The) Boston Safe Deposit and Trust Company Hilliard (JIB.), Lyons (W.L.), Inc. Provident National Bank Bradford (j.c.) & Co. Hough (William R.) & Co. Prudential-Bache Securities Inc. Brown (Alex.) & Sons, Inc. Howard, Weil, Labouisse, Friedrichs RBC Dominion Securities Corporation Brown Brothers Harriman & Co. Incorporated Rauscher Pierce Refsnes, Inc. Central Bank of the South Hummer (Wayne) & Co. Raymond, James & Associates, Inc. Central Fidelity Bank, N.A Huntington National Bank Refco Securities, Inc. Charles Schwab & Co., Inc. Hutchinson, Shockey, Erley & Co. Rodman & Renshaw, Inc. Chase Manhattan Bank, N.A. (The) IBJ Schroder Bank & Trust Company Roney &Co. Chase Securities, Inc. IDS Bank & Trust SBCI Swiss Bank Corporation Investment Chemical Bank Interstate/Johnson Lane Corporation Banking Inc. Chicago Corporation (The) Janney Montgomery Scott Inc. Salomon Brothers Inc Citibank, N.A. Jefferies & Company, Inc. Sanwa Bank California Citicorp Securities Markets, Inc. Jesup Josephthal & Co., Inc. Scott & Stringfellow Investment Corporation Citizens and Southern National Bank (The) Jones (Edward D.) & Co. Seattle-First National Bank Citizens Fidelity Bank and Trust Company Kellogg-Citizens National Bank Security Pacific Bank Washington, N.A City National Bank Kemper Clearing Corp. Security Pacific National Bank Connecticut Bank and Trust Company (The) Key Trust Company Shawmut Bank of Boston, N.A Connecticut National Bank (The) Kidder, Peabody & Co. Incorporated Shearson Lehman Brothers Inc. Continental Bank, National Association LaSulle National Bank Smith Barney, Harris Upham & Co. CoreStates Bank, N.A Lazard Freres & Co. Incorporated Cowen & Co. Lehman Speciul Securities Inc. Societe Generale Securities Corporation Craigie Incorporated Lerner (David) Associates, Inc. Society National Bank Crestar Bank Lewco Securities Corp. Southwest Securities, Inc. Custodial Trust Company MKI Securities Corp. Sovran Bank, N.A Dai-Ichi Kangyo Bank, Limited (The), Mabon, Nugent & Co. State Street Bank and Trust Company New York Branch Manufacturers and Traders Trust Company Stephens, Inc. Dain Bosworth Incorporated Manufacturers Hanover Securities Corporation Sterne, Agee & Leach, Inc. Daiwa Bank, Limited (The), New York Agency Manufacturers Hanover Trust Company Stife!, Nicolaus & Company Incorporated Daiwa Securities America Inc. Manufacturers Swiss American Securities Inc. Davenport & Co. of Virginia, Inc. Marine Midland Bank Swiss Bank Corporation New York Branch Davis (Shelby Cullom) & Co. McDonald & Company Securities, Inc. Trust Company Bank Deutsche Bank Capital Corporation Mellon Bank, N.A. UBS Securities Inc. Dillon, Read & Co. Inc. Mercantile-Safe Deposit & Trust Company u.s. Clearing Corp. Dominick & Dominick, Incorporated Merchants National Bank & Trust Company Union Planters National Bank Donaldson, Lufkin & Jenrette Securities of Indianapolis United Bank of Denver, National Association Corporation Merrill Lynch, Pierce, Fenner & Smith United Missouri Bank of Kansas City, N.A Drexel Burnham Lambert Incorporated Incorporated United States National Bank of Oregon Edwards (AG.) & Sons, Inc. Mesirow Capital, Inc. United States Trust Company of New York Fahnestock & Co., Inc. Midlantic National Bank Van Kampen Merritt Inc. Fidelity Bank, National Association Morgan Guafill1ty Trust Company Wachovia Bank & Trust Company, N.A Fiduciary Trust Company International of New York Wagner Stott Clearing Corp. Fifth Third Bank (The) Morgan (J.P.) Securities Inc. Wall Street Investment Services First Alabama Investments, Inc. Morgan, Keegan & Company, Inc. Weber, Hall, Sale & Associates, Inc. First Albany Corporation Morgan Stanley & Co. Incorporated Weiss, Peck & Greer First Boston Corporation (The) N.B. Clearing Corporation Wells Fargo Bank, National Association First City, Texas-Houston, N.A NBD Bank, N.A. Wheat, First Securities, Inc. First Fidelity Bank, National Association, NCNB National Bank of North Carolina Wilmington Trust Company New Jersey National City Bank Witter (Dean) Reynolds Inc. First Interstate Bank of California National Financial Services Corporation Yamaichi International (America), Inc. First Interstate Bank of Denver, N.A. National Westminster Bank N.J. Ziegler (B.c.) and Company First Interstate Bank of Washington N.A National Westminster Bank USA § As of Decelllber 31, 1990

page 4J. Indirect SDFS Participation * ** Knox (W.L.) & Company Larkin (Emmett A.) & Co., Inc. ABD Securities Corporation Lawrence (CJ.), Morgan Grenfell, Inc. Adler, Coleman & Co., Inc. Legg Mason Wood Walker, Inc. American Securities Corporation Liberty National Bank and Trust Company American Security Bank, N.A. of Louisville AmSouth Bank, N.A. Lloyds Bank Plc BHF Securities Corporation M&! Marshall & llsley Bank Baer (Julius) Securities Inc. Mercantile Trust Co. Bank IV Wichita, National Association Mercantile Trust Company National Association Bank of Bermuda International Limited Bank of California (The) Morgan Stanley Trust Company Bank of Montreal, New York Branch Murphy, Marseilles, Smith & Nammack Bank of Oklahoma, N.A. NCNB Texas National Bank Bank One Trust Company, N.A. Nationar Bank One Wisconsin Trust Company, N.A. New Jersey National Bank Barnett Banks Trust Company, N.A. Norstar Trust Company Bernstein (Sanford C) & Co., Inc. Offerman & Co., Inc. Bidwell & Company Old Kent Bank and Trust Company Boatmen's National Bank of St. Louis (The) Payson (H.M.) & Co. Canadian Imperial Bank of Commerce-- RAF Financial Corporation N.Y. Agency Ragen MacKenzie Incorporated Cantor Fitzgerald Corporate Brokers, Inc. Republic National Bank of New York Central Bank of Denver Riggs National Bank of Washington, D.C (The) Central Trust Company Robb, Peck, McCooey Clearing CorporatIOn Chapdelaine & Co. Royal Bank of Canada (The) Charles-Bush (JW) Securities, Inc. SLS Securities Clearance Chase Lincoln First Bank, N.A. Seattle-Northwest Securities Corporation Citytrust Signet Trust Company Comerica Bank-Detroit Southeast Bank, N.A. Commerce Bank of Kansas City, N.A. Star Bank, National Association Commerzbank Capital Markets Corporation Steichen (R.J.) & Company Craig-Hallum, Inc. Stern (M.L.) & Co., Inc. Crews & Associates, Inc. Summit Bank Davidson (D.A.) & Co., Inc. Summit Trust Company (The) Denver National Bank Team Bank, N.A. Doft & Co., Inc. Texas Commerce Bank National Association Dominion Trust Company Toronto Dominion Bank (The)-New York Branch Easton & Co. Trust Services of America, Inc. Equity Securities Trading Co., Inc. Trustcorp Bank, Ohio Ernst & Co. U.s. Bank of Washington, N.A. FKT-First National Bank of Louisville Union Bank Fiduciary Trust Company of Boston Union Bank of Switzerland First Interstate Bank of Arizona, N.A. Union Trust Company First Interstate Bank of Oklahoma City Valley National Bank of Arizona First Interstate Bank of Oregon, N.A. Valley Trust Company First Kentucky Trust Company (The) Wedbush Securities, Inc. First Manhattan Co. Wellington (H.G.) & Co. Inc. First National Bank and Trust Company Wheeling Dollar Bank of Tulsa (The) Williams Securities Group, Inc. First National Bank Chicago/First Chicago Wyoming National Bank Casper Capital Markets, Inc. Ziegler Thrift Trading, Inc. First National Bank of Colorado Springs (The) Zions First National Bank First National Bank of Omaha First of Michigan Corporation First Southwest Company * These firl1ls are also direct Participants in DTes Next­ First Trust Corporation Day Funds Settlement system. First Union National Bank ** As of Decel1lber 31, 1990 First Union National Bank of Florida First Wachovia Brokerage Service Corporation Fort Wayne National Bank Freeman Securities Company, Inc. Frost National Bank Fundamental Corporate Bond Brokers, Inc. Gruss (Oscar) & Son Incorporated Hanifen, Imhoff, Inc. Imperial Trust Company Indiana National Bank (The) Josephthal & Co. Incorporated Kalb, Voorhis & Co. Kenny (J.J.) Drake, Inc. King (CL.) & Associates Inc.

page 22 DTC STOCKHOLDERSt

American Stock Exchange Clearing First Trust National Association Timber Hill Inc. Corporation Fort Wayne National Bank Trust Company Bank American Stock Exchange, Inc. Frost National Bank United Missouri Bank of Kansas City, N.A. AmeriTrust Company National Association Goldman, Sachs & Co. United States Trust Company of New York AmSouth Bank, N.A. Gradison & Company Incorporated Valley National Bank of Arizona Arnhold and Bleichroeder (S.), Inc. Gruss (Oscar) & Son Incorporated Van Kampen Merritt Inc. BT Securities Corporation Hough (William R) & Co. Wachovia Bank & Trust Company, N.A. Baer (Julius) Securities Inc. Huntington National Bank Waterhouse Securities Inc. Bank of America NT & SA IDS Bank & Trust Wechsler & Krumholz, Inc. Bank of California (The) Imperial Trust Company Wells Fargo Bank, National Association Bank of Montreal, New York Branch Investors Bank and Trust Company Wilmington Trust Company Bank of New York (The) Jesup Josephthal & Co., Inc. Wood Gundy Corp. Bank of Tokyo Trust Company (The) Key Trust Company Zions First National Bank Bank One Trust Company, N.A. LaBranche & Co. Bankers Trust Company Lehman Special Securities Inc. t As of December 31, 1990 Barclays Bank PLC New York Branch Lewco Securities Corp. Barnett Banks Trust Company, N.A. MacAllaster Pitfield Mackay, Inc. Bear, Stearns & Co. Inc. Manufacturers and Traders Trust Company Boatmen's National Bank of St. Louis (The) Manufacturers Hanover Trust Company Boston Safe Deposit and Trust Company Marcus Schloss & Co., Inc. Brounoff, Claire, & Co., Inc. Marine Midland Bank Brown (Alex.) & Sons, Inc. Mayer & Schweitzer, Inc. Brown Brothers Harriman & Co. Mellon Bank, N.A. Carty & Company, Inc. Merchants National Bank & Trust Company Cazenove Incorporated of Indianapolis Central Bank of the South Merrill Lynch & Co., Inc. Central Trust Bank Michigan National Bank Chase Lincoln First Bank, N.A. Midlantic National Bank Chase Manhattan Bank, N.A. (The) Morgan Guaranty Trust Company of Chemical Bank New York Cincinnati Stock Exchange (The) Morgan Stanley & Co. Incorporated Citibank, N.A. NCNB National Bank of North Carolina Citicorp Securities Markets, Inc. NCNB Texas National Bank Citizens and Southern National Bank (The) National Association of Securities Dealers, Inc. City National Bank National City Bank Connecticut National Bank (The) National Westminster Bank N.J. Continental Bank, National Association National Westminster Bank PLC CoreStates Bank, N.A. National Westminster Bank USA County NatWest Securities Corporation USA New York Stock Exchange, Inc. Craigie Incorporated Nikko Securities Co. International, Inc. (The) Crews & Associates, Inc. Nomura Securities International, Inc. Denver National Bank Norstar Trust Company Dominion Trust Company Northern Trust Company (The) Donaldson, Lufkin & Jenrette Securities Norwest Bank Minnesota, National Association Corporation Oppenheimer & Co., Inc. Edwards (A.G.) & Sons, Inc. Pforzheimer (Carl H.) & Co. Execution Services Incorporated Reaves (W.H.) & Co., Inc. Fagenson & Co., Inc. SBCl Swiss Bank Corporation Investment Fahnestock & Co., Inc. Banking Inc. Fidelity Bank, National Association Salomon Brothers Inc Fiduciary Trust Company International Santa Barbara Bank & Trust Fiduciary Trust Company of Boston Sanwa Bank California First Albany Corporation Scott & Stringfellow Investment Corporation First Boston Corporation (The) Seattle-Northwest Securities Corporation First City, Texas-Houston, N.A. Security Pacific National Bank First Fidelity Bank, National Association, Security Trust Company, N.A. New Jersey Shawmut Bank of Boston, N.A. First Interstate Bank of California Smith New Court, Carl Marks Inc. First Interstate Bank of Denver, N.A. Sovran Bank, N.A. First Interstate Bank of Oregon, N.A. Star Bank, National Association, Cincinnati First Interstate Bank of Washington N.A. State Street Bank and Trust Company First National Bank and Trust Company Stock Clearing Corporation of Tulsa (The) Stock Yards Bank and Trust Company First National Bank of Boston (The) Swiss American Securities Inc. First National Bank of Chicago (The) Swiss Bank Corporation New York Branch First National Bank of Maryland (The) Team Bank, N.A. First Tennessee Bank N.A. Memphis Texas Commerce Bank National Association

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