<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 16, 1997
REGISTRATION NO. 333-23633
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------
AMERICAN BAR ASSOCIATION MEMBERS/
STATE STREET COLLECTIVE TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
MASSACHUSETTS 6722 04-6691601
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)
225 FRANKLIN STREET, BOSTON, MASSACHUSETTS 02110
(617) 985-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JOHN R. TOWERS, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY
STATE STREET BANK AND TRUST COMPANY
225 FRANKLIN STREET
BOSTON, MASSACHUSETTS 02110
(617) 985-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
WITH A COPY TO:
JUDITH R. THOYER, ESQ.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-6064
(212) 373-3000
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
Pursuant to Rule 429 under the Securities Act, the prospectus contained in
this Registration Statement also relates to Registration Statement No. 33-
92120.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED APRIL 16, 1997
AMERICAN BAR ASSOCIATION
MEMBERS RETIREMENT PROGRAM
UNITS OF BENEFICIAL INTEREST
AMERICAN BAR ASSOCIATION MEMBERS/STATE
STREET COLLECTIVE TRUST
The units offered hereby ("Units") represent pro rata beneficial interests in
eight collective investment funds ("Funds") and three portfolios of the
Structured Portfolio Service established under the American Bar Association
Members/State Street Collective Trust (the "Collective Trust"). The Funds and
the portfolios of the Structured Portfolio Service are investment options under
the American Bar Association Members Retirement Program (the "Program"), a
comprehensive retirement program sponsored by the American Bar Retirement
Association ("ABRA") in which members of the American Bar Association ("ABA")
and certain affiliated organizations and employees and partners of such members
are eligible to participate.
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 ("State Street"), the trustee of the Collective Trust,
operates and administers the Funds and the Structured Portfolio Service and
provides administrative services to the Program. The following Funds are
available through the Program:
STABLE ASSET RETURN FUNDSM invests primarily in high quality money market
instruments and investment contracts issued by insurance companies, banks or
other financial institutions, with the objective of providing current income
consistent with preserving principal and maintaining liquidity.
INTERMEDIATE BOND FUND invests generally in debt securities of varying
maturities, with an average portfolio duration of 3 to 6 years, with the
objective of achieving a competitive total return from current income and
capital appreciation.
BALANCED FUND invests primarily in common stocks, other equity-type
securities, medium to long-term debt securities and money market instruments,
with the objective of achieving both long-term capital appreciation and current
income.
VALUE EQUITY FUNDSM invests primarily in common stocks of larger companies
believed to be attractively priced relative to their future earnings power,
with the objective of achieving long-term growth of capital and dividend
income.
GROWTH EQUITY FUND invests primarily in common stocks and other equity-type
securities issued by large, well-established companies, with the primary
objective of achieving long-term growth of capital and the secondary objective
of realizing income.
INDEX EQUITY FUND invests primarily in common stocks with the objective of
replicating the total return of the broad U. S. stock market represented by the
Russell 3000 Index.
AGGRESSIVE EQUITY FUND invests primarily in common stocks and other equity-
type securities issued by small to medium sized companies believed to have a
strong potential for appreciation, with the objective of maximizing long-term
growth of capital.
INTERNATIONAL EQUITY FUND invests primarily in common stocks of established
non-U.S. companies, with the objective of achieving long-term growth of
capital.
Assets contributed under the Program may also be invested in portfolios of
the STRUCTURED PORTFOLIO SERVICESM, an investment service that offers three
distinct approaches to diversifying investments in the Program by giving
Investors the opportunity to select conservative, moderate or aggressive
allocations of assets among the Funds described above.
In addition, assets contributed under the Program may be invested (i) in any
publicly traded debt and equity securities and shares of numerous mutual funds
through Self-Managed Accounts or (ii) at certain times as described herein, in
investment contracts with varying maturities that are issued by insurance
companies that meet certain credit quality standards. The Self-Managed Accounts
and the insurance investment contracts are not registered under the Securities
Act of 1933 (the "Securities Act") and are described in this Prospectus for
information purposes only.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAS ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
FUNDS AND THE PORTFOLIOS OF THE STRUCTURED PORTFOLIO SERVICE UNDER THE
COLLECTIVE TRUST ARE NOT REGISTERED AS INVESTMENT COMPANIES UNDER THE
INVESTMENT COMPANY ACT OF 1940 AND, THEREFORE, ARE NOT SUBJECT TO COMPLIANCE
WITH THE REQUIREMENTS OF SUCH ACT. UNITS ARE NOT "REDEEMABLE SECURITIES" WITHIN
THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940. SEE "REGULATION OF
COLLECTIVE TRUST."
The date of this Prospectus is April , 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................... 3
Description of Investment Options.......................................... 16
Stable Asset Return Fund................................................... 17
Intermediate Bond Fund..................................................... 20
Balanced Fund.............................................................. 24
Value Equity Fund.......................................................... 25
Growth Equity Fund......................................................... 26
Index Equity Fund.......................................................... 28
Aggressive Equity Fund..................................................... 30
International Equity Fund.................................................. 32
Certain Information with Respect to the Funds.............................. 35
Derivative Instruments..................................................... 37
Investment Advisors........................................................ 39
Structured Portfolio Service............................................... 42
Self-Managed Accounts...................................................... 43
Insurance Investment Contracts............................................. 49
Equitable Real Estate Account.............................................. 50
Transfers between Investment Options and Withdrawals....................... 51
The Program................................................................ 52
Adoption of Program........................................................ 53
State Street .............................................................. 54
American Bar Retirement Association........................................ 54
Contributions and Investment Selection..................................... 55
Deductions and Fees........................................................ 57
Employer and Participant Responsibilities.................................. 64
Provisions of ABA Members Plans............................................ 65
Benefits and Distributions From ABA Members Plans.......................... 71
Benefits and Distributions From Individually Designed Plans................ 78
ERISA and Fiduciary Obligations............................................ 78
Regulation of Collective Trust............................................. 82
Federal Income Tax Considerations.......................................... 83
Taxation of Collective Trust............................................... 86
Legal Matters.............................................................. 86
Experts.................................................................... 86
Available Information...................................................... 86
Glossary of Terms Used in Prospectus....................................... 88
Index to Financial Statements.............................................. F-1
</TABLE>
For additional information regarding all aspects of the Program and the
investment options offered thereunder, contact State Street at (800) 826-8901.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY STATE
STREET.
UNITS OF BENEFICIAL INTEREST IN THE FUNDS AND THE PORTFOLIOS OF THE
STRUCTURED PORTFOLIO SERVICE UNDER THE COLLECTIVE TRUST ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, STATE STREET, AND UNITS OF
BENEFICIAL INTEREST ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND INVOLVE RISKS
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus. See "Glossary of Terms Used
in Prospectus" for a definition of certain capitalized terms used in this
Prospectus.
THE FUNDS AND THE PORTFOLIOS OF THE STRUCTURED PORTFOLIO SERVICE UNDER THE
COLLECTIVE TRUST ARE NOT REGISTERED AS INVESTMENT COMPANIES UNDER THE
INVESTMENT COMPANY ACT OF 1940 AND, THEREFORE, ARE NOT SUBJECT TO COMPLIANCE
WITH THE REQUIREMENTS OF SUCH ACT. UNITS ARE NOT "REDEEMABLE SECURITIES" WITHIN
THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940. SEE "REGULATION OF
COLLECTIVE TRUST."
INVESTMENT OPTIONS
State Street, a wholly owned subsidiary of State Street Boston Corporation, a
Massachusetts corporation and a holding company registered under the Federal
Bank Holding Company Act of 1956, makes available eight collective investment
Funds and three portfolios in a Structured Portfolio Service under the
Collective Trust. The Funds and the portfolios offered by the Structured
Portfolio Service are Investment Options (as hereinafter defined) for the
investment of assets under the Program, a comprehensive retirement program
sponsored by ABRA.
The Stable Asset Return Fund invests primarily in money market instruments
and investment contracts. See "Stable Asset Return Fund." The Intermediate Bond
Fund (the "Bond Fund") invests primarily in debt securities of varying
maturities. See "Intermediate Bond Fund." The Index Equity Fund invests
primarily in common stocks included in the Russell 3000 Index. See "Index
Equity Fund." The Value Equity Fund, Growth Equity Fund, Aggressive Equity Fund
and International Equity Fund invest primarily in equity securities. The
Balanced Fund invests in a combination of equity and debt securities. See
"Value Equity Fund," "Growth Equity Fund," "Aggressive Equity Fund,"
"International Equity Fund" and "Balanced Fund."
State Street may make additional Funds available as Investment Options from
time to time, subject to the approval of ABRA, and State Street may terminate
or amend the terms of the Investment Options from time to time upon notice to,
and in consultation with, ABRA.
State Street also makes available three portfolios in a Structured Portfolio
Service, an investment service that offers three distinct approaches to
diversifying investments in the Program by giving Investors the opportunity to
select conservative, moderate or aggressive allocations of assets among the
Funds (the "Structured Portfolio Service"). See "Structured Portfolio Service."
Under the Program, certain Participants, Employers or Plan trustees (each, as
hereinafter defined) may also utilize a self-managed brokerage account to
direct State Street to purchase and sell a wide variety of publicly traded debt
and equity securities and shares of numerous mutual funds (the "Self-Managed
Account"). The Self-Managed Account is available only to (i) Participants in
the ABA Retirement Plan (as hereinafter defined) and to Employers with respect
to the ABA Defined Benefit Plan (as hereinafter defined), provided that in
either case the Employer has designated the Self-Managed Account as an
Investment Option for its plan (such Participants and Employers are
collectively referred to as "Eligible Investors"), and (ii) Participants,
Employers and Plan trustees of certain Individually Designed Plans (as
hereinafter defined). Self-Managed Accounts are not registered under the
Securities Act and are described in this Prospectus for information purposes
only. See "Self-Managed Accounts."
3
<PAGE>
At certain times, State Street may also arrange to make available interests
in investment contracts ("Insurance Investment Contracts") issued by insurance
companies (commonly known as "guaranteed investment contracts" or "GICs") that
meet certain credit quality standards. There are significant restrictions on
withdrawals and transfers from Insurance Investment Contracts prior to
maturity. The interests in Insurance Investment Contracts are not registered
under the Securities Act and are described in this Prospectus for information
purposes only. See "Insurance Investment Contracts." The Funds, the Structured
Portfolio Service, the Self-Managed Accounts and the Insurance Investment
Contracts are collectively referred to as "Investment Options."
Certain assets contributed to the Program prior to January 1, 1992 are held
by The Equitable Life Assurance Society of The United States ("Equitable Life")
in a separate account that invests primarily in real estate (the "Equitable
Real Estate Account"). See "Equitable Real Estate Account." Equitable Life will
continue to hold and invest assets allocated to the Equitable Real Estate
Account until they are withdrawn from the Program or transferred to another
Investment Option available under the Program. Restrictions may apply to
withdrawals and transfers from the Equitable Real Estate Account that may delay
a withdrawal or transfer for a significant period of time following a
withdrawal or transfer request. No contributions or transfers to the Equitable
Real Estate Account are permitted. For more detailed information relating to
the Equitable Real Estate Accounts, see "Contributions and Investment
Selection--Additional Information." State Street has no control over the
management of assets held by Equitable Life and is not responsible for the
investment of such assets or Equitable Life's performance of its obligations
under the Program with respect to such assets.
Interests in the respective Funds and the Structured Portfolio Service
portfolios are represented by units of beneficial interest ("Units"). Each Unit
represents an equal pro rata interest in the net assets of a Fund or a
portfolio in the Structured Portfolio Service. Although the Funds and the
portfolios of the Structured Portfolio Service are similar in certain respects
to registered open-end management investment companies (commonly referred to as
"mutual funds"), the Funds and the portfolios of the Structured Portfolio
Service are not registered as investment companies under the Investment Company
Act of 1940 (the "Investment Company Act") and, therefore, are not subject to
compliance with the requirements of such act. Units are not "redeemable
securities" as defined in the Investment Company Act. See "Description of
Investment Options" and "Regulation of Collective Trust." Units representing
interests in the Funds or in each of the three portfolios of the Structured
Portfolio Service are held by State Street, as trustee of the ABA Members
Trusts (as hereinafter defined), for the benefit of Investors. Neither the
Units nor the assets of the Funds or the portfolios of the Structured Portfolio
Service are subject to the claims of State Street's creditors. The Units are
not insured by the Federal Deposit Insurance Corporation or any other
governmental agency. State Street's activities in connection with the operation
of the Collective Trust are subject to the requirements of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), a federal statute
specifically designed to regulate the activities of pension plan fiduciaries.
See "Regulation of Collective Trust."
THE PROGRAM
Attorneys who are sole practitioners and partnerships and professional
corporations engaged in the practice of law may adopt the Program for their law
practices if they or one of their partners or shareholders is a member or
associate of the ABA or of a state or local bar association that is represented
in the ABA's House of Delegates. Such a bar association or an organization
closely associated with the legal profession that has as an owner or member of
its governing board a member or associate of the ABA may also be eligible to
adopt the Program. The law practices, bar associations and other organizations
that are eligible to adopt the Program are referred to herein as "Eligible
Employers." See "The Program--Eligibility."
4
<PAGE>
Eligible Employers who elect to participate in the Program may do so by
adopting an individual plan (an "Individual Master Plan") under one or both of
two employee benefit plans sponsored by ABRA (the "ABA Members Plans"). The ABA
Members Plans consist of the American Bar Association Members Retirement Plan,
a defined contribution master plan (the "ABA Retirement Plan"), and the
American Bar Association Members Defined Benefit Plan, a defined benefit master
plan (the "ABA Defined Benefit Plan"). See "Provisions of ABA Members Plans"
for a description of the terms of the ABA Members Plans. Eligible Employers
that maintain their own individually designed employee benefit plans (the
"Individually Designed Plans") (together with Eligible Employers that
participate in the ABA Members Plans, referred to as "Employers") may also
participate in certain aspects of the Program through such plans. The ABA
Members Plans and the Individually Designed Plans are collectively referred to
as the "Plans." Participants are employees (together with their beneficiaries
where the context so requires) of Employers and self-employed individuals who
have adopted the Program for their practices.
Assets contributed under the Program are held by State Street as trustee of
the American Bar Association Members Retirement Trust (the "Master Trust") in
the case of assets contributed under Individual Master Plans and the American
Bar Association Members Pooled Trust for Retirement Plans (the "Pooled Trust")
in the case of assets contributed under Individually Designed Plans (the Master
Trust and the Pooled Trust are collectively referred to as the "ABA Members
Trusts"). Such assets are allocated among the Investment Options available
under the Program in accordance with the instructions of the person or entity
vested with responsibility for determining the investment allocation of the
assets of a Plan held in the Master Trust or Pooled Trust (the "Investor"). The
terms of each Plan determine who is the Investor with respect to the assets of
the Plan. In the case of the ABA Retirement Plan, each Participant is an
Investor. Generally, in the case of the ABA Defined Benefit Plan, the Employer
is the Investor, except that with respect to certain prior plan accounts under
the ABA Defined Benefit Plan, the Participant is the Investor. In the case of
Individually Designed Plans, the Investor may be the Participant, the Employer
or the Plan trustee.
State Street, 225 Franklin Street, Boston, Massachusetts 02110, (617) 985-
3000, administers and provides the Investment Options for the Program. As of
December 31, 1996, State Street and its affiliates held over $2.9 trillion of
assets in trust or under custody and had over $292 billion of assets under
management. See "State Street." State Street is also responsible for certain
recordkeeping and administrative services required by the Program. State
Street's administrative and recordkeeping responsibilities include maintenance
of individual account records or accrued benefit information for Participants
whose Employers choose to have State Street maintain such account records.
State Street also provides account and investment information to Employers and
Participants, receives all plan contributions, effects investment and transfer
transactions and distributes all benefits provided by the Plans to the
Participants or, in the case of some Individually Designed Plans, to the
trustees of such Plans ("Plan Trustees").
The following chart provides a summary of the features of the Investment
Options that are available under the Program.
5
<PAGE>
SUMMARY OF INVESTMENT OPTIONS*
<TABLE>
<CAPTION>
STABLE ASSET INTERMEDIATE BALANCED VALUE EQUITY GROWTH INDEX EQUITY AGGRESSIVE INTERNATIONAL
RETURN FUND** BOND FUND FUND FUND EQUITY FUND FUND*** EQUITY FUND EQUITY FUND
------------- ------------ ------------ -------------- ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Current Total return Current Long-term Long-term Replication Long-term Long-term
Objective: income from current income and growth of growth of of the total growth of growth of
consistent income and long-term capital and capital and return of capital capital
with capital capital dividend some the Russell
preserving appreciation appreciation income dividend 3000 Index
principal income
and
maintaining
liquidity
Invests High quality Debt Common Common stocks, Common Most of the Common Common
Primarily money market securities, stocks, primarily of stocks and common stocks of stocks and
In: instruments 2/3 actively other large equity-type stocks small to other equity
and managed and equity-type capitalization securities included in medium sized securities
investment 1/3 invested securities companies, of large, the Russell companies of
contracts of to replicate and debt believed to be well 3000 Index believed to established
insurance the Lehman securities undervalued established have strong non-U.S.
companies, Brothers companies appreciation companies
banks and Government/ potential
financial Corporate
institutions Bond Index
Risk to Low risk to Average Lower than a Average for an Average for Average for Higher than Higher than
Principal: principal credit risk fund equity fund an equity a average for average for
for a debt- investing fund diversified an equity an equity
oriented primarily in U.S. equity fund fund,
intermediate equities fund including
bond fund; risks due to
also risk of currency
loss related fluctuations
to movements
in interest
rates
Primary Interest Interest Interest Capital Capital Capital Capital Capital
Source income income and income, appreciation appreciation appreciation appreciation appreciation
of capital dividend and dividend and dividend and dividend
Potential appreciation income and income income income
Return: capital
appreciation
Estimated 1.2 years+ Generally 3 For debt N/A N/A N/A N/A N/A
Maturity to 6 years securities,
or duration generally
Duration: 5 to 6 years
duration
Volatility Subject to Below Generally Average for a Average for Comparable Above Above
of interest average less fund investing a fund to the average for average for
Return: rate volatility volatile in equities investing in Russell 3000 a fund a fund
fluctuation for a fund than a fund equities Index investing in investing in
investing in investing equities equities
debt exclusively
securities; in equities
volatility
subject to
fluctuations
in interest
rates
Transfer Daily Daily Daily Daily Daily Daily Daily Daily
Permitted:
</TABLE>
- -------
* In addition, certain Plans permit Investors to establish a self-managed
brokerage account. See "Self-Managed Accounts."
** Invests through the State Street Bank and Trust Company ABA Members/Pooled
Stable Asset Fund Trust, a collective investment fund maintained by State
Street.
*** Invests through the State Street Global Advisors (SSgA) Flagship S&P 500
Fund and the State Street Global Advisors (SSgA) Russell Special Small
Company Common Trust Fund, collective investment funds maintained by State
Street.
+ Average weighted maturity as of December 31, 1996.
6
<PAGE>
SUMMARY OF INVESTMENT OPTIONS
<TABLE>
<CAPTION>
STRUCTURED PORTFOLIO SERVICE
----------------------------------------------------------------------------
CONSERVATIVE MODERATE AGGRESSIVE
------------------------- ------------------------ ------------------------
<S> <C> <C> <C>
Investment Objectives: Higher current investment High current investment Long-term growth of
income and some capital income and greater capital and lower
appreciation capital appreciation current investment
income
Allocates Assets Stable Asset Return Fund. Stable Asset Return Intermediate Bond Fund..
30% Fund............... 10% 15%
To: Intermediate Bond Intermediate Bond Fund.. Value Equity Fund... 15%
Fund.................35% 30%
Value Equity Fund..... 7% Value Equity Fund... 11% Growth Equity Fund.. 15%
Growth Equity Fund.... 7% Growth Equity Fund.. 11% Index Equity Fund... 30%
Index Equity Fund.... 14% Index Equity Fund... 23% Aggressive Equity Fund..
5%
International Equity International Equity International Equity
Fund................. 7% Fund............... 15% Fund............... 20%
Transfer Permitted: Daily Daily Daily
</TABLE>
7
<PAGE>
SUMMARY OF FEES AND DEDUCTIONS
The table set forth below is provided to assist Eligible Employers, Investors
and Participants in understanding the various costs and expenses they will bear
directly or indirectly under the Program with respect to an investment in each
of the Investment Options. Such estimated expenses are stated as a percentage
of the assets of each Investment Option. Certain non-recurring fees and plan
administrative fees, which will be assessed against Employers or Participant
account balances, are not reflected in the table and are described elsewhere in
this Prospectus. For a discussion of the manner in which fees and deductions
are calculated and the amount of such fees and deductions to be received by
various parties in connection with the Program, see "Deductions and Fees."
<TABLE>
<CAPTION>
STABLE INTER- INTER-
ASSET MEDIATE VALUE GROWTH INDEX AGGRESSIVE NATIONAL STRUCTURED
RETURN BOND BALANCED EQUITY EQUITY EQUITY EQUITY EQUITY PORTFOLIO
FUND FUND FUND FUND FUND FUND FUND FUND SERVICE
------ ------- -------- ------ ------ ------ ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ESTIMATED EXPENSES:
Program Expense Fee(1).. .423% .423% .423% .423% .423% .423% .423% .423% NA (2)
Trustee, Management and
Administrative Fees;
Investment Advisor
Fees; and, where
applicable, Structured
Portfolio Service
Fee(1)................. .200% .460% .449% .469% .378% .172% .526% .957% .100%(2)
Other Expenses(3)....... .087% .090% .090% .082% .089% .085% .087% .082% -- (4)
---- ---- ---- ---- ---- ---- ----- ----- ------
Total................... .710% .973% .962% .974% .890% .680% 1.036% 1.462% .100%
</TABLE>
- --------
(1) The table is based on approximate assets of the Program on December 31,
1996, which total $2,390,000,000. The total includes $635,000,000 for the
Stable Asset Return Fund, $49,000,000 for the Intermediate Bond Fund,
$295,000,000 for the Balanced Fund, $48,000,000 for the Value Equity Fund,
$752,000,000 for the Growth Equity Fund, $83,000,000 for the Index Fund,
$276,000,000 for the Aggressive Equity Fund, $33,000,000 for the
International Equity Fund, $199,000,000 for the Self-Managed Account,
$16,000,000 for Insurance Investment Contracts, and $4,000,000 for the
Equitable Real Estate Account. Of the above amounts indicated for each
Fund, an aggregate of $69,000,000 is invested through the portfolios of the
Structured Portfolio Service. See Note 2 below. These fees vary based on
the size of the Funds or, as applicable, the portfolios of the Structured
Portfolio Service.
(2) Represents the Structured Portfolio Service fee. There are no other fees
directly attributable to the Structured Portfolio Service. However, the
Funds in which the portfolios of the Structured Portfolio Service are
invested bear the Program Expense Fees, the Trustee, Management and
Administrative Fees and the Investment Advisor Fees, as applicable.
(3) Includes the amortization of organizational expenses and fees and
deductions relating to recurring operational expenses, such as printing,
legal and accounting expenses. The foregoing chart does not include fees
and expenses payable by the Employer and the Participant. It also does not
include fees charged for the Self-Managed Account.
(4) No other expenses were paid for 1996 by the Structured Portfolio Service.
State Street may, in the future upon consultation with ABRA, determine the
amount of such other expenses attributable to, and to be paid by, the
Structured Portfolio Service.
Assets invested through a Self-Managed Account, Insurance Investment
Contracts and the Equitable Real Estate Account are subject to the Program
Expense Fee of .423%. Transaction costs, such as brokerage fees, commissions
and other expenses attributable to a Participant's or Employer's Self-Managed
Account, are charged in accordance with the schedule provided to the Employer
and the Participant from time to time. See "Deductions and Fees."
8
<PAGE>
SELECTED FINANCIAL DATA*
The selected financial data below provide information with respect to income,
expenses and capital changes for each Fund attributable to each Unit
outstanding for the periods indicated. The selected financial data for each of
the years ended December 31 have been derived from financial statements audited
by Price Waterhouse LLP, independent accountants of the Collective Trust. The
selected financial data should be read in conjunction with the financial
statements of the Funds, which appear elsewhere in this Prospectus.
STABLE ASSET RETURN FUND:**
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
SELECTED FINANCIAL DATA FOR
EACH UNIT OUTSTANDING FOR
THE PERIODS INDICATED:
Investment income........... $ .058 $ .061 $ .043 $ .035 $ .042
Expenses.................... (.007) (.007) (.007) (.008) (.008)
-------- -------- -------- -------- --------
Net investment income....... .051 .054 .036 .027 .034
Reinvestment of net
investment income.......... (.051) (.054) (.036) (.027) (.034)
-------- -------- -------- -------- --------
Net asset value at beginning
and end of period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Ratio of expenses to average
net assets................. .68% .73% .73% .75% .79%
Ratio of net investment
income to average net
assets..................... 5.15% 5.32% 3.55% 2.77% 3.45%
Net assets at end of period
(in thousands)............. $634,763 $630,208 $491,979 $509,905 $589,882
</TABLE>
INTERMEDIATE BOND FUND:
<TABLE>
<CAPTION>
SEPTEMBER 5, 1995
YEAR ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS) TO
1996 DECEMBER 31, 1995
------------ -----------------
<S> <C> <C>
SELECTED FINANCIAL DATA FOR EACH UNIT
OUTSTANDING FOR THE PERIODS INDICATED:
Investment income............................... $ .67 $ .34
Expenses........................................ (.06) (.02)
------- -------
Net investment income........................... .61 .32
Net realized and unrealized gain (loss) on in-
vestments...................................... (.30) .26
------- -------
Net increase in unit value...................... .31 .58
Net asset value at beginning of period.......... 10.58 10.00
------- -------
Net asset value at end of period................ $ 10.89 $ 10.58
------- -------
Ratio of expenses to average net assets......... .58% .69%***
Ratio of net investment income to average net
assets......................................... 5.82% 9.17%***
Portfolio turnover****.......................... 22.37% 1.60%
Total return.................................... 2.93% 5.80%
Net assets at end of period (in thousands)...... $49,612 $36,457
</TABLE>
- --------
* Per-Unit calculations have been prepared using the monthly average number
of units outstanding during the period.
** As of September 5, 1995, the Blended Rate Fund ("Blended Rate") was merged
into the Enhanced Short Term Investment Fund ("ESTIF") and ESTIF's name
was changed to the Stable Asset Return Fund. The Financial Statements of
the Fund reflect a combination of the assets and liabilities of ESTIF and
Blended Rate as of the effective date of the merger. As of such date,
Units previously outstanding of Blended Rate were deemed exchanged for
Units of ESTIF and all Units of ESTIF outstanding were deemed Units of
Stable Asset Return Fund.
*** Ratios annualized.
**** Reflects purchases and sales of shares of the registered investment
companies in which the Fund invests rather than the turnover of the
underlying portfolios of such registered investment companies.
9
<PAGE>
BALANCED FUND:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 2, 1992
DECEMBER 31, (COMMENCEMENT OF
-------------------------------------- OPERATIONS) TO
1996 1995 1994 1993 DECEMBER 31, 1992
-------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
SELECTED FINANCIAL DATA
FOR EACH UNIT
OUTSTANDING FOR THE
PERIODS INDICATED:
Investment income....... $ 1.30 $ 1.19 $ 1.08 $ 1.00 $ .89
Expenses................ (.33) (.29) (.26) (.26) (.25)
-------- -------- -------- -------- --------
Net investment income... .97 .90 .82 .74 .64
Net realized and
unrealized gain (loss)
investments............ 3.78 6.07 (.82) .82 (1.56)
-------- -------- -------- -------- --------
Net increase (decrease)
in unit value.......... 4.75 6.97 -- 1.56 (.92)
Net asset value at
beginning of period.... 32.01 25.04 25.04 23.48 24.40
-------- -------- -------- -------- --------
Net asset value at end
of period.............. $ 36.76 $32.01 $ 25.04 $ 25.04 $ 23.48
======== ======== ======== ======== ========
Ratio of expenses to av-
erage net assets....... .96% 1.00% 1.03% 1.07% 1.10%
Ratio of net investment
income to average net
assets................. 2.85% 3.08% 3.32% 3.05% 2.82%
Portfolio turnover...... 180.67% 154.73% 112.51% 153.14% 119.18%
Total return............ 14.84% 27.84% 0.0% 6.64% (3.77)%
Net assets at end of
period................. $295,401 $264,526 $198,945 $193,362 $167,242
</TABLE>
VALUE EQUITY FUND:
<TABLE>
<CAPTION>
SEPTEMBER 5 , 1995
YEAR ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS) TO
1996 DECEMBER 31, 1995
------------ ------------------
<S> <C> <C>
SELECTED FINANCIAL DATA FOR EACH UNIT
OUTSTANDING FOR THE PERIODS INDICATED:
Investment income.............................. $ .40 $ .13
Expenses....................................... (.14) (.04)
------- -------
Net investment income.......................... .26 .09
Net realized and unrealized gain on
investments................................... 2.54 .84
------- -------
Net increase in unit value..................... 2.80 .93
Net asset value at beginning of period......... 12.93 12.00
------- -------
Net asset value at end of period............... $ 15.73 $12.93
======= =======
Ratio of expenses to average net assets........ .99% 1.00%*
Ratio of net investment income to average net
assets........................................ 1.85% 2.12%*
Portfolio turnover............................. 16.73% 3.8%
Total return................................... 21.66% 7.75%
Net assets at end of period (in thousands)..... $48,131 $20,617
</TABLE>
- --------
* Ratios annualized
10
<PAGE>
GROWTH EQUITY FUND:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 2, 1992
DECEMBER 31, (COMMENCEMENT OF
-------------------------------------- OPERATIONS) TO
1996 1995 1994 1993 DECEMBER 31,1992
-------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C>
SELECTED FINANCIAL DATA
FOR EACH UNIT
OUTSTANDING FOR THE
PERIODS INDICATED:
Investment income....... $ 5.07 $ 3.88 $ 3.48 $ 3.16 $ 3.20
Expenses................ (2.22) (1.88) (1.60) (1.52) (1.45)
-------- -------- -------- -------- --------
Net investment income... 2.85 2.00 1.88 1.64 1.75
Net realized and
unrealized gain
investments............ 46.14 57.72 .61 12.99 3.00
-------- -------- -------- -------- --------
Net increase in unit
value.................. 48.99 59.72 2.49 14.63 4.75
Net asset value at
beginning of period.... 229.27 169.55 167.06 $ 152.43 $ 147.68
-------- -------- -------- -------- --------
Net asset value at end
of period.............. $ 278.26 $229.27 $ 169.55 $ 167.06 $ 152.43
======== ======== ======== ======== ========
Ratio of expenses to
average net assets..... .88% .92% .95% .96% 1.01%
Ratio of net investment
income to average net
assets................. 1.13% .98% 1.12% 1.03% 1.22%
Portfolio turnover...... 63.70% 60.38% 58.78% 81.50% 46.26%
Total return............ 21.37% 35.23% 1.49% 9.60% 3.22%
Net assets at end of
period (in thousands).. $752,798 $637,834 $479,435 $471,398 $427,933
</TABLE>
INDEX EQUITY FUND:*
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30, 1994
DECEMBER 31, (COMMENCEMENT OF
---------------- OPERATIONS) TO
1996 1995 DECEMBER 31, 1994
------- ------- -----------------
<S> <C> <C> <C>
SELECTED FINANCIAL DATA FOR EACH UNIT
OUTSTANDING FOR THE PERIODS INDICATED:
Investment income......................... $ .28 $ .02 $ --
Expenses.................................. (.11) (.08) (.04)
------- ------- -------
Net investment income (loss).............. .17 (.06) (.04)
Net realized and unrealized gain invest-
ments.................................... 2.72 3.68 .39
------- ------- -------
Net increase in unit value................ 2.89 3.62 .35
Net asset value at beginning of period.... 13.97 10.35 10.00
------- ------- -------
Net asset value at end of period.......... $ 16.86 $ 13.97 $ 10.35
======= ======= =======
Ratio of expenses to average net assets... .69% .68 % .94%**
Ratio of net investment income to average
net assets............................... 1.15% (.52)% .94%**
Portfolio turnover***..................... 17.48% 131.73 % 53.55%
Total return.............................. 20.68% 34.98 % 3.50%
Net assets at end of period (in thou-
sands)................................... $82,881 $48,020 $11,662
</TABLE>
- --------
* Commencing September 5, 1995, this Fund was invested to replicate the
Russell 3000 Index. Prior to that date, the Fund was invested to replicate
the S&P 500 Index (as defined herein).
** Ratios annualized.
*** Reflects purchases and sales of units of the collective investment funds in
which the Fund invests rather than the turnover of the underlying
portfolios of such collective investment funds.
11
<PAGE>
AGGRESSIVE EQUITY FUND:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 2, 1992
DECEMBER 31, (COMMENCEMENT OF
--------------------------------------- OPERATIONS) TO
1996 1995 1994 1993 DECEMBER 31, 1992
-------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
SELECTED FINANCIAL DATA
FOR EACH UNIT
OUTSTANDING FOR THE
PERIODS INDICATED:
Investment income....... $ .36 $ .32 $ .28 $ .25 $ .30
Expenses................ (.39) (.32) (.28) (.28) (.26)
-------- -------- -------- -------- --------
Net investment income
(loss)................. (.03) -- -- (.03) .04
Net realized and
unrealized gain (loss)
investments............ 7.47 7.81 (1.00) 3.60 1.43
-------- -------- -------- -------- --------
Net increase (decrease)
in unit value.......... 7.44 7.81 (1.00) 3.57 1.47
Net asset value at
beginning of period.... 33.57 25.76 26.76 $ 23.19 $ 21.72
-------- -------- -------- -------- --------
Net asset value at end
of period.............. $ 41.01 $ 33.57 $ 25.76 $ 26.76 $ 23.19
======== ======== ======== ======== ========
Ratio of expenses to av-
erage net assets....... 1.04% 1.10% 1.10% 1.15% 1.25%
Ratio of net investment
income to average net
assets................. (.06)% .01% .02% (.12)% .17%
Portfolio turnover...... 48% 63% 48% 42% 43%
Total return............ 22.16% 30.32% (3.74)% 15.39% 6.77%
Net assets at end of
period (in thousands).. $275,915 $214,539 $163,678 $153,465 $116,426
</TABLE>
INTERNATIONAL EQUITY FUND:
<TABLE>
<CAPTION>
SEPTEMBER 5, 1995
YEAR ENDED (COMMENCEMENT
DECEMBER 31, OF OPERATIONS) TO
1996 DECEMBER 31, 1995
------------ -----------------
<S> <C> <C>
SELECTED FINANCIAL DATA FOR EACH UNIT
OUTSTANDING FOR THE PERIODS INDICATED:
Investment income.............................. $ .70 $ .49
Expenses....................................... (.10) (.03)
------- -------
Net investment income.......................... .60 .46
Net realized and unrealized gain (loss) on
investments................................... 1.83 (.09)
------- -------
Net increase................................... 2.43 .37
Net asset value at beginning of period......... 15.37 15.00
------- -------
Net asset value at end of period............... $ 17.80 $ 15.37
======= =======
Ratio of expenses to average net assets........ .59% .57%*
Ratio of net investment income to average net
assets........................................ 3.58% 9.2%*
Portfolio turnover**........................... 73.42% 3.51%
Total return................................... 15.81% 2.47%
Net assets at end of period (in thousands)..... $33,268 $10,849
</TABLE>
- --------
* Ratios annualized.
** Reflects purchases and sales of shares of the registered investment company
in which the Fund invests rather than turnover of the underlying portfolio
of the registered investment company.
12
<PAGE>
STRUCTURED PORTFOLIO SERVICE--CONSERVATIVE PORTFOLIO
<TABLE>
<CAPTION>
SEPTEMBER 5, 1995
YEAR ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS)
1996 TO DECEMBER 31, 1995
------------ --------------------
<S> <C> <C>
SELECTED FINANCIAL DATA FOR EACH UNIT
OUTSTANDING FOR THE PERIODS INDICATED
Investment income........................... $ -- $ .001
Expenses.................................... (.01) (.003)
------- ------
Net investment loss......................... (.01) (.002)
Net realized and unrealized gain on invest-
ments...................................... 1.00 .472
------- ------
Net increase................................ .99 .47
Net asset value at beginning of period...... 10.47 10.00
------- ------
Net asset value at end of period............ $ 11.46 $10.47
======= ======
Ratio of expenses to average net assets..... .10% .09%*
Ratio of net investment loss to average net
assets..................................... (.10)% (.06)%*
Portfolio turnover**........................ 34.18% 2.53%
Total return................................ 9.46% 4.7%
Net assets at end of period (in thousands).. $11,201 $5,372
</TABLE>
STRUCTURED PORTFOLIO SERVICE--MODERATE PORTFOLIO
<TABLE>
<CAPTION>
SEPTEMBER 5, 1995
YEAR ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS)
1996 TO DECEMBER 31, 1995
------------ --------------------
<S> <C> <C>
SELECTED FINANCIAL DATA FOR EACH UNIT
OUTSTANDING FOR THE PERIODS INDICATED
Investment income........................... $ -- $ .001
Expenses.................................... (.01) (.003)
------- -------
Net investment (loss)....................... (.01) (.002)
Net realized and unrealized gain on invest-
ments...................................... 1.40 .542
------- -------
Net increase................................ 1.39 .54
Net asset value at beginning of period...... 10.54 10.00
------- -------
Net asset value at end of period............ $ 11.93 $ 10.54
======= =======
Ratio of expenses to average net assets..... .10% .09%*
Ratio of net investment loss to average net
assets..................................... (.10)% (.06)%*
Portfolio turnover**........................ 26.97% 3.57%
Total return................................ 13.19% 5.4%
Net assets at end of period (in thousands).. $32,617 $12,379
</TABLE>
- --------
* Ratios annualized.
** Reflects purchases and sales of units of the Funds in which the Portfolios
invest rather than the turnover of such underlying Funds.
13
<PAGE>
STRUCTURED PORTFOLIO SERVICE--AGGRESSIVE PORTFOLIO
<TABLE>
<CAPTION>
SEPTEMBER 5, 1995
YEAR ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS)
1996 TO DECEMBER 31, 1995
------------ --------------------
<S> <C> <C>
SELECTED FINANCIAL DATA FOR EACH UNIT
OUTSTANDING FOR THE PERIODS INDICATED
Investment income........................... $ -- $ .001
Expenses.................................... (.01) (.003)
------- ------
Net investment loss......................... (.01) (.002)
Net realized and unrealized gain on invest-
ments...................................... 1.85 .572
------- ------
Net increase................................ 1.84 .57
Net asset value at beginning of period...... 10.57 10.00
------- ------
Net asset value at end of period............ $ 12.41 $10.57
======= ======
Ratio of expenses to average net assets..... .10% .09%*
Ratio of net investment loss to average net
assets..................................... (.10)% (.06)%*
Portfolio turnover**........................ 27.95% 2.71%
Total return................................ 17.41% 5.7%
Net assets at end of period (in thousands).. $25,558 $9,999
</TABLE>
- --------
*Ratios annualized.
** Reflects purchases and sales of units of the Funds in which the Portfolios
invest rather than turnover of such underlying Funds.
CONTRIBUTIONS TO THE INVESTMENT OPTIONS
Contributions may be allocated to the Funds or to any of the portfolios of
the Structured Portfolio Service on a daily basis and are credited on the day
of receipt if accompanied or preceded by proper allocation instructions. Such
contributions are used to purchase Units of the Funds and the portfolios of the
Structured Portfolio Service based on the relevant per Unit net asset value of
each Fund or the portfolios of the Structured Portfolio Service, as applicable.
Contributions may not be allocated directly to the Self-Managed Account, but
must first be allocated to one or more of the other available Investment
Options and then transferred to the Self-Managed Account.
TRANSFERS AMONG INVESTMENT OPTIONS
Transfers may be made among the Funds, the Structured Portfolio Service and
Self-Managed Accounts generally on a daily basis based on the relevant per Unit
net asset value of each Fund or each portfolio of the Structured Portfolio
Service, as applicable. Amounts invested in an Insurance Investment Contract
may not be transferred from an Insurance Investment Contract to any of the
other Investment Options prior to the maturity date of the Insurance Investment
Contract. No transfers may be made to the Equitable Real Estate Account. There
is no charge for transfers.
BENEFITS AND DISTRIBUTIONS
A Participant's eligibility for benefits depends on the terms of the
applicable Plan. For information regarding the terms of an Individually
Designed Plan, a Participant should contact his or her Employer.
Under the ABA Members Plans, Participants are generally eligible for vested
benefits upon retirement, disability, death or termination of employment. If an
eligible Participant's vested benefit
14
<PAGE>
is $3,500 or less, the Participant will receive a lump sum distribution.
Otherwise, the Participant may either choose to leave the assets invested under
the Program or request a distribution of benefits. A Participant eligible to
receive a distribution will generally receive a distribution in the form of a
Qualified Joint and Survivor Annuity if the Participant is married and a Life
Annuity if the Participant is single. With the written consent of the
Participant's spouse, the Participant may request a lump sum payment or
periodic installment payments from the Program, or may choose among other types
of annuities that are available through the Program. A Participant with assets
allocated to a Self-Managed Account may be eligible to elect an in-kind
distribution of assets held in such Self-Managed Account, in accordance with
the rules established by State Street. All annuity forms of payment are subject
to certain additional administrative charges. Notwithstanding the foregoing, an
Employer that adopts the ABA Retirement Plan may elect in the participation
agreement not to have annuity forms of payment under the Plan, in which case
Participants eligible to receive a distribution in excess of $3,500 from such a
profit sharing plan may request only a lump sum payment or periodic installment
payments. Payments for any distribution from a Participant's account are made
by check to a Participant, as directed. The taxable portion of lump sum
payments and certain installment payments from the ABA Members Plans may be
directly rolled over to an individual retirement account established on the
Participant's behalf, or to another employer's qualified retirement plan, the
terms of which accept direct rollover contributions. See "Benefits and
Distributions from ABA Members Plans."
Depending on the terms of the Plan, the type of contribution under a Plan and
the age of the Participant, withdrawals from a Participant's account balance in
an ABA Retirement Plan may be permitted prior to retirement, disability, death
or termination of employment. Under certain circumstances, a Participant may be
permitted to borrow a portion of the Participant's account balance in an ABA
Retirement Plan. See "Benefits and Distributions from ABA Members Plans--In-
Service Withdrawals and Loans."
ADDITIONAL INFORMATION
Persons who are already Employers or Investors may obtain administrative and
investment allocation and transfer forms or additional information by calling
State Street at (800) 348-2272 between 9:00 a.m. and 8:00 p.m. Eastern time or
by writing to State Street Bank and Trust Company, P.O. Box 9109, Boston,
Massachusetts 02209-9109. Participants may also obtain such forms from their
Employers.
For information regarding enrollment in the Program, Eligible Employers may
call State Street at (800) 826-8901 between 9:00 a.m. and 5:00 p.m. Eastern
time or write to State Street Bank and Trust Company, P.O. Box 2236, Boston,
Massachusetts 02209-9109.
A recorded message providing current account information can be obtained by
calling State Street at (800) 348-2272.
15
<PAGE>
DESCRIPTION OF INVESTMENT OPTIONS
State Street makes available eight collective investment Funds and three
portfolios in a Structured Portfolio Service under the Collective Trust. The
Funds and the portfolios of the Structured Portfolio Service are Investment
Options under the Program. Assets contributed under the Program are held in the
Master Trust and the Pooled Trust, of which State Street is the sole trustee.
Assets invested through the ABA Members Plans are held under the Master Trust,
and assets invested through the Individually Designed Plan are held under the
Pooled Trust.
The following are Investment Options under the Program. The Stable Asset
Return Fund invests primarily in money market instruments and investment
contracts. The Intermediate Bond Fund (the "Bond Fund") invests primarily in
debt securities of varying maturities, with approximately 2/3 of such portfolio
to be actively managed and 1/3 of such portfolio to be invested to replicate
the Lehman Brothers Government/Corporate Bond Index (the "LB Bond Index"). The
Index Equity Fund invests primarily in common stocks included in the Russell
3000 Index. The Balanced Fund, Value Equity Fund, Growth Equity Fund,
Aggressive Equity Fund and International Equity Fund invest primarily in equity
securities or, in the case of the Balanced Fund, a combination of equity and
debt securities. Assets contributed under the Program may also be invested in
the portfolios of the Structured Portfolio Service, which offer three
approaches to diversifying investments in the Program by giving Investors the
opportunity to select conservative, moderate or aggressive allocations of
assets among the Program's Funds. In addition, assets contributed under the
Program may be invested (i) in any publicly traded debt and equity securities
and shares of numerous mutual funds through a Self-Managed Account and (ii)
when offered, in Insurance Investment Contracts of varying maturities (commonly
known as "guaranteed investment contracts" or "GICs") that are issued by
insurance companies that meet certain credit quality standards.
The Stable Asset Return Fund commenced operations on September 5, 1995
through a merger of the Enhanced Short-Term Investment Fund ("ESTIF") and the
Blended Rate Fund, each of which, preceding such merger, was a fixed income
Fund under the Program. As of such date, Units previously outstanding of the
Blended Rate Fund were deemed exchanged for Units of ESTIF and all Units of
ESTIF outstanding were deemed to be Units of Stable Asset Return Fund. The
Index Equity Fund commenced operations on April 30, 1994 and was originally
invested to replicate the returns of the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500 Index"). Effective September 5, 1995 the Fund
Declaration of the S&P 500 Index Fund was amended to reflect a change in its
investment objective to replicate the total return of the Russell 3000 Index, a
broad U.S. stock market index, and the name of the Fund was changed to Index
Equity Fund. The Intermediate Bond Fund, Value Equity Fund, International
Equity Fund and Structured Portfolio Service commenced operations on September
5, 1995.
Interests in the respective Funds and the portfolios of the Structured
Portfolio Service are represented by Units, each of which represents an
undivided pro rata share of the net assets of underlying Funds. Although the
Funds and the portfolios of the Structured Portfolio Service are similar in
certain respects to registered open-end management investment companies
(commonly referred to as "mutual funds"), the Funds and the portfolios of the
Structured Portfolio Service are not registered as investment companies under
the Investment Company Act and, therefore, are not subject to the requirements
of such act. The Units representing interests in the Funds and the portfolios
of the Structured Portfolio Service are held by State Street, as trustee of the
ABA Members Trusts, for the benefit of Investors of the Plans held in the
Master Trust or the Pooled Trust. Neither the Units nor the assets of the Funds
or a portfolio of the Structured Portfolio Service, as applicable, are subject
to the claims of State Street's creditors. The Units are not insured by the
Federal Deposit Insurance Corporation or any governmental agency. State
Street's activities as trustee of the Collective Trust are subject to the
requirements of ERISA. There are no voting rights connected with the ownership
of Units. See "Regulation of Collective Trust."
16
<PAGE>
Units in the Funds and the portfolios of the Structured Portfolio Service are
not "redeemable securities" within the meaning of the Investment Company Act.
However, each Unit entitles an Investor to exercise rights that are
substantially similar to the rights of holders of "redeemable securities"
issued by a mutual fund. Units in each Fund and in each portfolio of the
Structured Portfolio Service may be withdrawn on each Business Day (subject to
applicable restrictions under the terms of the Program) for cash equal to the
per Unit net asset value of the Fund or the portfolio in the Structured
Portfolio Service, respectively. In addition, transfers may be made among the
Funds and the portfolios in the Structured Portfolio Service based on the
relevant per Unit net asset values.
For purposes of the descriptions of the Funds herein, investments by a Fund
in collective investment funds maintained by State Street are deemed to be
investments in the underlying securities held by such collective investment
funds.
STABLE ASSET RETURN FUND
INVESTMENT OBJECTIVE. The investment objective of the Stable Asset Return
Fund is to provide current income consistent with the preservation of principal
and liquidity. The Stable Asset Return Fund will invest in investment contracts
and high quality money market instruments through collective investment funds
maintained by State Street. THERE CAN BE NO ASSURANCE THAT THE STABLE ASSET
RETURN FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE.
STRATEGY. The Stable Asset Return Fund invests in obligations of the United
States government and the agencies and instrumentalities thereof ("U.S.
Government Obligations"), notes, bonds and similar debt instruments of
corporations, commercial paper, certificates of deposit and time deposits,
bankers' acceptances, variable and indexed interest notes and repurchase
agreements (collectively, "Short-Term Investment Products"). The Fund also
invests in investment contracts, including "Synthetic GICs" (as defined below)
issued by insurance companies, banks or other financial institutions.
"Synthetic GICs" are arrangements comprised of an investment in one or more
underlying securities and a contract issued by an insurance company, bank or
other financial institution that provides for the return of principal and an
agreed upon rate of interest for purposes of permitting the Fund to be benefit
responsive (i.e., responsive to withdrawal, transfer and benefit payment
requests). The underlying securities of Synthetic GICs generally consist of
fixed income debt instruments. As of December 31, 1996, approximately 52% of
the Fund's assets were invested in Short-Term Investment Products and 48% of
the Fund's assets were invested in investment contracts. As of December 31,
1996, the average weighted maturity of the Stable Asset Return Fund was 1.2
years. The Fund's portfolio will be structured to provide cash flow to assist
liquidity management and to limit the volatility of movement in interest rates
received by the Fund while maintaining a rate of return that is sensitive to
current interest rates.
INVESTMENT GUIDELINES AND RESTRICTIONS AND CERTAIN RISK FACTORS. The Fund may
invest in a variety of U.S. Government Obligations, including bills and notes
issued by the U.S. Treasury and securities issued by agencies of the U.S.
Government, such as the Farmers Home Administration, the Export Import Bank of
the United States, the Small Business Administration, the Government National
Mortgage Association, the General Services Administration and the Maritime
Administration. Not all U.S. Government Obligations are backed by the full
faith and credit of the United States. For example, securities issued by the
Federal Farm Credit Bank or by the Federal National Mortgage Association are
supported by the agency's right to borrow money from the U.S. Treasury under
certain circumstances, and securities issued by the Federal Home Loan Bank are
supported only by the credit of the issuing agency. There is no guarantee that
the U.S. Government will support these types of securities, and, therefore,
they involve more risk than U.S. Government Obligations that are supported by
the full faith and credit of the United States.
17
<PAGE>
The Stable Asset Return Fund may enter into repurchase agreements with a
variety of banks and broker-dealers. In a repurchase agreement transaction,
the Fund acquires securities (usually U.S. Government Obligations) for cash
and obtains a simultaneous commitment from the seller to repurchase the
securities at an agreed-upon price and date. The resale price is in excess of
the acquisition price and reflects an agreed-upon market rate of interest
unrelated to the coupon rate on the purchased security. The difference between
the sale and the repurchase price is, in effect, interest for the period of
the agreement. In such transactions, the securities purchased by the Stable
Asset Return Fund will have a total value at least equal to the amount of the
repurchase price and will be held by State Street until repurchased. State
Street will continually monitor the value of the underlying securities to
verify that their value, including accrued interest, always equals or exceeds
the repurchase price.
The Stable Asset Return Fund may invest in U.S. dollar-denominated
instruments issued by foreign banks and foreign branches of U.S. banks, which
may involve special risks. Foreign banks may not be required to maintain the
same financial reserves or capital that are required of U.S. banks.
Restrictions on loans to single borrowers, prohibitions on certain self-
dealing transactions and other regulations designed to protect the safety and
solvency of U.S. banks may not be applicable to foreign banks. Furthermore,
investments in foreign banks may involve additional risks similar to those
associated with investments in foreign securities described in "International
Equity Fund--Certain Risk Factors." Foreign branches of U.S. banks are
generally subject to the U.S. banking laws, but obligations issued by such
branches, which are sometimes payable only by the branch, may be subject to
country risks relating to actions by foreign governments that may restrict or
even shut down the operations of some or all banks.
The Stable Asset Return Fund may commit to purchasing securities on a "when-
issued" basis, such that payment for and delivery of a security will occur
after the date that the Fund commits to purchase the security. The payment
obligation and the interest rate that will be received on the security are
each fixed at the time of the purchase commitment. Prior to payment and
delivery, however, the Stable Asset Return Fund will not receive interest on
the security, and will be subject to the risk of a loss if the value of the
when-issued security is less than the purchase price at the time of delivery.
Except with respect to U.S. Government Obligations, the Stable Asset Return
Fund may invest in a Short-Term Investment Product only if at the time of
purchase, the instrument is (i) rated in one of the two highest rating
categories applicable to corporate bonds by at least two nationally recognized
statistical rating organizations ("NRSROs"), at least one of which must be
Standard & Poor's Corporation ("S&P") or Moody's Investors Service, Inc.
("Moody's"), (ii) rated in the highest rating category applicable to
commercial paper by at least two NRSROs, at least one of which must be S&P or
Moody's, or (iii) if unrated, issued or guaranteed by an issuer that has other
comparable outstanding instruments that are so rated or is itself rated in one
of the two highest rating categories by at least two NRSROs, at least one of
which must be S&P or Moody's. For purposes of this restriction, an investment
in a repurchase agreement will be considered to be an investment in the
securities that are the subject of the repurchase agreement. Except with
respect to certain U.S. Government Obligations, each instrument purchased will
be subject to the risks of default by the issuer and the non-payment of
interest or principal that are usually associated with unsecured borrowings.
The Stable Asset Return Fund may not invest in any investment contract
unless, at the time of purchase, the investment contract or the issuer thereof
is rated in one of the two highest rating categories by at least two NRSROs,
at least one of which must be S&P or Moody's. Although these rating standards
must be satisfied at the time an investment contract is issued, the financial
condition of an issuer may change prior to maturity. The Stable Asset Return
Fund will generally be unable to
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dispose of an investment contract prior to its maturity in the event of the
deterioration of the financial condition of the issuer.
Except for investment contracts, the Fund generally does not invest more
than 5% of its assets in securities of a single issuer, determined at the time
of purchase, other than U.S. Government Obligations. For purposes of this 5%
limitation, investments in collective investment funds maintained by State
Street are considered to be investments in the underlying securities held by
such collective investment funds, and investments in repurchase agreements are
considered to be investments in the securities that are the subject of such
repurchase agreements. Other than investment contracts, the Fund may not
invest more than 10% of its net assets in illiquid securities, including
repurchase agreements with maturities of greater than seven days or portfolio
securities that are not readily marketable or redeemable, determined at the
time of purchase. The proportion of the assets of the Fund invested in
investment contracts of any one insurance company, bank or financial
institution may generally not be greater than 15% of the aggregate value of
investment contracts included in the Fund's portfolio, and in no event greater
than 20%, in each case determined at the time of purchase. To the extent that
the assets of the Stable Asset Return Fund are committed to investment
contracts of a single issuer, the Fund will be subject to a greater risk that
a default by such issuer will have a material adverse effect on the Fund. The
Stable Asset Return Fund will not acquire warrants or make any other
investment that is inconsistent with the restrictions applicable to the other
Funds described under "Certain Information with Respect to the Funds--
Investment Prohibitions." Except as explicitly set forth above and in
"Derivative Instruments," there are no other investment restrictions
applicable to the Stable Asset Return Fund.
VALUATION OF UNITS. When an Investor allocates assets to the Stable Asset
Return Fund, the account of the Investor is credited with that number of Units
with an aggregate price equal to the value of such assets allocated to the
Fund. Each Business Day the net income accrued by the Stable Asset Return Fund
is calculated and additional Units of the Fund with an aggregate value equal
to the accrued net income of the Fund are issued in proportion to the
Investors' interests.
THE STABLE ASSET RETURN FUND SEEKS TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER UNIT, ALTHOUGH THERE CAN BE NO ASSURANCE THAT IT WILL BE ABLE TO DO
SO. Consistent with this objective, the Short-Term Investment Products of the
Stable Asset Return Fund are valued on the basis of a valuation method known
as "Amortized Cost Pricing." Amortized Cost Pricing involves valuing an
instrument initially at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium, regardless of the impact
of fluctuating interest rates on the market value of the instrument. While
this method provides certainty in valuation, it may result in the
overvaluation or undervaluation of a particular instrument relative to the
market value of the instrument. The longer the maturity of an instrument, the
greater the exposure to such risk of overvaluation or undervaluation.
Investment contracts are valued at contract value (cost plus accrued
interest).
If an Investor were to receive a distribution from, or transfer out of, the
Stable Asset Return Fund at a time when the Stable Asset Return Fund was
overvalued, the Investor would be overpaid (based on market price) and the
value of the investments of remaining Investors would be diluted. Conversely,
if an Investor were to receive a distribution from, or transfer out of, the
Stable Asset Return Fund at a time when the Stable Asset Return Fund was
undervalued, the Investor would be underpaid (based on market price) and the
value of the investments of remaining Investors would be increased. If State
Street determines that the per Unit net asset value of the Stable Asset Return
Fund to the extent such value is determined based on Amortized Cost Pricing
method deviates from the net asset value determined by using available market
quotations or market equivalents (market value) to a
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large enough extent that it may result in a material dilution or other unfair
result to Investors, State Street may adjust the per Unit net asset value of
the Fund or take other action that it deems appropriate to eliminate or reduce
to the extent reasonably practicable such dilution or other unfair result. For
this purpose, only the Short-Term Investment Products are tested on a mark to
market basis. Such valuations for the Investment Contracts are not required by
generally accepted accounting principles because of the benefit responsive
structure of the Investment Contracts held in the Fund.
PERFORMANCE INFORMATION. The Stable Asset Return Fund may, from time to time,
report its performance in terms of its "yield" and "effective yield." The
Fund's yield is determined based upon historical earnings and is not intended
to indicate future performance. The "yield" of the Fund refers to the
annualized income generated by a daily investment in the Fund. The "effective
yield" is calculated similarly but, when annualized, the income earned by an
investment in the Fund is assumed to be reinvested. The "effective yield" will
be slightly higher than the "yield" because of the compounding effect of this
assumed reinvestment. A recorded message providing performance information for
the Stable Asset Return Fund is available at (800) 826-8905.
INVESTMENT ADVISOR. State Street is sole manager of the Stable Asset Return
Fund. State Street may in the future employ investment advisors, at its
discretion, to manage portions of the Fund, subject to consultation with ABRA.
INTERMEDIATE BOND FUND
INVESTMENT OBJECTIVE. The investment objective of the Bond Fund is to achieve
a total return from current income and capital appreciation by investing
primarily in a diversified portfolio of fixed-income securities. A portion of
the Bond Fund (approximately 2/3) will be actively managed, investing in fixed-
income securities with a portfolio duration generally from 3 to 6 years. The
other portion of the Bond Fund--the index portion--will be invested to
replicate the LB Bond Index, which is composed of approximately 5,000 issues of
fixed-income securities, including U.S. Government Obligations and investment
grade corporate bonds, each with an outstanding market value of at least $25
million and remaining maturity of greater than one year. As of December 31,
1996, U.S. Government Obligations and corporate debt securities represented 74%
and 26%, respectively, of the LB Bond Index. The actively managed portion seeks
to achieve, over an extended period of time, total returns comparable or
superior to broad measures of the domestic bond market. LEHMAN BROTHERS, INC.
DOES NOT SPONSOR THE BOND FUND, NOR IS IT AFFILIATED IN ANY WAY WITH THE BOND
FUND OR STATE STREET. THERE CAN BE NO ASSURANCE THAT THE BOND FUND WILL ACHIEVE
ITS INVESTMENT OBJECTIVE.
STRATEGY. The actively managed portion of the Bond Fund is expected to invest
its assets in fixed-income securities of varying maturities with a portfolio
duration generally from 3 to 6 years. The level of investments in fixed income
securities of this portion of the Bond Fund will vary, depending upon many
factors, including economic conditions, interest rates and other relevant
considerations. In selecting securities, economic forecasting, interest rate
anticipation, credit and call risk analysis, foreign currency exchange rate
forecasting and other security selection techniques will be taken into account.
Duration is a measure of the expected life of a fixed income security that
was developed as a more precise alternative to the concept of "term to
maturity." Duration incorporates a bond's yield, coupon interest payments,
final maturity and call features into one measure. Traditionally, a debt
security's "term to maturity" has been used as a proxy for the sensitivity of
the security's price to changes in interest rates (which is the "interest rate
risk" or "volatility" of the security). However, "term to maturity" measures
only the time until a debt security provides its final payment, taking no
account of
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the pattern of the security's payment prior to maturity. Duration is a measure
of the expected life of a fixed income security on a present value basis.
Duration takes the length of the time intervals between the present time and
the time that the interest and principal payments are scheduled or, in the case
of a callable bond, expected to be received, and weighs them by the present
values of the cash to be received at each future point in time. For any fixed
income security with interest payments occurring prior to the payment of
principal, duration is always less than maturity. In general, all other things
being equal, the lower the stated or coupon rate of interest of a fixed income
security, the longer the duration of the security; conversely, the higher the
stated or coupon rate of interest of a fixed income security, the shorter the
duration of the security.
The portion of the Fund's assets committed to investment in debt securities
with particular characteristics (such as maturity, type and coupon rate) will
vary based on the outlook for the U.S. and foreign economies, the financial
markets and other factors. The portfolio holdings will be concentrated in areas
of the bond market (based on quality, sector, coupon or maturity) that are
believed to be relatively undervalued.
The index portion of the Bond Fund will attempt to hold a representative
sample of the securities in the LB Bond Index so that, in the aggregate, the
investment characteristics of this portion of the Bond Fund's portfolio will
resemble those of the LB Bond Index. However, the index portion of the Bond
Fund is not expected to track the LB Bond Index with the same degree of
accuracy that complete replication of such index would provide. Over time, the
portfolio composition of the index portion of the Bond Fund will be altered (or
"rebalanced") to reflect changes in the characteristics of the LB Bond Index.
INVESTMENT GUIDELINES AND RESTRICTIONS. The actively managed portion of the
Bond Fund will invest primarily in the following types of securities, which may
be issued by domestic or foreign entities and denominated in U.S. dollars or
foreign currencies (subject to a 20% limit on foreign securities, as described
below): U.S. Government Obligations; corporate debt securities; corporate
commercial paper; mortgage and other asset-backed securities; variable and
floating rate debt securities; bank certificates of deposit, fixed time
deposits and bankers' acceptances; repurchase agreements; obligations of
foreign governments or their subdivisions, agencies and instrumentalities,
international agencies or supranational entities; and foreign currency
denominated securities. The Bond Fund may hold different percentages of the
assets in these various types of securities.
For the purpose of achieving income, the actively managed portion of the Bond
Fund may enter into repurchase agreements, but may not invest more than 15% of
its total assets in repurchase agreements maturing in more than seven days. See
"Stable Asset Return Fund--Investment Guidelines and Restrictions and Certain
Risk Factors."
The index portion of the Bond Fund will invest its assets so as to replicate
the LB Bond Index. Under normal market conditions, at least 90% of the value of
the total assets of the index portion will be invested in securities comprising
the LB Bond Index. For temporary defensive purposes, the index portion of the
Bond Fund may invest without limitation in U.S. Government Obligations,
commercial paper, and other money market instruments of the type purchased by
the Stable Asset Return Fund, as described in "Stable Asset Return Fund." The
index portion of the Bond Fund would invoke this right only in extraordinary
circumstances, such as war, the closing of equity markets, an extreme financial
calamity, or the threat of any such event.
For information with respect to the use of derivative instruments, see
"Derivative Instruments." In addition, the Bond Fund is subject to the same
investment restrictions that are applicable to the other Funds. See "Certain
Information with Respect to the Funds--Investment Prohibitions."
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CERTAIN RISK FACTORS WITH RESPECT TO THE BOND FUND. As to certain risk
factors with respect to investing in U.S. Government Obligations, see "Stable
Asset Return Fund--Investment Guidelines and Restrictions and Certain Risk
Factors," and, as to risk factors with respect to the use of derivative
instruments, see "Derivative Instruments."
The Bond Fund may purchase or sell securities on a when-issued or delayed
delivery basis. As to certain risks involved, see "Stable Asset Return Fund--
Investment Guidelines and Restrictions and Certain Risk Factors."
The actively managed portion of the Bond Fund will limit its foreign
investments to securities of issuers based in developed countries (including
newly industrialized countries, such as Taiwan, South Korea and Mexico).
Investing in the securities of issuers in any foreign country involves special
risks and considerations not typically associated with investing in U.S.
companies. See "International Equity Fund--Certain Risk Factors."
PORTFOLIO TURNOVER. As the level of portfolio turnover increases,
transaction expenses incurred by the Fund increase, which may adversely affect
the Fund's performance. Because the types and proportions of the Bond Fund's
assets may change frequently in accordance with market conditions, an annual
portfolio turnover rate cannot be predicted.
Index funds, such as the index portion of the Bond Fund, seek to create a
portfolio which substantially replicates the total sum of the securities
comprising the applicable index. Index funds are not managed through
traditional methods of fund management, which typically involve frequent
changes in a portfolio of securities on the basis of economic, financial and
market analyses. Therefore, brokerage costs, transfer taxes and certain other
transaction costs for index funds may be lower than those incurred by non-
index, traditionally managed funds.
Portfolio turnover for 1996 was 22.37% and for the period from September 5,
1995 to December 31, 1995 was 1.60%. Such turnover reflects purchases and
sales of shares of the registered investment companies in which the Fund
invests rather than the turnover of the underlying portfolios of such
registered investment companies. See "--Investment Advisors and Initial
Investments in Registered Investment Companies."
PERFORMANCE INFORMATION. The Fund's total return is based on the overall
dollar or percentage change in value of a hypothetical investment in the Fund
and assumes that all Fund's dividends and capital gain distributions are
reinvested. The "total return" sought by the Bond Fund will consist of
interest and dividends from underlying securities, capital appreciation
reflected in unrealized increases in value of portfolio securities or realized
from the purchase and sale of securities and futures and options. A recorded
message providing current unit values and yield for the Bond Fund is available
at (800) 348-2272. While the Bond Fund is invested in registered investment
companies (as described below) the yield for the Bond Fund will be calculated
by taking the weighted average annualized yield of such registered investment
companies and adjusting for the Fund's expenses. It is expected that when the
Fund is no longer invested in registered investment companies, the Fund's
"yield" will be calculated by dividing its net investment income per Unit
earned during the specified period by its net asset value per Unit on the last
day of such period and annualizing the result.
INVESTMENT ADVISORS AND INITIAL INVESTMENTS IN REGISTERED INVESTMENT
COMPANIES. State Street expects to select Pacific Investment Management
Company ("PIMCO") to serve as Investment Advisor to provide investment advice
and arrange for the execution of purchases and sales of securities for the
actively managed portion of the Bond Fund, subject to the supervision and
approval of State Street.
State Street, however, based upon the advice of PIMCO, has determined that
until a minimum level of assets (the "Minimum Level") (in this case
approximately $75 million) have been allocated to the actively managed portion
of the Bond Fund, in order to provide for efficient investment of the Bond
Fund's assets, PIMCO's advice will be obtained by investing approximately 2/3
of the funds
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directed by Investors into the Bond Fund in the PIMCO Total Return Fund, an
open-end management investment company registered under the Investment Company
Act and managed by PIMCO (the "Total Return Fund"). As of December 31, 1996,
$33.4 million in assets were allocated to the actively managed portion of the
Bond Fund and such assets are currently invested in the Total Return Fund. The
Total Return Fund invests at least 65% of its assets in a diversified portfolio
of fixed-income securities of varying maturities with a portfolio duration
generally from 3 to 6 years. The Total Return Fund has substantially similar
investment objectives to the actively managed portion of the Bond Fund. After
the Minimum Level is attained by the actively managed portion of the Bond Fund,
State Street expects that such portion will be managed as a separate collective
trust portfolio by State Street, with the advice of PIMCO.
With respect to the index portion of the Bond Fund, State Street expects to
select Barclay's Global Investors ("BGI") to serve as Investment Advisor to
provide investment advice and arrange for the execution of purchases and sales
of securities for the index portion of the Bond Fund, subject to the
supervision and approval of State Street.
State Street, however, upon the advice of BGI has determined that in order
for the index portion of the Bond Fund to meet its investment objective, until
the Minimum Level (in this case approximately $200 million) is attained, in
order to provide for efficient investment of the index portion of the Bond
Fund's assets, BGI's advice will be obtained by investing approximately 1/3 of
the funds directed by Investors into the Bond Fund in the MasterWorks Bond
Index Fund, an open-end management investment company registered under the
Investment Company Act (the "Bond Index Fund"), which invests in the securities
represented in the LB Bond Index. As of December 31, 1996, $16.1 million in
assets were allocated to the index portion of the Bond Fund and such assets are
currently invested in the Bond Index Fund. The Bond Index Fund is managed by
BGI and has substantially similar investment objectives to the index portion of
the Bond Fund. The Bond Index Fund attempts to achieve, in both rising and
falling markets, a correlation of at least 95% between the total return of its
net assets before expenses and the total return of the LB Bond Index. After the
Minimum Level is attained by the index portion of the Bond Fund, State Street
expects that such portion will be managed as a separate collective trust
portfolio by State Street with the advice of BGI.
State Street will monitor the performance of the Total Return Fund and the
Bond Index Fund, in light of the Bond Fund's investment objectives, to
determine whether the continued investment by the Bond Fund in such registered
investment companies is appropriate. If State Street concludes that the
investment objectives or performance of the Total Return Fund and the Bond
Index Fund are no longer consistent with those of the actively managed portion
and index portion of the Bond Fund, respectively, State Street may transfer a
portion or all of the assets of the Bond Fund that are invested in such
registered investment companies to other registered investment companies or
collective investment funds managed by State Street, which, in light of the
investment objectives of the Bond Fund, State Street deems to be more
appropriate. After the Minimum Level is reached for each portion of the Bond
Fund, State Street and the Investment Advisors will determine appropriate
redemption procedures from the Total Return Fund and the Bond Index Fund.
State Street has determined the percentage of the assets in the Bond Fund to
be allocated to each portion of the Bond Fund. Unless altered by State Street,
contributions to and withdrawals from the Bond Fund will be allocated 2/3 to
PIMCO and 1/3 to BGI. Income and realized gains attributable to the assets
allocated to each Investment Advisor will remain allocated to such Investment
Advisor thereby changing the percentage of total assets of the Bond Fund
allocated to each Investment Advisor. An Investment Advisor with superior
performance may thus provide investment advice with respect to a larger
percentage of the assets of the Bond Fund than originally allocated to such
advisor. For additional information with respect to the Investment Advisors,
see "Investment Advisors."
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BALANCED FUND
INVESTMENT OBJECTIVE. The investment objective of the Balanced Fund is to
achieve both current income and capital appreciation. The Balanced Fund seeks
to achieve, over an extended period of time, total returns comparable to or
superior to an appropriate combination of broad measures of the domestic stock
and bond markets. THERE CAN BE NO ASSURANCE THAT THE BALANCED FUND WILL ACHIEVE
ITS INVESTMENT OBJECTIVE.
STRATEGY. The Balanced Fund invests in publicly traded common stocks, other
equity-type securities, long-term debt securities with varying maturities and
money market instruments. The Balanced Fund normally maintains at least 40%,
but not more than 70%, of its total assets in common stocks and other equity-
type instruments, including convertible securities, and at least 30%, but not
more than 60%, of its total assets in nonconvertible debt securities and money
market instruments. The Balanced Fund invests only in long-term debt securities
of varying maturities that are rated investment grade by an NRSRO or, if
unrated, determined by State Street to be of comparable quality. The Balanced
Fund varies the portion of its assets invested in equity securities, debt
securities and money market instruments to achieve the Fund's investment
objective based upon economic conditions, the general level of common stock
prices, interest rates and other relevant considerations, including the risks
associated with each investment medium.
INVESTMENT GUIDELINES AND RESTRICTIONS. The Balanced Fund invests in equity
securities of the same types as those in which the Growth Equity Fund invests.
See "Growth Equity Fund." The Balanced Fund also invests in Short-Term
Investment Products. See "Stable Asset Return Fund--Strategy." Such
investments, however, may include certificates of deposit and time deposits of
London branches of U.S. banks (these investments are usually referred to as
"Eurodollars") and certificates of deposit and commercial paper issued by
Canadian chartered bank subsidiaries of U.S. banks.
To the extent that the assets of the Balanced Fund are invested in securities
of a single issuer, there is a greater risk that a deterioration in performance
or default by such issuer will have a material adverse effect on the Fund.
For temporary defensive purposes, the Balanced Fund may invest without
limitation in U.S. Government Obligations, commercial paper and other money
market instruments of the types purchased by the Stable Asset Return Fund, as
described in "Stable Asset Return Fund." The Fund would invoke this right only
in extraordinary circumstances, such as war, the closing of bond or equity
markets, an extreme financial calamity or the threat of any such event.
Additional investment restrictions applicable to the Balanced Fund are
described in "Certain Information with Respect to the Funds--Investment
Prohibitions."
CERTAIN RISK FACTORS. For information and risk factors associated with
investing in equity and debt securities, see "Index Equity Fund--Certain Risk
Factors," and "Stable Asset Return Fund." For information with respect to the
use of derivative instruments, see "Derivative Instruments." In addition,
investments in foreign securities involve special risks. For certain risk
factors associated with investing in foreign securities, see "International
Equity Fund--Certain Risk Factors."
PORTFOLIO TURNOVER. As the level of portfolio turnover increases, transaction
expenses incurred by the Fund, such as brokerage commissions, increase, which
may adversely affect the Fund's performance. Because the types and proportions
of the Balanced Fund's assets may change frequently in accordance with market
conditions, an annual portfolio turnover rate cannot be predicted. The turnover
was 180.67%, 154.73% and 112.51% for 1996, 1995 and 1994, respectively.
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INVESTMENT ADVISORS. State Street has retained Lincoln Capital Management
Company ("Lincoln Capital") and Miller, Anderson & Sherrerd to serve as
Investment Advisors to provide investment advice and arrange for the execution
of purchases and sales of securities for the Balanced Fund. State Street will
determine the percentage of the assets in the Balanced Fund to be allocated to
each Investment Advisor. Unless altered by State Street, contributions to and
withdrawals from the Balanced Fund will be allocated 50% to Lincoln Capital and
50% to Miller, Anderson & Sherrerd. Income and realized gains attributable to
the assets allocated to each Investment Advisor remain allocated to such
Investment Advisor, thereby changing the percentage of total assets of the
Balanced Fund allocated to each Investment Advisor. An Investment Advisor with
superior performance may thus provide investment advice with respect to a
larger portion of the Balanced Fund than originally allocated to such
Investment Advisor. For additional information regarding the Investment
Advisors, see "Investment Advisors."
VALUE EQUITY FUND
INVESTMENT OBJECTIVE. The Value Equity Fund's investment objective is to
invest in common stocks of larger companies believed to be attractively priced
relative to their future earnings power with the goal of achieving long-term
growth of capital and dividend income. The Value Equity Fund seeks to
outperform, over extended periods of time, broad measures of the domestic stock
market. The Value Equity Fund is broadly diversified and emphasizes sectors and
securities State Street and its Investment Advisor consider undervalued. THERE
CAN BE NO ASSURANCE THAT THE VALUE EQUITY FUND WILL ACHIEVE ITS INVESTMENT
OBJECTIVE.
STRATEGY. The Fund invests primarily in common stocks of companies that in
the opinion of State Street and its Investment Advisor are undervalued in the
market place. The Value Equity Fund seeks to achieve growth of capital through
investing primarily in common stocks of larger companies believed to be
attractively priced relative to their future earnings power. The Fund's
Investment Advisor seeks to limit the Fund's divergence from the market's
performance over full market cycles to moderate levels.
INVESTMENT GUIDELINES AND RESTRICTIONS. Although the assets of the Value
Equity Fund are generally invested in common stocks and other equity-type
securities, including convertible securities, the Value Equity Fund may invest
in non-equity securities, including investment grade bonds and debentures and
high quality money market instruments of the same types as those in which the
Stable Asset Return Fund may invest, when State Street and the Investment
Advisor determine that such investments may contribute to the attainment of the
Fund's investment objective. The Value Equity Fund will not invest more than
35% of its assets in non-equity securities, except for temporary defensive
purposes. The Fund may invest in non-equity securities when, in light of
economic conditions and the general level of stock prices, dividend rates,
prices of fixed income securities and the level of interest rates, it appears
that the Value Equity Fund's investment objective will not be met by buying
equity securities. To the extent that the Value Equity Fund's assets are
invested in non-equity securities, the Fund's net asset value may be adversely
affected by a rise in interest rates.
The Value Equity Fund may invest in securities of U.S. companies or foreign
companies whose stocks are traded on the U.S. stock exchanges or on the over-
the-counter markets. For many foreign securities, there are dollar-denominated
American Depository Receipts ("ADRs"), which are issued by domestic banks and
are traded on the U.S. stock exchanges or on over-the-counter markets and
represent interest in securities issued by foreign corporations. The Value
Equity Fund may invest in foreign securities directly and through ADRs. The
Fund may not make an investment if that investment would cause more than 15% of
the Fund's assets to be invested in foreign securities, including ADRs,
determined at the time of purchase.
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For temporary defensive purposes, the Value Equity Fund may invest without
limitation in U.S. Government Obligations, short-term commercial paper and
other money market instruments of the types purchased by the Stable Asset
Return Fund. See "Stable Asset Return Fund." The Fund would invoke this right
only in extraordinary circumstances, such as war, the closing of equity
markets, an extreme financial calamity, or the threat of any such event.
Additional investment restrictions applicable to the Value Equity Fund are
described in "Certain Information with Respect to the Funds--Investment
Prohibitions."
CERTAIN RISK FACTORS. For risk factors associated with investment in equity
securities, see "Index Equity Fund--Certain Risk Factors." For information
with respect to the use of derivative instruments, see "Derivative
Instruments." In addition, investments in foreign securities involve special
risks. For certain risk factors associated with investing in foreign
securities, see "International Equity Fund--Certain Risk Factors."
PORTFOLIO TURNOVER. As the level of portfolio turnover increases,
transaction expenses incurred by the Fund, such as brokerage commissions,
increase, which may adversely affect the Fund's performance. The Value Equity
Fund generally holds its investments for an extended period, and the average
annual rate of portfolio turnover is expected to be under 50%. However, it is
difficult to predict the rate of portfolio turnover in view of the potential
for unexpected market conditions. Therefore, in any single year, the portfolio
turnover rate may be either substantially less or substantially more than 50%.
Such turnover was 16.73% for 1996 and 3.8% for the period September 5, 1995 to
December 31, 1995. The 1995 turnover rate reflects the buildup of the Fund's
portfolio during its first three months of operations.
INVESTMENT ADVISOR. State Street has retained Sanford C. Bernstein & Co.,
Inc. ("Sanford Bernstein") to serve as Investment Advisor to provide
investment advice and arrange for the execution of purchases and sales of
securities for the Value Equity Fund. For additional information regarding the
Investment Advisor, see "Investment Advisors."
GROWTH EQUITY FUND
INVESTMENT OBJECTIVE. The Growth Equity Fund has a primary investment
objective of achieving long-term growth of capital and a secondary investment
objective of realizing income. The Growth Equity Fund seeks to achieve growth
of capital through increases in the value of the securities it holds and to
realize income principally from dividends on such securities. The Growth
Equity Fund seeks to achieve, over an extended period of time, total returns
comparable to or superior to those attained by broad measures of the domestic
stock market. THERE CAN BE NO ASSURANCE THAT THE GROWTH EQUITY FUND WILL
ACHIEVE ITS INVESTMENT OBJECTIVE.
STRATEGY. The Growth Equity Fund invests primarily in common stocks and
other equity-type securities issued by large, well-established companies. The
Growth Equity Fund may invest a portion of its assets in convertible
securities. Convertible securities, such as preferred stocks and convertible
debt instruments, contain both debt and equity features. Convertible
securities may provide some protection when stock prices generally decline,
but may experience less appreciation in value when stock prices generally
increase.
INVESTMENT GUIDELINES AND RESTRICTIONS. Although the assets of the Growth
Equity Fund will generally be invested in equity securities, the Growth Equity
Fund may invest in non-equity securities, including investment grade bonds and
debentures and high quality money market instruments of the same types as
those in which the Stable Asset Return Fund may invest, when State Street
determines that such investments may contribute to the attainment of the
Fund's investment objective. The
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Growth Equity Fund will not invest more than 35% of its assets in non-equity
securities, except for temporary defensive purposes. The Fund may invest in
non-equity securities when, in light of economic conditions and the general
level of stock prices, dividend rates, prices of fixed income securities and
the level of interest rates, it appears that the Growth Equity Fund's
investment objective will not be met by buying equity securities. To the extent
that the Growth Equity Fund's assets are invested in non-equity securities, the
Fund's net asset value may be adversely affected by a rise in interest rates.
For temporary defensive purposes, the Growth Equity Fund may invest without
limitation in U.S. Government Obligations, short-term commercial paper and
other money market instruments of the types purchased by the Stable Asset
Return Fund. See "Stable Asset Return Fund." The Fund would invoke this right
only in extraordinary circumstances, such as war, the closing of equity
markets, an extreme financial calamity, or the threat of any such event.
Although the Growth Equity Fund invests primarily in securities of U.S.
companies or foreign companies doing substantial business in the United States,
the Growth Equity Fund may invest a portion of its assets in the securities of
established foreign companies that do not do a substantial amount of business
in the United States. The Fund may invest in foreign securities directly and
through ADRs and may hold some foreign securities outside of the United States.
State Street has directed the Investment Advisors to the Growth Equity Fund not
to recommend an investment, and State Street will not cause the Growth Equity
Fund to make an investment if that investment would cause more than 15% of the
Fund's assets for which the Investment Advisor's advice is obtained to be
invested in foreign securities, including ADRs, determined at the time of
purchase.
Additional investment restrictions applicable to the Growth Equity Fund are
described in "Certain Information with Respect to the Funds--Investment
Prohibitions" and "Derivative Instruments."
CERTAIN RISK FACTORS. See "Index Equity Fund--Certain Risk Factors" for risk
factors associated with investing in equity securities. In addition,
investments in foreign securities involve special risks. For certain risk
factors associated with investing in foreign securities, see "International
Equity Fund--Certain Risk Factors."
PORTFOLIO TURNOVER. As the level of portfolio turnover increases, transaction
expenses incurred by the Fund, such as brokerage commissions, increase, which
may adversely affect the Fund's performance. The Growth Equity Fund generally
holds its investments for an extended period, and the average annual rate of
portfolio turnover is expected to be under 80%. However, it is difficult to
predict the rate of portfolio turnover in view of the potential for unexpected
market conditions. Therefore, in any single year, the portfolio turnover rate
may be either substantially less or substantially more than 80%. Such turnover
was 63.70%, 60.38% and 58.78% in 1996, 1995 and 1994, respectively.
INVESTMENT ADVISORS. State Street has retained Capital Guardian Trust Company
("Capital Guardian"), Columbus Circle Investors ("Columbus Circle") and RCM
Capital Management ("RCM Capital") to serve as Investment Advisors to provide
investment advice and arrange for the execution of purchases and sales of
securities for the Growth Equity Fund. State Street will determine the
percentage of the assets in the Growth Equity Fund to be allocated to each
Investment Advisor. Unless altered by State Street, contributions to and
withdrawals from the Growth Equity Fund will be allocated 40% to Capital
Guardian, 30% to Columbus Circle and 30% to RCM Capital. Income and realized
gains attributable to the assets allocated to each Investment Advisor remain
allocated to such Investment Advisor, thereby changing the percentage of total
assets of the Growth Equity Fund allocated to each Investment Advisor. An
Investment Advisor with superior performance may thus provide investment advice
with respect to a larger portion of the Growth Equity Fund than originally
allocated to such Investment Advisor. For additional information regarding the
Investment Advisors, see "Investment Advisors."
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INDEX EQUITY FUND
INVESTMENT OBJECTIVE. The investment objective of the Index Equity Fund is to
replicate the total return of the Russell 3000 Index by investing in stocks
included in the Russell 3000 Index, with the overall objective of achieving
long-term growth of capital. The Index Equity Fund invests indirectly in these
stocks through collective investment funds maintained by State Street. The
Russell 3000 Index represents approximately 98% of the U.S. equity market based
on the market capitalization of the companies in the Russell 3000 Index. As of
December 31, 1996 the largest company had a market capitalization of
approximately $2.3 billion and the smallest company had a market capitalization
of approximately $39.2 million. The Russell 3000 Index is reconstituted
annually on June 30 based on index methodology and market capitalization
rankings as of the preceding May 31. THERE CAN BE NO ASSURANCE THAT THE INDEX
FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE OF REPLICATING THE TOTAL RETURN OF
THE RUSSELL 3000 INDEX.
STRATEGY. To control costs, the Index Equity Fund does not attempt to own all
3,000 securities included in the Russell 3000 Index. Instead, the Fund attempts
to replicate the returns of the Russell 3000 Index by dividing it into two
categories: the S&P 500 Index, which is comprised of 500 stocks, and the
extended market portion of the U.S. equity market represented by the Russell
Special Small Company Index, which is comprised of approximately 2,500 stocks.
The securities in these two indicies represent the universe of securities
contained in the Russell 3000 Index. The Index Equity Fund invests in common
stocks included in the Russell 3000 Index by fully replicating the S&P 500
Index and the Russell Special Small Company Index with the possible exception
of the smallest companies in the Russell Special Small Company Index. Deviation
of the Fund's performance from the performance of the Russell 3000 Index
("tracking error") may result because the S&P 500 Index is calculated using
capitalization weights that are different from those used to calculate the
Russell 3000 Index and includes some securities not included in the Russell
3000 Index. Tracking error may also result from Investor purchases and
redemptions of Units of the Index Equity Fund, as well as from the expenses
borne by the Index Equity Fund. Such purchases and redemptions may necessitate
the purchase and sale of securities by the Index Equity Fund and the resulting
transaction costs may be substantial because of the number and the
characteristics of the securities held. Tracking error may also occur due to
factors such as the size of the portfolio and changes made in the Russell
indices or the manner in which the Russell indices are calculated.
INVESTMENT GUIDELINES AND RESTRICTIONS. The Index Equity Fund invests
predominantly in common stocks of U.S. companies. However, the Index Equity
Fund, may invest temporarily and without limitation for defensive purposes in
certain short term fixed-income securities. Such securities may be used to
invest uncommitted cash balances or to maintain liquidity to provide for
Investor redemptions. State Street will not cause the Index Equity Fund to make
an investment if that investment would cause the Fund to purchase warrants or
make any other investment that is inconsistent with the restrictions applicable
to the other Funds described under "Certain Information with Respect to the
Funds--Investment Prohibitions." The Fund concentrates in particular industries
to the extent the Russell 3000 Index concentrates in those industries. The
Index Equity Fund will not borrow money except as a temporary measure for
extraordinary or emergency purposes or to facilitate redemption (not for
leveraging or investment).
CERTAIN RISK FACTORS. By investing primarily in the U.S. equity market, the
Index Equity Fund is subject to a variety of market and financial risks that
may affect its return. The Unit price of the Index Equity Fund could be
volatile, and Investors should be able to tolerate sudden, sometimes
substantial fluctuations in the value of their investment. No assurance can be
given that Investors will be protected from the risks inherent in equity
investing. The Fund is intended to be a long-term investment vehicle and is not
designed to provide Investors with the means to speculate on short-term U.S.
stock market movements.
In addition, it should be noted that the stocks of small companies included
in the Russell indices have limited product lines, markets, or financial
resources, or may be dependent upon a small
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management group. Therefore, their securities may be subject to more abrupt or
erratic market movements than larger, more established companies, both because
their securities are typically traded in lower volume and because the issuers
are typically subject to a greater degree of changes in their earnings and
prospects.
For information with respect to the use of derivative instruments, see
"Derivative Instruments."
PORTFOLIO TURNOVER. Ordinarily, Index Equity Fund will sell securities only
to reflect certain changes in the Russell 3000 Index (including mergers or
changes in the composition of the Russell 3000 Index) or to accommodate cash
flows into and out of the Index Equity Fund. Accordingly, the turnover rate
for the Index Equity Fund is not expected to exceed 50% per annum. However, it
is difficult to predict the rate of portfolio turnover in view of the
potential for unexpected market conditions. Therefore, in any single year, the
portfolio turnover rate may be either substantially less or substantially more
than 50%. The turnover of the Fund was 17.48% and 131.73% in 1996 and 1995,
respectively, and reflects purchases and sales of units of the collective
investment funds in which the Fund invests rather than the turnover of the
underlying portfolios of such collective investment funds. See "--Investment
Advisor." Higher than expected turnover in 1995 is partly attributable to
adjustments made to the Fund's composition when its investment objective was
changed from replicating the returns of the S&P 500 Index to replicating the
returns of the Russell 3000 Index. See "Intermediate Bond Fund--Portfolio
Turnover" for information applicable to portfolio turnover of index funds.
INVESTMENT ADVISOR. State Street is sole manager and trustee of the Index
Equity Fund. However, in the future State Street may employ investment
advisors, at its discretion and subject to consultation with ABRA. The assets
of the Fund are currently invested in the State Street Global Advisors (SSgA)
Flagship S&P 500 Fund and the State Street Global Advisors (SSgA) Russell
Special Small Company Common Trust Fund.
INFORMATION ABOUT THE RUSSELL INDICES. The criteria used by Frank Russell &
Company ("Russell") to determine the initial list of securities eligible for
inclusion in the Russell indices is total market capitalization adjusted for
large private holdings and cross-ownership. Companies are not selected for
inclusion in the Russell indices because they are expected to have superior
stock price performance relative to the U.S. stock market in general or other
stocks in particular. Russell makes no representation or warranty, implied or
express, to any member of the public regarding the advisability of investing
in the Russell 3000 Index or the ability of the Russell 3000 Index to track
general market performance of large and small capitalization stocks.
"STANDARD & POOR'S (R)," "S&P (R)," "S&P 500 (R)," "STANDARD & POOR'S 500"
AND "500" ARE TRADEMARKS OF MCGRAW-HILL, INC. AND HAVE BEEN LICENSED FOR USE
BY STATE STREET. THE INDEX FUND IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED
BY STANDARD & POOR'S AND STANDARD & POOR'S MAKES NO REPRESENTATION REGARDING
THE ADVISABILITY OF INVESTING IN THE INDEX FUND.
"RUSSELL 3000 INDEX" AND "RUSSELL SPECIAL SMALL COMPANY INDEX" ARE
TRADEMARKS OF RUSSELL. THE RUSSELL 3000 INDEX IS NOT SPONSORED, ENDORSED, SOLD
OR PROMOTED BY RUSSELL, NOR DOES RUSSELL GUARANTEE THE ACCURACY AND/OR
COMPLETENESS OF THE RUSSELL 3000 INDEX OR ANY DATA INCLUDED THEREIN. RUSSELL
MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE RESULTS TO BE OBTAINED BY THE
FUND, OWNERS OF THE FUND, ANY PERSON OR ANY ENTITY FROM THE USE OF THE RUSSELL
3000 INDEX OR ANY DATA INCLUDED THEREIN. RUSSELL MAKES NO EXPRESS OR IMPLIED
WARRANTIES AND EXPRESSLY DISCLAIMS ALL SUCH WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE FOR USE WITH RESPECT TO THE RUSSELL 3000
INDEX OR ANY DATA INCLUDED THEREIN.
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AGGRESSIVE EQUITY FUND
INVESTMENT OBJECTIVE. The investment objective of the Aggressive Equity Fund
is to maximize long-term growth of capital. The Aggressive Equity Fund seeks to
achieve, over an extended period of time, total returns comparable to or
superior to those attained by broad measures of the domestic stock market.
THERE CAN BE NO ASSURANCE THAT THE AGGRESSIVE EQUITY FUND WILL ACHIEVE ITS
INVESTMENT OBJECTIVE.
STRATEGY. The Aggressive Equity Fund's investments may include securities of
relatively small to medium sized companies, new companies and companies that
may benefit from new technologies, new product or service developments or
management changes. The Fund may also invest in newly issued securities and
securities of seasoned, established companies that appear to have unusual value
or appreciation potential. Industry diversification is not an objective of the
Aggressive Equity Fund and the Fund, may, at times, be less diversified than
the other Funds.
INVESTMENT GUIDELINES AND RESTRICTIONS. The Aggressive Equity Fund invests
primarily in common stocks and other equity-type securities, including
convertible securities, that are believed to have strong potential for
appreciation.
Although the assets of the Aggressive Equity Fund will generally be invested
in equity securities, the Aggressive Equity Fund may also invest in non-equity
securities, including investment grade bonds and debentures and high quality
money market instruments of the same types as those in which the Stable Asset
Return Fund may invest, when State Street determines that in light of economic
conditions and the general level of stock prices, dividend rates, prices of
fixed income securities and the level of interest rates, such investments may
contribute to the attainment of the Fund's investment objective. See "Stable
Asset Return Fund." The Aggressive Equity Fund will not invest more than 35% of
its assets in non-equity securities, except for temporary defensive purposes.
To the extent that the Aggressive Equity Fund's assets are invested in non-
equity securities, the Fund's net asset value may be adversely affected by a
rise in interest rates.
For temporary defensive purposes, the Aggressive Equity Fund may invest
without limitation in U.S. Government Obligations, short-term commercial paper
and other money market instruments of the types purchased by the Stable Asset
Return Fund. See "Stable Asset Return Fund." The Fund would invoke this right
only in extraordinary circumstances, such as war, the closing of equity
markets, an extreme financial calamity, or the threat of any such event.
Although the Aggressive Equity Fund invests primarily in securities of U.S.
companies or foreign companies doing substantial business in the United States,
the Aggressive Equity Fund may invest a portion of its assets in the securities
of established foreign companies that do not do a substantial amount of
business in the United States. The Fund may invest in foreign securities
directly and through ADRs and may hold some foreign securities outside of the
United States. State Street has directed the Investment Advisors to the
Aggressive Equity Fund not to recommend an investment, and State Street will
not cause the Aggressive Equity Fund to make an investment if that investment
would cause more than 15% of the portion of the Fund's assets for which such
Investment Advisor's advice is obtained to be invested in foreign securities,
including ADRs, determined at the time of purchase. Additional investment
restrictions applicable to the Aggressive Equity Fund are described in "Certain
Information With Respect to the Funds--Investment Prohibitions" and "Derivative
Instruments."
CERTAIN RISK FACTORS. Generally, the Aggressive Equity Fund poses a greater
risk to principal than the other Funds. Investors should consider their
investments in the Aggressive Equity Fund as relatively long-term and involving
high risk to principal commensurate with potential for substantial gains. There
is no certainty regarding which companies and industries will in fact
experience capital growth, and such companies and industries may lose their
potential for capital growth at any time. To the extent that the assets of the
Aggressive Equity Fund are invested in the securities of a single issuer
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or a single industry, there is a greater risk that a deterioration in the
performance of such issuer or industry will have a material adverse effect on
the Fund. See "Index Equity Fund--Certain Risk Factors" for a description of
risk factors associated with investing in equity securities generally. See
"International Equity Fund--Certain Risk Factors" for a description of the
risks associated with investments in foreign securities.
A significant portion of the Aggressive Equity Fund's investments may be in
securities of small to medium sized companies, which typically have greater
market and financial risk than larger, more diversified companies. These
companies are often dependent on one or two products in rapidly changing
industries and may be more vulnerable to competition from larger companies with
greater resources and to economic conditions that affect their market sector.
Therefore, consistent earnings for such companies may not be as likely as for
more established companies. The smaller companies may not have adequate
resources to react optimally to change or to exploit opportunities. Small and
medium sized companies may also be more dependent on access to equity markets
to raise capital than are larger companies that have a greater ability to
support relatively larger debt burdens. The securities of such companies may be
held primarily by insiders or institutional investors, which may have an impact
on their marketability. These securities may be more volatile than the overall
market. Relatively new companies and companies which have recently made an
initial public offering may be perceived by the market as unproven. The
Aggressive Equity Fund's focus on appreciation potential will result in an
emphasis on securities of companies that may pay little or no dividends and
reinvest all or a significant portion of their earnings. The low expected
dividend level may also contribute to greater than average volatility.
PORTFOLIO TURNOVER. As the level of portfolio turnover increases, transaction
expenses incurred by the Fund, such as brokerage commissions, increase, which
may adversely affect the Fund's performance. Portfolio turnover of the
Aggressive Equity Fund may be high. Although it is not expected to exceed 150%
per year on average, it is difficult to predict the rate of portfolio turnover
in view of the potential for unexpected market conditions. Therefore, in any
single year, the portfolio turnover rate may be either substantially less or
substantially more than 150%. The possibility of high turnover reflects, in
part, the volatility of the securities in which the Fund invests and the
probability that the circumstances prompting investment in certain companies
may change more rapidly than in the case of larger, more diversified companies.
Portfolio turnover was 48%, 63% and 48% in 1996, 1995 and 1994, respectively.
INVESTMENT ADVISORS. State Street has retained Capital Guardian and Sit
Investment Associates, Inc. ("Sit Associates") to serve as Investment Advisors
to provide investment advice and arrange for the execution of purchases and
sales of securities for the Aggressive Equity Fund. State Street will determine
the percentage of the assets in the Aggressive Equity Fund to be allocated to
each Investment Advisor. Unless altered by State Street, contributions to and
withdrawals from the Aggressive Equity Fund will be allocated 50% to Capital
Guardian and 50% to Sit Associates. Income and realized gains attributable to
the assets allocated to each Investment Advisor remain allocated to such
Investment Advisor, thereby changing the percentage of total assets of the
Aggressive Equity Fund allocated to each Investment Advisor. An Investment
Advisor with superior performance may thus provide investment advice with
respect to a larger portion of the Aggressive Equity Fund than originally
allocated to such Investment Advisor. For additional information regarding the
Investment Advisors, see "Investment Advisors."
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INTERNATIONAL EQUITY FUND
INVESTMENT OBJECTIVE. The International Equity Fund's investment objective
is to seek long-term growth of capital through investment primarily in common
stocks of established non-U.S. companies. Common stocks of foreign companies
offer a way to seek long-term growth of capital. Total return will consist of
capital appreciation or depreciation, dividend income and currency gains or
losses. The International Equity Fund seeks to achieve, over an extended
period of time, total returns comparable to or superior to broad measures of
the international (non-U.S.) stock market. THERE CAN BE NO ASSURANCE THAT THE
INTERNATIONAL EQUITY FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE.
Over the last 30 years many foreign countries' economies have grown faster
than the United States' economy, and the average return from equity
investments in such countries has often exceeded the return on similar
investments in the U.S. Moreover, over the same period there has frequently
been a wide and largely unrelated variation in performance among international
equity markets. Within the framework of diversification, the International
Equity Fund seeks to identify and invest in companies participating in the
faster growing foreign economies and markets. State Street believes that
because more than half of the world's stock market value is traded abroad,
investment in foreign securities offers significant potential for long-term
capital appreciation and an opportunity to achieve investment diversification.
STRATEGY. The International Equity Fund intends to diversify investments
broadly among developed, newly industrialized and emerging countries and
generally to have at least three different countries represented in the
portfolio. It may invest in countries of the Far East and Europe, as well as
in South Africa, Australia, Canada, Latin America and other areas. Under
unusual circumstances, however, it may invest substantially all its assets in
only one or two countries. Under exceptional economic or market conditions
abroad, the International Equity Fund may temporarily invest all or a major
portion of its assets in U.S. Government Obligations or debt obligations of
U.S. companies of the type described under "Stable Asset Return Fund." The
Fund would invoke this right only in extraordinary circumstances, such as war,
the closing of equity markets, an extreme financial calamity, or the threat of
any such event.
INVESTMENT GUIDELINES AND RESTRICTIONS. In seeking to accomplish its
objective, the International Equity Fund will invest primarily in common
stocks of established foreign companies that are believed to have the
potential for growth of capital and in a variety of other equity-related
securities, such as preferred stocks, warrants and convertible securities of
such foreign companies, as well as foreign corporate and governmental debt
securities (when considered consistent with its investment objective). The
International Equity Fund may invest in non-equity securities when, in light
of economic conditions and the general level of stock prices, dividend rates,
prices of fixed-income securities and the level of interest rates, it appears
that the International Equity Fund's investment objective will not be met by
buying equity securities. Under normal conditions the International Equity
Fund's investments in securities other than common stocks and other equity-
related securities are limited to no more than 35% of total assets. Within
this limitation, the Fund will also maintain a small cash reserve which will
be invested in Short-Term Investment Products. See "Stable Asset Return Fund."
The International Equity Fund will normally conduct its foreign currency
exchange transactions either on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market or by entering into forward
contracts to purchase or sell foreign currencies. See "Derivative
Instruments."
The International Equity Fund is subject to the same investment prohibitions
and restrictions as the other Funds. See "Certain Information With Respect to
the Funds--Investment Prohibitions."
CERTAIN RISK FACTORS. Foreign stock prices are subject to many of the same
influences as U.S. stocks, such as general economic conditions, company and
industry earnings prospects, and investor
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psychology. See "Index Equity Fund--Certain Risk Factors." International
investing also involves additional risks that can increase the potential for
the losses in the Fund. These risks can be significantly magnified for
investments in emerging markets.
Currency Fluctuations. Transactions in foreign securities are conducted in
local currencies, so dollars usually must be exchanged for another currency
each time a stock is bought or sold or a dividend is paid. Likewise, share
price quotations and total return information will reflect conversion into
dollars. Accordingly, fluctuations in foreign exchange rates can significantly
increase or decrease the dollar value of a foreign investment, boosting or
offsetting its local market return. For example, if a French stock rose 10% in
price during a year but the U.S. dollar gained 5% against the French franc
during that time, the U.S. investor's return would be reduced to approximately
5%. This is the result because the franc would "buy" fewer dollars at the end
of the year than at the beginning, or, conversely, a dollar would buy more
francs. Exchange rate movements can be large and endure for extended periods of
time.
Costs. It is more expensive for U.S. investors to trade in foreign markets
than in the U.S. Investment pools offer a very efficient way for individuals to
invest abroad, but the overall expense ratios of international funds are
usually somewhat higher than those of typical domestic stock funds.
Political and Economic Factors. The economies, markets and political
structures of a number of the countries in which the Fund can invest do not
compare favorably with U.S. and other mature economies in terms of wealth and
stability. Therefore, investments in these countries may be riskier, and will
be subject to erratic and abrupt price movements. This is especially true for
emerging markets, such as those found in Latin America, Asia, Eastern Europe
and Africa. Even investments in countries with highly developed economies are
subject to risk. For example, the Japanese stock market historically has
experienced wide swings in value. Moreover, while certain countries have made
progress in economic growth, liberalization, fiscal discipline and political
and social stability, there is no assurance these trends will continue.
Some economies of the countries in which investments may be made are less
developed, less diverse (for example, various countries in Latin America,
Eastern Europe, Africa and Asia), overly reliant on particular industries and
more vulnerable to the ebb and flow of international trade, trade barriers and
other protectionist or retaliatory measures (for example, Japan, Southeast
Asia, Latin America, Eastern Europe and Africa). Some countries, particularly
in Latin America and other emerging markets have legacies of hyperinflation and
currency devaluations versus the dollar (which adversely affect returns to U.S.
investors.) Investments in countries that have recently begun moving away from
central planning and state-owned industries toward free markets, such as the
countries in Eastern Europe, China and Africa, should be regarded as
speculative.
Certain countries in which investments may be made will have histories of
instability and upheaval (for example, various countries in Latin America and
Africa) with respect to their internal politics that could cause their
governments to act in a detrimental or hostile manner toward private enterprise
or foreign investment. Actions such as nationalizing an industry or company,
expropriating assets, or imposing punative taxes could have a severe adverse
effect on security prices and impair the International Equity Fund's ability to
repatriate capital or income. Significant external risks, including war,
currently affect some countries. Governments in many emerging market countries
participate to some degree in their economies and securities markets.
Legal, Regulatory and Operational. Certain countries lack uniform accounting,
auditing and financial reporting standards, have less governmental supervision
of financial markets than in the U.S., do not honor legal rights enjoyed in the
U.S. and have settlement practices, such as delays, which may subject the
International Equity Fund to risks of loss not customary in U.S. markets. In
addition, securities markets in these countries have substantially lower
trading volumes than U.S. markets, resulting in less liquidity and more
volatility than experienced in the U.S.
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Pricing. Portfolio securities may be listed on foreign exchanges that are
open on days (such as Saturdays or U.S. legal holidays) when the International
Equity Fund does not compute its prices. As a result, the Fund's net asset
value may be significantly affected by trading on days when Investors cannot
make transactions.
Investing in International Stocks. Like U.S. stock investments, common stock
of foreign companies offer investors a way to build capital over time.
Nevertheless, the long-term rise of foreign stock prices as a group has been
punctuated by periodic declines. Share prices of all companies, even the best
managed and most profitable, whether U.S. or foreign, are subject to market
risk, which means they can fluctuate widely. In less well developed stock
markets, such as those in some Asian and most Latin American, Eastern European
and African countries, volatility may be heightened by actions of a few major
investors. For example, substantial increases or decreases in cash flows of
mutual funds investing in these markets could significantly affect stock prices
and, therefore, fund share prices. For this reason investors in foreign stocks
should have a long-term investment horizon and be willing to wait out declining
markets. The International Equity Fund should not be relied upon as a complete
investment program or used to play short-term swings in the stock or foreign
exchange markets.
The values of foreign fixed-income securities fluctuate in response to
changes in U.S. and foreign interest rates. Income received by the
International Equity Fund from sources within foreign countries may also be
reduced by withholding and other taxes imposed by such countries although tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes. Any such taxes paid by the International Equity Fund will reduce the net
income earned by it. State Street will consider available yields, net of any
required taxes, in selecting foreign dividend paying securities.
In addition, short-term movements in currency exchange rates could adversely
impact the availability of funds to pay for Investors' redemptions of
investments in the International Equity Fund. For example, if the exchange rate
for a currency declines after a security has been sold to provide funds for a
redemption from the Fund but before such funds are translated into U.S.
dollars, it could be necessary to liquidate additional portfolio securities in
order to finance the redemption.
PORTFOLIO TURNOVER. As the level of portfolio turnover increases, transaction
expenses incurred by the International Equity Fund (such as brokerage
commissions) will increase, which may adversely affect the Fund's overall
performance. The International Equity Fund generally will hold its investments
for an extended period of time, and the average annual rate of portfolio
turnover is expected to be under 50%. It is difficult, however, to predict the
rate of portfolio turnover in view of the potential for unexpected market
conditions, and securities may be purchased and sold without regard to the
length of time held when circumstances warrant. Therefore, in any given year,
the portfolio turnover rate may be substantially less or substantially more,
than 50%. Portfolio turnover was 73.42% for 1996 and 3.51% for the period from
September 5, 1995 to December 31, 1995. Such turnover reflects purchases and
sales of shares of the registered investment company in which the Fund invests
rather than the turnover of the underlying portfolio of such registered
investment company. See "--Investment Advisor and Initial Investment in
Registered Investment Companies."
INVESTMENT ADVISOR AND INITIAL INVESTMENTS IN REGISTERED INVESTMENT
COMPANIES. State Street expects to select Rowe Price-Fleming International,
Inc. ("Price-Fleming") to be the Investment Advisor for the International
Equity Fund to provide investment advice and arrange for the execution of
purchases and sales of securities for the International Equity Fund, subject to
the supervision and approval of State Street to accept or reject any
recommended investment.
State Street, however, upon the advice of Price-Fleming has determined that
in order for the International Equity Fund to meet its investment objective,
until a sufficient level of assets in the Fund is attained to provide for
efficient investment of the Fund's assets, Price-Fleming's advice will be
obtained by investing the funds directed by Investors into the International
Equity Fund in the
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T. Rowe Price International Stock Fund (the "T. Rowe International Fund"), a
registered investment company that is managed by Price-Fleming and that has
substantially the same investment objectives as the International Equity Fund.
As of December 31, 1996, $33.27 million in assets were invested in the Fund and
such assets are invested in the T. Rowe International Fund. After a sufficient
asset level is attained, which State Street currently expects to be
approximately $75 to $100 million (an increase from an original estimate of $25
million) the International Equity Fund will be managed as a separate collective
trust portfolio by State Street with the advice of Price-Fleming.
State Street, however, will monitor the performance of the T. Rowe
International Fund, in the light of the International Equity Fund's investment
objectives, to determine whether the continued investment by the International
Equity Fund in such registered investment company is appropriate. If State
Street concludes that the investment objectives or performance of the T. Rowe
International Fund are no longer consistent with those of the International
Equity Fund, State Street may transfer a portion of or all the assets of the
International Equity Fund to other registered investment companies or
collective investment funds maintained by State Street that, in light of the
investment objectives of the International Equity Fund, State Street deems to
be more appropriate.
It is anticipated that after a sufficient level of assets is reached, at
State Street's discretion, funds may be withdrawn from the T. Rowe
International Fund in such a manner as to not require the liquidation of
portfolio securities by the T. Rowe International Fund, although there can be
no assurance that this goal will be met. With the consent of Price-Fleming, all
or part of the International Equity Fund's withdrawals may consist of portfolio
securities valued at their current market value on the date of distribution,
which would then become portfolio securities in the International Equity Fund.
If a liquidation of the portfolio securities occurs, Price-Fleming will
recommend securities that it believes reflect a representative sample of the T.
Rowe International Fund's portfolio. State Street will have the authority to
approve or disapprove of Price-Fleming's recommendations. For additional
information with respect to the Investment Advisor, see "Investment Advisors."
CERTAIN INFORMATION WITH RESPECT TO THE FUNDS
INVESTMENT PROHIBITIONS
None of the Funds will:
. trade in foreign currency, except transactions incidental to the
settlement of purchases or sales of securities for the Funds;
. make an investment in order to exercise control or management over a
company;
. make short sales, unless the Funds have, by reason of ownership of other
securities, the right to obtain securities of a kind and amount
equivalent to the securities sold, which right will continue so long as a
Fund is in a short position;
. trade in commodities or commodity contracts, except options or futures
contracts (including options on futures contracts) with respect to
securities or securities indices for hedging purposes;
. write uncovered options;
. purchase real estate or mortgages, provided that the Funds may buy shares
of real estate investment trusts listed on U.S. stock exchanges or
reported on Nasdaq National Market if such purchases are consistent with
the investment objective and restrictions set forth in the fund
declaration for the Fund;
. except for the initial investments by the Bond Fund and the International
Equity Fund (see "Intermediate Bond Fund--Investment Advisors and Initial
Investments in Registered Investment Companies" and "International Equity
Fund--Investment Advisor and Initial Investments in Registered Investment
Companies"), invest in the securities of registered investment companies;
35
<PAGE>
. invest in oil, gas or mineral leases;
. purchase any security on margin or borrow money, except for short-term
credit necessary for clearance of securities transactions or, in the case
of the Index Fund, for redemption purposes; or
. make loans, except by (i) the purchase of marketable bonds, debentures,
commercial paper and similar marketable evidences of indebtedness and
(ii) engaging in repurchase agreement transactions.
State Street has directed the Investment Advisors not to recommend an
investment, and State Street will not cause the Funds to make an investment, if
that investment would cause (1) more than 5% of the portion of such Fund's net
assets to be invested in warrants generally, or more than 2% of such net assets
to be invested in warrants not listed on a nationally recognized U.S.
securities exchange, or (2) other than Investment Contracts, more than 10% of
the portion of such Fund's net assets to be invested in illiquid securities,
including repurchase agreements with maturities in excess of seven days or
portfolio securities that are not readily marketable, in each case determined
at the time of purchase. State Street has also directed the Investment Advisors
not to recommend an investment, and State Street will not cause the Funds to
make an investment, in an industry if that investment would cause more than 25%
of the portion of such Fund's assets allocated to such Investment Advisor to be
invested in that industry, determined at the time of purchase. In addition,
State Street has directed the Investment Advisors not to recommend an
investment, and State Street will not cause the Funds to make an investment, in
the securities of an issuer if that investment would cause more than 5% of the
portion of the assets of such Fund allocated to the Investment Advisor to be
invested in the securities of that issuer, determined at the time of purchase.
Except as described under "Derivative Instruments," State Street has no present
intention of causing the Funds to invest in options and financial futures
contracts and other derivatives, and will not do so without prior notification
to Investors.
Although none of the foregoing restrictions apply to the Initial Investment
Vehicles (as defined below), each such Initial Investment Vehicle has
restrictions that are set forth in its respective prospectus.
VALUATION OF UNITS. An Investor's interest in a Fund is represented by the
value of the Units credited to such Investor's account for that Fund. The
number of Units purchased with a contribution or transfer or allocation of
assets to a Fund (except for the Stable Asset Return Fund, which is generally
maintained at $1.00) is the quotient of (i) the amount allocated to the Fund
divided by (ii) the Unit Value of such Fund calculated as of the end of the
regular trading session of the New York Stock Exchange on the Business Day the
contribution is credited by State Street. Once a number of Units has been
credited to an Investor's account, this number will not vary because of any
subsequent fluctuation in the Unit Value. The value of each Unit, however, will
fluctuate with the investment experience of the particular Fund, which reflects
the investment income and realized and unrealized capital gains and losses of
that Fund.
Unit Values for the Funds are determined as of the close of the regular
trading session of the New York Stock Exchange on each Business Day. The Unit
Value for each Fund is the value of all assets of the Fund, less all
liabilities of such Fund, divided by the number of outstanding Units of such
Fund. The value of each Fund is determined by State Street based on the market
value of each Fund's portfolio of securities. The value of securities and other
assets that do not have readily available market prices is determined in good
faith by State Street. See "Stable Asset Return Fund--Valuation of Units" for
information as to the valuation of Units in such Fund.
TRANSFERS. Transfers to and from any of the Funds, as well as transfers to
and from the Structured Portfolio Service and the Self-Managed Accounts, may be
made on any Business Day. Transfers, however, cannot be made from an Insurance
Investment Contract to any other Investment Option prior to the maturity of
such Insurance Investment Contract. For additional information relating to
36
<PAGE>
transfers and withdrawals from the Investment Options, see "Transfers Between
Investment Options and Withdrawals."
PERFORMANCE INFORMATION. Each Fund may, from time to time, report its
performance in terms of the Fund's total return. A Fund's total return is
determined based on historical results and is not intended to indicate future
performance. A Fund's total return is computed by determining the average
annual compounded rate of return for a specified period which, when applied to
a hypothetical $1,000 investment in the Fund at the beginning of the period,
would produce the redeemable value of that investment at the end of the period.
Each Fund may also report a total return computed in the same manner but
without annualizing the result. A recorded message providing current Unit
Values for the Funds is available at (800) 348-2272.
DERIVATIVE INSTRUMENTS
FUNDS MANAGED DIRECTLY BY STATE STREET. The Funds will not engage, when
managed as separate portfolios by State Street (with or without the assistance
of Investment Advisors), in investments in derivative securities except as
described in this paragraph. The Index Fund may engage in limited transactions
in stock index futures and options as a substitute for comparable market
positions in the securities held by such Fund (with respect to the portion of
its portfolio that is held in cash items pending investment or to pay for
redemption requests). In addition, the International Equity Fund and, to a
lesser extent, the Balanced Fund, the Value Equity Fund, the Growth Equity Fund
and the Aggressive Equity Fund may enter into foreign currency hedging
transactions in connection with their purchase or sale of foreign securities as
described in the next paragraph. In addition, the Balanced Fund may continue to
hold current investments in the collateralized mortgage obligations ("CMOs")
that are included in its portfolio and that may be considered to be derivative
securities. However, no such additional investments may be made.
All such Funds that may invest in securities denominated in foreign
currencies may, when they enter into, and incidental to the settlement of, a
contract for the purchase or sale of a security denominated in a foreign
currency, enter into forward foreign currency exchange contracts to "lock in"
the U.S. dollar price of the security. A forward foreign currency exchange
contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the
contract. A Fund can use such contracts to reduce its exposure to changes in
the value of the currency it will deliver and increase its exposure to changes
in the value of the currency into which it will be exchanged. The effect on the
value of a Fund is similar to selling securities denominated in one currency
and purchasing securities denominated in another. Dollar-denominated ADRs,
which are issued by domestic banks and are traded in the United States on
exchanges or over-the-counter, are available with respect to many foreign
securities. ADRs do not lessen the foreign exchange risk inherent in investment
in the securities of foreign issuers; however, by investing in ADRs rather than
directly in the foreign issuers' stock, a Fund can avoid currency risks during
the settlement period for purchases or sales without having to engage in
separate foreign currency hedging transactions.
FUNDS INVESTING IN REGISTERED INVESTMENT COMPANIES. While the assets of the
Bond Fund are invested in the Total Return Fund or the Bond Index Fund (or in
such other registered investment companies as State Street may select) (the
"Initial Bond Fund Investment Vehicles"), investments by such registered
investment companies will be subject to the derivatives policies adopted by
such companies. Such policies are described in the prospectuses of such
registered investment companies and are set forth herein as interpreted by
State Street. Such registered investment companies may enter into interest
rate, index and currency exchange rate swap agreements for purposes of
attempting to obtain a particular desired investment objective at a lower cost
than if the investment company had invested directly in an instrument that
yielded that desired return and may utilize any of the strategies
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<PAGE>
referred to below, and may use foreign currency exchange contracts to lock in
the exchange rate for a purchased security in the manner described in the
preceding paragraph. Separately, while the assets of the International Equity
Fund are invested in the T. Rowe International Fund (or in such other
registered investment companies as State Street may select) (together with the
Initial Bond Fund Investment Vehicles, the "Initial Investment Vehicles"), the
Initial Investment Vehicles may enter into contracts designed to increase or
decrease their exposure to a particular currency, in an amount approximating
the value of some or all of the portfolio securities denominated in such
currency, if their managers believe that such currency may suffer or enjoy a
substantial movement against another currency. The Initial Investment Vehicles
may also invest in CMOs and other mortgage-related securities that may be
considered to be derivative securities. The Initial Bond Investment Vehicles
may effect short sales as part of their overall portfolio management strategies
or to offset potential declines in value of long positions in similar
securities as those sold short. To the extent that the Initial Bond Investment
Vehicles engage in uncovered short sales, they will maintain asset coverage in
the form of liquid assets in a segregated account. The T. Rowe International
Fund may invest up to 10% of its total assets in "Hybrid Instruments." These
instruments (a type of potentially high-risk derivative) can combine the
characteristics of securities, futures, and options. For example, the principal
amount, redemption, or conversion terms of a security could be related to the
market price of some commodity, currency, or securities index. Such securities
may bear interest or pay dividends at below market (or even relatively nominal)
rates. Under certain conditions, the redemption value of such an investment
could be zero.
The Initial Investment Vehicles may purchase and write call and put options
on securities, securities indices and on foreign currencies, and enter into
futures contracts and use options on futures contracts, and may sell previously
purchased options and futures contracts. The Initial Investment Vehicles also
may enter into swap agreements with respect to foreign currencies, interest
rates and securities indices. The Initial Investment Vehicles may use these
techniques to hedge against changes in interest rates, foreign currency
exchange rates or securities prices or as part of their overall investment
strategies, and may also purchase and sell options relating to foreign
currencies for purposes of increasing exposure to a foreign currency or to
shift exposure to foreign currency fluctuations from one country's currency to
another's.
The purchase and writing of options involves certain risks. During the option
period, a writer of a covered call option gives up, in return for the premium
on the option, the opportunity to profit from a price increase in the
underlying security above the exercise price but retains, as long as its
obligations as a writer continues, the risk of loss should the price of the
underlying security decline. The writer of an option traded on an option
exchange in the United States has no control over the time when it may be
required to fulfill the writer's obligation. Once an option writer has received
an exercise notice, it cannot effect a closing purchase transaction in order to
terminate its obligation under the option and must deliver the underlying
securities at the exercise price. If a put or call option is not sold when it
has remaining value, and if the market price of the underlying security, in the
case of a put, remains equal to or greater than the exercise price or, in the
case of a call, remains less than or equal to the exercise price, the investor
will lose its entire investment in the option. Also, when a put or call option
on a particular security is purchased to hedge against price movements in a
related security, the price of the put or call option may move more or less
than the price of the related security. Furthermore, there can be no assurance
that a liquid market will exist when an investor seeks to close out an option
position. If trading restrictions or suspensions are imposed on the options
markets, an investor may be unable to close out a position.
Because swap agreements are two-party contracts and may have terms of greater
than seven days, such agreements may be considered to be illiquid. Moreover, an
investor bears the risk of loss of the amount expected to be received under a
swap agreement in the event of the default or bankruptcy of a swap agreement
counterparty. The swaps market is a relatively new market and is largely
unregulated, and it is possible that developments in the swaps market,
including potential government
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<PAGE>
regulation, could adversely affect an investor's ability to terminate existing
swap agreements or to realize amounts to be received under such agreements.
There are several risks associated with the use of futures and futures
options for hedging purposes. There can be no guarantee that there will be a
correlation between price movements in the hedging vehicle and in the portfolio
securities being hedged. An incorrect correlation could result in a loss on
both the hedged securities and the hedging vehicle so that the portfolio return
might have been greater had hedging not been attempted. There can be no
assurance that a liquid market will exist at a time when an investor seeks to
close out a futures contract or a futures option position. Most futures
exchanges and boards of trade limit the amount of fluctuation permitted in
futures contract prices during a single day; once the daily limit has been
reached on a particular contract, no trades may be made that day at a price
beyond that limit. In addition, certain of these instruments are relatively new
and without significant trading history. As a result, there is no assurance
that an active secondary market will develop or continue to exist. Lack of a
liquid market for any reason may prevent an investor from liquidating an
unfavorable position even though the investor would remain obligated to meet
margin requirements until the position is closed.
The Initial Investment Vehicles may, if their managers believe that the
currency of a particular foreign country may suffer or enjoy a substantial
movement against another currency, enter into a forward contract to sell or buy
the former foreign currency (or another currency that acts as a proxy for that
currency). There can be no assurance, however, that this strategy will be
successful as currency movement can be difficult to predict. There are certain
markets where it is not possible to engage in effective foreign currency
hedging. This may be true, for example, for the currencies of various Latin
American countries and other emerging markets where the foreign exchange
markets are not sufficiently developed to permit hedging activity to take
place.
Mortgage-related securities include securities that directly or indirectly
represent a participation in, or are secured by and payable from, mortgage
loans on real property, such as CMO residuals or stripped mortgage-backed
securities, and may be structured in classes with rights to receive varying
proportions of principal and interest. The yield to maturity on an interest
only class is extremely sensitive to the rate of principal payments (including
prepayments) on the related underlying mortgage assets, and a rapid rate of
principal payments may have a material adverse effect on an investor's yield to
maturity from these securities. Early repayment of principal on some mortgage-
related securities (arising from prepayments of principal due to the sale of
the underlying property, refinancing or foreclosure, net of fees and costs
which may be incurred) may expose the Fund to a lower rate of return upon
reinvestment of principal.
INVESTMENT ADVISORS
State Street has retained the services of various Investment Advisors to
advise it with respect to its investment responsibility with respect to several
Funds. Each Investment Advisor recommends to State Street investments and
reinvestments of the assets allocated to it in accordance with the investment
policies of the respective Funds. State Street exercises discretion with
respect to the selection and retention of the Investment Advisors and may
remove upon consultation with ABRA an Investment Advisor at any time. State
Street may also change at any time the allocation of assets among Investment
Advisors to a single Fund, subject to consultation with ABRA.
The Investment Advisors are:
BARCLAY'S GLOBAL INVESTORS. Anticipated future advisor to the index portion
of the Bond Fund, BGI is located at 45 Fremont Street, San Francisco,
California 94105. As of January 2, 1996, Wells Fargo Nikko Investment Advisors
became a part of BGI, an indirect subsidiary of Barclays PLC, one
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<PAGE>
of the United Kingdom's largest companies and one of the world's foremost
providers of financial services. BGI is responsible for managing or providing
investment advice for assets aggregating in excess of $386 billion.
CAPITAL GUARDIAN TRUST COMPANY. Advisor to the Growth Equity Fund and the
Aggressive Equity Fund, Capital Guardian, a wholly-owned subsidiary of The
Capital Group Companies, Inc., is a California state chartered trust company
incorporated in 1968. Its principal place of business is 333 South Hope Street,
Los Angeles, California 90071. Capital Guardian provides investment management,
trust and other fiduciary services to corporate and public employee benefit
accounts, nonprofit organizations, a number of personal clients and trustee
services to certain retirement plans invested in the American Funds family of
mutual funds. As of December 31, 1996, it had approximately $57 billion in
assets under its management.
COLUMBUS CIRCLE INVESTORS. Advisor to the Growth Equity Fund, Columbus Circle
is a division of PIMCO Advisors, L.P., a Delaware limited partnership ("PIMCO
Advisors"). See "Pacific Investment Management Company" below. Columbus
Circle's principal place of business is Metro Center, One Station Place,
Stamford, Connecticut 06902. As of December 31, 1996, Columbus Circle had
approximately $14 billion of assets under management.
LINCOLN CAPITAL MANAGEMENT COMPANY. Advisor to the Balanced Fund, Lincoln
Capital is an Illinois sub-chapter S corporation. Its principal place of
business is 200 South Wacker Drive, Chicago, Illinois 60606. As of December 31,
1996, Lincoln Capital had approximately $42 billion of assets under management.
MILLER, ANDERSON & SHERRERD. Advisor to the Balanced Fund, Miller, Anderson &
Sherrerd was established in 1969 and was acquired by Morgan Stanley Group on
January 3, 1996. Its principal place of business is One Tower Bridge, West
Conshohocken, Pennsylvania 19428. As of December 31, 1996, Miller, Anderson &
Sherrerd had approximately $41 billion of assets under management, primarily
for tax-exempt pension funds and profit-sharing plans, Taft-Hartley plans,
foundations and endowments.
PACIFIC INVESTMENT MANAGEMENT COMPANY. Anticipated future advisor to the
actively managed portion of the Bond Fund, PIMCO is an investment counseling
firm founded in 1971, and currently has over $88 billion of assets under
management. PIMCO is a subsidiary partnership of PIMCO Advisors. A majority
interest in PIMCO Advisors is held by PIMCO Partners, G.P., a general
partnership between Pacific Financial Asset Management Corporation, an indirect
wholly owned subsidiary of Pacific Mutual Life Insurance Company, and PIMCO
Partners, L.P., a limited partnership controlled by the PIMCO Managing
Directors. PIMCO's address is 840 Newport Center Drive, Suite 360, Newport
Beach, California 92660.
RCM CAPITAL MANAGEMENT. Advisor to the Growth Equity Fund, RCM Capital is a
Delaware limited liability company solely involved in asset management
services. The firm is a wholly owned subsidiary of Dresdner Bank A.G.
("Dresdner"). Dresdner is an international banking organization. As the
successor to the business and operations of RCM Capital Management, a
California limited partnership, and its predecessors, RCM Capital was founded
in 1970 and has been continuously registered with the Commission since 1972.
RCM Limited L.P., a California limited partnership, is the managing agent of
RCM Capital and has responsibility for making business and investment decisions
for RCM Capital, subject to oversight by its Board of Managers. RCM General
Corporation is the general partner of RCM Limited L.P. and is owned solely by
the 26 RCM Capital principals, all located in the firm's principal place of
business at Suite 2900, Four Embarcadero Center, San Francisco, California
94111. RCM Capital is actively engaged in providing investment supervisory
services to institutional and individual clients, and is registered under the
Investment Advisers Act of 1940. As of December 31, 1996, RCM Capital had
approximately $27 billion of assets under management.
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ROWE PRICE-FLEMING INTERNATIONAL, INC. Anticipated future advisor to the
International Equity Fund, Price-Fleming was incorporated in Maryland in 1979
as a joint venture between T. Rowe Price Associates, Inc. ("T. Rowe Price") and
Robert Fleming Holdings Ltd. ("Flemings"). T. Rowe Price was incorporated in
Maryland in 1947 as a successor to the investment counselling business founded
by the late Thomas Rowe Price, Jr., in 1937. Flemings is a diversified
investment organization that participates in a global network of regional
investment offices in New York, London, Zurich, Geneva, Tokyo, Hong Kong,
Manila, Kuala Lumpur, Seoul, Taipei, Bombay, Jakarta, Singapore, Bangkok and
Johannesberg. Flemings was incorporated in 1974 in the United Kingdom as
successor to the business founded by Robert Fleming in 1873. As of December 31,
1996, Price-Fleming managed more than $29 billion of assets. The common stock
of Price-Fleming is 50% owned by a wholly-owned subsidiary of T. Rowe Price,
25% by a subsidiary of Flemings and 25% by a subsidiary of Jardine Fleming
Group Limited ("Jardine Fleming"). Half of Jardine Fleming is owned indirectly
by Flemings and half is indirectly owned by Jardine Matheson Holdings Limited.
Price-Fleming's U.S. office is located at 100 E. Pratt Street, Baltimore,
Maryland 21202.
SANFORD C. BERNSTEIN & CO., INC. Advisor to the Value Equity Fund, Sanford
Bernstein was founded in 1967. As of December 31, 1996, the firm had
approximately $51 billion in domestic, global and international equity,
balanced and fixed-income accounts for pension funds, endowments, trusts,
foundations, insurance companies, individuals and families. Independent and
staff owned, with 141 employees currently sharing in the profits, the firm has
a staff of 985, including 361 investment professionals.
SIT INVESTMENT ASSOCIATES, INC. Advisor to the Aggressive Equity Fund, Sit
Associates is a Minnesota corporation formed in 1981. Its principal place of
business is 4600 Norwest Center, 90 South Seventh Street, Minneapolis,
Minnesota 55402. Sit Associates provides investment advice, management and
related services to mutual funds, tax exempt investors, taxable investors and
individual investors. As of December 31, 1995, Sit Associates had over $5.3
billion of assets under management. Eugene C. Sit is the controlling
shareholder of Sit Associates.
Recommendations to buy and sell securities for the Funds are made by each
Investment Advisor in accordance with investment policies and restrictions of
the Funds and subject to the supervision of State Street. Investment
recommendations for the Funds are made independently from those of other
investment accounts managed by the Investment Advisors. Occasions may arise,
however, when the same investment recommendation is made for more than one
client's account. It is the practice of each Investment Advisor to allocate
such purchases or sales to be executed in connection with such recommendations
insofar as feasible among its several clients in a manner it deems equitable.
The principal factors which the Investment Advisors consider in making such
allocations are the relative investment objectives of the clients, the relative
size of the portfolio holdings of the same or comparable securities and the
then availability in the particular account of funds for investment. Portfolio
securities held by one client of an Investment Advisor may also be held by one
or more of its other clients. When two or more of its clients are engaged in
the simultaneous sale or purchase of securities, transactions are allocated as
to amount in accordance with formulae deemed to be equitable as to each client.
There may be circumstances when purchases or sales of portfolio securities for
one or more clients will have an adverse effect on other clients.
Transactions on stock exchanges on behalf of the Funds involve the payment of
negotiated brokerage commissions. There is generally no stated commission in
the case of securities traded in the over-the-counter markets, but the price of
those securities includes an undisclosed commission or mark-up. The cost of
securities purchased from underwriters includes an underwriting commission or
concession, and the prices at which securities are purchased from and sold to
dealers include a dealer's mark-up or mark-down.
In executing portfolio transactions, the Investment Advisors seek the most
favorable execution available. The agreements between State Street and the
Investment Advisors provide that, in assessing
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the best overall terms available for any transaction, the Investment Advisor
may consider factors it deems relevant, including the brokerage and research
services, as those terms are defined in section 28(e) of the Securities
Exchange Act of 1934, provided to the Funds, viewed in terms of either that
particular transaction or the broker or dealer's overall responsibilities to
the Fund.
State Street will periodically review the brokerage commissions paid by the
Funds to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits inuring to each Fund. It is
possible that certain of the services received from a broker or dealer in
connection with the execution of transactions will primarily benefit one or
more other accounts for which the Investment Advisor exercises discretion, or a
Fund other than that for which the transaction was executed. Conversely, any
given Fund may be the primary beneficiary of the service received as a result
of portfolio transactions effected for such other accounts or Funds. The fees
of the Investment Advisors are not reduced by reason of receipt of such
brokerage and research services.
STRUCTURED PORTFOLIO SERVICE
INVESTMENT OBJECTIVE. The Structured Portfolio Service provides investment
diversification by utilizing the Funds available to the Program. The
Conservative, Moderate and Aggressive portfolios offer Investors three distinct
approaches to diversifying investments in the Program. Each portfolio has a
different investment strategy and represents different risk and reward
characteristics that reflect an Investor's tolerance for investment risk. THERE
CAN BE NO ASSURANCE THAT THE STRUCTURED PORTFOLIO SERVICE WILL ACHIEVE ITS
INVESTMENT OBJECTIVE. The portfolios utilize seven of the Program's Funds: the
Stable Asset Return Fund, the Bond Fund, the Value Equity Fund, the Growth
Equity Fund, the Index Fund, the Aggressive Equity Fund and the International
Equity Fund. For information regarding the investment objectives, guidelines
and restrictions of each of the above Funds, refer to the description of such
Funds in this Prospectus.
STRATEGY. While there can be no guarantee, the overall volatility of the
three portfolios may be reduced by spreading investments over several types of
assets. However, the volatility of the Aggressive Portfolio may be greater than
that of the other two portfolios. As prices of stocks and bonds may respond
differently to changes in economic conditions and interest rate levels, a rise
in bond prices, for example, could help offset a fall in stock prices. Money
market securities, which are held in varying percentages by all the Funds, have
a stabilizing influence in comparison to stocks since their price fluctuations
are expected to be small. In addition, the income provided by bonds and money
market securities is expected to contribute positively to a portfolio's total
return, cushioning the impact of price declines or enhancing the effect of
price increases.
The Conservative Portfolio emphasizes shorter-term and fixed-income
securities and is intended for Investors with lower risk tolerance who seek
returns based primarily on higher current investment income. Funds in the
Conservative Portfolio are allocated as follows:
<TABLE>
<S> <C>
Stable Asset Return Fund............................................... 30%
Intermediate Bond Fund................................................. 35%
Value Equity Fund...................................................... 7%
Growth Equity Fund..................................................... 7%
Index Equity Fund...................................................... 14%
International Equity Fund.............................................. 7%
</TABLE>
The Moderate Portfolio takes a more balanced approach (in comparison to the
Conservative Portfolio) and is intended for Investors who seek returns based
upon relatively stable investment income but who also desire an increased
potential for growth. Its investments are allocated as follows:
<TABLE>
<S> <C>
Stable Asset Return Fund............................................... 10%
Intermediate Bond Fund................................................. 30%
Value Equity Fund...................................................... 11%
Growth Equity Fund..................................................... 11%
Index Equity Fund...................................................... 23%
International Equity Fund.............................................. 15%
</TABLE>
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The Aggressive Portfolio emphasizes stocks and is intended for Investors who
have a higher degree of risk tolerance and seek capital appreciation. Its
investments are allocated as follows:
<TABLE>
<S> <C>
Intermediate Bond Fund................................................. 15%
Value Equity Fund...................................................... 15%
Growth Equity Fund..................................................... 15%
Index Equity Fund...................................................... 30%
Aggressive Equity Fund................................................. 5%
International Equity Fund.............................................. 20%
</TABLE>
Allocations of Investor funds to the portfolios of the Structured Portfolio
Service are readjusted by State Street on the first Business Day of each month
to maintain the percentage allocations indicated above.
CERTAIN RISK FACTORS. For information and risk factors associated with each
of the Funds utilized in the Structured Portfolio Service, refer to such
disclosure in this Prospectus for each particular Fund.
VALUATION OF INVESTOR'S INTEREST. Investor's Units in the portfolios of the
Structured Portfolio Service are valued based upon the collective values of the
Units of the included Funds credited to such Investor's account in the
Structured Portfolio Service.
LIQUIDITY AND TRANSFERS. Transfers to or from any of the three portfolios may
be made on any Business Day. See "Transfers Between Investment Options and
Withdrawals."
PERFORMANCE INFORMATION. The Structured Portfolio Service may, from time to
time, report the value of a Unit in each of the portfolios. Such value will be
determined based on historical results and will not be intended to indicate
future performance. A recorded message providing current values for an
Investor's Units in each portfolio in the Structured Portfolio Service is
available at (800) 348-2272.
SELF-MANAGED ACCOUNTS
As an additional Investment Option under the Program, State Street makes
available to Employers, Plan trustees and to Participants whose Employers elect
to make such option available to them, a Self-Managed Account. Self-Managed
Accounts are not included in the Collective Trust and are not registered under
the Securities Act and are described in this Prospectus for information
purposes only.
PLANS ELIGIBLE TO ESTABLISH A SELF-MANAGED ACCOUNT
The Self-Managed Account is available as an Investment Option for
Participants in Individual Master Plans established under the ABA Retirement
Plan and for Employers of Individual Master Plans established under the ABA
Defined Benefit Plan, provided that the Employer has designated the Self-
Managed Account as an Investment Option for its Plan by executing a Self-
Managed Account Employer Enrollment Form. Additionally, the Self-Managed
Account is available as an Investment Option for Participants, Employers and
Plan trustees of Individually Designed Plans for which State Street provides
individual recordkeeping services, provided that the Employer/Plan trustee has
designated the Self-Managed Account as an Investment Option for its Plan.
Employers/Plan trustees may elect to make the Self-Managed Account available as
an Investment Option for their respective Plans by executing a Self-Managed
Account Employer Enrollment Form. The Self-Managed Account is not available as
an Investment Option for Individually Designed Plans for which State Street
provides aggregate recordkeeping services.
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PARTICIPANTS, EMPLOYERS AND PLAN TRUSTEES ELIGIBLE TO ESTABLISH A SELF-MANAGED
ACCOUNT
The Self-Managed Account offers investment flexibility by permitting an
Eligible Investor who is a Participant (in the case of a Plan where an Employer
has elected to make such an option available to Participants), an Employer (in
the case of a defined benefit plan for which State Street does not provide
individual recordkeeping services) or a Plan trustee (in the case of certain
Individually Designed Plans) to build an investment portfolio that is a product
of the Eligible Investor's own investment decisions. Under this Investment
Option, an Eligible Investor may transfer a portion of the amount of such
Eligible Investor's respective account or Plan balance to a Self-Managed
Account for the purchase, at the Eligible Investor's discretion, of a wide
variety of publicly traded debt and equity securities and shares of numerous
mutual funds.
ESTABLISHING A SELF-MANAGED ACCOUNT FOR PARTICIPANTS IN PLANS ESTABLISHED UNDER
THE ABA RETIREMENT PLAN
An Eligible Investor who is a Participant in a Plan established under the ABA
Retirement Plan may establish a Self-Managed Account by completing a Self-
Managed Account Application, which may be obtained by calling (800) 348-2272.
Once the requisite forms have been properly completed and returned to State
Street, the Participant will receive confirmation of the establishment of a
brokerage account with State Street Brokerage Services, Inc. ("State Street
Brokerage"), a registered broker-dealer affiliated with State Street. The
brokerage account will be used to effect transactions in securities for the
Self-Managed Account. State Street has entered into an agreement with National
Financial Services Corporation, a New York Stock Exchange member firm and a
registered broker-dealer that is not affiliated with State Street or State
Street Brokerage, to act as sub-custodian of all securities held in the Self-
Managed Account.
The Self-Managed Account generally is funded, in accordance with Program
rules established by State Street, through the "Base Plan," which is defined as
all Investment Options, including the Equitable Real Estate Account, but
excluding the Self-Managed Account. To establish a Self-Managed Account, a
Participant must transfer initially a minimum of $2,500 from the Participant's
Base Plan to the Self-Managed Account, provided that the Participant must at
all times maintain in the Participant's Base Plan the greater of $1,000 and 5%
of the Participant's entire account balance (including for purposes of the 5%
calculation the assets in the Participant's Self-Managed Account). After the
initial transfer, a Participant may make transfers of not less than $500 from
the Base Plan to the Self-Managed Account. No transfer from the Base Plan will
be permitted to the extent that such transfer would cause the Participant's
Base Plan to fall below the required minimum. Transfers to a Self-Managed
Account from the Base Plan will be made pro-rata from the various contribution
accounts which may have been established on behalf of such Participant under
the Base Plan. Separate contribution accounts are established on behalf of each
Participant for Employer contributions, 401(k) non-elective contributions,
matching contributions, 401(k) elective salary deferral contributions,
voluntary after-tax contributions or rollover contributions, as the case may
be.
Satisfaction of the requirement for maintenance of a minimum account balance
of a Participant's Base Plan described above will be based on the most recent
valuations of the Investment Options, which are daily except for the Self-
Managed Account, which is monthly. If the value of a Participant's Base Plan
falls below the greater of $1,000 and 5% of the Participant's aggregate account
balances in all Investment Options (including for purposes of the 5%
calculation the assets in the Participant's Self-Managed Account), the
Participant will not be permitted to transfer assets to the Self-Managed
Account until the required minimum in the Participant's Base Plan is again met.
Additionally, at the discretion of the Trustee, a Self-Managed Account may be
funded through in-kind transfers from other tax-qualified retirement plans. The
foregoing account balance minimums and transfer restrictions with regard to the
Base Plan remain in effect.
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ESTABLISHING A SELF-MANAGED ACCOUNT FOR EMPLOYERS SPONSORING A PLAN UNDER THE
ABA DEFINED BENEFIT PLAN
An Eligible Investor who is an Employer sponsoring a Plan under the ABA
Defined Benefit Plan may establish a Self-Managed Account by completing a
Self-Managed Account Employee Enrollment Form and a Self-Managed Account
Application, which may be obtained by calling (800) 348-2272. Once the
requisite forms have been properly completed and returned to State Street, the
Employer will receive confirmation of the establishment of a brokerage account
with State Street Brokerage. The brokerage account will be used to effect
transactions in securities for the Self-Managed Account.
The Self-Managed Account generally is funded, in accordance with Program
rules established by State Street, through the Base Plan, which is defined as
all Investment Options, including the Equitable Real Estate Account, but
excluding the Self-Managed Account. To establish a Self-Managed Account, an
Employer must transfer initially a minimum of $2,500 from the Employer's Base
Plan to the Self-Managed Account, provided that the Employer must at all times
maintain in the Employer's Base Plan the greater of $1,000 and 5% of the
Employer's entire account balance (including for purposes of the 5%
calculation the assets in the Employer's Self-Managed Account). After the
initial transfer, an Employer may make transfers of not less than $500 from
the Base Plan to the Self-Managed Account. No transfer from the Base Plan will
be permitted to the extent that such transfer would cause the Employer's Base
Plan to fall below the required minimum. Satisfaction of the requirement for
maintenance of a minimum account balance of an Employer's Base Plan described
above will be based on the most recent valuations of the Investment Options,
which are daily except for the Self-Managed Account, which is monthly. If the
value of an Employer's Base Plan falls below the greater of $1,000 or 5% of
the Employer's Plan balances in all Investment Options (including, for
purposes of the 5% calculation the assets in the Employer's Self-Managed
Account) the Employer will not be permitted to transfer assets to the Self-
Managed Account until the required minimum in the Employer's Base Plan is
again met.
Additionally, at the discretion of the Trustee, a Self-Managed Account may
be funded through in-kind transfers from other tax-qualified retirement plans.
The foregoing account balance minimums and transfer restrictions with regard
to the Base Plan remain in effect.
ESTABLISHING A SELF-MANAGED ACCOUNT FOR PARTICIPANTS, EMPLOYERS OR PLAN
TRUSTEES UNDER AN INDIVIDUALLY DESIGNED PLAN
An Eligible Investor who is either a Participant, Employer or Plan trustee
under an Individually Designed Plan may establish a Self-Managed Account by
completing a Self-Managed Account Application (and a Self-Managed Account
Employee Enrollment Form, in the case of an Eligible Investor who is an
Employer or Plan trustee), which may be obtained by calling (800) 348-2272.
Once the requisite forms have been properly completed and returned to State
Street, the Eligible Investor will receive confirmation of the establishment
of a brokerage account with State Street Brokerage. The brokerage account will
be used to effect transactions in securities for the Self-Managed Account.
The Self-Managed Account generally is funded, in accordance with Program
rules established by State Street, through the "Base Plan," which is defined
as all Investment Options, including the Equitable Real Estate Account, but
excluding the Self-Managed Account. To establish a Self-Managed Account, an
Eligible Investor must transfer initially a minimum of $2,500 from the
Eligible Investor's Base Plan to the Self-Managed Account, provided that the
Eligible Investor must at all times maintain in the Eligible Investor's Base
Plan the greater of $1,000 and 5% of the Eligible Investor's entire account
balance (including for purposes of the 5% calculation the assets in the
Eligible Investor's Self-Managed Account). After the initial transfer, an
Eligible Investor may make transfers of not less than $500 from the Base Plan
to the Self-Managed Account. No transfer from the Base Plan will be permitted
to the extent that such transfer would cause the Eligible Investor's Base Plan
to fall below
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the required minimum. For an Eligible Investor who is a Participant, all
transfers to a Self-Managed Account from the Base Plan will be made pro-rata
from the various contribution accounts established on behalf of such Eligible
Investor under the Base Plan. Separate contribution accounts are established on
behalf of each Participant for Employer contributions, 401(k) non-elective
contributions, matching contributions, 401(k) elective salary deferral
contributions, voluntary after-tax contributions, or rollover contributions, as
the case may be.
Satisfaction of the requirement for maintenance of a minimum account balance
of an Eligible Investor's Base Plan described above will be based on the most
recent valuations of the Investment Options, which are daily except for the
Self-Managed Account, which is monthly. If the value of an Eligible Investor's
Base Plan falls below the greater of $1,000 and 5% of the Eligible Investor's
aggregate account balances in all Investment Options (including for purposes of
the 5% calculation the assets in the Eligible Investor's Self-Managed Account),
the Eligible Investor will not be permitted to transfer assets to the Self-
Managed Account until the required minimum in the Eligible Investor's Base Plan
is again met.
Additionally, at the discretion of the trustee, a Self-Managed Account may be
funded through in-kind transfers from other tax-qualified retirement plans. The
foregoing account balance minimums and transfer restrictions with regard to the
Base Plan remain in effect.
CONTRIBUTIONS, WITHDRAWALS, TRANSFERS AND DISTRIBUTIONS
Contributions may not be made directly to a Self-Managed Account; all
contributions first must be allocated to one or more of the other Investment
Options in the Collective Trust and then transferred to the Self-Managed
Account. In-service withdrawals, loans and benefit distributions from an
Eligible Investor's contribution accounts are not permitted directly from a
Self-Managed Account; assets first must be transferred from the Self-Managed
Account to one or more of the other Investment Options prior to arranging for
such a withdrawal or loan. Transfers to or from a Self-Managed Account may be
effected by calling (800) 348-2272 or by providing to State Street a Request to
Transfer Between Investment Options form. See "Transfers Between Investment
Options and Withdrawals." Similarly, withdrawals from an Individual Master Plan
established under the ABA Defined Benefit Plan are not permitted from the Self-
Managed Account for purposes of benefit distributions, and assets must first be
transferred from the Self-Managed Account to one or more of the other
Investment Options prior to arranging for benefit distributions.
Notwithstanding the foregoing, an Eligible Investor who is a participant of
the ABA Retirement Plan may arrange for an in-kind distribution of securities
held in the Participant's Self-Managed Account upon the Participant's
retirement, disability, death or termination of employment, as authorized by
the Employer and subject to rules and procedures established from time to time
by State Street. In-kind distributions from an Employer's Self-Managed Account
relating to a Plan established under the ABA Defined Benefit Plan are not
available other than upon withdrawal of such Employer's Plan from the Program.
In-kind distributions from an Eligible Investor's Self-Managed Account relating
to an Individually Designed Plan are governed by the terms of the individual
plan document.
All transfers from a Self-Managed Account to any other Investment Option must
be made pro-rata based on the allocation in each of the Participant's
contribution accounts in the Self-Managed Account.
THIRD PARTY TRADE AUTHORIZATION
State Street permits Eligible Investors to authorize a third party
"Investment Manager," as defined in section 3(38) of ERISA, to trade the
Eligible Investor's Self-Managed Account. An Eligible Investor may authorize
such an investment manager by completing, along with the Investment Manager, a
State Street Brokerage Trading Authorization Form, which may be obtained by
calling
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(800) 348-2272. By executing and providing to State Street Brokerage a State
Street Brokerage Trading Authorization Form, the Eligible Investor ratifies and
confirms any and all transactions made on the Eligible Investor's behalf by the
authorized Investment Manager for the Eligible Investor's Self-Managed Account,
and the Investment Manager acknowledges that he/she is a fiduciary with respect
to such Account. Such trading authorization shall remain in full force and
effect until revoked by the Eligible Investor by a written notice delivered to
State Street Brokerage. The Investment Manager shall have the full discretion,
power, and authority to sell, purchase, exchange, convert, tender, trade or
otherwise acquire or dispose of stocks, bonds, and any other securities related
to the Eligible Investor's Self-Managed Account, in accordance with the terms
and conditions for the Eligible Investor's account and risk in the Eligible
Investor's name and/or number on State Street Brokerage's books.
The Eligible Investor establishing and authorizing an Investment Manager to
trade the Eligible Investor's Self-Managed Account retains the sole
responsibility for all investment decisions relating to the purchase or sale of
securities through a Self-Managed Account. Neither State Street, nor State
Street Brokerage, nor any representative of State Street or State Street
Brokerage may offer investment advice to the Eligible Investor.
ADDITIONAL INFORMATION
An Eligible Investor with a Self-Managed Account will receive:
. a confirmation notice of each securities transaction
. notification of all optional corporate actions, including, but not
limited to, tenders and calls
. proxy material and all other corporate communications intended for the
shareholders of the securities in the Self-Managed Account
. monthly statements showing transaction history and end-of-month portfolio
positions, for months in which there is portfolio activity
. quarterly statements for inactive accounts
An Investment Manager of an Eligible Investor's Self-Managed Account may
request to receive:
. a duplicate confirmation notice of each securities transaction
. duplicate monthly statements showing transaction history and end-of-month
portfolio positions
Fees applicable to a Self-Managed Account are set forth in "Deductions and
Fees."
PERMISSIBLE INVESTMENTS
An Eligible Investor may invest through the Self-Managed Account in a wide
variety of publicly traded debt and equity securities, including U.S.
Government Obligations, corporate bonds, and equity securities listed on the
New York Stock Exchange, American Stock Exchange or many regional exchanges, or
included for quotation on the Nasdaq National Market. In addition, an Eligible
Investor may invest through a Self-Managed Account in shares of many mutual
funds. A State Street Brokerage representative will tell you whether investment
in a particular mutual fund is available under the Self-Managed Account.
The following investments cannot be made by the Self-Managed Account:
. tax-exempt mutual funds and unit investment trusts
. tax-exempt bonds
. options, futures and commodity contracts
. private limited partnerships
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. foreign securities, except exchange-listed ADRs
. commercial paper
. bank investments (including certificates of deposit, treasury deposits,
bankers acceptances and bank investment contracts)
. insurance investments or insurance investment funds
. physical assets (such as coins, art, jewelry, and similar property)
INVESTMENT THROUGH THE SELF-MANAGED ACCOUNT
To transfer funds from the Base Plan to a Self-Managed Account, the Eligible
Investor should first call (800) 348-2272 and speak with a State Street
customer service representative who will process the transfer of funds to the
Self-Managed account. Transfer instructions received prior to 3:00 p.m. Eastern
time on a Business Day will be effective as of the close of business on the
date of receipt. Any transfer requests received after 3:00 p.m. Eastern time
will be effective as of the close of business on the following Business Day.
Amounts to be transferred to a Self-Managed Account will be withdrawn from an
Eligible Investor's Base Plan contribution accounts or the Base Plan of the
Employer's Plan. Such withdrawn amounts will be available for investment the
Business Day following the effective date of the transfer. Receipt and
execution of instructions from Eligible Investors are subject to the same rules
applicable to other Investment Options. See "Transfers Between Investment
Options and Withdrawals" and "Contributions and Investment Selection--
Allocation Instructions." No order to purchase securities shall be accepted or
executed unless an account has been properly established and there are
sufficient funds in the Self-Managed Account to pay for the securities.
To execute a purchase or a sale of securities in a Self-Managed Account, an
Eligible Investor or his/her authorized Investment Manager should call State
Street Brokerage and speak with a State Street Brokerage representative at
(800) 892-4514. Orders for the purchase of securities of a specific dollar
amount or share amount are permissible provided the value of the order is less
than or equal to the available funds in the Self-Managed Account. All
instructions will be provided to the State Street Brokerage representative by
telephone and all conversations will be recorded. Market orders, buy-limit day
orders and sell-limit day orders are permitted. However, the following
transactions are prohibited:
. purchases on margin
. short sales
The Eligible Investor establishing and directing the investment of the Self-
Managed Account has responsibility for all investment decisions relating to the
purchase or sale of securities through a Self-Managed Account. Neither State
Street nor State Street Brokerage, nor any representative of State Street or
State Street Brokerage may offer investment advice to the Eligible Investor.
Cash held in the Self-Managed Account of an Eligible Investor that is derived
from any sales for the account, or from dividends or interest received with
respect to securities (except for mutual fund shares) held in the account will
be deposited at the end of each Business Day in a money market fund (the "Sweep
Account"). The Sweep Account will be the SSgA Money Market Fund. Other short-
term investment funds may be made available as a Sweep Account as disclosed
from time to time to the Employer by State Street. Dividends and interest
earned from mutual fund shares will be reinvested in the respective mutual fund
generating such income unless prohibited by the fund. In the case of transfers
from other Investment Options to the Self-Managed Account, cash will be
transferred to the Sweep Account. Cash deposited in the Sweep Account will
remain invested therein unless and until otherwise directed by the Eligible
Investor. The Eligible Investor establishing and directing the investment of
the Self-Managed Account must provide specific directions pursuant to normal
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procedures to transfer some or all of the amount held in the Sweep Account to
other investments in the Self-Managed Account or to any other Investment
Option. Assets held in the Sweep Account may be expected to yield a money
market rate of return.
INSURANCE INVESTMENT CONTRACTS
Whenever made available by State Street, Investors may allocate assets to
Insurance Investment Contracts issued by insurance companies pursuant to which
the insurance company agrees to pay to the purchaser, upon the maturity of the
Insurance Investment Contract, the principal amount of the Insurance Investment
Contract plus interest accrued during the term of the Insurance Investment
Contract. The Insurance Investment Contracts are not registered under the
Securities Act and are described in this Prospectus for information purposes
only.
If available, State Street will select one or more insurance companies to
issue Insurance Investment Contracts to the ABA Members Trusts on behalf of
Investors that elect to invest in such Insurance Investment Contracts during a
designated investment period (the "Investment Period"). Each Investor that
elects to invest in an Insurance Investment Contract during the Investment
Period will be credited with a pro rata share of each Insurance Investment
Contract (of equal maturity) issued under the Program at the end of such
Investment Period.
Interest on each Insurance Investment Contract accrues for the full term of
the Insurance Investment Contract at the fixed rate in effect on the Business
Day the assets are credited to the Insurance Investment Contract. The interest
rates for Insurance Investment Contracts are expressed as effective annual
rates, reflecting daily compounding, but before deduction of fees and expenses,
which vary in relation to aggregate Program assets. See "Deductions and Fees."
The insurance company issuing each Insurance Investment Contract will be
obligated to repay the amount of all contributions by Investors and the
interest credited thereon. At the time an Insurance Investment Contract is
purchased, the issuing insurance company will be rated in either of the two
highest rating categories by at least two NRSROs, at least one of which must be
Moody's or S&P. No federal agency or insurance fund guarantees repayment of
principal and interest on Insurance Investment Contracts upon the default of
the issuing insurance company.
New Insurance Investment Contract rates are established prior to each
Investment Period and are available for the entire Investment Period. Interest
accrues from the day after a contribution is credited, or an amount is
transferred from another Investment Option, through the maturity date of the
Insurance Investment Contract. At maturity, the amount accumulated will
automatically be transferred to the Stable Asset Return Fund or such other Fund
as is designated by the Employer in the participation agreement or by notice,
unless the Investor provides other instructions. The identity of the Insurance
Investment Contract issuers for the current Investment Period and current
Insurance Investment Contract rates may be obtained by calling (800) 348-2272.
An Insurance Investment Contract is a general obligation of an insurance
company. Therefore, the financial risk associated with the interests in
Insurance Investment Contracts held by an Investor depends on the ongoing
financial condition of the insurance company or companies that issued Insurance
Investment Contracts. Although the Insurance Investment Contracts available
under the Program are issued by highly rated insurance companies, the financial
condition of the issuers may vary during the life of the Insurance Investment
Contracts and assets generally may not be withdrawn prior to maturity.
TRANSFERS. Transfers may not be made from one Insurance Investment Contract
prior to maturity to another or from an Insurance Investment Contract to
another Investment Option.
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Assets invested in an Insurance Investment Contract generally may not be
withdrawn from the Insurance Investment Contract at the time the Plan under
which the Insurance Investment Contract investment was made ceases to
participate in the Program. In such a case, an Investor's interest in an
Insurance Investment Contract will continue to be held by State Street as
custodian on behalf of the Plan until the Insurance Investment Contract matures
or the assets invested in the Insurance Investment Contract are withdrawn
pursuant to a permitted withdrawal. See "--Withdrawals." State Street will
receive a fee from the Plan for administrative services it provides in
connection with the custody of any such Insurance Investment Contract.
WITHDRAWALS. Withdrawals from an Insurance Investment Contract generally are
not permitted prior to maturity. However, assets may be withdrawn from an
Insurance Investment Contract prior to its maturity if benefit payments are to
be made from the Plan because of one of the following events:
. the Participant terminates employment with the Employer, including
retirement;
. the Participant becomes disabled (as defined in the Plan);
. the Participant attains age 70 1/2; or
. the Participant dies.
MATURING INSURANCE INVESTMENT CONTRACTS. An Investor may allocate the assets
of maturing Insurance Investment Contracts among Investment Options by
providing State Street with a Change of Investment Allocation form. An Investor
may also provide allocation instructions to a customer service representative
by calling (800) 348-2272. The Change of Investor Allocation form must be
received by State Street from the Employer. The maturity date of each Insurance
Investment Contract of an Investor is reported on the quarterly maturity
schedule. An Investor may allocate the assets of maturing Insurance Investment
Contracts in whole percentages or whole dollar amounts among any number of
Investment Options and may allocate the assets of Insurance Investment
Contracts attributable to employer contributions in different percentages than
the assets of Insurance Investment Contracts attributable to employee
contributions. Allocation instructions remain in effect for all Insurance
Investment Contracts that mature before State Street receives new allocation
instructions related to maturing Insurance Investment Contracts. State Street
must receive allocation instructions with respect to a maturing Insurance
Investment Contract before the maturity date of the Insurance Investment
Contract in order for it to be effective for that particular Insurance
Investment Contract. If an Investor allocates a maturing Insurance Investment
Contract to a new Insurance Investment Contract, if available, the new
Insurance Investment Contract rate will be the rate available on the date the
original Insurance Investment Contract matures. If an Investor does not provide
allocation instructions with respect to a maturing Insurance Investment
Contract, amounts released upon the maturity of the Insurance Investment
Contract will be allocated to the Stable Asset Return Fund or such other Fund
as may be designated by the Employer in the participation agreement or by
notice. An Investor may then transfer these amounts to any Investment Option.
EQUITABLE REAL ESTATE ACCOUNT
Certain assets contributed to the Program prior to January 1, 1992 are held
by Equitable Life in the Equitable Real Estate Account. Such assets will remain
invested in this account until they are transferred to another Investment
Option available under the Program. Restrictions apply to withdrawals and
transfers from the Equitable Real Estate Account that may delay a withdrawal or
transfer for a significant period of time following a withdrawal or transfer
request. No transfers or contributions to the Equitable Real Estate Account are
permitted.
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State Street has no control over the management of assets held by Equitable
Life and is not responsible for the investment of such assets or Equitable
Life's performance of its obligations under the Program with respect to such
assets. State Street, however, maintains the recordkeeping on the sale of such
account and provides notice to Investors, when appropriate. Interests in the
Equitable Real Estate Account are not registered under the Securities Act and
are described in this Prospectus for information purposes only. Information
relating to assets held in the Equitable Real Estate Account may be obtained by
writing or calling State Street. See "Contributions and Investment Selection--
Additional Information."
TRANSFERS BETWEEN INVESTMENT OPTIONS AND WITHDRAWALS
Investors may direct State Street to transfer amounts between Investment
Options at any time, subject to the terms and restrictions applicable to each
Investment Option. A specified whole percentage, whole dollar amount or the
total investment in an Investment Option may be transferred. Transfers will be
made on the day State Street receives properly authorized instructions from the
Investor, provided that such instructions are received not later than 3:00 p.m.
Eastern time on a Business Day. Transfer requests received after that hour will
be made on the next Business Day. Transfers involving Funds are effected based
upon the relative Unit Values of the Funds, as determined at the close of the
regular trading session of the New York Stock Exchange on the effective date of
the transfer. There is no fee for transfers between Investment Options.
The Equitable Real Estate Account contains certain transfer restrictions that
may delay a withdrawal or transfer for a significant period of time following a
withdrawal or transfer request. No transfers to the Equitable Real Estate
Account are permitted. Additional information relating to the Equitable Real
Estate Account may be obtained by writing or calling State Street.
Investors may request telephone transfer service either via the Voice
Response Unit ("VRU") or through a customer service representative. Investors
should call (800) 348-2272 in order to make telephone transfers. ALL TELEPHONE
TRANSFER INSTRUCTIONS ARE RECORDED. BY AUTHORIZING TELEPHONE TRANSFERS, THE
INVESTOR CONSENTS TO SUCH RECORDING. State Street will accept telephone
transfer instructions from any person who provides the correct identifying
information. Consequently, this service may entail additional risks. State
Street reserves the right, subject to the approval of ABRA, to cancel telephone
transfer services at any time without advance notice to Investors. Investors
may also complete a Request to Transfer Between Investment Options form, which
should be sent by the Employer to State Street Bank and Trust Company, P.O. Box
9109, Boston, Massachusetts 02209-9109.
State Street reserves the right to suspend withdrawals or transfers to or
from any Fund, portfolio of the Structured Portfolio Service or Self-Managed
Account at any time during which any market or stock exchange on which a
significant portion of the investments of a Fund, Structured Portfolio Service
or Self-Managed Account are quoted is closed (other than for ordinary holidays)
or during which dealings thereon are restricted or suspended. In addition,
State Street reserves the right to suspend withdrawals or transfers to or from
any Fund at any time during which (a) there exists any state of affairs, which,
in the reasonable opinion of State Street, constitutes an emergency as a result
of which disposition of the assets of a Fund would not be reasonably
practicable or would be seriously prejudicial to the holders of Units of a
Fund, (b) there has been a breakdown in the means of communication normally
employed in determining the price or value of any of the investments of a Fund,
or of current prices on any stock exchange on which a significant portion of
the investment of such a Fund are quoted, or when for any reason the prices or
values of any investments owned by such Fund cannot reasonably be promptly and
accurately ascertained, or (c) the transfer of funds involved in the
realization or acquisition of any investment cannot, in the reasonable opinion
of State Street, be effected at normal rates of exchange. In addition,
transfers and withdrawals from the Stable
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Asset Return Fund may be suspended or limited temporarily in the event that the
amount of liquid assets in the Stable Asset Return Fund are insufficient to
satisfy all withdrawal or transfer requests.
With respect to the Stable Asset Return Fund, State Street will utilize a
tiered liquidity structure in the following sequence to satisfy withdrawal and
transfer requests: cash flows (contributions, transfers-in, maturities and
interests); and sales of Short-Term Investment Products. In the unlikely event
that the amount of liquid assets held by the Stable Asset Return Fund is
insufficient to satisfy all withdrawal and transfer requests immediately, State
Street may be forced to limit or suspend withdrawals and transfers from the
Stable Asset Return Fund. In such cases, withdrawals by Investors from the
Program because of death, disability, retirement or termination of employment
will be given priority and will be honored from available liquid assets,
including the benefit responsive features of the Investment Contracts, in the
order in which withdrawal instructions were received by State Street. Subject
to any applicable legal requirements, after all such withdrawals have been
effected, transfers to other allowable Investment Options will be honored from
available liquid assets in the order that transfer instructions were received
by State Street. The length of any suspension or limitation on withdrawals or
transfers could vary and would depend, on the one hand, on the aggregate amount
of assets that Investors have requested to withdraw or transfer and, on the
other hand, on the rate at which assets become available for withdrawal or
transfer through the exercise of permitted withdrawal rights under the
Investment Contracts and through the maturity of Investment Contracts and the
rate at which additional moneys are contributed to the Stable Asset Return Fund
by Investors.
THE PROGRAM
The Program is sponsored by ABRA, an Illinois not-for-profit corporation
organized by the ABA to sponsor retirement programs for self-employed
individuals and employers who are members or associates of the ABA or certain
affiliated organizations. The Program is a comprehensive retirement program
that provides employers who adopt the Program with tax-qualified employee
retirement plans, a variety of Investment Options and related recordkeeping and
administrative services.
ELIGIBILITY
Sole practitioners, partnerships and professional corporations engaged in the
practice of law may adopt the Program if they or at least one of their partners
or shareholders, as the case may be, is a member or associate of the ABA or of
a state or local bar association that is represented in the ABA's House of
Delegates. These bar associations may also adopt the Program for their own
employees subject to certain limitations imposed by the Internal Revenue Code.
An organization that is not engaged in the practice of law may also be eligible
to adopt the Program if it is closely associated with the legal profession,
receives the approval of ABRA, and has, as an owner or a member of its
governing board, a member or associate of the ABA. State Street's retirement
program specialists are available to help individuals and organizations
determine whether they are eligible to adopt the Program.
ABA MEMBERS TRUSTS
Assets contributed under the Program are held in the ABA Members Trusts.
Assets contributed to the ABA Members Trusts are invested in the Investment
Options available under the Program in accordance with the instructions of
Investors. Assets invested through Individual Master Plans adopted under the
ABA Members Plans are held under the Master Trust and assets invested through
Individually Designed Plans are held under the Pooled Trust. In accordance with
the Plans, assets of the ABA Members Trusts are held for the benefit of the
Participants. The ABA Members Trusts have been determined by the Internal
Revenue Service (the "IRS") to be tax-exempt trusts under section 501(a) of the
Internal Revenue Code.
52
<PAGE>
ADOPTION OF PROGRAM
Eligible Employers who elect to participate in the Program may do so either
through their own Individually Designed Plans or by adopting one or both of two
ABA Members Plans sponsored by ABRA. The ABA Members Plans are master plans
designed to allow Eligible Employers to establish and maintain Individual
Master Plans that are qualified under section 401(a) of the Internal Revenue
Code.
Under the ABA Retirement Plan, an Eligible Employer may adopt a profit
sharing plan, a money purchase pension plan or a target benefit plan. The
available forms of the ABA Members Plans have been determined by the IRS to be
qualified under section 401(a) of the Internal Revenue Code for use by
employers for the benefit of their employees.
To adopt either the ABA Defined Benefit Plan or the ABA Retirement Plan, an
Eligible Employer must complete and execute a participation agreement. The
participation agreement contains the basic features that must be considered in
designing an appropriate Individual Master Plan under the Program and effects
the Eligible Employer's adoption of the Master Trust to hold assets of the
Individual Master Plan. State Street's retirement program specialists will
assist Eligible Employers in the preparation of a participation agreement.
However, State Street is not authorized to give tax or legal advice and
Eligible Employers should consult with their tax advisor prior to executing a
participation agreement. Depending on the form of participation agreement
adopted by an Eligible Employer and the other retirement plans, if any,
maintained by the Eligible Employer, it may be necessary to apply to the IRS
for a determination of the qualified status of the Individual Master Plan as
adopted by the Eligible Employer.
An Eligible Employer that maintains an Individually Designed Plan that is
qualified under section 401(a) of the Internal Revenue Code may also
participate in the Program and make use of the Investment Options available
under the Program by causing a participation agreement for the Pooled Trust to
be executed by the trustee of the Individually Designed Plan. Such trustee must
demonstrate to State Street that the participating trust is exempt from tax
under section 501(a) of the Internal Revenue Code and that the related
Individually Designed Plan is qualified under section 401(a) of the Internal
Revenue Code. State Street's retirement program specialists will assist in
preparation of a participation agreement. However, State Street is not
authorized to give tax or legal advice and Eligible Employers and the trustees
of an Individually Designed Plan should consult with their tax advisor prior to
executing a participation agreement.
For copies of the appropriate participation agreements and further
information concerning the steps to be taken to adopt the Program, call State
Street at (800) 826-8901 between 9:00 a.m. and 5:00 p.m. Eastern time or write
to State Street Bank and Trust Company, P.O. Box 2236, Boston, Massachusetts
02209-2236.
53
<PAGE>
STATE STREET
State Street provides certain administrative and recordkeeping services
required by the Program. As trustee of the Collective Trust, State Street is
responsible for the operation and management of Funds under the Collective
Trust. State Street also acts as the sole trustee of each of the ABA Members
Trusts, and at certain times arranges to make available Insurance Investment
Contracts as Investment Options under the Program.
State Street's principal offices are located at 225 Franklin Street, Boston,
Massachusetts 02110. State Street is a wholly-owned subsidiary of State Street
Boston Corporation, a Massachusetts corporation and a holding company
registered under the Federal Bank Holding Company Act of 1956. State Street is
a highly capitalized Massachusetts trust company, and as of the year ending
December 31, 1996, State Street and its affiliates had a total risk-based
capital ratio of 13.6%, which is far in excess of applicable regulatory
requirements. As of December 31, 1996, State Street together with its
affiliates had over $2.9 trillion of assets in trust or under custody and had
over $292 billion of assets under management. State Street together with its
affiliates is the largest mutual fund custodian in the world, the largest
master trust custodian bank and the largest custodian of international/global
assets for U.S. pension funds.
The following is a biographical summary of the experience of each of the
officers of the Collective Trust:
JAMES S. PHALEN. Mr. Phalen is the President and Chief Executive Officer
of the Collective Trust and Executive Vice President and Division Head of
Retirement Investment Services, a part of State Street Global Advisors, a
division of State Street. From June 1989 to August 1992 Mr. Phalen, age 46,
served as the President of Boston Financial Data Services, a subsidiary of
State Street. Mr. Phalen also serves as a director of Wellspring Resources
LLP.
NANCY P. ANTIN. Ms. Antin is the Vice President and Chief Financial
Officer of the Collective Trust, a Vice President of State Street and the
Director of ABRA Program Services. From January 1994 to June 1995, Ms.
Antin, age 37, was Vice President of ABRA Marketing and Client Services.
From June 1991 to January 1994, Ms. Antin was the Assistant Vice President
of ABRA Client Services. Prior to coming to State Street, Ms. Antin was
employed by IBM in Marketing and Administrative Management.
SUSAN C. DANIELS. Ms. Daniels is the Treasurer and Chief Accounting
Officer of the Collective Trust and a Vice President of State Street for
ABRA Program Services, Retirement Investment Services, a part of State
Street Global Advisors, a division of State Street. Prior to joining State
Street, Ms. Daniels, age 39, was Vice President of Internal Control and
Compliance at First Data Investor Services Group. From April 1990 to
November 1993, Ms. Daniels was Director of Internal Audit at Boston
Financial Data Services, a subsidiary of State Street.
AMERICAN BAR RETIREMENT ASSOCIATION
As sponsor of the Program, ABRA is responsible for the design of the
Program, the maintenance of the ABA Members Plans and the ABA Members Trusts,
and the designation of investment options to be made available under the
Program. Pursuant to an agreement between ABRA and State Street, as of January
1, 1992, ABRA has engaged State Street to provide administrative and
investment services and to make the Investment Options available under the
Program for a seven-year term. ABRA may terminate its agreement with State
Street prior to the end of its term in certain circumstances, including
failure by State Street to satisfy certain service standards or standards
regarding its financial condition. ABRA has also appointed State Street as
trustee of each of the ABA Members Trusts.
54
<PAGE>
ABRA retains the right to make recommendations to State Street regarding the
addition or deletion of Funds as Investment Options. ABRA, with or without the
assistance of a consultant, will monitor the performance of State Street and
its Investment Advisors and may make recommendations to State Street regarding
the engagement and termination of Investment Advisors. State Street is required
to give full good faith consideration to all such recommendations from ABRA,
although State Street retains exclusive management and control over Funds and
Investment Advisors. ABRA has certain rights to direct State Street to
establish or terminate Investment Options that are not Funds. In specified
cases when State Street fails to satisfy minimum investment performance
standards, ABRA also has certain additional rights to discontinue a Fund as an
Investment Option or to direct the establishment of another Investment Option
that is not a Fund.
State Street and ABRA have reviewed and negotiated the terms and conditions
of the documents establishing the respective rights and obligations of the
parties, including fees payable in connection with the Program. ABRA will
monitor State Street's administration and marketing of the Program and will
approve the hiring by State Street of certain other major service providers,
such as actuaries.
CONTRIBUTIONS AND INVESTMENT SELECTION
CONTRIBUTIONS
The Investor is responsible for allocating the assets of the Plan among the
Investment Options. The Investor may be either the Participant, the Employer or
the Plan trustee depending on the terms of the Plan. In the case of the ABA
Retirement Plan, the Participant is the Investor and, generally, in the case of
the ABA Defined Benefit Plan, the Employer is the Investor. However, with
respect to certain prior plan accounts under the ABA Defined Benefit Plan, the
Participant is the Investor. In the case of an Individually Designed Plan, the
Participant, Employer or Plan trustee may be the Investor. Employee-Investors
may not send contributions directly to State Street, but should direct all
contributions through their Employer. Contributions may be made by check or
money order payable to "State Street Bank and Trust Company, Trustee" and
should be sent to State Street Bank and Trust Company, P.O. Box 9109, Boston,
Massachusetts 02209-9109. Contributions sent by registered or certified mail
and items sent by overnight delivery services that do not deliver to post
office boxes should be sent to State Street Bank and Trust Company, ABRA
Program Services, Batterymarch Park III, 3 Pine Hill Drive, Quincy,
Massachusetts 02169. Employers who wish to transmit contributions to State
Street by wire transfer should provide wire notification and a contribution
remittance form to State Street at least two Business Days before funds are
wired.
All contributions must be received by State Street from the Employer within
the time specified by applicable law and must be accompanied by proper
instructions as to the allocation of such contributions to Participants'
individual accounts or the Plan account.
Contributions are credited on the day of receipt if they are accompanied or
preceded by proper allocation instructions and are received by 3:00 p.m.
Eastern time on a Business Day. Contributions received after that time will be
credited on the following Business Day. Remittance of a contribution which
State Street believes to be incorrect or failure to provide instructions as to
the particular Investor account to which a contribution should be deposited may
result in a delay in crediting contributions.
Contributions allocated to Funds or to any of the portfolios of the
Structured Portfolio Service are used to purchase Units in those Funds or in
the portfolios of the Structured Portfolio Service at the Unit Values of the
Fund or the portfolios of the Structured Portfolio Service, calculated as of
the close of the regular trading session of the New York Stock Exchange on the
Business Day on which the contributions are credited. Contributions allocated
to Insurance Investment Contracts begin to accrue interest on the day the
carrier begins to credit interest. Contributions may not be made directly to
the Self-Managed Account.
55
<PAGE>
ALLOCATION INSTRUCTIONS
Investors must provide instructions relating to contributions, assets of
maturing Insurance Investment Contracts and assets transferred from the
Equitable Real Estate Account either via the VRU or by completing the
appropriate allocation instruction form. All allocation instruction forms
should be sent by the Employer to State Street Bank and Trust Company, P.O.
Box 9109, Boston, Massachusetts 02209-9109. If State Street has received
notice satisfactory to it that there is no Employer to forward such
instructions, State Street may accept such instructions directly from non-
Employer Investors. Investment instructions sent by registered or certified
mail and items sent by overnight delivery services that do not deliver to post
office boxes should be sent to State Street Bank and Trust Company, ABRA
Program Services, Batterymarch Park III, 3 Pine Hill Drive, Quincy,
Massachusetts 02169.
Investors may allocate contributions in whole percentages among any number
of Investment Options and may direct the allocation of employer contributions
in different percentages than employee contributions. Investment percentages
elected for employer contributions will apply to profit sharing, pension plan
and rollover contributions. If a Plan includes a 401(k) feature, the
investment percentages elected for employer contributions will also apply to
401(k) qualified non-elective contributions and all matching contributions.
Contributions may not be allocated directly to a Self-Managed Account, but
must first be allocated to one or more of the other available Investment
Options in the Collective Trust and then transferred to a Self-Managed
Account. See "Self-Managed Accounts." The allocation percentages elected for
employee contributions will automatically apply to both voluntary after-tax
contributions and 401(k) salary deferral contributions. Investors should make
sure that the percentages requested add up to 100% for each type of
contribution. To the extent that State Street does not receive what it
considers proper allocation instructions or if such instructions are unclear
or ambiguous, State Street will endeavor to obtain a clarification or
correction of the instructions. To the extent State Street has not received
allocation instructions for either employer or employee contributions, State
Street will allocate the assets to the Stable Asset Return Fund or to such
other Fund as may be designated by the Employer in the participation agreement
or by notice. If transfers are required upon the maturity of Insurance
Investment Contracts or for any other reason and State Street has not received
allocation instructions, State Street will allocate the assets to be
transferred to the Stable Asset Return Fund or to such other Fund as may be
designated by the Employer in the participation agreement or by notice.
To change allocation instructions, Investors should complete the change of
investment allocation form indicating new investment allocation instructions
in whole percentages, which should then be forwarded by the Employer to State
Street at the appropriate address set forth above or Investors may change such
allocations via the VRU. Instructions become effective on the date of receipt,
provided that State Street receives them by 3:00 p.m. Eastern time on a
Business Day. Investment allocation instructions received after that time will
become effective on the following Business Day. Investment allocation
instructions remain in effect until State Street receives a subsequent request
to change investment allocations.
ADDITIONAL INFORMATION
Persons who are already Investors, Employers or Participants may obtain
administrative and investment forms or information relating to assets held in
the Equitable Real Estate Account or additional information by calling State
Street at (800) 348-2272 between 9:00 a.m. and 8:00 p.m Eastern time or by
writing to State Street Bank and Trust Company, P.O. Box 9109, Boston,
Massachusetts 02209-9109. Participants may also obtain such forms from their
Employers.
For information regarding enrollment in the Program, Eligible Employers may
call State Street at (800) 826-8901 between 9:00 a.m. and 5:00 p.m. Eastern
time or write to State Street Bank and Trust Company, P.O. Box 2236, Boston,
Massachusetts 02209-2236.
A recorded message providing current account information can be obtained by
calling State Street at (800) 348-2272.
56
<PAGE>
DEDUCTIONS AND FEES
Under the Program, certain fees are determined based upon a fixed percentage
of all assets in the Program or all assets in specified Investment Options.
Except as described below with respect to the Structured Portfolio Service
fee, these fees are charged to the appropriate Investment Option and paid as
an operating expense thereof. Other fees are charged at a fixed dollar amount
on a per-Participant, per-Plan, or per-transaction basis and are paid by the
Employer or the Participant, as the case may be, through the withdrawal of
assets from the Program. Such withdrawals for the purpose of paying fixed
dollar fees are made in accordance with the following sequence (the
"Withdrawal Sequence"): first, from the Stable Asset Return Fund, next from
the Bond Fund, next from the Index Fund, next from the Value Equity Fund, next
from the Growth Equity Fund, next from the Balanced Fund, next from the
Aggressive Equity Fund, next from the International Equity Fund, next from the
Structured Portfolio Service, next from Insurance Investment Contracts (with
amounts being deducted first from the most recently purchased Insurance
Investment Contract), and finally from the Self-Managed Account.
State Street Brokerage is authorized to cause securities or other assets in
the Self-Managed Account to be sold or redeemed to satisfy any charges,
deductions or fees due from an Eligible Investor's Self-Managed Account which
may be necessary or for which the assets in the Eligible Investor's Base Plan
are insufficient. Such sales or redemptions are made first from the Eligible
Investor's balance in the Sweep Account, if any, and then by sales or
redemption of securities most recently purchased by the Eligible Investor's
Self-Managed Account. The fees described below may be changed at any time upon
the mutual consent of State Street and ABRA.
PROGRAM EXPENSE FEE
A fee is paid to State Street and ABRA based upon the combined value of
Program assets in the Investment Options (including the Self-Managed Account)
and the Equitable Real Estate Account. In all instances, the fee is accrued
daily and paid monthly. For all Investment Options other than the Self-Managed
Account, the fee is paid directly from the assets of the Funds or as a
deduction from amounts accruing on the Insurance Investment Contracts and the
Equitable Real Estate Account. With respect to the Self-Managed Account, the
program expense fee is paid from the Investment Options in accordance with the
Withdrawal Sequence.
Benefit payments under the Program generally are made by check. Within five
Business Days before the check is payable, funds for the payment of benefits
are transferred to a non-interest bearing account with State Street. There is
no separate fee charged for benefit payments; rather, State Street retains any
earnings attributable to outstanding benefit checks and this has been taken
into account in setting State Street's fees under the Program.
All fees are determined at the following annual rates:
<TABLE>
<CAPTION>
VALUE OF RATE FOR
PROGRAM ASSETS STATE STREET
-------------- ------------
<S> <C>
First $500 million............................................ .564%
Next $850 million............................................. .40
Next $1.15 billion............................................ .25
Next $1.5 billion............................................. .175
Over $4.0 billion............................................. .15
<CAPTION>
VALUE OF RATE
PROGRAM ASSETS FOR ABRA
-------------- ------------
<S> <C>
First $500 million............................................ .075%
Next $850 million............................................. .065
Next $1.15 billion............................................ .035
Next $1.5 billion............................................. .025
Over $4.0 billion............................................. .015
</TABLE>
57
<PAGE>
TRUSTEE, MANAGEMENT AND ADMINISTRATION FEES
A fee is paid to State Street for its management, administration and custody
of the assets in the Investment Options (other than Self-Managed Accounts).
This fee is accrued on a daily basis and paid monthly from the assets of the
Funds or as a deduction from amounts accruing on Insurance Investment
Contracts. Such trustee, management and administrative fees attributable to the
Funds held by the Structured Portfolio Service are also accrued and paid from
the Funds. Fees are payable at the following annual rates:
<TABLE>
<CAPTION>
VALUE OF ASSETS IN BALANCED FUND,
VALUE EQUITY FUND, GROWTH EQUITY FUND,
AGGRESSIVE EQUITY FUND AND
INTERNATIONAL EQUITY FUND RATE
-------------------------------------- ----
<S> <C>
First $500 million................................................. .10 %
Next $500 million.................................................. .075
Over $1.0 billion.................................................. .05
<CAPTION>
VALUE OF ASSETS
IN STABLE ASSET
RETURN FUND* RATE
--------------- ----
<S> <C>
First $750 million................................................. .20 %
Next $250 million.................................................. .10
Over $1.0 billion.................................................. .075
<CAPTION>
VALUE OF ASSETS
IN BOND FUND RATE
--------------- ----
<S> <C>
First $500 million................................................. .10 %
Next $500 million.................................................. .075
Over $1.0 billion.................................................. .05
<CAPTION>
VALUE OF ASSETS
IN INDEX FUND RATE
--------------- ----
<S> <C>
First $50 million.................................................. .20 %
Over $50 million................................................... .13
<CAPTION>
VALUE OF ASSETS
IN INSURANCE
INVESTMENT CONTRACTS* RATE
--------------------- ----
<S> <C>
First $500 million................................................. .20 %
Next $1.0 billion.................................................. .10
Over $1.5 billion.................................................. .075
</TABLE>
- --------
* For the purpose of determining the management fees charged to assets invested
in the Stable Asset Return Fund and administrative fees charged to assets
invested in Insurance Investment Contracts, the amount of the assets held in
these two Investment Options is aggregated.
STRUCTURED PORTFOLIO SERVICE FEES
Assets allocated to portfolios of the Structured Portfolio Service will be
subject to an annual service fee of .10% for the first $100 million and .05%
over $100 million of the aggregate assets allocated to any of the portfolios in
the Structured Portfolio Service. There are no other fees directly attributable
to the Structured Portfolio Service. However, the Funds in which the portfolios
of the Structured Portfolio Service will be invested will bear the Program Fees
and the Trustee, Management and Administrative Fees described above, as well as
the Investment Advisor Fees, as applicable, described below.
The annual service fee is charged directly to the Structured Portfolio
Service as an expense thereof. The fee is accrued daily and paid monthly from
the assets of the portfolios in the Structured Portfolio Service.
58
<PAGE>
SELF-MANAGED ACCOUNT FEES
Transaction fees for the purchase or sale of securities for the account of
an Eligible Investor are charged in accordance with the schedule of rates
communicated from time to time to Eligible Investors with Self-Managed
Accounts. Additionally, assets invested through a Self-Managed Account are
subject to the Program expense fee, which is currently .423%. The Program
Expense Fee allocable to the Self-Managed Account will not be deducted or
charged against the Self-Managed Account. Instead, the program expense fee for
the Self-Managed Account will be paid from the Investment Options in
accordance with the Withdrawal Sequence or paid by the Employer if so elected.
INVESTMENT ADVISOR FEE
A fee is paid to each Investment Advisor based on the value of the assets
allocated to that Investment Advisor, as set forth below. These fees are
accrued on a daily basis and paid monthly from the assets of the Funds.
<TABLE>
<CAPTION>
VALUE OF ASSETS IN
BOND FUND ALLOCATED TO PIMCO* RATE
----------------------------- -----
<S> <C>
First $25 million................................................. .50 %
Next $25 million.................................................. .375
Over $50 million.................................................. .25
<CAPTION>
VALUE OF ASSETS IN BOND FUND
ALLOCATED TO BGI* RATE
---------------------------- -----
<S> <C>
First $.5 million................................................. .60 %
Next $1.5 million................................................. .40
Next $48 million.................................................. .10
Next $25 million.................................................. .06
Over $75 million.................................................. .04
</TABLE>
- --------
* During the time that the assets of the Bond Fund and the International
Equity Fund are invested in shares of registered investment companies, no
separate investment advisory fees will be paid by the applicable Funds. Such
Funds, however, will indirectly bear their proportionate share of the
investment advisory fees and annual operating expenses payable by such
registered investment companies. See "Intermediate Bond Fund-- Investment
Advisors and Initial Investments in Registered Investment Companies," and
"International Equity Fund--Investment Advisor and Initial Investment in
Registered Investment Companies." In the most recent periods for which
information is available, the Total Return Fund paid total asset management
and administration fees of .43%, the Bond Index Fund paid total asset
management and administration fees of .23% and the T. Rowe International Fund
paid total asset management and administration fees of .88%. Such fees vary
with the amount of assets held in such registered investment companies and as
a result of changes in the underlying fee structure of such investment
companies. However, Program Fees and Trustee, Management and Administrative
Fees are paid during the time that the Funds are invested in such registered
investment companies.
59
<PAGE>
<TABLE>
<CAPTION>
VALUE OF ASSETS IN
BALANCED FUND ALLOCATED
TO LINCOLN CAPITAL RATE
----------------------- -----
<S> <C>
First $20 million.................................................. .4675%
Next $130 million.................................................. .35
Next $350 million.................................................. .25
Next $500 million.................................................. .20
Over $1000 million................................................. .15
<CAPTION>
VALUE OF ASSETS IN
BALANCED FUND ALLOCATED TO
MILLER, ANDERSON & SHERRERD RATE
--------------------------- -----
<S> <C>
First $25 million.................................................. .60 %
Next $25 million................................................... .40
Next $50 million................................................... .375
Next $100 million.................................................. .25
Over $200 million.................................................. .20
<CAPTION>
VALUE OF ASSETS IN VALUE
EQUITY FUND
ALLOCATED TO
SANFORD BERNSTEIN RATE
------------------------ -----
<S> <C>
First $10 million.................................................. .50 %
Next $10 million................................................... .40
Next $30 million................................................... .35
Next $50 million................................................... .30
Next $50 million................................................... .25
Next $50 million................................................... .225
Next $50 million................................................... .20
Next $50 million................................................... .175
Over $300 million.................................................. .15
<CAPTION>
VALUE OF ASSETS IN
GROWTH EQUITY FUND
ALLOCATED TO COLUMBUS CIRCLE RATE
---------------------------- -----
<S> <C>
First $50 million.................................................. .50 %
Next $50 million................................................... .40
Over $100 million.................................................. .30
<CAPTION>
VALUE OF ASSETS IN
GROWTH EQUITY FUND
ALLOCATED TO RCM CAPITAL RATE
------------------------ -----
<S> <C>
First $10 million.................................................. .70 %
Next $10 million................................................... .60
Next $20 million................................................... .50
Next $20 million................................................... .35
Next $40 million................................................... .30
Over $100 million.................................................. .25
</TABLE>
60
<PAGE>
<TABLE>
<CAPTION>
VALUE OF ASSETS IN
GROWTH EQUITY FUND AND
AGGRESSIVE EQUITY FUND
ALLOCATED TO CAPITAL GUARDIAN RATE
----------------------------- -----
<S> <C>
First $20 million................................................... .50 %
Next $30 million.................................................... .35
Over $50 million.................................................... .225
</TABLE>
<TABLE>
<CAPTION>
VALUE OF ASSETS IN
AGGRESSIVE EQUITY FUND
ALLOCATED TO SIT ASSOCIATES RATE
--------------------------- ------
<S> <C>
First $10 million................................................ 1.00 %
Next $10 million................................................. .70
Over $20 million................................................. .60
<CAPTION>
VALUE OF ASSETS IN
INTERNATIONAL EQUITY FUND
ALLOCATED TO PRICE-FLEMING* RATE
--------------------------- ------
<S> <C>
First $20 million................................................ .75 %
Next $30 million................................................. .60
Over $50 million................................................. .50
</TABLE>
--------
<TABLE>
<S> <C>
* See footnote on page 59
</TABLE>
ORGANIZATIONAL EXPENSES
Expenses initially incurred in connection with the organization of certain
of the Funds, including state and federal securities law registration fees,
legal and accounting fees and expenses and printing costs, totalled
approximately $1,135,000. These expenses were borne equally by the initial
Funds and were capitalized by each Fund and amortized over the period
beginning January 1992 and ending May 1996.
Expenses incurred in connection with the organization of the Stable Asset
Return Fund, the Bond Fund, the Value Equity Fund, the Index Fund, the
International Equity Fund and the Structured Portfolio Service, including
state and federal securities law registration fees, legal and accounting fees
and expenses and printing costs, totaled approximately $1,765,970. These
expenses were allocated to the Funds based on net asset value, were
capitalized by each Fund and will be amortized over the period beginning
September 1995 and ending September 1998. If a Fund should terminate prior to
the full amortization of its organizational expenses, the amount per Unit that
will be realized by Investors upon the liquidation of the Fund will be less
than the per Unit Value at the time of liquidation.
ABA RETIREMENT PLAN AND INDIVIDUALLY DESIGNED PLAN FEES
ENROLLMENT FEE. A one time enrollment fee will be charged upon the
enrollment of a Plan in the Program, a Plan's addition of a 401(k) feature or
the addition of a Participant to a Plan at the following rates:
<TABLE>
<CAPTION>
ABA RETIREMENT PLAN AND INDIVIDUALLY DESIGNED
INDIVIDUALLY DESIGNED PLANS PLANS FOR WHICH STATE
ENROLLMENT AND FOR WHICH STATE STREET STREET DOES NOT
401(K) FEES MAINTAINS PARTICIPANT RECORDS MAINTAIN PARTICIPANT RECORDS
-------------- ----------------------------- ----------------------------
<S> <C> <C>
Enrollment fee for Plan
with 401(k) feature.... $50 per Participant $25 per Plan
Enrollment fee for Plan
without 401(k) feature. $25 per Participant $25 per Plan
Fee for adding 401(k)
feature to existing
Plan under the Program. No charge No charge
</TABLE>
If these fees are not paid by the Employer, they will be deducted from
Participant account balances in accordance with the Withdrawal Sequence.
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ANNUAL RECORD MAINTENANCE AND REPORT FEE. A record maintenance and report fee
of $8 per year will be charged for each Participant in a Plan for which State
Street maintains Participant records that does not have a 401(k) feature. This
fee will be $16 per year for each Participant in a Plan with a 401(k) feature.
This fee will be deducted quarterly from each Participant's account balance in
accordance with the Withdrawal Sequence.
RECHARACTERIZATION FEE. If contributions to an Individually Designed Plan
with a 401(k) feature must be recharacterized as another type of contribution,
a fee of $10 per Participant will be charged for the recharacterization and
deducted from the Participant's account balance in accordance with the
Withdrawal Sequence.
TARGET BENEFIT FEE. Each Employer establishing a target benefit plan through
adoption of the ABA Retirement Plan will be charged a set-up fee at the time
the plan is adopted. This fee covers the initial set-up cost and the first
year's payment of the administration and actuarial fee. Beginning with the
second plan year, an annual administration and actuarial fee will be charged in
addition to the fees and charges applicable to Plans adopted under the ABA
Retirement Plan. If this fee is not paid directly by the Employer, a pro rata
portion of such fee will be deducted from each Participant's account balance in
accordance with the Withdrawal Sequence. Fees charged for establishing and
maintaining a target benefit plan are identical to the ABA Defined Benefit Plan
fees described below. Additionally, an annual record maintenance and report fee
of $8 per year will be charged for each Participant in a target benefit plan,
for which State Street maintains Participant records. This fee will be deducted
quarterly from each Participant's account balance in accordance with the
Withdrawal Sequence.
ABA DEFINED BENEFIT PLAN FEES
INITIAL SETUP AND FIRST YEAR ADMINISTRATION AND ACTUARIAL FEE. Each Employer
adopting the ABA Defined Benefit Plan for 10 or fewer Participants must pay a
fee of $1,500 at the time the Plan is adopted. If the plan has from 11 to 24
Plan members, the fee is $2,500. For Plans with 25 or more Participants, State
Street will establish the amount of the fee to be charged. If this fee is not
paid directly by the Employer, such fee will be deducted from the Plan's assets
in accordance with the Withdrawal Sequence. This fee covers the initial setup
cost and the first year's payment of the administration and actuarial fee.
ANNUAL ADMINISTRATION AND ACTUARIAL FEE. Beginning with the second Plan year,
an annual administration and actuarial fee of $750 will be deducted from the
assets of each Plan with 10 or fewer Participants under the ABA Defined Benefit
Plan. If the Plan has from 11 to 24 Participants the annual fee is $1,250. For
Plans with 25 or more Participants, State Street will establish the amount of
the fee to be charged. If this fee is not paid directly by the Employer, such
fee will be deducted from the Plan's assets in accordance with the Withdrawal
Sequence.
MISCELLANEOUS FEES
ANNUITY ADMINISTRATIVE FEES. If a Participant elects an annuity option, an
administrative fee of $50 will be charged by State Street to obtain an annuity
quote. An additional administrative fee may be charged by the insurance company
providing the annuity. Such fees will be deducted from the Participant's
account balance or benefit in accordance with the Withdrawal Sequence.
PREMIUM TAXES. In certain jurisdictions, amounts used to purchase an annuity
are subject to a premium tax. Such taxes depend, among other things, on a
Participant's place of residence at the time distributions under the Program
begin and are subject to change.
CONVERSION FEE. An employer may be charged a one-time fee in connection with
the transfer of its Plan records from its previous recordkeeper to State
Street's computer system.
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SPECIAL FEES. An Employer may incur certain one-time fees in connection with
the review and analysis of a prior plan conducted by or on behalf of State
Street. Such fees must be paid separately at the time of the service.
FEE RECIPIENTS
The following information with respect to fees is based on the approximate
assets of the Program on December 31, 1996, which total $2,390,000,000. The
total includes $635,000,000 for the Stable Asset Return Fund, $49,000,000 for
the Bond Fund, $295,000,000 for the Balanced Fund, $47,000,000 for the Value
Equity Fund, $752,000,000 for the Growth Equity Fund, $83,000,000 for the Index
Fund, $276,000,000 for the Aggressive Equity Fund, $34,000,000 for the
International Equity Fund, $199,000,000 for the Self-Managed Account,
$16,000,000 for Insurance Investment Contracts, and $4,000,000 for the
Equitable Real Estate Account. Of the above amounts indicated for each Fund, an
aggregate of approximately $69,000,000 is invested through the portfolios of
the Structured Portfolio Service. These fees vary based on the size of the
Funds or, as applicable, the portfolios of the Structured Portfolio Service.
State Street in its capacity as administrator of the Program and manager of the
Funds would receive fees of $11,456,200 on an annual basis (exclusive of
certain non-recurring fees and the Structured Portfolio Service fee). ABRA
would receive fees of $1,291,500 on an annual basis in its capacity as sponsor
of the Program. Assuming the allocation of the assets of the Funds among the
Investment Advisors is as set forth above, the following advisory fees would
have been payable: Capital Guardian -- $1,231,000; Columbus Circle -- $717,000;
Lincoln Capital -- $545,000, Miller, Anderson & Sherrerd -- $552,500; RCM
Capital -- $640,000; Sit Associates -- $920,000; and Sanford Bernstein --
$184,500. In addition, based on the published fee schedules of the Initial
Investment Vehicles, the following anticipated Investment Advisors would have
received the following fees from registered investment companies into which
certain funds were invested: PIMCO -- $141,900; Price-Fleming -- $299,200; and
BGI -- $36,800.
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EMPLOYER AND PARTICIPANT RESPONSIBILITIES
EMPLOYER RESPONSIBILITIES
The Employer has the following principal responsibilities under the Program:
. serving as Plan Administrator;
. making and forwarding contributions within the time periods specified by
applicable law to State Street, with instructions as to the proper
allocation of such contributions to Participant accounts and appropriate
Investor allocation instructions;
. securing adequate fidelity bonding, as required, for every fiduciary and
every person (other than State Street personnel) who handles funds of the
Plan (See "ERISA and Fiduciary Obligations");
. maintaining personnel records necessary for Plan administration;
. determining employees' eligibility for participation in the Plan;
. determining eligibility for benefit distributions, including withdrawals;
. determining Participants' eligibility for, and amount of, top-heavy
contributions or benefits;
. monitoring the Plan's operational compliance with the qualification
requirements of the Internal Revenue Code;
. distributing summary plan descriptions, summaries of material
modifications and summary annual reports to all Participants and, if
applicable, former Participants;
. distributing Plan notices and forms to Participants and promptly
forwarding all such completed forms to State Street;
. distributing prospectuses regarding the Program to all Participants who
are permitted to direct the investment of their account balances under
the Plan;
. distributing State Street confirmation notices and statements to the
Participants, if Participants are permitted to direct the investment of
their account balances under the Plan;
. distributing notices to employees if the Individual Master Plan is
adopted or amended;
. filing a Form 5500 annual report for the Plan with the IRS, if required;
. administering the Participant loan program, if any;
. submitting the Plan to the IRS for a favorable determination letter, if
required (See "Federal Income Tax Considerations.");
. reviewing qualified domestic relations orders submitted by Participants
or alternate payees to the Plan;
. filing Forms 5310-A upon transfer of assets from plan to plan, if
required; and
. administering the claims procedure for the Plan.
ABA RETIREMENT PLAN. Under the ABA Retirement Plan, the Employer is also
responsible for complying with special non-discrimination rules if the Plan
accepts 401(k) salary deferral contributions, voluntary after-tax contributions
or employer matching contributions, determining the amount of each year's
contributions, allocating such contributions to eligible Participants and
determining compliance of such allocations with Internal Revenue Code section
415 requirements, and completing voluntary after-tax contribution worksheets if
such contributions are received. The Employer sponsoring a target benefit plan
must also provide timely and accurate information to State Street so that the
actuarially required contribution for each year can be calculated. The Employer
is also responsible for electing the Self-Managed Account option, if desired.
ABA DEFINED BENEFIT PLAN. Under the ABA Defined Benefit Plan, the Employer is
also responsible for providing timely and accurate information to State Street
so that the actuarially
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required contribution for each year can be calculated and directing State
Street as to the allocation of the Plan assets among Investment Options. The
Employer is also responsible for electing the Self-Managed Account option, if
desired.
INDIVIDUALLY DESIGNED PLANS. An Employer that maintains an Individually
Designed Plan that is a defined contribution plan has responsibilities similar
to those of an Employer who has adopted the ABA Retirement Plan, and an
Employer that maintains an Individually Designed Plan that is a defined benefit
plan has responsibilities similar to those of an Employer who has adopted the
ABA Defined Benefit Plan. These responsibilities will not be increased by
adoption of the Pooled Trust and participation in the Program. Under some
Individually Designed Plans, it may be the Plan trustee rather than the
Employer that is responsible for the performance of the duties of the Employer
under the Program. The Plan trustee is responsible for electing the Self-
Managed Account option, if desired.
ASSISTANCE WITH EMPLOYER RESPONSIBILITIES
State Street will provide the following information and other assistance to
Employers with respect to the fulfillment of their responsibilities:
. assist Employers with the completion of the Form 5500 annual report;
. provide a summary plan description for each Individual Master Plan;
. provide a form of summary annual report, as requested;
. provide instructions and available financial information to assist the
Employer in filing an IRS determination application;
. monitor compliance with section 415 of the Internal Revenue Code for
Individual Master Plans;
. provide available data to an Employer to enable such Employer to monitor
the compliance of its Individually Designed Plan with section 415;
. perform 401(k) and 401(m) testing for certain Plans for which the
Employer provides all relevant data; and
. perform top heavy testing for certain Plans for which the Employer
provides all relevant data.
In all cases, State Street's assistance will be based upon the data and
information provided to it by the Employer and by Equitable Life, as the prior
recordkeeper. The ultimate responsibility for the proper completion of these
tasks rests with the Employer. Employers are encouraged to seek individual tax
advice in connection with enrollment in the Program.
PARTICIPANT RESPONSIBILITIES
Participants are responsible for designating a beneficiary, selecting a form
of benefit payment and properly completing forms relating to Plan and Program
administration and forwarding them to their Employer. Under some Plans,
Participants are also responsible for directing State Street as to the
allocation of their accounts among the Investment Options. See "Contributions
and Investment Selection."
PROVISIONS OF ABA MEMBERS PLANS
The following description of the provisions of the ABA Members Plans, as well
as the description of benefits and distributions under the ABA Members Plans,
are intended as an overview of the terms of the ABA Members Plans. For
information regarding the applicable provisions of a particular Employer's
Plan, a Participant should refer to the summary plan description provided by
his or her Employer. All rights of a Participant under an Individual Master
Plan are governed in all respects by the detailed terms of the ABA Members
Plans as adopted by his or her Employer.
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<PAGE>
PLAN ELIGIBILITY REQUIREMENTS
Under the ABA Defined Benefit Plan and the ABA Retirement Plan, the Employer
specifies the eligibility requirements for its Individual Master Plan in the
participation agreement. The Employer may exclude any employee who has not
attained a specified age (not to exceed 21) and completed a specified number of
years (not to exceed two) in each of which the employee completed 1,000 hours
of service. If the Employer adopts the 401(k) arrangement as part of a profit
sharing plan, no more than twelve months of service may be required for
eligibility purposes.
The Employer may also, if allowed under the participation agreement, exclude
associate attorneys, employees of related employers, leased employees and
certain other types of employees at the Employer's election. However, the
exclusion of selected employees should only be elected if the Employer's
Individual Master Plan passes the Internal Revenue Code coverage and benefits
tests as implemented by regulations. A Participant may elect not to participate
in the ABA Members Plans. Any such election must be made when the individual is
first employed by the Employer (or, if later, when the individual first becomes
eligible to participate in the Plan), and will apply for the duration of such
individual's service with the Employer.
CONTRIBUTIONS AND BENEFITS
ABA RETIREMENT PLAN. Three types of plans are available under the ABA
Retirement Plan: a profit sharing plan, a defined contribution pension plan and
a target benefit plan. An Employer may establish one or more of the foregoing
plans by signing and completing the appropriate participation agreement or
agreements. The provisions of the ABA Retirement Plan and the Employer's
elections in the participation agreement determine the type, and amount, of
annual contributions that may be made under each Individual Master Plan. Under
a profit sharing plan, apart from Employer contributions and rollover
contributions, an Employer may authorize Participants to make 401(k) salary
deferral contributions and voluntary non-deductible after-tax contributions.
The Employer may also make matching contributions to a profit sharing plan
based on the 401(k) salary deferral and/or voluntary non-deductible after-tax
contributions made by Participants. Under a defined contribution pension plan
and a target benefit plan, only Employer contributions and rollover
contributions may be made.
An Employer that adopts the ABA Retirement Plan as a profit sharing plan
makes contributions in discretionary amounts to be determined annually. The
aggregate employer contribution to the Plan is limited to 15% of all
Participants' taxable compensation for the plan year (excluding, in the case of
self-employed persons, all deductible plan contributions, other than 401(k)
salary deferral contributions, and one-half of self-employment (SECA) taxes
paid). Any sole practitioner, partner or shareholder may elect to have his
contribution reduced. However, any election to reduce or eliminate a
contribution on behalf of a sole practitioner, partner or shareholder must be
made when the individual is first employed by the Employer (or, if later, when
the individual first becomes eligible to participate in the Plan), and will
apply for the duration of such individual's service with the Employer.
If the Employer selects a 401(k) arrangement under its profit sharing plan
participation agreement, employees may make salary deferral contributions to
the Plan on a pre-tax basis. Salary deferral contributions are subject to
special non-discrimination rules under which the maximum amount that may be
contributed by highly compensated employees is limited, depending upon the
amount contributed by non-highly compensated employees. The Employer may assist
its Plan in meeting these non-discrimination rules by making a special non-
forfeitable 401(k) contribution. In any event, the maximum amount each employee
may defer under the Plan and any other plan that includes a 401(k) arrangement
is limited to $7,000 per calendar year, as adjusted for inflation, reduced by
that employee's contributions to simplified employee pension (SEPs) and tax
deferred (section 403(b)) annuities, and contributions deductible by the
employee under a trust described under section 501(c)(18) of the Internal
Revenue Code. The inflation adjusted figure for the maximum amount of salary
deferral for an employee in 1997 is $9,500.
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An Employer that adopts the ABA Retirement Plan as a profit sharing plan may
also permit Participants to make voluntary non-deductible after-tax
contributions. Voluntary after-tax contributions are subject to special non-
discrimination rules under which the maximum amount that may be contributed by
highly compensated employees is limited, depending upon the amount contributed
by non-highly compensated employees. In addition, the Employer may make
matching contributions to a profit sharing plan which are based upon the
amount of voluntary after-tax or 401(k) salary deferral contributions made by
Participants. Special non-discrimination rules also apply to matching
contributions and may limit the amount of matching contributions that may be
made on behalf of highly compensated employees.
For 1997, a "highly compensated" employee for purposes of the non-
discrimination rules referenced above is generally (a) anyone who is an owner
of 5% or more of the practice in 1997 or was an owner of 5% or more of the
practice in 1996 or (b) anyone with earnings of more than $80,000 from the
practice in 1996 and, if the Employer elects, who is among the highest-paid
20% of employees. The foregoing dollar figures are adjusted periodically by
the IRS to reflect increases in cost of living.
Notwithstanding the foregoing, if the Employer adopts a Savings Incentive
Match Plan for Employees (a "SIMPLE 401(k) Plan") under its profit sharing
plan participation agreement, the following provisions apply. A SIMPLE 401(k)
Plan is not subject to the special non-discrimination rules applicable to
401(k) plans described above and is not subject to the top-heavy rules
discussed below. Employees may make 401(k) salary deferral contributions to
the Plan up to $6,000 per calendar year, as adjusted for inflation. The
Employer is required to contribute a matching contribution up to a limit of 3%
of the employee's compensation for the calendar year. Alternatively, the
Employer may elect, on an annual basis, to contribute 2% of compensation for
the calendar year for each eligible employee who received at least $5,000 (or
such lesser amount as may be elected by the Employer) in compensation for that
year. All contributions made to a SIMPLE 401(k) Plan must be non-forfeitable.
In order to adopt a SIMPLE 401(k) Plan, the Employer can employ no more than
100 employees whose compensation from the employer in the preceding calendar
year was at least $5,000. In general, if the Employer ceases to satisfy this
requirement for two calendar years, the Employer will no longer be eligible to
maintain a SIMPLE 401(k) Plan. In addition, no contributions may be made, or
benefits accrued for services, on behalf of any eligible employee under any
other plan or arrangement described in section 219(g) of the Internal Revenue
Code during any calendar year during which the SIMPLE 401(k) Plan is
maintained. In the event that the SIMPLE 401(k) Plan requirements are not met,
the Plan will be treated as a profit sharing plan with a 401(k) feature in
accordance with the provisions discussed above.
An Employer that adopts the ABA Retirement Plan as a defined contribution
pension plan is required to make an annual contribution for each Participant
in an amount equal to the percentage of such Participant's compensation that
is specified in the participation agreement.
An Employer may choose to adopt a target benefit plan under the ABA
Retirement Plan. The level of target benefit at normal retirement age for each
Participant is determined by a formula selected by the Employer in the
participation agreement. The Employer is required to make an annual
contribution to the account of each Participant in an amount equal to the
amount needed each year to accumulate a fund sufficient to pay the target
benefit to such Participant at normal retirement age. This determination is
made based on the Participant's age, and the interest rate and actuarial
factors selected in the participation agreement. The benefit payable to the
Participant upon retirement may be higher or lower than the target benefit,
depending on the investment performance of the Participant's account.
Under each type of plan, compensation in excess of statutory limits must be
disregarded in making contributions. The compensation limit for 1993 was
$235,840. Because of the changes to the Internal Revenue Code made by the
Omnibus Budget Reconciliation Act of 1993, the compensation limit for
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1994, 1995 and 1996 was $150,000 and for 1997 is $160,000. This limit will
increase in future years based on increases in the cost of living, in $10,000
increments. Under each type of plan, Employer contributions may be integrated
with Social Security, which means that contributions with respect to each
Participant's compensation in excess of the integration level may exceed
contributions made with respect to compensation below the integration level,
within limits imposed by the Internal Revenue Code. If an Employer maintains
more than one Plan, the Employer may only integrate one Plan.
Generally, if an Employer's defined contribution plan is top heavy (as
defined in the Internal Revenue Code), Employer contributions on behalf of
non-key employees must be at least 3% of compensation or the highest
percentage contributed (including salary deferrals) on behalf of key
employees, if less than 3%. A "key employee" generally means (a) an owner of
one of the ten largest (but more than 1/2%) interests in the practice with
earnings of more than $30,000, (b) an officer of the practice with earnings of
at least $62,500, (c) an owner of 5% or more of the practice, or (d) an owner
of more than 1% of the practice with earnings of more than $150,000. If the
Employer also maintains a defined benefit pension plan, Employer contributions
in an amount as high as 7 1/2% of compensation may be required to be made on
behalf of non-key employees under the defined contribution plan unless a
minimum benefit is provided in the defined benefit pension plan for the non-
key employees.
For 1997, the annual contributions and forfeitures allocated to a
Participant's accounts under all tax-qualified defined contribution plans of
an Employer are limited to the lesser of $30,000 and 25% of the Participant's
taxable compensation (excluding, in the case of self-employed persons, all
deductible plan contributions, other than 401(k) salary deferral
contributions, and one-half of self-employment (SECA) taxes paid). The
Participant's 401(k) salary deferral contributions and voluntary after-tax
contributions are taken into account for purposes of applying this limitation.
Each Participant's account balance equals the sum of the amounts accumulated
in each Investment Option. State Street will maintain separate records of each
Participant's interest in each of the Investment Options attributable to
Employer profit sharing contributions, 401(k) non-elective contributions,
matching contributions, 401(k) salary deferral contributions and voluntary
after-tax contributions. Any amounts rolled over from the plan of a previous
employer will also be accounted for separately. State Street's records will
reflect each Participant's degree of vesting (see below) in his account
balance attributable to Employer profit sharing contributions and matching
contributions. The foregoing recordkeeping will not be performed by State
Street for Aggregate Recordkeeping Plans.
Each Participant will receive an individual confirmation of each transaction
pursuant to which debits and credits are made to a Participant's account
(excluding the deduction of annual administrative fees, which will be reported
on the quarterly statements). The Participant will also receive, on a
quarterly basis, a statement showing cumulative activity for the quarter, the
account balance in each Investment Option, including market value by
contribution source and quarter-to-date and year-to-date contributions by
source. The Participant will also receive certain special statements and
communications with regard to a Self-Managed Account. These confirmation
notices and statements will be sent by State Street to the Employers for
distribution to the Participants.
ABA DEFINED BENEFIT PLAN. An Employer may establish a defined benefit plan
by completing and signing the appropriate participation agreement. The
provisions of the ABA Defined Benefit Plan and the benefit formula designated
by the Employer in the participation agreement determine the amount of the
benefit which may be accrued by a Participant each year. Such a Plan is
subject to the minimum funding requirements imposed by the Internal Revenue
Code, and the Employer must make contributions to the Plan each year at such
times and in such amounts necessary to comply with such funding requirements.
The amount of the minimum funding required each year is determined on an
actuarial basis. Such a Plan may also be required to be insured by the Pension
Benefit Guaranty Corporation. In such case, the Employer must make premium
payments to the Pension Benefit Guaranty Corporation each year on behalf of
the Participants.
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The benefit formula may be integrated with Social Security. This means that
benefits with respect to compensation above the integration level may be
greater than benefits with respect to compensation below the integration
level. Only one plan of each Employer may be integrated. In the case of top
heavy plans (as defined in the Internal Revenue Code), Participants must
accrue a benefit of at least 2% of compensation for each of their first ten
years of service. This required top heavy minimum benefit may be greater if
the Employer also adopts the ABA Retirement Plan, or otherwise maintains a
defined contribution plan.
Voluntary after-tax contributions are not accepted under the ABA Defined
Benefit Plan. However, rollover contributions (including direct transfers from
other qualified plans) may be made.
The Internal Revenue Code imposes certain limits on the amount of the annual
benefit that may be provided under a defined benefit plan. For 1997, each
Participant's maximum annual benefit payable at the Participant's social
security retirement age is limited to the lesser of $125,000 or 100% of
earnings (excluding, in the case of self-employed persons, all deductible plan
contributions, other than 401(k) salary deferral contributions, and one-half
of self-employment (SECA) taxes paid). Earnings for this purpose means the
Participant's highest average compensation for any three consecutive years of
Plan participation. Compensation in excess of statutory limits is disregarded
for all Plan purposes. The compensation limit for 1997 is $160,000. This limit
will increase in future years based on increases in the cost of living, in
$10,000 increments. The maximum benefit is reduced on a pro rata basis if the
Participant has fewer than 10 years of participation (where the $125,000 limit
applies) or 10 years of service (where the 100% limit applies). This maximum
benefit is further reduced for retirement prior to a Participant's social
security retirement age (or, in the case of a tax-exempt Employer, age 62),
and is increased for retirement after a Participant's social security
retirement age (or, in the case of a tax-exempt Employer, age 65).
State Street will maintain records of the Plan's interest in each of the
Investment Options. State Street will also maintain separate accounts for each
Participant reflecting amounts rolled over from a defined contribution plan or
from the plan of a previous employer. The Employer will receive a confirmation
of each transaction pursuant to which debits and credits are made to the
Plan's account (excluding the deduction of the annual administration and
actuarial fees), as well as a quarterly statement showing the amount of assets
of the Plan in each Investment Option, unless the Employer elects to have such
statements sent only annually. The Employer will also receive certain special
statements and communications with regard to its Self-Managed Account, if any.
VESTING
Vesting refers to the non-forfeitable portion of a Participant's accrued
benefit under the ABA Defined Benefit Plan or of the Participant's account
balance attributable to Employer contributions and matching contributions
under the ABA Retirement Plan. The Participant's account balance attributable
to 401(k) salary deferral contributions, qualified non-elective contributions,
qualified matching contributions, voluntary after-tax contributions and
rollover contributions is non-forfeitable at all times.
A Participant will become fully vested in all benefits if still employed by
the Employer at death, disability, attainment of normal retirement age or to
the extent funded upon termination of the Plan. If the Participant terminates
employment before that time, any benefits that have not yet become vested
under the Plan's vesting schedule will be forfeited. The normal retirement age
is 65 under the ABA Retirement Plan and may be 65 with up to 5 years of
participation under the ABA Defined Benefit Plan.
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A Participant's benefits must vest in accordance with the schedule elected by
the Employer in its participation agreement, which schedule may be any of the
schedules below, or a schedule at least as favorable as one below:
<TABLE>
<CAPTION>
SCHEDULE A VESTED SCHEDULE B VESTED SCHEDULE C VESTED
YEARS OF SERVICE PERCENTAGE PERCENTAGE PERCENTAGE
---------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
1 0% 0% 0%
2 100 20 0
3 100 40 100
4 100 60 100
5 100 80 100
6 100 100 100
</TABLE>
If the Plan requires more than one year of service for participation, it must
use Schedule A or one at least as favorable to Participants.
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BENEFITS AND DISTRIBUTIONS FROM ABA MEMBERS PLANS
RETIREMENT, DISABILITY AND TERMINATION OF EMPLOYMENT
Under either ABA Members Plan, Participants are eligible for benefits upon
retirement or disability, or upon termination of employment with a vested
benefit. In addition, Participants in a profit sharing plan established under
the ABA Members Retirement Plan are eligible (a) to receive a distribution of
their vested matching and employer contributions, and earnings thereon, upon
reaching age 59 1/2 unless an earlier age (not less than 55) has been elected
by the Employer in its participation agreement and (b) to receive a
distribution of their 401(k) salary deferral contributions and 401(k)
qualified employer contributions, and earnings thereon, upon reaching age 59
1/2. Participants are eligible to receive a distribution of their after-tax
contributions and their rollover contributions at any time. Participants in a
defined contribution pension plan or target benefit plan under the ABA Members
Retirement Plan who continue employment beyond age 65 are eligible to begin
receiving their benefits at any time after age 65 (or such earlier age
designated by the Employer in its defined contribution pension plan
participation agreement as the Plan's normal retirement age). If the value of
the Participant's vested benefit is $3,500 or less, the Employer must direct
State Street to make a lump sum distribution to the Participant within a
reasonable time after termination of employment. If the value of the
Participant's vested benefit is more than $3,500, the Participant may request
distribution of vested benefits by filing a benefits election form with the
Employer. If the Participant does not request distribution at that time, the
Participant's benefits will remain in the Investment Options until the
Participant elects to take distribution. If a Participant fails to otherwise
elect, payment of the Participant's benefit will automatically commence no
later than 60 days after the end of the plan year in which the Participant
attains normal retirement age, the Participant terminates employment or the
10th anniversary of the date the Participant commenced participation in the
Plan, whichever is later. Prior to distribution, assets in the Program may be
transferred among the Investment Options, subject to the restrictions that
normally apply to each Investment Option. Special restrictions apply to a
Participant's ability to receive distributions from the Equitable Real Estate
Account. See "Equitable Real Estate Account."
For years beginning after December 31, 1996, Participants must generally
begin to receive benefits on the later of April 1 of the year after (i) the
calendar year in which they reach age 70 1/2 or (ii) the calendar year in
which they retire. This rule does not apply to Participants (other than a more
than 10% partner or a sole proprietorship in an unincorporated practice) who
have filed a special contrary election with their Employer prior to January 1,
1984. Notwithstanding the foregoing, a 5% owner must begin to receive
benenfits no later than April 1 of the year after the calendar year in which
they reach age 70 1/2.
For a general explanation of the federal income tax treatment of benefit
distributions see "Federal Income Tax Considerations."
If the value of the Participant's vested benefit is more than $3,500, the
normal form of distribution is a Qualified Joint and Survivor Annuity (as
described below) in the case of a married Participant, and a Life Annuity (as
described below) in the case of a single Participant. In either case, the
Participant may, within 90 days before his annuity starting date, select one
or more of the following forms of distribution in lieu of the normal form. If
a married Participant selects a form other than the Qualified Joint and
Survivor Annuity, the Participant's spouse must consent in writing to such
selection. See "--Spousal Consent Requirements." Notwithstanding the
foregoing, an Employer that adopts the ABA Retirement Plan as a profit sharing
plan or SIMPLE 401(k) Plan may elect in the participation agreement not to
have annuity forms of payment under the Individual Master Plan. A Participant
eligible to receive a distribution in excess of $3,500 from such a profit
sharing plan may request a lump sum payment or periodic installment payments
but may not elect an annuity form of payment.
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QUALIFIED JOINT AND SURVIVOR ANNUITY. This benefit option consists of an
annuity providing monthly payments for the duration of a Participant's life
and, after the Participant's death, for the Participant's surviving spouse's
life. Effective January 1, 1993, a Participant may elect that the surviving
annuity payable be 50% of the amount of annuity payable during the life of the
Participant. Payments will cease after the Participant and the Participant's
spouse die, even if the Participant has received only one payment. The law
requires that if the value of a married Participant's vested benefits exceeds
$3,500, the Participant must receive a Qualified Joint and Survivor Annuity
unless the Participant's spouse consents in writing to a contrary election.
Those requirements do not apply, however, in the case of a profit sharing plan
or SIMPLE 401(k) Plan that does not provide for annuity forms of payment, as
described above. See "--Spousal Consent Requirements" below for an explanation
of the procedures for electing not to receive a Qualified Joint and Survivor
Annuity.
LIFE ANNUITY. This benefit option consists of an annuity providing equal
monthly payments for the Participant's life. Payments will cease upon the
Participant's death, regardless of the number of payments received by the
Participant.
LUMP SUM PAYMENT. This benefit option consists of a single payment of all or
part of a Participant's vested benefits. A Participant who elects to receive a
lump sum payment of only part of such Participant's balance must elect to
receive at least $1,000. If a Participant has more than one Insurance
Investment Contract, amounts held in the Participant's most recently purchased
Insurance Investment Contract will first be used to make payment. If a
Participant's vested benefit is $3,500 or less, the Participant will
automatically receive a lump sum payment of the entire amount.
PERIODIC INSTALLMENTS. This benefit option consists of monthly, quarterly,
semi-annual or annual payments over a period of at least three years. A
Participant may choose either a time-certain payout, which provides variable
payments over a specified period of time, or a dollar-certain payout which
provides level payments over a variable period of time. During the installment
period, a Participant's remaining account balance will be invested in whatever
Investment Options the Participant designates. Each payment will be drawn pro
rata from all the Investment Options that the Participant has selected. If a
Participant has more than one Insurance Investment Contract, amounts held in
the Participant's most recently purchased Insurance Investment Contract will
first be used to make installment payments. If a Participant dies before
receiving all the installments, the remaining payments will be made to the
Participant's beneficiary. Except in the case of Participant accounts
transferred from certain defined contribution plans, this periodic installment
benefit option is not available for Plans under the ABA Defined Benefit Plan or
Individually Designed Plans.
LIFE ANNUITY-PERIOD CERTAIN. This benefit option consists of an annuity
providing monthly payments for the Participant's life, or if longer, a
specified period of time. If the Participant dies before the end of that
specified period, payments will continue to the Participant's beneficiary until
the end of the period. Subject to certain limitations, a Participant may
specify a minimum payment period of 5, 10, 15 or 20 years; the longer the
specified period, the smaller the monthly payments will be.
JOINT AND SURVIVOR ANNUITY. This benefit option consists of an annuity
providing monthly payments for the Participant's life and that of the
Participant's beneficiary if the beneficiary survives the Participant. The
Participant may specify the percentage of the annuity payment to be made to the
Participant's beneficiary. Subject to certain legal limitations, that
percentage may be 50% or 100%.
JOINT AND SURVIVOR ANNUITY-PERIOD CERTAIN. This benefit option consists of an
annuity providing monthly payments for the Participant's life and that of the
Participant's surviving beneficiary or, if longer, a specified period of time.
If the Participant and the Participant's beneficiary both die before the end of
the specified period, payments will continue to the Participant's contingent
beneficiary until the end of the period. Subject to legal limitations, the
Participant may specify a
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minimum payment period of 5, 10, 15 or 20 years and the percentage (either 50%
or 100%) of the annuity payment to be made to the Participant's surviving
beneficiary. The longer the specified period, the smaller the monthly payments
will be.
CASH REFUND ANNUITY. This benefit option consists of an annuity providing
equal monthly payments for the Participant's life with a guarantee that the sum
of those payments will be at least equal to the portion of the Participant's
vested benefits used to purchase the annuity. If upon the Participant's death,
the sum of the monthly payments to the Participant is less than that amount,
the Participant's beneficiary will receive a lump sum payment of the remaining
guaranteed amount. Except in the case of Participant accounts transferred from
certain defined contribution plans, cash refund annuities are not available
under the ABA Defined Benefit Plan.
IN-KIND DISTRIBUTIONS. If a Participant has allocated assets to a Self-
Managed Account, the Participant may be able to elect to receive an in-kind
distribution of securities in the Self-Managed Account upon retirement, death,
disability or termination of employment. In-kind distributions are subject to
administrative rules and procedures established by State Street from time to
time. In-kind distributions are not available under ABA Defined Benefit Plan,
other than upon withdrawal of such Plan from the Program. In-kind distributions
from an Eligible Investor's Self-Managed Account relating to an Individually
Designed Plan are governed by the terms of the individual plan document.
Under a Qualified Joint and Survivor Annuity or Cash Refund Annuity, the
amount of the monthly payment is fixed at retirement and remains level
throughout the distribution period. In the case of the ABA Retirement Plan, and
the prior plan accounts under the ABA Defined Benefit Plan the Participant may
select either fixed or variable payments under the Life Annuity, Life Annuity-
Period Certain, Joint and Survivor Annuity and Joint and Survivor Annuity-
Period Certain. If a variable annuity is selected, the monthly payments may
vary with the investment performance of the insurance company annuity product.
Under any form of annuity payment that involves payment of a survivor annuity
(other than to the Participant's spouse under the Qualified Joint and Survivor
Annuity), the term "beneficiary" refers to the joint annuitant specified by the
Participant rather than to the person or persons named by the Participant in
the beneficiary designation form.
In order for a Participant to begin receiving benefits under an ABA Members
Plan, the Participant must complete and submit to his Employer a properly
completed Benefit Request Form, which the Employer must then forward to State
Street. Distributions will generally be paid as soon as practicable after State
Street receives properly completed forms. In the event that a Participant
elects payment in the form of in-kind distributions from a Participant's Self-
Managed Account, payment may be delayed to permit State Street to arrange for
such distributions. Similarly, if a Participant elects a form of annuity
distribution, commencement of benefit payments may be delayed in order for
State Street to arrange for the purchase of an annuity from an insurance
company. Annuity payments will be paid by the insurance company directly to the
Participant.
State Street will purchase annuities from insurance companies at commercially
available rates. In addition to the rates offered by the insurance companies
and the rating of such insurance companies, State Street may consider such
other factors as it deems relevant in the exercise of its fiduciary duty in the
purchase of such annuities. The amount of payments depends on the form of
annuity selected, the Participant's age, the age of the Participant's
beneficiary if the Participant selects a joint and survivor annuity, and the
guarantee feature, if any.
The minimum amount that may be used to purchase any type of annuity is
$3,501. State Street will charge a fee of $50 against the Investor's account
balance in accordance with the Withdrawal Sequence for providing annuity
quotes. An insurance company may charge an annuity administrative fee, which
will be deducted by the insurance company from the amount used to purchase the
annuity.
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Once State Street has applied the Participant's interest in the Plan towards
the purchase of an annuity from an insurance company, the Participant ceases
to be covered by the ABA Members Trusts and the Participant must look to the
insurance company for benefit payments. An annuity is a general obligation of
an insurance company. Therefore the financial risk associated with a
Participant's interest in an annuity will depend on the ongoing financial
condition of the issuing insurance company.
State Street uses the value of the Participant's vested benefits as of the
end of the regular trading session of the New York Stock Exchange on the day
payment is due to determine the amount of benefits the Participant is to
receive. State Street will not, therefore, begin processing the Participant's
check until the following Business Day. Participants should expect their check
to be mailed within five Business Days after processing begins (longer in the
case of a first annuity payment or certain in-kind distributions).
Distributions under a qualified retirement plan such as those under the
Program are subject to extremely complicated legal requirements. When a
Participant is ready to retire, the Participant should discuss the available
payment options with the Participant's Employer and tax advisor.
DEATH BENEFITS
If a Participant dies after benefits have commenced, the Participant's
spouse or other designated beneficiary can continue to receive benefits based
on the payment option selected by the Participant if such payment option
provides for survivor benefits. If a Participant dies before benefits have
commenced, the terms of the ABA Retirement Plan and the ABA Defined Benefit
Plan differ in certain respects, as described below. State Street's customer
service representatives can provide information regarding these and other
requirements affecting death benefits by phone at (800) 348-2272.
ABA RETIREMENT PLAN. Under the ABA Retirement Plan, if the Participant dies
before benefits have commenced and the Participant is married at the date of
his or her death, then the Participant's entire account balance will be used
to provide the Participant's surviving spouse with a pre-retirement survivor
annuity. Effective January 1, 1993, however, a Participant may elect that only
50% of the Participant's account balance be used to provide a pre-retirement
survivor annuity for his or her surviving spouse, and that the remaining 50%
of the Participant's account balance be paid to the Participant's designated
beneficiary. The pre-retirement survivor annuity is paid in the form of a life
annuity providing monthly payments for the life of the Participant's surviving
spouse. The spouse generally may elect to receive such survivor benefit in one
of the optional forms of benefit available under the Plan in lieu of a life
annuity. However, effective January 1, 1993, the Participant may elect not to
permit his or her spouse to make this election (of an alternative form of
benefit payment) after the Participant's death.
The requirement to provide all or a portion of a Participant's account
balance to the Participant's surviving spouse in the form of a pre-retirement
survivor annuity does not apply if the Employer has elected not to have the
annuity forms of payment under its Individual Master Plan. In this case, the
Participant's account balance will be payable to the Participant's surviving
spouse as the Participant's sole beneficiary in the form of a lump sum
payment, or any other option form of benefit available under the Plan as
elected by such surviving spouse.
A married Participant has the right to have his or her spouse waive the
right to receive a death benefit in the event of the Participant's death, and
designate another beneficiary to receive the Participant's entire account
balance. To designate a beneficiary or to change an earlier designation, a
Participant's employer must send State Street a beneficiary designation form.
A Participant's spouse must consent in writing to a designation of any non-
spouse beneficiary. See "--Spousal Consent Requirements." The marriage of a
Participant is deemed to revoke a prior beneficiary designation, and
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a Participant's divorce is deemed to revoke the divorced spouse as the
beneficiary designated under the Plan. If no valid beneficiary designation is
on file with State Street on the date of the Participant's death, the
Participant's account balance will be paid to the Participant's spouse, or if
the Participant is not married, to the first surviving class of (a) the
Participant's children per stirpes, (b) the Participant's parents and (c) the
Participant's siblings per stirpes. If none of them survive the Participant,
the Participant's accrued benefit will be paid to the Participant's estate.
The law requires benefits to be completely distributed by the end of the
calendar year which contains the fifth anniversary of the Participant's death
unless the Participant's account balance is paid to the Participant's spouse in
the form of an annuity or installments over a period not exceeding the spouse's
life expectancy and commencing no later than the end of the calendar year in
which the Participant would have attained age 70 1/2, or in the case of a non-
spouse beneficiary, is paid over a period not exceeding the non-spouse
beneficiary's life expectancy and commencing before the end of the calendar
year following the year in which the Participant died.
Under the ABA Retirement Plan, on the Business Day State Street receives
proof of a Participant's death, State Street will automatically transfer a
Participant's account balance in the Funds or the portfolios of the Structured
Portfolio Service to the Stable Asset Return Fund or such other Fund as is
designated by the Employer in the participation agreement. See "Stable Asset
Return Fund." Any amounts held for the Participant in Insurance Investment
Contracts are transferred upon maturity to the Stable Asset Return Fund or such
other Fund as is designated by the Employer in the participation agreement. All
such amounts are held in such Fund until the Participant's beneficiary requests
a distribution or transfer. However, a Participant may elect, by providing
State Street with written notice, that these automatic transfers to the Stable
Asset Return Fund or such other Fund designated by the Employer in the
participation agreement not take place upon the Participant's death. If the
Participant so elects, upon the Participant's death all amounts in the
Participant's account balance will remain allocated to the Investment Options
to which they were allocated on the date of the Participant's death. After the
Participant's death, the Participant's beneficiary will have the right to
direct the investment of the Participant's account balance by providing State
Street with written instructions along with the proof of death.
ABA DEFINED BENEFIT PLAN. Under the ABA Defined Benefit Plan, if the
Participant dies before benefits have commenced, and the Participant is married
on the date of his or her death, then the Participant's surviving spouse will
be eligible to receive a pre-retirement survivor annuity. This survivor annuity
is a life annuity providing monthly payments for the surviving spouse's
lifetime in the amount equal to the greater of (i) the amount which would have
been payable had the Participant retired at the date of his or her death (or if
the Participant had not attained his or her earliest retirement age under the
Plan as of such date, as if the Participant terminated employment and survived
until such earliest retirement age), elected to receive payment of his or her
benefit in the form of a Qualified Joint and Survivor Annuity, and died
immediately thereafter, or (ii) the actuarial equivalent of the Participant's
entire accrued benefit. The Participant's surviving spouse may elect to receive
this survivor benefit in one of the optional forms of benefit provided under
the Plan in lieu of a life annuity, and may elect to defer the commencement of
payment of such benefit to a later date, but in no event later than the end of
the calendar year in which the Participant would have attained age 70 1/2. A
married Participant and his or her spouse can waive this pre-retirement
survivor annuity, and designate another beneficiary to receive such benefit. To
designate a beneficiary or to change an earlier designation, a Participant's
employer must send State Street a beneficiary designation form. A Participant's
spouse must consent in writing to a designation of any non-spouse beneficiary.
See "--Spousal Consent Requirements."
If a Participant dies before benefits have commenced, and the Participant is
not married on such date or his or her spouse has waived the right of his or
her spouse to receive a pre-retirement survivor annuity, payment of the
Participant's accrued benefit under the Plan will be paid to the Participant's
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designated beneficiary. Such beneficiary may elect to receive the actuarial
equivalent of such benefit in the form of a lump sum, or some other optional
form of benefit available under the Plan. If paid in the form of a lump sum,
payment of such benefit must be made no later than the end of calendar year
which contains the fifth anniversary of the Participant's death. Alternatively,
such benefit may be made in the form of an annuity commencing no later than the
end of the calendar year following the year in which the Participant died. If
no valid beneficiary designation is on file with State Street on the date of
the Participant's death, the Participant's accrued benefit will be paid to the
Participant's spouse, or if the Participant is not married, to the first
surviving class of (a) the Participant's children per stirpes, (b) the
Participant's parents and (c) the Participant's siblings per stirpes. If none
of them survive the Participant, the Participant's accrued benefit will be paid
to the Participant's estate.
The Employer is responsible for ensuring that the ABA Defined Benefit Plan
has sufficient cash available under the Plan to pay a Participant's death
benefits. State Street accepts no responsibility for such matters.
SPOUSAL CONSENT REQUIREMENTS
If the Employer has adopted the ABA Defined Benefit Plan or has adopted the
ABA Retirement Plan and has elected not to have the annuity forms of payments
under its Plan, a Participant may designate a non-spouse beneficiary any time
after the earlier of the first day of the plan year in which the Participant
attains age 35 or the date on which the Participant separates from service with
the Participant's Employer. If the Participant designates a beneficiary other
than the Participant's spouse prior to the last day of the plan year preceding
the plan year in which the Participant reaches age 35, the Participant's spouse
must consent to the designation and, upon the Participant's reaching age 35,
must again give his or her consent or the designation will lapse. A Participant
may elect a benefit (or make a withdrawal) in a form other than a Qualified
Joint and Survivor Annuity within the 90-day period before the Participant's
annuity starting date. In order to elect a form of benefit other than a
Qualified Joint and Survivor Annuity or designate a non-spouse beneficiary, the
Participant's spouse must consent to the Participant's election in writing. To
consent, the Participant's spouse must sign the appropriate line on the
Participant's election of benefits or beneficiary designation form. The
Participant's spouse's signature must be witnessed by a notary public or plan
representative.
A Participant may revoke such election and elect a Qualified Joint and
Survivor Annuity or designate the Participant's spouse as beneficiary simply by
filing the appropriate form. The Participant's spouse's consent is not required
for this revocation.
It is also possible for a Participant's spouse to sign a blanket consent
form. By signing this form, the Participant's spouse consents not just to a
specific beneficiary or, with respect to the waiver of the Qualified Joint and
Survivor Annuity, the form of distribution, but gives the Participant the right
to name any beneficiary or, if applicable, any form of distribution the
Participant wants. Once the Participant files such a form, the Participant may
change the election whenever the Participant wants, even without spousal
consent.
If the Employer has elected not to have the annuity forms of payment under
its Plan, the Participant's spouse must be Participant's sole primary
beneficiary unless the spouse has consented (in the manner described above for
Plans with annuity forms of payment) to any primary beneficiary other than the
spouse. This can occur at any time, regardless of the Participant's age.
IN-SERVICE WITHDRAWALS AND LOANS
VOLUNTARY AFTER-TAX CONTRIBUTIONS. Participants in a profit sharing plan
established under the ABA Retirement Plan may withdraw their voluntary after-
tax contributions and earnings thereon at
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any age without proof of hardship, subject to any withdrawal restrictions
applicable to the Investment Options. Each withdrawal must be of at least $300
(or if less, the Participant's entire account balance attributable to voluntary
after-tax contributions).
ROLLOVER CONTRIBUTIONS. Participants in a plan established under the ABA
Retirement Plan may withdraw their rollover contributions and earnings thereon
at any age without proof of hardship, subject to any withdrawal restrictions
applicable to the Investment Options. Each withdrawal must be of at least $300
(or, if less, the Participant's entire account balance attributable to rollover
contributions).
401(K) SALARY DEFERRAL CONTRIBUTIONS. Participants in a 401(k) plan
established under the ABA Retirement Plan are eligible to withdraw their 401(k)
salary deferral account contributions, 401(k) employer account contributions
and earnings accrued thereon, subject to any withdrawal restrictions applicable
to the Investment Options. Such withdrawal will be permitted by the Employer
only if the Participant has attained age 59 1/2 or (if so elected by the
Employer in its participation agreement with respect to 401(k) salary deferral
account contributions) the Employee can demonstrate that he has a financial
hardship which cannot be met from other reasonably available resources. Under
current Internal Revenue Service regulations, financial hardship will be deemed
to exist with respect to:
. medical expenses for the Participant, the Participant's spouse or
dependents;
. the purchase of the principal residence for the Participant;
. the payment of tuition, room and board and related educational fees for
the next 12 months of post-secondary education for the Participant, the
Participant's spouse or dependents; or
. the need to prevent an eviction from, or mortgage foreclosure on, the
Participant's principal residence.
Even after a Participant has demonstrated to the Employer that he has an
immediate and heavy financial need, the Employer may only permit a hardship
distribution in an amount not in excess of the Participant's financial need
(plus amounts necessary to pay any Federal, state or local income taxes or
penalties reasonably anticipated to result from the distribution) if the
Participant has obtained all distributions and nontaxable loans available under
all plans maintained by the Employer and if the Participant suspends all salary
deferral contributions and voluntary after-tax contributions to all plans
maintained by the Employer for twelve months (including nonqualified deferred
compensation, stock purchase and stock option plans).
EMPLOYER CONTRIBUTIONS (OTHER THAN QUALIFIED NON-ELECTIVE AND QUALIFIED
MATCHING CONTRIBUTIONS) AND ROLLOVER CONTRIBUTIONS. Participants in a profit
sharing plan established under the ABA Retirement Plan who are fully vested may
be eligible to withdraw their employer, matching and rollover contributions,
and earnings thereon, subject to any withdrawal restrictions applicable to the
Investment Options. Such a withdrawal will be permitted by the Employer only if
the Participant has attained such age specified by Employer in the
participation agreement (not earlier than age 55 and not later than age 59 1/2)
or can demonstrate that he has a financial hardship (as defined above), the
Participant has withdrawn the full available amount of his voluntary after-tax
contribution, and the Employer has elected this hardship withdrawal option
under its participation agreement.
No in-service withdrawals are permitted from an ABA Defined Benefit Plan.
LOANS. Under the ABA Retirement Plan, a Participant may borrow a portion of
his vested account balance if the Employer has elected the loan option under
its participation agreement. Each Participant is limited to two loans per plan
year and is not eligible for additional loans if such Participant already has
five or more loans outstanding. The granting of loans to Participants is
administered by the Employer and may be subject to additional restrictions and
limitations set forth in the ABA Retirement Plan. The total amount of
outstanding loans (plus accrued interest) to a
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Participant may not exceed the lesser of (a) $50,000 (reduced by the highest
outstanding loan balance during the twelve (12) months ending on the day before
the loan is made), or (b) fifty percent (50%) of the vested interest of the
Participant's accounts. The minimum amount a Participant may borrow is $1,000.
Each loan must be evidenced by a promissory note and secured by fifty percent
(50%) of a Participant's vested interest in the Plan. Each loan must be made at
a reasonable rate of interest and repaid within five (5) years unless the loan
is used to acquire the Participant's personal residence. Whenever a Participant
becomes entitled to benefits from the Plan because he retires, becomes
disabled, dies or terminates employment, the Employer will direct the Trustee
to apply the amount of the distribution to pay off the outstanding loan (and
accrued interest), whether or not then due, before distributing the balance, if
any, to the Participant. Pursuant to IRS rules, sole proprietors, more than 10%
partners and shareholder-employees of an S corporation who own more than 5% of
the practice may not receive a loan (or continue to hold an outstanding loan)
from the Plan without first obtaining a prohibited transaction exemption from
the Department of Labor.
The amount of an in-service withdrawal or loan will be drawn from the
Investment Options selected by the Participant. In-service withdrawals and
loans are restricted from Insurance Investment Contracts and the Equitable Real
Estate Account.
No in-service withdrawals or loans are permitted unless the Participant has
obtained the requisite spousal consent. Notwithstanding the foregoing, spousal
consent requirements are not applicable with respect to an Employer that adopts
the ABA Retirement Plan as a profit sharing plan and elects in the
participation agreement not to have annuity forms of payment. See "--Spousal
Consent Requirements." State Street will process an in-service withdrawal or
loan only upon receipt of specific written instructions from the Employer.
BENEFITS AND DISTRIBUTIONS FROM INDIVIDUALLY DESIGNED PLANS
The foregoing discussion regarding eligibility, contributions and benefits,
vesting and time and form of benefit distributions apply only to the ABA
Members Plans. The terms and provisions of an Individually Designed Plan are
governed by the terms of such Plan, which may vary significantly from the
foregoing description. Participants in Individually Designed Plans should
address questions regarding such Plans to their Employer.
For a Participant to receive a distribution of benefits under an Individually
Designed Plan, the Participant's Employer must send State Street a request for
disbursement form. State Street will send single sum payments to the trustee of
an Individually Designed Plan as of the close of business on the Business Day
State Street receives a properly completed form. If the Participant wishes to
receive annuity payments, the trustee of the Individually Designed Plan may
purchase an annuity contract through the Program. Commencement of payments may
be delayed in order for State Street to arrange for the purchase of an annuity
from an insurance company. Annuity payments will be paid by the insurance
company directly to the Participant.
Throughout this Prospectus, reference is made to the requirement that all
allocation instructions and benefit payment forms must be submitted by the
Employer to State Street. In the case of Individually Designed Plans, State
Street may accept such forms and instructions directly from the Trustee of such
Plan in accordance with procedures established by State Street.
ERISA AND FIDUCIARY OBLIGATIONS
Each Employer's plan and trust, as well as the Master Trust, the Pooled Trust
and the Collective Trust, are subject to the requirements of ERISA, and the
underlying assets are considered ERISA plan assets. The obligations imposed by
ERISA apply to those persons who have discretionary authority or
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control regarding the management or administration of ERISA plan assets.
Accordingly, each Employer, each trustee of an Individually Designed Plan,
State Street, as trustee of the ABA Members Trusts and the Collective Trust,
ABRA and each Investment Advisor will be considered ERISA fiduciaries to the
extent that they exercise any discretionary authority or control over plan
assets.
Fiduciaries must manage ERISA plan assets consistent with the fiduciary
requirements set forth in Part 4 of Title I of ERISA, including the requirement
that (a) the investments satisfy the diversification standard for a plan set
forth in section 404(a) of ERISA, (b) the investments be prudent and be in the
best interests of a plan and its members and beneficiaries, (c) the investment
be permissible under the terms of the underlying plan and trust documents, and
(d) the plan not engage in a transaction described in section 406 of ERISA
(commonly referred to as a "prohibited transaction"), unless an exemption
applies. Therefore, each Employer must determine that the Investment Options
meet the applicable fiduciary requirements of ERISA.
In determining whether an investment is prudent for purposes of ERISA, the
appropriate fiduciary for each plan who makes investment decisions should
consider all facts and circumstances, including, without limitation, whether
the investment provides sufficient liquidity in light of the foreseeable needs
of the plan, and whether the investment is reasonably designed, as part of the
plan assets with respect to which the fiduciary has investment duties, to
further the purposes of the plan, taking into consideration the risk of loss
and the opportunity for gain or other return associated with the investment.
The assets of the Collective Trust and the Funds will be invested in accordance
with the investment policies and objectives expressed herein and each Self-
Managed Account will be invested in accordance with the investment directions
of the respective Participant, Employer or Plan trustee. None of State Street,
ABRA and the Investment Advisors has any responsibility for developing any
overall investment strategy of any Plan. In addition, under ERISA, no plan
fiduciary is liable for any loss which results from the individual investment
election of a Participant or beneficiary to the extent that a plan and a
particular transaction complies with section 404(c) of ERISA and the Department
of Labor regulations thereunder.
As a fiduciary, State Street must manage the assets of the Collective Trust
consistent with the applicable fiduciary requirements of ERISA, including the
prudent man requirement, the exclusive benefit requirement and the prohibited
transaction rules. With respect to the prohibited transaction rules, State
Street intends to rely on several prohibited transaction class exemptions. In
addition, it is contemplated that State Street and the Investment Advisors will
each meet the requirements of a "qualified professional asset manager" as
defined in Prohibited Transaction Class Exemption 84-14, issued by the
Department of Labor.
BONDING. As a fiduciary, each Employer must secure adequate bonding as
required by section 412 of ERISA for every fiduciary of the Plan and for every
person (other than for State Street personnel) who handles funds or property of
the Plan (a "Plan official"). The bond must protect the Plan against loss due
to acts of fraud or dishonesty by Plan officials. The amount of the bond is
determined at the beginning of each Plan year, and must be at least 10% of the
amount of the funds handled. The amount must, however, be at least $1,000, and
generally is not required to be more than $500,000.
ERISA SECTION 404(C)
IN GENERAL. The ABA Retirement Plan is intended to be a plan described in
section 404(c) of ERISA and the Department of Labor regulations thereunder.
Each adopting Employer intends, by adopting the ABA Retirement Plan, to have
section 404(c) of ERISA apply to the plan as so adopted. Under section 404(c)
of ERISA, a Participant (or beneficiary) who exercises control over assets in
his or her plan account generally is not deemed to be a plan fiduciary, and
persons who are otherwise plan fiduciaries, including the adopting Employer,
ABRA and State Street may be relieved of ERISA
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fiduciary liability for any loss which are the direct and necessary result of
investment instructions given by the Participant (or beneficiary). However,
such relief may not be available for investments made pursuant to the default
provisions applicable to cases where a Participant (or beneficiary) has not
made an investment election.
The Department of Labor regulations under section 404(c) of ERISA describe
the standards for determining whether a plan, and a particular transaction, is
afforded this relief. The regulations define an "ERISA Section 404(c) plan" as
an individual account plan, such as the ABA Retirement Plan, that (i) provides
participants (or beneficiaries) an opportunity to exercise control over assets
in their individual plan accounts, and (ii) provides participants (or
beneficiaries) an opportunity to choose, from a broad range of investment
alternatives, the manner in which some or all of the assets in their accounts
are invested. Set forth below is a summary of the manner in which the ABA
Retirement Plan satisfies the requirement of the regulations.
OPPORTUNITY TO EXERCISE CONTROL. The ABA Retirement Plan provides
Participants (or beneficiaries) an opportunity to give investment instructions
to a fiduciary designated by the Employer, which is State Street unless the
Employer designates another fiduciary for this purpose. Participants (or
beneficiaries) also are provided (or have the opportunity to obtain) certain
information intended to enable them to make informed decisions as to available
investment alternatives. This information includes: (i) identification and
description of the investment options available under the plan, including a
general description of the investment objectives and risk and return
characteristics of each option; (ii) identification of any investment managers
designated by the Employer; (iii) a description of plan procedures under which
Participants may give investment instructions, including limitations on
frequency or number of directions; (iv) identification of certain transaction
fees and expenses which are charged to a Participant's account; (v) copies of
prospectuses with respect to any mutual fund where a Participant's account has
no previous investment in such option; and (vi) copies of certain materials
(such as voting forms and proxy information) necessary for a Participant to
exercise pass-through voting, tender and similar rights.
Upon request, certain additional information must be provided to Participants
by the Plan fiduciary designated by the Employer (or person or persons
designated by the Plan fiduciary to act on its behalf), and the Employer must
identify the name, address and phone number of such person or persons. For an
Employer which has not designated a fiduciary other than State Street for this
purpose, requests should be made to State Street Bank and Trust Company, ABRA
Program Services, P.O. Box 9109, Boston, MA 02209-9109 or by calling the ABRA
Customer Service Line at State Street at (800) 348-2272. This information
includes: (i) a description of the annual operating expenses of each Investment
Option, such as investment management fees, administrative fees and transaction
costs, which may reduce a Participant's account, and the aggregate amount of
such expenses expressed as a percentage of net assets of the Investment Option;
(ii) copies of prospectuses, financial statements and reports and other
materials relating to Investment Options; (iii) a list of the underlying assets
of an Investment Option that holds "plan assets" (within the meaning of
Department of Labor Regulation Section 2510.3-101), and the value of each such
asset (or the proportion of the investment alternative which it comprises), and
with respect to certain fixed rate investment contracts, the name of the issuer
of the contract and the contract term and rate of return; (iv) information
concerning the value of shares or units in available Investment Options,
including their past and current investment performance; and (v) information
concerning the value of shares or units in investment options held in a
Participant's account.
The Department of Labor regulations permit fiduciaries to decline to
implement a Participant's investment instructions under certain circumstances,
for example, if the result would be a transaction prohibited under ERISA or the
Internal Revenue Code, or would generate taxable income to the plan. State
Street, as plan trustee, may, therefore, decline to follow the investment
instructions of a
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Participant under certain circumstances. It is generally not anticipated,
however, that the exercise of investment elections allowed under the ABA
Retirement Plan, including Self-Managed Accounts, would result in such
circumstances.
RANGE OF INVESTMENT ALTERNATIVES. The Department of Labor regulations require
a plan to offer at least three "core" investment alternatives which (i) are
diversified as to type of investment; (ii) have materially different risk and
return characteristics; (iii) in the aggregate enable a Participant to achieve
an investment portfolio with appropriate aggregate risk and return
characteristics; and (iv) tend to minimize through diversification the overall
risk to Participants' portfolios. The Stable Asset Return Fund, the Bond Fund,
the Balanced Fund, the Value Equity Fund, the Growth Equity Fund, the Index
Fund, the Aggressive Equity Fund and the International Equity Fund are intended
to constitute "core" investment options. See "Stable Asset Return Fund,"
"Intermediate Bond Fund," "Balanced Fund," "Value Equity Fund," "Growth Equity
Fund," "Index Equity Fund," "Aggressive Equity Fund" and "International Equity
Fund." A plan also may offer additional "non-core" investment options, such as
Insurance Investment Contracts and, if the Employer has so provided, the Self-
Managed Account. The relief from fiduciary liability provided by section 404(c)
of ERISA is applicable to all investment elections under a plan, including any
elections to invest in any of the "non-core" investments described above.
The Department of Labor regulations require a plan to allow Participants to
transfer among the "core" investment options at least once during any three-
month period. The ABA Retirement Plan generally permits Participants to make
investment elections and make transfers among investment options on a daily
basis.
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REGULATION OF COLLECTIVE TRUST
Although Funds and the Structured Portfolio Service are similar in certain
respects to registered open-end management investment companies (commonly
referred to as "mutual funds"), Funds and the Structured Portfolio Service
under the Collective Trust are exempt from registration under the Investment
Company Act because they are "collective trust funds" maintained by a bank
consisting solely of assets of the Plans. For this reason, the Funds and the
Structured Portfolio Service are not subject to compliance with the
requirements of the Investment Company Act that apply to mutual funds.
A typical mutual fund is operated by a board of trustees through contractual
arrangements with one or more investment advisers, administrators, custodians
and similar service providers. Under the Investment Company Act, a mutual fund
is required to provide shareholders with voting rights with respect to a
variety of matters, including the election of the mutual fund's trustees, the
approval of the fund's contracts with its investment advisers and the approval
of changes to the mutual fund's fundamental investment policies.
Unlike the typical mutual fund, the Collective Trust is operated by a single
corporate trustee (State Street), which is responsible for all aspects of each
Fund and the Structured Portfolio Service, including portfolio management,
administration and custody. Under the Collective Trust, Investors have no
voting rights with respect to the selection of State Street, as trustee, the
selection of the Fund's Investment Advisors or changes to any investment policy
of a Fund and the Structured Portfolio Service. State Street may make
additional Funds available as Investment Options from time to time subject to
the approval of ABRA, and State Street may terminate or amend the terms of the
Funds from time to time upon notice to, and in consultation with, ABRA. On
behalf of the Investors, however, ABRA will exercise independent oversight of
State Street with respect to certain aspects of the Program. In particular,
none of the fees charged by State Street or the Investment Advisors may be
changed without the prior approval of ABRA. For additional information
concerning the role of ABRA under the Program, see "American Bar Retirement
Association."
Under the Investment Company Act, the investment advisor to a mutual fund and
its affiliates are prohibited from engaging in principal transactions with the
mutual fund. Although these provisions of the Investment Company Act do not
apply to the Funds and the Structured Portfolio Service, similar prohibitions
on self-dealing are applicable to State Street and each Investment Advisor
under ERISA.
A mutual fund is required to issue "redeemable securities" within the meaning
of the Investment Company Act. To satisfy this requirement, a mutual fund may
not invest more than 10% of its assets in illiquid securities and may not
suspend or postpone the redemption of shares for more than seven days, except
under certain extraordinary circumstances. Similar provisions have been adopted
with respect to each of the Funds, except the Stable Asset Return Fund, which
may invest more than 10% of its assets in illiquid securities and may
temporarily suspend or postpone withdrawals or transfers if there are
insufficient liquid assets to satisfy withdrawal or transfer requests. For
additional information concerning the risks associated with an investment in
the Stable Asset Return Fund, see "Stable Asset Return Fund."
The Stable Asset Return Fund relies on Amortized Cost Pricing as the method
for valuing portfolio securities of the Fund. Unlike a mutual fund, however,
the Fund and the Structured Portfolio Service are not subject to Rule 2a-7
under the Investment Company Act, which requires a mutual fund, as a condition
to the use of Amortized Cost Pricing, to satisfy certain quality
diversification and maturity standards with respect to its portfolio. For a
more complete description of the risks associated with the use of Amortized
Cost Pricing, see "Stable Asset Return Fund--Valuation of Units."
Finally, because the Funds and the Structured Portfolio Service are not
registered under the Investment Company Act, the Funds and the Structured
Portfolio Service are not subject to the periodic reporting requirements of the
Investment Company Act and the operations of the Funds and the Structured
Portfolio Service are not subject to inspection by the Securities and Exchange
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Commission. State Street, however, is subject to supervision and examination by
the Board of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation and the Massachusetts Commissioner of Banks. Furthermore,
State Street is required to comply with the provisions of ERISA, to the extent
applicable, in connection with the administration of the Program.
FEDERAL INCOME TAX CONSIDERATIONS
The provisions of the Internal Revenue Code relating to contributions and
distributions under qualified retirement plans are outlined briefly below. For
purposes of this outline it is assumed that Participants are not participants
in any other qualified retirement plan. Provisions of the Internal Revenue Code
that govern participation, vesting, funding or prohibited transactions are
generally not discussed herein, although some information on these subjects
appears elsewhere. There is also no discussion herein of the reporting and
disclosure or fiduciary requirements of ERISA. In addition, there is no
discussion of the impact, if any, of state laws that may apply. For information
on these matters, Employers, Plan trustees and Participants should consult
their tax advisors.
An Eligible Employer's adoption of the Pooled Trust does not require IRS
approval. If an Eligible Employer adopts an ABA Members Plan, the Eligible
Employer will not need IRS approval unless the Eligible Employer adopts certain
provisions or maintains another plan. State Street will inform Eligible
Employers whether they need to submit their plan to the IRS for approval. If
such a submission is required, Eligible Employers will have to pay the IRS a
user fee, which is currently $125. This fee is subject to change at the
discretion of the IRS.
CONTRIBUTIONS
Employer contributions to a Plan are deductible in the fiscal year for which
they are made if the limitations of section 404 of the Internal Revenue Code
are met. As a general rule, Employer contributions must be made for any fiscal
year by the due date (including extensions) for filing the Employer's federal
income tax return for that fiscal year. However, Participants' salary deferral
contributions under a 401(k) plan and Participants' voluntary after-tax
contributions must be contributed by the Employer as soon as practicable after
the payroll period for which the deferral or contribution is made and within
the time specified by applicable law.
An Employer that has adopted the ABA Retirement Plan as a profit sharing plan
makes contributions in discretionary amounts to be determined annually. An
individually designed profit sharing plan may provide for contributions that
are either discretionary or fixed by a formula contained in the Plan. The
aggregate Employer contribution to the Plan, including Participants' salary
deferrals under a 401(k) arrangement, is limited to 15% of all Participants'
taxable compensation for the plan year.
An Employer that has adopted the ABA Retirement Plan as a defined
contribution pension plan must contribute a percentage of each Participant's
compensation as specified by the Employer in the participation agreement. An
Employer that has adopted the ABA Retirement Plan as a target benefit pension
plan must contribute an amount actuarially determined necessary to fund the
benefit targeted at normal retirement age. In either a defined contribution
pension plan or a target benefit plan, the Employer deductible contribution is
limited by the formula specified in the participation agreement.
Contributions on behalf of each Participant in one or more Plans established
under the ABA Retirement Plan are limited to the lesser of $30,000 and 25% of
taxable compensation (excluding, in the case of self-employed persons, all
deductible plan contributions, other than 401(k) salary deferral contributions,
and one-half of self-employment (SECA) taxes paid). The Participant's after-tax
employee contributions, and salary deferrals under a 401(k) plan and
forfeitures are taken into account for purposes of applying this limitation.
Employer contributions under the ABA Retirement Plan or an individually
designed defined contribution plan that are in excess of the foregoing limits
are not deductible.
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A Participant's deferrals under a 401(k) plan may not exceed $7,000 as
adjusted for inflation ($9,500 for 1997) when combined with his elective
contributions to simplified pensions (SEPs) and tax deferred (section 403(b))
annuities and contributions deductible by the employee under a trust described
under section 501(c)(18) of the Internal Revenue Code.
Under the ABA Defined Benefit Plan or any individually designed defined
benefit pension plan, the Plan's actuary determines the amount of the annual
contribution. If the Employer adopts both the ABA Defined Benefit Plan and the
ABA Retirement Plan (or any other combination of defined benefit and defined
contribution plans), its deductible contribution is limited to 25% of all
Participants' taxable compensation or the amount necessary to meet the minimum
funding standard under the defined benefit plan, whichever is greater.
If the Employer contributes more to the Plan than is deductible under the
above rules, the Employer may be liable for a 10% penalty tax on that non-
deductible amount and may risk disqualifying the plan.
Elective deferrals to a 401(k) plan are subject to applicable FICA (social
security) and FUTA (unemployment) taxes.
DISTRIBUTIONS
Income or gains on contributions are generally not subject to federal income
tax until benefits are distributed to the Participant or the Participant's
beneficiary. Generally, distributions in excess of an employee's after-tax
contributions are taxed as ordinary income to the recipient.
LUMP SUM PAYMENT. If a Participant's benefits are paid as a lump sum
distribution after the Participant participates in a Plan for at least five
taxable years, the recipient may be able to use five-year income averaging.
Under this method, the lump sum distribution is taxed in the year of receipt as
though it were the recipient's only income and were received over a five-year
period. To qualify for five-year income averaging, the distribution must
consist of the Participant's entire interest in the Plan and must be made in
one taxable year of the recipient after attainment of age 59 1/2. Five-year
income averaging is available only for one lump sum distribution, and only
after age 59 1/2. Through 1991, a recipient may elect capital gain treatment
with respect to a percentage of the portion of the Participant's lump sum
distribution attributable to pre-1974 contributions. Note: Effective for tax
years beginning after December 31, 1999, five-year income averaging is
repealed.
If a Participant was born before 1936, the Participant may elect to have
special rules apply to one lump sum distribution provided it is made after
attainment of age 59 1/2 or on account of death, disability (if the Participant
is self-employed), or separation from service if the Participant is an
employee. Under these special rules, a Participant may elect either ten-year
income averaging using 1986 rates or five-year income averaging using then
current rates. Furthermore, a Participant may elect separately to pay tax on
the portion of the Participant's distribution attributable to pre-1974
contributions at a flat 20% rate.
Any part of the taxable portion of a Participant's account balance or benefit
may qualify for a tax-deferred rollover into an IRA or another employer's
qualified plan that accepts rollovers if the rollover is completed within 60
days, unless the distribution is one of a series of substantially equal
payments (such as annuity payments or installments) made (1) over the life (or
life expectancy) of the Participant or the joint lives (or joint life
expectancies) of the Participant and his beneficiary, or (2) over a specified
period of 10 years or more. In addition, installment payments from a Plan
required to be made because a Participant has attained age 70 1/2 are not
eligible for rollover. Amounts that are rolled over into an IRA cannot
generally be withdrawn without penalty before the Participant reaches age 59
1/2 and any such withdrawals will be taxable as ordinary income and will be
ineligible for the preferential five-year averaging for lump-sum distributions.
A rollover can be made "directly" from the plans to an IRA or to another
employer's qualified plan that accepts rollovers. The amount of any eligible
rollover distribution that is not transferred in a "direct" rollover is subject
to mandatory 20%
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withholding. Additionally, any amount that is not rolled over is includible in
the Participant's gross income and may be subject to the 10% additional income
tax on premature distributions described below.
ANNUITY PAYMENTS AND MONTHLY INSTALLMENTS. Each annuity or installment
payment a Participant receives is treated as ordinary income except where the
Participant has a "cost basis" in the benefit. A Participant's cost basis is
equal to the amount of the Participant's voluntary after-tax contributions,
plus any Employer contributions the Participant was required to include in
gross income in prior years. A portion of each payment a Participant receives
will be excluded from gross income to reflect the recovery of the Participant's
cost basis.
IN-SERVICE WITHDRAWALS OF AFTER-TAX CONTRIBUTIONS. The portion of each in-
service withdrawal of voluntary after-tax employee contributions that is
attributable to earnings will be included in a Participant's gross income.
Amounts contributed before January 1, 1987 to employer plans that on May 5,
1986 permitted active employees to withdraw their after-tax contributions are
taxable upon withdrawal only to the extent that they exceed the amount of the
Participant's cost basis. Amounts included in gross income under this rule may
also be subject to the additional 10% income tax on premature distributions
described below.
PREMATURE DISTRIBUTIONS. A Participant may be liable for an additional 10%
income tax on all taxable amounts distributed before age 59 1/2 unless the
distribution falls within a specified exception or is rolled over into an IRA
or other qualified plan.
The exceptions to the penalty tax include (a) distributions made on account
of the Participant's death or disability, (b) distributions in the form of a
life annuity or installments over the Participant's life expectancy (or the
joint life expectancy of the Participant and the Participant's beneficiary),
(c) distributions due to separation from active service after age 55 and (d)
distributions used to pay deductible medical expenses.
EXCESS DISTRIBUTIONS. For tax years beginning on and after January 1, 2000, a
Participant may be liable for a 15% excise tax on all distributions in excess
of a threshold amount.
EXCESS ACCUMULATION. The estate of a Participant may be liable for a 15%
additional estate tax if upon the Participant's death, the aggregate amounts
accumulated on the Participant's behalf in qualified plans, IRAs and tax
deferred annuities exceed a threshold amount which varies depending on the
Participant's age and applicable interest rate in effect at death. The estate
of a Participant who made a special grandfather election on his 1987 or 1988
Federal income tax return may be subject to a different threshold.
FEDERAL INCOME TAX WITHHOLDING
Under the ABA Members Plans, federal income tax will be withheld from all
taxable payments unless, where permitted, the recipient elects otherwise. The
rate of withholding will depend on the type and, in certain cases, the amount
of the distribution. A person receiving periodic monthly payments of less than
$1,200 in 1997 will generally be exempt from withholding, although he may elect
to have tax withheld. A person receiving monthly payments of $1,200 or more
will generally be subject to withholding as if the benefit payments were wages,
unless he elects not to have tax withheld. Where a person whose monthly
payments are $1,200 or more makes no withholding election whatsoever, tax will
be withheld as if the person were married and claiming three withholding
allowances. A special withholding table may be used to determine the
withholding liability of a periodic payment. Although the amount of any
periodic payment that will be withheld is determined as if the periodic payment
were a payment of wages to the Participant for a payroll period, the amount to
be withheld is calculated separately from any amounts that are actually paid to
the Participant as
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wages for the same period. Non-periodic distributions from a Plan will be
subject to mandatory withholding at the rate of 20%, unless the distribution is
transferred directly to another employer's qualified plan or to an IRA. A
Participant will receive additional information and appropriate forms for
withholding when he requests the necessary forms for a distribution or
withdrawal.
Under an Individually Designed Plan that uses the Pooled Trust for investment
only, State Street will pay the full amount of the distribution to the Plan's
trustee. The Plan's trustee is responsible for withholding federal income tax
upon distribution to the Participant.
TAXATION OF COLLECTIVE TRUST
The Collective Trust is a tax-exempt group trust established pursuant to
Revenue Ruling 81-100, 1981-1 C.B. 326. State Street has received from the IRS
on behalf of the Collective Trust a favorable determination letter with respect
to the tax-exempt status of the Collective Trust.
As a tax-exempt group trust, the Collective Trust is not subject to federal
income tax unless the Collective Trust generates unrelated business taxable
income as defined in the Internal Revenue Code ("UBTI"). It is the policy of
State Street not to invest any portion of the assets of the Collective Trust in
a manner that will generate UBTI. However, if State Street determines that a
proposed investment cannot be structured to avoid UBTI and that the projected
after-tax return on that investment is sufficient to justify the making of such
investment, then State Street may elect to make that investment. In the
unlikely event that any UBTI is incurred by the Collective Trust, it is
anticipated that any tax thereon would be reported and paid by the Collective
Trust as an expense of the Collective Trust.
LEGAL MATTERS
The validity of the issuance of the Units offered hereby has been passed upon
for the Collective Trust by Paul, Weiss, Rifkind, Wharton & Garrison, New York,
New York. Paul Weiss, Rifkind, Wharton & Garrison will rely, as to matters of
Massachusetts law, upon the opinion of Goodwin, Procter & Hoar LLP, Boston,
Massachusetts.
EXPERTS
The financial statements of each of the Funds, appearing in this Prospectus
have been so included in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
accounting and auditing.
AVAILABLE INFORMATION
The Collective Trust is subject to the informational requirements of the
Exchange Act and in accordance therewith, it files reports and other
information with the Commission in Washington, D.C.
Registration Statements on Form S-1, including amendments thereto, relating
to the Units offered hereby have been filed by the Collective Trust with the
Commission. This Prospectus does not contain all the information set forth in
the Registration Statements to which they relate and the exhibits and schedules
thereto. Statements contained in this Prospectus as to the contents of any
contract or any other document referred to are not necessarily complete, and in
each instance reference is made to the copy of such contract or other document
filed or incorporated by reference as an exhibit to the Registration
Statements, each such statement being qualified in all respects by such
reference. For further information with respect to the Collective Trust and
State Street and the Units offered by the Prospectus reference is hereby made
to the Registration Statements, exhibits and schedules.
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The Collective Trust's reports and other information filed in accordance with
the Exchange Act and the Registrations Statements and exhibits and schedules
thereto may be inspected, without charge, and copied at at the public reference
facility maintained at the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and on request, at the Commission's
regional offices at 7 World Trade Center, New York, New York 10048 and the
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission also maintains a site on the World
Wide Web that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission
(including the Collective Trust). The address of such site is
http://www.sec.gov.
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GLOSSARY OF TERMS USED IN PROSPECTUS
ABA--American Bar Association.
ABA DEFINED BENEFIT PLAN--The American Bar Association Members Defined Benefit
Plan, a defined benefit master plan.
ABA MEMBERS PLANS--The ABA Defined Benefit Plan and the ABA Retirement Plan,
collectively.
ABA MEMBERS TRUSTS--The Master Trust and the Pooled Trust, collectively.
ABA RETIREMENT PLAN--The American Bar Association Members Retirement Plan, a
defined contribution master plan.
ABRA--The American Bar Retirement Association, an Illinois not-for-profit
corporation established by the ABA to sponsor retirement programs for its
members and members of certain affiliated organizations.
ADRS--American Depository Receipts, which are securities representing interests
in securities issued by foreign corporations that are traded in U.S. dollars on
U.S. markets.
AGGREGATE RECORDKEEPING PLANS--Any Plan for which State Street keeps records on
an aggregate Plan basis, but does not keep records of separate accounts of
Participants under the Plan.
AGGRESSIVE EQUITY FUND--A Fund under the Collective Trust.
AMORTIZED COST PRICING--A method of valuing debt securities in which the
security is valued initially at its cost and, thereafter, assuming a constant
amortization to maturity of any discount or premium, regardless of the impact
on fluctuating interest rates on the market value of the security.
BALANCED FUND--A Fund under the Collective Trust.
BASE PLAN--The Investment Options, including the Equitable Real Estate Account
but excluding the Self-Managed Account, to which a Participant or Employer has
allocated assets.
BGI--BZW Barclay's Global Investors, anticipated future investment advisor to
the index portion of the Bond Fund.
BOND FUND--A Fund under the Collective Trust.
BOND INDEX FUND--the MasterWorks Bond Index Fund, a registered investment
company in which the Bond Fund invests.
BUSINESS DAY--Any day State Street is open and the New York Stock Exchange is
open for trading.
CAPITAL GUARDIAN--Capital Guardian Trust Company, an Investment Advisor to the
Growth Equity Fund and Aggressive Equity Fund.
COLLECTIVE TRUST--The American Bar Association Members/State Street Collective
Trust, a collective trust established and maintained by State Street for the
purpose of providing Investment Options to Investors under the Program.
COLUMBUS CIRCLE--Columbus Circle Investors, an Investment Advisor to the Growth
Equity Fund.
COMMISSION--The U.S. Securities and Exchange Commission.
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ELIGIBLE EMPLOYER--A law practice, bar association or other organization that
is eligible to adopt the Program.
ELIGIBLE INVESTORS--Participants in Plans established under the ABA Retirement
Plan, Employers that have established a Plan under the ABA Defined Benefit Plan
and Plan trustees under certain Individually Designed Plans, provided that in
such case the Employer or Plan trustee establishing such Plan has designated
the Self-Managed Account as an available Investment Option for its Plan.
EMPLOYER--An employer that has adopted an ABA Members Plan or has caused the
Pooled Trust to be adopted as part of its Individually Designed Plan. In some
contexts, Employer may also refer to the trustee of a trust established
pursuant to an Individually Designed Plan.
EQUITABLE LIFE--The Equitable Life Assurance Society of The United States, a
New York stock life insurance company.
EQUITABLE REAL ESTATE ACCOUNT--An Equitable Life separate account offered by
Equitable Life, as an Investment Option under the Program through December 31,
1991.
ERISA--The Employee Retirement Income Security Act of 1974, as amended.
FUNDS--Collective investment funds under the Collective Trust.
GIC--A guaranteed investment contract issued by an insurance company.
GROWTH EQUITY FUND--A Fund under the Collective Trust.
INDEX EQUITY FUND--A Fund under the Collective Trust.
INDIVIDUAL MASTER PLAN--A Plan adopted by an Eligible Employer under either the
ABA Defined Benefit Plan or the ABA Retirement Plan.
INDIVIDUALLY DESIGNED PLAN--A qualified individual employee pension or profit
sharing plan adopted by an Eligible Employer, other than an Individual Master
Plan.
INITIAL BOND FUND INVESTMENT VEHICLES--The Bond Index Fund and the Total Return
Fund.
INITIAL INVESTMENT VEHICLES--The Bond Index Fund, the Total Return Fund and the
T. Rowe International Fund.
INSURANCE INVESTMENT CONTRACT--Investment contracts issued by insurance
companies (commonly known as "guaranteed investment contracts or "GICs") of
three-year or five-year maturities and available as Investment Options under
the Program.
INTERNAL REVENUE CODE--The Internal Revenue Code of 1986, as amended.
INTERNATIONAL EQUITY FUND--A Fund under the Collective Trust.
INVESTMENT ADVISOR--A person or entity appointed by State Street to make
recommendations regarding the acquisition and disposition of assets in a Fund.
INVESTMENT COMPANY ACT--The Investment Company Act of 1940.
INVESTMENT CONTRACTS--Investment contracts or funding agreements issued by
insurance companies or investment contracts or certificates of deposit issued
by banks or trust companies.
INVESTMENT OPTION--Any investment vehicle to which assets contributed under the
Program may be allocated.
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INVESTMENT PERIOD--The specified period during which contributions are accepted
under the Program for the next purchase of designated Insurance Investment
Contracts.
INVESTOR--The person vested with the responsibility of determining the
allocation of the assets of a Plan among the Investment Options available under
the Program. The terms of each Plan determine the identity of the Investor for
the assets of the Plan or portion thereof.
IRS--Internal Revenue Service.
LB BOND INDEX--The Lehman Brothers Government/Corporate Bond Index.
LINCOLN CAPITAL--Lincoln Capital Management Company, an Investment Advisor to
the Balanced Fund.
MASTER TRUST--The American Bar Association Members Retirement Trust, which
holds assets contributed to the Program by Employers and Participants under the
Individual Master Plans.
MILLER, ANDERSON & SHERRERD--An Investment Advisor to the Balanced Fund.
MOODY'S--Moody's Investors Service, Inc.
NRSRO--Nationally recognized statistical rating organization.
PARTICIPANT--Employees (together with their beneficiaries where the context so
requires) of Employers and self-employed individuals who have adopted the
Program for their practices.
PIMCO--Pacific Investment Management Company, anticipated future Investment
Advisor to the actively managed portion of the Bond Fund.
PLAN--Either an Individual Master Plan or an Individually Designed Plan.
PLAN TRUSTEE--The trustee of an Individually Designed Plan.
POOLED TRUST--The American Bar Association Members Pooled Trust for Retirement
Plans, which holds assets contributed to the Program by Individually Designed
Plans.
PRICE-FLEMING--Rowe Price-Fleming International, Inc., anticipated future
Investment Advisor to the International Equity Fund.
PROGRAM--The American Bar Association Members Retirement Program.
RCM CAPITAL--RCM Capital Management, an Investment Advisor to the Growth Equity
Fund.
SANFORD BERNSTEIN--Sanford C. Bernstein & Co., Inc., an Investment Advisor to
the Value Equity Fund.
S&P--Standard & Poor's Corporation.
S&P 500 INDEX--Standard & Poor's 500 Composite Stock Price Index.
SECURITIES ACT--The Securities Act of 1933.
SELF-MANAGED ACCOUNT--An Investment Option through which a Participant may
direct the purchase and sale of publicly traded debt and equity securities and
shares of mutual funds for the Participant's individual account.
90
<PAGE>
SHORT TERM INVESTMENT PRODUCTS--U.S. Government Obligations, notes, bonds and
similar debt instruments of corporations, commercial paper, certificate of
deposit and time deposits, bankers' acceptances, variable and indexed interest
notes and repurchase agreements.
SIT ASSOCIATES--Sit Investment Associates, Inc., an Investment Advisor to the
Aggressive Equity Fund.
STABLE ASSET RETURN FUND--A Fund under the Collective Trust.
STATE STREET--State Street Bank and Trust Company, a trust company organized
under the laws of The Commonwealth of Massachusetts that serves as trustee of
the ABA Members Trusts and the Collective Trust and as administrator of the
Program.
STRUCTURED PORTFOLIO SERVICE--three portfolios established under the Collective
Trust that offer conservative, moderate and aggressive allocations,
respectively, of assets among the Funds described herein.
SWEEP ACCOUNT--An account established for a Participant with a mutual fund or
other short-term investment fund for the temporary investment of excess cash
held in the Participant's Self-Managed Account.
T. ROWE INTERNATIONAL FUND--The T. Rowe Price International Stock Fund, a
registered investment company in which the International Equity Fund invests.
TOTAL RETURN FUND--The PIMCO Total Return Fund, a registered investment company
in which the Bond Fund invests.
UNIT--A pro rata beneficial interest in a Fund or a portfolio of the Structured
Portfolio Service under the Collective Trust.
UNIT VALUe--The dollar value of a Unit of a Fund or of an interest in a
portfolio of the Structured Portfolio Service.
U.S. GOVERNMENT OBLIGATIONS--Obligations of the United States and the agencies
and instrumentalities thereof.
VALUE EQUITY FUND--A Fund under the Collective Trust.
VRU--The Voice Response Unit, which may be reached by dialing (800) 348-2272.
WITHDRAWAL SEQUENCE--The order in which Investment Options are chosen for the
withdrawal of assets to pay fees under the Program.
91
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
Report of Independent Accountants....................................... F-3
Financial Statements:
AGGRESSIVE EQUITY FUND
Statement of Assets and Liabilities................................... F-4
Statement of Operations............................................... F-5
Statement of Changes in Net Assets.................................... F-6
Selected Per-Unit Data and Ratios..................................... F-7
Schedule of Investments............................................... F-8
BALANCED FUND
Statement of Assets and Liabilities................................... F-17
Statement of Operations............................................... F-18
Statement of Changes in Net Assets.................................... F-19
Selected Per-Unit Data and Ratios..................................... F-20
Schedule of Investments............................................... F-21
GROWTH EQUITY FUND
Statement of Assets and Liabilities................................... F-36
Statement of Operations............................................... F-37
Statement of Changes in Net Assets.................................... F-38
Selected Per-Unit Data and Ratios..................................... F-39
Schedule of Investments............................................... F-40
STABLE ASSET RETURN FUND
Statement of Assets and Liabilities................................... F-49
Statement of Operations............................................... F-50
Statement of Changes in Net Assets.................................... F-51
Selected Per-Unit Data and Ratios..................................... F-52
Schedule of Investments............................................... F-53
INDEX EQUITY FUND
Statement of Assets and Liabilities................................... F-55
Statement of Operations............................................... F-56
Statement of Changes in Net Assets.................................... F-57
Selected Per-Unit Data and Ratios..................................... F-58
INTERMEDIATE BOND FUND
Statement of Assets and Liabilities................................... F-59
Statement of Operations............................................... F-60
Statement of Changes in Net Assets.................................... F-61
Selected Per-Unit Data and Ratios..................................... F-62
</TABLE>
F-1
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
INTERNATIONAL EQUITY FUND
Statement of Assets and Liabilities................................... F-63
Statement of Operations............................................... F-64
Statement of Changes in Net Assets.................................... F-65
Selected Per-Unit Data and Ratios..................................... F-66
VALUE EQUITY FUND
Statement of Assets and Liabilities................................... F-67
Statement of Operations............................................... F-68
Statement of Changes in Net Assets.................................... F-69
Selected Per-Unit Data and Ratios..................................... F-70
Schedule of Investments............................................... F-71
STRUCTURED PORTFOLIO SERVICE
(CONSERVATIVE, MODERATE, AGGRESSIVE)
Statement of Assets and Liabilities................................... F-80
Statement of Operations............................................... F-81
Statement of Changes in Net Assets.................................... F-82
Selected Per-Unit Data and Ratios..................................... F-84
Notes to Financial Statements......................................... F-86
</TABLE>
F-2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustee and Unitholders of theAmerican Bar Association Members/State
Street Collective Trust
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the selected per-unit data and
ratios present fairly, in all material respects, the financial position of the
Aggressive Equity Fund, Balanced Fund, Growth Equity Fund, Stable Asset Return
Fund, Index Equity Fund, Intermediate Bond Fund, International Equity Fund,
Value Equity Fund, Conservative Structured Portfolio Service, Moderate
Structured Portfolio Service and Aggressive Structured Portfolio Service
constituting the American Bar Association Members/State Street Collective Trust
(hereafter referred to as the "Trust") at December 31, 1996, and the results of
each of their operations, the changes in each of their net assets and the
selected per-unit data and ratios for the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
selected per-unit data and ratios (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at December 31, 1996 by correspondence with the custodian and
brokers and the application of alternative procedures where confirmations from
brokers were not received, provide a reasonable basis for the opinion expressed
above.
Price Waterhouse LLP
Boston, Massachusetts
March 13, 1997
F-3
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
AGGRESSIVE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $210,446,953)......................... $276,817,407
Cash.............................................................. 506
Receivable for investments sold................................... 708,938
Dividends and interest receivable................................. 207,092
Unamortized organizational costs.................................. 130,150
------------
Total Assets.................................................... 277,864,093
------------
LIABILITIES
Payable for investments purchased................................. 1,483,352
Payable for fund units redeemed................................... 61,261
Investment advisory fee payable................................... 283,259
State Street Bank and Trust Co.--program fee payable.............. 86,368
Trustee, management and administration fees payable............... 17,897
American Bar Retirement Association--program fee payable.......... 13,220
Other accruals.................................................... 3,268
------------
Total Liabilities............................................... 1,948,625
------------
NET ASSETS (equivalent to $41.01 per unit based on 6,727,703 units
outstanding)..................................................... $275,915,468
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
AGGRESSIVE EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
Investment Income
Dividends (net of foreign tax expense of $787)................... $ 1,506,725
Interest......................................................... 900,043
-----------
Total investment income........................................ 2,406,768
-----------
Expenses
Investment advisory fee.......................................... 1,123,524
State Street Bank and Trust Co.--program fee..................... 935,218
Trustee, management and administration fees...................... 195,990
American Bar Retirement Association--program fee................. 137,248
Amortization of organization costs............................... 92,875
Reports to unitholders........................................... 22,678
Legal and audit fees............................................. 59,699
-----------
Total expenses................................................. 2,567,232
-----------
Net investment loss................................................ (160,464)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain................................................ 24,233,418
Change in net unrealized appreciation............................ 24,880,200
-----------
Net realized and unrealized gain on investments................ 49,113,618
-----------
Net increase in net assets resulting from operations............... $48,953,154
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
AGGRESSIVE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
YEAR ENDED
DECEMBER 31,
--------------------------
1996 1995
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss)..................... $ (160,464) $ 21,542
Net realized gain on investments................. 24,233,418 24,251,662
Net change in unrealized appreciation on
investments..................................... 24,880,200 25,668,269
------------ ------------
Net increase in net assets resulting from
operations...................................... 48,953,154 49,941,473
------------ ------------
FROM UNITHOLDER TRANSACTIONS
Proceeds from units issued....................... 35,023,922 22,582,789
Cost of units redeemed........................... (22,600,318) (21,663,086)
------------ ------------
Net increase in net assets resulting from
unitholder transactions......................... 12,423,604 919,703
------------ ------------
Net increase in net assets..................... 61,376,758 50,861,176
NET ASSETS
Beginning of year................................ 214,538,710 163,677,534
------------ ------------
End of year...................................... $275,915,468 $214,538,710
============ ============
NUMBER OF UNITS
Outstanding--beginning of year................... 6,390,559 6,352,921
Sold........................................... 937,668 762,699
Redeemed....................................... (600,524) (725,061)
------------ ------------
Outstanding--end of year......................... 6,727,703 6,390,559
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
AGGRESSIVE EQUITY FUND
SELECTED PER-UNIT DATA AND RATIOS
(For a unit outstanding throughout the period)*
<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 2, 1992
FOR THE YEAR ENDED (COMMENCEMENT
DECEMBER 31, OF OPERATIONS)
----------------------------------------- TO DECEMBER 31,
1996 1995 1994 1993 1992
-------- -------- -------- -------- ---------------
<S> <C> <C> <C> <C> <C>
Investment income....... $ .36 $ .32 $ .28 $ .25 $ .30
Expenses................ (.39) (.32) (.28) (.28) (.26)
-------- -------- -------- -------- --------
Net investment income
(loss)................. (.03) -- -- (.03) .04
Net realized and
unrealized gain (loss)
on investments......... 7.47 7.81 (1.00) 3.60 1.43
-------- -------- -------- -------- --------
Net increase (decrease)
in unit value.......... 7.44 7.81 (1.00) 3.57 1.47
Net asset value at
beginning of period.... 33.57 25.76 26.76 23.19 21.72
-------- -------- -------- -------- --------
Net asset value at end
of period.............. $ 41.01 $ 33.57 $ 25.76 $ 26.76 $ 23.19
======== ======== ======== ======== ========
Ratio of expenses to
average net assets..... 1.04 % 1.10 % 1.10 % 1.15 % 1.25 %
Ratio of net investment
income (loss) to
average net assets..... (.06)% .01 % .02 % (.12)% .17 %
Portfolio turnover...... 48 % 63 % 48 % 42 % 43 %
Total return............ 22.16 % 30.32 % (3.74)% 15.39 % 6.77 %
Net assets at end of
period (in thousands).. $275,915 $214,539 $163,678 $153,465 $116,426
</TABLE>
- --------
* Calculations prepared using the monthly average number of units outstanding
during the period.
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
AGGRESSIVE EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCKS (95.6%)
BASIC INDUSTRIES (3.0%)
CHEMICALS
IMC Global Inc. ....................................... 33,500 $ 1,310,688
OM Group Inc. ......................................... 42,000 1,134,000
R.P.M. Inc. Ohio....................................... 74,875 1,272,875
Scotts Co.*............................................ 40,000 795,000
Valspar Corp. ......................................... 18,000 1,019,250
------------
5,531,813
------------
MINING
Oil Dri Corp. Amer. ................................... 32,000 480,000
Pittston Co. .......................................... 50,000 1,000,000
------------
1,480,000
------------
PAPER
Pentair Inc. .......................................... 41,500 1,338,375
------------
TOTAL BASIC INDUSTRIES................................. 8,350,188
------------
CAPITAL GOODS (4.6%)
AGRICULTURAL MACHINERY
Lindsay Mfg Co. ....................................... 28,650 1,339,388
------------
ELECTRICAL EQUIPMENT
ASM Lithography Hldg*.................................. 30,000 1,494,375
Novellus Sys Inc.*..................................... 37,000 2,004,938
------------
3,499,313
------------
INDUSTRIAL MACHINERY
Crane Co. ............................................. 69,900 2,027,100
Integrated Process Equip Corp.*........................ 45,000 810,000
NN Ball & Roller Inc. ................................. 51,700 788,425
Silicon Vy Group Inc.*................................. 75,000 1,509,375
------------
5,134,900
------------
POLLUTION CONTROL
Air & Water Tech Corp., Class A*....................... 86,200 495,650
USA Waste Svcs Inc.*................................... 30,400 969,000
Waste Mgmt Int'l. PLC ADR***........................... 150,900 1,188,338
------------
2,652,988
------------
TOTAL CAPITAL GOODS.................................... 12,626,589
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
AGGRESSIVE EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
CONSUMER BASICS (9.7%)
DRUGS AND HEALTH CARE
Apria Healthcare Group Inc.*........................... 30,000 $ 562,500
Biogen Inc.*........................................... 83,000 3,216,250
Cardiac Pathways Corp.*................................ 8,000 95,000
Cephalon Inc.*......................................... 86,000 1,763,000
Elan PLC ADR***........................................ 102,000 3,391,500
FHP International Corp.*............................... 7,200 267,300
Gilead Sciences Inc.*.................................. 56,500 1,412,500
Healthsouth Corp.*..................................... 113,000 4,364,625
Immune Response Corp. Del.*............................ 137,700 1,136,025
Millenium Pharmaceuticals Inc.*........................ 26,600 462,175
Oxford Health Plans Inc.*.............................. 91,000 5,329,188
Physio Control Int'l. Corp.*........................... 54,700 1,230,750
Ultratech Stepper Inc.*................................ 59,800 1,420,250
------------
24,651,063
------------
FOOD AND BEVERAGES
Ben & Jerry's Homemade Inc.*........................... 50,000 543,750
Thorn Apple Vy Inc.*................................... 60,000 795,000
------------
1,338,750
------------
MISCELLANEOUS
Urocor Inc.*........................................... 79,000 755,438
------------
TOTAL CONSUMER BASICS.................................. 26,745,251
------------
CONSUMER DURABLE GOODS (3.6%)
AUTO PARTS
Standard Prods Co. .................................... 34,400 877,200
Walbro Corp. .......................................... 42,000 766,500
------------
1,643,700
------------
AUTOMOBILES
Harley Davidson Inc. .................................. 60,500 2,843,500
United Auto Group Inc.*................................ 28,700 739,025
------------
3,582,525
------------
HOUSEHOLD APPLIANCES AND FURNISHINGS
Harman Int'l. Inds Inc. New............................ 20,000 1,112,500
Libbey Inc. ........................................... 56,000 1,561,000
Williams Sonoma Inc.*.................................. 25,000 909,375
------------
3,582,875
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-9
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
AGGRESSIVE EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
TIRES AND RUBBER
Bandag Inc. ........................................... 23,000 $ 1,089,625
------------
TOTAL CONSUMER DURABLE GOODS........................... 9,898,725
------------
CONSUMER NON-DURABLE GOODS (6.0%)
APPAREL AND TEXTILES
Donna Karan Int'l. Inc.*............................... 49,700 702,013
Jones Apparel Group Inc.*.............................. 28,000 1,046,500
------------
1,748,513
------------
COSMETICS AND TOILETRIES
Lauder Estee Cos. Inc., Class A........................ 40,000 2,035,000
Paragon Trade Brands Inc.*............................. 39,900 1,197,000
------------
3,232,000
------------
RETAIL TRADE
Cole Nat'l Corp., Class A*............................. 28,000 735,000
Kohls Corp.*........................................... 73,000 2,865,250
Micro Whse Inc.*....................................... 36,000 423,000
Nine West Group Inc.*.................................. 14,100 653,888
Peoplesoft Inc.*....................................... 96,000 4,602,000
Petsmart Inc.*......................................... 54,000 1,181,250
Spiegel Inc., Class A.................................. 100,000 706,250
------------
11,166,638
------------
TOYS, AMUSEMENTS, SPORTING GOODS
Coleman Co. Inc.*...................................... 33,600 462,000
------------
TOTAL CONSUMER NON-DURABLES............................ 16,609,151
------------
CONSUMER SERVICES (2.7%)
AIR TRAVEL
Continental Airls Inc., Class B*....................... 55,000 1,553,750
------------
HOTELS AND RESTAURANTS
Buffets Inc.*.......................................... 93,000 848,625
Foodmaker Inc.*........................................ 83,000 736,625
Promus Hotel Corp.*.................................... 46,100 1,365,713
Rio Hotel & Casino Inc.*............................... 87,000 1,272,375
Ruby Tuesday Inc.*..................................... 28,200 521,700
Sizzler Int'l. Inc.*................................... 69,500 199,813
------------
4,944,851
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-10
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
AGGRESSIVE EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
LEISURE TIME
Cannondale Corp.*...................................... 34,000 $ 765,000
Casino America Inc.*................................... 54,400 173,400
------------
938,400
------------
TOTAL CONSUMER SERVICES................................ 7,437,001
------------
ENERGY (7.2%)
DOMESTIC OIL
Noble Affiliates Inc. ................................. 58,000 2,776,750
------------
GAS EXPLORATION
Energen Corp. ......................................... 37,500 1,134,375
Triton Energy Ltd., Class A*........................... 30,500 1,479,250
Vintage Petroleum Inc. ................................ 37,800 1,304,100
------------
3,917,725
------------
PETROLEUM SERVICES
Camco Int'l. Inc. ..................................... 85,700 3,952,913
Coflexip ADR**......................................... 34,236 898,695
Global Marine Inc. New*................................ 85,300 1,759,313
Parker & Parsley Petroleum Co. ........................ 126,500 4,648,875
Petroleum Geo Svcs As ADR***........................... 47,500 1,852,500
------------
13,112,296
------------
TOTAL ENERGY........................................... 19,806,771
------------
FINANCE (13.7%)
BANKS
Central Fid Bks Inc. .................................. 52,500 1,351,875
Charter One Finl Inc................................... 42,250 1,774,500
Coast Svgs Finl Inc.*.................................. 30,000 1,098,750
Commerce Bancshares Inc................................ 17,850 825,563
First Amern Corp. Tenn*................................ 7,500 432,188
First Rep BanCorp. Inc.*............................... 50,923 852,960
Hibernia Corp., Class A................................ 50,000 662,500
TCF Financial Corp..................................... 114,500 4,980,750
------------
11,979,086
------------
FINANCIAL SERVICES
APS Hldg Corp., Class A*............................... 27,600 427,800
Green Tree Finl Corp................................... 42,700 1,649,288
Jefferies Group Inc. .................................. 25,000 1,009,375
Keystone Finl Inc...................................... 34,500 862,500
------------
3,948,963
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
AGGRESSIVE EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
INSURANCE
ACE Ltd. .............................................. 39,500 $ 2,374,938
Blanch E W Hldgs Inc. ................................. 13,100 263,638
First American Finl Corp. ............................. 30,000 1,233,750
Harleysville Group Inc. ............................... 30,000 915,000
Mgic Invt Corp. Wis.................................... 55,000 4,180,000
Mercury Gen Corp. New.................................. 89,500 4,698,750
Nac Re Corp.*.......................................... 6,000 203,250
Nymagic Inc. .......................................... 25,000 450,000
------------
14,319,326
------------
INVESTMENT ADVISORS
CMAC Investment Corp. ................................. 44,800 1,646,400
Price T Rowe & Assoc Inc. ............................. 120,500 5,241,750
------------
6,888,150
------------
SAVINGS AND LOAN
First Finl Corp. Inc................................... 31,750 777,875
------------
TOTAL FINANCE.......................................... 37,913,400
------------
GENERAL BUSINESS (12.5%)
BROADCASTING
Comcast Corp., Class A................................. 40,539 722,101
Cox Radio Inc., Class A*............................... 45,000 787,500
Gaylord Entmt Co., Class A............................. 45,352 1,037,427
Global Star Telecom*................................... 36,200 2,280,600
Infinity Broadcasting Corp.*........................... 71,062 2,389,460
Macromedia Inc.*....................................... 49,000 882,000
Spelling Entmt Group Inc.*............................. 55,000 405,625
Westwood One Inc.*..................................... 62,000 1,030,750
------------
9,535,463
------------
BUSINESS SERVICES
Acclaim Entertainment Inc.*............................ 118,100 383,825
Accustaff Inc.*........................................ 26,775 565,622
Corestaff Inc.*........................................ 55,000 1,302,813
Fiserv Inc. ........................................... 83,100 3,053,925
Interim Svcs Inc.*..................................... 21,000 745,500
Jacobs Energy Group Inc.*.............................. 30,000 708,750
Legato Systems Inc.*................................... 21,000 685,125
Loewen Group Inc. ..................................... 58,000 2,269,250
National Data Corp. ................................... 28,500 1,239,750
Paychex Inc. .......................................... 48,000 2,469,000
Stewart Enterprises Inc., Class A...................... 91,000 3,094,000
Team Rent Group Inc.*.................................. 32,000 516,000
------------
17,033,560
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-12
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
AGGRESSIVE EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
PUBLISHING
Hollinger International Inc., Class A.................. 65,500 $ 753,250
Pulitzer Pubg Co....................................... 17,000 788,375
Quebecor Prtg Inc. .................................... 74,200 1,298,500
Topps Inc.*............................................ 162,200 648,800
------------
3,488,925
------------
TELECOMMUNICATIONS SERVICES
Comstat Corp. ......................................... 64,000 1,576,000
Netcom Online Communications*.......................... 20,000 260,000
Paging Network Inc.*................................... 87,800 1,338,950
Premisys Communications Inc.*.......................... 18,000 607,500
Vanguard Cellular Sys Inc., Class A*................... 37,900 596,925
------------
4,379,375
------------
TOTAL GENERAL BUSINESS................................. 34,437,323
------------
MISCELLANEOUS (7.0%)
CONGLOMERATES
Chris Craft Inds. Inc.*................................ 23,000 963,125
U S Inds Inc., New*.................................... 45,300 1,557,188
------------
2,520,313
------------
MISCELLANEOUS
Alyn Corp.*............................................ 45,000 489,375
Cymer Inc.*............................................ 40,000 1,925,000
Dendrite Int'l. Inc.*.................................. 97,600 805,200
Depuy Inc.*............................................ 40,000 810,000
Everest Reinsurance Hldgs.............................. 29,000 833,750
Mark Bros. Jewelers Inc.*.............................. 50,000 581,250
Martin Marietta Matls Inc. ............................ 56,000 1,302,000
Moneygram Pmt Sys Inc.*................................ 28,300 374,975
Mondavi Robert Corp., Class A*......................... 16,500 602,250
PFF BanCorp. Inc.*..................................... 70,000 1,041,250
Polymer Group Inc.*.................................... 48,000 666,000
Scripps Howard Inc., Class A........................... 20,000 700,000
Superior Tele Com Inc.*................................ 38,000 774,250
TMP Worldwide Inc.*.................................... 65,000 828,750
TAG Heuer Int'l. Sa ADR* **............................ 31,000 499,875
Transocean Offshore Inc................................ 37,800 2,367,225
------------
14,601,150
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-13
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
AGGRESSIVE EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
REAL ESTATE
Brooks Fiber Pptys Inc.*............................... 19,300 $ 492,150
Irvine Apt Cmntys Inc. ................................ 37,800 945,000
------------
1,437,150
------------
ROYALTY TRUST
San Juan Basin Rty Tr. ................................ 80,000 660,000
------------
TOTAL MISCELLANEOUS.................................... 19,218,613
------------
SHELTER (0.4%)
CONSTRUCTION MATERIALS
Granite Const. Inc..................................... 60,000 1,140,000
------------
TOTAL SHELTER.......................................... 1,140,000
------------
TECHNOLOGY (21.5%)
AEROSPACE
Computer Sciences Corp.*............................... 17,000 1,396,125
------------
COMPUTERS AND BUSINESS EQUIPMENT
Ceridian Corp.*........................................ 93,800 3,798,900
Indus Group Inc.*...................................... 35,200 906,400
Komag Inc.*............................................ 40,000 1,085,000
Medic Computer Sys Inc.*............................... 62,000 2,499,375
Metromail Corp. New*................................... 16,400 299,300
Stormedia Inc., Class A*............................... 57,000 919,125
Sundstrand Corp. ...................................... 38,500 1,636,250
3Com Corp.*............................................ 58,500 4,292,438
Western Digital Corp.*................................. 10,000 568,750
------------
16,005,538
------------
ELECTRONICS
ADC Telecommunications Inc.*........................... 59,000 1,836,375
Analog Devices Inc.*................................... 123,500 4,183,563
Aspen Technology Inc.*................................. 8,500 682,125
Avid Technology Inc.*.................................. 41,100 426,413
Credence Systems Corp.*................................ 51,000 981,750
Electronics For Imaging Inc.*.......................... 30,000 2,467,500
Etec Sys Inc.*......................................... 37,200 1,422,900
Kulicke & Soffa Inds Inc............................... 85,000 1,615,000
LoJack Corp.*.......................................... 110,000 1,100,000
Octel Communications Corp.*............................ 71,000 1,242,500
Picturetel Corp. New*.................................. 103,500 2,691,000
Teleflex Inc........................................... 22,400 1,167,600
Xilinx Inc.*........................................... 77,000 2,834,563
------------
22,651,289
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-14
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
AGGRESSIVE EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
SOFTWARE
Baan Co. NVF*.......................................... 48,000 $ 1,668,000
Business Objects SA ADR* **............................ 95,000 1,282,500
Cerner Corp.*.......................................... 56,500 875,750
HBO & Co. ............................................. 80,500 4,779,688
HCIA Inc.*............................................. 36,100 1,245,450
Informix Corp.*........................................ 55,500 1,130,813
Intuit Inc.*........................................... 29,000 913,500
Microchip Technology Inc.*............................. 43,000 2,187,625
Parametric Technology Corp.*........................... 101,000 5,188,874
------------
19,272,200
------------
TOTAL TECHNOLOGY....................................... 59,325,152
------------
TRANSPORTATION (2.0%)
RAILROADS AND EQUIPMENT
ABC Rail Prods Corp.*.................................. 51,000 1,013,625
Railtex Inc.*.......................................... 28,000 707,000
------------
1,720,625
------------
TRUCKING AND FREIGHT FORWARDING
Landstar Sys Inc.*..................................... 54,800 1,274,100
Polaris Inds Inc. ..................................... 38,000 902,500
Teekay Shipping Corp. ................................. 29,500 966,125
US Freightways Corp. .................................. 27,000 740,801
------------
3,883,526
------------
TOTAL TRANSPORTATION................................... 5,604,151
------------
UTILITIES (1.7%)
ELECTRONIC UTILITIES
Calenergy Inc.*........................................ 50,000 1,681,250
------------
GAS AND PIPELINE UTILITIES
Enron Global Pwr Pipelines Llc......................... 30,000 810,000
------------
TELEPHONE
Lci International Inc.*................................ 108,500 2,332,750
------------
TOTAL UTILITIES........................................ 4,824,000
------------
TOTAL COMMON STOCKS (Cost $197,580,986)................ 263,936,315
------------
<CAPTION>
PRINCIPAL
----------
<S> <C> <C>
CONVERTIBLE BONDS (COST $275,000) (0.1%)
Trenwick Group Inc. ................................... $ 275,000 290,125
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-15
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
AGGRESSIVE EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
UNITS VALUE
---------- ------------
<S> <C> <C>
SHORT TERM INVESTMENTS (COST $12,590,967) (4.6%)
State Street Bank Yield Enhanced Short Term Investment
Fund................................................. 12,590,967 $ 12,590,967
------------
TOTAL INVESTMENTS (100.3%) (COST $210,446,953)........ 276,817,407
Other Assets less Liabilities (-0.3%)................. (901,939)
------------
NET ASSETS (100%)..................................... $275,915,468
============
</TABLE>
- --------
* Non-income producing security.
** An American Depository Receipt (ADR) is a certificate issued by a U.S. bank
representing the right to receive securities of the foreign issuer
described. The values of ADRs are significantly influenced by trading on
exchanges not located in the United States or Canada.
The accompanying notes are an integral part of these financial statements.
F-16
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $272,594,728)......................... $315,074,250
Cash.............................................................. 32,414
Receivable for investments sold................................... 3,408,893
Receivable for fund units sold.................................... 443,928
Dividends and interest receivable................................. 1,733,590
Unamortized organizational costs.................................. 139,059
Other assets...................................................... 30,377
------------
Total Assets.................................................... 320,862,511
------------
LIABILITIES
Payable for investments purchased................................. 25,098,449
Investment advisory fee payable................................... 229,995
State Street Bank and Trust Co.--program fee payable.............. 93,413
Trustee, management and administration fees payable............... 19,538
American Bar Retirement Association--program fee payable.......... 13,906
Other accruals.................................................... 1,078
Other liabilities................................................. 4,800
------------
Total Liabilities............................................... 25,461,179
------------
NET ASSETS (equivalent to $36.76 per unit based
on 8,036,685 units outstanding).................................. $295,401,332
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-17
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
BALANCED FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
Investment Income
Dividends (net of foreign tax expense of $23,113)................ $ 3,175,652
Interest......................................................... 7,485,491
Other income..................................................... 12,160
-----------
Total investment income........................................ 10,673,303
-----------
Expenses
Investment advisory fee.......................................... 1,054,148
State Street Bank and Trust Company--program fee................. 1,061,817
Trustee, management and administration fees...................... 222,594
American Bar Retirement Association--program fee................. 155,832
Amortization of organization costs............................... 107,401
Reports to unitholders........................................... 23,150
Legal and audit fees............................................. 60,940
-----------
Total expenses................................................. 2,685,882
-----------
Net investment income.............................................. 7,987,421
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain................................................ 26,015,161
Change in net unrealized appreciation............................ 5,122,866
-----------
Net realized and unrealized gain on investments................ 31,138,027
-----------
Net increase in net assets resulting from operations............... $39,125,448
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-18
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
BALANCED FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
YEAR ENDED
DECEMBER 31,
--------------------------
1996 1995
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income............................ $ 7,987,421 $ 7,226,056
Net realized gain on investments................. 26,015,161 12,645,440
Net change in unrealized appreciation on
investments..................................... 5,122,866 36,248,116
------------ ------------
Net increase in net assets resulting from
operations...................................... 39,125,448 56,119,612
------------ ------------
FROM UNITHOLDER TRANSACTIONS
Proceeds from units issued....................... 19,822,374 32,559,549
Cost of units redeemed........................... (28,072,708) (23,097,710)
------------ ------------
Net increase (decrease) in net assets resulting
from unitholder transactions.................... (8,250,334) 9,461,839
------------ ------------
Net increase in net assets..................... 30,875,114 65,581,451
NET ASSETS
Beginning of year................................ 264,526,218 198,944,767
------------ ------------
End of year...................................... $295,401,332 $264,526,218
============ ============
NUMBER OF UNITS
Outstanding--beginning of year................... 8,264,600 7,946,412
Sold........................................... 584,936 1,122,266
Redeemed....................................... (812,851) (804,078)
------------ ------------
Outstanding--end of year......................... 8,036,685 8,264,600
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-19
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
BALANCED FUND
SELECTED PER-UNIT DATA AND RATIOS
(For a unit outstanding throughout period)*
<TABLE>
<CAPTION>
JANUARY 2, 1992
FOR THE YEAR ENDED (COMMENCEMENT
DECEMBER 31, OF OPERATIONS)
-------------------------------------- TO DECEMBER 31,
1996 1995 1994 1993 1992
-------- -------- -------- -------- ---------------
<S> <C> <C> <C> <C> <C>
Investment income....... $ 1.30 $ 1.19 $ 1.08 $ 1.00 $ .89
Expenses................ (.33) (.29) (.26) (.26) (.25)
-------- -------- -------- -------- --------
Net investment income... .97 .90 .82 .74 .64
Net realized and
unrealized gain (loss)
on investments......... 3.78 6.07 (.82) .82 (1.56)
-------- -------- -------- -------- --------
Net increase (decrease)
in unit value.......... 4.75 6.97 -- 1.56 (.92)
Net asset value at
beginning of period.... 32.01 25.04 25.04 23.48 24.40
-------- -------- -------- -------- --------
Net asset value at end
of period.............. $ 36.76 $ 32.01 $ 25.04 $ 25.04 $ 23.48
======== ======== ======== ======== ========
Ratio of expenses to
average net assets..... .96% 1.00% 1.03% 1.07% 1.10%
Ratio of net investment
income to average net
assets................. 2.85% 3.08% 3.32% 3.05% 2.82%
Portfolio turnover...... 180.67% 154.73% 112.51% 153.14% 119.18%
Total return............ 14.84% 27.84% 0.0% 6.64% (3.77%)
Net assets at end of
period (in thousands).. $295,401 $264,526 $198,945 $193,362 $167,242
</TABLE>
- --------
* Calculations prepared using the monthly average number of units outstanding
during the period.
The accompanying notes are an integral part of these financial statements.
F-20
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
BALANCED FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCKS (57.0%)
BASIC INDUSTRIES (3.8%)
CHEMICALS
Cabot Corp. ........................................... 1,800 $ 45,225
Dow Chem Co. .......................................... 600 47,025
Du Pont EI De Nemours & Co. ........................... 21,200 2,000,750
FMC Corp. New *........................................ 8,800 617,100
Grace W R & Co. ....................................... 36,300 1,878,525
Great Lakes Chemical Corp. ............................ 2,800 130,900
Monsanto Co. .......................................... 80,500 3,129,438
Rhone Poulnec S A ADR**................................ 3,170 107,384
Rohm & Haas Co. ....................................... 1,500 122,438
------------
8,078,785
------------
MINING
Cyprus Amax Minerals Co. .............................. 4,000 93,500
Phelps Dodge Corp. .................................... 6,200 418,500
Potash Corp. Sask Inc. ................................ 400 34,000
------------
546,000
------------
PAPER
Bowater Inc. .......................................... 10,200 383,775
Champion Int'l. Corp. ................................. 9,900 428,175
Kimberly Clark Corp. .................................. 9,836 936,879
------------
1,748,829
------------
PLASTICS
Illinois Tool Wks Inc. ................................ 8,400 670,950
Premark Int'l. Inc. ................................... 3,700 82,325
------------
753,275
------------
TOTAL BASIC INDUSTRIES................................. 11,126,889
------------
CAPITAL GOODS (1.1%)
AGRICULTURAL MACHINERY
Deere & Co. ........................................... 5,700 231,563
------------
CONSTRUCTION AND MINING EQUIPMENT
Caterpillar Inc. ...................................... 1,100 82,775
Harnischfeger Inds Inc. ............................... 2,600 125,125
------------
207,900
------------
ELECTRICAL EQUIPMENT
General Elec Co. ...................................... 5,200 514,150
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-21
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
BALANCED FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
INDUSTRIAL MACHINERY
Cummins Engine Inc. ................................... 21,200 $ 975,200
Ingersoll Rand Co. .................................... 9,600 427,200
Kennametal Inc. ....................................... 1,300 50,538
Parker Hannifin Corp. ................................. 2,200 85,250
Tecumseh Prods Co., Class A............................ 2,500 143,438
Trinova Corp. ......................................... 17,900 651,113
------------
2,332,739
------------
TOTAL CAPITAL GOODS.................................... 3,286,352
------------
CONSUMER BASICS (17.5%)
DRUGS AND HEALTH CARE
Abbott Labs............................................ 3,200 162,400
American Home Products Corp. .......................... 59,000 3,458,875
Baxter Int'l. Inc. .................................... 10,800 442,800
Becton Dickinson & Co. ................................ 14,200 615,925
Bergen Brunswig Corp., Class A......................... 4,300 122,550
Bristol Myers Squibb Co. .............................. 40,200 4,371,750
Cardinal Health Inc. .................................. 20,999 1,223,163
Columbia / HCA Healthcare Corp. ....................... 15,486 631,055
Foundation Health Corp.*............................... 6,000 190,500
Fresenius Med Care Aktiengesel ADR***.................. 27,900 784,688
Guidant Corp. ......................................... 4,700 267,900
Healthcare Compare Corp.*.............................. 12,500 529,688
Health Mgmt Assoc., Class A*........................... 20,200 454,500
Johnson & Johnson...................................... 43,400 2,159,150
Mallinckrodt Inc. New.................................. 15,900 701,588
Maxicare Health Plans Inc.*............................ 3,100 68,975
Merck & Co. Inc. ...................................... 7,900 626,075
Owen Healthcare Inc.*.................................. 3,500 92,750
Pharmacia & Upjohn Inc. ............................... 22,000 871,750
Pfizer Inc. ........................................... 26,700 2,212,763
Schering Plough Corp. ................................. 6,200 401,450
Smithkline Beecham PLC ADR**........................... 45,900 3,121,200
Tenet Healthcare Corp.*................................ 4,800 105,000
------------
23,616,495
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-22
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
BALANCED FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
FOOD AND BEVERAGE
Archer Daniels Midland Co. ............................ 7,623 $ 167,706
Campbell Soup Co. ..................................... 29,000 2,327,250
Coca Cola Co. ......................................... 79,700 4,194,213
Coca Cola Enterprises Inc. ............................ 5,900 286,150
Conagra Inc. .......................................... 7,400 368,150
IBP Inc. .............................................. 4,000 97,000
Pepsico. Inc. ......................................... 77,000 2,252,250
Unilever N V........................................... 17,200 3,014,300
------------
12,707,019
------------
HOUSEHOLD PRODUCTS
Gillette Co. .......................................... 28,000 2,177,000
Procter & Gamble Co. .................................. 31,700 3,407,750
Tupperware Corp. ...................................... 3,700 198,413
------------
5,783,163
------------
TOBACCO
Philip Morris Cos. Inc. ............................... 70,800 7,973,850
RJR Nabisco Hldgs Corp. New............................ 47,220 1,605,480
------------
9,579,330
------------
TOTAL CONSUMER BASICS.................................. 51,686,007
------------
CONSUMER DURABLE GOODS (1.7%)
AUTO PARTS
Eaton Corp. ........................................... 11,800 823,050
------------
AUTOMOBILES
Chrysler Corp. ........................................ 29,600 976,800
Ford Mtr Co. Del. ..................................... 3,700 117,938
General Mtrs Corp. .................................... 39,100 2,179,825
------------
3,274,563
------------
TIRES AND RUBBER
Goodyear Tire and Rubber............................... 16,300 837,413
------------
TOTAL CONSUMER DURABLE GOODS........................... 4,935,026
------------
CONSUMER NON-DURABLES (3.7%)
APPAREL AND TEXTILES
Gucci Group N V........................................ 7,700 491,838
Springs Inds Inc. ..................................... 4,400 189,200
V F Corp. ............................................. 4,000 270,000
Warnaco Group Inc. .................................... 14,200 420,675
------------
1,371,713
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-23
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
BALANCED FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
PHOTOGRAPHY
Eastman Kodak Co. ..................................... 33,500 $ 2,688,375
------------
RETAIL TRADE
CVS Corp. ............................................. 10,500 434,438
Dillard Dept Stores Inc., Class A...................... 2,200 67,925
Home Depot Inc. ....................................... 14,033 703,404
Lowes Cos Inc. ........................................ 27,600 979,800
May Dept Stores Co. ................................... 26,500 1,238,875
Payless Shoesource Inc.*............................... 9,800 367,500
Pep Boys Manny Moe & Jack.............................. 12,600 387,450
Sears Roebuck & Co. ................................... 32,200 1,485,225
------------
5,664,617
------------
TOYS, AMUSEMENTS, SPORTING GOODS
Mattel Inc. ........................................... 46,700 1,295,925
------------
TOTAL CONSUMER NON-DURABLES............................ 11,020,630
------------
CONSUMER SERVICES (2.5%)
AIR TRAVEL
AMR Corp. Del.*........................................ 12,500 1,101,563
Delta Airlines Inc. Del. .............................. 5,700 403,988
UAL Corp.*............................................. 1,100 68,750
------------
1,574,301
------------
HOTELS AND RESTAURANTS
Boston Chicken Inc.*................................... 6,300 226,013
Brinker Int'l. Inc.*................................... 20,400 326,400
HFS Inc.*.............................................. 27,500 1,643,125
Mirage Resorts Inc.*................................... 13,200 285,450
------------
2,480,988
------------
LEISURE TIME
Carnival Corp., Class A................................ 37,000 1,221,000
Circus Circus Enterprises Inc.*........................ 5,700 195,938
Disney Walt Co. ....................................... 18,300 1,274,138
International Game Technology.......................... 29,200 532,900
------------
3,223,976
------------
TOTAL CONSUMER SERVICES................................ 7,279,265
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-24
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
BALANCED FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
ENERGY (2.0%)
DOMESTIC OIL
Atlantic Richfield Co. ................................ 800 $ 106,000
Panenergy Corp. ....................................... 1,200 54,000
Phillips Petroleum Co. ................................ 20,600 911,550
Tenneco Inc. New....................................... 7,000 315,875
------------
1,387,425
------------
GAS EXPLORATION
Enron Oil & Gas Co. ................................... 9,500 239,875
Union Pacific Res Group Inc. .......................... 8,711 254,797
------------
494,672
------------
INTERNATIONAL OIL
Amoco Corp. ........................................... 2,400 193,200
British Petroleum PLC ADR**............................ 11,400 1,611,675
Mobil Corp. ........................................... 3,600 440,100
Royal Dutch Petroleum Co. ............................. 3,000 512,250
Texaco Inc. ........................................... 4,800 471,000
YPF Sociedad Anonima ADR**............................. 4,800 121,200
------------
3,349,425
------------
PETROLEUM SERVICES
Mapco. Inc. ........................................... 7,800 265,200
Repsol S A ADR**....................................... 13,600 518,500
------------
783,700
------------
TOTAL ENERGY........................................... 6,015,222
------------
FINANCE (8.2%)
BANKS
Bank New York Inc. .................................... 2,600 87,750
Citicorp............................................... 4,800 494,400
Crestar Finl Corp. .................................... 1,900 141,313
First Chicago Nbd Corp. ............................... 16,590 891,713
First UN Corp. ........................................ 14,265 1,055,610
Mellon Bk Corp. ....................................... 7,100 504,100
Nationsbank Corp. ..................................... 7,300 713,575
Norwest Corp. ......................................... 22,600 983,100
Republic NY Corp. ..................................... 1,100 89,788
Signet Banking Corp. .................................. 7,400 227,550
Wells Fargo & Co. ..................................... 2,700 728,325
------------
5,917,224
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-25
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
BALANCED FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
FINANCIAL SERVICES
Allstate Corp. ........................................ 19,659 $ 1,137,765
American Express Co. .................................. 3,500 197,750
Capital One Finl Corp. ................................ 9,400 338,400
Case Corp. ............................................ 13,600 741,200
Chase Manhattan Corp. New.............................. 33,800 3,016,650
Dean Witter Discover & Co. ............................ 1,400 92,750
Federal Nat'l Mtg Assn ................................ 6,400 238,400
Federal Home Ln Mtg Corp. ............................. 1,700 187,213
Household Int'l. Inc. ................................. 15,700 1,448,325
Reliastar Finl Corp. .................................. 1,300 75,075
Salomon Inc. .......................................... 1,000 47,125
------------
7,520,653
------------
INSURANCE
Ace Ltd. .............................................. 11,400 685,425
Aetna Inc. ............................................ 15,500 1,240,000
American Gen Corp. .................................... 5,700 232,988
American Int'l. Group Inc. ............................ 20,400 2,208,300
Cigna Corp. ........................................... 8,200 1,120,325
Chubb Corp. ........................................... 1,100 59,125
Exel Ltd. ............................................. 16,600 628,725
ITT Hartford Group Inc. ............................... 21,400 1,444,500
Loews Corp. ........................................... 10,600 999,050
Old Rep Int'l Corp. ................................... 2,850 76,238
Providian Corp. ....................................... 5,700 292,838
St Paul Cos Inc. ...................................... 4,000 234,500
Transamerica Corp. .................................... 10,187 804,773
Transatlantic Hldgs Inc. .............................. 900 72,450
------------
10,099,237
------------
INVESTMENT ADVISORS
Bear Stearns Cos Inc. ................................. 9,900 275,963
Lehman Brothers Hldgs Inc. ............................ 9,100 285,513
------------
561,476
------------
SAVINGS AND LOAN
Great Westn Finl Corp. ................................ 3,700 107,300
------------
TOTAL FINANCE.......................................... 24,205,890
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-26
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
BALANCED FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
GENERAL BUSINESS (3.0%)
BROADCASTING
Clear Channel Communications*.......................... 15,800 $ 570,775
Tele Communications Inc. New*.......................... 32,300 421,919
------------
992,694
------------
BUSINESS SERVICES
Automatic Data Processing Inc. ........................ 64,300 2,756,863
First Data Corp. ...................................... 8,400 306,600
Gtech Hldgs Corp.*..................................... 13,300 425,600
Olsten Corp. .......................................... 2,400 36,300
Sabre Group Hldgs Inc., Class A*....................... 8,000 223,000
Service Corp. Int'l. .................................. 47,400 1,327,200
------------
5,075,563
------------
NEWSPAPERS
Gannett Inc. .......................................... 4,900 366,888
Reuters Hldgs PLC ADR**................................ 7,900 604,350
------------
971,238
------------
OFFICE FURNISHINGS AND SUPPLY
Standard Register...................................... 7,600 247,000
------------
TELECOMMUNICATIONS
Lucent Technologies Inc. .............................. 9,074 419,673
MFS Communications Inc. ............................... 12,900 703,050
Tele Communications Liberty Media Group Inc.*.......... 12,750 364,172
------------
1,486,895
------------
TOTAL GENERAL BUSINESS................................. 8,773,390
------------
MISCELLANEOUS (0.5%)
CONGLOMERATES
Harcourt Gen Inc. ..................................... 7,300 336,713
Textron Inc. .......................................... 8,500 801,125
------------
1,137,838
------------
MISCELLANEOUS
Ultramar Diamond Shamrock.............................. 6,300 199,238
------------
TOTAL MISCELLANEOUS.................................... 1,337,076
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-27
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
BALANCED FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
TECHNOLOGY (9.3%)
AEROSPACE
Allied Signal Inc. .................................... 6,200 $ 415,400
Boeing Co. ............................................ 26,200 2,787,025
McDonnell Douglas Corp. ............................... 6,200 396,800
TRW Inc. .............................................. 2,000 99,000
United Technologies Corp. ............................. 13,200 871,200
U.S. Robotics Corp.*................................... 11,600 835,200
------------
5,404,625
------------
COMPUTERS AND BUSINESS EQUIPMENT
Cisco Sys Inc.*........................................ 59,300 3,772,963
Compaq Computer Corp.*................................. 7,400 549,450
Hewlett Packard Co. ................................... 51,900 2,607,975
International Business Machines........................ 1,800 271,800
Seagate Technology*.................................... 14,600 576,700
Stratus Computer Inc.*................................. 2,500 68,125
------------
7,847,013
------------
ELECTRONICS
Altera Corp.*.......................................... 12,900 937,669
Beckman Instrs Inc. New................................ 6,900 264,788
DSC Communications Corp.*.............................. 13,800 246,675
Electronic Data Sys Corp. New.......................... 18,800 813,100
Honeywell Inc. ........................................ 9,400 618,050
Intel Corp. ........................................... 41,100 5,381,531
Molex Inc., Class A.................................... 10,300 366,938
Raytheon Co. .......................................... 2,600 125,125
Tektronix Inc. ........................................ 2,300 117,875
Xilinx Inc.*........................................... 22,700 835,644
------------
9,707,395
------------
SOFTWARE
BMC Software Inc.*..................................... 13,500 558,563
Informix Corp.*........................................ 26,900 548,088
Microsoft Corp.*....................................... 19,400 1,602,925
Oracle Sys Corp.*...................................... 44,750 1,868,313
------------
4,577,889
------------
TOTAL TECHNOLOGY....................................... 27,536,922
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-28
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
BALANCED FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
TRANSPORTATION (0.4%)
RAIL TRANSPORTATION
Burlington Northn Santa Fe............................. 2,700 $ 233,213
CSX Corp. ............................................. 4,600 194,350
Union Pacific Corp. ................................... 14,300 859,788
------------
1,287,351
------------
TOTAL TRANSPORTATION................................... 1,287,351
------------
UTILITIES (2.5%)
ELECTRIC UTILITIES
Central Me Pwr Co. .................................... 10,600 123,225
DQE, Inc. ............................................. 5,900 171,100
Entergy Corp. ......................................... 4,500 124,875
GPU Inc. .............................................. 16,300 548,088
Peco Energy Co. ....................................... 21,300 537,825
Unicom Corp. .......................................... 18,300 496,388
------------
2,001,501
------------
GAS AND PIPELINE UTILITIES
Coastal Corp. ......................................... 14,300 698,913
------------
TELEPHONE
AT&T Corp. ............................................ 43,000 1,870,500
GTE Corp. ............................................. 17,200 782,600
MCI Communications Corp. .............................. 2,800 91,525
SBC Communications Inc. ............................... 15,200 786,600
Sprint Corp. .......................................... 32,400 1,291,950
------------
4,823,175
------------
TOTAL UTILITIES........................................ 7,523,589
------------
COMMON STOCKS FOREIGN (0.8%)
CANADA
ENERGY
Renaissance Energy Ltd.*............................... 31,900 1,086,785
Talisman Energy Inc.*.................................. 36,800 1,225,502
------------
TOTAL COMMON STOCKS FOREIGN............................ 2,312,287
------------
TOTAL COMMON STOCKS (Cost $126,026,633)................ 168,325,896
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-29
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
BALANCED FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL VALUE
---------- ------------
<S> <C> <C>
FIXED INCOME (40.6%)
CORPORATE BONDS (4.6%)
ASSET BACKED
Nal Auto Tr 7.30% 12/15/00****.......................... $ 189,883 $ 190,416
Neiman Marcus Credit Master Tr 7.60% 06/15/03........... 1,310,000 1,357,894
Prime Cr Card Master Tr1 6.75% 11/15/05................. 1,240,000 1,243,484
Railcar Tr No 7.75% 06/01/04............................ 634,100 662,000
World Finl Network Cr Card Tr 6.70% 02/15/04............ 600,000 604,128
World Omni Automobile Lease 6.55% 06/25/02.............. 1,000,000 1,007,180
------------
5,065,102
------------
ELECTRIC UTILITIES
Edison Mission Energy Fdg Corp. 7.33% 09/15/08****...... 100,000 100,344
Israel Elec Corp. Ltd. 7.25% 12/15/06****............... 225,000 223,700
------------
324,044
------------
FINANCE AND BANKING
BT Instl Cap Tr A 8.09% 12/01/26****.................... 150,000 148,595
Bankamerica Instl Cap A 8.07% 12/31/26****.............. 175,000 176,519
Beverly Finance 8.36% 07/15/04.......................... 250,000 262,278
Corestates Cap 8.00% 12/15/26****....................... 125,000 124,849
Creekwood Cap Corp. 8.47% 03/16/15****.................. 244,511 261,994
Equitable Life Assur Soc USA 6.95% 12/01/05****......... 250,000 245,245
Excel Paralubes Fdg Corp. 7.43% 11/01/15****............ 250,000 247,128
Farmers Ins Exch 8.625% 05/01/24****.................... 250,000 255,583
FBS Cap 8.09% 11/15/26****.............................. 100,000 97,751
First Chicago Nbd Instl Cap 7.95% 12/01/26****.......... 225,000 223,117
First Un Instl Tr I 8.04% 12/01/26****.................. 200,000 199,450
Hancock John Mut Life Ins Co. 7.375% 02/14/24........... 250,000 240,968
JPM Cap Tr I 7.54% 01/15/27............................. 305,000 298,073
Massachusetts Mut Life Ins Co. 7.625% 11/15/23****...... 250,000 250,190
Metropolitan Life Ins Co. 7.45% 11/01/23****............ 250,000 232,715
Nationwide Mutual Life 7.50% 02/15/24****............... 250,000 233,005
New York Life Ins Cor 7.50% 12/15/23****................ 250,000 242,230
PNC Instl Cap Tr A 7.95% 12/15/26****................... 350,000 347,599
Principal Mut Life Ins Co. 7.875% 03/01/24****.......... 400,000 392,124
Rhone Poulenc A3 8.62% 01/05/21......................... 250,000 268,688
Scotia Pacific Hldg Corp. 7.95% 07/20/15................ 218,266 222,715
Town & Ctry Fdg Corp. 5.85% 08/15/98.................... 450,000 444,704
Wells Fargo & Co.Mtn Bk Entry 5.562% 01/28/97........... 350,000 348,513
Wells Fargo Cap A 8.125% 12/01/26****................... 275,000 277,492
------------
6,041,525
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-30
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
BALANCED FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL VALUE
---------- ------------
<S> <C> <C>
INDUSTRIALS
Jet Equip Tr 10.0% 06/15/12****......................... $ 350,000 $ 401,965
Philip Morris Co. 6.375% 02/01/06....................... 250,000 237,660
RJR Nabisco Inc. 8.75% 04/15/04......................... 160,000 161,482
------------
801,107
------------
MISCELLANEOUS
Alcoa Aluminio S A 7.50% 12/16/08....................... 300,000 296,598
------------
OTHER
Fifty Seventh Str Assocs LLC 7.125% 06/01/17****........ 249,118 242,332
Oxymar 7.50% 02/15/16****............................... 175,000 168,499
Tele Communications Inc. 9.25% 01/15/23................. 175,000 170,091
------------
580,922
------------
OTHER UTILITIES
Mobile Energy Svcs Co. LLC 8.665% 01/01/17.............. 215,571 223,981
Ras Laffan Liquefied Nat Gas 8.294% 09/15/14****........ 350,000 355,814
------------
579,795
------------
TOTAL CORPORATE BONDS................................... 13,689,093
------------
MORTGAGE RELATED (18.7%)
FEDERAL RELATED
Fed Hm Ln PC G00035 10.50% 02/01/21..................... 172,274 190,041
Fed Hm Ln PC G00356 7.00% 06/01/25...................... 439,460 432,732
Fed Hm Ln PC G00454 6.50% 02/01/26...................... 5,280,986 5,076,348
Fed Hm Ln PC G00576 7.00% 12/01/24...................... 683,813 670,644
Fed Hm Ln PC 554922 10.50% 12/01/20..................... 384,237 424,697
Fed Hm Ln PC 555283 10.00% 09/01/17..................... 480,221 526,062
Fed Hm Ln PC 555293 10.00% 11/01/20..................... 433,863 474,942
Fed Hm Ln PC C00291 7.00% 01/01/24...................... 216,795 213,602
Fed Hm Ln PC TBA 7.50% 01/01/99***...................... 2,200,000 2,202,063
Fed Hm Ln PC 549859 11.00% 09/01/20..................... 161,242 180,540
Fed Hm Ln PC D06744 10.50% 08/01/19..................... 146,216 160,880
Fed Hm Ln PC D06959 10.50% 04/01/16..................... 121,639 134,184
------------
10,686,735
------------
GOVERNMENT SPONSORED
FNMA Pool 291293 6.50% 09/01/24......................... 42,075 40,300
FNMA Pool 303157 10.00% 05/01/22........................ 246,817 271,921
FNMA Pool 303554 11.50% 09/01/25........................ 178,089 202,781
FNMA Pool 311424 6.50% 03/01/26......................... 91,333 87,108
FNMA Pool 318558 6.50% 02/01/26......................... 336,850 321,271
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-31
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
BALANCED FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL VALUE
---------- ------------
<S> <C> <C>
FNMA Pool 318974 6.50% 08/01/25......................... $ 33,799 $ 32,278
FNMA Pool 331874 6.50% 12/01/25......................... 90,880 86,791
FNMA Pool 335339 6.50% 02/01/26......................... 262,885 250,726
FNMA Pool 337423 6.50% 02/01/26......................... 814,143 777,507
FNMA Pool 337430 6.50% 03/01/26......................... 224,460 214,079
FNMA Pool 337434 6.50% 02/01/26......................... 817,668 780,873
FNMA Pool 337850 6.50% 03/01/26......................... 522,668 498,494
FNMA Pool 338197 6.50% 03/01/26......................... 327,178 312,046
FNMA Pool 338235 6.50% 03/01/26......................... 500,495 477,502
FNMA Pool 338305 6.50% 03/01/26......................... 823,084 785,271
FNMA Pool 338767 6.50% 03/01/26......................... 288,813 275,545
FNMA Pool 339230 6.50% 03/01/26......................... 807,217 770,100
FNMA Pool 339442 6.50% 03/01/26......................... 818,384 780,787
FNMA Pool 339837 6.50% 03/01/26......................... 1,351,719 1,289,621
FNMA Pool 343361 6.50% 09/01/24......................... 790,563 757,209
FNMA TBA 7.0% 01/01/99***............................... 6,775,000 6,622,563
FNMA TBA 7.0% 01/01/99***............................... 550,000 537,625
FNMA TBA 15 7.0% 01/01/99***............................ 3,575,000 3,494,563
FNMA TBA 30 7.0% 01/01/99***............................ 2,900,000 2,834,750
------------
22,501,711
------------
OTHER COLLATERALIZED MORTGAGE OBLIGATIONS
AFC Mtg Ln Tr 8.07% 9/25/27............................. 299,999 307,592
Alps 94 1Pass Thru Tr 7.80% 9/15/04..................... 225,000 230,625
Alps 94 1Pass Thru Tr 9.35% 9/15/04..................... 248,732 257,748
Citicorp Mtg Secs Inc. 6.25% 04/25/24................... 550,000 461,137
Dlj Mtg Accep Corp. 7.40% 06/01/03...................... 425,855 434,232
Dlj Mtg Accep Corp. 7.20% 07/14/03...................... 274,303 277,674
Dlj Mtg Accep Corp. 7.58% 03/13/28...................... 250,000 258,693
First Omni Cr Card Master Tst 6.65% 09/15/03............ 1,290,000 1,300,875
GE Capital Mtg Svcs Inc. 6.50% 12/25/23................. 300,000 252,000
GE Capital Mtg Services Inc. 7.00% 07/25/24............. 194,106 177,122
Merrill Lynch Mtg Invs Inc. 7.523% 06/15/21............. 400,476 406,735
Mid St Tr II 9.625% 04/01/03............................ 500,000 546,290
National Car Rental Finl Corp. 7.35% 10/20/03****....... 250,000 251,980
PNC Mtg Secs Corp. 7.50% 7/25/24........................ 425,000 407,601
Rural Hsg Tr 1987 1 3.33% 04/01/26...................... 421,962 395,625
Sears Cr Account Master Tr II 6.20% 03/15/02............ 1,040,000 1,031,545
Sears Cr Account Master Tr II 6.50% 10/15/03............ 600,000 605,058
Standard Cr Card Master Tr I 8.25% 01/07/07............. 1,140,000 1,237,960
Team Fleet Fing Corp. 6.65% 12/15/02****................ 250,000 246,770
World Finl Pptys Tower B 6.91% 09/01/13................. 649,510 642,203
------------
9,729,465
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-32
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
BALANCED FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL VALUE
---------- ------------
<S> <C> <C>
OTHER MARKETABLE MORTGAGE-RELATED SECURITIES
Airplanes Passthrough Tr 6.596% 03/15/19............... $ 135,976 $ 136,656
FHA GMAC 195 7.43% 11/01/25............................ 265,914 257,764
Federal Home Ln Mtg PC Gtd 9.50% 04/15/20.............. 110,488 122,744
Federal Home Ln Mtg PC Gtd 10.00% 05/15/20............. 325,000 350,490
Federal Home Ln Mtg PC Gtd 10.00% 06/15/20............. 205,000 223,384
Federal Nat'l Mtg Assn Remic 8.50% 09/25/20............ 342,806 352,446
Federal Nat'l Mtg Assn Remic 11.73% 03/25/22........... 100,000 104,312
Prime Ppty Fd 6.633% 07/23/03 ****..................... 250,000 247,760
------------
1,795,556
------------
U.S. GUARANTEED
GNMA Pool 008927 6.50% 07/20/26........................ 1,777,268 1,805,314
GNMA Pool 033635 11.00% 12/15/09....................... 2,924 3,277
GNMA Pool 034701 11.00% 01/15/10....................... 24,078 26,991
GNMA Pool 038109 11.00% 02/15/10....................... 1,328 1,488
GNMA Pool 040492 11.00% 07/15/10....................... 21,353 23,936
GNMA Pool 041749 11.00% 07/15/10....................... 35,364 39,769
GNMA Pool 041987 11.00% 08/15/10....................... 6,539 7,353
GNMA Pool 042354 11.00% 08/15/10....................... 19,929 22,411
GNMA Pool 048698 11.00% 09/15/10....................... 1,330 1,496
GNMA Pool 058816 11.00% 01/15/13....................... 1,767 1,991
GNMA Pool 134123 11.00% 09/15/15....................... 18,745 21,245
GNMA Pool 141387 11.00% 10/15/15....................... 11,027 12,498
GNMA Pool 232061 10.50% 09/15/17....................... 168,323 188,310
GNMA Pool 274800 10.50% 5/15/19........................ 3,306 3,706
GNMA Pool 285191 10.50% 03/15/20....................... 51,565 57,745
GNMA Pool 287170 10.50% 08/15/20....................... 217,680 244,208
GNMA Pool 780488 10.00% 10/15/21....................... 175,000 192,550
GNMA Pool 080011 6.00% 11/20/26........................ 1,010,000 1,011,899
GNMA Pool 080022 6.00% 12/20/26........................ 353,500 354,165
GNMA TBA 7.50% 01/15/99***............................. 1,950,000 1,950,609
GNMA TBA 7.50% 12/20/99***............................. 2,700,000 2,700,844
GNMA TBA 7.50% 01/15/99***............................. 1,700,000 1,700,531
------------
10,372,336
------------
TOTAL MORTGAGE RELATED................................. 55,085,803
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-33
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
BALANCED FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL VALUE
----------- ------------
<S> <C> <C>
U.S. TREASURY (17.3%)
DIRECT
United States Treasury Bonds 8.125% 08/15/19......... $ 4,215,000 $ 4,875,575
United States Treasury Bonds 8.75% 08/15/20.......... 2,080,000 2,562,622
United States Treasury Notes 7.00% 04/15/99.......... 2,750,000 2,811,435
United States Treasury Notes 7.125% 09/30/99......... 2,100,000 2,158,086
United States Treasury Notes 7.875% 11/15/04......... 5,520,000 6,023,700
United States Treasury Notes 7.50% 02/15/05.......... 6,245,000 6,679,215
United States Treasury Notes 7.125% 2/29/00.......... 3,670,000 3,778,375
United States Treasury Notes 6.75% 04/30/00.......... 3,770,000 3,841,291
United States Treasury Notes 6.125% 07/31/00......... 3,480,000 3,480,000
United States Treasury Notes 5.875% 04/30/98......... 10,980,000 10,997,129
------------
47,207,428
------------
GUARANTEED
Guaranteed Expt Trusts Pdvsa 6.550% 06/15/04......... 917,643 925,135
Resolution Fdg Corp. 8.875% 07/15/20................. 2,560,000 3,116,006
------------
4,041,141
------------
TOTAL U.S. TREASURY.................................. 51,248,569
------------
TOTAL FIXED INCOME (Cost $119,843,206)............... 120,023,465
------------
SHORT TERM INVESTMENTS (9.1%)
COMMERCIAL PAPER
Commercial Credit Co. 01/14/97....................... 1,800,000 1,796,516
Ford Mtr Cr Co. 01/10/97............................. 1,800,000 1,797,575
General Elec Cap Corp. Disc 01/14/97................. 1,800,000 1,796,490
Household Fin Corp. 01/14/97......................... 1,800,000 1,796,484
Raytheon Co. 01/14/97................................ 1,800,000 1,796,516
Siemens Cap Corp. 01/14/97........................... 1,800,000 1,796,516
Toyota Mtr Cr Co. 01/14/97........................... 1,800,000 1,796,516
------------
12,576,613
------------
<CAPTION>
UNITS
-----------
<S> <C> <C>
OTHER
State Street Bank Yield Enhanced Short Term
Investment Fund..................................... 14,148,276 14,148,276
------------
TOTAL SHORT TERM INVESTMENTS (Cost $26,724,889)...... 26,724,889
------------
TOTAL INVESTMENTS (COST $272,594,728) (106.7%)....... 315,074,250
Other Assets less Liabilities (-6.7%)................ (19,672,918)
------------
NET ASSETS (100%).................................... $295,401,332
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-34
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
BALANCED FUND
DECEMBER 31, 1996
- --------
* Non-income producing security
** An American Depository Receipt (ADR) is a certificate issued by a U.S.
bank representing the right to receive securities of the foreign issuer
described. The values of ADRs are significantly influenced by trading on
exchanges not located in the United States and Canada.
*** To be announced (TBA) securities are purchased (sold) on a forward
commitment basis with an appropriate principal amount and no definite
maturity date. The actual principal amount and maturity date will be
determined upon settlement. Unsettled TBA purchase commitments are valued
at the current market value of the underlying security. The maturity date
disclosed represents the maturity date of the underlying security and the
principal amount disclosed represents the contractual amount. The Fund
may rollover the TBA commitment into a new TBA commitment prior to
settlement if the fund manager deems it appropriate to do so.
**** Security is restricted in accordance with Rule 144A under the Securities
Act of 1933, which allows for the resale of such securities only to
certain qualified buyers. The total cost and market value of Rule 144A
securities owned at December 31, 1996 were $6,334,052 and $6,385,166
(2.16% of net assets), respectively.
The accompanying notes are an integral part of these financial statements.
F-35
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
GROWTH EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $564,888,296)......................... $752,791,114
Cash.............................................................. 424,895
Receivable for investments sold................................... 806,506
Receivable for fund units sold.................................... 647,332
Dividends and interest receivable................................. 845,555
Unamortized organizational costs.................................. 354,713
Other receivables................................................. 47,140
------------
Total Assets.................................................... 755,917,255
------------
LIABILITIES
Payable for investments purchased................................. 2,278,350
Investment advisory fee payable................................... 496,249
State Street Bank and Trust Co.--program fee payable.............. 238,431
Trustee, management and administration fees payable............... 49,437
American Bar Retirement Association--program fee payable.......... 36,774
Other accruals.................................................... 16,093
Other liabilities................................................. 3,872
------------
Total Liabilities............................................... 3,119,206
------------
NET ASSETS (equivalent to $278.26 per unit based on 2,705,373
units outstanding)............................................... $752,798,049
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-36
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
GROWTH EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
Investment Income
Dividends (net of foreign tax expense of $90,113)............... $ 12,437,990
Interest........................................................ 1,590,969
------------
Total investment income....................................... 14,028,959
------------
Expenses
Investment advisory fee......................................... 2,131,138
State Street Bank and Trust Company--program fee................ 2,628,715
Trustee, management and administration fees..................... 550,986
American Bar Retirement Association--program fee................ 385,778
Amortization of organization costs.............................. 245,775
Reports to unitholders.......................................... 55,425
Legal and audit fees............................................ 145,901
------------
Total expenses................................................ 6,143,718
------------
Net investment income............................................. 7,885,241
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain............................................... 77,526,269
Change in net unrealized appreciation........................... 50,117,149
------------
Net realized and unrealized gain on investments............... 127,643,418
------------
Net increase in net assets resulting from operations............ $135,528,659
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-37
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
GROWTH EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
YEAR ENDED
DECEMBER 31,
--------------------------
1996 1995
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income............................ $ 7,885,241 $ 5,626,845
Net realized gain on investments................. 77,526,269 56,424,537
Net change in unrealized appreciation on
investments..................................... 50,117,149 106,003,676
------------ ------------
Net increase in net assets resulting from
operations...................................... 135,528,659 168,055,058
------------ ------------
FROM UNITHOLDER TRANSACTIONS
Proceeds from units issued....................... 36,326,804 36,551,989
Cost of units redeemed........................... (56,891,452) (46,208,502)
------------ ------------
Net decrease in net assets resulting from
unitholder transactions......................... (20,564,648) (9,656,513)
------------ ------------
Net increase in net assets..................... 114,964,011 158,398,545
NET ASSETS
Beginning of year................................ 637,834,038 479,435,493
------------ ------------
End of year...................................... $752,798,049 $637,834,038
============ ============
NUMBER OF UNITS
Outstanding--beginning of year................... 2,781,980 2,827,713
Sold........................................... 146,346 188,320
Redeemed....................................... (222,953) (234,053)
------------ ------------
Outstanding--end of year......................... 2,705,373 2,781,980
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-38
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
GROWTH EQUITY FUND
SELECTED PER-UNIT DATA AND RATIOS
(For a unit outstanding throughout the period)*
<TABLE>
<CAPTION>
JANUARY 2, 1992
FOR THE YEAR ENDED (COMMENCEMENT
DECEMBER 31, OF OPERATIONS)
-------------------------------------- TO DECEMBER 31,
1996 1995 1994 1993 1992
-------- -------- -------- -------- ---------------
<S> <C> <C> <C> <C> <C>
Investment income....... $ 5.07 $ 3.88 $ 3.48 $ 3.16 $ 3.20
Expenses................ (2.22) (1.88) (1.60) (1.52) (1.45)
-------- -------- -------- -------- --------
Net investment income... 2.85 2.00 1.88 1.64 1.75
Net realized and
unrealized gain
on investments......... 46.14 57.72 .61 12.99 3.00
-------- -------- -------- -------- --------
Net increase............ 48.99 59.72 2.49 14.63 4.75
Net asset value at
beginning of period.... 229.27 169.55 167.06 152.43 147.68
-------- -------- -------- -------- --------
Net asset value at end
of period.............. $ 278.26 $ 229.27 $ 169.55 $ 167.06 $ 152.43
======== ======== ======== ======== ========
Ratio of expenses to
average net assets..... .88% .92% .95% .96% 1.01%
Ratio of net investment
income to average net
assets................. 1.13% .98% 1.12% 1.03% 1.22%
Portfolio turnover...... 63.70% 60.38% 58.78% 81.50% 46.26%
Total return............ 21.37% 35.23% 1.49% 9.60% 3.22%
Net assets at end of
period (in thousands).. $752,798 $637,834 $479,435 $471,398 $427,933
</TABLE>
- --------
* Calculations prepared using the monthly average number of units outstanding
during the period.
The accompanying notes are an integral part of these financial statements.
F-39
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
GROWTH EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCKS (98.4%)
BASIC INDUSTRIES (4.4%)
ALUMINUM
Aluminum Co. Amer...................................... 68,000 $ 4,335,000
------------
CHEMICALS
Air Prods & Chems Inc. ................................ 56,000 3,871,000
Georgia Gulf Corp. .................................... 79,800 2,144,625
IMC Global Inc. ....................................... 76,000 2,973,500
Zeneca Group PLC ADR**................................. 55,800 4,687,200
------------
13,676,325
------------
PAPER
James Riv Corp. Va..................................... 121,200 4,014,750
Kimberly Clark Corp. .................................. 62,400 5,943,600
------------
9,958,350
------------
PLASTICS
Illinois Tool Wks Inc. ................................ 62,000 4,952,250
------------
TOTAL BASIC INDUSTRIES................................. 32,921,925
------------
CAPITAL GOODS (5.4%)
CONSTRUCTION AND MINING
Dover Corp. ........................................... 78,400 3,939,600
------------
ELECTRICAL EQUIPMENT
Boston Scientific Corp.*............................... 16,000 960,000
General Elec Co. ...................................... 155,000 15,325,625
General Instrument Corp. .............................. 54,000 1,167,750
Philips Electrs N V.................................... 116,000 4,640,000
------------
22,093,375
------------
INDUSTRIAL MACHINERY
Applied Materials Inc. ................................ 150,000 5,390,625
York Int'l. Corp. ..................................... 78,100 4,363,838
------------
9,754,463
------------
POLLUTION CONTROL
Browning Ferris Inds Inc. ............................. 126,000 3,307,500
WMX Technologies Inc. ................................. 51,500 1,680,188
------------
4,987,688
------------
TOTAL CAPITAL GOODS.................................... 40,775,126
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-40
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
GROWTH EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
CONSUMER BASICS (23.0%)
DRUGS AND HEALTH CARE
Abbott Labs............................................ 131,000 $ 6,648,250
American Home Products Corp. .......................... 31,600 1,852,550
Amgen Inc.*............................................ 46,000 2,501,250
Astra AB ADR**......................................... 180,000 8,820,000
Cardinal Health Inc. .................................. 64,350 3,748,388
Centocor Inc.*......................................... 37,000 1,322,750
Columbia / HCA Healthcare Corp. ....................... 104,050 4,240,038
FHP International Corp.*............................... 74,700 2,773,238
Forest Labs Inc.*...................................... 23,000 753,250
Guidant Corp. ......................................... 210,000 11,970,000
Johnson & Johnson...................................... 69,600 3,462,600
Lilly Eli & Co. ....................................... 142,800 10,424,400
Medtronic Inc. ........................................ 38,100 2,590,800
Merck & Co. Inc. ...................................... 135,000 10,698,750
Pacificare Health Sys Inc. Class B*.................... 51,500 4,390,375
Pharmacia & Upjohn Inc. ............................... 154,000 6,102,250
Pfizer Inc. ........................................... 226,000 18,729,750
Sangstat Med Corp.*.................................... 39,800 1,054,700
Smithkline Beecham PLC ADR**........................... 81,000 5,508,000
United Healthcare Corp. ............................... 96,800 4,356,000
Vivra Inc.*............................................ 27,000 745,875
Warner Lambert Co. .................................... 61,600 4,620,000
------------
117,313,214
------------
FOOD AND BEVERAGE
Archer Daniels Midland Co. ............................ 135,000 2,970,000
CPC Int'l. Inc. ....................................... 46,000 3,565,000
Coca Cola Co. ......................................... 75,000 3,946,875
Coca Cola Co. Enterprises Inc. ........................ 45,000 2,182,500
Conagra Inc. .......................................... 90,000 4,477,500
Kellogg Co. ........................................... 56,000 3,675,000
McCormick & Co. Inc. .................................. 97,300 2,292,631
Panamerican Beverages Inc. Class A..................... 20,000 937,500
Pepsico Inc. .......................................... 89,000 2,603,250
Pioneer Hi Bred Int'l. Inc. ........................... 14,000 980,000
------------
27,630,256
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-41
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
GROWTH EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
HOUSEHOLD PRODUCTS
Colgate Palmolive Co. ................................. 34,000 $ 3,136,500
Gillette Co. .......................................... 66,300 5,154,825
Procter & Gamble Co. .................................. 28,000 3,010,000
------------
11,301,325
------------
RETAIL GROCERY
Safeway Inc. New*...................................... 93,100 3,980,025
------------
TOBACCO
Philip Morris Cos. Inc. ............................... 117,000 13,177,125
------------
TOTAL CONSUMER BASICS.................................. 173,401,945
------------
CONSUMER DURABLE GOODS (1.0%)
AUTOMOBILES
Honda Motor Ltd. ADR**................................. 70,000 3,963,750
Volvo Aktiebolaget ADR**............................... 158,500 3,447,375
------------
TOTAL CONSUMER DURABLE GOODS........................... 7,411,125
------------
CONSUMER NON-DURABLES (5.6%)
APPAREL AND TEXTILES
Liz Claiborne Inc. .................................... 23,000 888,375
Nike Inc. Class B...................................... 43,100 2,575,225
V F Corp. ............................................. 40,400 2,727,000
------------
6,190,600
------------
COSMETICS AND TOILETRIES
Avon Products Inc. .................................... 33,700 1,925,113
Revlon Inc. Class A*................................... 53,000 1,583,375
------------
3,508,488
------------
RETAIL TRADE
Autozone Inc.*......................................... 76,600 2,106,500
CVS Corp. ............................................. 20,000 827,500
Federated Dept Stores Inc. Del.*....................... 59,000 2,013,375
Home Depot Inc. ....................................... 68,500 3,433,563
Limited Inc. .......................................... 100,000 1,837,500
Nine West Group Inc.*.................................. 21,000 973,875
Price Costco. Inc.*.................................... 125,700 3,158,213
TJX Co. S Inc. New..................................... 74,000 3,505,750
Toys R Us Inc.*........................................ 116,200 3,486,000
Wal Mart Stores Inc. .................................. 75,000 1,715,625
Woolworth Corp.*....................................... 205,000 4,484,375
------------
27,542,276
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-42
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
GROWTH EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
TOYS, AMUSEMENTS, SPORTING GOODS
Hasbro Inc............................................. 118,000 $ 4,587,250
------------
TOTAL CONSUMER NON-DURABLES............................ 41,828,614
------------
CONSUMER SERVICES (3.0%)
AIR TRAVEL
Delta Airlines Inc. Del................................ 73,138 5,183,656
------------
HOTELS AND RESTAURANTS
Hilton Hotels Corp..................................... 160,200 4,185,225
Host Marriott Corp.*................................... 307,000 4,912,000
Marriot Int'l. Inc..................................... 17,000 939,250
------------
10,036,475
------------
LEISURE TIME
Disney Walt Co......................................... 63,179 4,398,838
Doubletree Corp.*...................................... 22,000 990,000
Harrah's Entertainment Inc.*........................... 88,500 1,758,938
------------
7,147,776
------------
TOTAL CONSUMER SERVICES................................ 22,367,907
------------
ENERGY (7.1%)
DOMESTIC OIL
Atlantic Richfield Co. ................................ 53,600 7,102,000
USX Marathon Group New................................. 116,100 2,771,888
------------
9,873,888
------------
GAS EXPLORATION
BJ Svcs Co.*........................................... 19,000 969,000
Burlington Res Inc. ................................... 50,200 2,528,825
Enron Corp. ........................................... 91,000 3,924,375
Union Pacific Res Group Inc. .......................... 121,951 3,567,067
------------
10,989,267
------------
INTERNATIONAL OIL
British Petroleum PLC ADR**............................ 7,000 989,625
Chevron Corp. ......................................... 51,000 3,315,000
Mobil Corp. ........................................... 25,000 3,056,250
Royal Dutch Petroleum Co. ............................. 23,000 3,927,250
Shell Trans & Trading PLC.............................. 40,000 4,095,000
------------
15,383,125
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-43
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
GROWTH EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
PETROLEUM SERVICES
Helmerich and Payne Inc. .............................. 74,100 $ 3,862,463
Schlumberger Ltd. ..................................... 108,300 10,816,463
Western Atlas Inc.*.................................... 35,000 2,480,625
------------
17,159,551
------------
TOTAL ENERGY........................................... 53,405,831
------------
FINANCE (13.8%)
BANKS
Bankamerica Corp. ..................................... 66,000 6,583,500
Chase Manhattan Corp. New.............................. 59,200 5,283,600
Citicorp............................................... 26,000 2,678,000
First Chicago Nbd Corp. ............................... 73,690 3,960,838
First Sec Corp. Del. .................................. 28,000 945,000
Morgan J P & Co. Inc. ................................. 39,066 3,813,818
Nationsbank Corp. ..................................... 48,200 4,711,550
PNC Bank Corp. ........................................ 149,000 5,606,125
Suntrust Bks Inc. ..................................... 80,000 3,940,000
Wells Fargo & Co. ..................................... 13,500 3,641,625
------------
41,164,056
------------
FINANCIAL SERVICES
Allstate Corp. ........................................ 100,500 5,816,438
Associates First Cap Corp. Class A..................... 66,100 2,916,663
Federal Nat'l Mtg Assn................................. 75,000 2,793,750
Green Tree Finl Corp. ................................. 100,800 3,893,400
Household Int'l. Inc. ................................. 10,000 922,500
Merrill Lynch & Co. Inc. .............................. 30,600 2,493,900
Student Ln Marketing Assn. New......................... 45,500 4,237,188
------------
23,073,839
------------
INSURANCE
American Int'l. Group Inc. ............................ 73,187 7,922,493
Cincinnati Finl Corp. ................................. 64,229 4,166,856
Exel Ltd. ............................................. 222,000 8,408,250
General Re Corp. ...................................... 43,500 6,862,125
PMI Group Inc. ........................................ 17,000 941,375
------------
28,301,099
------------
INVESTMENT ADVISORS
Edwards AG Inc. ....................................... 95,500 3,211,188
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-44
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
GROWTH EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
SAVINGS AND LOAN
Ahmanson H F and Co. .................................. 95,000 $ 3,087,500
Golden West Finl Corp. Del............................. 75,000 4,734,375
------------
7,821,875
------------
TOTAL FINANCE.......................................... 103,572,057
------------
GENERAL BUSINESS (9.7%)
BROADCASTING
TCI Satellite Entertainment Inc. Class A*.............. 13,000 128,375
Tele Communications Inc. New*.......................... 130,000 1,698,125
U S West Inc.*......................................... 205,000 3,792,500
Viacom Inc. Class A*................................... 70,000 2,415,000
Viacom Inc. Class B*................................... 20,500 714,938
------------
8,748,938
------------
BUSINESS SERVICES
America Online Inc. Del.*.............................. 90,000 2,992,500
Bisys Group Inc.*...................................... 23,000 852,438
CUC Int'l. Inc.*....................................... 112,800 2,679,000
Cognizant Corp.*....................................... 56,000 1,848,000
Danka Bus Sys ADR**.................................... 23,000 813,625
First Data Corp. ...................................... 97,108 3,544,442
Information Res Inc.*.................................. 72,000 1,008,000
Interpublic Group Cos Inc. ............................ 90,000 4,275,000
Nokia Corp. ADR**...................................... 47,000 2,708,375
Olsten Corp.*.......................................... 40,000 605,000
Service Corp. Int'l. .................................. 63,200 1,769,600
------------
23,095,980
------------
NEWSPAPERS
Gannett Inc. .......................................... 39,000 2,920,125
Newscorp Ltd., New ADR**............................... 90,000 1,878,750
Newscorp Ltd. ADR**.................................... 45,000 793,125
------------
5,592,000
------------
OFFICE FURNISHINGS AND SUPPLIES
Avery Dennison Corp. .................................. 28,000 990,500
Staples Inc.*.......................................... 172,800 3,121,200
------------
4,111,700
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-45
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
GROWTH EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
PUBLISHING
Dun & Bradstreet Corp. ................................ 56,000 $ 1,330,000
Jostens Inc. .......................................... 169,958 3,590,363
Time Warner Inc. ...................................... 168,500 6,318,750
------------
11,239,113
------------
TELECOMMUNICATIONS SERVICES
Ascend Communications Inc.*............................ 56,900 3,534,913
Cascade Communications Corp.*.......................... 6,000 330,750
Lucent Technologies Inc. .............................. 93,200 4,310,500
MFS Communications Inc.*............................... 140,800 7,673,600
Paging Network Inc.*................................... 52,000 793,000
Qualcomm Inc.*......................................... 52,800 2,105,400
Tele Communications Inc. New*.......................... 64,500 1,842,281
------------
20,590,444
------------
TOTAL GENERAL BUSINESS................................. 73,378,175
------------
MISCELLANEOUS (1.5%)
CONGLOMERATES
Textron Inc. .......................................... 57,000 5,372,250
U S Inds Inc. New*..................................... 53,700 1,845,938
------------
7,218,188
------------
MISCELLANEOUS
Acnielson Corp.*....................................... 59,999 907,485
Planet Hollywood Int'l. Inc.*.......................... 39,000 770,250
Saks Hldgs Inc.*....................................... 37,000 999,000
Transocean Offshore Inc. .............................. 23,600 1,477,950
------------
4,154,685
------------
TOTAL MISCELLANEOUS.................................... 11,372,873
------------
TECHNOLOGY (20.2%)
AEROSPACE
Allied Signal Inc. .................................... 14,000 938,000
Boeing Co. ............................................ 190,575 20,272,416
Lockheed Martin Corp. ................................. 69,500 6,359,250
U S Robotics Corp.*.................................... 56,100 4,039,200
------------
31,608,866
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-46
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
GROWTH EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
COMPUTERS AND BUSINESS EQUIPMENT
Cabletron Systems Inc.*................................ 97,100 $ 3,228,575
Cisco. Sys Inc.*....................................... 144,000 9,162,000
Compaq Computer Corp.*................................. 19,000 1,410,750
EMC Corp.*............................................. 32,000 1,060,000
International Business Machines........................ 50,200 7,580,200
Netscape Communications Corp.*......................... 62,900 3,577,438
Seagate Technology*.................................... 109,000 4,305,500
Sun Microsystems Inc.*................................. 32,000 822,000
Sundstrand Corp. ...................................... 51,000 2,167,500
3COM Corp.*............................................ 25,000 1,834,375
Xerox Corp. ........................................... 94,500 4,973,063
------------
40,121,401
------------
ELECTRONICS
Adaptec Inc.*.......................................... 74,400 2,976,000
Apple Computer*........................................ 92,900 1,939,288
Ericsson L M Tel Co. Class B ADR**..................... 211,000 6,369,563
Honeywell Inc. ........................................ 72,400 4,760,300
Intel Corp. ........................................... 172,600 22,599,813
KLA Instrs Corp.*...................................... 145,000 5,147,500
LSI Logic Corp.*....................................... 65,000 1,738,750
Newbridge Networks Corp.*.............................. 33,000 932,250
SGS Thomson Microelectronics*.......................... 16,000 1,120,000
Teradyne Inc.*......................................... 170,000 4,143,750
------------
51,727,214
------------
SOFTWARE
Computer Assoc Int'l. Inc. ............................ 78,925 3,926,519
HBO & Co. ............................................. 76,500 4,542,188
Informix Corp.*........................................ 58,000 1,181,750
Microsoft Corp.*....................................... 122,800 10,146,350
Oracle Sys Corp.*...................................... 124,000 5,177,000
Sterling Comm. Inc.*................................... 32,000 1,128,000
Sterling Software Inc.*................................ 12,000 379,500
Sybase Inc.*........................................... 143,000 2,386,313
------------
28,867,620
------------
TOTAL TECHNOLOGY....................................... 152,325,101
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-47
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
GROWTH EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
TRANSPORTATION (0.5)%
RAILROADS AND EQUIPMENT
Union Pacific Corp. ................................... 65,000 $ 3,908,125
------------
TOTAL TRANSPORTATION................................... 3,908,125
------------
UTILITIES (3.2%)
GAS AND PIPELINE UTILITIES
MCN Corp. ............................................. 22,000 635,250
Sonat Inc. ............................................ 59,400 3,059,100
------------
3,694,350
------------
TELEPHONE
Airtouch Communications Inc.*.......................... 83,300 2,103,325
AT & T Corp. .......................................... 73,975 3,217,913
GTE Corp. ............................................. 78,000 3,549,000
MCI Communications Corp. .............................. 102,000 3,334,125
Telephone & Data Sys Inc. ............................. 64,200 2,327,250
Worldco Inc.*.......................................... 237,700 6,195,040
------------
20,726,653
------------
TOTAL UTILITIES........................................ 24,421,003
------------
TOTAL COMMON STOCKS (Cost $553,186,989)................ 741,089,807
------------
<CAPTION>
UNITS
----------
<S> <C> <C>
SHORT TERM INVESTMENTS (COST $11,701,307) (1.6%)
State Street Bank Yield Enhanced Short Term Investment
Fund)................................................. 11,701,307 11,701,307
------------
TOTAL INVESTMENTS (Cost $564,888,296) (100%)........... 752,791,114
Other Assets less Liabilities (0.0%)................... 6,935
------------
NET ASSETS (100%)...................................... $752,798,049
============
</TABLE>
- --------
* Non-income producing security.
** An American Depository Receipt (ADR) is a certificate issued by a U.S.
bank representing the right to receive securities of the foreign issuer
described. The values of ADRs are significantly influenced by trading on
exchanges not located in the United States or Canada
The accompanying notes are an integral part of these financial statements.
F-48
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
STABLE ASSET RETURN FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS
Investments:
ABA Members/Pooled Stable Asset Fund Trust, at value (cost
$633,897,240)................................................... $633,897,240
State Street Bank Yield Enhanced Short Term Investment Fund, at
value (cost $1,358,947).......................................... 1,358,947
Unamortized organizational costs.................................. 299,520
------------
Total Assets.................................................... 635,555,707
------------
LIABILITIES
Payable for fund units redeemed................................... 443,785
State Street Bank and Trust Co.--program fee payable.............. 196,940
Trustee, management and administration fees payable............... 106,748
American Bar Retirement Association--program fee payable.......... 30,187
Other accruals.................................................... 15,278
------------
Total Liabilities............................................... 792,938
------------
Net assets (equivalent to $1.00 per unit based on 634,762,769
units outstanding)............................................... $634,762,769
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-49
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
STABLE ASSET RETURN FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
Interest income.................................................... $36,000,595
-----------
Expenses
State Street Bank and Trust Company--program fee................. 2,337,676
Trustee, management and administration fees...................... 1,235,231
American Bar Retirement Association--program fee................. 343,088
Amortization of organization costs............................... 205,836
Reports to unitholders........................................... 23,275
Legal and audit fees............................................. 61,272
-----------
Total expenses................................................. 4,206,378
-----------
Net investment income and net increase in net assets resulting from
operations........................................................ $31,794,217
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-50
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
STABLE ASSET RETURN FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
----------------------------
1996 1995
------------- -------------
<S> <C> <C>
FROM OPERATIONS
Net investment income and net increase in net
assets resulting from operations.............. $ 31,794,217 $ 28,957,399
------------- -------------
Reinvestment of net investment income.......... (31,794,217) (28,957,399)
------------- -------------
FROM UNITHOLDER TRANSACTIONS (at $1.00 per unit):
Proceeds from units issued..................... 102,727,142 98,534,266
Units issued in connection with reinvestment of
net investment income......................... 31,794,217 28,957,399
Units issued in connection with acquisition of
Blended Rate Fund............................. -- 222,343,776
Cost of units redeemed......................... (129,966,222) (211,607,186)
------------- -------------
Net increase in net assets resulting from
unitholder transactions....................... 4,555,137 138,228,255
------------- -------------
Net increase in net assets................... 4,555,137 138,228,255
NET ASSETS
Beginning of year.............................. 630,207,632 491,979,377
------------- -------------
End of year.................................... $ 634,762,769 $ 630,207,632
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-51
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
STABLE ASSET RETURN FUND
SELECTED PER-UNIT DATA AND RATIOS
(For a unit outstanding throughout the year)*
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Investment income............ $ .058 $ .061 $ .043 $ .035 $ .042
Expenses..................... (.007) (.007) (.007) (.008) (.008)
-------- -------- -------- -------- --------
Net investment income........ .051 .054 .036 .027 .034
Reinvestment of net
investment income........... (.051) (.054) (.036) (.027) (.034)
-------- -------- -------- -------- --------
Net asset value at beginning
and end of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Ratio of expenses to average
net assets.................. .68% .73% .73% .75% .79%
Ratio of net investment
income to average net
assets...................... 5.15% 5.32% 3.55% 2.77% 3.45%
Net assets at end of year (in
thousands).................. $634,763 $630,208 $491,979 $509,905 $589,882
</TABLE>
- --------
* Calculations prepared using the monthly average number of units outstanding
during the period.
The accompanying notes are an integral part of these financial statements.
F-52
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
STABLE ASSET RETURN FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
UNITS OF COLLECTIVE INVESTMENT FUNDS
<TABLE>
<S> <C>
State Street Bank ABA Members/Pooled Stable Asset Fund Trust
("SAFT") (Units 633,897,240) (a)................................ $633,897,240
State Street Bank Yield Enhanced Short Term Investment Fund
(Units 1,358,947)............................................... 1,358,947
------------
TOTAL INVESTMENTS (Cost $635,256,187) (100.1%)................... 635,256,187
OTHER ASSETS LESS LIABILITIES (-0.1%)............................ (493,418)
------------
NET ASSETS (100.0%).............................................. $634,762,769
============
</TABLE>
- --------
(a) The Stable Asset Return Fund participates in the following SAFT
investments:
<TABLE>
<CAPTION>
EFFECTIVE ANNUAL INVESTMENTS AT
PERCENTAGE RATE CONTRACT VALUE
1996 (NOTE 2)
---------------- --------------
<S> <C> <C>
INVESTMENT CONTRACTS
Allstate Life Insurance Company
9 Investment Contracts
(Maturities ranging from April 1, 1997 to
July 31, 1999)............................ 6.52-7.53% $22,412,049
Continental Assurance Company
6 Investment Contracts
(Maturities ranging from July 31, 1997 to
December 31, 2002)........................ 6.00-7.32 38,158,411
Hartford Life Insurance Company
1 Investment Contract
(Maturities ranging from September 30,
1997 to December 31, 1998)................ 4.70-6.44 3,670,654
John Hancock Mutual Life Insurance Company
6 Investment Contracts
(Maturities ranging from March 31, 1997 to
November 30, 2002)........................ 5.06-7.75 21,001,014
Life of Virginia
3 Investment Contracts, Indexed
(Maturities ranging from June 30, 1999 to
August 31, 2001 and upon funds request)... 4.71-7.10 16,071,657
Metropolitan Life Insurance Company
3 Investment Contracts
(Maturities ranging from August 31, 1997
to February 28, 2001)..................... 6.08-6.37 25,253,870
New York Life Asset Management
6 Investment Contracts
(Maturities ranging from March 31, 1997 to
October 31, 1999)......................... 5.51-6.93 25,025,322
Pacific Mutual Life Insurance Company
3 Investment Contracts, Indexed
(Maturities ranging from May 31, 1997 to
January 31, 2002)......................... 5.17-6.91 25,609,410
Principal Mutual Life Insurance Company
6 Investment Contracts
(Maturities ranging from September 30,
1997 to February 28, 2002)................ 5.70-7.20 21,025,685
Provident Life and Accident Assurance
Company
2 Investment Contracts
(Maturities ranging from December 31, 1997
to March 31, 1998)........................ 5.10-7.48 9,047,183
Providian Capital Management
5 Investment Contracts
(Maturities ranging from April 30, 1997 to
March 31, 2002)........................... 6.67-7.03 29,528,045
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-53
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
STABLE ASSET RETURN FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
EFFECTIVE ANNUAL INVESTMENTS AT
PERCENTAGE RATE CONTRACT VALUE
1996 (NOTE 2)
---------------- --------------
<S> <C> <C>
INVESTMENT CONTRACTS (CONTINUED)
Prudential Asset Management
4 Investment Contracts
(Maturities ranging from Janury 31, 1997 to
January 31, 2000).......................... 5.19-7.35% $ 22,241,208
Sun Life of Canada
2 Investment Contracts
(Maturities ranging from December 31, 1999
to April 30, 2001)......................... 6.82-6.87 17,484,554
Transamerica Asset Management
1 Investment Contract
(Maturities ranging from September 1, 1997
to August 31, 2000)........................ 6.25 4,324,032
------------
Total Investment Contracts (Cost
$280,853,094).............................. 280,853,094
------------
SYNTHETIC INVESTMENT CONTRACTS*
CDC Investment Management Group
1 Investment Contract
(Maturities ranging from February 29, 1997
to December 31, 1999)
Underlying Security:
FHLMC, 6.75%, 10/15/13, principal
$8,330,000
Total market value $8,272,489, wrapper
($340,233)................................. 7.70 7,932,256
J. P. Morgan
1 Investment Contract
(Maturities ranging from January 15, 1997
to January 15, 1999)
Underlying Security:
U.S. Treasury Note, 6.375%, 1/15/99,
principal $6,451,000
Total market value $6,415,869, wrapper
$1,252,910................................. 5.28 7,668,779
Morgan Guaranty Trust Company
1 Investment Contract
(Maturities ranging from December 15, 1999
to May 15, 2001)
Underlying Security:
Advanta Credit Card Master Trust, 5.655%,
11/13/03, principal $10,000,000
Total market value $9,849,572, wrapper
$388,599................................... 7.06 10,238,171
------------
Total Synthetic Investment Contracts (Cost
$25,839,206)............................... 25,839,206
------------
<CAPTION>
AMORTIZED
COST VALUE
---------------- --------------
<S> <C> <C>
SHORT TERM INVESTMENTS
State Street Bank Yield Enhanced Short Term
Investment Fund--327,204,940 units......... $327,204,940 327,204,940
------------
Total investments (cost $633,897,240)....... $633,897,240
============
</TABLE>
- --------
* Synthetic investment contracts represent individual assets placed in a trust
with ownership by the fund and a third party issues a wrapper contract that
provides that holders can, and must, execute transactions at contract value.
Individual assets of the synthetic contracts are valued at representative
quoted market prices. The wrapper is valued as the difference between the
fair value of the assets and contract value of the investment contract.
The accompanying notes are an integral part of these financial statements.
F-54
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INDEX EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS
Investments:
State Street Bank Flagship S&P 500 Index Fund, at value (cost
$50,726,746 and units 522,641).................................... $62,405,446
State Street Bank Russell Special Small Company Common Trust Fund,
at value (cost $18,314,033 and units 1,372,227)................... 20,005,704
Cash............................................................... 145,835
Receivable for fund units sold..................................... 473,697
Unamortized organizational costs................................... 38,911
-----------
Total Assets..................................................... 83,069,593
-----------
LIABILITIES
Payable for investments purchased.................................. 146,836
State Street Bank and Trust Co.--program fee payable............... 25,728
Trustee, management and administration fees payable................ 12,078
American Bar Retirement Association--program fee payable........... 3,755
Other accruals..................................................... 193
-----------
Total Liabilities................................................ 188,590
-----------
Net assets (equivalent to $16.86 per unit based on 4,914,409 units
outstanding)...................................................... $82,881,003
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-55
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INDEX EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividend income.................................................. $ 1,212,076
-----------
Total investment income........................................ 1,212,076
-----------
EXPENSES
State Street Bank and Trust Co.--program fee..................... 249,826
Trustee, management and administration fees...................... 120,881
American Bar Retirement Association--program fee................. 36,659
Amortization of organization costs............................... 19,404
Legal and audit fees............................................. 19,983
Report to unitholders............................................ 7,591
-----------
Total expenses................................................. 454,344
-----------
Net investment income.............................................. 757,732
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) INVESTMENTS
Net realized gain................................................ 5,721,776
Change in net unrealized appreciation on investments............. 6,212,264
-----------
Net realized and unrealized gain on investments................ 11,934,040
-----------
Net increase in net assets resulting from operations............... $12,691,772
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-56
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INDEX EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
YEAR ENDED
DECEMBER 31,
------------------------
1996 1995
----------- -----------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss)....................... $ 757,732 $ (140,720)
Net realized gain on investments................... 5,721,776 673,628
Net change in unrealized appreciation on
investments....................................... 6,212,264 6,934,028
----------- -----------
Net increase in net assets resulting from
operations........................................ 12,691,772 7,466,936
----------- -----------
FROM UNITHOLDER TRANSACTIONS
Proceeds from units sold........................... 31,403,731 38,208,921
Cost of units redeemed............................. (9,234,771) (9,317,584)
----------- -----------
Net increase in net assets resulting from
unitholder transactions........................... 22,168,960 28,891,337
----------- -----------
Net increase in net assets....................... 34,860,732 36,358,273
NET ASSETS
Beginning of year.................................. 48,020,271 11,661,998
----------- -----------
End of year........................................ $82,881,003 $48,020,271
=========== ===========
NUMBER OF UNITS
Outstanding--beginning of year..................... 3,437,843 1,126,553
Sold............................................. 2,077,161 3,069,243
Redeemed......................................... (600,595) (757,953)
----------- -----------
Outstanding--end of year........................... 4,914,409 3,437,843
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-57
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INDEX EQUITY FUND
SELECTED PER-UNIT DATA AND RATIOS
(For a unit outstanding throughout the period)*
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE APRIL 30, 1994
YEAR ENDED (COMMENCEMENT
DECEMBER 31, OF OPERATIONS) TO
---------------- DECEMBER 31,
1996 1995 1994
------- ------- -----------------
<S> <C> <C> <C>
Investment income......................... $ .28 $ .02 $ --
Expenses.................................. (.11) (.08) (.04)
------- ------- -------
Net investment income (loss).............. .17 (.06) (.04)
Net realized and unrealized gain on
investments.............................. 2.72 3.68 .39
------- ------- -------
Net increase in unit value................ 2.89 3.62 .35
Net asset value at beginning of period.... 13.97 10.35 10.00
------- ------- -------
Net asset value at end of period.......... $ 16.86 $ 13.97 $ 10.35
======= ======= =======
Ratio of expenses to average net assets... .69% .68% .94%**
Ratio of net investment income (loss) to
average net assets....................... 1.15% (.52%) .94%**
Portfolio turnover ***.................... 17.48% 131.73% 53.55%
Total return.............................. 20.68% 34.98% 3.50%
Net assets at end of period (in
thousands)............................... $82,881 $48,020 $11,662
</TABLE>
- --------
* Calculations prepared using the monthly average number of units outstanding
during the period.
** Ratios annualized.
*** Reflects purchases and sales of units of the collective investment funds in
which the Fund invests rather than the turnover of the underlying
portfolios of such collective investments funds.
The accompanying notes are an integral part of these financial statements.
F-58
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INTERMEDIATE BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS
Investments:
PIMCO Total Return Fund, at value
(cost $33,306,599 and shares 3,182,755)........................... $33,418,929
MasterWorks Bond Index Funds, at value
(cost $16,483,656 and shares 1,706,199)........................... 16,191,828
Receivable for fund units sold..................................... 157,405
Unamortized organizational costs................................... 23,347
-----------
Total Assets................................................... 49,791,509
-----------
LIABILITIES
Payable for investments purchased.................................. 157,405
State Street Bank and Trust Co.--program fee payable............... 15,506
Trustee, management and administration fees payable................ 4,201
American Bar Retirement Association--program fee payable........... 2,271
Other accruals..................................................... 309
-----------
Total Liabilities.............................................. 179,692
-----------
NET ASSETS (equivalent to $10.89 per unit
based on 4,556,518 units outstanding)............................. $49,611,817
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-59
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INTERMEDIATE BOND FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends........................................................ $ 2,848,793
-----------
Total investment income.......................................... 2,848,793
-----------
EXPENSES
State Street Bank and Trust Co.--program fee..................... 168,340
Trustee, management and administration fees...................... 34,961
American Bar Retirement Association--program fee................. 24,704
Amortization of organization costs............................... 20,570
Reports to unitholders........................................... 2,922
Legal and audit fees............................................. 7,695
-----------
Total expenses................................................. 259,192
-----------
Net investment income.............................................. 2,589,601
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss................................................ (177,766)
Change in net unrealized depreciation............................ (1,011,400)
-----------
Net realized and unrealized loss on investments................ (1,189,166)
-----------
Net increase in net assets resulting from operations............... $ 1,400,435
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-60
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INTERMEDIATE BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
SEPTEMBER 5,
1995
FOR THE (COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
DECEMBER 31, DECEMBER 31,
1996 1995
------------ -----------------
<S> <C> <C>
FROM OPERATIONS
Net investment income........................ $ 2,589,601 $ 972,338
Net realized gain (loss) on investments...... (177,766) 8,982
Net change in unrealized appreciation
(depreciation) on investments............... (1,011,400) 831,903
------------ -----------
Net increase in net assets resulting from
operations................................ 1,400,435 1,813,223
------------ -----------
FROM UNITHOLDER TRANSACTIONS
Proceeds from units issued................... 21,795,326 35,221,124
Cost of units redeemed....................... (10,040,616) (577,675)
------------ -----------
Net increase in net assets resulting from
unitholder transactions................... 11,754,710 34,643,449
------------ -----------
Net increase in net assets............... 13,155,145 36,456,672
NET ASSETS
Beginning of period.......................... 36,456,672 --
------------ -----------
End of period................................ $ 49,611,817 $36,456,672
============ ===========
NUMBER OF UNITS
Outstanding--beginning of period............. 3,447,358 --
Sold....................................... 2,076,702 3,503,766
Redeemed................................... (967,542) (56,408)
------------ -----------
Outstanding--end of period................... 4,556,518 3,447,358
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-61
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INTERMEDIATE BOND FUND
SELECTED PER-UNIT DATA AND RATIOS
(For a unit outstanding throughout the period)*
<TABLE>
<CAPTION>
FOR THE PERIOD
SEPTEMBER 5,
1995
FOR THE (COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
DECEMBER 31, DECEMBER 31,
1996 1995
------------ -----------------
<S> <C> <C>
Investment income............................... $ .67 $ .34
Expenses........................................ (.06) (.02)
------- -------
Net investment income........................... .61 .32
Net realized and unrealized gain (loss) on
investments.................................... (.30) .26
------- -------
Net increase in unit value...................... .31 .58
Net asset value at beginning of period.......... 10.58 10.00
------- -------
Net asset value at end of period................ $10.89 $10.58
======= =======
Ratio of expenses to average net assets......... .58% .69%**
Ratio of net investment income to average net
assets......................................... 5.82% 9.17%**
Portfolio turnover ***.......................... 22.37% 1.60%
Total return.................................... 2.93% 5.80%
Net assets at end of period (in thousands)...... $49,612 $36,457
</TABLE>
- --------
*Calculations prepared using the monthly average number of units outstanding
during the period.
**Ratios annualized.
***Reflects purchases and sales of shares of the registered investment
companies in which the Fund invests rather than the turnover of the underlying
portfolios of such registered investment companies.
The accompanying notes are an integral part of these financial statements.
F-62
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS
Investment in T. Rowe Price International Stock Fund at value (cost
$32,234,612 and shares 2,410,622)................................. $33,266,583
Receivable for fund units sold..................................... 697,432
Unamortized organizational costs................................... 15,884
-----------
Total Assets..................................................... 33,979,899
-----------
LIABILITIES
Payable for investments purchased.................................. 697,432
State Street Bank and Trust Co.--program fee payable............... 10,130
Trustee, management and administration fees payable................ 2,132
American Bar Retirement Association--program fee payable........... 1,657
Other accruals..................................................... 248
-----------
Total Liabilities................................................ 711,599
-----------
NET ASSETS (equivalent to $17.80 per unit based on 1,868,547 units
outstanding)...................................................... $33,268,300
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-63
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends......................................................... $ 967,405
----------
Total investment income......................................... 967,405
----------
EXPENSES
State Street Bank and Trust Co.--program fee...................... 87,483
Trustee, management and administration fees....................... 18,343
American Bar Retirement Association--program fee.................. 13,009
Amortization of organization costs................................ 7,025
Reports to unitholders............................................ 2,917
Legal and audit fees.............................................. 7,677
----------
Total expenses.................................................. 136,454
----------
Net investment income............................................... 830,951
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain................................................. 1,492,478
Change in net unrealized appreciation............................. 1,022,272
----------
Net realized and unrealized gain on investments................. 2,514,750
----------
Net increase in net assets resulting from operations................ $3,345,701
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-64
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INTERNATIONAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
SEPTEMBER 5,
1995
FOR THE (COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
DECEMBER 31, DECEMBER 31,
1996 1995
------------ -----------------
<S> <C> <C>
FROM OPERATIONS
Net investment income........................ $ 830,951 $ 248,677
Net realized gain on investments............. 1,492,478 2,277
Net change in unrealized appreciation on
investments................................. 1,022,272 9,699
------------ -----------
Net increase in net assets resulting from
operations.................................. 3,345,701 260,653
------------ -----------
FROM UNITHOLDER TRANSACTIONS
Proceeds from sales of units................. 35,096,067 10,772,518
Cost of units redeemed....................... (16,022,030) (184,609)
------------ -----------
Net increase in net assets resulting from
unitholder transactions..................... 19,074,037 10,587,909
------------ -----------
Net increase in net assets................. 22,419,738 10,848,562
NET ASSETS
Beginning of period.......................... 10,848,562 --
------------ -----------
End of period................................ $ 33,268,300 $10,848,562
============ ===========
NUMBER OF UNITS
Outstanding--beginning of period............. 705,954 --
Sold....................................... 2,107,610 718,291
Redeemed................................... (945,017) (12,337)
------------ -----------
Outstanding--end of period................... 1,868,547 705,954
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-65
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INTERNATIONAL EQUITY FUND
SELECTED PER-UNIT DATA AND RATIOS
(For a unit outstanding throughout the period)*
<TABLE>
<CAPTION>
FOR THE PERIOD
SEPTEMBER 5,
1995
FOR THE (COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
DECEMBER 31, DECEMBER 31,
1996 1995
------------ -----------------
<S> <C> <C>
Investment income............................... $ .70 $ .49
Expenses........................................ (.10) (.03)
------- -------
Net investment income........................... .60 .46
Net realized and unrealized gain (loss) on
investments.................................... 1.83 (.09)
------- -------
Net increase.................................... 2.43 .37
Net asset value at beginning of period.......... 15.37 15.00
------- -------
Net asset value at end of period................ $ 17.80 $ 15.37
======= =======
Ratio of expenses to average net assets......... .59% .57%**
Ratio of net investment income to average net
assets......................................... 3.58% 9.2%**
Portfolio turnover ***.......................... 73.42% 3.51%
Total return.................................... 15.81% 2.47%
Net assets at end of period (in thousands)...... $33,268 $10,849
</TABLE>
- --------
* Calculations prepared using the monthly average number of units outstanding
during the period.
** Ratios annualized.
*** Reflects purchases and sales of shares of the registered investment company
in which the Fund invests rather than the turnover of the underlying
portfolios of the registered investment company.
The accompanying notes are an integral part of these financial statements.
F-66
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
VALUE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $40,236,294)........................... $47,190,964
Cash............................................................... 512
Receivable for fund units sold..................................... 887,148
Dividends and interest receivable.................................. 160,568
Unamortized organizational costs................................... 22,323
-----------
Total Assets..................................................... 48,261,515
-----------
LIABILITIES
Payable for investments purchased.................................. 66,675
Investment advisory fee payable.................................... 43,713
State Street Bank and Trust Co.--program fee payable............... 14,527
Trustee, management and administration fees payable................ 3,010
American Bar Retirement Association--program fee payable........... 2,127
Other accruals..................................................... 269
-----------
Total Liabilities................................................ 130,321
-----------
NET ASSETS (equivalent to $15.73 per unit based on 3,060,634 units
outstanding)...................................................... $48,131,194
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-67
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
VALUE EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign tax expense of $1,567)............... $ 763,336
Interest....................................................... 236,317
----------
Total investment income...................................... 999,653
----------
EXPENSES
Investment advisory fee........................................ 143,180
State Street Bank and Trust Co.--program fee................... 132,856
Trustee, management and administration fees.................... 27,818
American Bar Retirement Association--program fee............... 19,494
Amortization of organization costs............................. 9,774
Reports to unitholders......................................... 4,264
Legal and audit fees........................................... 11,223
----------
Total expenses............................................... 348,609
----------
Net investment income.......................................... 651,044
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain.............................................. 535,992
Change in net unrealized appreciation.......................... 5,938,274
----------
Net realized and unrealized gain on investments.............. 6,474,266
----------
Net increase in net assets resulting from operations........... $7,125,310
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-68
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
VALUE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
SEPTEMBER 5,
1995
FOR THE (COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
DECEMBER 31, DECEMBER 31,
1996 1995
------------ -----------------
<S> <C> <C>
OPERATIONS
Net investment income......................... $ 651,044 $ 109,882
Net realized gain (loss) on investments....... 535,992 (11,116)
Net change in unrealized appreciation on
investments.................................. 5,938,274 1,016,389
----------- -----------
Net increase in net assets resulting from
operations................................... 7,125,310 1,115,155
----------- -----------
UNITHOLDER TRANSACTIONS
Proceeds from sales of units.................. 28,084,938 19,898,639
Cost of units redeemed........................ (7,695,572) (397,276)
----------- -----------
Net increase in net assets resulting from
unitholder transactions...................... 20,389,366 19,501,363
----------- -----------
Net increase in net assets.................. 27,514,676 20,616,518
NET ASSETS
Beginning of period........................... 20,616,518 --
----------- -----------
End of period................................. $48,131,194 $20,616,518
=========== ===========
NUMBER OF UNITS
Outstanding--beginning of period.............. 1,594,367 --
Sold........................................ 2,004,767 1,627,099
Redeemed.................................... (538,500) (32,732)
----------- -----------
Outstanding--end of period.................... 3,060,634 1,594,367
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-69
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
VALUE EQUITY FUND
SELECTED PER-UNIT DATA AND RATIOS
(For a unit outstanding throughout the period)**
<TABLE>
<CAPTION>
FOR THE PERIOD
SEPTEMBER 5,
1995
FOR THE (COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
DECEMBER 31, DECEMBER 31,
1996 1995
------------ -----------------
<S> <C> <C>
Investment income............................... $ .40 $ .13
Expenses........................................ (.14) (.04)
------- -------
Net investment income........................... .26 .09
Net realized and unrealized gain on investments. 2.54 .84
------- -------
Net increase in unit value...................... 2.80 .93
Net asset value at beginning of period.......... 12.93 12.00
------- -------
Net asset value at end of period................ $ 15.73 $ 12.93
======= =======
Ratio of expenses to average net assets......... .99% 1.00%*
Ratio of net investment income to average net
assets......................................... 1.85% 2.12%*
Portfolio turnover.............................. 16.73% 3.8%
Total return.................................... 21.66% 7.75%
Net assets at end of period (in thousands)...... $48,131 $20,617
</TABLE>
- --------
* Ratios annualized.
** Calculations prepared using the monthly average number of units outstanding
during the period.
The accompanying notes are an integral part of these financial statements.
F-70
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
VALUE EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCKS (90.3%)
BASIC INDUSTRIES (6.3%)
ALUMINUM
Alcan Alum Ltd. ........................................ 7,700 $ 258,913
Alumax Inc.*............................................ 1,800 60,075
Aluminum Co. Amer....................................... 4,300 274,125
-----------
593,113
-----------
CHEMICALS
Dow Chem Co. ........................................... 4,500 352,688
Du Pont EI De Nemours & Co. ............................ 1,100 103,813
Eastman Chem Co. ....................................... 3,400 187,850
FMC Corp. New*.......................................... 2,900 203,363
Great Lakes Chemical Corp. ............................. 3,200 149,600
Nalco Chem Co. ......................................... 2,300 83,088
Sigma Aldrich........................................... 3,400 212,288
Union Carbide Corp. .................................... 4,700 192,113
-----------
1,484,803
-----------
CONTAINERS & GLASS
Ball Corp. ............................................. 9,100 236,600
-----------
PAPER
Champion Int'l Corp. ................................... 4,900 211,925
International Paper Co. ................................ 6,500 262,438
Minnesota Mining & Mfg Co. ............................. 2,400 198,900
-----------
673,263
-----------
TOTAL BASIC INDUSTRIES.................................. 2,987,779
-----------
CAPITAL GOODS (4.7%)
ELECTRICAL EQUIPMENT
Arrow Electrs Inc.*..................................... 4,400 235,400
General Elec Co. ....................................... 9,300 919,538
-----------
1,154,938
-----------
INDUSTRIAL MACHINERY
Briggs & Stratton Corp. ................................ 5,700 250,800
Giddings & Lewis Inc. ................................. 7,200 92,700
Wheelabrator Technologies Inc. ......................... 9,100 147,875
-----------
491,375
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-71
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
VALUE EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- -----------
<S> <C> <C>
POLLUTION CONTROL
Browning Ferris Inds Inc. .............................. 9,500 $ 249,375
WMX Technologies Inc. .................................. 6,100 199,013
Waste Mgmt Int'l. PLC ADR* **........................... 23,600 185,850
-----------
634,238
-----------
TOTAL CAPITAL GOODS..................................... 2,280,551
-----------
CONSUMER BASICS (14.1%)
DRUGS & HEALTH CARE
Abbott Labs............................................. 9,200 466,900
Allergan Inc. .......................................... 7,400 263,625
American Home Products Corp. ........................... 600 35,175
Bard C R Inc. .......................................... 9,000 252,000
Bausch & Lomb Inc. ..................................... 5,600 196,000
Bristol Myers Squibb Co. ............................... 5,300 576,375
Columbia/HCA Healthcare Corp. .......................... 4,350 177,263
Foundation Health Corp. ................................ 6,500 206,375
Johnson & Johnson....................................... 3,600 179,100
Lilly Eli & Co. ........................................ 400 29,200
Merck & Co. Inc. ....................................... 4,700 372,475
Pharmacia & Upjohn Inc. ................................ 10,300 408,138
Pfizer Inc. ............................................ 3,100 256,913
Smithkline Beecham PLC ADR**............................ 3,200 217,600
United Healthcare Corp. ................................ 6,000 270,000
-----------
3,907,139
-----------
FOOD & BEVERAGES
Coca Cola Co. .......................................... 11,600 610,450
Heinz H J Co. .......................................... 5,800 207,350
Pepsico Inc. ........................................... 7,000 204,750
Whitman Corp. .......................................... 3,400 77,775
-----------
1,100,325
-----------
HOUSEHOLD PRODUCTS
Dial Corp. New.......................................... 3,600 53,100
Procter & Gamble Co. ................................... 2,300 247,250
-----------
300,350
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-72
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
VALUE EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- -----------
<S> <C> <C>
TOBACCO
American Brands Inc. ................................... 5,000 $ 248,125
Philip Morris Cos. Inc. ................................ 9,000 1,013,625
RJR Nabisco Hldgs Corp. New............................. 7,000 238,000
-----------
1,499,750
-----------
TOTAL CONSUMER BASICS................................... 6,807,564
-----------
CONSUMER DURABLE GOODS (3.4%)
AUTO PARTS
Genuine Parts Co. ...................................... 3,000 133,500
-----------
AUTOMOBILE
Chrysler Corp. ......................................... 1,400 46,200
Ford Mtr Co. Del. ...................................... 17,400 554,625
General Mtrs Corp. ..................................... 1,200 66,900
-----------
667,725
-----------
HOUSEHOLD APPLIANCES
Maytag Corp. ........................................... 11,900 235,025
Whirlpool Corp. ........................................ 3,500 163,188
-----------
398,213
-----------
MOBILE HOMES
Fleetwood Enterprises Inc. ............................. 3,600 99,000
-----------
TIRES AND RUBBER
Cooper Tire & Rubber Co. ............................... 11,200 221,200
Goodyear Tire and Rubber................................ 2,200 113,025
-----------
334,225
-----------
TOTAL CONSUMER DURABLES................................. 1,632,663
-----------
CONSUMER NON-DURABLES (6.3%)
APPAREL & TEXTILES
Reebok Int'l Ltd. ...................................... 6,800 285,600
Russell Corp. .......................................... 4,100 121,975
Springs Inds Inc. ...................................... 2,600 111,800
V F Corp. .............................................. 3,700 249,750
-----------
769,125
-----------
LIQUOR
Anheuser Busch Cos. Inc. ............................... 7,600 304,000
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-73
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
VALUE EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- -----------
<S> <C> <C>
RETAIL TRADE
Dayton Hudson Corp. .................................... 5,900 $ 231,575
Dillard Dept Stores Inc., Class A....................... 7,000 216,125
Limited Inc. ........................................... 14,560 267,540
Penney J C Inc. ........................................ 2,900 141,375
Price Costco. Inc.* .................................... 3,600 90,450
Supervalu Inc. ......................................... 6,000 170,250
Toys R Us Inc.*......................................... 8,700 261,000
Wal Mart Stores Inc. ................................... 25,200 576,450
-----------
1,954,765
-----------
TOTAL CONSUMER NON DURABLES............................. 3,027,890
-----------
CONSUMER SERVICES (1.5%)
AIR TRAVEL
AMR Corp. Del.*......................................... 2,500 220,313
Delta Airlines Inc. Del. ............................... 3,200 226,800
-----------
447,113
-----------
HOTELS AND RESTAURANTS
McDonalds Corp. ........................................ 1,200 54,300
-----------
LEISURE TIME
Brunswick Corp. ........................................ 7,600 182,400
Disney Walt Co. ........................................ 500 34,813
-----------
217,213
-----------
TOTAL CONSUMER SERVICES................................. 718,626
-----------
ENERGY (8.3%)
DOMESTIC OIL
Ashland Inc. ........................................... 4,000 175,500
Atlantic Richfield Co. ................................. 2,600 344,500
Phillips Pete Co. ...................................... 5,600 247,800
Sun Inc. ............................................... 9,400 229,125
Unocal Corp. ........................................... 6,701 272,217
-----------
1,269,142
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-74
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
VALUE EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- -----------
<S> <C> <C>
INTERNATIONAL OIL
Amoco Corp. ............................................ 5,600 $ 450,800
Chevron Corp. .......................................... 5,500 357,500
Exxon Corp. ............................................ 5,300 519,400
Mobil Corp. ............................................ 1,800 220,050
Royal Dutch Petroleum Co. .............................. 4,900 836,675
Texaco Inc. ............................................ 3,700 363,063
-----------
2,747,488
-----------
TOTAL ENERGY............................................ 4,016,630
-----------
FINANCE (19.6%)
BANKS
Banc One Corp. ......................................... 8,380 360,340
Bankamerica Corp. ...................................... 4,700 468,824
Chase Manhattan Corp. New............................... 5,000 446,250
Citicorp................................................ 2,500 257,500
First Chicago NBD Corp. ................................ 2,600 139,750
First Un Corp. ......................................... 3,200 236,800
Fleet Finl Group Inc. .................................. 6,500 324,188
Key Corp. New........................................... 5,000 252,500
Morgan J P & Co. Inc. .................................. 3,100 302,638
Nationsbank Corp. ...................................... 3,800 371,450
PNC Bk Corp. ........................................... 7,200 270,900
Republic NY Corp. ...................................... 2,900 236,713
-----------
3,667,853
-----------
FINANCIAL SERVICES
Dean Witter Discover & Co. ............................. 3,900 258,375
Federal Home Ln Mtg Corp. .............................. 3,200 352,400
Federal Natl Mtg Assn................................... 13,900 517,775
Merrill Lynch & Co. Inc. ............................... 4,300 350,450
Salomon Inc. ........................................... 4,700 221,488
-----------
1,700,488
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-75
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
VALUE EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- -----------
<S> <C> <C>
INSURANCE
Aetna Inc. ............................................. 4,000 $ 320,000
Ambac Inc. ............................................. 800 53,100
American Gen Corp. ..................................... 7,200 294,300
American Int'l Group Inc. .............................. 1,300 140,725
Cigna Corp. ............................................ 2,200 300,575
Chubb Corp. ............................................ 5,200 279,500
ITT Hartford Group Inc. ................................ 4,100 276,750
Lincoln Natl Corp. ..................................... 4,800 252,000
Loews Corp. ............................................ 3,100 292,175
Marsh & Mclennan Companies Inc. ........................ 1,200 124,800
Ohio Cas Corp. ......................................... 5,600 198,800
Old Rep Int'l Corp. .................................... 7,000 187,250
St Paul Cos Inc. ....................................... 4,500 263,814
Torchmark Inc. ......................................... 3,800 191,900
Uslife Corp. ........................................... 6,100 202,825
-----------
3,378,514
-----------
INVESTMENT ADVISORS
Morgan Stanley Group Inc. .............................. 5,100 291,338
-----------
SAVINGS AND LOAN
Golden West Finl Corp. Del.............................. 3,200 202,000
Great Westn Finl Corp. ................................. 5,900 171,100
-----------
373,100
-----------
TOTAL FINANCE........................................... 9,411,293
-----------
GENERAL BUSINESS (1.3%)
BUSINESS SERVICES
Block H & R Inc. ....................................... 6,000 174,000
Viad Corp. ............................................. 3,600 59,400
-----------
233,400
-----------
NEWSPAPERS
Dow Jones & Co. Inc. ................................... 4,000 135,500
Gannett Inc. ........................................... 1,600 119,800
-----------
255,300
-----------
PUBLISHING
American Greetings Corp., Class A....................... 4,600 130,525
-----------
TELECOMMUNICATION SERVICES
Lucent Technologies Inc. ............................... 4 185
-----------
TOTAL GENERAL BUSINESS.................................. 619,410
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-76
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
VALUE EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- -----------
<S> <C> <C>
MISCELLANEOUS (1.2%)
CONGLOMERATES
ITT Inds Inc. .......................................... 9,800 $ 240,100
Textron Inc. ........................................... 900 84,825
-----------
324,925
-----------
MISCELLANEOUS
Canadian Pac Ltd. New................................... 8,800 233,200
-----------
TOTAL MISCELLANEOUS..................................... 558,125
-----------
SHELTER (2.3%)
CONSTRUCTION MATERIALS
Armstrongworld Inds Inc. ............................... 3,000 208,500
Masco Corp. ............................................ 5,000 180,000
Owens Corning........................................... 5,300 225,913
-----------
614,413
-----------
HOMEBUILDERS
Centex Corp. ........................................... 4,800 180,600
Kaufman & Broad Home Corp. ............................. 10,900 140,338
Pulte Corp. ............................................ 6,200 190,650
-----------
511,588
-----------
TOTAL SHELTER........................................... 1,126,001
-----------
TECHNOLOGY (9.2%)
AEROSPACE
Boeing Co. ............................................. 100 10,638
Rockwell Int'l Corp. New................................ 2,400 146,100
-----------
156,738
-----------
COMPUTERS & BUSINESS EQUIPMENT
Compaq Computer Corp.*.................................. 5,500 408,375
E M C Corp.*............................................ 11,200 371,000
Hewlett Packard Co. .................................... 12,700 638,175
International Business Machines......................... 5,800 875,800
Quantum Corp.*.......................................... 9,100 260,488
Seagate Technology*..................................... 7,600 300,200
-----------
2,854,038
-----------
ELECTRONICS
Intel Corp. ............................................ 6,300 824,906
Motorola Inc. .......................................... 3,200 196,400
-----------
1,021,306
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-77
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
VALUE EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- -----------
<S> <C> <C>
SOFTWARE
Microsoft Corp.*........................................ 4,600 $ 380,075
-----------
TOTAL TECHNOLOGY........................................ 4,412,157
-----------
TRANSPORTATION (1.9%)
RAILROADS & EQUIPMENT
CSX Corp. .............................................. 4,600 194,350
Union Pac Corp. ........................................ 4,000 240,500
-----------
434,850
-----------
TRUCKING & FREIGHT FORWARDING
Federal Express Corp.*.................................. 6,000 267,000
Ryder Sys Inc. ......................................... 7,800 219,375
-----------
486,375
-----------
TOTAL TRANSPORTATION.................................... 921,225
-----------
UTILITIES (10.2%)
ELECTRIC UTILITIES
Allegheny Power Systems Inc. ........................... 7,700 233,888
American Elec Pwr Inc. ................................. 7,300 300,213
Consolidated Edison Co. NY Inc. ........................ 9,200 269,100
Dominion Res Inc. Va.................................... 1,700 65,450
GPU Inc. ............................................... 8,200 275,725
Illinova Corp. ......................................... 7,500 206,250
P P & L Res Inc. ....................................... 10,300 236,900
Pacificorp.............................................. 11,300 231,650
Puget Sound Pwr & Lt Co. ............................... 10,200 244,800
-----------
2,063,976
-----------
GAS & PIPELINE UTILITIES
Transcanada Pipelines Ltd. ............................. 11,400 199,500
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-78
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
VALUE EQUITY FUND
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
---------- -----------
<S> <C> <C>
TELEPHONE
AT&T Corp. ............................................. 19,800 $ 861,284
Alltel Corp. ........................................... 8,800 276,100
Ameritech Corp. New..................................... 900 54,563
Bell Atlantic Corp. .................................... 500 32,375
Bellsouth Corp. ........................................ 1,900 76,713
GTE Corp. .............................................. 6,200 282,100
MCI Communications Corp. ............................... 11,200 366,100
Pacific Telesis Group................................... 7,900 290,325
SBC Communications Inc. ................................ 900 46,575
Sprint Corp. ........................................... 6,200 247,225
U S West Inc. .......................................... 4,000 129,000
-----------
2,662,360
-----------
TOTAL UTILITIES......................................... 4,925,836
-----------
TOTAL COMMON STOCKS (Cost $36,457,212).................. 43,445,750
-----------
<CAPTION>
PRINCIPAL
----------
<S> <C> <C>
US TREASURY NOTES (COST $2,325,805) (4.8%)
United States Treasury Notes 6.5% 8/15/05............... $1,787,000 1,798,455
United States Treasury Notes 7.0% 7/15/06............... 475,000 493,482
-----------
TOTAL US TREASURY NOTES................................. 2,291,937
-----------
<CAPTION>
UNITS
----------
<S> <C> <C>
SHORT TERM INVESTMENTS (COST $1,453,277) (3.0%)
State Street Bank Yield Enhanced Short Term Investment
Fund................................................... 1,453,277 1,453,277
-----------
TOTAL INVESTMENTS (COST $40,236,294) (98.1%)............ 47,190,964
Other Assets less Liabilities (1.9%).................... 940,230
-----------
NET ASSETS (100%)....................................... $48,131,194
===========
</TABLE>
- --------
* Non-income producing security.
** An American Depository Receipt (ADR) is a certificate issued by a U.S. bank
representing the right to receive securities of the foreign issuer
described. The values of ADRs are significantly influenced by trading on
exchanges not located in the United States or Canada.
The accompanying notes are an integral part of these financial statements.
F-79
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
STRUCTURED PORTFOLIO SERVICE
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE
------------ ----------- -----------
<S> <C> <C> <C>
ASSETS
Investments in State Street
Bank and Trust Co.
collective investment
funds, at value:
Stable Asset Return Fund
(cost of $3,360,910 and
$3,262,309 and units of
3,360,910 and 3,262,309,
respectively)............ $ 3,360,910 $ 3,262,309 $ --
Intermediate Bond Fund
(cost of $3,738,952,
$9,395,751, and
$3,679,299, and units of
360,099, 898,802, and
352,135, respectively)..... 3,921,062 9,786,926 3,834,350
Value Equity Fund (cost of
$671,879, $3,100,676, and
$3,321,398 and units of
49,865, 228,180, and
243,810, respectively)... 784,213 3,588,540 3,834,350
Growth Equity Fund (cost
of $678,123, $3,142,579,
and $3,365,229 and units
of 2,817, 12,895, and
13,778, respectively).... 784,213 3,588,540 3,834,350
Index Equity Fund (cost of
$1,352,944, $6,545,266,
and $6,701,767 and units
of 92,991, 444,867, and
454,672, respectively)... 1,568,425 7,503,310 7,668,699
International Equity Fund
(cost of $706,160,
$4,432,437, and
$4,662,350 and units of
44,043, 274,828, and
287,127, respectively)... 784,213 4,893,463 5,112,466
Aggressive Equity Fund
(cost of $1,136,728 and
units of 31,161)......... -- -- 1,278,116
Receivable for fund units
sold..................... 2,293 35,243 105,008
----------- ----------- -----------
Total Assets............ 11,205,329 32,658,331 25,667,339
LIABILITIES
Payable for investments
purchased.................. 2,293 35,243 105,008
Accrued expenses............ 2,059 5,748 4,470
----------- ----------- -----------
Net assets (equivalent to
$11.46, $11.93 and $12.41
per unit based on 977,202,
2,733,228 and 2,060,096
units outstanding,
respectively).............. $11,200,977 $32,617,340 $25,557,861
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-80
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
STRUCTURED PORTFOLIO SERVICE
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE
------------ ---------- ----------
<S> <C> <C> <C>
Investment income.......................... $ -- $ -- $ --
Service fees............................... 8,859 24,228 17,939
-------- ---------- ----------
Net investment loss........................ (8,859) (24,228) (17,939)
-------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on investments......... 361,277 839,719 770,720
Change in net unrealized appreciation.... 517,590 2,209,625 2,216,922
-------- ---------- ----------
Net realized and unrealized gain
on investments........................ 878,867 3,049,344 2,987,642
-------- ---------- ----------
Net increase in net assets resulting
from operations....................... $870,008 $3,025,116 $2,969,703
======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-81
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
STRUCTURED PORTFOLIO SERVICE
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE
------------ ----------- -----------
<S> <C> <C> <C>
FROM OPERATIONS
Net investment loss................... $ (8,859) $ (24,228) $ (17,939)
Net realized gain on investments...... 361,277 839,719 770,720
Net change in unrealized appreciation
on investments....................... 517,590 2,209,625 2,216,922
----------- ----------- -----------
Net increase in net assets resulting
from operations...................... 870,008 3,025,116 2,969,703
----------- ----------- -----------
FROM UNITHOLDER TRANSACTIONS
Proceeds from sales of units.......... 7,290,330 21,783,374 16,350,276
Cost of units redeemed................ (2,331,440) (4,570,137) (3,761,578)
----------- ----------- -----------
Net increase in net assets resulting
from unitholder transactions......... 4,958,890 17,213,237 12,588,698
----------- ----------- -----------
Net increase in net assets.......... 5,828,898 20,238,353 15,558,401
NET ASSETS
Beginning of year..................... 5,372,079 12,378,987 9,999,460
----------- ----------- -----------
End of year........................... $11,200,977 $32,617,340 $25,557,861
=========== =========== ===========
NUMBER OF UNITS
Outstanding--beginning of year........ 513,200 1,173,968 946,103
Sold................................ 679,535 1,965,891 1,429,208
Redeemed............................ (215,533) (406,631) (315,215)
----------- ----------- -----------
Outstanding--end of year.............. 977,202 2,733,228 2,060,096
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-82
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
STRUCTURED PORTFOLIO SERVICE
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD SEPTEMBER 5, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1995
<TABLE>
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE
------------ ----------- ----------
<S> <C> <C> <C>
FROM OPERATIONS
Net investment loss.................... $ (848) $ (2,227) $ (2,066)
Net realized gain on investments....... 2,506 7,217 9,557
Net change in unrealized appreciation
on investments........................ 198,179 551,723 478,635
---------- ----------- ----------
Net increase in net assets resulting
from operations....................... 199,837 556,713 486,126
---------- ----------- ----------
FROM UNITHOLDER TRANSACTIONS
Proceeds from sales of units........... 5,230,320 12,053,677 9,649,106
Cost of units redeemed................. (58,078) (231,403) (135,772)
---------- ----------- ----------
Net increase in net assets resulting
from unitholder transactions.......... 5,172,242 11,822,274 9,513,334
---------- ----------- ----------
Net increase in net assets and net
assets at end of period............. $5,372,079 $12,378,987 $9,999,460
========== =========== ==========
NUMBER OF UNITS
Outstanding--beginning of period....... -- -- --
Sold................................. 518,912 1,196,925 959,121
Redeemed............................. (5,712) (22,957) (13,018)
---------- ----------- ----------
Outstanding--end of period............. 513,200 1,173,968 946,103
========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-83
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
STRUCTURED PORTFOLIO SERVICE
SELECTED PER-UNIT DATA AND RATIOS
FOR THE YEAR ENDED DECEMBER 31, 1996
(For a unit outstanding throughout the year)*
<TABLE>
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE
------------ -------- ----------
<S> <C> <C> <C>
Investment income............................ $ -- $ -- $ --
Expenses..................................... (.01) (.01) (.01)
------- ------- -------
Net investment loss.......................... (.01) (.01) (.01)
Net realized and unrealized gain on
investments................................. 1.00 1.40 1.85
------- ------- -------
Net increase................................. .99 1.39 1.84
Net asset value at beginning of year......... 10.47 10.54 10.57
------- ------- -------
Net asset value at end of year............... $ 11.46 $ 11.93 $ 12.41
======= ======= =======
Ratio of expenses to average net assets...... .10% .10% .10%
Ratio of net investment loss to average net
assets...................................... (.10%) (.10%) (.10%)
Portfolio turnover**......................... 34.18% 26.97% 27.95%
Total return................................. 9.46% 13.19% 17.41%
Net assets at end of year (in thousands)..... $11,201 $32,617 $25,558
</TABLE>
- --------
* Calculations prepared using the monthly average number of units outstanding
during the year.
** Reflects purchases and sales of units of the funds in which the Portfolios
invests rather than turnover of such underlying funds.
The accompanying notes are an integral part of these financial statements.
F-84
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
STRUCTURED PORTFOLIO SERVICE
SELECTED PER-UNIT DATA AND RATIOS
(For a unit outstanding throughout the year)*
<TABLE>
<CAPTION>
FOR THE PERIOD
SEPTEMBER 5, 1995
(COMMENCEMENT OF
OPERATIONS) TO
DECEMBER 31, 1995
----------------------------------
CONSERVATIVE MODERATE AGGRESSIVE
------------ -------- ----------
<S> <C> <C> <C>
Investment income............................ $ .001 $ .001 $ .001
Expenses..................................... (.003) (.003) (.003)
------ ------- ------
Net investment loss.......................... (.002) (.002) (.002)
Net realized and unrealized gain on invest-
ments....................................... .472 .542 .572
------ ------- ------
Net increase................................. .47 .54 .57
Net asset value at beginning of period....... 10.00 10.00 10.00
------ ------- ------
Net asset value at end of period............. $10.47 $ 10.54 $10.57
====== ======= ======
Ratio of expenses to average net assets**.... .09% .09% .09%
Ratio of net investment loss to average net
assets**.................................... (.06%) (.06%) (.06 %)
Portfolio turnover***........................ 2.53% 3.57% 2.71%
Total return................................. 4.7% 5.4% 5.7%
Net assets at end of period (in thousands)... $5,372 $12,379 $9,999
</TABLE>
- --------
* Calculations prepared using the monthly average number of units outstanding
during the period.
** Ratios annualized.
*** Reflects purchases and sales of units of the funds in which the Portfolios
invest rather than turnover of such underlying funds.
The accompanying notes are an integral part of these financial statements.
F-85
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE TRUST
American Bar Association Members/State Street Collective Trust (the "Trust")
was organized on August 8, 1991 under a Declaration of Trust, as amended and
restated on December 5, 1991 and as amended on July 31, 1995. The Trust is
maintained exclusively for the collective investment monies administered on
behalf of participants in the American Bar Association Members Retirement
Program. Eight separate collective investment Funds (the "Funds") and the
Structured Portfolio Service (the "Portfolios") are established under the
Trust. The Structured Portfolio Service offers three approaches to diversifying
investments by selecting various allocations among the Funds. The Funds and
Portfolios are investment options under the American Bar Association Members
Retirement Program (the "Program") which is sponsored by the American Bar
Retirement Association ("ABRA"). The objectives of the Funds and Portfolios are
as follows:
Aggressive Equity Fund--long term growth of capital through investment in
common stocks of small to medium sized companies believed to have strong
appreciation potential.
Balanced Fund--current income and long-term capital appreciation through
investment in common stocks, other equity-type securities and debt
securities.
Growth Equity Fund--long term growth of capital and some dividend income
through investment in common stocks and equity-type securities of large,
well established companies.
Stable Asset Return Fund ("SARF")--current income consistent with
preserving principal and maintaining liquidity through investment in high
quality money market instruments and investment contracts and funding
agreements of insurance companies, banks and financial institutions.
Currently invests in the State Street Bank ABA Members/Pooled Stable Asset
Fund Trust, a separate State Street Bank and Trust Company ("State Street
Bank" or the "Trustee") collective investment fund.
Index Equity Fund--replication of the total return of the Russell 3,000
Index. Currently invests in the State Street Bank Flagship S&P 500 Index
Fund and State Street Bank Russell Special Small Company Common Trust Fund,
separate State Street Bank collective investment funds.
Intermediate Bond Fund (commenced September 5, 1995)--total return from
current income and capital appreciation through investment in debt
securities. Currently invests in the PIMCO Total Return Fund and
MasterWorks Bond Index Fund (formerly Stagecoach Inc. Bond Index Fund),
registered investment companies.
International Equity Fund (commenced September 5, 1995)--long term growth
of capital through investment in common stocks and other equity securities
of established non-U.S. companies. Currently invests in the T. Rowe Price
International Stock Fund, a registered investment company.
Value Equity Fund (commenced September 5, 1995)--long term growth of
capital and dividend income through investment in common stocks, primarily
of large capitalization companies believed to be undervalued.
Structured Portfolio Service (commenced September 5, 1995)
Conservative--high current investment income and some capital
appreciation.
Moderate--high current investment income and greater capital
appreciation.
Aggressive--long term growth of capital and lower current investment
income.
Each Structured Portfolio Service achieves its objective through a pre-
determined investment allocation in the Funds. See Statement of Assets and
Liabilities for Fund allocation at December 31, 1996.
F-86
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Effective September 5, 1995, the Blended Rate Fund, a separate collective
investment fund established under the Trust, was merged into the Enhanced Short
Term Investment Fund ("ESTIF") and ESTIF's name was changed to SARF (see Note
7).
The Trust may offer and sell an unlimited number of units representing
interests in separate Funds and Portfolios of the Trust, each unit to be
offered and sold at the per unit net asset value of the corresponding Fund or
Portfolio.
State Street Bank serves as trustee of the Trust. On January 1, 1992, State
Street Bank assumed responsibility for administering and providing investment
options for the Program. State Street Bank is a trust company established under
the laws of The Commonwealth of Massachusetts and is a wholly-owned subsidiary
of State Street Boston Corporation, a Massachusetts corporation and a holding
company registered under the Federal Bank Holding Company Act of 1956, as
amended.
State Street Bank is responsible for certain recordkeeping and administrative
services required by the Program. In addition, State Street Bank provides
account and investment information to employers and participants, receives all
plan contributions, effects investment and transfer transactions and
distributes all benefits provided by the plans to the participants or, in the
case of some individually designed plans, to the trustees of such plans.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
policies are in accordance with generally accepted accounting principles and
provisions of the Trust agreement:
A. Security Valuation
Stable Asset Return Fund: It is the Trust's policy to attempt to maintain
a constant price of $1.00 per unit for SARF. SARF invests in a State Street
Bank collective investment fund whose investments include insurance
company, bank and financial institution investment contracts and short-term
investments. Consistent with this objective, the short-term portfolio
instruments of the collective investment fund are valued on the basis of
amortized cost which approximates fair value. Amortized cost involves
valuing an instrument initially at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium, regardless of
the impact of fluctuating interest rates on the market value of the
instrument. The insurance company, bank and financial institution
investment contracts are maintained at contract value (cost plus accrued
interest) which approximates fair value. The values of investments in
collective investment funds are based on the net asset value of the
respective collective investment fund.
Other Funds: Stocks listed on national securities exchanges and certain
over-the-counter issues traded on the National Association of Securities
Dealers, Inc. automated quotation (NASDAQ) national market system are
valued at the last sale price, or, if no sale, at the latest available bid
price. Other unlisted stocks reported on the NASDAQ system are valued at
quoted bid prices.
Foreign securities not traded directly or in American Depository Receipt
(ADR) form in the United States are valued in the local currency at the
last sale price on the respective exchange. Foreign currency is converted
into its U.S. dollar equivalent at current exchange rates.
United States Treasury securities and other obligations issued or
guaranteed by the United States Government, its agencies or
instrumentalities are valued at representative quoted prices.
F-87
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Long-term publicly traded corporate bonds are valued at prices obtained
from a bond pricing service of a major dealer in bonds when such prices are
available. If not valued by a pricing service, such securities are valued
at prices obtained from independent brokers. Convertible bonds and unlisted
convertible preferred stocks are valued at bid prices obtained from one or
more major dealers in such securities; where there is a discrepancy between
dealers, values may be adjusted based on recent discount spreads to the
underlying common stock.
Investments with prices that cannot be readily obtained, if any, are
carried at fair value as determined in good faith under consistently
applied procedures established by and under the supervision of the Trustee.
The values of investments in collective investment funds and registered
investment companies are based on the net asset value of the respective
collective investment fund or registered investment company.
B. Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date (date the order
to buy or sell is executed). Interest income is recorded on the accrual
basis. Dividend income is recorded on the ex-dividend date. Interest income
is increased by accretion of discount and reduced by amortization of
premium. Realized gains and losses are reported on the basis of identified
cost of securities delivered.
A Fund's portfolio of investments may include securities purchased on a
when issued basis, which may be settled in the month after the issue date.
Interest income is not accrued until the settlement date.
C. Income Taxes
State Street Bank, on behalf of the Trust, has received a favorable
determination letter dated March 9, 1992, from the Internal Revenue Service
which concluded that the Trust is a trust arrangement described in Rev.
Rul. 81-100, 1981, C.B. 326 and exempt from federal income tax pursuant to
Section 501(a) of the Internal Revenue Code. Accordingly, no provision for
Federal income taxes is required.
D. Distributions to Participants
Stable Asset Return Fund: As of the close of business on each daily
valuation date, all net investment income is allocated among the
unitholders in proportion to the number of units held by each unitholder in
the fund and is reinvested on behalf of each such unitholder in new units.
All Other Funds: Pursuant to the Declaration of Trust, the funds are not
required to distribute their net investment income or gains from the sale
of portfolio investments.
E. Sales and Redemptions of Units of Participation
The units offered represent interests in the Funds and Portfolios
established under the Trust. The Trust may offer and sell an unlimited
number of registered units, each unit to be offered and sold at the
respective Fund's and Portfolio's net asset value.
F. Use of Estimates
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
F-88
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
3. INVESTMENT ADVISORY, INVESTMENT MANAGEMENT AND RELATED PARTY TRANSACTIONS
State Street Bank has retained the services of Capital Guardian Trust
Company, a wholly-owned subsidiary of The Capital Group Companies, Inc.,
Columbus Circle Investors, a division of PIMCO Advisors, L.P., RCM Capital
Management, a limited liability company, is a wholly owned subsidiary of
Dresdner Bank, A.G., Sit Investment Associates, Inc., Miller, Anderson &
Sherrerd, LLP, a wholly owned subsidiary of Morgan Stanley Asset Management
Holdings, Inc., Lincoln Capital Management Company, and Sanford C. Bernstein &
Co., Inc. to advise it with respect to its investment responsibility and has
allocated the assets of certain of the Funds among the investment advisors.
Each investment advisor recommends to State Street Bank investments and
reinvestments of the assets allocated to it in accordance with the investment
policies of the respective Fund as described above. State Street Bank exercises
discretion with respect to the selection and retention of the investment
advisors and may remove, upon consultation with ABRA, an investment advisor at
any time.
A fee is paid to each investment advisor for certain of the funds based on
the value of the assets allocated to that investment advisor and the respective
breakpoints agreed to in the contract. These fees are accrued on a daily basis
and paid monthly from the assets. Fee rate ranges based on the respective
breakpoints are as follows:
<TABLE>
<CAPTION>
INVESTMENT ADVISOR FEE RATE RANGE
------------------ ---------------
<S> <C> <C>
Capital Guardian Trust Company (Growth Equity and
Aggressive Equity)....................................... .225% to .50%
Columbus Circle Investors (Growth Equity)................. .30% to .50%
RCM Capital Management (Growth Equity).................... .25% to .70%
Sit Investment Associates (Aggressive Equity)............. .60% to 1.00%
Miller, Anderson & Sherrerd, LLP (Balanced)............... .20% to .60%
Lincoln Capital Management Company (Balanced)............. .15% to .4675%
Sanford C. Bernstein & Co., Inc. (Value Equity)........... .15% to .50%
</TABLE>
A program fee ("Program Fee") is paid to State Street Bank and ABRA based on
the value of Program assets. This fee is accrued on a daily basis and paid
monthly from the assets of the Funds based on the following annual rates:
<TABLE>
<CAPTION>
RATE FOR RATE FOR
STATE STREET BANK ABRA
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
VALUE OF PROGRAM ASSETS 1996 1996
----------------------- ----------------- ------------
<S> <C> <C>
First $500 million......................... .564% .075%
Next $850 million.......................... .40% .065%
Next $1.15 billion......................... .25% .035%
Next $1.5 billion.......................... .175% .025%
Over $4.0 billion.......................... .15% .015%
</TABLE>
State Street Bank and ABRA received Program fees of $7,601,931 and $1,115,812
for the year ended December 31, 1996, respectively.
F-89
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
A fee is paid to State Street Bank for its trustee, management and
administration of the assets in the Funds. This fee is accrued on a daily basis
and paid monthly from the assets of the Funds at the following annual rates:
<TABLE>
<CAPTION>
VALUE OF ASSETS IN BALANCED, VALUE EQUITY, GROWTH EQUITY,
AGGRESSIVE EQUITY AND INTERNATIONAL EQUITY FUNDS RATE
--------------------------------------------------------- ----
<S> <C>
First $500 million................................................. .10%
Next $500 million.................................................. .075%
Over $1 billion.................................................... .05%
<CAPTION>
VALUE OF ASSETS IN INDEX EQUITY FUND RATE
------------------------------------ ----
<S> <C>
First $50 million.................................................. .20%
Over $50 million................................................... .13%
<CAPTION>
VALUE OF ASSETS IN STABLE ASSET RETURN FUND* RATE
-------------------------------------------- ----
<S> <C>
First $750 million................................................. .20%
Next $250 million.................................................. .10%
Over $1.0 billion.................................................. .075%
<CAPTION>
VALUE OF ASSETS IN INTERMEDIATE BOND FUND RATE
----------------------------------------- ----
<S> <C>
First $500 million................................................. .10%
Next $500 million.................................................. .075%
Over $1.0 billion.................................................. .05%
</TABLE>
- --------
* For the purpose of determining the management fees charged to assets
invested in the Stable Asset Return Fund and administrative fees charged to
assets invested in Insurance Investment Contracts (an investment option of
the Program not included in the Trust), the amount of the assets held in
these two investment options is aggregated.
State Street Bank received trustee, management and administration fees which
aggregated $2,406,804 for the year ended December 31, 1996.
Assets allocated to the Portfolios are not subject to any fees except an
annual service fee of .10% for the first $100 million and .05% over $100
million. State Street Bank received Portfolio service fees of $51,026 for the
year ended December 31, 1996.
4. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities
excluding U.S. Government and short-term investments were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-------------------------
PURCHASES SALES
------------ ------------
<S> <C> <C>
Aggressive Equity Fund........................... $128,239,961 $119,409,361
Growth Equity Fund............................... 457,533,598 439,101,311
Balanced Fund.................................... 102,283,264 119,362,075
Stable Asset Return Fund......................... 136,505,106 133,313,248
Index Equity Fund................................ 34,284,546 11,559,734
Value Equity Fund................................ 25,312,526 5,887,699
International Equity Fund........................ 37,252,756 17,056,338
Intermediate Bond Fund........................... 24,692,772 9,959,670
Conservative Structured Portfolio Service........ 8,088,116 3,032,313
Moderate Structured Portfolio Service............ 24,141,842 6,550,390
Aggressive Structured Portfolio Service.......... 17,596,247 5,014,474
</TABLE>
F-90
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The aggregate cost of purchases and proceeds from sales of U.S. Government
securities were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-------------------------
PURCHASES SALES
------------ ------------
<S> <C> <C>
Balanced Fund.................................... $424,694,317 $389,535,344
Value Equity Fund................................ 1,371,119 --
Growth Equity Fund............................... 730,905 3,707,083
</TABLE>
5. ORGANIZATIONAL EXPENSES
Expenses incurred in connection with the organization of the original funds
(Balanced, Aggressive, SARF and Growth) (the "Original Funds") in 1991 included
state and federal securities registration fees, legal and accounting fees and
expenses, and printing costs. These expenses were borne equally by the Original
Funds, capitalized by each Original Fund and amortized over a period of 60
months on a straight line basis. On May 15, 1996 ABRA reimbursed the Original
Funds for the remaining unamortized portion of the organization costs.
Organization costs reimbursed were $39,802, $35,366, $61,360, and $60,987 for
the Balanced, Aggressive, SARF and Growth Funds, respectively.
Expenses incurred in connection with the addition of new Funds and Portfolios
and the reorganization of the Program in 1995 included state and federal
securities registration fees, legal and accounting fees and expenses and
printing costs. These expenses were allocated to the Funds based on net asset
value, capitalized by each Fund and amortized over a period of 36 months on a
straight line basis. Organizational costs are reallocated on a quarterly basis
between Funds based on net asset value. There were no organizational expenses
allocated to the Portfolios.
If a Fund should terminate prior to the full amortization of its
organizational expenses, the amount per unit that will be realized by investors
upon the liquidation of the Fund may be less than the per unit net asset value
of the Fund at the time of liquidation. The unamortized portion of the
organizational expenses will be charged as an expense of the Fund in the event
of termination.
6. GEOGRAPHIC AND INDUSTRY CONCENTRATION
Certain Funds maintain investments in ADRs which involve special risks. These
securities may be subject to foreign government taxes that reduce their
attractiveness. Other risks of investing in such securities include political
or economic instability in the country involved, the difficulty of predicting
international trade patterns and the possibility of the imposition of exchange
controls. Foreign issuers generally are not subject to uniform accounting,
auditing and financial reporting standards comparable to those applicable to
domestic issuers. There is generally less regulation of stock exchanges,
brokers, banks and companies abroad than in the United States. With respect to
certain foreign countries, there is a possibility of expropriation or
diplomatic developments which could adversely affect investment in these
countries. ADRs do not lessen the risk of investing in foreign issuers;
however, by investing in ADRs rather than directly in foreign issuers' stock,
the Funds will avoid currency risks during the settlement period for purchases
or sales. In addition, the domestic market for ADRs may be more liquid than the
foreign market for the underlying securities.
A significant portion of the Aggressive Equity Fund's investments are in
securities of small to medium-sized companies, which typically have greater
market and financial risk than larger, more
F-91
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
diversified companies. These companies are often dependent on one or two
products in rapidly changing industries and may be more vulnerable to
competition from larger companies with greater resources and to economic
conditions that affect their market sector.
SARF invests in a collective investment fund that maintains investments in
contracts issued by insurance companies. The issuing institution's ability to
meet its contractual obligations under the respective contracts may be affected
by future economic and regulatory developments in the insurance industry.
7. ACQUISITION OF BLENDED RATE FUND
On September 5, 1995, SARF acquired all of the net assets of the Blended Rate
Fund. The acquisition was accomplished by an exchange of 222,343,776 units of
SARF (valued at $1.00/unit) for the 222,343,776 units of Blended Rate Fund
outstanding on September 5, 1995. The Blended Rate Fund's net assets at that
date ($222,343,776) were combined with those of SARF. The aggregate net assets
of SARF and the Blended Rate Fund immediately before the acquisition were
$498,717,192 and $222,343,776, respectively. Immediately after the acquisition,
the aggregate net assets of SARF were $721,060,968.
F-92
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered are set forth in the following table (all amounts
except the registration fee are estimated):
<TABLE>
<S> <C>
Registration fee.................................................. $ 303,031
Accountant's fees and expenses.................................... 94,000
Legal fees and expenses........................................... 60,000
Printing expenses................................................. 300,000
Blue Sky fees and expenses........................................ 20,000
Miscellaneous..................................................... 7,969
---------
Total........................................................... 785,000
=========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
State Street's By-Laws provide that State Street shall indemnify each person
who is or was a director, officer, employee or other agent of State Street
against all liabilities, costs and expenses, including but not limited to
amounts paid in satisfaction of judgments, in settlement or as fines and
penalties, and counsel fees and disbursements reasonably incurred by such
persons in connection with the defense or disposition of or otherwise in
connection with or resulting from any action, suit or other proceeding, whether
civil, criminal, administrative or investigative, before any court or
administrative or legislative or investigative body, in which such person may
be or may have been involved as a party or otherwise or with which such person
may be or may have been threatened, while in office or thereafter, by reason of
being or having been such a director, officer, employee, agent or trustee, or
by reason of any action taken or not taken in any such capacity, except with
respect to any matter as to which such person shall have been finally
adjudicated by a court of competent jurisdiction not to have acted in good
faith in the reasonable belief that such action was in the best interests of
State Street.
State Street Boston Corporation, the parent company of State Street, carries
director and officer liability insurance that protects directors and officers
from losses arising out of actual or alleged negligence or imprudent acts or
omissions while they are directing or managing the affairs of State Street
Boston Corporation.
State Street Boston Corporation also carries bankers professional liability
insurance which protects State Street and State Street Boston Corporation
against losses resulting from actual or alleged wrongful acts committed in
connection with rendering a professional service.
Each of the Investment Advisor Agreements between State Street and the
Investment Advisors provides that to the extent permitted by applicable law,
the Investment Advisor agrees to indemnify and hold harmless State Street for
any losses, damages or expenses resulting from (1) any recommendation of the
Investment Advisor or based on information provided by the Investment Advisor,
(2) the Investment Advisor's failure to provide correct and timely information
or to make recommendations on a timely basis as provided in the applicable
Agreement and (3) any disclosure relating to the Investment Advisor or the
services provided by the Investment Advisor with respect to a Fund which the
Investment Advisor has prepared, approved in writing or has not disapproved
within five (5) business days following transmission to a person designated by
the Investment Advisor to review such disclosure; provided, however, that the
Investment Advisor shall not be required to indemnify and hold harmless State
Street to the extent that such losses, damages or expenses result from an act
or omission of the Investment Advisor with respect to which the Investment
Advisor not only has used such care, skill, prudence and diligence as a
reasonably prudent person acting in like
II-1
<PAGE>
capacity and familiar with such matters would use in the conduct of an
enterprise of like character and with like aims, but also has otherwise acted
in accordance with the Investment Advisor Agreement.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since April 1995, the Collective Trust has issued an aggregate of
$447,776,437 of unregistered Units. Such Units were offered and sold in
reliance upon the exemption from registration under Rule 180 promulgated under
the Securities Act relating to exemption from registration of interests and
participations issued in connection with certain H.R. 10 plans.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT
----------- -----------------------
<C> <S> <C>
3.1 American Bar Association Members/State Street Collective
Trust, Declaration of Trust by State Street Bank and Trust
Company, amended and restated December 5, 1991, with
Exhibits 1-5 attached thereto, included as Exhibit 3.1 to
Registrant's Form S-1 Registration Statement No. 33-50080
and incorporated herein by reference thereto.
3.2 American Bar Association Members/State Street Collective
Trust, Amendment to Declaration of Trust by State Street
Bank and Trust Company dated July 31, 1995, with Exhibits 1-
9 attached thereto, included as Exhibit 3.2 to Registrants
Form S-1 Registration Statement No. 33-92120 and
incorporated herein by reference thereto.
3.3 American Bar Association Members/State Street Collective
Trust, Amended and Restated Fund Declarations dated as of
April 12, 1996 for each of the Aggressive Equity Fund, the
Balanced Fund, the Growth Equity Fund, the Index Equity
Fund, the Intermediate Bond Fund, the International Equity
Fund and the Value Equity Fund, included as Exhibit 3.3 to
Registrants Form S-1 Registration Statement No. 33-92120 and
incorporated herein by reference thereto.
3.4* American Bar Association Members/State Street Collective
Trust, Second Amended and Restated Fund Declaration, dated
as of April 11, 1997, for the Stable Asset Return Fund.
4.1 American Bar Association Members/State Street Collective
Trust, Fund Declaration for each Fund and the Structured
Portfolio Service, included in Exhibits No. 3.1, 3.2, 3.3 or
3.4.
5.1* Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
regarding the legality of the Units registered.
5.2* Opinion of Goodwin, Procter & Hoar LLP regarding matters of
Massachusetts law.
10.1 Trust Agreement of the American Bar Association Members
Retirement Trust, amended and restated as of January 1,
1992, by and between the American Bar Retirement Association
and State Street Bank and Trust Company, included as Exhibit
10.1 to Registrant's Form 10-K for the year ended December
31, 1991 and incorporated herein by reference thereto.
10.2 Trust Agreement of the American Bar Association Members
Pooled Trust for Retirement Plans, amended and restated as
of January 1, 1992, by and between the American Bar
Retirement Association and State Street Bank and Trust
Company, included as Exhibit 10.2 to Registrant's Form 10-K
for the year ended December 31, 1991 and incorporated herein
by reference thereto.
10.3 Amendment to the American Bar Association Members Retirement
Trust dated July 31, 1995 by and between the American Bar
Retirement Association and State Street Bank and Trust
Company, included as Exhibit 10.3 to Registrants Form S-1
Registration Statement No. 33-92120 and incorporated herein
by reference thereto.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT
----------- -----------------------
<C> <S> <C>
10.4 Amendment to the American Bar Association Members Pooled
Trust for Retirement Plans dated July 31, 1995 by and
between the American Bar Retirement Association and State
Street Bank and Trust Company, included as Exhibit 10.4 to
Registrants Form S-1 Registration Statement No. 33-92120 and
incorporated herein by reference thereto.
10.5* American Bar Association Members Retirement Plan--Basic Plan
Document No. 01, as approved by the Internal Revenue Service
on December 16, 1996 .
10.6 American Bar Association Members Defined Benefit Pension
Plan--Basic Plan Document No. 02 and related participation
agreements, included as Exhibit 10.4 to Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on
Form S-1 No. 33-42274 and incorporated herein by reference
thereto.
10.7 Administrative and Investment Services Agreement effective
January 1, 1992, between State Street Bank and Trust Company
and the American Bar Retirement Association, included as
Exhibit 10.5 to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form S-1 No. 33-42274
and incorporated herein by reference thereto.
10.8 Amendment No. 1 to Administrative and Investment Services
Agreement effective January 1, 1992 by and between State
Street Bank and Trust Company and the American Bar
Retirement Association, included as Exhibit 10.6 to
Registrant's Form S-1 Registration Statement No. 33-50080
and incorporated herein by reference thereto.
10.9 Amendment No. 2 to Administrative and Investment Services
Agreement dated July 31, 1995 by and between State Street
Bank and Trust Company and the American Bar Association
Retirement Association, included as Exhibit 10.9 to
Registrants Form S-1 Registration Statement No. 33-92120 and
incorporated herein by reference thereto.
10.10 Investment Advisor Agreement effective as of January 1, 1992
by and between State Street Bank and Trust Company and
Capital Guardian Trust Company relating to the Growth Equity
Fund, included as Exhibit 10.6 to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1991 and
incorporated herein by reference thereto.
10.11 Investment Advisor Agreement effective as of January 1, 1992
by and between State Street Bank and Trust Company and RCM
Capital Management relating to the Growth Equity Fund,
included as Exhibit 10.8 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1991 and
incorporated herein by reference thereto.
10.12 Investment Advisor Agreement effective as of January 1, 1992
by and between State Street Bank and Trust Company and
Capital Guardian Trust Company relating to the Aggressive
Equity Fund, included as Exhibit 10.9 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1991 and
incorporated herein by reference thereto.
10.13 Investment Advisor Agreement effective as of January 1, 1992
by and between State Street Bank and Trust Company and Sit
Investment Associates, Inc. relating to the Aggressive
Equity Fund, included as Exhibit 10.10 to Registrant's
Annual Report on Form 10-K for the year ended December 31,
1991 and incorporated herein by reference thereto.
10.14 Investment Advisor Agreement effective as of October 1, 1992
by and between State Street Bank and Trust Company and
Miller, Anderson & Sherrerd relating to the Balanced Fund,
included as Exhibit 10.13 to Registrant's Form S-1
Registration Statement No. 33-50080 and incorporated herein
by reference thereto.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT
----------- -----------------------
<C> <S> <C>
10.15 Investment Advisor Agreement effective as of November 1,
1992 by and between State Street Bank and Trust Company and
Lincoln Capital Management Company relating to the Balanced
Fund, included as Exhibit 10.14 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1992 and
incorporated herein by reference thereto.
10.16 Investment Advisor Agreement effective as of August 1, 1993
by and between State Street Bank and Trust Company and
Columbus Circle Investors relating to the Growth Equity
Fund, included as Exhibit 10.15 to Registrant's Form S-1
Registration Statement No. 33-68730 and incorporated herein
by reference thereto.
10.17 Investment Advisor Agreement dated July 31, 1995 by and
between State Street Bank and Trust Company and Sanford
Bernstein & Co. Inc. relating to the Value Equity Fund,
included as Exhibit 10.17 to Registrants Form S-1
Registration Statement No. 33-92120 and incorporated herein
by reference thereto.
10.18 Plan of Merger effective as of September 5, 1995 merging
Blended Rate Fund with and into Enhanced Short Term
Investment Fund, included as Exhibit 10.18 to Registrants
Form S-1 Registration Statement No. 33-92120 and
incorporated herein by reference thereto.
23.1* Consent of Paul, Weiss, Rifkind, Wharton & Garrison,
included in the opinion filed as Exhibit 5.1.
23.2* Consent of Goodwin, Procter & Hoar LLP, included in the
opinion filed as Exhibit 5.2.
23.3* Consent of Price Waterhouse.
24.1 Power of Attorney.
27.1 Financial Data Schedule.
</TABLE>
- --------
* Filed herewith.
(b) Financial Statement Schedules and Related Reports
A Schedule of Investments for each of the Aggressive Equity Fund, the
Balanced Fund, the Growth Equity Fund and the Value Equity Fund is filed as
part of this Registration Statement. See "Index to Financial Statements."
All other schedules and reports are omitted because they are not applicable
or not required, or because the information required, therein is included in
the financial statements or the notes thereto.
II-4
<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospecctus filed by the Company pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be a part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF BOSTON, COMMONWEALTH OF
MASSACHUSETTS, ON APRIL 14, 1997.
AMERICAN BAR ASSOCIATION MEMBERS/
STATE STREET COLLECTIVE TRUST
/s/ James S. Phalen
By: _________________________________
Name: James S. Phalen
Title: President and Chief
Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
SIGNATURE TITLE DATE
/s/ James S. Phalen President and Chief
- ------------------------------------- Executive Officer April 14, 1997
JAMES S. PHALEN of the American Bar
Association
Members/State
Street Collective
Trust (Principal
Executive Officer)
/s/ Nancy P. Antin Vice President and
- ------------------------------------- Chief Financial April 14, 1997
NANCY P. ANTIN Officer of the
American Bar
Association
Members/State
Street Collective
Trust (Principal
Financial Officer)
/s/ Susan C. Daniels Treasurer and Chief
- ------------------------------------- Accounting Officer April 14, 1997
SUSAN C. DANIELS of the American Bar
Association
Members/State
Street Collective
Trust (Principal
Accounting Officer)
II-6
<PAGE>
SIGNATURE TITLE DATE
* Chairman and Chief
- ------------------------------------- Executive Officer April 14, 1997
MARSHALL N. CARTER of State Street
Bank and Trust
Company
* Director, President
- ------------------------------------- and Chief Operating April 14, 1997
DAVID A. SPINA Officer of State
Street Bank and
Trust Company
* Director of State
- ------------------------------------- Street Bank and April 14, 1997
TENLEY E. ALBRIGHT Trust Company
* Director of State
- ------------------------------------- Street Bank and April 14, 1997
JOSEPH A. BAUTE, JR. Trust Company
* Director of State
- ------------------------------------- Street Bank and April 14, 1997
I. MACALLISTER BOOTH Trust Company
Director of State
- ------------------------------------- Street Bank and
JAMES I. CASH, JR. Trust Company
* Director of State
- ------------------------------------- Street Bank and April 14, 1997
TRUMAN S. CASNER Trust Company
* Director of State
- ------------------------------------- Street Bank and April 14, 1997
NADER F. DAREHSHORI Trust Company
II-7
<PAGE>
SIGNATURE TITLE DATE
* Director of State
- ------------------------------------- Street Bank and April 14, 1997
ARTHUR L. GOLDSTEIN Trust Company
* Director of State
- ------------------------------------- Street Bank and April 14, 1997
CHARLES F. KAYE Trust Company
* Director of State
- ------------------------------------- Street Bank and April 14, 1997
JOHN M. KUCHARSKI Trust Company
* Director of State
- ------------------------------------- Street Bank and April 14, 1997
CHARLES R. LAMANTIA Trust Company
Director of State
- ------------------------------------- Street Bank and
DAVID B. PERINI Trust Company
* Director of State
- ------------------------------------- Street Bank and April 14, 1997
DENNIS J. PICARD Trust Company
/s/ Nicholas A. Lopardo
*By _________________________________
NAME: NICHOLAS A. LOPARDO
ATTORNEY-IN-FACT
/s/ John R. Towers
*By _________________________________
NAME: JOHN R. TOWERS
ATTORNEY-IN-FACT
II-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT
----------- -----------------------
<C> <S> <C>
3.1 American Bar Association Members/State Street Collective
Trust, Declaration of Trust by State Street Bank and Trust
Company, amended and restated December 5, 1991, with
Exhibits 1-5 attached thereto, included as Exhibit 3.1 to
Registrant's Form S-1 Registration Statement No. 33-50080
and incorporated herein by reference thereto.
3.2 American Bar Association Members/State Street Collective
Trust, Amendment to Declaration of Trust by State Street
Bank and Trust Company dated July 31, 1995, with Exhibits 1-
9 attached thereto, included as Exhibit 3.2 to Registrants
Form S-1 Registration Statement No. 33-92120 and
incorporated herein by reference thereto.
3.3 American Bar Association Members/State Street Collective
Trust, Amended and Restated Fund Declarations dated as of
April 12, 1996 for each of the Aggressive Equity Fund, the
Balanced Fund, the Growth Equity Fund, the Index Equity
Fund, the Intermediate Bond Fund, the International Equity
Fund and the Value Equity Fund, included as Exhibit 3.3 to
Registrants Form S-1 Registration Statement No. 33-92120 and
incorporated herein by reference thereto.
3.4* American Bar Association Members/State Street Collective
Trust, Amended and Restated Fund Declaration, dated as of
April 11, 1997 for the Stable Asset Return Fund.
4.1 American Bar Association Members/State Street Collective
Trust, Fund Declaration for each Fund and the Structured
Portfolio Service, included in Exhibits No. 3.1, 3.2, 3.3 or
3.4.
5.1* Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
regarding the legality of the Units registered.
5.2* Opinion of Goodwin, Procter & Hoar LLP regarding matters of
Massachusetts law.
10.1 Trust Agreement of the American Bar Association Members
Retirement Trust, amended and restated as of January 1,
1992, by and between the American Bar Retirement Association
and State Street Bank and Trust Company, included as Exhibit
10.1 to Registrant's Form 10-K for the year ended December
31, 1991 and incorporated herein by reference thereto.
10.2 Trust Agreement of the American Bar Association Members
Pooled Trust for Retirement Plans, amended and restated as
of January 1, 1992, by and between the American Bar
Retirement Association and State Street Bank and Trust
Company, included as Exhibit 10.2 to Registrant's Form 10-K
for the year ended December 31, 1991 and incorporated herein
by reference thereto.
10.3 Amendment to the American Bar Association Members Retirement
Trust dated July 31, 1995 by and between the American Bar
Retirement Association and State Street Bank and Trust
Company, included as Exhibit 10.3 to Registrants Form S-1
Registration Statement No. 33-92120 and incorporated herein
by reference thereto.
10.4 Amendment to the American Bar Association Members Pooled
Trust for Retirement Plans dated July 31, 1995 by and
between the American Bar Retirement Association and State
Street Bank and Trust Company, included as Exhibit 10.4 to
Registrants Form S-1 Registration Statement No. 33-92120 and
incorporated herein by reference thereto.
10.5* American Bar Association Members Retirement Plan--Basic Plan
Document No. 01, as approved by the Internal Revenue Service
on December 16, 1996.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT
----------- -----------------------
<C> <S> <C>
10.6 American Bar Association Members Defined Benefit Pension
Plan--Basic Plan Document No. 02 and related participation
agreements, included as Exhibit 10.4 to Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on
Form S-1 No. 33-42274 and incorporated herein by reference
thereto.
10.7 Administrative and Investment Services Agreement effective
January 1, 1992, between State Street Bank and Trust Company
and the American Bar Retirement Association, included as
Exhibit 10.5 to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form S-1 No. 33-42274
and incorporated herein by reference thereto.
10.8 Amendment No. 1 to Administrative and Investment Services
Agreement effective January 1, 1992 by and between State
Street Bank and Trust Company and the American Bar
Retirement Association, included as Exhibit 10.6 to
Registrant's Form S-1 Registration Statement No. 33-50080
and incorporated herein by reference thereto.
10.9 Amendment No. 2 to Administrative and Investment Services
Agreement dated July 31, 1995 by and between State Street
Bank and Trust Company and the American Bar Association
Retirement Association, included as Exhibit 10.9 to
Registrants Form S-1 Registration Statement No. 33-92120 and
incorporated herein by reference thereto.
10.10 Investment Advisor Agreement effective as of January 1, 1992
by and between State Street Bank and Trust Company and
Capital Guardian Trust Company relating to the Growth Equity
Fund, included as Exhibit 10.6 to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1991 and
incorporated herein by reference thereto.
10.11 Investment Advisor Agreement effective as of January 1, 1992
by and between State Street Bank and Trust Company and RCM
Capital Management relating to the Growth Equity Fund,
included as Exhibit 10.8 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1991 and
incorporated herein by reference thereto.
10.12 Investment Advisor Agreement effective as of January 1, 1992
by and between State Street Bank and Trust Company and
Capital Guardian Trust Company relating to the Aggressive
Equity Fund, included as Exhibit 10.9 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1991 and
incorporated herein by reference thereto.
10.13 Investment Advisor Agreement effective as of January 1, 1992
by and between State Street Bank and Trust Company and Sit
Investment Associates, Inc. relating to the Aggressive
Equity Fund, included as Exhibit 10.10 to Registrant's
Annual Report on Form 10-K for the year ended December 31,
1991 and incorporated herein by reference thereto.
10.14 Investment Advisor Agreement effective as of October 1, 1992
by and between State Street Bank and Trust Company and
Miller, Anderson & Sherrerd relating to the Balanced Fund,
included as Exhibit 10.13 to Registrant's Form S-1
Registration Statement No. 33-50080 and incorporated herein
by reference thereto.
10.15 Investment Advisor Agreement effective as of November 1,
1992 by and between State Street Bank and Trust Company and
Lincoln Capital Management Company relating to the Balanced
Fund, included as Exhibit 10.14 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1992 and
incorporated herein by reference thereto.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT
----------- -----------------------
<C> <S> <C>
10.16 Investment Advisor Agreement effective as of August 1, 1993
by and between State Street Bank and Trust Company and
Columbus Circle Investors relating to the Growth Equity
Fund, included as Exhibit 10.15 to Registrant's Form S-1
Registration Statement No. 33-68730 and incorporated herein
by reference thereto.
10.17 Investment Advisor Agreement dated July 31, 1995 by and
between State Street Bank and Trust Company and Sanford
Bernstein & Co. Inc. relating to the Value Equity Fund,
included as Exhibit 10.17 to Registrants Form S-1
Registration Statement No. 33-92120 and incorporated herein
by reference thereto.
10.18 Plan of Merger effective as of September 5, 1995 merging
Blended Rate Fund with and into Enhanced Short Term
Investment Fund, included as Exhibit 10.18 to Registrants
Form S-1 Registration Statement No. 33-92120 and
incorporated herein by reference thereto.
23.1* Consent of Paul, Weiss, Rifkind, Wharton & Garrison,
included in the opinion filed as Exhibit 5.1.
23.2* Consent of Goodwin, Procter & Hoar LLP, included in the
opinion filed as Exhibit 5.2.
23.3* Consent of Price Waterhouse.
24.1 Power of Attorney.
27.1 Financial Data Schedule.
</TABLE>
- --------
* Filed herewith.
<PAGE>
Exhibit 3.4
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET
COLLECTIVE TRUST
SECOND AMENDED FUND DECLARATION
STABLE ASSET RETURN FUND
(FORMERLY ENHANCED SHORT TERM INVESTMENT FUND)
Pursuant to Article VII of the Declaration of Trust, dated December 5,
1991, which authorizes State Street Bank and Trust Company as trustee ("State
Street" or the "Trustee") of the American Bar Association Members/State Street
Collective Trust (the "Collective Trust") to amend the Fund Declarations of the
investment funds established under the Collective Trust, effective as of April
11, 1997, State Street hereby amends and restates the Fund Declaration dated
November 25, 1991 of the Enhanced Short Term Investment Fund ("ESTIF"), an
investment fund established under the Collective Trust, to, among other things,
change the name of ESTIF and certain aspects of the investment objectives,
guidelines and restrictions applicable thereto. The provisions of the
Declaration of Trust are incorporated herein by reference. In addition, the
Trustee agrees and declares that it will hold, administer and deal with all
money and property received or purchased by it as Trustee of the Collective
Trust subject to the additional terms and conditions set forth in this Fund
Declaration. Capitalized terms used and not otherwise defined shall have the
meanings set forth in the Declaration of Trust.
1. Name of the Fund. The name of this investment fund shall be
----------------
"Stable Asset Return Fund" (the "Fund").
2. Investment Objective. The investment objective of the Fund is to
--------------------
provide current income consistent with preserving principal and maintaining
liquidity.
3. Investment Guidelines and Restrictions. The assets of the Fund
--------------------------------------
shall be normally invested and reinvested in (a) obligations of the United
States and the agencies and instrumentalities thereof ("United States
Obligations") and in other high quality money market instruments, including, but
not limited to, notes, bonds and similar debt instruments, commercial paper,
certificates of deposit and time deposits, bankers' acceptances, variable and
indexed
<PAGE>
interest notes and repurchase agreements (collectively, "Short-term Investment
Products"); and (b) investment contracts or "Synthetic GICs" (as defined below)
issued by insurance companies, banks or other financial institutions
(collectively, "Investment Contracts"). For this purpose, "Synthetic GICs" means
arrangements comprised of an investment in one or more securities and a contract
issued by an insurance company, bank or other financial institution that
provides for the return of principal and an agreed upon rate of interest. All
such Investment Contracts and Synthetic GICs shall be benefit responsive (i.e.,
responsive to withdrawal, transfer and benefit payment requests at book or face
value and shall satisfy any other conditions as may be required so that each
such contract can be accounted for and valued at book or face value under
generally accepted accounting principles). The underlying securities of
Synthetic GICs shall generally consist of fixed-income debt instruments.
All of the investments by the Fund may be made through collective
investment funds maintained by State Street, so long as such collective
investment funds comply with the investment guidelines and restrictions
described herein.
It is the intention of the Trustee not to cause the Fund to invest in
derivative securities, except to the extent set forth in the Prospectus of the
Collective Trust from time to time in effect pursuant to which the Units of the
Fund may be issued. The Trustee, subject to consultation with ABRA, may in the
future review such investment policy.
Investments in Short-Term Investment Products, other than United States
Obligations, at the time of purchase (a) must be rated or issued by issuers that
rated in either of the two highest rating categories applicable to bonds by at
least two nationally recognized statistical rating organizations ("NRSROs"), at
least one of which must be Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's Corporation ("S&P"), (b) must be rated or issued by issuers
that rated in the highest rating category applicable to commercial paper by at
least two NRSROs, at least one of which must be Moody's or S&P, or (c) if
unrated, must be issued or guaranteed by an issuer that has other comparable
outstanding instruments that are so rated or is itself rated in either of the
two highest rating categories by at least two NRSROs, at least one of which
must be Moody's or S&P. For purposes of this restriction, an investment in a
repurchase agreement will be considered to be an investment in the securities
that are subject to the repurchase agreement.
<PAGE>
The Stable Asset Return Fund will not invest in any Investment Contract,
unless, at the time of purchase, the Investment Contract or issuer is rated in
one of the two highest rating categories by at least two NRSROs, at least one of
which must be S&P or Moody's.
Except for Investment Contracts and United States Obligations, the
Trustee shall not invest, either directly or indirectly through one or more
collective investment funds, more than 5% of the assets of the Fund in
securities of a single issuer, determined at the time of purchase. Other than
Investment Contracts, the Trustee shall not, either directly or indirectly
through one or more collective investment funds, invest more than 10% of the
assets of the Fund in illiquid securities, including repurchase agreements with
maturities of greater than 7 days or portfolio securities that are not readily
marketable or redeemable, in each case determined at the time of purchase. The
proportion of the assets of the Fund invested, either directly or indirectly
through one or more collective investment funds, in Investment Contracts of any
one insurance company, bank or financial institution will generally not be
greater than 15% of the aggregate value of Investment Contracts included in the
Fund's portfolio, and in no event greater than 20%, in each case determined at
the time of purchase.
4. Transfers. A Participating Trust may request withdrawal of any
---------
number of Units from the Fund on any Business Day; provided, however, the
Trustee may limit or suspend certain or all withdrawal and transfer rights when
the amount of liquid assets held by the Fund are insufficient in the judgment of
the Trustee to satisfy all required withdrawal and transfer requests.
5. Trustee, Management and Administrative Fees. For services rendered
-------------------------------------------
as trustee of the Fund, the Trustee will be entitled to receive compensation in
the amount and at the time set forth in Schedule A attached hereto.
6. Conflicts. In the event of a conflict between the terms of this
---------
document and the Declaration of Trust, the Declaration of Trust shall control
unless the Declaration of Trust specifically permits the Trustee to vary the
particular provision set forth therein.
<PAGE>
IN WITNESS WHEREOF, STATE STREET BANK AND TRUST COMPANY has caused its
name to be signed to this Amended Fund Declaration for the Stable Asset Return
Fund by its proper officer as of April 11, 1997.
ATTEST: STATE STREET BANK AND TRUST
COMPANY
By: /s/ Gary E. Jenkins By: /s/ Nancy P. Antin
--------------------------- --------------------------
Name: Gary E. Jenkins Name: Nancy P. Antin
Title: Vice President Title: Vice President
<PAGE>
STABLE ASSET RETURN FUND
(FORMERLY ENHANCED SHORT TERM INVESTMENT FUND)
SECOND AMENDED FUND DECLARATION
SCHEDULE A
For services rendered to the Stable Asset Return Fund, the Trustee shall
be entitled to receive with respect to the assets of the Fund a Trustee,
Management and Administrative fee,/1/ charged at the following annual rates,
which will accrue on a daily basis and will be paid monthly, provided that such
fee shall be reduced by the amount of any management fee received by the Trustee
(which for these purposes shall not exceed the amount set forth below) on
account of the investment of any assets of the Fund in any other collective
investment trust maintained by the Trustee:
Value of Assets in
Stable Asset Return Fund Rate
------------------------ ----
First $750 million .20 %
Next $250 million .10
Over $1.0 billion .075
- -----------------
/1/ For the purpose of determining such fees charged to assets invested in the
Stable Asset Return Fund and administrative fees charged to assets invested
in Insurance Investment Contracts (as defined in the Prospectus of the
Collective Trust in effect from time to time), the amount of the assets
held in these two investment options shall be aggregated.
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF PAUL, WEISS, RIFKIND, WHARTON & GARRISON]
April 15, 1997
American Bar Retirement Association
541 North Fairbank Court
Chicago, Illinois 60611-3314
State Street Bank and Trust
Company
225 Franklin Street
Boston, Massachusetts 02110
American Bar Association Members/
State Street Collective Trust
Registration Statement on Form S-1
Registration No. 333-23633
----------------------------------
Ladies and Gentlemen:
In connection with the above-captioned Registration Statement on
Form S-1 (the "Registration Statement") filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933 (the "Act") and the rules and
regulations promulgated thereunder (the "Rules"), we have been requested by
State Street Bank
<PAGE>
2
and Trust Company (the "Trustee"), a Massachusetts trust company and the trustee
of the American Bar Association Members/State Street Collective Trust (the
"Collective Trust"), a collective trust established and maintained by the
Trustee for the purpose of providing various investment vehicles for assets
contributed by members of the American Bar Association Members Retirement
Program, a program sponsored by the American Bar Retirement Association, an
Illinois not-for-profit corporation ("ABRA"), to render our opinion as to the
legality of the $1,000,000,000 of units of beneficial interests in eight
collective investment funds and three portfolios of a Structured Portfolio
Service (the "Units") established by the Trustee under the Collective Trust and
registered under the Registration Statement.
In connection with this opinion, we have examined originals, or
copies certified or otherwise identified to our satisfaction, of the following
documents (collectively, the "Documents"): the Registration Statement (including
all amendments thereto); the Administrative and Investment Services Agreement
dated as of January 1, 1992 between ABRA and the Trustee, as amended; the
American Bar Association Members Retirement Trust dated January 1, 1992 between
ABRA and the Trustee, as amended; the American Bar Association Members Pooled
Trust for Retirement Plans dated January 1, 1992 between ABRA and the Trustee,
as amended; and the Declaration of Trust dated August 8, 1991, as amended and
restated through November 18, 1991, and as further amended, and all exhibits
thereto. In addition,
<PAGE>
3
we have made such other investigations of fact and law and have examined and
relied upon the originals, or copies certified or otherwise identified to our
satisfaction of such other certificates, records, agreements, instruments and
documents as in our judgement are necessary and appropriate to render the
opinions set forth below.
In rendering the opinions set forth below, we have assumed, without
independent investigation, the enforceability of the Documents against each
party thereto, the genuineness of all signatures, the legal capacity of all
individuals who have executed any of the documents reviewed by us, the
authenticity of all documents submitted to us as originals, the conformity to
the originals of all documents submitted to us as certified, photostatic,
reproduced or conformed copies of valid existing agreements or other documents,
the authenticity of all such latter documents and that the statements regarding
matters of fact in the certificates, records, agreements, instruments and
documents that we have examined are accurate and complete.
Based on the foregoing, and subject to the assumptions set forth herein, we
are of the opinion that the Units, when issued and delivered and paid for as
contemplated in the Registration Statement and the Documents, will be legally
issued, fully paid and non-assessable by the Trustee.
We are members of the Bar of the State of New York and do not purport to be
experts in, or to express any opinion concerning, the laws of any
<PAGE>
4
jurisdiction other than the laws of the State of New York and the Federal laws
of the United States. With your permission, this opinion is rendered as to all
matters relating to Massachusetts law in reliance upon the opinion dated the
date hereof of Goodwin, Proctor & Hoar, which opinion is filed as an exhibit to
the Registration Statement. Our opinions are rendered only with respect to the
laws, and the rules, regulations and orders thereunder, which are currently in
effect.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our name under the caption "Legal Matters" in
the prospectus included in the Registration Statement. In giving this consent,
we do not thereby agree that we come within the category of persons whose
consent is required by the Act or the Rules.
Very truly yours,
/s/ Paul, Weiss, Rifkind, Wharton & Garrison
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
<PAGE>
EXHIBIT 5.2
[LETTERHEAD OF GOODWIN, PROCTER & HOAR LLP]
April 15, 1997
American Bar Association Members/
State Street Collective Trust
225 Franklin Street
Boston, MA 02110
Ladies and Gentlemen:
In connection with Amendment No. 1 to the Registration Statement on Form S-1,
registration number 333-23633 (the "Registration Statement"), of the American
Bar Association Members/State Street Collective Trust (the "Collective Trust"),
being filed with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, with respect to the offering of units of
beneficial interest with an aggregate offering price of up to one billion
dollars ($1,000,000,000) (the "Units") in the Collective Trust, we have been
requested as special Massachusetts counsel to the Collective Trust to furnish
our opinion as to the legality of the Units registered pursuant to the
Registration Statement.
For purposes of rendering this opinion, we have examined (i) the Amended and
Restated Declaration of Trust of the Collective Trust dated December 5, 1991, as
amended as of July 31, 1995 and further amended as of April 12, 1996 and April
11, 1997 (the "Trust Declaration"); (ii) (a) the Second Amended and Restated
Fund Declaration of Balanced Fund dated as of April 12, 1996, (b) the Second
Amended and Restated Fund Declaration of Growth Equity Fund dated as of April
12, 1996, (c) the Second Amended and Restated Fund Declaration of Index Equity
Fund dated as of April 12, 1996, (d) the Second Amended and Restated Fund
Declaration of Aggressive Equity Fund dated as of April 12, 1996, (e) the First
Amended and Restated Fund Declaration of Intermediate Bond Fund dated as of
April 12, 1996, (f) the First Amended and Restated Fund Declaration of Value
Equity Fund dated as of April 12, 1996, (g) the First Amended and Restated Fund
Declaration of International Equity Fund dated as of April 12, 1996, (h) the
Second Amended Fund Declaration of Stable Asset Return Fund (formerly Enhanced
Short Term Investment Fund) dated as of April 11, 1997, and (i) the Fund
Declaration of Structured Portfolio Service, dated as of July 31, 1995 with an
effective date of September 5, 1995 (collectively, the "Fund Declarations"); and
(iii) such other documents, records and certificates as we have deemed necessary
or appropriate to render the opinion expressed below. We have assumed the
genuineness of all signatures and the authenticity and completeness of all items
submitted to us as originals, the conformity with originals and the completeness
of all items submitted to us as copies, and the legal capacity of all natural
persons. With respect to documents executed by the American Bar Retirement
Association, we have assumed that such entity has the power to enter into and
perform its obligations thereunder and we have assumed the due authorization by
such entity of all requisite action and the due execution and delivery of such
documents by such entity.
<PAGE>
Page 2
We assume for purposes of this opinion that the notices required under
Section 3.01 and 3.03(a) of the Trust Declaration have been duly given in
connection with all amendments to the Fund Declarations. We also assume that
the merger of the Blended Rate Fund and the Enhanced Short Term Investment Fund
has been carried out in accordance with the provisions of the Plan of Merger
dated as of September 5, 1995 and as described in the Prospectus included in the
Registration Statement, and that the notice required under Section 7.03(b) of
the Trust Declaration has been duly given in connection therewith. We are
attorneys admitted to practice in The Commonwealth of Massachusetts. We express
no opinion herein concerning the laws of any jurisdictions other than the laws
of The Commonwealth of Massachusetts.
Based upon and subject to the foregoing, we are of the opinion that, under
the laws of The Commonwealth of Massachusetts, in which state the Collective
Trust is organized, the Units, when issued in accordance with the terms of the
Prospectus contained in the Registration Statement, as in effect at the time of
issuance, will be legally issued, fully paid and non-assessable by the trustee
of the Collective Trust.
We have not assisted with or participated in the preparation of the
Registration Statement or the Prospectus and, therefore, are not passing upon,
and do not assume any responsibility for, the accuracy, completeness or fairness
of any of the statements contained in the Registration Statement or the
Prospectus or in any of the documents contained in the Registration Statement or
incorporated therein by reference, and we make no representation that we have
independently verified the accuracy, completeness or fairness of such
statements. Without limiting the foregoing, we assume no responsibility for,
and have not independently verified, the accuracy, completeness or fairness of
the financial statements or notes thereto, financial schedules and other
financial and statistical data included in the Registration Statement and the
Prospectus, and we have not examined the accounting, financial or statistical
records from which such statements and notes, schedules and data are derived.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm in the Prospectus under
the caption "Legal Matters." In addition, we understand that Paul, Weiss,
Rifkind, Wharton & Garrison intends to rely on this opinion in rendering an
opinion to the Collective Trust in connection with the Registration Statement
and we hereby consent to such reliance.
Very truly yours,
/s/ Goodwin, Procter & Hoar LLP
Goodwin, Procter & Hoar LLP
<PAGE>
EXHIBIT 10.5
As Approved by Internal Revenue Service December 16, 1996
---------------------------------------------------------
AMERICAN BAR ASSOCIATION
MEMBERS RETIREMENT PLAN
(Amended and Restated Effective December 16, 1996)
This is Basic Plan Document No. 01
----------------------------------
Copyright @ 1996 by American Bar Retirement Association. All rights reserved.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Article I. Establishment of the Plan............................................................... 1
-------------------------
1.1 Promulgation of Plan............................................................................. 1
--------------------
1.2 Implementation of Plan........................................................................... 1
----------------------
1.3 Substitution of Plan for Preexisting Plan........................................................ 1
-----------------------------------------
1.4 Paired Plans..................................................................................... 1
------------
Article II. Definitions............................................................................. 2
-----------
Article III. Participation........................................................................... 25
-------------
3.1 Participation Requirements....................................................................... 25
--------------------------
3.2 Exclusion of Associates.......................................................................... 25
-----------------------
3.3 Exclusion of Employees of Related Businesses..................................................... 25
--------------------------------------------
3.4 Exclusion of Leased Employees.................................................................... 25
-----------------------------
3.5 Exclusion of Other Employees..................................................................... 25
----------------------------
3.6 Breaks in Service................................................................................ 26
-----------------
3.7 Preexisting Plan................................................................................. 26
----------------
3.8 Participation of Sole Proprietors, Partners and Shareholders..................................... 26
------------------------------------------------------------
3.9 Owner-Employee Who Controls Business............................................................. 26
------------------------------------
Article IV. Employer Contributions.................................................................. 27
----------------------
4.1 Employer Contributions........................................................................... 27
----------------------
4.2 Eligibility for Employer Contributions........................................................... 28
--------------------------------------
4.3 Allocation of Employer Contributions............................................................. 30
------------------------------------
4.4 Top-Heavy Status of Employer Plan................................................................ 33
---------------------------------
4.5 Timing of Employer Contributions................................................................. 35
--------------------------------
Article V. 401(k) Arrangement...................................................................... 35
------------------
5.1 Purpose.......................................................................................... 35
-------
5.2 Contributions to 401(k) Salary Deferral Account.................................................. 35
-----------------------------------------------
5.3 Nondiscrimination Test for 401(k) Contributions.................................................. 36
-----------------------------------------------
5.4 Multiple Use Test................................................................................ 38
-----------------
5.5 Distribution of Excess Contributions............................................................. 39
------------------------------------
5.6 Distribution of Excess Elective Deferrals........................................................ 40
-----------------------------------------
5.7 Qualified Nonelective Contributions and Qualified Matching Contributions......................... 41
------------------------------------------------------------------------
5.8 Reduction of Elective Contributions.............................................................. 41
-----------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Article VI. Post-Tax Employee Contributions and Matching Contributions.............................. 41
----------------------------------------------------------
6.1 Post-Tax Employee Contributions.................................................................. 41
-------------------------------
6.2 Form and Amount of Post-Tax Employee Contributions............................................... 42
--------------------------------------------------
6.3 Matching Contributions........................................................................... 42
----------------------
6.4 Nondiscrimination Test for Post-Tax Employee and Matching Contributions.......................... 43
-----------------------------------------------------------------------
6.5 Qualified Nonelective Contributions, Elective Contributions and Additional
--------------------------------------------------------------------------
Matching Contributions........................................................................... 45
----------------------
6.6 Reduction of Post-Tax Employee Contribution Amounts.............................................. 45
---------------------------------------------------
6.7 Distribution of Excess Aggregate Contributions................................................... 45
----------------------------------------------
Article VII. Investment of Contributions............................................................. 46
---------------------------
7.1 Investment of Contributions...................................................................... 46
---------------------------
7.2 Transfers Between Investment Options............................................................. 47
------------------------------------
Article VIII. Distribution of Benefits................................................................ 47
------------------------
8.1 Eligibility...................................................................................... 47
-----------
8.2 Methods of Distribution.......................................................................... 48
-----------------------
8.3 Commencement of Benefits......................................................................... 49
------------------------
8.4 Valuation of Accounts............................................................................ 50
---------------------
8.5 Notice of Distribution of Benefits............................................................... 50
----------------------------------
8.6 Applicability of Annuity Rules to Employer Plan.................................................. 50
-----------------------------------------------
8.7 Cash-Out of Small Accounts....................................................................... 54
--------------------------
8.8 Participant's Consent for Distribution........................................................... 54
--------------------------------------
8.9 Treatment of Contributions Made After Benefits Commence.......................................... 55
-------------------------------------------------------
8.10 Rules Governing Forms of Payment................................................................. 55
--------------------------------
8.11 Special Distribution Requirements................................................................ 56
---------------------------------
Article IX. Distributions to Beneficiaries.......................................................... 61
------------------------------
9.1 Designated Beneficiary........................................................................... 61
----------------------
9.2 Due Proof of Death............................................................................... 62
------------------
9.3 Death of Participant Before Benefits Commence.................................................... 62
---------------------------------------------
9.4 Death of Participant After Benefits Commence..................................................... 65
--------------------------------------------
9.5 Payments After Death of Surviving Spouse......................................................... 66
----------------------------------------
Article X. Vesting and Forfeitures................................................................. 66
-----------------------
10.1 Full Vesting..................................................................................... 66
------------
10.2 Vesting Schedules................................................................................ 66
-----------------
10.3 Amendments Affecting Vested Portion.............................................................. 67
-----------------------------------
10.4 Determination of Forfeiture...................................................................... 67
---------------------------
10.5 Treatment of Forfeiture.......................................................................... 67
-----------------------
10.6 Resumption of Service Within Five Years.......................................................... 68
---------------------------------------
10.7 Resumption of Service After Five Years........................................................... 68
--------------------------------------
10.8 Treatment of Forfeitures in Plan Termination..................................................... 69
--------------------------------------------
10.9 Nonforfeitability of Other Accounts.............................................................. 69
-----------------------------------
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Article XI. In-Service Loans and Withdrawals........................................................ 69
--------------------------------
11.1 Loans............................................................................................ 69
-----
11.2 401(k) Hardship Withdrawals...................................................................... 73
---------------------------
11.3 Other Profit Sharing Plan Withdrawals............................................................ 75
-------------------------------------
11.4 Withdrawals of Rollover or Post-Tax Employee Contributions....................................... 76
----------------------------------------------------------
Article XII. Amendments.............................................................................. 77
----------
12.1 Amendments by Employer........................................................................... 77
---------------------
12.2 Amendments by ABRA............................................................................... 77
------------------
12.3 Prohibited Amendments............................................................................ 77
---------------------
Article XIII. Plan Termination........................................................................ 78
----------------
13.1 Termination by Employer.......................................................................... 78
-----------------------
13.2 Distribution of Participant Accounts............................................................. 78
------------------------------------
13.3 Role of Trustee.................................................................................. 79
---------------
Article XIV. Preservation of Participants' Benefits.................................................. 79
--------------------------------------
14.1 Repayment of Certain Contributions............................................................... 79
----------------------------------
14.2 Plan Merger, Consolidation or Transfer........................................................... 80
--------------------------------------
14.3 Trustee-to-Trustee Transfer...................................................................... 80
---------------------------
14.4 Transfer of Employee Accounts to Another Plan.................................................... 80
---------------------------------------------
14.5 Rollover From Another Plan....................................................................... 81
--------------------------
Article XV. Delegation of Powers.................................................................... 81
--------------------
15.1 Delegation of Powers to ABRA and to Trustee...................................................... 81
-------------------------------------------
15.2 Delegation of Powers By Related Businesses....................................................... 81
------------------------------------------
15.3 Fees Charged Certain ABA Nonmembers.............................................................. 81
-----------------------------------
Article XVI. Miscellaneous........................................................................... 82
-------------
16.1 Governing Law.................................................................................... 82
-------------
16.2 Limitation of Participant Rights................................................................. 82
--------------------------------
16.3 Allocation of Responsibilities Among Fiduciaries................................................. 82
------------------------------------------------
16.4 Plan Administrator............................................................................... 83
------------------
16.5 Indemnification of ABRA Directors and Pre-1992 Trustees.......................................... 84
-------------------------------------------------------
16.6 Claims Procedure................................................................................. 85
----------------
16.7 Nontransferability of Benefits................................................................... 85
------------------------------
16.8 Payment of Expenses.............................................................................. 85
-------------------
16.9 Failure of Employer Plan to Qualify.............................................................. 86
-----------------------------------
Article XVII. Limitations on Contributions............................................................ 86
----------------------------
17.1 Basic Limitation................................................................................. 86
----------------
17.2 Limitation with Other Defined Contribution Master or Prototype Plans............................. 86
--------------------------------------------------------------------
17.3 Use of Estimated Compensation.................................................................... 87
-----------------------------
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
17.4 Determination of Excess Amount in Special Case................................................... 87
----------------------------------------------
17.5 Disposal of Excess Amount........................................................................ 87
-------------------------
17.6 Limitation with Other Defined Contribution Plan (Other Than Master or Prototype)................. 88
--------------------------------------------------------------------------------
17.7 Limitation with Defined Benefit Plan............................................................. 88
------------------------------------
17.8 Definitions...................................................................................... 89
-----------
Article XVIII. Direct Rollovers...................................................................... 93
----------------
18.1 General Rule..................................................................................... 93
------------
18.2 Definitions...................................................................................... 93
-----------
</TABLE>
-iv-
<PAGE>
AMERICAN BAR ASSOCIATION
MEMBERS RETIREMENT PLAN
Article I. Establishment of the Plan
---------- -------------------------
1.1 Promulgation of Plan. This Plan is a master plan sponsored by the
--------------------
American Bar Retirement Association ("ABRA") and is known as the American Bar
Association Members Retirement Plan. The Employer, by executing the
Participation Agreement, has adopted the Plan to provide retirement and
disability benefits for its Employees who are eligible to participate in the
Plan. The Plan is designed to meet the requirements of the Code and ERISA, and
any other act relating thereto which may hereafter be enacted. It replaces the
form of the Plan that received favorable opinion letters, issued by the Internal
Revenue Service dated February 26, 1992, November 10, 1992 and July 29, 1992.
1.2 Implementation of Plan. ABRA has entered into a trust agreement
----------------------
with the Trustee to implement the Employer Plans of Employers that adopt the
Plan and the employer plans of employers that adopt the American Bar Association
Members Defined Benefit Pension Plan. The name of the Trust is the American Bar
Association Members Retirement Trust and its provisions are incorporated herein
by reference and made a part hereof. All employers adopting the Plan must use
the Trust as their sole funding vehicle. The employer becomes a party to the
Trust by executing the Participation Agreement.
1.3 Substitution of Plan for Preexisting Plan. The Plan may be adopted
-----------------------------------------
by an Employer in substitution for any preexisting master, prototype or
individually designed Qualified Plan, if this Plan as adopted would provide a
benefit to each Participant immediately after adoption (if the Employer Plan
then terminated) which is at least equal to the benefit the Participant would
have been entitled to receive under the Preexisting Plan (if it had then
terminated). In the case of any such substitution, the funds held for the
Preexisting Plan shall be transferred to the Trustee as soon as practicable and
credited to the appropriate Accounts of the Participants and invested in
accordance with Article VII as though they were contributions made under this
Plan.
1.4 Paired Plans.
------------
(a) Paired Plans Generally. The standardized form of (i) the
----------------------
Defined Contribution Pension Plan, (ii) the Profit Sharing Plan, (iii)
the Target Benefit Plan and (iv) the American Bar Association Members
Defined Benefit Pension Plan shall be treated as paired plans with
respect to an Employer to the extent that the Employer adopts any
<PAGE>
combination of such plans. Each Employer Plan by itself, or the
Employer Plans together, will meet the nondiscrimination rules of Code
Section 401(a)(4), the contribution limitations of Code Section 415 and
the top-heavy provisions of Code Section 416.
(b) Specific Restrictions for Paired Plans. If the Employer
--------------------------------------
adopts more than one of the standardized forms described in subsection
(a), and thus is considered to maintain paired plans, the restrictions
of this subsection shall apply for Plan Years beginning after December
31, 1992. The Employer shall, in each Participation Agreement relating
to the paired plans, make either of the following two elections
------
(notwithstanding any contrary provision in the Plan relating to Minimum
Contributions and to the Employer's right to make certain elections in
each Participation Agreement):
(1) The Employer shall not fail to provide the Minimum
Contribution under either of the paired plans due solely to making
such Minimum Contribution to the other paired plan for the same
Plan Year.
(2) The Employer shall make elections designed to benefit
the same participants under each of the paired plans, and shall
not be required to make the Minimum Contribution under both of the
paired plans. As a result, the Employer shall, under the relevant
Participation Agreements, make identical elections with respect to
minimum participation requirements, entry dates and the
eligibility of participants to make, receive or share in
contributions.
Article II. Definitions
----------- -----------
The following terms shall have the meanings described in this Article
unless the context clearly indicates another meaning. All references in the Plan
to specific Articles or Sections shall refer to Articles or Sections of the Plan
unless otherwise indicated. Unless the context indicates otherwise, words of one
gender include the other gender and terms in the singular include the plural.
2.1 Accounts. "Accounts" means all the accounts maintained for a
--------
particular Participant under the Employer Plan, namely the Employer Account, the
401(k) Employer Account, the 401(k) Salary Deferral Account, the Matching
Contribution Account, the Post-Tax Employee Contribution Account, and the Prior
Plan Account.
-2-
<PAGE>
2.2 Actual Contribution Percentage. "Actual Contribution Percentage"
------------------------------
means the average of the actual contribution ratios (calculated separately for
each Participant in a specified group) of the sum of (a) the Matching
Contributions (other than Qualified Matching Contributions taken into account
under Section 5.7); (b) the Post-Tax Employee Contributions; (c) the Qualified
Nonelective Contributions not taken into account under the Actual Deferral
Percentage test of Section 5.3; and (d) the Elective Contributions not taken
into account under the Actual Deferral Percentage test of Section 5.3, for each
Plan Year, divided by the Participant's Compensation for such Plan Year. In
addition, forfeitures of Excess Aggregate Contributions or Matching
Contributions allocated to a Participant's Accounts generally shall be taken
into account in the year in which such forfeitures are allocated. However,
Matching Contributions that are forfeited either to correct Excess Aggregate
Contributions or because the contributions to which they relate are Excess
Deferrals, Excess Contributions or Excess Aggregate Contributions shall not be
taken into account. The actual contribution ratios and the Actual Contribution
Percentage for each group shall be calculated to the nearest of one-hundredth of
one percent.
2.3 Actual Deferral Percentage. "Actual Deferral Percentage" means the
--------------------------
average of the actual deferral ratios (calculated separately for each
Participant in a specified group) of the amount of Elective Contributions
(including Qualified Nonelective Contributions and Qualified Matching
Contributions treated as Elective Contributions under Section 5.7) made on
behalf of each Participant for the Plan Year to the Participant's Compensation
for the Plan Year. In determining the actual deferral ratio, Excess Elective
Deferrals of Highly Compensated Employees shall be considered Elective
Contributions, but Excess Elective Deferrals of Nonhighly Compensated Employees
that arise solely from Elective Deferrals made under the Employer Plan or other
plans of the Employer shall not be considered Elective Contributions. Elective
Contributions shall not include Elective Contributions taken into account under
the Actual Contribution Percentage test of Section 6.4, provided that the Actual
Deferral Percentage test of Section 5.3 is satisfied both with and without the
exclusion of such Elective Contributions. The actual deferral ratios and the
Actual Deferral Percentage for each group shall be calculated to the nearest
one-hundredth of one-percent of the Participant's Compensation. The actual
deferral ratio of a Participant who makes no Elective Contributions shall be
zero.
2.4 Adjustment Factor. "Adjustment Factor" means the cost-of-living
-----------------
adjustment prescribed by the Secretary of Treasury under Code Section 415(d) for
each year beginning after December 31, 1987.
-3-
<PAGE>
2.5 American Bar Association Members Defined Benefit Pension Plan. The
-------------------------------------------------------------
"American Bar Association Members Defined Benefit Pension Plan" is a master plan
sponsored by ABRA, designed to meet the requirements of the Code and ERISA that
apply to Qualified Defined Benefit Plans.
2.6 Annuity Starting Date. "Annuity Starting Date" means the first day
---------------------
of the first period as to which a benefit under the Plan is payable as an
annuity or, in the case of a benefit under the Plan not payable in the form of
an annuity, the first day on which all events have occurred that entitle the
Participant to the Plan benefit.
2.7 Beneficiary. "Beneficiary" means the person or persons or trust or
-----------
entity, designated under Section 9.1, and in accordance with Code Section
401(a)(9), to receive any benefits payable under the Plan after the death of a
Participant.
2.8 Break in Service. "Break in Service" means a 12-consecutive-month
----------------
period beginning on an Employee's Employment Commencement Date in which he or
she does not complete more than 500 Hours of Service with the Employer. Each
such 12-month period shall constitute a one-year Break in Service. For purposes
of determining whether an Employee has incurred a Break in Service, the Employee
shall be credited with up to 501 Hours of Service for any period of absence
resulting from pregnancy, the birth or adoption of a child or the care of the
child following its birth or adoption. The Employee shall receive credit for the
number of Hours of Service that would otherwise have been credited to him or her
during such absence, or if that number cannot be determined, eight Hours of
Service for each day of such absence. Such Hours of Service shall be credited to
the Employee for the 12 consecutive month period beginning on his or her
Employment Commencement Date during which the absence begins or, if the Employee
would not otherwise have incurred a Break in Service for that 12-month period,
for the following such 12-month period.
2.9 Business Day. "Business Day" means any day on which the New York
------------
Stock Exchange is open for trading and on which the Insurer's home office (or,
as of January 1, 1992, State Street's principal office) is open for business.
Any Notice to the Trustee received after 3:00 p.m. (Eastern time) shall be
deemed received on the next Business Day.
2.10 Cash Refund Annuity. "Cash Refund Annuity" means an annuity
-------------------
payable during the lifetime of a Participant, with a single-sum payment at his
or her death to his or her Beneficiary equal to the excess, if any, of the
amount applied to provide the annuity over the sum of the annuity payments made
during the Participant's lifetime.
-4-
<PAGE>
2.11 Code. "Code" means the Internal Revenue Code of 1986, as amended.
----
2.12 Collective Trust. "Collective Trust" means the American Bar
----------------
Association Members/State Street Collective Trust, a group trust established by
State Street under a declaration of trust dated as of August 8, 1991, as amended
and in effect from time to time.
2.13 Compensation. "Compensation" of a Participant for Plan Years
------------
beginning before January 1, 1991 means total W-2 earnings from the Employer, and
for Plan Years beginning after December 31, 1990 means one of the following
definitions (as elected by the Employer in the Participation Agreement):
(a) Information Required to be Reported under Code Sections
-------------------------------------------------------
6041,6051 and 6052 ("wages, tips and other compensation" box on Form
------------------
W-2). Compensation means wages as defined in Code Section 3401(a) and
all other compensation to an Employee by the Employer (in the course of
the Employer's trade or business) for which the Employer is required to
furnish to the Employee a written statement under Code Sections
6041(d), 6051(a)(3) and 6052. Compensation must be determined without
regard to any rules under Code Section 3401(a) that limit the
remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for
agricultural labor in Code Section 3401(a)(2)).
(b) Code Section 3401(a) Wages. Compensation means wages as
--------------------------
defined in Code Section 3401(a) for the purposes of income tax
withholding at the source, but determined without regard to any rules
that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the
exception for agricultural labor in Section 3401(a)(2)).
(c) 415 Safe-Harbor Compensation. Compensation means wages,
----------------------------
salaries, and fees for professional services and other amounts received
(without regard to whether or not an amount is paid in cash) for
personal services actually rendered in the course of employment with
the Employer to the extent that the amounts are includable in gross
income (including, but not limited to, commissions paid to
salespersons, compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, tips, bonuses, fringe
benefits, and reimbursements or other expense allowances under a
"nonaccountable plan" as described in Income Tax Regulations Section
1.62-2(c)), and excluding the following:
-5-
<PAGE>
(1) Employer contributions to a plan of deferred
compensation which are not includible in the Employee's gross
income for the taxable year in which contributed, or Employer
contributions under a simplified employee pension plan to the
extent such contributions are deductible by the Employee, or any
distributions from a plan of deferred compensation;
(2) Amounts realized from the exercise of a nonqualified
stock option, or when restricted stock (or property) held by the
Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(3) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
(4) Other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity contract
described in Code Section 403(b) (whether or not the contributions
are actually excludable from the gross income of the Employee).
For any Participant who is a Self-Employed Individual, Compensation
means the amount of his or her Earned Income from the Employer for the Plan
Year. Compensation shall include only that compensation that is actually paid or
made available to the Participant during the Plan Year, which shall be the
determination period for the purpose of calculating each Participant's
Compensation. A Participant's Compensation for the Plan Year during which he or
she first becomes a Participant shall include only amounts earned since the
Entry Date as of which he or she became a Participant.
Notwithstanding the definition selected by the Employer and described
above, several adjustments to the definition of Compensation shall be made:
First, Compensation shall include any amount which is contributed by the
Employer under a salary reduction agreement and which is not includable in the
gross income of the Participant under Code Section 125, 402(e)(3), 402(h)(1)(B)
or 403(b). Second, if so elected by the Employer in the Participation Agreement
(if this election is available under the agreement, and regardless of whether
the Employer's contributions under the Employer Plan are integrated with the
Employer's Social Security contributions), Compensation shall not include all of
the following (even if includable in gross income): reimbursements or other
expense allowances, fringe benefits (cash and noncash), moving expenses,
deferred
-6-
<PAGE>
compensation and welfare benefits. Third, if so elected by the Employer in the
Participation Agreement (if this election is available under the agreement, and
only if the Employer's contributions under the Employer Plan are not integrated
with the Employer's Social Security contributions), Compensation shall not
include bonuses, overtime pay, and/or other forms of compensation specified by
the Employer in the agreement. The exclusions described in the preceding two
sentences shall apply only for purposes of calculating contributions (other than
the Minimum Contribution in the case of the second of the two exclusions) and
the allocation of forfeitures under Articles IV, V and VI.
The amount of Compensation of each Participant for any Plan Year that
will be taken into account for determining all benefits under the Employer Plan
shall be limited to $200,000 of such Compensation. The limit shall be multiplied
by the Adjustment Factor for the calendar year during which the Plan Year
begins, and the first adjustment shall be for Plan Years beginning in 1990. If
the period for determining Compensation used in calculating an Employee's
allocation for a Plan Year is a short Plan Year (i.e., shorter than 12 months),
the annual Compensation limit is an amount equal to the otherwise applicable
annual Compensation limit multiplied by a fraction, the numerator of which is
the number of months in the short Plan Year, and the denominator of which is 12.
For purposes of the $200,000 limit, all Qualified Plans maintained by the
Employer or a Related Employer shall be treated as a single plan.
If compensation for any prior Plan Year is taken into account in
determining an Employee's allocations or benefits for the current Plan Year, the
compensation for such prior Plan Year is subject to the applicable annual
compensation limit in effect for that prior Plan Year. For this purpose, the
applicable annual compensation limit for Plan Years beginning before January 1,
1990 is $200,000.
In addition to other applicable limitations set forth in the plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual compensation of each Employee
taken into account under the Plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding 12
months, over which compensation is determined (determination period) beginning
in such calendar year. If a determination period consists of fewer than 12
months, the OBRA '93 annual compensation limit will be multiplied by a fraction,
the numerator of which is the number of
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<PAGE>
months in the determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under section 401(A)(17) of the Code shall mean the
OBRA '93 annual compensation limit set forth in this provision.
If compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the current Plan Year,
the compensation for that prior determination period is subject to the OBRA '93
annual compensation limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000.
In determining the Compensation of a Participant for the purpose of
applying the $150,000 or $200,000 limit, the rules of Code Section 414(q)(6)
shall apply, except that, in applying such rules, the term "family" shall
include only the Participant's spouse and any lineal descendants of the
Participant who have not attained age 19 before the close of the Plan Year. If,
as a result of the application of such rules, the $150,000 or $200,000
limitation is exceeded, then (except for purposes of determining Covered
Compensation with respect to a Participant under Section 4.3) the $150,000 or
$200,000 limitation shall be prorated among the Participant and his or her
Family Members in proportion to each such individual's Compensation as
determined before the application of the $150,000 or $200,000 limitation.
2.14 Defined Contribution Pension Plan. "Defined Contribution Pension
---------------------------------
Plan" means an Employer Plan under which contributions are made on the basis of
Section 4.1(b).
2.15 Disability. "Disability" means the inability of a Participant to
----------
perform the usual duties of his or her employment with the Employer by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or to be of long-continued and indefinite duration
(presumably for life), as determined by the Employer on the basis of either (a)
a written determination by the Social Security Administration that disability
payments under the Social Security Act have been approved, or, (b) if a Social
Security determination has not been issued, other suitable evidence acceptable
either to the Insurer (for Employer determinations made before January 1, 1992)
or to the Trustee (for Employer determinations made after December 31, 1991).
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<PAGE>
2.16 Earned Income. "Earned Income" means net earnings from
-------------
self-employment (as defined in Code Section 1402(a)) with respect to a trade or
business in which a Self-Employed Individual is compensated for personal
services which are actually rendered by him or her and are a material
income-producing factor in the Employer's business for which the Employer Plan
is established. With the exception of the salary reduction amounts described in
the definition of Compensation, the Earned Income for any Plan Year of any
Participant who is a Self-Employed Individual shall be determined without regard
to any items not includible in gross income for federal income tax purposes or
to the deductions related to such items and shall be reduced by any amount which
constitutes an Employer contribution to any Qualified Plan maintained by the
Employer to the extent that the Employer is allowed a deduction for such
contribution under Code Section 404. Net earnings shall be determined with
regard to the deduction allowed to the taxpayer by Code Section 164(f) for
taxable years beginning after December 31, 1989.
2.17 Effective Date. "Effective Date" means the date specified in the
--------------
Participation Agreement as of which the Employer Plan is to become effective.
2.18 Elective Contributions. "Elective Contributions" means Employer
----------------------
contributions made to a plan that were subject to a cash or deferred election
under a cash or deferred arrangement (whether or not such arrangement is a
qualified 401(k) arrangement). No amount that has become currently available to
an Employee or that is designated or treated, at the time of deferral or
contribution, as a Post-Tax Employee Contribution may be treated as an Elective
Contribution.
2.19 Elective Deferrals. "Elective Deferrals" for a taxable year means
------------------
the sum of the following: (a) any Elective Contribution under a qualified 401(k)
arrangement to the extent such contribution is not includible in the
individual's gross income for the taxable year on account of Code Section
402(a)(8); (b) any employer contribution to a simplified employee pension (as
defined in Code Section 408(k)) to the extent such contribution is not
includible in the individual's gross income for the taxable year on account of
Code Section 402(h)(1)(B); (c) any employer contribution to an annuity contract
under Code Section 403(b) under a salary reduction agreement (within the meaning
of Code Section 3121(a)(5)(D)) to the extent such contribution is not includible
in the individual's gross income for the taxable year on account of Code Section
403(b); (d) any employee contribution designated as deductible under a trust
described in Code Section 501(c)(18) to the extent that such contribution is
deductible from such individual's income for the taxable year on account of Code
Section 501(c)(18). For purposes of this definition, such employee contribution
shall be treated
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<PAGE>
as though it were excluded from the individual's gross income. Elective
Deferrals shall not include any deferrals properly distributed as an Excess
Amount (as defined in Section 17.8(g)).
2.20 Employee. "Employee" means any person (including a Self-Employed
--------
Individual) who derives Compensation from the Employer or from a Related
Employer, including each Leased Employee. An independent contractor is not an
Employee. For purposes of allocation of the Employer contribution and
forfeitures, the term "Employee" shall not include any person (a) who is
included in a unit of employees covered by an agreement which the Secretary of
Labor finds to be a collective bargaining agreement between "employee
representatives" and one or more employers, including the Employer, if
retirement benefits were the subject of good-faith bargaining (provided that not
more than 2% of the employees of the Employer who are covered under the
agreement are professionals as defined in Income Tax Regulations Section
1.410(b)-9), and which agreement does not provide for participation in the Plan,
or (b) who is a nonresident alien (within the meaning of Code Section
7701(b)(1)(B)) and receives no earned income (within the meaning of Code Section
911(d)(2)) from the Employer which constitutes income from sources within the
United States (within the meaning of Code Section 861(a)(3)). The term "employee
representatives" does not include any organization more than half of whose
members are Employees who are owners, officers or executives of the Employer.
2.21 Employer. "Employer," except as otherwise defined in Section 17.8
--------
for purposes of Article XVII, means any entity that signs the Participation
Agreement as Employer, including (a) any sole practitioner, partnership,
corporation or association engaged in the practice of law, provided that the
sole practitioner or at least one partner of the partnership or one shareholder
of the corporation is a member or associate of the American Bar Association or
of a Qualified Bar Association, (b) the American Bar Association, (c) any
Qualified Bar Association, and (d) any organization that does not engage in the
practice of law but is closely associated with the legal profession, that
receives the approval of ABRA, and that has as an owner or a member of its
governing board a member or associate of the American Bar Association. The term
"Employer" shall also include any successor to the entity that has adopted the
Plan if such successor has agreed, or is required by operation of law, to
continue the Plan and Trust.
For purposes of the Plan, a sole practitioner is deemed to be his or
her own Employer and a partnership is deemed to be the Employer of each
Self-Employed Individual. Upon the death of an Employer who is a sole
practitioner, Section 13.1 shall apply and all duties and responsibilities of
the Employer under the Plan
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<PAGE>
shall be assumed by a person or persons designated by the executor or
administrator of the estate of the deceased Employer.
An Employee's Service shall include any period of employment with a
Related Employer, and all employees employed by the Employer or by a Related
Employer shall be treated as employed by a single employer.
2.22 Employer Account. "Employer Account" means the account maintained
----------------
for the Employer contributions made on behalf of a Participant under Section 4.1
(other than the portion of such contributions designated by the Employer as
Qualified Nonelective Contributions or Qualified Matching Contributions under
Sections 5.7 and/or 6.5 and allocated to Participants' 401(k) Employer
Accounts), after adjustment for earnings, changes in market value, fees,
expenses and distributions, if any.
2.23 Employer Plan. "Employer Plan" means the Plan as adopted and
-------------
maintained by an Employer, with the provisions specified in the Employer's
Participation Agreement.
2.24 Employment Commencement Date. "Employment Commencement Date" means
----------------------------
the day on which an Employee performs his or her first Hour of Service upon his
or her employment or reemployment by the Employer, and any anniversary of that
day.
2.25 Entry Date. "Entry Date" means the Effective Date and each other
----------
date specified by the Employer in the Participation Agreement.
2.26 ERISA. "ERISA" means the Employee Retirement Income Security Act
-----
of 1974, as amended.
2.27 Excess Aggregate Contributions. "Excess Aggregate Contributions"
------------------------------
means, with respect to any Plan Year, the excess of:
(a) The aggregate amounts taken into account in computing the
Actual Contribution Percentage made on behalf of Highly Compensated
Employees for such Plan Year, over
(b) The maximum amounts permitted by the Actual Contribution
Percentage test of Section 6.4 (determined by reducing contributions
made on behalf of Highly Compensated Employees in order of their Actual
Contribution Percentages beginning with the highest of such
percentages).
2.28 Excess Contributions. "Excess Contributions" means, with respect
--------------------
to any Plan Year, the excess of:
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<PAGE>
(a) The aggregate amounts actually taken into account in computing
the Actual Deferral Percentage of Highly Compensated Employees for such
Plan Year, over
(b) The maximum amounts of such contributions permitted by the
Actual Deferral Percentage test of Section 5.3 (determined by reducing
contributions made on behalf of Highly Compensated Employees in order
of their Actual Deferral Percentages, beginning with the highest of
such percentages).
2.29 Excess Elective Deferrals. "Excess Elective Deferrals" means the
-------------------------
amount of Elective Deferrals in a taxable year in excess of the dollar
limitation under Code Section 402(g) that are includable in a Participant's
gross income under such Section, and which are allocated by a Participant to his
or her 401(k) Salary Deferral Account under the claim procedures set forth in
Section 5.6. Excess Elective Deferrals shall be treated as Annual Additions (as
defined in Section 17.8(b)) under the Employer Plan, unless such amounts are
distributed no later than the first April 15 following the close of the
Participant's taxable year.
2.30 Family Member. "Family Member" means an individual who is
-------------
described in Code Section 414(q)(6) and shall include any individual who is a
member of a Highly Compensated Employee's family, provided that the Highly
Compensated Employee is (a) a Five Percent Owner or (b) a member of a group
consisting of the 10 Highly Compensated Employees paid the greatest compensation
during the Plan Year. For purposes of the foregoing, the term "family" means,
with respect to any Employee, such Employee's spouse and lineal ascendants or
descendants and the spouses of such lineal ascendants or descendants.
2.31 Fiduciary. "Fiduciary" means the Board of Directors of ABRA, the
---------
Plan Administrator, the Trustee, the Insurer (before January 1, 1992) and each
Investment Manager.
2.32 Fiscal Year. "Fiscal Year" means the taxable year of the Employer
-----------
for Federal income tax purposes.
2.33 Five Percent Owner. "Five Percent Owner" means, in the case of an
------------------
Employer that is not a corporation, a person who owns more than 5% of the
capital or profits interest in the Employer and, in the case of an Employer that
is a corporation, a person who owns (or is considered to own within the meaning
of Code Section 318) more than 5% of the outstanding stock of the Employer or
stock possessing more than 5% of the total combined voting power of all stock of
the Employer.
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<PAGE>
2.34 401(k) Employer Account. "401(k) Employer Account" means the
-----------------------
account maintained for Qualified Nonelective Contributions and Qualified
Matching Contributions made on behalf of a Participant, after adjustment for
earnings, changes in market value, and distributions, if any.
2.35 401(k) Salary Deferral Account. "401(k) Salary Deferral Account"
------------------------------
means the account maintained for Elective Contributions of a Participant under
Section 5.2, after adjustment for earnings, changes in market value,
distributions and withdrawals, if any.
2.36 Highly Compensated Employee. "Highly Compensated Employee" means
---------------------------
an Employee described in Code Section 414(q) and includes highly compensated
active Employees and highly compensated former Employees. A highly compensated
active Employee includes an Employee who performs service for the Employer
during the determination year and who, during the look-back year:
(a) Received Compensation from the Employer in excess of $75,000
(as adjusted by the Adjustment Factor for that year);
(b) Received Compensation from the Employer in excess of $50,000
(as adjusted by the Adjustment Factor for that year) and was a member
of the top-paid group for such year; or
(c) Was an officer of the Employer and received Compensation
during such year that is greater than 50% of the dollar limitation in
effect under Code Section 415(b)(1)(A).
The term Highly Compensated Employee also includes any Employee (i) who
is described in the preceding sentence if the term "determination year" is
substituted for the term "look-back" year and who is among the 100 Employees who
received the most Compensation from the Employer during the determination year,
or (ii) who is a Five Percent Owner at any time during the look-back year or
determination year.
If no officer has satisfied the compensation requirement of subsection
(c) during either the determination year or look-back year, the highest paid
officer for such year shall be treated as a Highly Compensated Employee.
For this purpose, the determination year shall be the Plan Year. The
look-back year shall be the 12-month period immediately preceding the
determination year.
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<PAGE>
A highly compensated former Employee includes any Employee who
separated from service (or was deemed to have separated) prior to the
determination year, performs no service for the Employer during the
determination year, and was a highly compensated active Employee for either the
separation year or any determination year ending on or after the Employee's 55th
birthday.
If an Employee is, during a determination year or look-back year, a
Family Member of either a Five Percent Owner who is an active or former Employee
or a Highly Compensated Employee who is one of the 10 most Highly Compensated
Employees ranked on the basis of Compensation paid by the Employer during such
year, then the Family Member and the Five Percent Owner or top-10 Highly
Compensated Employee shall be treated as a single Employee receiving
Compensation and plan contributions or benefits equal to the sum of such
Compensation and contributions or benefits of the Family Member and Five Percent
Owner or top-10 Highly Compensated Employee.
The determination of who is a Highly Compensated Employee, including
the determinations of the number and identity of Employees in the top-paid
group, the top 100 Employees, the number of Employees treated as officers and
the Compensation that is considered, will be made in accordance with Code
Section 414(q) and the regulations thereunder.
2.37 Hour of Service. "Hour of Service" means each hour for which:
---------------
(a) An Employee is directly or indirectly paid or entitled to
payment by the Employer for the performance of duties,
(b) An Employee is directly or indirectly paid or entitled to
payment by the Employer for reasons (such as vacation, holiday,
sickness, incapacity, disability, layoff, jury duty, military duty or
paid leave of absence) other than for the performance of duties
(irrespective of whether the employment relationship has terminated),
unless such payment is solely for the purpose of complying with
applicable worker's compensation or disability insurance laws, and
(c) Back pay for an Employee, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer.
Hours of Service for the performance of duties will be credited to an
Employee for the period of time in which the duties were performed, and Hours of
Service for reasons other
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<PAGE>
than the performance of duties or for back pay will be credited to the Employee
for the period of time to which such hours related, but there will be no
duplication in the crediting of Hours of Service. Hours of Service shall be
determined and credited in a manner consistent with Section 2530.200b-2 of the
Department of Labor Regulations.
To the extent that the Employer does not keep records of actual Hours
of Service, the Hours of Service to be credited to an Employee shall be
calculated on the basis of one of the following methods (as elected by the
Employer in the Participation Agreement):
Method A. Hours of Service: One hour for each Hour of Service.
--------
Method B. Days of Service: 10 hours for each day for which he
--------
or she would be entitled under Method A to receive credit for at least
one Hour of Service.
Method C. Weeks of Service: 45 hours for each week for which
--------
he or she would be entitled under Method A to receive credit for at
least one Hour of Service.
Method D. Months of Service: 190 hours for each month for
--------
which he or she would be entitled under Method A to receive credit for
at least one Hour of Service.
In no event shall more than 501 Hours of Service be credited to an Employee for
any single continuous period during which duties are not performed by the
Employee.
2.38 Insurer. "Insurer" means The Equitable Life Assurance Society of
-------
the United States.
2.39 Investment Manager. "Investment Manager" means a person or entity
------------------
who is defined as such in ERISA Section 3(38) and who serves as such with
respect to all or any portion of the Trust assets.
2.40 Investment Options. "Investment Options" means the investment
------------------
options established under the Trust in which monies received by the Trustee are
invested.
2.41 Joint and Survivor Annuity. "Joint and Survivor Annuity" means an
--------------------------
annuity payable for the life of a Participant with a survivor annuity for the
life of his or her Beneficiary which is equal to a percentage of the amount of
the annuity payable during the joint lives of the Participant and his or her
Beneficiary. The percentage of the survivor annuity may be any whole percentage
from 50% through 100% (but only 50% or 100% for
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<PAGE>
annuity payments that begin after December 31, 1991), as designated by the
Participant.
2.42 Joint and Survivor Annuity-Period Certain. "Joint and Survivor
-----------------------------------------
Annuity-Period Certain" means an annuity payable during the joint lifetime of a
Participant and his or her Beneficiary, and continuing during the remaining
lifetime of the survivor or until the end of a specified period, whichever is
later. After the survivor's death, any payments coming due shall be paid to the
next succeeding Beneficiary. The specified period may be 5, 10, 15 or 20 years,
and the percentage of the survivor annuity may be any whole percentage from 50%
through 100% (but only 50% or 100% for annuity payments that begin after
December 31, 1991), as designated by the Participant.
2.43 Key Employee. "Key Employee" means, with respect to any particular
------------
Plan Year, any Participant who, at any time during that Plan Year or any of the
four preceding Plan Years (or, if less, all preceding Plan Years), is any of the
following:
(a) An officer of the Employer or of a Related Employer who
receives Compensation in excess of 50% of the dollar limitation in
effect at that time under Code Section 415(b)(1)(A), provided that no
more than 50 Employees (or, if less, the greater of three or 10% of all
Employees), excluding those Employees who are described in Code Section
414(q)(8), shall be treated as officers for purposes of this
subsection;
(b) An Employee who owns (or is considered to own within the
meaning of Code Section 318) both more than a 1/2% interest and one of
the 10 largest interests in the Employer and who receives Compensation
in excess of the dollar limitation in effect from time to time under
Code Section 415(c)(1)(A);
(c) A Five Percent Owner; or
(d) An Employee who receives Compensation from the Employer of
more than $150,000 and who would be described in the definition of Five
Percent Owner if "1%" were substituted for "5%."
For purposes of applying Code Section 318 to subsection (b) above, Code
Section 318(a)(2)(C) shall be applied by substituting "5%" for "50%." In
addition, the rules of Code Sections 414(b), (c) and (m) shall not apply for
purposes of determining percentage ownership in the Employer under this Section.
2.44 Leased Employee. "Leased Employee" means any person (other than a
---------------
common-law employee of the Employer) who, under an
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<PAGE>
agreement between the Employer and any leasing organization, has performed
services for the Employer (or for the Employer and related persons determined in
accordance with Code Section 414(n)(6)) on a substantially full-time basis for
at least one year, provided that the services are of a type historically
performed by employees in the business field of the Employer. Contributions or
benefits provided to a Leased Employee by the leasing organization that are
attributable to the services performed for the Employer shall be treated as
provided by the Employer.
The term Leased Employee shall not include any person who would
otherwise be described in the preceding paragraph if Leased Employees do not
constitute more than 20% of the Employer's nonhighly compensated work force
within the meaning of Code Section 414(n)(5)(C)(ii) and the person is covered by
a money-purchase pension plan maintained by the leasing organization that
provides (i) a nonintegrated employer contribution rate of at least 10% of
compensation (as defined in Code Section 415(c)(3)), but including amounts
contributed under a salary reduction agreement that are excludable from the
person's gross income under Code Section 125, 402(e)(3), 402(h)(1)(B) or 403(b),
(ii) immediate participation and (iii) full and immediate vesting.
2.45 Life Annuity. "Life Annuity" means a straight life annuity payable
------------
in equal installments during the lifetime of a Participant or, if applicable,
his or her spouse or other Beneficiary that terminates upon the death of the
Participant, his or her spouse, or other Beneficiary (as applicable).
2.46 Life Annuity-Period Certain. "Life Annuity-Period Certain" means
---------------------------
an annuity payable during the lifetime of a Participant or until the end of a
specified period, whichever is later. After the Participant's death, any
payments coming due shall be paid to his or her Beneficiary. The specified
period may be 5, 10, 15 or 20 years, as designated by the Participant.
2.47 Matching Contribution Account. "Matching Contribution Account"
-----------------------------
means the account maintained for Matching Contributions (other than Qualified
Matching Contributions) made to this Plan on behalf of a Participant, after
adjustment for earnings, changes in market value, distributions and withdrawals,
if any.
2.48 Matching Contributions. "Matching Contributions" means any
----------------------
contributions to a Qualified Defined Contribution Plan made by the Employer for
the Plan Year and allocated to an Employee's account under such Qualified Plan
by reason of such Employee's Post-Tax Employee Contributions or Elective
Contributions to that plan. Any forfeiture allocated on the basis of Post-Tax
Employee
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<PAGE>
Contributions, Elective Contributions or Matching Contributions shall also be
considered a Matching Contribution.
2.49 Members. "Members" means the members, from time to time, of the
-------
Board of Governors of the American Bar Association, who are the sole corporate
members of ABRA.
2.50 Minimum Contribution. "Minimum Contribution" means the Employer
--------------------
contribution determined in accordance with the following rules as to a
particular Plan Year:
(a) Except as otherwise provided under subsections (c), (d)
and (e), the Employer contributions (under Article IV) and forfeitures
(under Article X) allocated on behalf of each Participant who is not a
Key Employee shall not be less than 3% of the Participant's
Compensation (or, if less, and if the Employer has no Qualified Defined
Benefit Plan that designates the Employer Plan to satisfy the minimum
contribution/benefit requirements of Code Section 416, the largest
percentage of Employer contributions and forfeitures, as a percentage
of Key Employee's Compensation as limited by Code Section 401(a)(17),
allocated on behalf of any Key Employee for that Plan Year). The
Minimum Contribution shall be determined without regard to Social
Security contributions, Elective Contributions and Matching
Contributions.
(b) The Minimum Contribution shall be made even though, under
other Plan provisions, the Participant would not otherwise be entitled
to receive an allocation (or would have received a lesser allocation)
for the Plan Year because of the Participant's failure to complete
1,000 Hours of Service (or any equivalent provided in the Plan).
(c) The Minimum Contribution shall not be made for a Participant
who is not employed by the Employer on the last day of the Plan Year,
if such a last-day requirement otherwise applies under the Employer
Plan.
(d) The Minimum Contribution shall not be made for a Participant
to the extent that the Participant is covered under another Qualified
Plan (or Plans) of the Employer and the Employer has elected in the
nonstandardized Participation Agreement that the minimum contribution
and benefit requirements of Code Section 416 shall be satisfied by such
other Qualified Plan (or Plans).
(e) The Minimum Contribution shall not be made if the Employer has
elected under Section 4.4 to determine whether the Employer Plan is
Top-Heavy for each Plan Year and the
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Employer Plan is in fact determined not to be Top-Heavy for that Plan
Year.
(f) If subsection (a) applies (but the exceptions in subsections
(c), (d) and (e) do not apply), and the Employer adopts more than one
form of the Plan, the Employer Plan under which the Minimum
Contribution shall be made shall be determined under Section 4.1.
(g) The figure "5%" shall be substituted for "3%" in
subsection (a) if the Employer has also adopted the American Bar
Association Members Defined Benefit Pension Plan, both such plan and
the Employer Plan are "Top-Heavy" (within the meaning of Section 4.4),
and the Employer elects to make the Minimum Contribution under the
Employer Plan.
2.51 Nonhighly Compensated Employee. "Nonhighly Compensated Employee"
------------------------------
means an Employee who is neither a Highly Compensated Employee nor a Family
Member.
2.52 Normal Retirement Age. "Normal Retirement Age" means age 65 or a
---------------------
lesser age specified by the Employer in a Participation Agreement relating to a
Defined Contribution Pension Plan.
2.53 Notice to the Trustee. "Notice to the Trustee" or "Notice" means
---------------------
any written notice, designation, or election under the Plan by the Employer, a
Participant or a Beneficiary, made on the appropriate form provided by, or
acceptable to, the Trustee and delivered to the Trustee or the Trustee's
designated agent. Participant and Beneficiary Notices shall be submitted by the
individual giving the Notice to the Employer for transmittal to the Trustee or
the Trustee's designated agent provided that, if such Notice is being given at a
time when it is impractical or impossible for transmittal to be made by the
Employer (or if such Notice is given before January 1, 1992 under Section 13.2
or Section 8.2), the individual giving the Notice may submit it directly to the
Trustee or the Trustee's designated agent along with a satisfactory explanation
of such impossibility or impracticality. Notice to the Trustee shall be deemed
to have been given on the date of its receipt (determined in accordance with
rules established by the Trustee) at the address specified by the Trustee or the
Trustee's designated agent.
2.54 Owner-Employee. "Owner-Employee" means any person who owns more
--------------
than 10% of the capital or profits interest in the Employer, if that Employer is
other than a corporation.
2.55 Participant. "Participant" means any Employee who becomes a
-----------
Participant in accordance with Article III, including
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<PAGE>
any former Employee who is receiving or will receive benefits under the Plan.
2.56 Participation Agreement. "Participation Agreement" means the
-----------------------
agreement (in the form approved by the Trustee for such purpose) under which the
Employer has adopted this Plan as its retirement plan, and has become an
Employer under the Trust forming a part of the Plan. The provisions of the
Participation Agreement are incorporated by reference and are a part of the
Employer Plan.
2.57 Period of Vesting Service. "Period of Vesting Service" means a
-------------------------
period of Service beginning on an Employee's Employment Commencement Date and
ending on his or her first Severance from Service Date which is followed by a
Period of Severance of at least 12 months. Periods of Vesting Service before the
Effective Date (or, if applicable, the effective date of a Preexisting Plan)
shall be disregarded in determining a Participant's Vested Portion unless the
Employer has specified otherwise in the Participation Agreement. If a
Participant whose Severance from Service Date occurred before he or she had any
Vested Portion is reemployed by the Employer, his or her prior Periods of
Vesting Service will be disregarded if his or her Period of Severance is at
least five years and it equals or exceeds his or her aggregate prior Periods of
Vesting Service.
2.58 Period of Severance. "Period of Severance" means the period
-------------------
commencing on an Employee's Severance from Service Date and, if applicable,
ending on the date of his or her subsequent reemployment by the Employer.
2.59 Plan. "Plan" means the "American Bar Association Members
----
Retirement Plan," as amended from time to time.
2.60 Plan Administrator. "Plan Administrator" means, with respect to
------------------
each Employer Plan, the Employer, whose duties as a Fiduciary are set forth in
Article XVI.
2.61 Plan Year. "Plan Year" means the Employer's Fiscal Year.
---------
2.62 Post-Tax Employee Contributions. "Post-Tax Employee Contributions"
-------------------------------
means Employee after-tax contributions which, if made to this Plan, shall be
allocated to the Post-Tax Employee Contribution Account of a Participant in
accordance with Section 6.2.
2.63 Post-Tax Employee Contribution Account. "Post-Tax Employee
--------------------------------------
Contribution Account" means the Account maintained for Post-Tax Employee
Contributions after adjustment for earnings,
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changes in market value, fees, expenses, distributions and withdrawals, if any.
2.64 Predecessor Organization. "Predecessor Organization" means any
------------------------
entity:
(a) With which the Employer shows significant continuity of
ownership, business or workforce; or
(b) Which is determined to be a predecessor organization under
regulations issued by the Secretary of Treasury.
2.65 Preexisting Plan. "Preexisting Plan" means a plan for which this
----------------
Plan has been substituted in accordance with Section 1.3.
2.66 Prior Plan Account. "Prior Plan Account" means the account
------------------
established and maintained for amounts attributable to employer contributions
under another Qualified Plan under Article XIV, after adjustment for earnings,
changes in market value and distributions, if any.
2.67 Profit Sharing Plan. "Profit Sharing Plan" means an Employer Plan
-------------------
under which contributions are made on the basis of Section 4.1(a).
2.68 Qualified Bar Association. "Qualified Bar Association" means an
-------------------------
organization of lawyers represented in the House of Delegates of the American
Bar Association.
2.69 Qualified Defined Benefit Plan. "Qualified Defined Benefit Plan"
------------------------------
means a defined benefit plan that is a Qualified Plan.
2.70 Qualified Defined Contribution Plan. "Qualified Defined
-----------------------------------
Contribution Plan" means a defined contribution plan that is a Qualified Plan.
2.71 Qualified Domestic Relations Order. "Qualified Domestic Relations
----------------------------------
Order" means a judicial order that falls within the terms of Code Section
414(p), as determined by the Plan Administrator, or any domestic relations order
entered before 1985 that the Plan Administrator elects to treat as a qualified
domestic relations order within the meaning of Code Section 414(p).
2.72 Qualified Joint and Survivor Annuity. "Qualified Joint and
------------------------------------
Survivor Annuity" means an immediate annuity payable for the life of the
Participant with a survivor annuity for the life of his or her spouse (to whom
the Participant is married or is
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<PAGE>
treated under a Qualified Domestic Relations Order as being married when his or
her benefit payments begin, except as otherwise provided under a Qualified
Domestic Relations Order), that is equal to 100% of the amount of the annuity
payable during the joint lives of the Participant and his or her spouse.
However, effective January 1, 1993, a Participant may elect that the survivor
annuity payable be 50% of the amount of the annuity payable during the joint
lives of the Participant and his or her spouse. If such election is not made,
however, the survivor annuity shall be 100%. For purposes of this Section, the
actuarial value of the joint and survivor annuity shall be equal to the
aggregate balance in the Participant's Accounts.
2.73 Qualified Matching Contribution. "Qualified Matching
-------------------------------
Contribution," in accordance with applicable Income Tax Regulations, means any
Matching Contribution to a Qualified Plan of the Employer made by the Employer
on behalf of an Employee that (i) the Employee may not elect to receive in cash
until distributed from the Qualified Plan, (ii) is 100% vested and
nonforfeitable when made, and (iii) is not distributable under the terms of such
Qualified Plan to Employees or their beneficiaries before the earliest of:
(a) Separation from service, death or disability of the
Employee;
(b) Attainment of age 59 1/2 by the Employee in a Qualified
Plan that is a profit-sharing plan;
(c) Termination of the Qualified Plan without establishment of
a successor Qualified Defined Contribution Plan other than an "employee
stock ownership plan" (as defined in Code Section 4975(e) or 409) or a
"simplified employee pension" (as defined in Code Section 408(k));
(d) The disposition by an Employer that is a corporation to an
unrelated corporation of substantially all of the assets (within the
meaning of Code Section 409(d)(2)) in the trade or business of the
corporation if the Employer continues to maintain this Plan after the
disposition but only with respect to Employees who continue employment
with the corporation acquiring such assets; or
(e) The disposition by an Employer that is a corporation to an
unrelated entity of the Employer's interest in a subsidiary (within the
meaning of Code Section 409(d)(3)), if the Employer continues to
maintain this Plan, but only with respect to Employees who continue
employment with such subsidiary.
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<PAGE>
Any distribution after March 31, 1988 that is triggered by subsection (c), (d)
or (e) shall be made in a single-sum payment.
2.74 Qualified Nonelective Contributions. "Qualified Nonelective
-----------------------------------
Contributions," in accordance with Code Section 401(m)(4)(C), means any
contribution to a Qualified Plan of the Employer (other than Matching
Contributions) made by the Employer on behalf of an Employee that (i) the
Employee may not elect to receive in cash until distributed from the Qualified
Plan, (ii) is 100% vested and nonforfeitable when made, and (iii) is not
distributable under the terms of such Qualified Plan to Employees or their
beneficiaries before the earliest of the five events listed in the definition of
Qualified Matching Contribution.
2.75 Qualified Plan. "Qualified Plan" means a retirement plan that
--------------
meets the requirements for qualification under Code Section 401.
2.76 Related Employer. "Related Employer" means (a) any member of a
----------------
controlled group of corporations of which the Employer is a member, as defined
in Code Section 414(b); (b) any other trade or business under common control of
or with the Employer, as defined in Code Section 414(c); (c) any member of an
affiliated service group of which the Employer is a member, as defined in Code
Section 414(m); and (d) any other entity required to be aggregated with the
Employer under Code Section 414(o).
2.77 Rollover Account. "Rollover Account" means the account established
----------------
and maintained for amounts attributable to Eligible Rollover Contributions (as
defined in Section 18.2(a)) contributed to this Plan pursuant to Section 14.4.
2.78 Self-Employed Individual. "Self-Employed Individual" means in any
------------------------
Plan Year any individual who has Earned Income for that Plan Year or who would
have had Earned Income if the Employer had net profits for that Plan Year.
2.79 Service. "Service" means any period during which an Employee is
-------
employed by, or is the sole practitioner or a partner of, the Employer. In any
case in which the Employer maintains the plan of a Predecessor Organization or
adopts the Plan under Section 1.3 in substitution for a Preexisting Plan,
service for such Predecessor Organization or under the Preexisting Plan shall be
treated as Service for the Employer. In addition, if the Employer so elects in
the Participation Agreement, service for any other Predecessor Organization may
be treated as Service for the Employer.
2.80 Severance from Service Date. "Severance from Service Date" means
---------------------------
the date of an Employee's retirement, termination of
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<PAGE>
employment or death, the first anniversary of the commencement of an Employee's
Disability or approved leave of absence from the Employer or the second
anniversary of the commencement of an Employee's absence resulting from
pregnancy, the birth or adoption of a child or the care of a child following its
birth or adoption (or such later date as the Employer may specify by agreement
with the Employee). For the purpose of applying this definition, a Self-Employed
Individual shall be treated as an Employee.
2.81 State Street. "State Street" means State Street Bank and Trust
------------
Company, a trust company organized and existing under the laws of The
Commonwealth of Massachusetts.
2.82 Shareholder-Employee. "Shareholder-Employee" means any individual
--------------------
who is an employee or officer of an Employer that is an "S corporation" within
the meaning of Code Section 1361(a)(1) and who owns (or is considered as owning
within the meaning of Code Section 318(a)(1)) on any day of the Fiscal Year more
than 5% of the Employer's outstanding stock.
2.83 Target Benefit Plan. "Target Benefit Plan" means an Employer Plan
-------------------
under which Employer contributions are made on the basis of Section 4.1(c).
2.84 Trust. "Trust" means the American Bar Association Members
-----
Retirement Trust, as amended from time to time.
2.85 Trustee. "Trustee" means the Trustee of the Trust and any
-------
successor Trustee or Trustees.
2.86 Vested Portion. "Vested Portion" means an amount equal to that
--------------
percentage of a Participant's Employer Account and a Participant's Matching
Contribution Account in which the Participant's rights are nonforfeitable and
fully vested, which percentage is determined by reference to the vesting
schedule specified in the Participation Agreement and referenced in Article X.
The term "Unvested Portion" means the balance, if any, of such Accounts. With
respect to a Participant's other Accounts, the term "Vested Portion" means 100%
of such Accounts.
2.87 Year of Eligibility Service. "Year of Eligibility Service" means a
---------------------------
12-consecutive-month period beginning on an Employee's Employment Commencement
Date in which he or she has 1,000 or more Hours of Service, regardless of
whether his or her Service continues throughout such period. If an Employer
under Section 3.1 elects an eligibility-service requirement of less than one
Year of Eligibility Service, the 1,000-hour standard under this Section shall be
pro-rated over the period of Eligibility Service elected.
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<PAGE>
Article III. Participation
------------ -------------
3.1 Participation Requirements. An Employee will become a Participant
--------------------------
in the Employer Plan as of the first Entry Date following his or her completion
of the number of Years of Eligibility Service (not in excess of two) and
attainment of the age (not in excess of 21) specified in the Participation
Agreement. The Employer may not in the Participation Agreement require more than
one Year of Eligibility Service unless the Employer also in the Participation
Agreement specifies that Participants will vest in accordance with Schedule A
under Section 10.2 (or a vesting schedule at least as favorable as Schedule A).
If the Employer adopts the 401(k) arrangement described in Article V, no more
than 12 months of Eligibility Service may be required for eligibility to
participate in the 401(k) arrangement. An Employee who has attained at least two
Years of Eligibility Service before the first day of the Plan Year beginning in
1989 shall be treated as satisfying the eligibility-service requirement (if any)
under this Section as of the last day of the Plan Year beginning in 1988.
In the event that a Participant is no longer a member of an eligible
class of Employees and becomes ineligible to participate but has not incurred an
Break in Service, such employee will participate immediately upon returning to
an eligible class of Employees. If such Participant incurs a Break in Service,
eligibility will be determined under the Break in Service rules of the Plan.
In the event an employee who is not a member of an eligible class of
Employees becomes a member of an eligible class, such employee will participate
immediately if such employee has satisfied the minimum age and service
requirements specified in the Participation Agreement and would otherwise
previously become a Participant.
In addition, a Prior Plan Account may be established on behalf of an
Employee under Article XIV (pertaining to transfers and rollovers) even though
the Employee is not yet a Participant under the Plan. Such an Employee shall be
deemed a Participant for all purposes of the Plan other than Articles IV, V and
VI. On the first Entry Date as of which the Employee has satisfied the age and
service requirements of this Section, he or she shall become a Participant in
the Plan for all purposes.
3.2 Exclusion of Associates. The Employer may specify in a
-----------------------
nonstandardized Participation Agreement that attorneys who are not partners or
shareholders of the Employer are not eligible to participate in the Plan despite
their satisfaction of the requirements of Section 3.1.
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<PAGE>
3.3 Exclusion of Employees of Related Businesses. The Employer may
--------------------------------------------
specify in a nonstandardized Participation Agreement that employees of any
Related Employer are not eligible to participate in the Plan despite their
satisfaction of the requirements of Section 3.1.
3.4 Exclusion of Leased Employees. The Employer may specify in a
-----------------------------
nonstandardized Participation Agreement that Leased Employees are not eligible
to participate in the Plan despite their satisfaction of the requirements of
Section 3.1.
3.5 Exclusion of Other Employees. The Employer may specify in a
----------------------------
nonstandardized Participation Agreement that certain types of Employees are not
eligible to participate in the Plan despite their satisfaction of the
requirements of Section 3.1.
3.6 Breaks in Service. If an Employee incurs a Break in Service, his or
-----------------
her Years of Eligibility Service before the Break in Service shall not be taken
into account for purposes of Section 3.1 if, before the Break in Service, he or
she had not completed the number of Years of Eligibility Service required. If a
former Employee who has completed the requirements of Section 3.1 is reemployed
by the Employer (either before or after incurring a Break in Service), he or she
will become a Participant or resume active participation in the Plan on the date
he or she again becomes an Employee.
3.7 Preexisting Plan. If this Plan was substituted for a Preexisting
----------------
Plan, each participant in the Preexisting Plan shall be a Participant in this
Plan on the Effective Date.
3.8 Participation of Sole Proprietors, Partners and Shareholders. The
------------------------------------------------------------
Employer may specify in a nonstandardized Participation Agreement that an
Employee who is a sole proprietor, partner or shareholder may elect not to be a
Participant by providing notice to the Employer before the first day of the Plan
Year for which the election is to be effective. The election may be revoked at
any time upon notice to the Employer before the first day of the Plan Year for
which the revocation is to be effective. Notwithstanding the foregoing,
effective as of the first day of the Plan Year beginning after December 31, 1988
(or as of April 1, 1989, if later), an election under this Section may be made
only in the form of a one-time irrevocable election and only upon the Employee's
commencement of employment or upon the Employee's first becoming eligible to
participate in any Qualified Plan of the Employer. The election shall apply to
the duration of the Employee's employment with the Employer. An Employee's
election under this Section shall not by itself constitute a termination of the
Employer Plan.
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<PAGE>
3.9 Owner-Employee Who Controls Business. If an Owner-Employee, either
------------------------------------
alone or as part of a group of two or more Owner-Employees, controls both the
business to which this Plan applies and one or more other unincorporated trades
or businesses, he or she must establish one or more Qualified Plans with respect
to such other trades or businesses and such plans when taken together with the
Plan must as a single plan satisfy the requirements of Code Sections 401(a) and
(d) with respect to the employees of this and all such trades or businesses. If
an Owner-Employee, either alone or as part of a group of two or more
Owner-Employees, does not control the business to which the Plan applies but
does control one or more other unincorporated trades or businesses, he or she
must establish one or more Qualified Plans with respect to such other trades or
businesses that provide contributions and benefits that are not less favorable
than the contributions and benefits provided for Owner-Employees under this
Plan, and the plans so established must satisfy the requirements of Code
Sections 401(a) and (d).
If an individual is covered as an Owner-Employee under the plans of two
or more trades or businesses which are not controlled and the individual
controls a trade or business, then the contributions or benefits of the
employees under the plan of the trades or businesses which are controlled must
be as favorable as those provided for him under the most favorable plan of the
trade or business which is not controlled.
If an Employer has an Owner-Employee that is required by this Section
to cover employees of another controlled trade or business with a Qualified
Plan, then (a) the Employer must adopt the Plan by means of a nonstandardized
Participation Agreement and (b) the Employer may choose to cover such employees
under the Employer Plan.
For purposes of this Section, "control" means ownership of more than
50% of the trade or business involved. For purposes of determining ownership, an
Owner-Employee, or a group of two or more Owner-Employees, shall be considered
to own any interest in a partnership that is owned by a partnership in which the
Owner-Employee, or group of two or more Owner-Employees, owns more than 50% of
the trade or business. The provisions of this Section do not apply where the
only persons who would be covered by a Qualified Plan for such other
unincorporated trade or business would be the Owner-Employee or group of
Owner-Employees who control such other unincorporated trade or business.
Article IV. Employer Contributions
----------- ----------------------
4.1 Employer Contributions. The Employer shall make contributions to
----------------------
the Trust by check or money order (or by any
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<PAGE>
other method acceptable to the Trustee or the Trustee's designated agent). The
amount of such contributions for each Participant for each Plan Year shall be
determined on the basis of subsection (a), (b) or (c), depending on the form of
Participation Agreement signed by the Employer. To adopt a Profit Sharing Plan,
a Defined Contribution Pension Plan and/or a Target Benefit Plan, the Employer
shall complete a separate Participation Agreement for each type of Plan adopted.
Employer contributions made for each Participant on the basis of this Section
for a Plan Year shall be subject to the limitations of Article XVII. In no event
shall contributions made on the basis of this Section (when added to Employer
contributions under Articles V and VI) exceed the maximum amount deductible by
the Employer under Code Section 404.
(a) Profit-Sharing Plan. For each Plan Year the Employer, in
-------------------
its discretion, shall determine the amount to be contributed on behalf
of all Participants.
(b) Defined Contribution Pension Plan. For each Plan Year the
---------------------------------
Employer shall contribute for each Participant that percentage of the
Compensation of such Participant that is specified in the Participation
Agreement. However, for Plan Years beginning before January 1, 1992, an
Employer that maintains only a Defined Contribution Pension Plan shall
make at least the Minimum Contribution on behalf of each Participant
for that Plan Year (unless the Employer Plan is determined under
Section 4.4 not to be Top-Heavy for that Plan Year).
(c) Target Benefit Plan. For each Plan Year the Employer shall
-------------------
contribute for each Participant the amount determined in accordance
with the Target Benefit Plan Participation Agreement.
For each Plan Year, an Employer that maintains both a Profit Sharing Plan and a
Defined Contribution Pension Plan shall first make its contribution under
subsection (b) before making its contribution under subsection (a) for the Plan
Year.
If the Employer adopts more than one form of the Plan, the following
rules shall apply in determining the Employer Plan under which the Minimum
Contribution (if any) shall be made:
(x) If none of the Employer Plans is Top-Heavy, the Minimum
Contribution requirement shall not apply.
(y) If only one of the Employer Plans is Top-Heavy, the
Minimum Contribution shall be made under that Employer Plan.
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(z) If one or more Participants participate in two or more
Top-Heavy Employer Plans, the Minimum Contribution for such
Participants shall be made to:
(1) The Employer Plan as to which the Employer has
elected to make integrated contributions; or
(2) The Employer Plan specified in the Participation
Agreements, if the Employer has not elected to make integrated
contributions to any Employer Plan.
4.2 Eligibility for Employer Contributions. The Employer may specify in
--------------------------------------
a nonstandardized Participation Agreement that any sole proprietor, partner or
shareholder who is a Participant in a Profit Sharing Plan may elect, before the
close of any Plan Year, to have a reduced contribution or no contribution made
by the Employer on his or her behalf for such Plan Year. Notwithstanding the
foregoing, effective as of the first day of the Plan Year beginning after
December 31, 1988 (or as of April 1, 1989, if later), an election under this
Section may be made only in the form of a one-time irrevocable election and only
upon the Employee's commencement of employment or upon the Employee's first
becoming eligible to participate in any Qualified Plan of the Employer. The
election shall apply to the duration of the Employee's employment with the
Employer.
A Participant with not more than 500 Hours of Service, whose employment
terminates during the Plan Year and who is not employed on the last day of the
Plan Year shall not share in the Employer contributions for the Plan Year. In
addition, the Employer may elect in a nonstandardized Participation Agreement
that a Participant must complete 1,000 Hours of Service during a Plan Year
and/or be employed on the last day of the Plan Year to share in Employer
contributions for that Plan Year. However, these requirements (if elected) shall
not apply to the extent of the death, Disability or retirement of a Participant
during a Plan Year, nor in the event that applying these eligibility rules would
result in the failure of the Employer Plan to meet the requirements of Code
Section 401(a)(4), 410(b) or 401(a)(26) for the Plan Year. The 1,000 Hours of
Service requirement (if elected) shall not apply with respect to Minimum
Contributions. If any Plan Year is less than 12 months in length, the
requirement that 1,000 Hours of Service be completed as a condition of
eligibility of Participants to receive a share of the Employer's contribution
shall be proportionately reduced to reflect the shorter Plan Year.
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<PAGE>
4.3 Allocation of Employer Contributions.
------------------------------------
(a) General Allocation Rules. Each Participant's allocable
------------------------
share (as determined below), if any, of the Employer contribution under
Section 4.1 for a Plan Year shall be credited to his or her Employer
Account (except to the extent that it is designated as a Qualified
Nonelective Contribution or a Qualified Matching Contribution for that
Plan Year under Sections 5.7 and/or 6.5 and is allocated to his or her
401(k) Employer Account in a Profit Sharing Plan). Subject to the
limitations of Article XVII, such Employer contribution shall be
allocated among the Participants who are eligible for such allocation
under Section 4.2 and the terms of the Participation Agreement.
If the Employer has adopted a Target Benefit Plan, allocation
of Employer contributions under Section 4.1(c) shall be made on the
basis of the provisions in the Target Benefit Plan Participation
Agreement, rather than under the remainder of this Section. If the
Employer has adopted a Profit Sharing Plan and/or a Defined
Contribution Pension Plan, allocation of Employer contributions under
Sections 4.1(a) and 4.1(b) shall be made on the basis of Compensation
and in accordance with paragraphs (c)(1) through (c)(3), the
applicability of which shall depend on the extent to which the Employer
has elected in the Participation Agreement to integrate its Employer
Plan contributions with its contributions for Old-Age, Survivors and
Disability Insurance, as well as whether the Employer has adopted a
Profit Sharing Plan, a Defined Contribution Pension Plan, or both.
(b) Effect on Allocation of Integrating Employer
--------------------------------------------
Contributions. Employer contributions under the Employer Plan shall not
be integrated (with Employer Social Security contributions) if the
Employer maintains any other Qualified Plan that provides integrated
contributions or benefits for any of the same Participants. If the
Employer elects to integrate Employer contributions and adopts only a
Profit Sharing Plan or only a Defined Contribution Pension Plan,
paragraphs (c)(1) through (c)(3) shall apply. If the Employer elects to
integrate Employer contributions and adopts both a Profit Sharing Plan
and a Defined Contribution Pension Plan, the Employer shall specify in
the Participation Agreement which Employer Plan shall be integrated.
Only one Employer Plan can be integrated. Paragraphs (c)(1) and (c)(2)
shall apply only to the allocation of contributions under the
integrated Employer Plan, and paragraph (c)(3) below shall apply to the
allocation of Employer contributions under each Employer Plan.
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<PAGE>
If the Employer does not elect to integrate Employer
---
contributions and adopts only a Profit Sharing Plan or only a Defined
Contribution Pension Plan, paragraphs (c)(1) and (c)(3) shall apply. If
the Employer does not elect to integrate Employer contributions and
adopts both a Profit Sharing Plan and a Defined Contribution Pension
Plan, paragraph (c)(1) shall apply only to the allocation of Employer
contributions under the Plan designated under Section 4.1 to receive
the Minimum Contribution, and paragraph (c)(3) shall apply to the
allocation of Employer contributions under each Employer Plan.
(c) Allocation Steps. Each applicable step of the allocation
----------------
process shall be made only after each preceding step has been completed
and only to the extent that the Employer contribution is sufficient to
complete all or a part of such applicable step.
(1) Step One: Minimum Contribution. That portion of the
------------------------------
Employer contribution, if any, which is equal to the Minimum
Contributions for all eligible Participants (determined
pursuant to Section 2.50) shall be allocated among such
Participants.
(2) Step Two: Integrated Contribution. That portion of the
---------------------------------
Employer contribution, if any, which does not exceed an amount
determined by multiplying the "Minimum Contribution
Percentage" (or, if less, the "Integrated Percentage") by the
total "Covered Compensation" of all eligible Participants,
shall be allocated among such Participants who have Covered
Compensation. For purposes of this allocation, in the case of
a Participant who has exceeded the Cumulative Permitted
Disparity Limit described below, such Participant's total
Compensation for the Plan Year will be taken into account.
(A) "Minimum Contribution Percentage" means the
percentage specified in the Article II definition of
Minimum Contribution.
(B) "Integrated Percentage" means the greater of (i)
5.7% or (ii) the percentage equal to the rate of tax under
Code Section 3111(a) in effect as of the beginning of the
Plan Year that is attributable to the old age insurance
portion of the Old Age, Survivors and Disability Insurance
provisions of the Social Security Act (the "old-age tax
rate"). However, the Employer may specify a lower
percentage in the Participation Agreement, or a lower
percentage may be required
-31-
<PAGE>
under the definition of Covered Compensation in the
subparagraph that follows.
(C) "Covered Compensation" means the amount
of a Participant's Compensation in excess of the
"Taxable Wage Base" ("TWB") as of the beginning of
the Plan Year (or a lower wage base specified in the
Participation Agreement). If a lower wage base
specified in the Participation Agreement is greater
than the greater of $10,000 or 20% of the TWB but not
more than 80% of the TWB, the Integrated Percentage
shall be no more than 4.3%. If a lower wage base
specified in the Participation Agreement is more than
80% of the TWB but less than 100% of the TWB, the
Integrated Percentage shall be no more than 5.4%. If
the old-age tax rate exceeds 5.7%, the reduction in
the Integrated Percentage shall be proportionate to
the reductions from the 5.7% Integrated Percentage
given in the preceding two sentences.
(D) "Taxable Wage Base" means the
contribution and benefit base in effect under Section
230 of the Social Security Act at the beginning of
the Plan Year.
(E) "Cumulative Permitted Disparity Limit"
means for each Participant 35 total cumulative
permitted disparity years. Total cumulative permitted
disparity years means the number of years credited to
the Participant for allocation or other accrual
purposes under this Plan, any other Qualified Plan,
or Simplified Employee Pension (as defined in Section
17.8(l)) (whether or not terminated) ever maintained
by the Employer. For purposes of determining the
Participant's Cumulative Permitted Disparity Limit,
all years ending in the same calender year are
treated as the same year. If the participant has not
Benefited under a Qualified Defined Benefit Plan or
target benefit plan for any year beginning on or
after January 1, 1994, the Participant has no
cumulative disparity limit.
(F) "Benefit." A Participant is treated as
Benefiting under the Plan for any Plan Year in which
the Participant received or is deemed to receive an
allocation in accordance with section 1.410(b)-3(a).
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<PAGE>
Each eligible Participant shall be credited with a portion of
the Employer contribution based on the ratio which the Minimum
Contribution Percentage (or, if less, the Integrated Percentage)
multiplied by the Participant's Covered Compensation bears to the
Minimum Contribution Percentage (or, if less, the Integrated
Percentage) multiplied by the Covered Compensation of all such
Participants for the Plan Year.
In addition, that portion of the Employer contribution, if
any, which does not exceed an amount determined by multiplying the
difference, if any, of the Integrated Percentage less the Minimum
Contribution Percentage by the sum of the total Compensation plus
the Covered Compensation of all Participants, shall be allocated
among all eligible Participants, in proportion to each such
Participant's total and Covered Compensation. For purposes of this
allocation, in the case of a Participant who has exceeded the
Cumulative Permitted Disparity Limit described above, such
Participant's total Compensation for the Plan Year will be taken
into account.
(3) Step Three: Nonintegrated Contribution. The remaining
--------------------------------------
portion of the Employer contribution, if any, shall be allocated
among all Participants eligible to receive an allocation. Each
eligible Participant's share of this remaining portion shall be
based on the ratio that the Participant's Compensation bears to
the Compensation of all such Participants for that Plan Year.
4.4 Top-Heavy Status of Employer Plan. An Employer may elect in
certain Participation Agreements to test the Employer Plan annually to determine
whether the Employer Plan is Top Heavy. For each Plan Year as to which an
election under this Section is not in effect, the Employer Plan shall be treated
as being Top-Heavy for that Plan Year. If the Employer Plan is tested for a
particular Plan Year and is found not to be Top-Heavy, the Employer shall not
make a Minimum Contribution for that Plan Year. For Plan Years beginning before
January 1, 1992, the election under this Section may not be made with respect to
an Employer Plan under which Employer contributions are integrated.
(a) "Determination Date" means, for any Plan Year, the last
day of the preceding Plan Year. For the first Plan Year, the
Determination Date means the last day of that year.
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<PAGE>
(b) "Permissive Aggregation Group" means the Required
Aggregation Group of plans plus any other Qualified Plans of the
Employer which, when considered with the Required Aggregation Group,
would continue to satisfy the requirements of Code Sections 401(a)(4)
and 410.
(c) "Present Value of Accrued Benefits" means the value
determined by using the interest and mortality rates specified in the
Participation Agreement. The accrued benefit of a Participant other
than a Key Employee shall be determined under (i) the method, if any,
that uniformly applies for accrual purposes under all Qualified Defined
Benefit Plans maintained by the Employer, or (ii) if there is no such
method, as if such benefit accrued not more rapidly than the slowest
accrual rate permitted under the fractional rule of Code Section
411(b).
(d) "Required Aggregation Group" means each Qualified Plan of
the Employer in which at least one Key Employee participates or
participated at any time during the plan year containing the
Determination Date or during any of the four preceding plan years
(regardless of whether the plan has terminated) and any other Qualified
Plan that enables any plan in which a Key Employee participates to meet
the requirements of Code Section 401(a)(4) or 410.
(e) "Top-Heavy" means with respect to any Plan Year that any
one of the following conditions exists:
(1) The Top-Heavy Ratio for the Employer Plan exceeds 60%,
and the Employer Plan is not part of any Required Aggregation
Group or Permissive Aggregation Group.
(2) The Employer Plan is part of a Required Aggregation
Group but not part of a Permissive Aggregation Group, and the
Top-Heavy Ratio for the Required Aggregation Group exceeds
60%.
(3) The Employer Plan is part of a Required Aggregation
Group and part of a Permissive Aggregation Group, and the Top-
Heavy Ratio for the Permissive Aggregation Group exceeds 60%.
(f) "Top-Heavy Ratio" means:
(1) The Top-Heavy Ratio for the Employer Plan, or any
Required or Permissive Aggregation Group, as appropriate, is a
fraction the numerator of which is the sum of account balances
under the aggregated Qualified Defined Contribution Plans of
the Employer
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<PAGE>
(including this Plan and any "simplified employee pension
plan" as defined in Code Section 408(k)) for all Key Employees
computed in accordance with Code Section 416 and the Present
Value of Accrued Benefits under the aggregated Qualified
Defined Benefit Plans of the Employer for all Key Employees as
of the Determination Date, and the denominator of which is the
sum of the account balances under the aggregated Qualified
Defined Contribution Plans (including this Plan and any
"simplified employee pension plan" as defined in Code Section
408(k)) for all Participants determined in accordance with
Code Section 416 and the Present Value of Accrued Benefits
under the Qualified Defined Benefit Plans for all Participants
as of the Determination Date, all in accordance with Code
Section 416 and the regulations thereunder. Both the numerator
and the denominator of the Top-Heavy Ratio are adjusted for
any distribution of an accrued benefit or any part of any
account balance made within the plan year containing the
Determination Date and the four preceding plan years. Both the
numerator and denominator of the Top-Heavy Ratio are increased
to reflect any Employer contributions which are due but unpaid
as of the Determination Date but which are required to be
taken into account as such under Code Section 416 and the
regulations thereunder.
(2) For purposes of paragraph (1), the value of
account balances and the Present Value of Accrued Benefits
will be determined as of the latest valuation date that falls
within or ends with the 12-month period ending on the
Determination Date. The account balances and accrued benefits
of a Participant (A) who is not a Key Employee but who was a
Key Employee in a prior Plan Year or (B) who has not performed
services for the Employer maintaining this Plan at any time
during the five-year period described in paragraph (1), shall
be disregarded. The calculation of the Top-Heavy Ratio and the
extent to which distributions, rollovers, and transfers are
taken into account will be made in accordance with Code
Section 416 and the regulations thereunder. Deductible
employee contributions shall not be taken into account for
purposes of computing the Top-Heavy Ratio. When aggregating
plans the value of Account balances and accrued benefits shall
be calculated with reference to the Determination Dates that
fall within the same calendar year.
4.5 Timing of Employer Contributions. The contributions made by
--------------------------------
the Employer under this Article for any Plan Year shall be made no later than
the due date (including extensions) for
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<PAGE>
filing the Employer's Federal income tax return for the Fiscal Year that
coincides with such Plan Year.
Article V. 401(k) Arrangement
--------- ------------------
5.1 Purpose. A decision to make contributions to the Trust under the
-------
provisions of this Article, which describes a cash or deferred arrangement under
Code Section 401(k), shall be available only to those Employers (other than
tax-exempt Employers that are not permitted by law to maintain 401(k)
arrangements) that maintain a Profit Sharing Plan. An Employer makes such a
decision when it selects the applicable provision of a Profit Sharing Plan
Participation Agreement.
5.2 Contributions to 401(k) Salary Deferral Account. Subject to Article
-----------------------------------------------
XVII, each Participant may enter into a written salary reduction agreement with
his or her Employer to make Elective Contributions to his or her 401(k) Salary
Deferral Account. No Participant shall be permitted to contribute, in any
calendar year, Elective Contributions to this Plan or to any other Qualified
Plan of the Employer in excess of the dollar limitation of Code Section 402(g)
in effect at the beginning of that calendar year. Contributions under this
Section shall be considered Employer contributions to the Plan and shall be made
by payroll deductions or nonperiodic transfers of designated portions of the
Participant's Compensation, in accordance with rules and procedures established
by the Employer. Elections to make Elective Contributions to a Participant's
401(k) Salary Deferral Account may not be made retroactively, and shall remain
in effect until modified or terminated. A Participant may elect to commence,
modify or terminate his or her election to make Elective Contributions at any
time. Such election shall be made in accordance with the Employer's
administrative procedures, on forms provided by the Employer for that purpose,
and shall be put into effect as soon as administratively feasible. The Employer
shall make contributions to the Trust under this Section by check or by money
order (or by any other method acceptable to the Trustee or the Trustee's
designated agent) as quickly as practicable after such amounts are withheld, but
in no event later than the end of the 12-month period immediately following the
Plan Year to which the contributions relate. A Participant's interest in his or
her 401(k) Salary Deferral Account shall be nonforfeitable and fully vested at
all times.
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<PAGE>
5.3 Nondiscrimination Test for 401(k) Contributions.
-----------------------------------------------
(a) Nondiscrimination Test. In any Plan Year, the Actual
----------------------
Deferral Percentage for Participants who are Highly Compensated
Employees and the Actual Deferral Percentage for all other Participants
shall satisfy paragraph (1) or (2) of the following Actual Deferral
Percentage test:
(1) The Actual Deferral Percentage for the group of
Participants who are Highly Compensated Employees is not more
than the Actual Deferral Percentage for the group of all other
Participants multiplied by 1.25.
(2) The excess of the Actual Deferral Percentage for
the group of Participants who are Highly Compensated Employees
over the Actual Deferral Percentage for the group of all other
Participants is not more than two percentage points, and the
Actual Deferral Percentage for the group of Participants who
are Highly Compensated Employees is not more than the Actual
Deferral Percentage of the group of all other Participants
multiplied by two.
Reliance on paragraph (2), rather than on paragraph (1), to satisfy the
Actual Deferral Percentage test shall be subject to the limitations set
forth in Section 5.4.
(b) Rules for Application of Actual Deferral Percentage Test.
--------------------------------------------------------
(1) For purposes of this Section, the Actual Deferral
Percentage for any Participant who is a Highly Compensated
Employee for the Plan Year, and who is eligible to make
Elective Contributions or to receive an allocation of
Qualified Nonelective Contributions or Qualified Matching
Contributions under two or more 401(k) arrangements that are
maintained by the Employer, shall be determined as if all such
contributions were made under a single arrangement. As a
general rule, if a Highly Compensated Employee participates in
two or more 401(k) arrangements that have different Plan
Years, all 401(k) arrangements ending with or within the same
calendar year shall be treated as a single arrangement.
However, certain plans shall be treated as separate plans if
mandatorily disaggregated in accordance with the Income Tax
Regulations under Code Section 401(k).
(2) If the Employer Plan satisfies the requirements
of Code Section 401(k), 401(a)(4) or 410(b) only if aggregated
with one or more other
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<PAGE>
Qualified Plans, or if one or more other plans satisfy such
requirements only if aggregated with the Employer Plan, then
this Section shall be applied by determining the Actual
Deferral Percentage of Employees as if all such plans were a
single plan. Notwithstanding the above requirement, for Plan
Years beginning after December 31, 1989, plans may be
aggregated to satisfy Code Section 401(k) only if they have
the same Plan Year.
(3) For purposes of determining the Actual Deferral
Percentage of a Participant who is a Highly Compensated
Employee, the Elective Contributions, Qualified Nonelective
Contributions, Qualified Matching Contributions and
Compensation of the Participant shall include the Elective
Contributions, Qualified Nonelective Contributions, Qualified
Matching Contributions and Compensation of Family Members.
Such Family Members shall be disregarded as separate Employees
in determining the Actual Deferral Percentage for Participants
who are Highly Compensated Employees and for those who are
Nonhighly Compensated Employees. Excess Contributions shall be
allocated to such Participants and their Family Members in the
manner prescribed by applicable Income Tax Regulations.
(4) For purposes of inclusion in the Actual Deferral
Percentage test, Elective Contributions, Qualified Nonelective
Contributions and Qualified Matching Contributions must be
made before the last day of the 12-month period immediately
following the Plan Year to which the contributions relate.
(5) Adequate records, sufficient to demonstrate
satisfaction of the Actual Deferral Percentage test and the
amount of Qualified Nonelective Contributions or Qualified
Matching Contributions, or both, used in such test, shall be
maintained.
(6) The determination and treatment of the Actual
Deferral Percentage of any Participant shall satisfy such
other requirements as may be prescribed by the Secretary of
the Treasury.
5.4 Multiple Use Test. This Section describes a limitation on the
-----------------
multiple use of the alternative limits set forth in Sections 5.3(a)(2) and
6.4(a)(2). If at least one Highly Compensated Employee participates in both a
401(k) arrangement maintained by the Employer (including the 401(k) arrangement
under Article V) and a plan subject to the Actual Contribution Percentage test
of Code Section 401(m)(2) and maintained by
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<PAGE>
the Employer (including this Employer Plan), and if the sum of the Actual
Deferral Percentage ("ADP") and Actual Contribution Percentage ("ACP") of those
Highly Compensated Employees subject to either or both tests exceeds the
"Aggregate Limit," then the ACP of those Highly Compensated Employees shall be
reduced (beginning with the Highly Compensated Employee whose ACP is the
highest) so that the Aggregate Limit is not exceeded. The Employer may elect to
reduce the ACP either for all Highly Compensated Employees or only for those
Highly Compensated Employees who are eligible for both the 401(k) arrangement
and the 401(m) plan. The amount by which each Highly Compensated Employee's ACP
is reduced shall be treated as an Excess Aggregate Contribution. The ADP and ACP
of Highly Compensated Employees are determined for purposes of this paragraph
after any corrections required to meet the ADP and ACP tests. A "multiple use"
shall not be considered to occur, and this Section shall not apply, if either
the ADP or the ACP of the Highly Compensated Employees does not exceed 1.25
multiplied by the respective ADP or ACP of the Nonhighly Compensated Employees.
The term "Aggregate Limit" means the greater of the following two subsections:
(a) The sum of (i) 125% of the greater of the relevant ADP or the
relevant ACP, and (ii) two percentage points plus the lesser of the
relevant ADP or the relevant ACP. In no event may the amount in clause (ii)
exceed twice the lesser of the relevant ADP or the relevant ACP.
(b) The sum of (i) 125% of the lesser of the relevant ADP or the
relevant ACP, and (ii) two percentage points plus the greater of the
relevant ADP or the relevant ACP. In no event may the amount in clause (ii)
exceed twice the greater of the relevant ADP or the relevant ACP.
For purposes of this Section, "relevant ADP" means the ADP of the group of
eligible Nonhighly Compensated Employees under the 401(k) arrangement for the
plan year, and "relevant ACP" means the ACP of the group of eligible Nonhighly
Compensated Employees under the 401(m) plan for the plan year beginning with or
within the plan year of the 401(k) arrangement.
5.5 Distribution of Excess Contributions. Except to the extent
------------------------------------
"recharacterized" in accordance with the last paragraph of this Section, Excess
Contributions (as adjusted for any allocable income or loss) shall be
distributed to each Participant on whose behalf such Excess Contributions were
made for a Plan Year. The Employer shall direct the Trustee to make such
distribution on behalf of the Participant of the amount to be distributed. The
effective date of the distribution shall generally be the Business Day
designated in the Employer's Notice to the Trustee or five Business Days after
the date on which Notice to the
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<PAGE>
Trustees is received, whichever is later. However, if the Trustee can ascertain
the excess amount, the Trustee may, but shall not be obligated to, make the
distribution before the end of the Plan Year after the Plan Year to which the
Excess Contributions relate, whether or not Notice to the Trustee has been
provided. Failure to make the distributions within 2 1/2 months after the last
day of the Plan Year in which such Excess Contributions arose will subject the
Employer to an excise tax under Code Section 4979 equal to 10% of the excess
amount that should have been distributed under this Section. Excess
Contributions shall be allocated to Participants who are Highly Compensated
Employees on the basis of their respective portions of the Excess Contributions
attributable to each such Highly Compensated Employee. Excess Contributions of
Participants who are subject to the Family Member aggregation rules shall be
allocated among the Family Members in proportion to the Elective Deferrals (and
amounts treated as Elective Deferrals) of each Family Member that are combined
to determine the combined Actual Deferral Percentage.
Excess Contributions shall be taken from relevant Participants' 401(k)
Salary Deferral Accounts. Excess Contributions that would otherwise be
distributed to the Participant shall be adjusted for the income or loss in the
401(k) Salary Deferral Account attributable to such Excess Contributions, and
shall be reduced in accordance with the Income Tax Regulations by the amount of
Excess Elective Deferrals distributed to the Participant in accordance with
Section 5.6. The income (or loss) allocable to the Excess Contributions in the
401(k) Salary Deferral Account shall be the difference between the amount of the
Excess Contributions on the date of allocation to the Account and the value of
such amount on the effective date of distribution. For this purpose, Excess
Contributions shall be considered to be the most recently contributed of each
relevant type of contribution.
This paragraph shall be effective for Plan Years beginning after
December 31, 1991. Notwithstanding the foregoing provisions of this Section to
the contrary, the Employer may by Notice to the Trustee elect for a particular
Plan Year to have the recharacterization provisions of this paragraph apply. If
such an election is timely made in accordance with rules established by the
Trustee, a distribution of Excess Contributions that would otherwise be made to
a Participant shall instead be treated as distributed to the Participant and
then contributed by the Participant to the Employer Plan in the form of Post-Tax
Employee Contributions. However, such recharacterized amounts shall remain
nonforfeitable, shall not be subject to withdrawal under Section 11.4, and shall
be subject to the same distribution requirements applicable to Elective
Deferrals. Recharacterized amounts shall be accounted for
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<PAGE>
separately from the Participant's Post-Tax Employee Contributions to assure that
the distribution restrictions described in the preceding sentence are satisfied.
Amounts shall not be recharacterized by a Highly Compensated Employee to the
extent that such amount, in combination with his or her other Post-Tax Employee
Contributions, would exceed any stated limit under the Employer Plan on Post-Tax
Employee Contributions. Recharacterization must occur no later than 2 1/2 months
after the last day of the Plan Year in which the Excess Contributions arose, and
shall be deemed to occur no earlier than the date on which the last Highly
Compensated Employee is informed in writing of the amount recharacterized and
the consequences of recharacterization. Recharacterized amounts shall be taxable
to the Participant in his or her tax year in which he or she would have received
them in cash.
5.6 Distribution of Excess Elective Deferrals. Excess Elective
-----------------------------------------
Deferrals contributed to the Employer Plan (as adjusted for any allocable income
or loss) shall be distributed no later than each April 15 to Participants who
claim Excess Elective Deferrals for the preceding calendar year. A Participant
is deemed to notify the Plan Administrator of any Excess Elective Deferrals that
arise by taking into account only those Elective Deferrals made to the Employer
Plan and any other Qualified Plans of the Employer. A Participant's claim for
such distribution shall be submitted to the Plan Administrator no later than
March 1. The claim shall specify the Participant's Excess Elective Deferrals for
the preceding calendar year, and shall be accompanied by the Participant's
written statement that, if the amount is not distributed, the Excess Elective
Deferrals when added to other Elective Deferrals of the Participant exceed the
limit imposed on the Participant by Code Section 402(g) for the year in which
the deferral occurred.
The Employer shall be responsible for delivering Notice to the Trustee
that directs the Trustee to pay to the Participant the amount to be distributed.
The notice must be received at least five Business Days before April 15. The
effective date of the distribution shall be the first Business Day on or after
Notice to the Trustee is received. The income (or loss) allocable to the Excess
Elective Deferrals in the 401(k) Salary Deferral Account shall be the difference
between the amount of the Excess Elective Deferrals on the date of allocation to
the Account and the value of such amount on the effective date of distribution.
5.7 Qualified Nonelective Contributions and Qualified Matching
----------------------------------------------------------
Contributions. In accordance with applicable Income Tax Regulations, the
- -------------
Employer may elect to make Qualified Nonelective Contributions and/or Qualified
Matching Contributions, which shall be considered, to the extent necessary (and
to the extent
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<PAGE>
not considered under Section 6.5), in conducting the Actual Deferral Percentage
test in Section 5.3. Each contribution (i) may be made as a uniform percentage
of Compensation or as a uniform dollar amount contributed on a per capita basis,
(ii) may be made for all Participants (who are otherwise eligible under Section
4.2 to share in Employer contributions) or, if the contribution is made after
the end of the Plan Year to which it relates, only for all or certain of those
eligible Participants who are Nonhighly Compensated Employees, and (iii) may be
made at any time during the relevant Plan Year or, for purposes of satisfying
the Actual Deferral Percentage test, by no later than the end of the 12-month
period immediately following such Plan Year to which the contributions relate.
Qualified Nonelective Contributions and Qualified Matching Contributions that
are considered in conducting the Actual Deferral Percentage test under Section
5.3 may not be taken into account in determining whether any other contributions
or benefits satisfy the requirements of Code Section 401(a)(4) and shall not
taken into account in determining the Employer Plan's compliance with the Actual
Contribution Percentage test under Section 6.4(a). Contributions under this
Section shall be allocated to the appropriate Participants' 401(k) Employer
Accounts.
5.8 Reduction of Elective Contributions. To meet the Actual Deferral
-----------------------------------
Percentage test of Section 5.3, the Plan Administrator may cause a prospective
reduction in, or otherwise prospectively limit, the Elective Contributions to be
contributed on behalf of any Highly Compensated Employee during the Plan Year.
The amount of the reduction or limitation shall be determined on the basis of
reasonable estimates as to the Elective Contributions to be contributed to the
Plan during the Plan Year.
Article VI. Post-Tax Employee Contributions and Matching Contributions
---------- ----------------------------------------------------------
6.1 Post-Tax Employee Contributions. An Employer who adopts a Profit
-------------------------------
Sharing Plan may elect in certain Participation Agreements to permit (a) all
Participants who are Employees, (b) only Participants who are Nonhighly
Compensated Employees, or (c) only those Participants specified in a
nonstandardized Participation Agreement, to make Post-Tax Employee Contributions
in any Plan Year. An Employer who adopted a Defined Contribution Pension Plan
before April 10, 1989 may not permit Participants to make Post-Tax Employee
Contributions to the Plan for Plan Years beginning after the Plan Year in which
this amended Plan is adopted. An Employer who adopts a Defined Contribution
Pension Plan on or after April 10, 1989, or who at any time adopts a Target
Benefit Plan, may not permit Participants to make Post-Tax Employee
Contributions to that Plan.
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<PAGE>
6.2 Form and Amount of Post-Tax Employee Contributions. The amount of
--------------------------------------------------
Post-Tax Employee Contributions made by any Participant shall be limited in
accordance with this Article and Article XVII. Post-Tax Employee Contributions
shall be remitted to the Trustee by check or money order (or any other method
acceptable to the Trustee or the Trustee's designated agent). Post-Tax Employee
Contributions shall be credited to the Post-Tax Employee Contribution Account of
the Participant. A Participant's interest in his or her Post-Tax Employee
Contribution Account shall be nonforfeitable and fully vested at all times.
6.3 Matching Contributions. An Employer may, in its discretion, make
----------------------
Matching Contributions to the Plan. The amount of such Matching Contributions
shall be calculated by reference to the Participant's Elective Contributions
and/or Post-Tax Employee Contributions to the Plan as specified by the Employer
in the Participation Agreement. Matching Contributions may, at the election of
the Employer, be allocated on behalf of all Participants, certain types of
Participants specified in a nonstandardized Participation Agreement, or only
Participants who are Nonhighly Compensated Employees. Matching Contributions
shall be subject to the Actual Contribution Percentage test set forth in Section
6.4. Matching Contributions made on behalf of a Participant shall be allocated
to that Participant's Matching Contribution Account except to the extent that
the Employer designates the contributions as Qualified Matching Contributions
under Section 5.7. Matching Contributions that are not Qualified Matching
Contributions shall be subject to the vesting and forfeiture rules applicable to
Employer contributions under Article X. The Employer shall make contributions to
the Trust under this Section by check or money order (or by any other method
acceptable to the Trustee or the Trustee's designated agent). For purposes of
satisfying the Actual Contribution Percentage test of Section 6.4, Matching
Contributions shall be made no later than the end of the 12-month period
immediately following the Plan Year to which such contributions relate.
6.4 Nondiscrimination Test for Post-Tax Employee and Matching
---------------------------------------------------------
Contributions.
- -------------
(a) Nondiscrimination Test. In any Plan Year beginning after
----------------------
December 31, 1986, the Actual Contribution Percentage for Participants
who are Highly Compensated Employees and the Actual Contribution
Percentage for all other Participants shall satisfy paragraph (1) or
(2) of the following Actual Contribution Percentage test:
(1) The Actual Contribution Percentage for the group
of Participants who are Highly Compensated Employees is not
more than the Actual Contribution
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Percentage for the group of all other Participants multiplied
by 1.25.
(2) The excess of the Actual Contribution Percentage
for the group of Participants who are Highly Compensated
Employees over the Actual Contribution Percentage for the
group of all other Participants is not more than two
percentage points, and the Actual Contribution Percentage for
the group of Participants who are Highly Compensated Employees
is not more than the Actual Contribution Percentage of the
group of all other Participants multiplied by two.
Reliance on paragraph (2), rather than on paragraph (1), to satisfy the Actual
Contribution Percentage test shall be subject to the limitations set forth in
Section 5.4.
(b) Rules for Application of Actual Contribution Percentage
-------------------------------------------------------
Test.
- ----
(1) For purposes of this Section, the Actual
Contribution Percentage for any Participant who is a Highly
Compensated Employee for the Plan Year, and who is eligible to
make Post-Tax Employee Contributions or to receive an
allocation of Matching Contributions, Qualified Nonelective
Contributions or Elective Contributions under two or more
Qualified Plans or 401(k) arrangements that are maintained by
the Employer, shall be determined as if all such contributions
were made under a single plan. As a general rule, if a Highly
Compensated Employee participates in two or more 401(k)
arrangements that have different plan years, all 401(k)
arrangements ending with or within the same calendar year
shall be treated as a single arrangement. However, certain
plans shall be treated as separate plans if mandatorily
disaggregated in accordance with the Income Tax Regulations
under Code Section 401(m).
(2) If the Employer Plan satisfies the requirements
of Code Section 401(m), 401(a)(4) or 410(b) only if aggregated
with one or more other Qualified Plans, or if one or more such
other Qualified Plans satisfy such requirements only if
aggregated with the Employer Plan, then this Section shall be
applied by determining the Actual Contribution Percentages of
Participants as if all such plans were a single plan.
Notwithstanding the foregoing, for Plan Years beginning after
December 31, 1989, plans may be aggregated to satisfy Code
Section 401(m) only if they have the same Plan Year.
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<PAGE>
(3) For purposes of determining the Actual
Contribution Percentage of a Participant who is a Highly
Compensated Employee, the Post-Tax Employee Contributions,
Matching Contributions, Qualified Nonelective Contributions,
Elective Contributions and Compensation of the Participant
shall include the Post-Tax Employee Contributions, Matching
Contributions, Qualified Nonelective Contributions, Elective
Contributions and Compensation of Family Members. Such Family
Members shall be disregarded as separate Employees in
determining the Actual Contribution Percentage for
Participants who are Highly Compensated Employees and for
those who are Nonhighly Compensated Employees. Excess
Aggregate Contributions shall be allocated to such
Participants and their Family Members in the manner prescribed
by applicable Income Tax Regulations.
(4) For purposes of the Actual Contribution
Percentage test, Post-Tax Employee Contributions are
considered to have been made in a Plan Year if they are made
no later than 30 days after the close of the Plan Year and are
designated as Post-Tax Employee Contributions for such Plan
Year. Matching Contributions and Qualified Nonelective
Contributions shall be considered made for a Plan Year if made
no later than the end of the 12-month period beginning on the
day after the close of the Plan Year.
(5) Adequate records, sufficient to demonstrate
satisfaction of the Actual Contribution Percentage test and
the amount of Qualified Nonelective Contributions or Matching
Contributions, or both, used in such test, shall be
maintained.
(6) The determination and treatment of the Actual
Contribution Percentage of any Participant shall satisfy such
other requirements as may be prescribed by the Secretary of
the Treasury.
6.5 Qualified Nonelective Contributions, Elective Contributions and
---------------------------------------------------------------
Additional Matching Contributions. In accordance with applicable Income Tax
- ---------------------------------
Regulations, the Employer may elect to make Qualified Nonelective Contributions
and/or additional Matching Contributions, which shall be considered, to the
extent necessary (and to the extent not considered under Section 5.7), in
conducting the Actual Contribution Percentage test in Section 6.4. Each
contribution (i) may be made as a uniform percentage of Compensation or as a
uniform dollar amount contributed on a per capita basis if the contribution is a
Qualified Nonelective Contribution, (ii) may be made for all
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<PAGE>
Participants (who are otherwise eligible under Section 4.2 to share in Employer
contributions) or, if the contribution is made after the end of the Plan Year to
which it relates, only for all or certain of those eligible Participants who are
Nonhighly Compensated Employees, and (iii) may be made at any time during the
relevant Plan Year or, for purposes of satisfying the Actual Contribution
Percentage test, by no later than the end of the 12-month period immediately
following such Plan Year to which the contributions relate. In addition, and in
accordance with applicable Income Tax Regulations, Elective Contributions may be
considered to be Matching Contributions for purposes of satisfying the test.
Qualified Nonelective Contributions, Matching Contributions, and Elective
Contributions treated as Matching Contributions, may not be taken into account
in determining whether any other contributions or benefits satisfy the
requirements of Code Sections 401(a)(4) and shall not be taken into account in
determining the Employer Plan's compliance with the Actual Deferral Percentage
test under Section 5.3(a).
6.6 Reduction of Post-Tax Employee Contribution Amounts. The Plan
---------------------------------------------------
Administrator may, to meet the Actual Contribution Percentage test of Section
6.4, cause a prospective reduction in, or otherwise prospectively, limit the
amount of Post-Tax Employee Contributions to be contributed by any Highly
Compensated Employee during the Plan Year. The amount of the reduction shall be
determined on the basis of reasonable estimates as to the amount of Post-Tax
Employee Contributions to be contributed to the Plan during the Plan Year.
6.7 Distribution of Excess Aggregate Contributions. Excess Aggregate
----------------------------------------------
Contributions (as adjusted for any allocable income or loss) shall be forfeited
by (and disposed of in accordance with Section 10.5), if otherwise forfeitable
under the Employer Plan, or distributed to the Participants to whose Accounts
such contributions were allocated for a Plan Year. The Employer shall direct the
Trustee to forfeit a particular amount, or to make payment to the Participant of
the amount to be distributed. The effective date of a distribution shall
generally be the Business Day designated in the Employer's Notice to the
Trustees or five Business Days after the date on which Notice to the Trustee is
received, whichever is later. However, if the Trustee can ascertain the excess
amount, the Trustee may, but shall not be obligated to, effect the forfeiture
and/or distribution under this Section before the end of the Plan Year after the
Plan Year to which the Excess Aggregate Contributions relate, whether or not
Notice to the Trustee has been provided. Failure to make the necessary
distributions and/or forfeitures within 2 1/2 such excess amounts arose will
subject the Employer to an excise tax under Code Section 4979 equal to 10% of
the excess amounts that should have been distributed or forfeited under this
Section. Excess Aggregate Contributions of Participants who are subject to the
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<PAGE>
Family Member aggregation rules shall be allocated among the Family Members in
proportion to the Post-Tax Employee Contributions and Matching Contributions
(and amounts treated as Matching Contributions) of each Family Member that are
combined to determine the combined Actual Contribution Percentage.
Excess Aggregate Contributions that would otherwise be forfeited or
distributed to the Participant shall be adjusted for the income or loss
attributable to such Excess Aggregate Contributions. The income (or loss)
allocable to the Excess Aggregate Contributions in each relevant Account shall
be the difference between the amount of the Excess Aggregate Contributions on
the date of allocation to the Account and the value of such amount on the
effective date of forfeiture or distribution. For this purpose, Excess Aggregate
Contributions shall be considered to be the most recently contributed of each
relevant type of contribution. All Excess Aggregate Contributions shall be taken
on a pro-rata basis from all Accounts to which such amounts are attributable.
Article VII. Investment of Contributions
----------- ---------------------------
7.1 Investment of Contributions. All contributions made under the Plan
---------------------------
shall be invested in the Investment Options. Each Participant shall designate by
Notice to the Trustee the portion (expressed in whole percentages) of each
contribution made by him or her or on his or her behalf that is to be invested
in each of the Investment Options. Such a designation shall be subject to
restrictions set forth in the Trust and to rules established by the Trustee and
shall remain in effect until Notice to the Trustee is received changing the
designation. If any Participant initially fails to designate the manner of
investment of any contribution, that contribution shall be invested in the
Investment Option designated by the Employer in the Participation Agreement for
this purpose. The Trustee shall maintain individual accounts for each
Participant reflecting the amount in each Investment Option attributable to his
or her Employer Account, 401(k) Employer Account, 401(k) Salary Deferral
Account, Matching Contribution Account, Post-Tax Employee Contribution Account
and Prior Plan Account. A Participant who has elected to invest all or a portion
of his or her Accounts in the Investment Option designated by the Trustee as the
Self- Managed Account shall be entitled to appoint an "investment manager," as
defined in Section 3(38) of ERISA, who shall direct the Trustee regarding the
purchase and sale of securities thereunder.
7.2 Transfers Between Investment Options. A Participant may elect to
------------------------------------
transfer all or any portion of the amounts then credited to his or her Accounts
from one Investment Option to another Investment Option to the extent such
transfers are
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<PAGE>
permitted under (i) the group annuity contract or funding agreement issued by
the Insurer, (ii) the Collective Trust, (iii) the Trust, (iv) any insurance
contract in which Trust assets are invested, and (v) any contract(s) entered
into between ABRA and State Street. Such a transfer shall also be subject to
restrictions set forth in the Trust and to rules established by the Trustee.
Such transfers shall be made by Notice to the Trustee and shall become effective
no later than the first Business Day on or after the later of (i) the day on
which Notice to the Trustee is received or (ii) the date specified in such
Notice.
Article VIII. Distribution of Benefits
------------ ------------------------
8.1 Eligibility. A Participant who is no longer an Employee shall be
-----------
eligible to receive the Vested Portion of his or her Accounts. A Self-Employed
Individual who ceases to perform services for the Employer as such (i.e., who no
longer derives Earned Income with respect to the Employer's business) shall be
considered to be "no longer an Employee" under the preceding sentence. A
Participant who incurs a Disability shall also be considered no longer to be an
Employee for the purpose of being eligible to receive benefits under the Plan,
provided that the Participant or the Employer furnishes Notice to the Trustee of
the Disability. A Participant in a Profit Sharing Plan who is still an Employee
shall be eligible to receive a distribution of the Vested Portion of the
Participant's Accounts under this Article, other than the Participant's 401(k)
Salary Deferral Account and 401(k) Employer Account, upon attaining such age
(not earlier than 55 nor later than 59 1/2) as specified by the Employer in the
Participation Agreement, provided that if no age is so specified, such age shall
be 59 1/2. A Participant in a Profit Sharing Plan who is still an Employee shall
be eligible to receive a distribution of the Participant's 401(k) Salary
Deferral Account and 401(k) Employer Account upon attaining age 59 1/2. An
alternate payee under a Qualified Domestic Relations Order shall be entitled to
a distribution prior to the Participant's "earliest retirement age" (as defined
in Section 414(p)(4)(B) of the Code) to the extent provided in such order. A
Participant in a Defined Contribution Pension Plan or Target Benefit Plan who is
still an Employee and who attains Normal Retirement Age shall be eligible to
receive a distribution of his or her Accounts under this Article.
8.2 Methods of Distribution. Subject to Sections 8.6 and 8.11, a
-----------------------
Participant who is eligible to receive benefits under Section 8.1 may elect in
accordance with Section 8.6(b) (if applicable) to have his or her benefits under
the Plan paid in any one or more (except as provided below) of the following
forms:
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<PAGE>
(a) As a single sum payment which may be the full value of the
Accounts of the Participant or such lesser amount as specified by the
Participant.
(b) As a series of level monthly, quarterly, semi-annual or
annual installment payments in an amount specified by the Participant,
such that the period of payment is projected as of the date of the
first payment to be a period of at least 36 months' duration. Such
level payments shall continue until the Accounts are exhausted, with
the final payment being equal to the amount remaining in the Accounts.
The amount applied to provide payment in this form shall be invested in
the Investment Option(s) designated by the Participant, and the
Participant's Accounts shall be adjusted to reflect each level payment,
expenses and investment experience.
(c) As a series of monthly, quarterly, semi-annual or annual
installment payments made over a specified period of at least 36
months' duration designated by the Participant. The amount applied to
provide payment in this form shall be invested in the Investment
Option(s) designated by the Participant, and each installment payment
will represent a pro rata portion of the total amount so applied,
adjusted to reflect expenses and investment experience.
(d) Unless the Employer has elected in the appropriate
Participation Agreement and in accordance with Section 8.6 not to make
the annuity forms of payment under this subsection available, as a
fixed or variable annuity providing monthly payments, based on the
amount applied to provide the annuity. The forms of annuity available
on a fixed or variable basis are the Life Annuity, the Life
Annuity-Period Certain, the Joint and Survivor Annuity and the Joint
and Survivor Annuity-Period Certain. The forms of annuity available
only on a fixed basis are the Qualified Joint and Survivor Annuity and
the Cash Refund Annuity.
A Participant may elect to receive installment payments under
subsection (b) or (c), but not under both subsections simultaneously. A
Participant who elects level installment payments under subsection (b) may at a
later date change that election (subject to Sections 8.6 and 8.11) (i) to
increase or decrease the amount of each payment (provided that after such
increase or decrease the projected payment period calculated as of the date
payments first began shall not be less than 36 months) or (ii) to request all or
any portion of the balance of his or her Accounts in a single sum. A Participant
who elects installment payments under subsection (c) may at a later date change
that election (subject to Sections 8.6 and 8.11) (i) to increase or decrease,
but not to less than 36 months, the
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<PAGE>
specified period of the installment payments or (ii) to request all or any
portion of the balance of his or her Accounts in a single sum. The election of a
form of annuity shall become irrevocable on the date as of which payment of
benefits under the annuity commences. A change in benefit election shall be
effective on the last Business Day of a calendar month if Notice to the Trustee
of such change is received on or before the 15th day of that month. If the
Trustee receives the Notice after the 15th day of a month, the change in benefit
election shall be effective on the last Business Day of the following calendar
month. No more than one benefit change shall be permitted in any calendar year.
8.3 Commencement of Benefits. Benefits shall commence as soon as
------------------------
administratively practicable following the later of (i) the Participant's
eligibility to commence receiving plan benefits and (ii) Notice to the Trustee
of such eligibility. However, benefits shall not commence after the Required
Beginning Date specified in Section 8.11.
If any portion of a Participant's Accounts is invested in one or more
Investment Options that impose restrictions as to the timing of distributions,
such restrictions shall take precedence over the distribution provisions of the
Plan. In addition, subject to the commencement requirements in the next
paragraph and in Section 8.11, benefit commencement under this Section shall be
subject to restrictions set forth in the Trust and to rules established by the
Trustee. Finally, beginning as of January 1, 1992, if a Participant is to
receive an annuity form of distribution, commencement of benefit payments might
be delayed while the Trustee arranges for the purchase of an annuity from an
insurance company.
Except with respect to the required distributions under Section 8.11,
and unless the Participant elects otherwise, distribution of benefits shall
begin not more than 60 days after the last day of the Plan Year in which occurs
the latest of the Participant's (i) 65th birthday, (ii) termination of Service,
or (iii) 10th anniversary of the date he or she commenced participation in the
Employer Plan. The failure of the Participant (and spouse, if applicable) to
consent to a distribution before the Participant attains (or would have attained
if living) the later of age 62 or Normal Retirement Age shall be deemed to be an
election to defer the commencement of benefits.
8.4 Valuation of Accounts. Benefits payable under this Article shall be
---------------------
based on the value of the Participant's Accounts determined as of the close of
business on the first Business Day on or after the day as of which distribution
of his or her benefits is to commence and, in the case of installment payments,
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<PAGE>
as of the close of business on the first Business Day of every month thereafter.
8.5 Notice of Distribution of Benefits. Notice to the Trustee of a
----------------------------------
Participant's eligibility to commence receiving benefits shall be given promptly
but in no event later than the 15th day of March of the calendar year following
the calendar year in which the Participant attains age 70 1/2. The Notice to the
Trustee for such benefits shall indicate, in accordance with Section 8.6(b),
whether or not benefits are to be paid as a Qualified Joint and Survivor Annuity
(if applicable under the Employer Plan) and, if not, the form of benefit
elected.
8.6 Applicability of Annuity Rules to Employer Plan. An Employer may
-----------------------------------------------
elect in a Participation Agreement for a Profit Sharing Plan (including a
Participation Agreement executed as an amendment of an existing Employer Plan or
a Pre-existing Plan) not to have the annuity provisions of Articles VIII and IX
apply to the Employer Plan.
(a) Election Not to Have Annuity Rules Apply. If the
----------------------------------------
Employer makes the election not to have the annuity rules apply to the
Employer Plan, the following provisions shall apply with respect to the
Accounts to which the election applies:
(1) The Employer Plan shall not be a direct or indirect
transferee of any Qualified Plan that has been subject to the
survivor annuity requirements of Code Sections 401(a)(11) and
417.
(2) In the case of an Employer Plan that prior to the
effective date of such election, was not subject to the
annuity provisions of Articles VIII and IX (or the comparable
provisions of any predecessor plan), the sole forms of payment
available to Participants and Beneficiaries under such
Employer Plan shall be a single-sum distribution and
nonannuity installment payments under Sections 8.2(a), (b) and
(c).
(3) In the case of an Employer Plan that prior to the
effective date of such election, was subject to the annuity
provisions of Articles VIII and IX (or the comparable
provisions of any predecessor plan), the forms of payment
available to Participants and Beneficiaries under such
Employer Plan shall include those described in clause (2)
above and the annuity forms of distribution described in
Section 8.2(d).
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<PAGE>
(4) Each Participant's sole primary Beneficiary shall
be his or her surviving spouse, unless (i) the spouse consents
to the naming of a different or additional primary Beneficiary
in a manner that satisfies the rules of subsection (b) for
spousal consent to a Participant's waiver of the Qualified
Joint and Survivor Annuity (or one of the circumstances in
which no such consent is required applies), or (ii) the
Participant elects an annuity form of distribution described
in Section 8.2(d).
(b) Application of Annuity Rules. This subsection (b) shall
----------------------------
apply to all Accounts under an Employer Plan for which the Employer
does not make the election under subsection (a). In addition, if an
Employer makes the election under subsection (a) with respect to an
Employer Plan that prior to the effective date of such election was
subject to the annuity provisions of Articles VIII and IX (or the
comparable provisions of any predecessor plan), this subsection shall
apply to any Participant who elects an annuity form of distribution
described in Section 8.2(d).
(1) Additional Forms of Distribution. The annuity
--------------------------------
forms of distribution described in Section 8.2(d) shall apply.
(2) Automatic Form of Distribution. If a married
------------------------------
Participant is eligible to receive benefits under this
Article, his or her benefits shall be paid in the form of a
Qualified Joint and Survivor Annuity unless he or she has made
a contrary election under this subsection. If an unmarried
Participant is eligible to receive benefits under this
Article, his or her benefits shall be paid in the form of a
Life Annuity unless he or she elects otherwise.
(3) Notice of Participant's Rights. The Employer
------------------------------
shall provide to each Participant no less than 30 days and no
more than 90 days before the Annuity Starting Date a written
explanation of:
(A) The terms and conditions of the Qualified Joint
and Survivor Annuity;
(B) The Participant's right to elect under this
subsection not to receive a Qualified Joint and Survivor
Annuity and the effect of such an election;
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<PAGE>
(C) The right of the Participant's spouse; and
(D) The Participant's right to revoke his or her
election not to receive a Qualified Joint and Survivor
Annuity and the effect of such revocation.
The Employer shall provide the Participant with a comparable
written explanation of his or her right to designate a
Beneficiary other than his or her spouse and to elect that his
or her spouse receive distribution of benefits in a form other
than the Life Annuity payable under Section 9.3(a). This
explanation shall be provided before the last to end of (i)
the period beginning with the first day of the Plan Year in
which the Participant attains age 32 and ending with the close
of the Plan Year preceding the Plan Year in which the
Participant attains age 35, (ii) a reasonable period ending
after the individual becomes a Participant, and (iii) a
reasonable period ending after separation from service before
the Participant attains age 35. If when a Participant becomes
entitled to an explanation under this paragraph the Employer
no longer exists or is incapable of acting, the Trustee shall
furnish the explanation. A reasonable period ending after the
individual becomes a Participant is the two-year period
beginning one year before the date the Participant becomes a
Participant and ending one year after that date. The
explanation shall be provided to a Participant who separates
from service before the Plan Year in which he or she attains
age 35 within the two-year period beginning one year before
separation and ending one year after separation. If the
Participant later returns to employment with the Employer, the
period for giving the explanation shall be redetermined under
this paragraph.
(4) Waiver of Spouse's Survivor Benefits. The
------------------------------------
Participant may elect, by Notice to the Trustee at any time
within the 90-day period ending on the Annuity Starting Date,
not to have his or her benefits paid in the form of a
Qualified Joint and Survivor Annuity, in which case they shall
be paid in any other form of benefit elected under Section
8.2. If benefits are to be paid in accordance with Section
9.3(a) upon the Participant's death, the Participant may
elect, by Notice to the Trustee during the period beginning on
the first day of the Plan Year in which he or she attains age
35 (or, if he or she separates from Service before that Plan
Year, beginning on the date of
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<PAGE>
separation) and ending with his or her death, for a
Beneficiary other than his or her spouse to receive payment of
the value of his or her Accounts. In addition, a Participant
who will not yet attain age 35 by the end of any current Plan
Year may make a special qualified election to designate a
Beneficiary other than his or her spouse to receive payment of
the value of his or her Accounts. This election shall be
effective for the period beginning on the date of the election
and ending on the first day of the Plan Year in which the
Participant will attain age 35. Benefits payable in accordance
with Section 9.3(a) will be automatically reinstated as of the
first day of the Plan Year in which the Participant attains
age 35 unless a new election designating a Beneficiary other
than the spouse is made in accordance with this paragraph.
Any election described in this paragraph must be
consented to by the Participant's spouse in writing before a
notary or a representative of the Employer Plan unless the
Participant can prove to the satisfaction of the Employer that
there is no spouse or that the spouse cannot be located. Also,
if the Participant has become legally separated from the
spouse or has been abandoned (within the meaning of local law)
and has a court order to such effect, or qualifies for any
other exception that is authorized by the Internal Revenue
Service for this purpose, spousal consent is not required
unless a Qualified Domestic Relations Order provides
otherwise. The Participant's election must designate a
specific Beneficiary (including any class of Beneficiaries or
any contingent Beneficiaries) that may not be changed without
further consent of the spouse, unless the spouse's consent
expressly permits designation by the Participant without
further consent of the spouse. The spouse's consent shall
acknowledge the effect of the election. In addition, the
spouse's consent (or the establishment that the consent of the
spouse may not be obtained) shall only be valid with respect
to such spouse. A Participant's waiver of the Qualified Joint
and Survivor Annuity shall not be effective unless the
election designates a form of benefit payment which may not be
changed without further spousal consent (or the spouse
expressly permits designations by the Participant without any
further spousal consent). A consent that permits designations
by the Participant without any requirement of further spousal
consent must acknowledge that the spouse has the right to
limit consent to a specific Beneficiary, and a specific form
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<PAGE>
of benefit where applicable, and that the spouse voluntarily
elects to relinquish either or both of these rights. No
consent (including a consent to an election made before the
end of the Plan Year ending before a Participant attains age
35) shall be valid unless the Participant has received the
notice required by paragraph (3). A Participant who makes an
election under this Section may revoke that election, without
spousal consent, by Notice to the Trustee at any time before
the Annuity Starting Date.
8.7 Cash-Out of Small Accounts. If the combined value of the
--------------------------
Vested Portion of a Participant's Accounts is $3,500 or less at the time payment
is to commence, the Employer shall, by Notice to the Trustee, direct the Trustee
to (or if there is no Employer the Trustee shall) pay such Vested Portion to the
Participant in a single sum without the consent of the Participant or spouse
(and the Nonvested Portion shall be treated as a forfeiture). If the value of a
Participant's Vested Portion is zero, the Participant shall be deemed to have
received a distribution from his or her Accounts.
8.8 Participant's Consent for Distribution. If the combined value
--------------------------------------
of the Vested Portion of a Participant's Accounts exceeds (or at the time of any
prior distribution exceeded) $3,500, and the Vested Portion may be distributed
before the Participant attains, or would have attained if not deceased, the
later of age 62 or Normal Retirement Age, the Participant and the Participant's
spouse (or, where either the Participant or the spouse has died, the survivor)
must consent to any such distribution. (However, spousal consent shall not be
required to the extent that the amount to be distributed is subject to an
election made by the Employer under Section 8.6(a).) The consent shall be made
in writing within the 90-day period ending on the Annuity Starting Date. The
Plan Administrator shall notify the Participant (and spouse, if applicable) of
the right to defer any distribution until the Participant attains or would have
attained Normal Retirement Age. The notice shall include a general description
of the material features, and an explanation of the relative values, of the
optional forms of benefit available under the Plan in a manner that would
satisfy the notice requirements of, and shall be provided within the time period
specified in, Section 8.6(b).
Notwithstanding the foregoing, only the Participant need consent to
the commencement of a distribution in the form of a Qualified Joint and Survivor
Annuity. Neither the consent of the Participant nor the Participant's spouse
shall be required to the extent that a distribution is required to satisfy Code
Section 401(a)(9) or 415.
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If a distribution is one to which sections 401(a)(11) and 417 of the
Internal Revenue Code do not apply, such distribution may commence less than 30
days after the notice required under section 1.411(a)-11(c) of the Income Tax
Regulations is given, provided that:
(1) the Plan Administrator clearly informs the
participant that the participant has a right to a period of at
least 30 days after receiving the notice to consider the
decision of whether or not to elect a distribution (and, if
applicable, a particular distribution option), and
(2) the Participant, after receiving the notice,
affirmatively elects a distribution.
8.9 Treatment of Contributions Made After Benefits Commence. Any
-------------------------------------------------------
contributions made by or on behalf of a Participant after applying the amounts
in his or her Accounts to provide benefits in accordance with this Article shall
be added to his or her Accounts in accordance with the Plan, and the value of
his or her Accounts shall thereafter be applied to provide benefits for the
Participant in accordance with this Article.
8.10 Rules Governing Forms of Payment. All forms of payment described
--------------------------------
in Section 8.2 are subject (a) to the terms of the group annuity contract issued
by the Insurer (for all such annuity payments begun before January 1, 1992 and
for all such installment payments made before January 1, 1992) or (b) to the
terms of the Collective Trust, the Trust, any insurance contract in which Trust
assets are invested and any contract(s) entered into between ABRA and State
Street (for all such annuity payments begun after December 31, 1991 and for all
such installment payments made after December 31, 1991). No less than a minimum
amount, as determined under rules of the Insurer or the Trustee (as applicable
under the preceding sentence) must be applied under each such form of benefit.
An amount is deemed to be applied to provide a benefit on the date such benefit
is commenced under Section 8.3. In the event of any inconsistency or
contradiction between the terms of (i) the group annuity contract, the
Collective Trust, the Trust, any insurance contract in which Trust assets are
invested or any contract(s) entered into between ABRA and State Street and (ii)
the terms of the Plan, the terms of the Plan shall control. The terms of any
annuity contract that the Plan purchases for, and distributes to, a Participant
or spouse shall comply with the requirements of this Plan. Any certificate of
annuity or annuity contract issued or delivered to a Participant or Beneficiary
shall be nontransferable except by surrender to the issuing insurance company.
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<PAGE>
8.11 Special Distribution Requirements. Subject to Section 8.6(b)
---------------------------------
regarding Qualified Joint and Survivor Annuities (if applicable to the Employer
Plan), this Section shall apply to any distribution of a Participant's Benefit
(except for distributions occurring after the Participant's death, which shall
be governed by Article IX) and shall take precedence over any inconsistent
provisions of the Plan. All distributions required under this Article shall be
determined and made in accordance with the Income Tax Regulations under Code
Section 401(a)(9), including the minimum distribution incidental benefit
requirement of Proposed Income Tax Regulation Section 1.401(a)(9)-2.
(a) Required Beginning Date. The entire interest of a
-----------------------
Participant must be distributed or begin to be distributed by no later
than the Participant's "Required Beginning Date." As a general rule, a
Participant's "Required Beginning Date" is the first day of April of
the calendar year following the calendar year in which the Participant
attains age 70 1/2. However, the Required Beginning Date of a
Participant who attained age 70 1/2 before January 1, 1988 shall be
determined in accordance with one of the following paragraphs, as
applicable:
(1) Non-Five Percent Owners. The Required Beginning
-----------------------
Date of a Participant who is not a Five Percent Owner (as defined
in subsection (b)) is the first day of April of the calendar year
following the calendar year in which the later of retirement or
attainment of age 70 1/2 occurs.
(2) Five Percent Owners. The Required Beginning Date
-------------------
of a Participant who is a Five Percent Owner during any year
beginning after December 31, 1979 is the first day of April
following the later of (A) the calendar year in which he or she
attains age 70 1/2 or (B) the earlier of the calendar year with or
within which ends the Plan Year in which the Participant becomes a
Five Percent Owner or the calendar year in which the Participant
retires.
The Required Beginning Date of a Participant who is not a Five Percent
Owner, who attains age 70 1/2 during 1988 and who has not retired as of
January 1, 1989, is April 1, 1990.
(b) Five Percent Owner. A Participant is treated as a Five
------------------
Percent Owner under this Section if he or she is a Five Percent Owner
at any time during the Plan Year ending with or within the calendar
year in which such owner attains age 66 1/2 or during any subsequent
Plan Year.
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(c) Continuation of Required Payments. Once benefit payments
---------------------------------
have begun to a Five Percent Owner in accordance with this Section, the
payments must continue even if the Participant ceases to be a
Five-Percent Owner in a subsequent year.
(d) Limits on Distribution Periods. As of the first
------------------------------
Distribution Calendar Year, benefit payments (if not made in the form
of a single-sum distribution) may be made only over one of the
following periods (or a combination of them):
(1) The life of the Participant;
(2) The life of the Participant and a Beneficiary;
(3) A period certain not extending beyond the Participant's
Life Expectancy; or
(4) A period certain not extending beyond the joint and last
survivor expectancy of the Participant and a Beneficiary.
(e) Determination of Amount to be Distributed Each Year. If
---------------------------------------------------
the Participant's Benefit is to be distributed in other than a single
sum, the following minimum distribution rules shall apply on or after
the Required Beginning Date:
(1) If a Participant's Benefit is to be distributed
over a period not extending beyond the Life Expectancy of the
Participant or the joint life and last survivor expectancy of the
Participant and the Participant's Beneficiary, the amount required
to be distributed for each calendar year (beginning with
distributions for the first Distribution Calendar Year) must at
least equal the quotient obtained by dividing the Participant's
Benefit by the Applicable Life Expectancy.
(2) For calendar years before 1989, if the
Participant's spouse is not the Beneficiary, the method of
distribution selected must assure that at least 50% of the present
value of the amount available for distribution is paid within the
Life Expectancy of the Participant.
(3) For calendar years after 1988, the amount to be
distributed each year (beginning with distributions for the first
Distribution Calendar Year) shall not be less than the quotient
obtained by dividing the Participant's Benefit by the lesser of
(A) the
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Applicable Life Expectancy or (B) if the Participant's spouse is
not the designated Beneficiary, the applicable divisor determined
from the table set forth in Q&A-4 of Section 1.401(a)(9)-2 of the
Proposed Income Tax Regulations.
(4) The minimum distribution required for the Participant's
first Distribution Calendar Year must be made on or before the
Participant's Required Beginning Date. The minimum distribution
for the other Distribution Calendar Years, including the minimum
distribution for the Distribution Calendar Year in which the
Participant's Required Beginning Date occurs, must be made on or
before December 31 of that Distribution Calendar Year.
(5) If the Participant's Benefit is distributed in the form
of an annuity purchased from an insurance company, distributions
thereunder shall be made in accordance with the requirements of
Code Section 401(a)(9) and applicable regulations.
(f) Additional Terms for this Section.
---------------------------------
(1) Applicable Life Expectancy: The Life Expectancy (or
--------------------------
joint and last survivor expectancy) calculated using the attained
age of the Participant (or Beneficiary) as of the Participant's
(or Beneficiary's) birthday in the applicable calendar year, and
reduced by one for each calendar year which has elapsed since the
date Life Expectancy was first calculated. If Life Expectancy is
being recalculated, the Applicable Life Expectancy shall be the
Life Expectancy as so recalculated. The applicable calendar year
shall be the first Distribution Calendar Year, and if Life
Expectancy is being recalculated, each succeeding Distribution
Calendar year. If annuity payments commence in accordance with
subsection (e)(5) before the Required Beginning Date, the
applicable calendar year is the year such payments commence. If
distribution is in the form of an immediate annuity purchased
after the Participant's death with the Participant's remaining
interest, the applicable calendar year is the year of purchase.
(2) Distribution Calendar Year: A calendar year for which a
--------------------------
minimum distribution is required. For distributions beginning
before the Participant's death, the first Distribution Calendar
Year is the calendar year immediately preceding the calendar year
that contains the Participant's Required Beginning Date.
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<PAGE>
For distributions beginning after the Participant's death, the
first Distribution Calendar Year is the calendar year in which
distributions are required to begin in accordance with Section
9.3.
(3) Life Expectancy: Life expectancy and joint and
---------------
last survivor expectancy shall be computed by use of the
expected return multiples in Tables V and VI of Section 1.72-9
of the Income Tax Regulations determined at the time
distributions are required to begin. Notwithstanding the
foregoing, a Participant (or spouse, in the case of
distributions described in Section 9.3) may before
distributions are required to begin, elect to have such life
expectancies recalculated annually. Such election shall be
irrevocable as to the Participant (or spouse) once
distribution begins and shall apply to all subsequent years.
The Life Expectancy of a nonspouse Beneficiary may not be
recalculated.
(4) Participant's Benefit: the balance of the
---------------------
Participant's Accounts as of the last valuation date in the
calendar year immediately preceding the Distribution Calendar
Year (Valuation Calendar Year) increased by the amount of any
contributions or forfeitures allocated to the Accounts as of
dates in the Valuation Calendar Year and decreased by
distributions made in the Valuation Calendar Year after the
valuation date. For this purpose, if any portion of the
minimum distribution for the first Distribution Calendar Year
is made in the second Distribution Calendar Year on or before
the Required Beginning Date, the amount of such distribution
shall be treated as if it had been made in the first
Distribution Calendar Year.
(g) Special Transition Rule.
-----------------------
(1) Notwithstanding the other requirements of this
Section, but subject to the Qualified Joint and Survivor
Annuity requirements in this Article (if applicable),
distribution on behalf of any Participant, including a Five
Percent Owner, may be made in accordance with the following
requirements (regardless of when the distribution commences):
(A) The distribution is one that would not have
disqualified such Plan under Code Section 401(a)(9)
as in effect prior to amendment by the Deficit
Reduction Act of 1984;
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(B) The distribution is in accordance with a
method of distribution designated by the Participant
whose interest is being distributed or, if the
Participant is deceased, by a Beneficiary of the
Participant;
(C) The designation was in writing, was signed by
the Participant or the Beneficiary, and was made
before January 1, 1984;
(D) The Participant had accrued a benefit under
the Plan as of December 31, 1983; and
(E) The method of distribution designated by the
Participant or the Beneficiary specifies the time at
which distribution will commence, the period over
which distributions will be made and, in the case of
any distribution upon the Participant's death, the
Beneficiaries of the Participant listed in order of
priority.
(2) A distribution upon death will not be covered by
this transitional rule unless the information in the
designation contains the required information described above
with respect to the distributions to be made upon the death of
the Participant.
(3) For any distribution that commenced before
January 1, 1984, but continued after December 31, 1983, the
Participant (or the Beneficiary) to whom the distribution is
being made will be presumed to have designated the method of
distribution under which the distribution is being made if the
method of distribution was specified in writing and the
distribution satisfies the requirements in paragraph (1).
(4) If a designation is revoked, any subsequent
distribution must satisfy the requirements of Code Section
401(a)(9) and the regulations thereunder. If a designation is
revoked after the date distributions are required to begin,
the Trust must distribute by the end of the calendar year
following the calendar year in which the revocation occurs the
total amount not yet distributed that would have been required
to have been distributed to satisfy Code Section 401(a)(9) and
the regulations thereunder, but for the election described in
this subsection. For calendar years after 1988, such
distributions must meet the minimum distribution incidental
benefit requirements in Section 1.401(a)(9)-2 of the Proposed
Income Tax Regulations.
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<PAGE>
Any changes in the designation will be considered to be a
revocation of the designation. However, the mere substitution
or addition of another Beneficiary (not named in the
designation) under the designation will not be considered to
be a revocation of the designation, so long as such
substitution or addition does not alter the period over which
distributions are to be made under the designation, directly
or indirectly (for example, by altering the relevant measuring
life). In the case in which an amount is transferred or rolled
over from one plan to another plan, the rules in Q&A J-2 and
Q&A J-3 of Section 1.401(a)(9)-1 of the Proposed Income Tax
Regulations shall apply.
Article IX. Distributions to Beneficiaries
---------- ------------------------------
9.1 Designated Beneficiary. Subject to the rights of the Participant's
----------------------
spouse as set forth in Section 8.6, a Participant by Notice to the Trustee may
designate a Beneficiary under the Plan and may revise such designation from time
to time by Notice to the Trustee without the consent of any previously
designated Beneficiary. Each such Notice may include contingent or successive
Beneficiaries and shall become effective upon receipt by the Trustee. The
marriage of a Participant shall be deemed to revoke any prior designation of a
Beneficiary, and a Participant's divorce shall be deemed to revoke any prior
designation of the divorced Spouse as a Beneficiary, whether in writing or
pursuant to Section 8.6, if written evidence of such marriage or divorce shall
be received by the Trustee before distribution shall have been made in
accordance with such designation.
If at the time of a Participant's death there is no surviving
Beneficiary to receive any amount that becomes payable to a Beneficiary, such
amount shall be paid to the first surviving class of the following classes of
successive preference persons, as determined by the Employer: (i) the
Participant's spouse, (ii) if there is no surviving spouse, the Participant's
surviving children and children of deceased children, per stirpes, (iii) if
-----------
there are no survivors described in clause (i) or (ii), the Participant's
surviving parents, (iv) if there are no survivors described in clause (i), (ii)
or (iii), the Participant's surviving brothers and sisters, per stirpes, and (v)
-----------
if there are no survivors described in clause (i), (ii), (iii) or (iv), the
executors or administrators of the estate of the Participant upon whose death
such amount becomes payable. For purposes of this paragraph, "children" includes
both natural and legally adopted children.
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<PAGE>
The interest of any Beneficiary shall cease at death, if the
Beneficiary's death occurs before the Participant's death. Upon the death of a
Beneficiary who has commenced receiving benefits under the Plan, any remaining
benefits payable under the Plan shall be paid to the executors or administrators
of the estate of such Beneficiary, except as otherwise provided by the
Beneficiary in a valid and effective Beneficiary designation form filed with the
Trustee.
Notwithstanding any provision of this Section to the contrary, the
person entitled to receive a survivor annuity payable after the Participant's
death (under a form of payment in Section 8.2(d) that provides for a survivor
annuity) shall be the joint annuitant designated by the Participant in the
election-of-benefits form. The joint annuitant so designated shall be treated
under this Section and under the Plan as the Participant's Beneficiary, and
shall be the only person entitled to receive the survivor annuity.
9.2 Due Proof of Death. The Beneficiary of a deceased Participant shall
------------------
be eligible to receive benefits as provided in this Article upon submission to
the Trustee of due proof of the death of such Participant. "Due proof" shall
consist of a certified copy of a death certificate or, if a death certificate is
unavailable, such other similar document as the Trustee may deem acceptable and
shall be furnished by the Employer or the Participant's Beneficiary within 60
days after learning of the death of such Participant.
9.3 Death of Participant Before Benefits Commence. If a Participant
---------------------------------------------
dies before payment of his or her benefits has commenced, the value of his or
her Accounts shall be determined as of the first Business Day on or after the
receipt by the Trustee of due proof of his or her death. Immediately following
such valuation and effective upon the date thereof, the Accounts of the
Participant shall be transferred to the Investment Option designated by the
Employer in the Participation Agreement as the "default" Investment Option for
all Employer Plan purposes (unless the Participant before his or her death
elected to have his or her Accounts remain invested upon death in the same
Investment Options in which the Accounts were invested immediately before death,
in which case such election shall be given effect), and retained therein until
instructions to the contrary are received from the Participant's Beneficiary or
Beneficiaries. Any transfer between Investment Options under this Section shall
be subject to the rules of (i) the group annuity contract or funding agreement
issued by the Insurer, (ii) the Collective Trust, (iii) the Trust, (iv) any
insurance contract in which Trust assets are invested, and (v) any contract(s)
entered into between ABRA and State Street, any of which may restrict such
transfer in whole or in part. Such a
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<PAGE>
transfer shall also be subject to restrictions set forth in the Trust and to
rules established by the Trustee.
Distributions shall be made in accordance with the Proposed Income Tax
Regulations under Code Section 401(a)(9) as follows:
(a) If the Participant is survived by a spouse and Section
8.6(b) applies to the Employer Plan, the total value of his or her
Accounts will be applied to provide such spouse with a Life Annuity
under Section 8.2(d), unless at the time of the Participant's death
there was on file with the Trustee a contrary election under Section
8.6(b). However, effective January 1, 1993, a Participant may elect
that 50%, rather than 100%, of the value of his or her Accounts will be
applied to provide his or her spouse with a survivor annuity. If such
election is on file with the Trustee at the time of the Participant's
death, 50% of the value of the Participant's Accounts will be applied
to provide the Participant's spouse with a life annuity and the
remaining 50% of the value of the Participant's Accounts will be paid
to the designated Beneficiary. If such election is on file with the
Trustee at the time of the Participant's death and the Participant has
failed to designate a Beneficiary, the remaining 50% of the value of
the Participant's Accounts will be paid in accordance with the
procedures of Section 9.1.
If the value of the Accounts of a deceased Participant is
payable in accordance with this subsection, the Participant's spouse
may elect, by Notice to the Trustee before payment of benefits is to
commence, to have payment of such benefits made in any one or more
other forms permitted under Section 8.2. However, effective January 1,
1993, a Participant may elect that the normal form of survivor benefits
payable under this subsection, namely a life annuity, cannot be changed
by his or her surviving spouse. If such election is on file with the
Trustee at the time of the Participant's death, the Participant's
spouse may not elect to have payment of such benefits made in any form
other than a life annuity. Subject to the requirements set forth below,
the surviving spouse may elect to have payment of benefits commence at
any time.
(b) If the value of the Accounts of the deceased Participant
is not payable in accordance with subsection (a), or if the election in
Section 8.6(a) applies, such value of Accounts shall be paid to the
deceased Participant's Beneficiary. The amount payable to the
Beneficiary shall be paid in a single sum unless the Beneficiary
elects, by Notice to the Trustee before payment is to commence, to have
payment made in any one or more
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<PAGE>
other forms described in Section 8.2, subject, however, to the
provisions of Section 8.6 and 8.10 and of this Article.
Benefits that become payable in accordance with this Section shall be
distributed either (i) by December 31 of the calendar year containing the fifth
anniversary of the Participant's death or (ii) over a period not exceeding the
Life Expectancy of the Beneficiary and commencing on or before December 31 of
the calendar year immediately following the calendar year of the death of the
Participant. If the Beneficiary is the Participant's spouse, the period
described in clause (ii) of the preceding sentence may commence at any time up
to December 31 of the calendar year in which the Participant would have attained
age 70 1/2. If the spouse dies before distribution commences, the first sentence
of this paragraph shall apply as though the spouse were the Participant. For
purposes of this Section, any amount paid to the child of a Participant will be
treated as if it had been paid to the surviving spouse, as long as the amount
becomes payable to the surviving spouse when the child reaches majority age.
If a Participant's Benefit is to be distributed over a period not
extending beyond the Life Expectancy of the Beneficiary, the amount required to
be distributed each calendar year, beginning with distributions for the first
Distribution Calendar Year, must at least equal the quotient obtained by
dividing the Participant's Benefit by the Applicable Life Expectancy without
regard to Proposed Income Tax Regulation Section 1.401(a)(9)-2. Alternatively,
the Participant's Benefit may be distributed to the Beneficiary in the form of
an annuity, provided such distribution shall be made in accordance with the
requirements of Section 401(a)(9) of the Code and the Income Tax Regulations
thereunder. The terms "Participant's Benefit," "Life Expectancy," "Distribution
Calendar Year" and "Applicable Life Expectancy" are defined in Section 8.11.
Benefits payable in accordance with this Section shall be based on the
value of the Participant's Accounts determined as of the close of business the
first Business Day on or after the date as of which distribution of his or her
benefits commences and, in the case of installment payments, as of the close of
business on the first Business Day of every month thereafter. The determination
of the date of benefit commencement shall depend on when the Trustee receives
due proof of the Participant's death or, if before the commencement of
distribution the Trustee receives an election by the Beneficiary of an
alternative form of benefit as permitted under either subsection (a) or (b), on
the date such election is received. The date of benefit commencement shall be
the first Business Day of the first calendar month after such proof or election
is received, if received on or before the 15th day of the month. If such proof
or election is received
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<PAGE>
after the 15th day of the month, the date of benefit commencement shall be the
first Business Day of the second calendar month following such receipt.
9.4 Death of Participant After Benefits Commence. If the Participant
--------------------------------------------
dies after the distribution of benefits has commenced in accordance with the
requirements of Code Section 401(a)(9) and Section 8.11, the remaining payments,
if any, shall be made to the Participant's Beneficiary at least as rapidly as
under the form of benefit in effect at the Participant's death (except to the
extent otherwise provided in Income Tax Regulations governing Code Section
401(a)(9)). As of the first Business Day on or after the receipt by the Trustee
of due proof of the Participant's death, the amounts, if any, in the
Participant's Accounts shall be determined. Immediately following such valuation
and effective upon the date thereof, the Accounts of the Participant shall be
transferred to the Investment Option designated by the Employer in the
Participation Agreement as the "default" Investment Option for all Employer Plan
purposes (unless the Participant before his or her death elected to have his or
her Accounts remain invested upon death in the same Investment Options in which
the Accounts were invested immediately before death, in which case such election
shall be given effect), and retained therein until instructions to the contrary
are received from the Participant's Beneficiary or Beneficiaries. Any transfer
between Investment Options under this Section shall be subject to the rules of
(i) the group annuity contract or funding agreement issued by the Insurer, (ii)
the Collective Trust, (iii) the Trust, (iv) any insurance contract in which
Trust assets are invested, and (v) any contract(s) entered into between ABRA and
State Street, any of which may restrict such transfer in whole or in part.
9.5 Payments After Death of Surviving Spouse. If a surviving spouse who
----------------------------------------
is a Beneficiary dies before receiving all benefits payable in accordance with
the requirements of Code Section 401(a)(9) and this Article, any remaining
benefits shall be distributed to the spouse's Beneficiary at least as rapidly as
under the form of benefit in effect at the spouse's death.
Article X. Vesting and Forfeitures
--------- -----------------------
10.1 Full Vesting. If a Participant's Service terminates on or after
------------
Normal Retirement Age, or before Normal Retirement Age due to death or
Disability, his or her Vested Portion shall be 100%.
10.2 Vesting Schedules. Subject to Section 13.2 and to any contrary
-----------------
provision of the Trust, if a Participant's Service terminates before Normal
Retirement Age (by reason other than
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<PAGE>
death or Disability), the Vested Portion of his or her Employer Account and
Matching Contribution Account shall be determined in accordance with one of the
following schedules specified in the Participation Agreement:
<TABLE>
<CAPTION>
Period of Schedule Schedule Schedule
Vesting Service A B C
--------------- -------- -------- --------
<S> <C> <C> <C>
Less than two years 0% 0% 0%
Two years 100% 20% 0%
Three years 100% 40% 100%
Four years 100% 60% 100%
Five years 100% 80% 100%
Six years or more 100% 100% 100%
</TABLE>
Schedule D: A schedule that, when compared with Schedule A, B or C,
----------
provides for a Vested Portion that is at every point equal to or
greater than the Vested Portion prescribed under Schedule A, B or C,
whichever is selected for comparison. The Employer shall specify
Schedule D in the Participation Agreement.
Schedule E: Full and immediate vesting at all times.
----------
If the Employer has selected Schedule A, B, C or D in substitution for
a prior vesting schedule and the new schedule provides for a Vested Portion that
is at any point less than the Vested Portion prescribed under the prior
schedule, then the Vested Portion of any Participant adversely affected by the
new schedule shall be increased to the lowest percentage of his or her Accounts
under the new schedule that does not adversely affect such Participant.
10.3 Amendments Affecting Vested Portion. If an amendment of this Plan
-----------------------------------
in any way directly or indirectly affects the computation of a Participant's
Vested Portion, each Participant having a Period of Vesting Service of at least
five years (or three years if the Participant has at least one Hour of Service
in any Plan Year beginning after December 31, 1988) may elect to have his or her
Vested Portion computed under the Plan without regard to such amendment. The
period during which the election may be made shall commence with the date as of
which the amendment is adopted and shall end on the later of 60 days after the
amendment is adopted, 60 days after the amendment becomes effective, or 60 days
after the Participant receives notice of the amendment.
10.4 Determination of Forfeiture. A Participant whose Severance from
---------------------------
Service Date occurs before Normal Retirement Age (by reason other than death or
Disability) shall forfeit the
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<PAGE>
amounts in his or her Employer Account and Matching Contribution Account that
are not vested under Section 10.2, based on his or her Vested Portion at the
time of the Severance from Service Date. The forfeiture shall occur as of the
earlier of the Participant's receipt of the Vested Portion or the completion of
a Period of Severance of at least five years. The forfeiture shall be calculated
on the basis of the Vested Portion and the value of the Accounts on the first
Business Day of the first calendar month on or after the later of (i) the date
the forfeiture occurs or (ii) the date of Notice to the Trustee of the
forfeiture, provided that the later of these two events occurs in the first 15
days of a month; otherwise the amount shall be calculated as of the first day of
the second calendar month following the later of the two events.
10.5 Treatment of Forfeiture. Subject to the limitations of Article
-----------------------
XVII, amounts forfeited by Participants during any Plan Year, together with
earnings on such amounts after forfeiture, shall be withdrawn from the
Participant's Account and invested in the Investment Option designated by the
Employer in the Participation Agreement for this purpose until disposed of in
accordance with this Section and Section 10.6. Once a forfeiture has occurred,
it shall be disposed of at the time and in the manner directed by the Employer
in a Notice to the Trustee, subject to the following rules:
(a) Before January 1, 1992, the amount shall be reallocated among
Participants who are entitled to an allocation of Employer
contributions for each Plan Year (as though that amount were an
additional Employer contribution for that Plan Year), if the amount
arose under a Profit-Sharing Plan, or the amount shall be applied to
reduce Employer contributions under the Employer Plan, if the amount
arose under a Defined Contribution Pension Plan or Target Benefit Plan.
However, the Employer may elect in each case in the Participation
Agreement to apply the other available method to the Employer Plan.
(b) After December 31, 1991, the Employer shall elect in the
Participation Agreement for each type of plan whether to reallocate
forfeitures among eligible Participants (in the manner described in
subsection (a)) or to use forfeitures to reduce Employer contributions.
However, forfeitures arising under a Defined Contribution Pension Plan
or a Target Benefit Plan must be used to reduce Employer contributions.
Forfeitures arising under Section 6.7 shall also be disposed of in accordance
with this Section, although such forfeitures shall not be reallocated to the
Accounts of Participants who at that time are Highly Compensated Participants.
Upon receipt of the
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<PAGE>
Employer's Notice to the Trustee governing the disposition of forfeitures, the
Trustee shall make such transfers of amounts among Investment Options as are
necessary to reflect the treatment under this Section.
10.6 Resumption of Service Within Five Years. If a Participant who
---------------------------------------
sustained a forfeiture resumes Service with the Employer before he or she has
incurred a Period of Severance of at least five years, an amount equal to the
forfeiture determined under Section 10.4 shall be restored to the Participant's
Employer Account and/or Matching Contribution Account, as appropriate. The
restoration shall be made as of the date that the Trustee is notified by the
Employer that the Participant's Service with the Employer has resumed. Any
forfeiture amount that must be restored to a Participant's Employer Account will
be taken from any forfeitures that have not been disposed of under Section 10.5
and, if the amount of forfeitures available for this purpose is insufficient,
the Employer shall make a timely supplemental contribution of an amount
sufficient to enable the Trustee to restore the forfeiture to the Participant's
Accounts.
10.7 Resumption of Service After Five Years. If a Participant who
--------------------------------------
sustained a forfeiture resumes Service with the Employer after he or she has
incurred a Period of Severance of at least five years, the forfeiture shall not
be restored to the Participant's Accounts. Thereafter, the Participant shall be
100% vested with respect to any undistributed portion of his or her Employer
Account and Matching Contribution Account that is attributable to the Employer's
contributions made with respect to his or her preceding Period of Vesting
Service, and the vesting schedule under Section 10.2 shall be applied only to
the portion of his or her Employer Account and Matching Contribution Account
that is attributable to the Employer's contributions made with respect to his or
her Period of Vesting Service following his or her reemployment with the
Employer.
10.8 Treatment of Forfeitures in Plan Termination. Subject to the
--------------------------------------------
requirements of Section 13.2 and Article XVII, if the Employer Plan is
terminated before all forfeited amounts, and all income thereon, have been
disposed of under Sections 10.5 and 10.6, the amounts not disposed of shall be
allocated pro rata to the Employer Accounts of Participants who are Employees on
the date of termination, in accordance with their relative Compensation for the
Plan Year in which termination occurs.
10.9 Nonforfeitability of Other Accounts. The entire interest of each
-----------------------------------
Participant in his or her Post-Tax Employee Contribution Account, Prior Plan
Account, 401(k) Salary Deferral Account and 401(k) Employer Account shall be at
all times fully vested and nonforfeitable.
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<PAGE>
Article XI. In-Service Loans and Withdrawals
---------- --------------------------------
11.1 Loans. An Employer may, in certain Participation Agreements, elect to
-----
permit Participants, Beneficiaries and alternate payees (under Qualified
Domestic Relations Orders) to borrow from the Vested Portion of their Accounts.
Upon the completed and signed application of a potential borrower on a form
provided by and submitted to the Employer, the Employer in its discretion as
Plan Administrator may grant a loan or loans to the individual (and shall then
direct the Trustee to make payment accordingly) upon the satisfaction of the
following specific conditions (and such additional rules, which shall not be
inconsistent with this Section, as the Insurer for loans made before January 1,
1992, or State Street for loans made after December 31, 1991, or the Employer
for all loans, may from time to time establish):
(a) Nondiscriminatory Availability. Loans must be made available to
------------------------------
all Participants, Beneficiaries and alternate payees on a reasonably
equivalent basis. Loans must not be made available to Highly Compensated
Employees in an amount equal to a greater percentage of the balances in
their Accounts than the percentage made available to other potential
borrowers.
(b) Reasonable Interest Rate. Each new or renewed loan must bear a
------------------------
reasonable rate of interest commensurate with the interest rates charged by
persons in the business of lending money for commercial loans that would be
made under similar circumstances. The Employer shall review the interest
rates charged by such persons and shall establish the rate applicable to
each loan at the time the loan is approved.
(c) Use of Accounts as Security. Each loan shall be adequately
---------------------------
secured by assignment of a portion of the borrower's Accounts in an amount
equal to the principal amount of the loan. This security interest shall not
be a violation of Section 16.7.
(d) Certain Loans Prohibited. The Employer may not permit a loan
------------------------
under the Employer Plan that would constitute a prohibited transaction
(within the meaning of Code Section 4975). Except to the extent permitted in
accordance with the terms of a prohibited transaction exemption issued by
the Department of Labor, no loans shall be made to any Owner-Employee or
Shareholder-Employee.
(e) Limits on Number and Amount of Loans. No loan shall be approved
------------------------------------
for an amount less than $1,000. No person may have more than two loans under
the Plan in any single
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<PAGE>
Plan Year, nor more than five outstanding loans under the Plan at any
particular time. In addition, a borrower's loans outstanding at any time
(under the Employer Plan and under all Qualified Plans of the Employer and
any Related Employer) shall not exceed the lesser of (1) $50,000, reduced by
the excess (if any) of (A) the highest outstanding balance of loans to the
borrower from the Employer Plan during the one-year period ending on the day
before the date on which such loan was made over (B) the outstanding balance
of loans to the borrower from the Employer Plan on the date on which such
loan was made, or (2) one-half of the Vested Portion of the borrower's
Accounts.
(f) Spousal Consent. This subsection shall not apply to the extent
---------------
that the Employer has made an election under Section 8.6(a) that applies to
the Accounts from which the proposed loan is to be made. A married
Participant may not borrow from his or her Accounts unless his or her spouse
has consented to the loan. Such consent must be given in writing, must
acknowledge the effect of the loan and must be witnessed before a notary
public or a representative of the Employer Plan, during the 90-day period
before the loan is secured. Such consent shall thereafter be binding with
respect to the consenting spouse or any subsequent spouse with respect to
that loan. A new consent shall be required if the Vested Portion is used for
renegotiation, extension, renewal or other revision of the loan. If a valid
consent has been obtained, the portion of the Participant's Vested Portion
used as a security interest held by the Plan by reason of an outstanding
loan shall be deducted from the Participant's Accounts for the purpose of
determining the amounts payable at the time of death or distribution, but
only if such portion of the Participant's Vested Portion is used as
repayment of the loan.
(g) Repayment of Loans; Maximum Term. All loans granted under the
--------------------------------
Employer Plan shall be evidenced by a written promissory note payable to the
Trustee specifying the amount of the loan and the term of the loan. Payments
of principal and interest shall be made in accordance with a written
repayment schedule agreed upon by the borrower and Employer. However, (i)
payments shall be amortized in substantially level payments over the term of
the loan; (ii) payments shall be made no less frequently than quarterly;
(iii) if payment by payroll deduction is not possible due to employment
status or is not required by the Employer, payments shall be made by
personal check made to the order of the Trustee on or before the last
business day of each payment period; and (iv) all loans shall be repaid
within five years unless used to acquire any dwelling unit
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<PAGE>
which within a reasonable time (determined when the loan is made) is to be
used as the principal residence as determined under section 1034 of the Code
of the borrower.
(h) Default. The Employer, as Plan Administrator, shall determine
-------
whether and when a default on any loan has occurred. In the event of a
default in payment of either principal or interest due under the terms of
any loan, the Employer may, in its discretion, declare the full amount of
the loan due and payable and may take any lawful action to remedy the
default. The Employer shall consider a default to have occurred if any
payment is not made within 90 days following the day on which it was due.
The Employer's action to remedy a loan default may include set-off of the
remaining balance of the loan against the borrower's Accounts securing the
loan, although, set-off shall not be made before a distributable event
occurs under the Plan. The Employer may set off amounts owed by a defaulting
borrower without violating Section 16.7. The Employer shall by Notice to the
Trustee direct the Trustee as to any actions to be taken under this
subsection as the result of a default. No individual who has defaulted on a
loan under the Plan shall be granted any additional loan under the Plan.
(i) Offset of Outstanding Loans Against Distributions. The portion
-------------------------------------------------
of a Participant's Accounts used as security for a loan under this Section
shall be taken into account for purposes of determining the amounts payable
at the time of death or distribution, but only if that portion of the
Participant's Accounts is used as repayment of the loan. If less than 100%
of the Vested Portion of the Participant's Accounts (determined without
regard to the preceding sentence) is payable to the Participant's surviving
spouse, then the balance in the Accounts shall be adjusted by first reducing
the Vested Portion by the amount of the security used as repayment of the
loan, and then determining the benefit payable to the surviving spouse.
(j) Segregated Fund to Be Maintained. A segregated investment fund
--------------------------------
shall be established for each Participant who is granted any loans. The
amount of the loans shall be credited to the segregated investment fund. The
segregated fund shall not reflect any earnings or changes in market value of
the Investment Options, but shall instead be credited with the interest
payments made by the borrower under the terms of his or her loans. The
Employer shall direct the Trustee to charge any repayments of principal,
along with any interest paid on principal, against the segregated investment
fund and to credit that amount to the
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Investment Options specified in the designation then in effect under Section
7.1.
(k) Source of Loans. Before January 1, 1992, the borrowed amount
---------------
shall be taken from the Investment Option or Options, and from the Account
or Accounts, determined in accordance with rules established by the Insurer.
Effective as of January 1, 1992, the borrowed amount shall be taken from the
Investment Option specified by the Participant for this purpose (or pro rata
from all relevant Investment Options, if so specified by the Participant).
Subject to the Participant's Investment Option election, the borrowed amount
shall be taken from the Participant's Accounts in the order specified by the
Trustee from time to time. In no event, however, may amounts be taken from
any particular Investment Option in violation of (i) the group annuity
contract or funding agreement issued by the Insurer, (ii) the Collective
Trust, (iii) the Trust, (iv) any insurance contract in which Trust assets
are invested, or (v) any contract(s) entered into between ABRA and State
Street.
(l) Administration of Plan Loan Program. The Employer, as Plan
-----------------------------------
Administrator, shall be solely responsible for administering a participant
loan program established under this Section. As such, the Employer shall be
responsible for determining, under this Section, all the terms and
conditions of the loans, including whether a Participant, Beneficiary or
alternate payee is eligible for a loan, whether a loan request will be
approved or denied, the amount of the loan and the rate of interest to be
charged under it, the terms of repayment and the determination of whether a
default has occurred.
11.2 401(k) Hardship Withdrawals. If the Employer has elected to adopt the
---------------------------
401(k) arrangement of Article V and has also elected in the Participation
Agreement to adopt the hardship-withdrawal feature of this Section, then this
Section shall apply. Subject to the spousal consent requirements of Section
8.6(b), if applicable, an active Participant who has not incurred a Disability
may apply to withdraw from his or her 401(k) Salary Deferral Account an amount
required on account of a hardship necessary to satisfy an "immediate and heavy
financial need," provided that the Participant lacks other available financial
resources. A distribution will be deemed to be made on account of an "immediate
and heavy financial need" if the distribution is on account of (i) the purchase
(excluding mortgage payments) of a principal residence of the Participant; (ii)
payment of tuition, room and board and related educational fees for the next 12
months of post-secondary education for the Participant or his or her spouse,
children or dependents (as
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defined in Code Section 152); (iii) payment of expenses incurred or necessary
for medical care (as defined in Code Section 213(d)) for the Participant, his or
her spouse or dependents (as defined in Code Section 152), or of expenses
necessary for these persons to obtain medical care (as defined in Code Section
213(d)); (iv) the need to prevent either the eviction of the Participant from
his or her principal residence or the foreclosure on the mortgage on the
Participant's principal residence; or (v) such other deemed immediate and heavy
financial needs designated by the Commissioner of Internal Revenue through the
publication of revenue rulings, notices, and other documents of general
applicability.
The amount that may be withdrawn because of hardship cannot exceed the
aggregate contributions, less any amount previously withdrawn, made by the
Participant to his or her 401(k) Salary Deferral Account, plus any earnings on
such amounts allocable as of the last day of the last Plan Year ending before
July 1, 1989. If a loss brings the value of the 401(k) Salary Deferral Account
below its value as of the last day of the last Plan Year ending before July 1,
1989, amounts in the Participant's 401(k) Employer Account may be distributed
because of hardship to the extent necessary to reach the 401(k) Salary Deferral
Account value as of the last day of the last Plan Year ending before July 1,
1989. However, the amount that can be distributed cannot exceed the value of the
combined assets in the Participant's 401(k) Salary Deferral Account and 401(k)
Employer Account. A distribution will be deemed necessary to satisfy an
immediate and heavy financial need of the Participant if all the following
requirements are satisfied:
(a) The distribution is not in excess of the amount of the
immediate and heavy financial need of the Participant (which may include any
amounts necessary to pay any Federal, state or local income taxes or
penalties reasonably anticipated to result from the distribution).
(b) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable (at the time of the loan) loans
currently available under all plans maintained by the Employer.
(c) The Participant's Elective Contributions and Post-Tax Employee
Contributions to this Plan are suspended for 12 months under this Employer
Plan, and for at least 12 months under other Qualified Plans and
nonqualified plans of deferred compensation maintained by the Employer,
after the receipt of the hardship distribution.
(d) The Participant may not make Elective Contributions to this
Plan and all other Qualified Plans of
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the Employer for the Participant's taxable year immediately following the
taxable year of the hardship distribution in excess of the dollar limitation
of Code Section 402(g) for such next taxable year less the amount of such
Participant's Elective Contributions for the taxable year of the hardship
distribution.
In addition, such additional methods wherein a distribution shall be deemed to
be necessary to satisfy an immediate and heavy financial need as are prescribed
by the Commissioner of Internal Revenue through the publication of revenue
rulings, notices, and other documents of general applicability shall be
incorporated into the Plan by reference. For withdrawals made before January 1,
1992, a Participant who has attained age 59 1/2 or has incurred a Disability may
make withdrawals irrespective of the foregoing hardship requirements.
The Employer, as Plan Administrator, shall receive a Participant's
application and determine whether the hardship requirements of this Section have
been satisfied. If so, the Employer shall provide the appropriate information to
the Trustee and shall direct the Trustee to make payment to the Participant of
the approved amount to be withdrawn. The effective date of any such withdrawal
shall be the first Business Day on or after the later of (i) Notice to the
Trustee or (ii) the date specified in such Notice. Subject to rules adopted by
the Insurer (for withdrawals made before January 1, 1992) or by the Trustee (for
withdrawals made after December 31, 1991), the Participant shall indicate the
Investment Options from which each withdrawal is to be made and the dollar
amount applicable to each Investment Option. As to each Investment Option
specified (and in the order so specified), the withdrawn amount shall be taken
first from the 401(k) Salary Deferral Account and second, if applicable, from
the 401(k) Employer Account. In no event, however, may amounts be taken from a
particular Investment Option in violation of (i) the group annuity contract or
funding agreement issued by the Insurer, (ii) the Collective Trust, (iii) the
Trust, (iv) any insurance contract in which Trust assets are invested, or (v)
any contract(s) entered into between ABRA and State Street. In addition, a
withdrawal under this Section shall be subject to restrictions set forth in the
Trust and to rules established by the Trustee. A withdrawal under this Section
shall be paid to the Participant in cash (or by check). The Insurer (or, after
December 31, 1991, the Trustee) may adopt rules providing that no less than a
minimum amount may be withdrawn under this Section by a Participant at any one
time.
11.3 Other Profit Sharing Plan Withdrawals. If the Employer has adopted a
-------------------------------------
Profit Sharing Plan (whether or not the Employer has also elected to adopt the
401(k) arrangement of Article V) and has elected in the Participation Agreement
to adopt the
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hardship-withdrawal feature of this Section, then this Section shall apply. A
Participant who is still an Employee and whose Vested Portion of all Accounts is
100% may request a withdrawal from his or her Employer Account, Matching
Contribution Account and Prior Plan Account. However, to be eligible to make
such a withdrawal, the Participant must satisfy all the following conditions:
(a) The Participant must first make all available withdrawals from
his or her Post-Tax Employee Contribution Account under Section 11.4.
(b) The Participant must demonstrate that the withdrawal is
necessary to satisfy an "immediate and heavy financial need," as defined in
clauses (i) through (v) of the first paragraph of Section 11.2.
(c) The Participant must demonstrate that the amount of the
withdrawal does not exceed the amount of the immediate and heavy financial
need (which may include any amounts necessary to pay any Federal, state or
local income taxes or penalties reasonably anticipated to result from the
distribution).
Withdrawals under this Section shall be subject to the spousal consent
requirements of Section 8.6(b), if applicable.
The Employer, as Plan Administrator, shall receive a Participant's
application and determine whether the applicable conditions for a withdrawal
under this Section have been satisfied. If so, the Employer shall provide the
appropriate information to the Trustee and shall direct the Trustee to make
payment to the Participant of the approved amount to be withdrawn. The effective
date of the withdrawal shall be the first Business Day on or after the later of
(i) Notice to the Trustee or (ii) the date specified in such Notice. Subject to
rules adopted by the Insurer (for withdrawals made before January 1, 1992) or by
the Trustee (for withdrawals made after December 31, 1991), the Participant
shall indicate the Investment Options from which each withdrawal is to be made
and the dollar amount applicable to each Investment Option. As to each
Investment Option specified (and in the order so specified), the withdrawn
amount shall be taken from the Participant's Accounts in the order specified by
the Trustee from time to time. In no event, however, may amounts be withdrawn
from a particular Investment Option in violation of (i) the group annuity
contract or funding agreement issued by the Insurer, (ii) the Collective Trust,
(iii) the Trust, (iv) any insurance contract in which Trust assets are invested,
or (v) any contract(s) entered into between ABRA and State Street. In addition,
a withdrawal under this Section shall be subject to restrictions set forth in
the
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Trust and to rules established by the Trustee. A withdrawal under this
Section shall be paid to the Participant in cash (or by check). The Insurer (or,
after December 31, 1991, the Trustee) may adopt rules providing that no less
than a minimum amount may be withdrawn under this Section by a Participant at
any one time.
11.4 Withdrawals of Rollover or Post-Tax Employee Contributions. Subject to
----------------------------------------------------------
restrictions set forth in the Trust and to rules adopted by the Trustee, and
subject to the spousal consent requirements of Section 8.6(b) (if applicable), a
Participant may make withdrawals from his or her Rollover Account or Post-Tax
Employee Contribution Account by Notice to the Trustee. The effective date of
the withdrawal shall be the first Business Day on or after the later of (i)
Notice to the Trustee or (ii) the date specified in such Notice. Subject to
rules adopted by the Insurer (for withdrawals made before January 1, 1992) or by
the Trustee (for withdrawals made after December 31, 1991), the Participant
shall indicate the Investment Options from which each withdrawal is to be made
and the dollar amount applicable to each Investment Option. In no event,
however, may amounts be withdrawn from a particular Investment Option in
violation of (i) the group annuity contract or funding agreement issued by the
Insurer, (ii) the Collective Trust, (iii) the Trust, (iv) any insurance contract
in which Trust assets are invested, or (v) any contract(s) entered into between
ABRA and State Street. In addition, a withdrawal under this Section shall be
subject to restrictions set forth in the Trust and to rules established by the
Trustee. A withdrawal under this Section shall be paid to the Participant in
cash (or by check). The Insurer (or, after December 31, 1991, the Trustee) may
adopt rules providing that no less than a minimum amount may be withdrawn under
this Section by a Participant at any one time.
Article XII. Amendments
----------- ----------
12.1 Amendments by Employer. Subject to Section 12.3, the Employer may amend
----------------------
the Employer Plan by executing a new Participation Agreement or by attaching a
statement to the Participation Agreement setting forth (a) the method by which
the Employer Plan will conform to the requirements of Code Section 415 or (b)
the method by which the Employer will avoid duplication of minimum contributions
or benefits required under Code Section 416. In addition, the Employer may add
certain model amendments published by the Internal Revenue Service that
specifically provide that their adoption will not cause the Employer Plan to be
treated as individually designed. If the Employer makes any other amendments to
the Employer Plan (including a waiver of the minimum funding requirement under
Code Section 412(d)) or substitutes for the Trust another trust to
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implement the Employer Plan and appoints trustees thereunder, the Employer Plan
shall no longer be considered to be a part of the Plan. In that case, no further
Employer or Employee contributions may be made to the Trust, and, subject to
rules established by the Insurer (before January 1, 1992) or the Trustee (after
December 31, 1991), the Trustee shall cause to be transferred to such other
trust under such plan all amounts in the Accounts of Participants or their
Beneficiaries. Before the Trustee will approve any such transfer, the Employer
must furnish evidence, satisfactory to the Trustee, that a favorable
determination letter either has been or will be issued by the Internal Revenue
Service covering the plan as so amended (or that the transferee plan is a
standardized plan under an IRS-approved master or prototype retirement plan).
The Employer shall furnish the Trustee with a copy of any amendment to the
Employer Plan within 30 days after it is adopted.
12.2 Amendments by ABRA. ABRA may amend this Plan without the consent of the
------------------
Employer, provided that ABRA shall not change any of the elections made by any
Employer in its Participation Agreement unless such change is necessary in order
that the Plan may continue to meet the requirements for qualification under Code
Section 401.
12.3 Prohibited Amendments. No amendment of the Plan or of an Employer Plan
---------------------
shall:
(a) Reduce the amounts in the Accounts of any Participant or reduce
any vested right or interest to which any Participant or Beneficiary is then
entitled under this Plan, except that the Participant's Accounts may be
reduced to the extent permitted under Code Section 412(c)(8);
(b) Eliminate an optional form of benefit under Section 8.2 with
respect to Participants' Account balances as of the date of amendment;
(c) Vest in the Employer any interest or control over any assets of
the Trust;
(d) Cause any assets of the Trust to be used for, or diverted to,
purposes other than for the exclusive benefit of Participants and their
Beneficiaries; or
(e) Change any of the rights, duties or powers of the Trustee
without the Trustee's written consent.
Article XIII. Plan Termination
----------------
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13.1 Termination by Employer. The Employer may terminate the Employer Plan
-----------------------
by filing with the Trustee an instrument in writing executed by the Employer.
The Employer Plan shall also terminate upon the merger, liquidation or
dissolution of the Employer, the death of the Employer (if the Employer is a
sole practitioner), the sale of all or substantially all of the Employer's
assets, or a judicial declaration that the Employer is insolvent or bankrupt.
However, in any such event arrangements may be made for the Employer Plan to be
continued by any successor to the Employer. Neither a temporary cessation of
contributions nor the suspension of the Employer Plan and contributions by the
Employer shall be deemed to be a termination of the Employer Plan.
13.2 Distribution of Participant Accounts. Upon termination or partial
------------------------------------
termination of the Employer Plan, or complete discontinuance of contributions
by the Employer thereunder, the right of each affected Participant (including
each Former Participant who terminated employment with the Employer while his or
her Vested Portion was less than 100%, who has not incurred five consecutive
one-year Breaks in Service, and who is required under applicable official
guidance of the Internal Revenue Service to receive upon termination a
restoration of the Unvested Portion of his or her Accounts) to the amounts in
his or her Accounts at such time shall be fully vested and nonforfeitable
(subject to any contrary provisions of the Trust). If the Employer Plan is
terminated, the Employer, subject to the rules of the Insurer (before January 1,
1992) or the Trustee (after December 31, 1991), shall direct the Trustee to
cause the amounts in the Accounts of each Participant to be distributed in
accordance with the provisions of Article VIII or, if applicable, Article IX.
With respect to amounts in a Participant's 401(k) Employer and 401(k) Salary
Deferral Accounts, the Employer may only direct the Trustee to make such
distributions if the Employer does not maintain a successor plan, other than an
"employee stock ownership plan" (as defined in Code Section 4975(e) or 409) or a
"simplified employee pension" (as defined in Code Section 408(k)), and if such
distributions after March 31, 1988 are made in a single-sum payment.
Distributions shall be made under this Section as soon as administratively
feasible.
13.3 Role of Trustee. No termination or partial termination of this Employer
---------------
Plan nor any discontinuance of Employer contributions shall affect the validity
of the Trust or the rights and duties of the Trustee to pay withdrawals and
benefits as provided in the Plan.
Article XIV. Preservation of Participants' Benefits
----------- --------------------------------------
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14.1 Repayment of Certain Contributions. Except as otherwise provided below,
----------------------------------
contributions made under the Plan shall not be used for any purpose other than
for the exclusive benefit of Participants and their beneficiaries, and no assets
of the Trust fund shall at any time revert or be repaid to the Employer, except
that:
(a) If, due to a mistake of fact made in good faith, the Employer
makes a contribution (i) that otherwise would not have been made or (ii)
which is of a greater amount than the amount that otherwise would have been
contributed, such contribution or excess amount may be repaid by the Trustee
to the Employer provided that such repayment is made within 12 months from
the date the contribution was made; and
(b) If a contribution (or portion thereof) made by the Employer is
disallowed as a deduction for Federal income tax purposes to the Employer,
the amount of such contribution (or portion thereof) may be repaid by the
Trustee to the Employer provided that such repayment is made within 12
months after the disallowance of the deduction.
The Employer shall direct the Trustee to make a repayment under this Section. In
making a repayment under subsection (a) or (b), only the amount of the
contribution (or portion thereof) involved may be repaid, and no earnings
attributable thereto may be included in such repayment. If net investment losses
are attributable to the amount, the amount repayable shall be adjusted to
reflect its proportional share of any such net investment losses.
14.2 Plan Merger, Consolidation or Transfer. No merger or consolidation of
--------------------------------------
an Employer Plan with, or transfer of Employer Plan assets or liabilities to,
any other plan will occur unless each Participant would (if such successor plan
then terminated) receive a benefit immediately after the merger, consolidation
or transfer that is equal to or greater than the benefit he or she would have
been entitled to receive immediately before the merger, consolidation or
transfer (if the Employer Plan had then terminated). In the event of such
merger, consolidation or transfer, the Trustee may transfer assets of the
Employer Plan to the trustees or funding agent of the successor plan and shall
direct such trustees or agent as to the amounts to be credited to the respective
accounts of Participants participating in the successor plan. Alternatively, if
the Trust is used to fund such successor plan, the Trustee shall continue to
hold such assets for the benefit of such Participants in accordance with the
terms of the successor plan.
14.3 Trustee-to-Trustee Transfer. If an Employee who becomes a Participant
---------------------------
has an account or accounts under a
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Qualified Plan in which he or she previously participated, the Trustee, upon
request of the Participant (or upon the request of the Employer, provided the
Qualified Plan in which the Participant previously participated is a plan of
such Employer) and with the consent of both the Employer and the employer under
such other Qualified Plan, may accept amounts accrued by the Participant under
such other Qualified Plan for credit to the Participant's corresponding Accounts
(provided that the Trustee is assured of the tax-qualified status of the
transferor plan). The Plan Administrator shall determine both the conditions
under which each such transfer is to be made and the Accounts to which
transferred amounts are to be credited, and shall convey this determination to
the Trustee by Notice to the Trustee. Transferred amounts shall be credited to
Accounts that adequately protect the tax characteristics and distribution
restrictions that apply to the transferred amounts.
14.4 Transfer of Employee Accounts to Another Plan. If a Participant
---------------------------------------------
terminates employment with the Employer and subsequently becomes a participant
in a Qualified Plan maintained by another employer, the Trustee, upon request of
the Participant and with the consent of both the Employer and such other
employer, may transfer amounts credited to the Participant's Accounts to such
other Qualified Plan for credit to the Participant's accounts under the other
Qualified Plan, provided that the Participant is fully vested under the other
Qualified Plan with respect to the Vested Portion of his or her Accounts that is
transferred. The transfer of a Participant's Accounts to another Qualified Plan
shall not be permitted before the Participant's termination of employment with
the Employer and commencement of participation in another employer's Qualified
Plan. The Plan Administrator shall determine the conditions under which each
such transfer is to be made.
14.5 Rollover From Another Plan. A Participant who has received an Eligible
--------------------------
Rollover Distribution (as defined in Section 18.2(a)) may roll over such
distribution into this Plan for credit to a Rollover Account established for him
or her under the Plan. The rollover may be a rollover made directly by Qualified
Plan, a rollover of the distribution to the Participant within 60 days of its
receipt or a rollover of the balance of an IRA (i.e., individual retirement
account, individual retirement annuity or individual retirement bond) in which
such distribution was separately invested. The Participant shall be required to
provide evidence satisfactory to the Trustee that the rollover satisfies the
Code requirements for rollover contributions to Qualified Plans.
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Article XV. Delegation of Powers
---------- --------------------
15.1 Delegation of Powers to ABRA and to Trustee. The Employer delegates to
-------------------------------------------
ABRA the power to settle all matters relating to the Trustee, including the
power to establish a trust or trusts and enter into a trust agreement or
agreements with the Trustee, remove the Trustee and to appoint a successor
Trustee as provided in the Trust, the power to amend the Trust as provided in
the Trust, the power to amend the Plan as provided in Section 12.2, the power to
interpret the provisions of the Plan, and the power to adopt such rules of
procedure and regulations as are consistent with the provisions of the Plan and
as are deemed appropriate. The powers delegated to ABRA shall be exercised
through its Board of Directors or such officer, committee or other person as the
Board may designate from time to time and shall be exercised only when similarly
exercised with respect to all Employers similarly situated who have adopted the
Plan. Notice to the Employer of any action taken by ABRA in accordance with the
powers delegated to it may be given by notice mailed to the Employer or in such
other manner as ABRA deems appropriate.
15.2 Delegation of Powers By Related Businesses. Each Related Employer whose
------------------------------------------
Employees are Participants in the Plan shall be deemed to have designated the
Employer as its agent with respect to the Plan and all relations with ABRA and
the Trustee under Section 15.1.
15.3 Fees Charged Certain ABA Nonmembers. ABRA charges an annual
-----------------------------------
participation fee with respect to each sole practitioner, partner or shareholder
of the Employer who is a Participant for each year during which he or she is not
a member of the American Bar Association but is a Participant in the Plan. Each
year, ABRA bills directly each Participant who is responsible for paying such
fee. The Employer delegates to ABRA the power to collect payment of such fee
from the Accounts of each responsible Participant if the annual participation
fee remains unpaid after six months have elapsed since the date the first
statement covering such fee was sent to the Participant. In such case, ABRA may
notify the Trustee that the fee remains unpaid, and the Trustee may withdraw the
amount from the Participant's Accounts and remit the amount to ABRA. ABRA may
change the amount of the annual participation fee from time to time. Any such
change will be made effective prospectively only.
Article XVI. Miscellaneous
----------- -------------
16.1 Governing Law. To the extent not superseded by Federal law, the laws
--------------
of the State of Illinois shall be controlling in all matters relating to the
Plan.
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16.2 Limitation of Participant Rights. The adoption and maintenance of the
--------------------------------
Plan and the Trust by the Employer shall not be construed as giving any
Participant or other person any legal or equitable right against the Employer or
the Trustee, except as provided herein or in the Trust or as enlarging,
modifying or affecting the tenure or terms of employment of any Participant.
16.3 Allocation of Responsibilities Among Fiduciaries. Each Fiduciary shall
------------------------------------------------
have only those specific powers, duties, responsibilities and obligations as are
specifically allocated to it under the Plan. In general, the Board of Directors
of ABRA, in addition to having the powers described in Section 15.1, shall have
the sole authority to appoint and remove the Trustee and to amend or terminate,
in whole or in part, the Plan and the Trust.
The Plan Administrator shall have the duties, with respect to the Employer
Plan, provided under Section 16.4. In addition, the Plan Administrator shall
have the sole responsibility for the administration of the Employer Plan, which
responsibility is specifically described in Section 16.4 and in the Trust.
The Trustee shall have the sole responsibility for the administration of the
Trust and the management of the assets under the Trust, which responsibility may
also be delegated in whole or in part to one or more Investment Managers in
accordance with procedures set forth in the Trust, which may or may not be the
Insurer. The Trustee shall be responsible only for the Trust assets that it
manages. If the Trustee or ABRA appoints one or more Investment Managers, the
Investment Manager shall have the sole responsibility for management of the
Trust assets with respect to which it has been appointed. To the extent that
Trust assets are allocated to one or more separate accounts of an insurance
company, such insurer shall be the Investment Manager with respect to those
assets; except that, by agreement with the Insurer for all periods ending before
January 1, 1992, one or more other persons may be appointed by the Trustee as
Investment Manager with respect to all or a portion of such assets. The Insurer
(before January 1, 1992) or the Trustee (after December 31, 1991) shall be
responsible for such administration of the Plan as is delegated to it by means
of a group annuity contract (or other agreement) and an administrative
agreement. Before January 1, 1992, the Trustee shall have the sole
responsibility to select, contract with, review the performance of, and remove
the Insurer (subject to the terms of such contract and agreements) and any
Investment Managers. After December 31, 1991, ABRA shall have the sole
responsibility to select, contract with, review the performance of, and remove
the Trustee (subject to the terms of applicable agreements), while the Trustee
and ABRA shall each have the sole responsibility to select, contract with,
review the performance of, and remove, certain of the
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Investment Managers (in accordance with the terms of applicable agreements).
Each Fiduciary warrants that any directions given, information furnished, or
action taken by it shall be in accordance with the provisions of the Plan and
Trust, as the case may be, authorizing or providing for such direction,
information or action. Furthermore, each Fiduciary may rely upon any such
direction, information or action of another Fiduciary as being proper under the
Plan and Trust, and is not required under the Plan or the Trust to inquire into
the propriety of any such direction, information or action, except that each
Fiduciary shall not be relieved from liability for a breach of fiduciary
responsibility by a co-Fiduciary under ERISA Section 405(a). It is intended
under the Plan and the Trust that each Fiduciary shall be responsible for the
proper exercise of its own powers, duties, responsibilities and obligations
under the Plan and Trust.
To the extent that the Participants direct the investment of their Accounts,
ERISA Section 404(c) is intended to apply and, to the extent applicable, shall
apply, and neither the Trustee nor ABRA shall be liable for any loss that
results from the Participants' exercise of investment control.
16.4 Plan Administrator. With respect to the Employer Plan, the Plan
------------------
Administrator shall exercise such authority and responsibility as it deems
appropriate to comply with ERISA and governmental regulations issued thereunder
relating to:
(a) Reports and notifications to Participants;
(b) Reports to and registration with the Internal Revenue
Service;
(c) Annual reports to the United States Department of Labor; and
(d) Any other actions required by ERISA or the Plan.
In addition to the foregoing, the Plan Administrator shall have such duties
and powers as may be necessary to discharge its duties hereunder, including, but
not by way of limitation, the following:
(e) To construe and interpret the Employer Plan, decide all
questions of eligibility and determine the amount, manner and time of
payment of any benefits hereunder;
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(f) To prescribe procedures to be followed by Participants or
beneficiaries filing applications for benefits consistent with the Plan and
Trust;
(g) To prepare and distribute, in such manner as the Plan
Administrator determines to be appropriate, information explaining the
Employer Plan, and to distribute appropriate information regarding the
Investment Options;
(h) To receive from Participants such information as shall be
necessary for the proper administration of the Employer Plan and Trust; and
(i) To administer any participant loan program established under
Article XI.
The Plan Administrator shall have no power to add to, subtract from or modify
any of the terms of the Plan, or to change or add to any benefits provided by
the Plan, or to waive or fail to apply any requirements of eligibility under the
Plan.
16.5 Indemnification of ABRA Directors and Pre-1992 Trustees. The members
-------------------------------------------------------
of the Board of Directors of ABRA ("Directors") and each individual Trustee
(before January 1, 1992) shall be indemnified by ABRA for all liability, joint
or several, for their acts and omissions and for the acts and omissions of their
agents in the administration and operations of the Plan and Trust. The Directors
and the pre-1992 Trustees shall also be indemnified by ABRA against all costs
and expenses reasonably incurred by them in connection with the defense of any
action, suit or proceeding in which they may be made party defendants by reason
of their being or having been Directors or Trustee, whether or not then serving
as such, including the cost of reasonable settlements (other than amounts paid
to ABRA) made to avoid costs of litigation and payment of any judgment or decree
entered in such action, suit or proceeding. ABRA shall not, however, indemnify
any Director or pre-1992 Trustee with respect to any act not undertaken in good
faith and in a manner reasonably believed by such individual to be in, or not
opposed to, the best interests of the Plan and Trust and the Participants
(unless such individual is successful, on the merits or otherwise, in the
defense of such action, suit or proceeding, in which case he or she shall be
indemnified against expenses, including attorneys' fees, actually and reasonably
incurred in connection with the defense), or with respect to the cost of any
settlement unless the settlement has been approved by a court of competent
jurisdiction. The right of indemnification shall not be exclusive of any other
right to which the Directors or pre-1992 Trustees may be legally entitled and it
shall inure to the benefit of any designated representative of such individual.
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16.6 Claims Procedure. The Employer shall notify in writing any Participant
----------------
or Beneficiary whose claim for benefits under the Plan has been denied, either
wholly or in part, setting forth the specific reasons for such denial in a
manner calculated to be understood by the Participant or Beneficiary. Such
notice shall be furnished to the Participant or Beneficiary within 60 days of
such denial and shall provide that, within 60 days after its receipt, the
Participant or Beneficiary may apply to the Employer for a full and fair review
of the decision denying the claim.
16.7 Nontransferability of Benefits. Except as specified in Code Section
------------------------------
401(a)(13) and the Income Tax Regulations thereunder, no right or interest of
any Participant or Beneficiary in the Plan or in his or her Accounts or benefits
under the Plan shall be assignable or transferable in any manner, subject to any
lien, or liable for (or subject to) any obligation or liability of any person.
The preceding sentence shall not apply to an assignment, transfer or attachment
under a Qualified Domestic Relations Order.
16.8 Payment of Expenses. All reasonable costs, fees and expenses incurred
-------------------
in connection with the administration and operation of the Plan and Trust, as
such expenses are allocated to the Employer Plan, shall be paid out of the
Accounts to the extent not paid by the Employer. Such expenses shall include
fees for legal, accounting or investment services rendered to the Trustee,
charges payable under any group annuity contract or funding agreement entered
into by the Trustee, enrollment, recordkeeping, administration and other fees
(including, but not limited to, any termination fees) payable in accordance with
the terms of any agreement entered into between ABRA and either the Insurer or
the Trustee pertaining to the Trust and the Employer Plan. An Employer may
designate in writing that any such payment shall be for the administrative
expenses charged by the Trustee and ABRA for accounts invested in any one or
more Investment Options as may be designated by the Trustee. If no such
designation is made, such payment shall be deemed to reduce expense allocations
otherwise made to the Accounts of all Plan Participants. Until paid, the
administrative expenses shall constitute a liability of Trust. However, the
Employer may reimburse the Trust for any administrative expenses described
above. Any administrative expense paid to the Trust as a reimbursement shall be
subject to the allocation rules contained in the third sentence of this Section,
and shall not be considered an Employer contribution to the Plan.
16.9 Failure of Employer Plan to Qualify. If an Employer Plan fails to
------------------------------------
obtain or retain the status of a Qualified Plan, the Employer Plan shall no
longer participate in this master Plan and shall be considered an individually
designed Plan.
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Article XVII. Limitations on Contributions
------------- ----------------------------
Note: Section 17.8 contains definitions that apply solely for purposes of
this Article.
17.1 Basic Limitation. If a Participant does not participate in and has
----------------
never participated in any other Qualified Plan, Welfare Benefit Fund or
Individual Medical Account that provides an Annual Addition under Section 17.2
maintained by the Employer, the amount of Annual Addition that may be allocated
under the Employer Plan on that Participant's behalf for a Limitation Year shall
not exceed the lesser of the Maximum Permissible Amount or any other limitation
contained in the Plan.
17.2 Limitation with Other Defined Contribution Master or Prototype Plans.
--------------------------------------------------------------------
If, in addition to the Plan, the Employer maintains any other Qualified Defined
Contribution Plans (all of which are Master or Prototype Plans), Welfare Benefit
Funds, Individual Medical Accounts, or Simplified Employee Pensions, the amount
of Annual Addition that may be allocated under the Employer Plan on a
Participant's behalf for a Limitation Year shall not exceed the lesser of:
(a) The Maximum Permissible Amount, reduced by the sum of any
annual additions allocated to the Participant's accounts for the same
Limitation Year under such other Qualified Defined Contribution Plans,
Welfare Benefit Funds, Individual Medical Accounts, and Simplified Employee
Pensions; and
(b) Any other limitation in Articles IV and V.
For purposes of this Article, the following amounts shall be treated as
Annual Additions under a Qualified Defined Contribution Plan maintained by the
Employer: First, amounts allocated after March 31, 1984 to the Participant's
Individual Medical Account under a pension or annuity plan maintained by the
Employer. Second, amounts derived from contributions paid or accrued after
December 31, 1985 in taxable years of the Employer ending after that date that
are attributable to post-retirement medical benefits allocated to the account of
a key employee (as defined in Code Section 419A(d)(3)) under a Welfare Benefit
Fund maintained by the Employer. Third, allocations under a Simplified Employee
Pension.
17.3 Use of Estimated Compensation. Before the determination of the
-----------------------------
Participant's actual Compensation for a Limitation Year, the Maximum Permissible
Amount may be determined on the basis of the Participant's estimated annual
Compensation for such Limitation Year. Such estimated annual Compensation shall
be determined on a reasonable basis and shall be uniformly
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determined for all Participants similarly situated. Any Employer contributions
(including allocation of forfeitures) based on estimated annual Compensation
shall be reduced by any Excess Amounts carried over from prior Limitation Years.
As soon as is administratively feasible after the end of a Limitation Year, the
Maximum Permissible Amount for such Limitation Year shall be determined on the
basis of the Participant's actual Compensation for such Limitation Year.
17.4 Determination of Excess Amount in Special Case. If a Participant's
----------------------------------------------
Annual Additions result in an Excess Amount, the Excess Amount shall be deemed
to consist of the amounts most recently allocated. However, amounts contributed
first to a Simplified Employee Pension, followed by amounts contributed to a
Welfare Benefit Fund or Individual Medical Account shall always be deemed to
have been allocated prior to amounts allocated to a Qualified Plan (including
this Plan).
If an Excess Amount was allocated to a Participant on an Allocation Date of
the Employer Plan that coincides with an Allocation Date of another plan, the
Excess Amount attributed to this Plan will be the product of:
(a) The total Excess Amount allocated as of such date (including
any amount which would have been allocated except for the limitations of
Code Section 415), times
(b) The ratio that (1) the amounts allocated to the Participant as
of such date under the Employer Plan bears to (2) the total amount allocated
as of such date under all such Qualified Defined Contribution Plans
(determined without regard to the limitations of Code Section 415).
17.5 Disposal of Excess Amount. If, pursuant to the foregoing provisions,
-------------------------
there is an Excess Amount with respect to a Participant for a Limitation Year
attributable to this Plan, such Excess Amount shall be disposed of as follows,
in the order specified:
(a) Any Post-Tax Employee Contributions shall be returned to the
Participant;
(b) If after the application of subsection (a) an Excess Amount
still exists, any Elective Contributions together with any gains
attributable thereto (as determined by the Trustee) shall be returned to the
Participant;
(c) If after the application of subsections (a) and (b) an Excess
Amount still exists, and the Participant is covered by the Plan at the end
of the Limitation Year, the
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<PAGE>
Excess Amount in the Participant's Accounts shall be used to reduce Employer
contributions (including any allocation of forfeitures) for such Participant
in the next Limitation Year, and each succeeding Limitation Year if
necessary;
(d) If after the application of subsections (a) and (b) an Excess
Amount still exists, and the Participant is not covered by the Plan at the
end of the Limitation Year, the Excess Amount shall be held unallocated in a
suspense account. The suspense account shall be applied to reduce future
Employer contributions (including allocation of any forfeitures) for all
remaining Participants in the next Limitation Year, and each succeeding
Limitation Year if necessary;
(e) If a suspense account is in existence at any time during the
Limitation Year under this Section, it shall not participate in the
allocation of the Trust's investment gains and losses. If a suspense account
is in existence at any time during a particular Limitation Year, all amounts
in the suspense account must be allocated and reallocated to Participants'
Accounts before any Employer or any Employee contributions may be made to
the Employer Plan for that Limitation Year. Excess amounts may not be
distributed to Participants or Former Participants.
17.6 Limitation with Other Defined Contribution Plan (Other Than Master or
---------------------------------------------------------------------
Prototype). If the Employer also maintains another plan which is a Qualified
- ---------
Defined Contribution Plan (other than a Master or Prototype Plan), the Annual
Addition allocated under the Employer Plan on behalf of any Participant shall be
limited in accordance with the provisions of Sections 17.2 and 17.5, as though
the other plan were a Master or Prototype plan, unless the Employer provides
other limitations in the Participation Agreement.
17.7 Limitation with Defined Benefit Plan. If the Participant is also, or
------------------------------------
ever was, a participant in a Qualified Defined Benefit Plan maintained by the
Employer, the sum of the Participant's Defined Contribution Plan Fraction and
Defined Benefit Plan Fraction shall not exceed 1.00 in any Limitation Year. To
the extent that such sum would exceed 1.00 for the Limitation Year, the amount
that would otherwise be accrued for the Participant shall be reduced as set
forth in the Employer's Participation Agreement.
17.8 Definitions.For purposes of this Article, the following terms shall
-----------
have the following meanings:
(a) Allocation Date. "Allocation Date" means the date as of which
---------------
all or any portion of an Annual Addition is
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<PAGE>
allocated or credited to a Participant's Accounts under this Plan for a
Limitation Year. An Annual Addition made in a subsequent Limitation Year is
deemed allocated or credited as of the last day of the preceding Limitation
Year if it is made (1) for such preceding Limitation Year and (2) not later
than the time prescribed by law (including any extensions) for filing the
Employer's Federal income tax return for the Employer's Fiscal Year with or
within which such Limitation Year ends.
(b) Annual Addition. "Annual Addition" means, with respect to any
---------------
Participant, the sum, for the Limitation Year, of (1) all contributions
allocated to his or her Employer Account, 401(k) Employer Account, Matching
Contribution Account, and 401(k) Salary Deferral Account, including any
Excess Amounts applied under Section 17.5 to reduce Employer contributions,
and including Excess Contributions and Excess Aggregate Contributions
without regard to whether such amounts are distributed or forfeited; (2)
Excess Elective Deferrals unless such amounts are distributed no later than
the first April 15 following the close of the relevant taxable year of the
Participant; (3) all forfeitures allocated to his or her Accounts; and (4)
all Post-Tax Employee Contributions under Section 6.1.
For purposes of this Article, any amounts transferred from another
Qualified Plan under Section 14.3 and any rollover contribution made under
Section 14.5 shall not be treated as either Employer or Post-Tax Employee
Contributions and shall not be included in determining Annual Additions.
(c) Compensation. With respect to each Participant, "Compensation"
------------
means the general definition of Compensation elected by the Employer in the
Participation Agreement under Section 2.13(a), (b) or (c). For any
Participant who is a Self-Employed Individual, Compensation means the amount
of his or her Earned Income from the Employer for the Limitation Year. For
Limitation Years beginning after December 31, 1991, for purposes of applying
the limitations of this Article, Compensation for a Limitation Year is the
Compensation actually paid or includible in gross income during such
Limitation Year. Notwithstanding the preceding sentence, Compensation for a
participant in a Qualified Defined Contribution Plan who is permanently and
totally disabled (as defined in Code Section 22(e)(3)) is the Compensation
such participant would have received for the Limitation Year if the
participant had been paid at the rate of Compensation paid immediately
before becoming permanently and totally disabled. Such imputed Compensation
for the disabled participant may be taken into account only if the
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<PAGE>
participant is not a Highly Compensated Employee and contributions made on
behalf of such participant are nonforfeitable when made.
(d) Defined Benefit Plan Fraction. "Defined Benefit Plan Fraction"
-----------------------------
means a fraction whose numerator is the sum of the Participant's projected
annual benefits under all the Qualified Defined Benefit Plans (whether or
not terminated) maintained by the Employer, and whose denominator is the
lesser of 125% (or 100% (i) in the case of Paired Plans or (ii) as otherwise
specified in the Participation Agreement for Plans other than Paired Plans
under Code Section 416(h)) of the dollar limitation determined for the
Limitation Year under Code Sections 415(b) and 415(d) and 140% of the
Participant's highest average Compensation. For purposes of this definition,
projected annual benefit means the annual retirement benefit to which the
Participant would be entitled under a Qualified Defined Benefit Plan
maintained by the Employer (adjusted to an actuarially equivalent single
life annuity if the benefit is payable in any form other than a single life
annuity or a Qualified Joint and Survivor Annuity) assuming that the
Participant continued employment with the Employer until the normal
retirement age under the Qualified Defined Benefit Plan (or his or her
current age, if greater) and that his or her Compensation and all other
factors used in determining that benefit remained constant from the current
Limitation Year until his or her retirement and highest average Compensation
means the Participant's average Compensation for the three consecutive
Limitation Years that produce the greatest average. Notwithstanding the
above, in the case of a Participant who was a participant on the first day
of the first Limitation Year beginning after December 31, 1986 in one or
more Qualified Defined Benefit Plans maintained by the Employer that were in
existence on May 6, 1986, the denominator of the Defined Benefit Plan
Fraction shall not be less than 125% of the aggregate annual retirement
benefits that the Participant had accrued under those Qualified Defined
Benefit Plans as of the close of the last Limitation Year beginning before
January 1, 1987, disregarding any changes in the terms and conditions of the
plan after May 5, 1986. The preceding sentence applies only if the Qualified
Defined Benefit Plans individually and in the aggregate satisfied the
requirements of Code Section 415 for all Limitation Years beginning before
January 1, 1987.
(e) Defined Contribution Plan Fraction. "Defined Contribution Plan
----------------------------------
Fraction" means a fraction whose numerator is the sum of the annual
additions to the Participant's accounts under all the Qualified Defined
Contribution Plans (whether or not terminated) maintained by the Employer
for
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<PAGE>
the current and all prior Limitation Years (including any annual
additions attributable to Individual Medical Accounts, Welfare Benefit
Funds, Simplified Employee Pensions, and to the Participant's Post-Tax
Employee Contributions to all Qualified Defined Benefit Plans, whether or
not terminated, maintained by the Employer), and whose denominator is the
sum of the maximum aggregate amounts for the current Limitation Year and all
of the Participant's prior Limitation Years of Service (regardless of
whether a defined contribution plan was maintained by the Employer). For
purposes of this definition, the maximum aggregate amount means, for any
Limitation Year, the lesser of 125% (or 100% (i) in the case of Paired Plans
or (ii) as specified in the Participation Agreement for Plans other than
Paired Plans pursuant to Code Section 416(h)) of the dollar limitation
determined under Code Sections 415(b) and 415(d) in effect under Code
Section 415(c)(1)(A) and 35% of the Participant's Compensation for that
Limitation Year. Notwithstanding the above, if the Participant was a
participant as of the end of the first day of the Limitation Year beginning
after December 31, 1986 in one or more Qualified Defined Contribution Plans
maintained by the Employer that were in existence on May 6, 1986 and the sum
of his or her Defined Contribution Plan Fraction and his or her Defined
Benefit Plan Fraction would otherwise exceed 1.0, the numerator of his or
her Defined Contribution Plan Fraction shall be reduced by an amount equal
to the product of the excess of that sum over 1.0 and the denominator of his
or her Defined Contribution Plan Fraction. The reduction under the preceding
sentence shall be computed on the basis of the fractions as of the end of
the last Limitation Year beginning before January 1, 1987 and disregarding
any changes in the terms and conditions of the Plan made after May 5, 1986,
but using the Code Section 415 limitation applicable to the first Limitation
Year beginning on or after January 1, 1987. For purposes of computing the
Defined Contribution Plan Fraction, the Annual Addition for any Limitation
Year beginning before January 1, 1987 shall not be recomputed to treat all
Post-Tax Employee Contributions as an Annual Addition.
(f) Employer. "Employer" means the Employer under this Plan. The
--------
Employer and all Related Employers, as modified by Code Section 415(h),
shall be considered a single employer for purposes of applying the
limitations of this Article.
(g) Excess Amount. "Excess Amount" means the excess of a
-------------
Participant's Annual Addition for a Limitation Year over the Participant's
Maximum Permissible Amount (or, if applicable, such amount as reduced as
required by
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<PAGE>
Section 17.2(a)), less any administrative charges allocable to
such excess.
(h) Individual Medical Account. "Individual Medical Account"
--------------------------
means an individual medical account as defined in Code Section
415(1)(2).
(i) Limitation Year. "Limitation Year" means the Plan Year. All
---------------
Qualified Plans maintained by the Employer must use the same Limitation
Year. If the Limitation Year is changed to a different 12-consecutive-month
period, the new Limitation Year must begin on a day within the Limitation
Year in which the change is made.
(j) Master or Prototype Plan. "Master or Prototype Plan" means a
------------------------
plan, the form of which is the subject of a favorable opinion letter
from the Internal Revenue Service.
(k) Maximum Permissible Amount. "Maximum Permissible Amount"
--------------------------
means with respect to any Participant for a Limitation Year the lesser of
(1) $30,000 (or if greater, 25% of the defined benefit dollar limitation set
forth in Code Section 415(b)(1) as in effect for the Limitation Year), or
(2) 25% of his or her Compensation from the Employer for that Limitation
Year. Effective for Limitation Years beginning after 1986, clause (2) of the
previous sentence shall not apply to any contributions treated as Annual
Additions pursuant to Code Section 419A or 415(l)(1), as described in
Section 17.2. If the Limitation Year changes because the Employer's Fiscal
Year is changed, the Maximum Permissible Amount shall not exceed $30,000 (or
if greater, 25% of the defined benefit dollar limitation set forth in Code
Section 415(b)(1) as in effect for the Limitation Year) multiplied by a
fraction whose numerator is the number of months in the short Limitation
Year and whose denominator is 12.
(l) Simplified Employee Pension. "Simplified Employee
---------------------------
Pension" means a simplified employee pension as defined in Code Section
408(k).
(m) Welfare Benefit Fund. "Welfare Benefit Fund" means a welfare
--------------------
benefit fund as defined in Code Section 419(e).
Article XVIII. Direct Rollovers
-------------- ----------------
18.1 General Rule. This Article applies to distributions made on or after
------------
January 1, 1993. Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a Distributee's election under this Article, a Distributee
may elect, at the time and in the manner prescribed by the Plan
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<PAGE>
Administrator, to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the Distribution in a
Direct Rollover.
18.2 Definitions.
-----------
(a) Eligible Rollover Distribution: An Eligible Rollover
------------------------------
Distribution is any distribution of all or any portion of the balance
to the credit of the Distributee, except that an Eligible Rollover
Distribution does not include: any distribution that is one of a
series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
Distributee or the joint lives (or joint life expectancies) of the
Distributee and the Distributee's designated Beneficiary, or for a
specified period of ten years or more; any distribution to the extent
such distribution is required under Section 401(a)(9) of the Code; the
portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities); and any
distribution reasonably expected to total less than $200 during a
year.
(b) Eligible Retirement Plan: An Eligible Retirement Plan is an
------------------------
individual retirement account described in Section 408(a) of the Code,
an individual retirement annuity described in Section 408(b) of the
Code, an annuity plan described in Section 403(a) of the Code, or a
qualified trust described in Section 401(a) of the Code, that accepts
the Distributee's Eligible Rollover Distribution. However, in the case
of an Eligible Rollover Distribution to the surviving Spouse, an
Eligible Retirement Plan is an individual retirement account or
individual retirement annuity.
(c) Distributee: A Distributee includes an Employee or former
-----------
Employee. In addition, the Employee's or former Employee's surviving
Spouse and the Employee's or former Employee's Spouse or former Spouse
who is the alternate payee under a Qualified Domestic Relations Order,
as defined in Section 414(p) of the Code, are Distributees with regard
to the interest of the Spouse or former Spouse.
(d) Direct Rollover: A Direct Rollover is a payment by the Plan
---------------
to the Eligible Retirement Plan specified by the Distributee.
* * *
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<PAGE>
The form of this Plan and its Participation Agreements as approved by the
Internal Revenue Service by Opinion Letters dated February 26, 1992, November
10, 1992, July 29, 1992 and December 16, 1996, are adopted this 24th day of
December, 1996.
AMERICAN BAR RETIREMENT ASSOCIATION
By /s/ Benjamin H. Lacy
-----------------------------------
Its President
-------------------------------
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<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Amendment No. 1 to the Registration Statement on Form S-1 of our report dated
March 13, 1997, relating to the financial statements and selected per-unit data
and ratios of Aggressive Equity Fund, Balanced Fund, Growth Equity Fund, Stable
Asset Return Fund, Index Equity Fund, Intermediate Bond Fund, International
Equity Fund, Value Equity Fund, Conservative Structured Portfolio Service,
Moderate Structured Portfolio Service and Aggressive Structured Portfolio
Service, each a fund or portfolio of the American Bar Association Members/State
Street Collective Trust, which appear in such Prospectus. We also consent to
the reference to us under the headings "Selected Financial Data" and "Experts"
in such Prospectus.
/s/ PRICE WATERHOUSE LLP
Boston, Massachusetts
April 14, 1997
