<PAGE>
Filed pursuant to Rule 424(b)(3)
Registration No. 333-23633
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 in any
publicly traded debt and equity securities and shares of numerous mutual funds
through Self-Managed Accounts. The Self-Managed Accounts 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 8, 1998
<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........................................................ 40
Structured Portfolio Service............................................... 42
Self-Managed Accounts...................................................... 44
Equitable Real Estate Account.............................................. 49
Transfers between Investment Options and Withdrawals....................... 49
The Program................................................................ 51
Adoption of Program........................................................ 51
State Street .............................................................. 52
American Bar Retirement Association........................................ 53
Contributions and Investment Selection..................................... 54
Deductions and Fees........................................................ 56
Employer and Participant Responsibilities.................................. 62
Provisions of ABA Members Plans............................................ 63
Benefits and Distributions From ABA Members Plans.......................... 68
Benefits and Distributions From Individually Designed Plans................ 75
ERISA and Fiduciary Obligations............................................ 76
Regulation of Collective Trust............................................. 79
Federal Income Tax Considerations.......................................... 80
Taxation of Collective Trust............................................... 83
Legal Matters.............................................................. 83
Experts.................................................................... 83
Available Information...................................................... 83
Glossary of Terms Used in Prospectus....................................... 85
Index to Financial Statements.............................................. F-2
</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 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." The Funds, the Structured Portfolio Service
and the Self-Managed Account are collectively referred to as "Investment
Options."
3
<PAGE>
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 managed by ERE Yarmouth, Inc. 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 the performance by Equitable Life and ERE
Yarmouth, Inc. of their 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."
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
4
<PAGE>
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, 1997, State Street and its affiliates held over $3.9 trillion of
assets in trust or under custody and had over $390 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 1.3 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 Bank and Trust Company S&P 500 Index Fund
with Futures and the State Street Bank and Trust Company Russell Special
Small Company Common Trust Fund, collective investment funds maintained by
State Street.
+ Average weighted maturity as of December 31, 1997.
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).. .383% .383% .383% .383% .383% .383% .383% .383% NA (2)
Trustee, Management and
Administrative Fees;
Investment Advisor
Fees; and, where
applicable, Structured
Portfolio Service
Fee(1)................. .200% .464% .308% .405% .303% .153% .504% .920% .087%(2)
Other Expenses(3)....... .058% .059% .059% .056% .060% .061% .063% .060% -- (4)
---- ---- ---- ---- ---- ---- ---- ----- ------
Total................... .641% .906% .750% .844% .746% .597% .950% 1.363% .087%
</TABLE>
- --------
(1) The table is based on approximate assets of the Program on December 31,
1997, which total $2,971,000,000. The total includes $635,000,000 for the
Stable Asset Return Fund, $83,000,000 for the Intermediate Bond Fund,
$359,000,000 for the Balanced Fund, $113,000,000 for the Value Equity Fund,
$968,000,000 for the Growth Equity Fund, $154,000,000 for the Index Fund,
$332,000,000 for the Aggressive Equity Fund, $59,000,000 for the
International Equity Fund, $264,000,000 for the Self-Managed Account, and
$4,000,000 for the Equitable Real Estate Account. Of the above amounts
indicated for each Fund, an aggregate of $135,000,000 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, registration, consulting 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 1997 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 and the Equitable Real Estate
Account are subject to the program expense fee of .383%. 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. Per-Unit
calculations have been prepared using the monthly average number of units
outstanding during the period.
STABLE ASSET RETURN FUND:*
<TABLE>
<CAPTION>
FOR THE PERIOD
DECEMBER 5, 1991
YEAR ENDED (COMMENCEMENT
DECEMBER 31, OF OPERATIONS TO
---------------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993 1992 1991)
-------- -------- -------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL DATA
FOR EACH UNIT
OUTSTANDING FOR THE
PERIODS INDICATED:
Investment income....... $ .060 $ .058 $ .061 $ .043 $ .035 $ .042 $ .004
Expenses................ (.007) (.007) (.007) (.007) (.008) (.008) (.000)
-------- -------- -------- -------- -------- -------- --------
Net investment income... .053 .051 .054 .036 .027 .034 .004
Reinvestment of net
investment income...... (.053) (.051) (.054) (.036) (.027) (.034) (.004)
-------- -------- -------- -------- -------- -------- --------
Net asset value at
beginning and end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ========
Ratio of expenses to
average net assets..... .68% .68% .73% .73% .75% .79% --
Ratio of net investment
income to average net
assets................. 5.38% 5.15% 5.32% 3.55% 2.77% 3.45% --
Net assets at end of
period (in thousands).. $634,565 $634,763 $630,208 $491,979 $509,905 $589,882 $560,334
</TABLE>
INTERMEDIATE BOND FUND:
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED SEPTEMBER 5, 1995
DECEMBER 31, (COMMENCEMENT OF
----------------- OPERATIONS) TO
1997 1996 DECEMBER 31, 1995
-------- ------- -----------------
<S> <C> <C> <C> <C>
SELECTED FINANCIAL DATA FOR EACH UNIT
OUTSTANDING FOR THE PERIODS
INDICATED:
Investment income..................... $ .97 $ .67 $ .34
Expenses.............................. (.07) (.06) (.02)
-------- ------- -------
Net investment income................. .90 .61 .32
Net realized and unrealized gain
(loss) on investments................ .12 (.30) .26
-------- ------- -------
Net increase in unit value............ 1.02 .31 .58
Net asset value at beginning of peri-
od................................... 10.89 10.58 10.00
-------- ------- -------
Net asset value at end of period...... $ 11.91 $ 10.89 $ 10.58
======== ======= =======
Ratio of expenses to average net as-
sets................................. .57% .58% .69%**
Ratio of net investment income to av-
erage net assets..................... 7.93% 5.82% 9.17%**
Portfolio turnover***................. 14% 22% 2%+
Total return.......................... 9.37% 2.93% 5.80%+
Net assets at end of period (in thou-
sands)............................... $ 82,734 $49,612 $36,457
</TABLE>
- -------
* As of September 5, 1995, the Blended Rate Fund 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 the
Blended Rate Fund as of the effective date of the merger. 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 Units of the 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.
+ Not annualized.
9
<PAGE>
BALANCED FUND:*
<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 2, 1992
YEAR ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS) TO
------------------------------------------------ DECEMBER 31,
1997 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL DATA
FOR EACH UNIT
OUTSTANDING FOR THE
PERIODS INDICATED:
Investment income....... $ 1.42 $ 1.30 $ 1.19 $ 1.08 $ 1.00 $ .89
Expenses................ (.35) (.33) (.29) (.26) (.26) (.25)
-------- -------- -------- -------- -------- --------
Net investment income... 1.07 .97 .90 .82 .74 .64
Net realized and
unrealized gain (loss)
investments............ 6.59 3.78 6.07 (.82) .82 (1.56)
-------- -------- -------- -------- -------- --------
Net increase (decrease)
in unit value.......... 7.66 4.75 6.97 -- 1.56 (.92)
Net asset value at
beginning of period.... 36.76 32.01 25.04 25.04 23.48 24.40
-------- -------- -------- -------- -------- --------
Net asset value at end
of period.............. $ 44.42 $ 36.76 $32.01 $ 25.04 $ 25.04 $ 23.48
======== ======== ======== ======== ======== ========
Ratio of expenses to av-
erage net assets....... .84% .96% 1.00% 1.03% 1.07% 1.10%**
Ratio of net investment
income to average net
assets................. 2.62% 2.85% 3.08% 3.32% 3.05% 2.82%**
Portfolio turnover...... 122% 181% 155% 113% 153% 119%***
Total return............ 20.84% 14.84% 27.84% 0.00% 6.64% (3.77)%***
Average commissions
rate+.................. $ 0.0510 $ 0.0550 -- -- -- --
Net assets at end of
period................. $358,503 $295,401 $264,526 $198,945 $193,362 $167,242
</TABLE>
- --------
VALUE EQUITY FUND:
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED SEPTEMBER 5 , 1995
DECEMBER 31, (COMMENCEMENT OF
----------------- OPERATIONS) TO
1997 1996 DECEMBER 31, 1995
-------- ------- ------------------
<S> <C> <C> <C> <C>
SELECTED FINANCIAL DATA FOR EACH UNIT
OUTSTANDING FOR THE PERIODS
INDICATED:
Investment income.................... $ .47 $ .40 $ .13
Expenses............................. (.17) (.14) (.04)
-------- ------- -------
Net investment income................ .30 .26 .09
Net realized and unrealized gain on
investments......................... 4.08 2.54 .84
-------- ------- -------
Net increase in unit value........... 4.38 2.80 .93
Net asset value at beginning of
period.............................. 15.73 12.93 12.00
-------- ------- -------
Net asset value at end of period..... $ 20.11 $ 15.73 $12.93
======== ======= =======
Ratio of expenses to average net
assets.............................. .90% .99% 1.00%**
Ratio of net investment income to
average net assets.................. 1.61% 1.85% 2.12%**
Portfolio turnover................... 13% 17% 4%***
Total return......................... 27.84% 21.66% 7.75%***
Average commissions rate+............ $ 0.0603 $0.0729 --
Net assets at end of period (in
thousands).......................... $113,103 $48,131 $20,617
</TABLE>
- --------
* The Balanced Fund changed advisors on June 30, 1997.
** Ratios annualized
*** Not annualized.
+ Average commissions rate paid is presented for fiscal periods beginning on
or after September 1, 1995.
10
<PAGE>
GROWTH EQUITY FUND:*
<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 2, 1992
YEAR ENDED (COMMENCEMENT
DECEMBER 31, OF OPERATIONS) TO
------------------------------------------------ DECEMBER 31,
1997 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
SELECTED
FINANCIAL DATA
FOR EACH UNIT
OUTSTANDING FOR
THE PERIODS
INDICATED:
Investment in-
come........... $ 4.15 $ 5.07 $ 3.88 $ 3.48 $ 3.16 $ 3.20
Expenses........ (2.60) (2.22) (1.88) (1.60) (1.52) (1.45)
-------- -------- -------- -------- -------- --------
Net investment
income......... 1.55 2.85 2.00 1.88 1.64 1.75
Net realized and
unrealized gain
investments.... 80.01 46.14 57.72 .61 12.99 3.00
-------- -------- -------- -------- -------- --------
Net increase in
unit value..... 81.56 48.99 59.72 2.49 14.63 4.75
Net asset value
at beginning of
period......... 278.26 229.27 169.55 167.06 152.43 147.68
-------- -------- -------- -------- -------- --------
Net asset value
at end of
period......... $ 359.82 $ 278.26 $229.27 $ 169.55 $ 167.06 $ 152.43
======== ======== ======== ======== ======== ========
Ratio of
expenses to
average net
assets......... .80% .88% .92% .95% .96% 1.01%**
Ratio of net
investment
income to
average net
assets......... .48% 1.13% .98% 1.12% 1.03% 1.22%**
Portfolio turn-
over........... 88% 64% 60% 59% 82% 46%***
Total return.... 29.31% 21.37% 35.23% 1.49% 9.60% 3.22%***
Average commis-
sions rate+.... $ 0.0516 $ 0.0564 -- -- -- --
Net assets at
end of period
(in thousands). $967,854 $752,798 $637,834 $479,435 $471,398 $427,933
</TABLE>
- --------
INDEX EQUITY FUND:++
<TABLE>
<CAPTION>
FOR THE PERIOD
APRIL 30, 1994
YEAR ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS) TO
--------------------------- DECEMBER 31,
1997 1996 1995 1994
-------- ------- ------- ----------------
<S> <C> <C> <C> <C>
SELECTED FINANCIAL DATA FOR EACH
UNIT
OUTSTANDING FOR THE PERIODS
INDICATED:
Investment income............... $ .08 $ .28 $ .02 $ --
Expenses........................ (.12) (.11) (.08) (.04)
-------- ------- ------- -------
Net investment income (loss).... (.04) .17 (.06) (.04)
Net realized and unrealized gain
investments.................... 5.23 2.72 3.68 .39
-------- ------- ------- -------
Net increase in unit value...... 5.19 2.89 3.62 .35
Net asset value at beginning of
period......................... 16.86 13.97 10.35 10.00
-------- ------- ------- -------
Net asset value at end of peri-
od............................. $ 22.05 $ 16.86 $ 13.97 $ 10.35
======== ======= ======= =======
Ratio of expenses to average net
assets......................... .62 % .69% .68 % .94%**
Ratio of net investment income
to average net assets.......... (.22)% 1.15% (.52)% .94%**
Portfolio turnover+++........... 11 % 17% 132 % 54%***
Total return.................... 30.78 % 20.68% 34.98 % 3.50%***
Net assets at end of period (in
thousands)..................... $153,709 $82,881 $48,020 $11,662
</TABLE>
- --------
*The Growth Equity Fund changed advisors in June 1997.
**Ratios annualized.
***Not annualized.
+Average commissions rate paid is presented for fiscal periods beginning on or
after September 1, 1995.
++ Commencing September 5, 1995, the Index Equity 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).
+++ 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>
FOR THE PERIOD
JANUARY 2, 1992
YEAR ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS)
--------------------------------------------------- TO DECEMBER 31,
1997 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
SELECTED
FINANCIAL DATA
FOR EACH UNIT
OUTSTANDING FOR
THE PERIODS
INDICATED:
Investment
income......... $ .39 $ .36 $ .32 $ .28 $ .25 $ .30
Expenses........ (.45) (.39) (.32) (.28) (.28) (.26)
-------- -------- -------- -------- -------- --------
Net investment
income (loss).. (.06) (.03) -- -- (.03) .04
Net realized and
unrealized gain
(loss)
investments.... 7.64 7.47 7.81 (1.00) 3.60 1.43
-------- -------- -------- -------- -------- --------
Net increase
(decrease) in
unit value..... 7.58 7.44 7.81 (1.00) 3.57 1.47
Net asset value
at beginning of
period......... 41.01 33.57 25.76 26.76 23.19 21.72
-------- -------- -------- -------- -------- --------
Net asset value
at end of
period......... $ 48.59 $ 41.01 $ 33.57 $ 25.76 $ 26.76 $ 23.19
======== ======== ======== ======== ======== ========
Ratio of ex-
penses to aver-
age net assets. .98 % 1.04% 1.10% 1.10% 1.15% 1.25%*
Ratio of net
investment
income to
average net
assets......... (.11)% (.06)% .01% .02 % (.12)% .17%*
Portfolio
turnover....... 36 % 48 % 63% 48 % 42 % 43%**
Total return.... 18.48 % 22.16 % 30.32% (3.74)% 15.39 % 6.77%**
Average
commissions
rate***........ $ 0.0487 $ 0.0502 -- -- -- --
Net assets at
end of period
(in thousands). $331,940 $275,915 $214,539 $163,678 $153,465 $116,426
</TABLE>
INTERNATIONAL EQUITY FUND:
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED SEPTEMBER 5, 1995
DECEMBER 31, (COMMENCEMENT
---------------- OF OPERATIONS) TO
1997 1996 DECEMBER 31, 1995
------- ------- -----------------
<S> <C> <C> <C>
SELECTED FINANCIAL DATA FOR EACH UNIT
OUTSTANDING FOR THE PERIODS
INDICATED:
Investment income..................... $ 1.12 $ .70 $ .49
Expenses.............................. (.10) (.10) (.03)
------- ------- -------
Net investment income................. 1.02 .60 .46
Net realized and unrealized gain
(loss) on investments................ (.61) 1.83 (.09)
------- ------- -------
Net increase.......................... .41 2.43 .37
Net asset value at beginning of
period............................... 17.80 15.37 15.00
------- ------- -------
Net asset value at end of period...... $ 18.21 $ 17.80 $ 15.37
======= ======= =======
Ratio of expenses to average net
assets............................... .54% .59% .57%*
Ratio of net investment income to
average net assets................... 5.41% 3.58% 9.2%*
Portfolio turnover+................... 101% 73% 4%**
Total return.......................... 2.30% 15.81% 2.47%**
Net assets at end of period (in
thousands)........................... $58,997 $33,268 $10,849
</TABLE>
- --------
* Ratios annualized.
** Not annualized.
*** Average commissions rate paid is presented for fiscal periods beginning on
or after September 1, 1995.
+ 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>
FOR THE PERIOD
YEAR ENDED SEPTEMBER 5, 1995
DECEMBER 31, (COMMENCEMENT OF
----------------- OPERATIONS)
1997 1996 TO DECEMBER 31, 1995
------- ------- --------------------
<S> <C> <C> <C>
SELECTED FINANCIAL DATA FOR EACH UNIT
OUTSTANDING FOR THE PERIODS
INDICATED
Investment income.................... $ -- $ -- $ .001
Expenses............................. (.01) (.01) (.003)
------- ------- ------
Net investment loss.................. (.01) (.01) (.002)
Net realized and unrealized gain on
investments......................... 1.52 1.00 .472
------- ------- ------
Net increase......................... 1.51 .99 .47
Net asset value at beginning of peri-
od.................................. 11.46 10.47 10.00
------- ------- ------
Net asset value at end of period..... $ 12.97 $ 11.46 $10.47
======= ======= ======
Ratio of expenses to average net as-
sets................................ .09 % .10 % .09 %*
Ratio of net investment loss to aver-
age net assets...................... (.09)% (.10)% (.06)%*
Portfolio turnover**................. 33 % 34 % 3 %***
Total return......................... 13.18 % 9.46 % 4.7 %***
Net assets at end of period (in thou-
sands).............................. $17,228 $11,201 $5,372
</TABLE>
STRUCTURED PORTFOLIO SERVICE--MODERATE PORTFOLIO
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED SEPTEMBER 5, 1995
DECEMBER 31, (COMMENCEMENT OF
----------------- OPERATIONS)
1997 1996 TO DECEMBER 31, 1995
------- ------- --------------------
<S> <C> <C> <C>
SELECTED FINANCIAL DATA FOR EACH UNIT
OUTSTANDING FOR THE PERIODS
INDICATED
Investment income.................... $ -- $ -- $ .001
Expenses............................. (.01) (.01) (.003)
------- ------- -------
Net investment (loss)................ (.01) (.01) (.002)
Net realized and unrealized gain on
investments......................... 2.01 1.40 .542
------- ------- -------
Net increase......................... 2.00 1.39 .54
Net asset value at beginning of peri-
od.................................. 11.93 10.54 10.00
------- ------- -------
Net asset value at end of period..... $ 13.93 $ 11.93 $ 10.54
======= ======= =======
Ratio of expenses to average net as-
sets................................ .09 % .10 % .09 %*
Ratio of net investment loss to aver-
age net assets...................... (.09)% (.10)% (.06)%*
Portfolio turnover**................. 18 % 27 % 4 %***
Total return......................... 16.76 % 13.19 % 5.4 %***
Net assets at end of period (in thou-
sands).............................. $66,095 $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.
***Not annualized.
13
<PAGE>
STRUCTURED PORTFOLIO SERVICE--AGGRESSIVE PORTFOLIO
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED SEPTEMBER 5, 1995
DECEMBER 31, (COMMENCEMENT OF
----------------- OPERATIONS)
1997 1996 TO DECEMBER 31, 1995
------- ------- --------------------
<S> <C> <C> <C>
SELECTED FINANCIAL DATA FOR EACH UNIT
OUTSTANDING FOR THE PERIODS
INDICATED
Investment income.................... $ -- $ -- $ .001
Expenses............................. (.01) (.01) (.003)
------- ------- ------
Net investment loss.................. (.01) (.01) (.002)
Net realized and unrealized gain on
investments......................... 2.51 1.85 .572
------- ------- ------
Net increase......................... 2.50 1.84 .57
Net asset value at beginning of peri-
od.................................. 12.41 10.57 10.00
------- ------- ------
Net asset value at end of period..... $ 14.91 $ 12.41 $10.57
======= ======= ======
Ratio of expenses to average net as-
sets................................ .09 % .10 % .09 %*
Ratio of net investment loss to aver-
age net assets...................... (.09)% (.10)% (.06)%*
Portfolio turnover**................. 18 % 28 % 3 %***
Total return......................... 20.15 % 17.41 % 5.7 %***
Net assets at end of period (in thou-
sands).............................. $51,868 $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.
*** Not annualized.
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. 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 $5,000 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 $5,000 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 two-thirds of such
portfolio to be actively managed and one-third 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 in any publicly traded debt and equity securities and
shares of numerous mutual funds through a Self-Managed Account.
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" 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, 1997, approximately 44% of the Fund's assets
were invested in Short-Term Investment Products and 56% of the Fund's assets
were invested in investment contracts. As of December 31, 1997, the average
weighted maturity of the Stable Asset Return Fund was 1.3 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
18
<PAGE>
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
19
<PAGE>
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 two-thirds) 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,
1997, U.S. Government Obligations and corporate debt securities represented 72%
and 28%, 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
20
<PAGE>
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."
21
<PAGE>
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 was 14%, 22% and 2% for 1997, 1996 and the period from
September 5, 1995 to December 31, 1995, respectively. 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 two-
thirds of the
22
<PAGE>
funds 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,
1997, $56 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 one-
third 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, 1997, $27 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 two-
thirds to PIMCO and one-third to BGI. Income and 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."
23
<PAGE>
BALANCED FUND
INVESTMENT OBJECTIVE. The investment objective of the Balanced Fund is to
achieve both current income and long-term 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."
Effective June 30, 1997, State Street began to direct the allocation of the
Fund's assets between debt and equity securities consistent with the Fund's
strategy and began to obtain investment advice from separate advisors for each
of the debt and equity portions of the Fund. Before then, State Street
allocated a portion of the Fund's assets to each of its Investment Advisors,
who then advised State Street with respect to both debt and equity securities
and with respect to the allocation of the Fund's assets between debt and equity
securities. Effective June 30, 1997, State Street directed that approximately
40% of the Balanced Fund's assets be allocated to debt securities (with respect
to which State Street will receive advice from one Investment Advisor) and
approximately 60% be allocated to equity securities (with respect to which
State Street will receive advice from another Investment Advisor).
Contributions to and withdrawls from the Fund are allocated so that the
percentage of debt and equity securities will be as close to approximately 40%
and 60%, respectively, as may be practical, taking into account the level of
contributions and withdrawals and the Fund's percentage of debt and equity
securities at the time of each contribution or withdrawal. State Street may
change the allocation within the Fund, as well as the allocation of the
contributions to and withdrawals from the Fund from
24
<PAGE>
time to time. Income and gains attributable to the assets allocated to each
Investment Advisor will remain allocated to such Investment Advisor unless
reallocated by State Street.
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 122%, 181%, and 155% for 1997, 1996, and 1995, respectively.
INVESTMENT ADVISORS. State Street has retained Capital Guardian Trust Company
("Capital Guardian") 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. Capital Guardian will
serve as Investment Advisor with respect to investments in equity securities
and Miller, Anderson & Sherrerd will serve as Investment Advisor with respect
to investments in debt securities. 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.
25
<PAGE>
The Value Equity Fund may invest 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.
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 13%, 17% and 4% for 1997, 1996 and the period September 5,
1995 to December 31, 1995, respectively. 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. A portion of the
Growth Equity Fund (initially 25%) will be invested to replicate the Russell
1000 Growth Index, which is composed of those Russell 1000 securities with a
greater than average growth orientation. The remainder of the Growth Equity
Fund will be actively managed. 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. RUSSELL DOES NOT
SPONSOR THE GROWTH EQUITY FUND, NOR IS IT AFFILIATED IN ANY WAY WITH THE
GROWTH EQUITY FUND OR STATE STREET. THERE CAN BE NO ASSURANCE THAT THE GROWTH
EQUITY FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE.
26
<PAGE>
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 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 88%, 64% and 60% in 1997, 1996 and 1995 respectively.
27
<PAGE>
INVESTMENT ADVISORS. State Street has retained Capital Guardian, Lincoln
Capital Management Company ("Lincoln Capital"), Dresdner RCM Global Investors
LLC ("Dresdner RCM") and Bankers Trust Company ("Bankers Trust") 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
25% to each of the Fund's Investment Advisors. Bankers Trust will serve as
advisor to the index portion of the Fund. Income and 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."
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, 1997, the largest company had a market capitalization of
approximately $240 billion and the smallest company had a market capitalization
of approximately $20 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
28
<PAGE>
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 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 11%, 17% and 132% in 1997, 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 Bank and Trust Company
S&P 500 Index Fund with Futures and the State Street Bank and Trust Company
Russell Special Small Company Common Trust Fund collective trust funds
maintained by State Street.
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
29
<PAGE>
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.
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
30
<PAGE>
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 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 36%, 48% and 63% in 1997, 1996 and 1995 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
31
<PAGE>
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 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."
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, capital gains, 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.
Historically, returns on foreign investments have not moved together with U.S.
stocks over the long term. However, foreign stocks may not always move counter
to U.S. stocks in the short run.
STRATEGY. The International Equity Fund intends to diversify investments
broadly among developed 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
32
<PAGE>
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 psychology. See "Index Equity Fund--
Certain Risk Factors." International investing also involves additional risks,
such as currency risk, that can increase the potential for the losses in the
Fund. Normally, these risks are significantly greater 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. The Fund's total return will be affected by currency fluctuations. The
exact amount of the impact depends on the currencies represented in the Fund's
portfolio and how each one appreciates or depreciates in relation to the U.S.
dollar. Exchange rate movements can be large, unpredictable 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. 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. This
makes investment in such markets significantly riskier than investment in other
markets.
Some economies of the countries in which investments may be made are less
developed, overly reliant on particular industries and more vulnerable to the
ebb and flow of international trade, trade barriers and other protectionist or
retaliatory measures. Some countries, particularly in Latin America and other
emerging markets have legacies of hyperinflation and the risk of future
hyperinflation and currency devaluations versus the dollar (which adversely
affect returns to U.S. investors) and may be overly dependent on foreign
capital (a risk that is exacerbated by large currency movements). 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.
33
<PAGE>
Certain countries in which investments may be made will have histories of
instability and upheaval 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 capital controls,
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 a significant
degree in the countries' 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.
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 found in Asian, 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
34
<PAGE>
portfolio turnover rate may be substantially less or substantially more, than
50%. Portfolio turnover was 101%, 73% and 4% for 1997, 1996 and the period from
September 5, 1995 to December 31, 1995, respectively. 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 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, 1997, $59 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, 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;
35
<PAGE>
. 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;
. 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) 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 and statement of
additional information.
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)
36
<PAGE>
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. For additional information relating to 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 and the indexed portion of the
Growth Equity 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
37
<PAGE>
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 and statements
of additional information 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 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. Hybrid Instruments can have volatile prices and limited
liquidity, and their use by the T. Rowe International Fund may not be
successful. In addition, investors should not view percentage investment
restrictions as an accurate gauge of the potential risk of such investments.
For example, in a given period, a 5% investment in Hybrid Investments could
have significantly more of an impact on the T. Rowe International Fund's share
price than its weighting in the portfolio.
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.
38
<PAGE>
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 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
39
<PAGE>
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:
BANKERS TRUST COMPANY. Advisor to the index portion of the Growth Equity
Fund, Bankers Trust began business in 1903 as a trust company and became a
commercial bank in 1917, and it is now one of the largest commercial banks in
the United States and has over 15,000 employees in more than 50 countries. Its
holding company, Bankers Trust New York Corporation, is headquartered in One
Bankers Trust Plaza, New York, NY 10006. The bank's client base includes major
corporations, financial institutions, governments and high net worth
individuals. The U.S. Investment Management Group ("USIM") is the firm's
primary provider of asset management services. Since the 1930's, USIM and its
global affiliates, including Bankers Trust Australia Limited and Japan Bankers
Trust, have built one of the world's largest asset management firms. As of
December 31, 1997, Bankers Trust managed over $318 billion in assets for
institutional and individual clients worldwide (of which approximately $282 was
managed by USIM).
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 December 31, 1995, Wells Fargo Nikko Investment
Advisors became a part of BGI, an indirect subsidiary of Barclays PLC, one 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 $504 billion.
CAPITAL GUARDIAN TRUST COMPANY. Advisor to the equity portion of the Balanced
Fund, and 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, 1997, it had approximately $67 billion in assets under its
management.
DRESDNER RCM GLOBAL INVESTORS LLC. Advisor to the Growth Equity Fund,
Dresdner RCM is the institutional investment management arm of the Dresdner
Bank Group outside of Germany. Dresdner RCM established a global identity based
on the integration of RCM Capital Management based in San Francisco, Thornton
and Co. based in London and Hong Kong, the asset management business of
Kleinwort Benson Management based in London and Tokyo, and BIP Gestion in
Paris. The firm has its global headquarters at Suite 2900, Four Embarcadero
Center, San Francisco, CA 94111, with investment management, client servicing,
and operations in the world's primary financial centers. As of December 31,
1997, Dresdner RCM had approximately $60 billion of assets under management.
40
<PAGE>
LINCOLN CAPITAL MANAGEMENT COMPANY. Advisor to the Growth Equity 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, 1997, Lincoln Capital had approximately $48 billion of assets under
management.
MILLER, ANDERSON & SHERRERD. Advisor to the debt portion of 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, 1997,
Miller, Anderson & Sherrerd had approximately $59.4 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 $118 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 Investment Management Company, a California
corporation and an indirect wholly owned subsidiary of Pacific Life Insurance
Company, and PIMCO Partners, LLC, a limited liability company controlled by the
PIMCO Managing Directors. PIMCO's address is 840 Newport Center Drive, Suite
360, Newport Beach, California 92660.
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,
1997, Price-Fleming managed more than $30 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, 1997, the firm had
approximately $70 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 161 employees currently sharing in the profits, the firm has
a staff of 1,116, including 402 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, 1997, 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
41
<PAGE>
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 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, as amended,
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
42
<PAGE>
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>
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.
43
<PAGE>
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. Assets invested
through a Self Managed Account are subject to the program expense fee. See
"Deductions and Fees--Program Expense Fee." 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.
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
44
<PAGE>
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.
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.
45
<PAGE>
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 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
46
<PAGE>
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 (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
47
<PAGE>
. 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
. 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.
48
<PAGE>
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, purchases on margin
and short sales are prohibited.
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
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.
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.
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 the
performance by Equitable Life and ERE Yarmouth, Inc. of their 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
49
<PAGE>
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 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
50
<PAGE>
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.
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
51
<PAGE>
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.
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.
State Street's principal offices are located at 225 Franklin Street, Boston,
Massachusetts 02110. State Street is a wholly-owned subsidiary of State Street
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, 1997, State Street and its affiliates had a total risk-based capital ratio
of 13.8%, which is far in excess of applicable regulatory requirements. As of
December 31, 1997, State Street together with its affiliates had over $3.9
trillion of assets in trust or under custody and had over $390 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 47,
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.
52
<PAGE>
From January 1994 to June 1995, Ms. Antin, age 38, 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 40, 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.
YEAR 2000 PREPARATION
Many computer systems and software products worldwide and throughout all
industries will not function properly as the year 2000 approaches unless
changed due to a once-common programming standard that represents years using
two-digits. This is the "Year 2000" problem that has received considerable
media coverage. State Street implemented a comprehensive program in 1996 that
addresses Year 2000 compliance and is supported by a corporate-wide structure
of compliance teams, a central program management office and a governance and
oversight structure.
As part of this program, State Street has identified those systems and
applications that require modification, redevelopment or replacement. The
program has established appropriate testing procedures and a schedule for
completion of this work. State Street's Year 2000 program also establishes
standards and deadlines for its vendors and other third-party providers, and
procedures for determining reasonable alternatives to those third-party
providers, including subcustodians, who do not meet compliance standards.
State Street's goal is to be Year 2000 compliant by December 31, 1998 with
respect to its internal systems. Testing and integration of third-party
providers' systems will continue into 1999. As of year-end 1997, the program
is well under way.
State Street is fully committed to achieving its compliance goal. This
program requires hiring staff and consultants, purchasing equipment and
incurring other expenses. State Street Corporation expects to absorb these
expenses within normal spending levels.
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.
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
53
<PAGE>
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. All contributions should be remitted
from the Employer's business account. 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 may not be
made directly to the Self-Managed Account.
ALLOCATION INSTRUCTIONS
Investors must provide instructions relating to contributions and assets
transferred from the Equitable Real Estate Account either via the VRU or by
completing the appropriate allocation
54
<PAGE>
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 a transfer from an Investment Option is required for any
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.
55
<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, 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 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>
56
<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. 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
</TABLE>
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 expense 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.
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 .383%. 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.
57
<PAGE>
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>
<TABLE>
<CAPTION>
VALUE OF ASSETS IN
GROWTH EQUITY 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 $1,000 million............................................... .15
<CAPTION>
VALUE OF ASSETS IN
BALANCED FUND ALLOCATED TO
MILLER, ANDERSON & SHERRERD RATE
--------------------------- -----
<S> <C>
First $25 million................................................. .50 %
Next $50 million.................................................. .25
Next $775 million................................................. .15
Over $850 million................................................. .125
</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 .85%. 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 expense fees and trustee, management and administrative fees
are paid during the time that the Funds are invested in such registered
investment companies. Price-Fleming has separately agreed that in return for
administrative services provided by State Street with respect to the
International Equity Fund, Price-Fleming shall pay State Street a .10%
administrative fee which is credited to the International Equity Fund.
58
<PAGE>
<TABLE>
<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 BANKERS TRUST RATE
-------------------------- -----
<S> <C>
First $100 million................................................. .075 %
Next $100 million.................................................. .0375
Over $200 million.................................................. .010
<CAPTION>
VALUE OF ASSETS IN
GROWTH EQUITY FUND
ALLOCATED TO DRESDNER RCM 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
<CAPTION>
VALUE OF ASSETS IN BALANCED FUND,
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>
--------
* Investment Advisor fees payable to Capital Guardian are subject to a fee
reduction equal to 5% of the aggregate Investment Advisor fee payable to
Capital Guardian.
** See footnote on page 58.
59
<PAGE>
ORGANIZATIONAL EXPENSES
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.
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.
60
<PAGE>
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 $1,200 will be deducted from the
assets of each Plan with fewer than 25 Participants under the ABA Defined
Benefit Plan. 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.
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, 1997, which total $2,971,000,000. The
total includes $635,000,000 for the Stable Asset Return Fund, $83,000,000 for
the Intermediate Bond Fund, $359,000,000 for the Balanced Fund, $113,000,000
for the Value Equity Fund, $968,000,000 for the Growth Equity Fund,
$154,000,000 for the Index Fund, $332,000,000 for the Aggressive Equity Fund,
$59,000,000 for the International Equity Fund, $264,000,000 for the Self-
Managed Account, and $4,000,000 for the Equitable Real Estate Account. Of the
above amounts indicated for each Fund, an aggregate of approximately
$135,000,000 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
$12,800,000 on an annual basis (exclusive of certain non-recurring fees and the
Structured Portfolio Service fee). ABRA would receive fees of $1,447,000 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 --
$1,467,000 (after an applicable fee discount of $77,000); Bankers Trust --
$116,000; Lincoln Capital -- $763,000, Miller, Anderson & Sherrerd -- $331,000;
RCM Capital -- $790,000; Sit Associates -- $1,070,000; and Sanford Bernstein --
$378,000. 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 -- $240,800; Price-Fleming -- $502,000
(before credit of a $59,000 administrative fee paid to the International Fund
by Price-Fleming); and BGI -- $62,000.
61
<PAGE>
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
62
<PAGE>
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.
63
<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 1998 is $10,000.
64
<PAGE>
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 1998, 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 1998 or was an owner of 5% or more of the
practice in 1997 or (b) anyone with earnings of more than $80,000 from the
practice in 1997 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
65
<PAGE>
1996 was $150,000 and for 1997 and 1998 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 $65,000, (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 1998, 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.
66
<PAGE>
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 1998, each
Participant's maximum annual benefit payable at the Participant's social
security retirement age is limited to the lesser of $130,000 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 1998 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 $130,000 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.
67
<PAGE>
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.
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 $5,000 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 $5,000, 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.
68
<PAGE>
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 $5,000, 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 $5,000 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.
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
$5,000, 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's vested benefit is $5,000 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 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.
69
<PAGE>
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 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.
70
<PAGE>
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
$5,001. 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.
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
71
<PAGE>
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 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." 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,
72
<PAGE>
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
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 Benefit Request Form 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.
73
<PAGE>
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 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.
74
<PAGE>
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 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 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 process 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.
75
<PAGE>
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 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.
76
<PAGE>
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 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.
77
<PAGE>
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 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." If the Employer has so provided, a plan may also offer the Self-Managed
Account as an additional "non-core" investment option. 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.
78
<PAGE>
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."
79
<PAGE>
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
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.
80
<PAGE>
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.
A Participant's deferrals under a 401(k) plan may not exceed $7,000 as
adjusted for inflation ($10,000 for 1998) when combined with his elective
contributions to simplified pensions (SEPs) tax deferred (section 403(b))
annuities and SIMPLE 401(k) plans 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.
81
<PAGE>
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, but prior to
the year a participant retires, are 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% 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, (d)
distributions used to pay deductible medical expenses, (e) distributions to an
alternative payee pursuant to a qualified domestic relations order, (f)
distributions to unemployed individuals for health insurance premiums, (g)
distributions for qualified higher education expenses, and (h) distributions
for certain first time home purchases.
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 1998 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
82
<PAGE>
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 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
83
<PAGE>
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.
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.
84
<PAGE>
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.
BANKERS TRUST--Bankers Trust Company, an Investment Advisor to the Growth
Equity Fund.
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--The Intermediate Bond Fund, 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 the New York Stock Exchange is open for trading.
CAPITAL GUARDIAN--Capital Guardian Trust Company, an Investment Advisor to the
Balanced Fund, 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.
COMMISSION--The U.S. Securities and Exchange Commission.
85
<PAGE>
DRESDNER RCM--Dresdner RCM Global Investors LLC, an Investment Advisor to the
Growth Equity Fund.
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.
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, as amended.
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.
86
<PAGE>
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 Growth Equity 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.
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, as amended.
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.
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.
87
<PAGE>
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.
88
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustee and Unitholders of the
American 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, 1997, 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, 1997 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, 1998
F-1
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
Report of Independent Accountants....................................... F-1
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-32
Statement of Operations............................................... F-33
Statement of Changes in Net Assets.................................... F-34
Selected Per-Unit Data and Ratios..................................... F-35
Schedule of Investments............................................... F-36
STABLE ASSET RETURN 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
Schedule of Investments............................................... F-59
INDEX EQUITY FUND
Statement of Assets and Liabilities................................... F-61
Statement of Operations............................................... F-62
Statement of Changes in Net Assets.................................... F-63
Selected Per-Unit Data and Ratios..................................... F-64
INTERMEDIATE BOND FUND
Statement of Assets and Liabilities................................... F-65
Statement of Operations............................................... F-66
Statement of Changes in Net Assets.................................... F-67
Selected Per-Unit Data and Ratios..................................... F-68
INTERNATIONAL EQUITY FUND
Statement of Assets and Liabilities................................... F-69
Statement of Operations............................................... F-70
Statement of Changes in Net Assets.................................... F-71
Selected Per-Unit Data and Ratios..................................... F-72
</TABLE>
F-2
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
VALUE EQUITY FUND
Statement of Assets and Liabilities................................... F-73
Statement of Operations............................................... F-74
Statement of Changes in Net Assets.................................... F-75
Selected Per-Unit Data and Ratios..................................... F-76
Schedule of Investments............................................... F-77
STRUCTURED PORTFOLIO SERVICE
(CONSERVATIVE, MODERATE, AGGRESSIVE)
Statement of Assets and Liabilities................................... F-86
Statement of Operations............................................... F-87
Statement of Changes in Net Assets.................................... F-88
Selected Per-Unit Data and Ratios..................................... F-90
Notes to Financial Statements......................................... F-93
</TABLE>
F-3
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
AGGRESSIVE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $252,133,577)......................... $331,261,601
Cash.............................................................. 1,245
Receivable for investments sold................................... 2,111,984
Receivable for fund units sold.................................... 783,589
Dividends and interest receivable................................. 240,858
Unamortized organizational costs.................................. 53,124
------------
Total Assets.................................................... 334,452,401
------------
LIABILITIES
Payable for investments purchased................................. 2,035,414
Investment advisory fee payable................................... 337,637
State Street Bank and Trust Co.--program fee payable.............. 92,394
Trustee, management and administration fees payable............... 28,047
American Bar Retirement Association--program fee payable.......... 14,017
Other accruals.................................................... 5,304
------------
Total Liabilities............................................... 2,512,813
------------
NET ASSETS (equivalent to $48.59 per unit based on 6,831,480 units
outstanding)..................................................... $331,939,588
============
</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, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign tax expense of $83).................... $ 1,577,956
Interest......................................................... 1,118,012
-----------
Total investment income........................................ 2,695,968
-----------
EXPENSES
Investment advisory fee.......................................... 1,362,018
State Street Bank and Trust Co.--program fee..................... 1,077,330
Trustee, management and administration fees...................... 225,470
American Bar Retirement Association--program fee................. 157,383
Amortization of organization costs............................... 77,792
Reports to unitholders........................................... 48,900
Legal and audit fees............................................. 41,455
Registration fee................................................. 46,361
Other expenses................................................... 12,768
-----------
Total expenses................................................. 3,049,477
-----------
Net investment loss................................................ (353,509)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain................................................ 39,709,808
Change in net unrealized appreciation............................ 12,757,570
-----------
Net realized and unrealized gain on investments................ 52,467,378
-----------
Net increase in net assets resulting from operations............... $52,113,869
===========
</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,
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment loss.............................. $ (353,509) $ (160,464)
Net realized gain on investments................. 39,709,808 24,233,418
Net change in unrealized appreciation on invest-
ments........................................... 12,757,570 24,880,200
------------ ------------
Net increase in net assets resulting from opera-
tions........................................... 52,113,869 48,953,154
------------ ------------
FROM UNITHOLDER TRANSACTIONS
Proceeds from units issued....................... 41,120,394 35,023,922
Cost of units redeemed........................... (37,210,143) (22,600,318)
------------ ------------
Net increase in net assets resulting from
unitholder transactions......................... 3,910,251 12,423,604
------------ ------------
Net increase in net assets..................... 56,024,120 61,376,758
NET ASSETS
Beginning of year................................ 275,915,468 214,538,710
------------ ------------
End of year...................................... $331,939,588 $275,915,468
============ ============
NUMBER OF UNITS
Outstanding--beginning of year................... 6,727,703 6,390,559
Sold........................................... 920,581 937,668
Redeemed....................................... (816,804) (600,524)
------------ ------------
Outstanding--end of year......................... 6,831,480 6,727,703
============ ============
</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 year)*
<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 2, 1992
FOR THE YEAR ENDED (COMMENCEMENT
DECEMBER 31, OF OPERATIONS) TO
--------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Investment income....... $ .39 $ .36 $ .32 $ .28 $ .25 $ .30
Expenses................ (.45) (.39) (.32) (.28) (.28) (.26)
-------- -------- -------- -------- -------- --------
Net investment loss..... (.06) (.03) -- -- (.03) .04
Net realized and
unrealized gain (loss)
on investments......... 7.64 7.47 7.81 (1.00) 3.60 1.43
-------- -------- -------- -------- -------- --------
Net increase (decrease)
in unit value.......... 7.58 7.44 7.81 (1.00) 3.57 1.47
Net asset value at be-
ginning of year........ 41.01 33.57 25.76 26.76 23.19 21.72
-------- -------- -------- -------- -------- --------
Net asset value at end
of year................ $ 48.59 $ 41.01 $ 33.57 $ 25.76 $ 26.76 $ 23.19
======== ======== ======== ======== ======== ========
Ratio of expenses to
average net assets..... .98 % 1.04 % 1.10% 1.10 % 1.15 % 1.25%****
Ratio of net investment
income (loss) to
average net assets..... (.11)% (.06)% .01% .02 % (.12)% .17%****
Portfolio turnover...... 36 % 48 % 63% 48 % 42 % 43%***
Total return............ 18.48 % 22.16 % 30.32% (3.74)% 15.39 % 6.77%***
Average commissions
rate**................. $ 0.0487 $ 0.0502 -- -- -- --
Net assets at end of
year
(in thousands)......... $331,940 $275,915 $214,539 $163,678 $153,465 $116,426
</TABLE>
- --------
* Calculations prepared using the monthly average number of units
outstanding during the year.
** Average commissions rate paid is presented for fiscal periods beginning on
or after September 1, 1995.
*** Not annualized.
**** Ratios annualized.
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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCKS (92.3%)
BASIC INDUSTRIES (2.3%)
CHEMICALS
OM Group Inc. .......................................... 42,000 $ 1,538,250
R.P.M. Inc. Ohio........................................ 93,593 1,427,293
------------
2,965,543
------------
PAPER
Caraustar Industries Inc. .............................. 45,000 1,541,250
Pentair Inc. ........................................... 52,800 1,897,500
------------
3,438,750
------------
PLASTICS
Advanced Energy Industries Inc.*........................ 79,500 1,187,531
------------
TOTAL BASIC INDUSTRIES.................................. 7,591,824
------------
CAPITAL GOODS (6.1%)
BUILDING CONSTRUCTION
McDermott J. Ray S A*................................... 57,500 2,472,500
------------
ELECTRICAL EQUIPMENT
ASM Lithography Holding N V*............................ 46,000 3,105,000
Watsco Inc. ............................................ 40,000 987,500
------------
4,092,500
------------
INDUSTRIAL MACHINERY
Alyn Corp.*............................................. 45,000 472,500
Crane Company........................................... 77,000 3,339,875
Integrated Process Equipment Corp.*..................... 45,000 708,750
Kennametal Inc. ........................................ 52,000 2,694,250
NN Ball & Roller Inc. .................................. 112,700 1,000,213
U.S. Filter Corp.*...................................... 71,000 2,125,563
------------
10,341,151
------------
MISCELLANEOUS
Silicon Vy Group Inc. .................................. 75,000 1,696,875
------------
POLLUTION CONTROL
Waste Mgmt Int'l. PLC ADR* **........................... 264,000 1,650,000
------------
TOTAL CAPITAL GOODS..................................... 20,253,026
------------
</TABLE>
F-8
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
AGGRESSIVE EQUITY FUND
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
CONSUMER BASICS (8.2%)
DRUGS AND HEALTHCARE
Biogen Inc.*............................................ 85,500 $ 3,110,063
Cardiac Pathways Corp.*................................. 8,000 56,000
Depuy Inc. ............................................. 70,000 2,012,500
Dura Pharmaceuticals Inc.*.............................. 71,300 3,270,888
Elan PLC ADR* **........................................ 82,000 4,197,375
Gilead Sciences Inc.*................................... 56,500 2,161,125
Healthsouth Corp.*...................................... 64,000 1,776,000
Immune Response Corp.Del*............................... 137,700 1,531,913
Millennium Pharmaceuticals*............................. 26,600 505,400
Oxford Health Plans Inc.*............................... 34,500 536,906
Phycor Inc.*............................................ 25,500 688,500
Physio Control Int'l. Corp.*............................ 54,700 868,363
Vertex Pharmaceuticals Inc.*............................ 43,500 1,435,500
------------
22,150,533
------------
FOOD AND BEVERAGE
Ben & Jerry's Homemade Inc.*............................ 50,000 775,000
Delmonte Company*....................................... 121,600 1,778,400
Thorn Apple Vy Inc. .................................... 60,000 870,000
------------
3,423,400
------------
HOUSEHOLD PRODUCTS
USA Detergents Inc.*.................................... 58,000 471,250
------------
TOBACCO
Swisher Int'l. Group Inc.*.............................. 45,300 770,100
------------
MISCELLANEOUS
Urocor Inc.*............................................ 79,000 488,813
------------
TOTAL CONSUMER BASICS................................... 27,304,096
------------
CONSUMER DURABLE GOODS (3.1%)
AUTO PARTS
Standard Products Company............................... 34,400 881,500
Walbro Corp. ........................................... 42,000 564,375
------------
1,445,875
------------
AUTOMOBILES
Circuit City Stores Inc. ............................... 55,300 497,700
Harley Davidson Inc. ................................... 121,000 3,312,375
United Auto Group Inc.*................................. 18,000 326,250
------------
4,136,325
------------
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
HOUSEHOLD APPLIANCES AND FURNISHINGS
Harman Int'l. Industries Inc. New....................... 20,000 $ 848,750
Libbey Inc. ............................................ 56,000 2,121,000
Williams Sonoma Inc.*................................... 9,000 376,875
------------
3,346,625
------------
TIRES AND RUBBER
Bandag Inc. ............................................ 28,000 1,496,250
------------
TOTAL CONSUMER DURABLE GOODS............................ 10,425,075
------------
CONSUMER NON-DURABLE GOODS (4.0%)
APPAREL AND TEXTILES
Jones Apparel Group Inc.*............................... 23,200 997,600
------------
COSMETICS AND TOILETRIES
Lauder Estee Companies Inc. ............................ 36,000 1,851,750
Paragon Trade Brands Inc.*.............................. 76,900 990,088
------------
2,841,838
------------
RETAIL TRADE
Cole Nat'l Corp.*....................................... 8,000 239,500
Gymboree Corp.*......................................... 40,000 1,095,000
Kohls Corp.*............................................ 54,000 3,678,750
Micro Whse Inc.*........................................ 36,000 501,750
Proffitts Inc.*......................................... 60,000 1,706,250
Staples Inc.*........................................... 84,000 2,331,000
------------
9,552,250
------------
TOTAL CONSUMER NON-DURABLE GOODS........................ 13,391,688
------------
CONSUMER SERVICES (2.2%)
HOTELS AND RESTAURANTS
Buffets Inc.*........................................... 93,000 871,875
Rio Hotel & Casino Inc.*................................ 77,000 1,617,000
Ruby Tuesday Inc. ...................................... 28,200 726,150
Sizzler Int'l. Inc. .................................... 69,500 186,781
------------
3,401,806
------------
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
LEISURE TIME
Acclaim Entertainment Inc.*............................. 119,500 $ 433,188
Ascent Entertainment Group Inc.*........................ 97,637 1,012,984
Imax Corp. ADR* **...................................... 40,000 880,000
Westwood One Inc.*...................................... 40,000 1,485,000
------------
3,811,172
------------
TOTAL CONSUMER SERVICES................................. 7,212,978
------------
ENERGY (4.5%)
DOMESTIC OIL
NGC Corp. .............................................. 81,000 1,417,500
Noble Affiliates Inc. .................................. 54,500 1,921,125
------------
3,338,625
------------
GAS EXPLORATION
Energen Corp. .......................................... 37,300 1,482,675
Forcenergy Inc. ........................................ 50,500 1,322,469
Vintage Pete Inc. ...................................... 73,000 1,387,000
------------
4,192,144
------------
INTERNATIONAL OIL
Ranger Oil Ltd. ADR*.................................... 150,000 1,031,250
------------
PETROLEUM SERVICES
Camco Int'l. Inc. ...................................... 52,900 3,369,069
Transocean Offshore Inc. ............................... 61,100 2,944,256
------------
6,313,325
------------
TOTAL ENERGY............................................ 14,875,344
------------
FINANCE (17.0%)
BANKS
Bank Utd Corp. ......................................... 44,300 2,167,931
CCB Fin'l. Corp. ....................................... 13,800 1,483,500
Coast Svgs Fin'l. Inc.*................................. 30,000 2,056,875
Commerce Bancshares Inc. ............................... 18,742 1,269,771
First Amern Corp. Tenn ................................. 36,000 1,791,000
Hamilton Bancorp Inc. Fla*.............................. 46,000 1,339,750
Hibernia Corp. ......................................... 50,000 940,625
PFF Bancorp Inc.*....................................... 70,000 1,391,250
Republic NY Corp. ...................................... 15,500 1,769,906
------------
14,210,608
------------
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
FINANCIAL SERVICES
Americredit Corp.*...................................... 46,700 $ 1,293,006
Green Tree Fin'l. Corp. ................................ 39,200 1,026,550
Medallion Fin'l. Corp. ................................. 78,000 1,716,000
Reliastar Fin'l. Corp. ................................. 45,500 1,874,031
------------
5,909,587
------------
INSURANCE
ACE Ltd. ADR*........................................... 36,000 3,474,000
Everest Reinsurance Hldgs............................... 29,000 1,196,250
FPA Medical Management Inc.*............................ 81,500 1,517,938
Harleysville Group Inc. ................................ 60,000 1,440,000
Mercury Gen Corp. New................................... 130,000 7,182,500
Magic Investment Corp. Wis ............................. 56,000 3,724,000
Mutual Risk Management Ltd. ADR*........................ 77,000 2,305,188
Nymagic Inc. ........................................... 25,000 689,063
------------
21,528,939
------------
INVESTMENT COMPANIES
CMAC Invest Corp. ...................................... 33,800 2,040,675
Ocwen Asset Invt Corp. ................................. 45,000 922,500
Price T Rowe & Associates Inc. ......................... 72,700 4,571,013
------------
7,534,188
------------
SAVINGS AND LOAN
TCF Financial Corp. .................................... 213,000 7,228,688
------------
TOTAL FINANCE........................................... 56,412,010
------------
GENERAL BUSINESS (13.6%)
BROADCASTING
Cablevision Systems Corp.*.............................. 32,000 3,064,000
Chris Craft Industries Inc.*............................ 29,690 1,553,158
Global Star Telecom*.................................... 120,588 5,923,886
HBO & Co. .............................................. 112,200 5,385,600
Spelling Entertainment Group Inc. ...................... 167,100 1,169,700
------------
17,096,344
------------
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
BUSINESS SERVICES
Accustaff Inc.*......................................... 117,000 $ 2,691,000
Ba Merchants Services Inc.*............................. 88,500 1,570,875
Corestaff Inc.*......................................... 63,500 1,682,750
Data Processing Corp.*.................................. 60,000 1,530,000
Fiserv Inc.*............................................ 73,600 3,615,600
Jacobs Engr Group Inc.*................................. 300 7,613
Legato Systems Inc.*.................................... 38,300 1,685,200
National Data Corp. .................................... 42,500 1,535,313
Paychex Inc. ........................................... 90,050 4,558,781
Stewart Enterprises Inc. ............................... 87,000 4,056,375
Sylvan Learning Systems Inc.*........................... 29,400 1,146,600
------------
24,080,107
------------
NEWSPAPERS
Media Gen. Inc ......................................... 13,700 572,831
------------
PUBLISHING
Pulitzer Publishing Company............................. 17,000 1,067,813
Topps Inc. ............................................. 162,200 359,881
------------
1,427,694
------------
TELECOMMUNICATIONS SERVICES
Comsat Corp. ........................................... 77,000 1,867,250
------------
TOTAL GENERAL BUSINESS.................................. 45,044,226
------------
MISCELLANEOUS (11.3%)
CONGLOMERATES
U.S. Industries Inc. New................................ 54,450 1,640,306
------------
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
MISCELLANEOUS
Castle Dental Centers Inc.*............................. 50,000 $ 387,500
Chancellor Media Corp.*................................. 17,600 1,313,400
Consolidated Cap Corp.*................................. 78,000 1,584,375
Corn Products Int'l. Inc.*.............................. 1,100 32,794
Cymer Inc. ............................................. 33,400 501,000
Dollar Thrifty Automotive Grp*.......................... 45,000 922,500
Esg Re Ltd.*............................................ 14,600 343,100
Firearms Training Sys Inc.*............................. 51,300 266,119
Hagler Bailly Inc. ..................................... 90,000 2,025,000
Icg Communications Inc.*................................ 50,000 1,362,500
Indus Int'l. Inc.*...................................... 55,200 400,200
Intelligroup Inc.*...................................... 146,700 2,805,638
Kulicke & Soffa Industries Inc.*........................ 85,000 1,583,125
Metro Information Svcs Inc.*............................ 50,000 1,387,500
Mondavi Robert Corp.*................................... 16,500 804,375
Moneygram Pmt Sys Inc.*................................. 151,000 1,623,250
Newpark Res Inc.*....................................... 7,500 131,250
Nine Westgroup Inc. .................................... 63,100 1,636,656
Promus Hotel Corp. New*................................. 92,500 3,885,000
Speedfam Int'l. Inc.*................................... 43,700 1,158,050
Staff Leasing Inc.*..................................... 28,000 528,500
Superior Telecom Inc. .................................. 6,600 228,113
TMP Worldwide Inc.*..................................... 75,000 1,725,000
Tag Heuer Int'l S A ADR* **............................. 31,000 255,750
Tefron Ltd.*............................................ 80,500 1,851,500
Total Ctl Prods Inc.*................................... 143,200 1,754,200
United Meridian Corp.*.................................. 44,500 1,251,563
Viatel Inc.*............................................ 185,000 925,000
White Cap Industries Corp.*............................. 72,600 1,352,175
------------
34,025,133
------------
REAL ESTATE
Irvine Apartment Communities Inc. ...................... 37,800 1,202,513
------------
ROYALTY TRUSTS
San Juan Basin Rty Trust................................ 80,000 740,000
------------
TOTAL MISCELLANEOUS..................................... 37,607,952
------------
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
SHELTER (1.0%)
CONSTRUCTION MATERIALS
Granite Const. Inc. .................................... 60,000 $ 1,380,000
Martin Marietta Materials Inc. ......................... 56,000 2,047,500
------------
3,427,500
------------
TOTAL SHELTER........................................... 3,427,500
------------
TECHNOLOGY (15.8%)
AEROSPACE
Computer Sciences Corp.*................................ 23,000 1,920,500
------------
COMPUTERS AND BUSINESS EQUIPMENT
Be Semiconductor Industries*............................ 28,000 269,500
Ceridian Corp.*......................................... 46,900 2,148,606
Novellus Sys. Inc.*..................................... 94,000 3,037,375
Pairgain Technologies Inc.*............................. 69,000 1,336,875
Peoplesoft Inc.*........................................ 139,000 5,421,000
Pixar*.................................................. 48,800 1,055,300
Stormedia Inc.*......................................... 57,000 124,688
Xilinx Inc.*............................................ 70,000 2,454,375
------------
15,847,719
------------
ELECTRONICS
ADC Telecommunications Inc.*............................ 108,000 4,509,000
Analog Devices Inc.*.................................... 130,000 3,599,375
Aspen Technology Inc.*.................................. 44,500 1,524,125
Credence Systems Corp.*................................. 76,000 2,251,500
Digital Microwave Corp.*................................ 80,000 1,160,000
Electroglas Inc.*....................................... 72,000 1,111,500
Eletronics For Imaging Inc.*............................ 73,500 1,221,938
Electric Sys Inc.*...................................... 62,000 2,883,000
Lam Resh Corp.*......................................... 45,000 1,316,250
LoJack Corp.*........................................... 110,000 1,622,500
Picturetel Corp.*....................................... 63,000 409,500
Teleflex Inc. .......................................... 30,400 1,147,600
------------
22,756,288
------------
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
SOFTWARE
Baan Company NVF ADR* **............................... 37,000 $ 1,221,000
Check Point Software Tech Ltd. ADR* **................. 41,500 1,691,125
Dendrite Int'l. Inc.*.................................. 111,800 2,166,125
Microchip Technology Inc. ............................. 50,500 1,515,000
Midway Games Inc.*..................................... 64,000 1,164,000
Parametric Technology Corp.*........................... 89,000 4,216,375
------------
11,973,625
------------
TOTAL TECHNOLOGY....................................... 52,498,132
------------
TRANSPORTATION (2.7%)
AIR TRAVEL
America West Hldg Corp.*............................... 54,800 1,020,650
Continental Airls Inc.*................................ 18,000 866,250
------------
1,886,900
------------
RAILROADS
Railtex Inc. .......................................... 28,000 400,750
------------
TRUCKING AND FREIGHT FORWARDING
Air Express Int'l. Corp. .............................. 26,900 820,439
Caliber Sys Inc. ...................................... 33,500 1,631,031
Landstar Sys Inc.*..................................... 65,800 1,735,475
MS Carriers Inc.*...................................... 25,700 639,288
Polaris Industries Inc. ............................... 59,000 1,803,188
------------
6,629,421
------------
TOTAL TRANSPORTATION................................... 8,917,071
------------
UTILITIES (0.5%)
GAS & PIPELINE UTILITIES
Eastern Enterprises.................................... 33,900 1,525,500
------------
TOTAL UTILITIES........................................ 1,525,500
------------
TOTAL COMMON STOCK (Cost $227,358,398)................. 306,486,422
------------
<CAPTION>
UNITS
----------
<S> <C> <C>
SHORT TERM INVESTMENTS (COST $24,775,179) (7.5%)
State Street Bank Yield Enhanced Short Term Investment
Fund.................................................. 24,775,179 24,775,179
------------
TOTAL INVESTMENTS (COST $252,133,577) (99.8%).......... 331,261,601
Other Assets less Liabilities (0.2%)................... 677,987
------------
NET ASSETS (100.0%).................................... $331,939,588
============
</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 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, 1997
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $345,397,782)......................... $361,378,330
Cash.............................................................. 19,812
Receivable for investments sold................................... 821,470
Dividends and interest receivable................................. 2,018,121
Unamortized organizational costs.................................. 53,224
------------
Total Assets.................................................... 364,290,957
------------
LIABILITIES
Payable for investments purchased................................. 3,919,164
Payable for fund units redeemed................................... 1,399,029
Investment advisory fee payable................................... 315,689
State Street Bank and Trust Co.--program fee payable.............. 101,834
Trustee, management and administration fees payable............... 21,645
American Bar Retirement Association--program fee payable.......... 15,051
Other accruals.................................................... 14,221
Other liabilities................................................. 1,557
------------
Total Liabilities............................................... 5,788,190
------------
NET ASSETS (equivalent to $44.42 per unit based on 8,070,199 units
outstanding)..................................................... $358,502,767
============
</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, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign tax expense of $24,365)............... $ 2,841,395
Interest........................................................ 8,672,999
------------
Total investment income....................................... 11,514,394
------------
EXPENSES
Investment advisory fee......................................... 995,814
State Street Bank and Trust Company--program fee................ 1,154,131
Trustee, management and administration fees..................... 241,510
American Bar Retirement Association--program fee................ 168,606
Amortization of organization costs.............................. 83,899
Reports to unitholders.......................................... 52,342
Legal and audit fees............................................ 44,373
Registration fee................................................ 49,624
Other expenses.................................................. 17,290
------------
Total expenses................................................ 2,807,589
------------
Net investment income............................................. 8,706,805
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain............................................... 80,198,178
Change in net unrealized appreciation........................... (26,498,974)
------------
Net realized and unrealized gain on investments............... 53,699,204
------------
Net increase in net assets resulting from operations.............. $ 62,406,009
============
</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,
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income............................ $ 8,706,805 $ 7,987,421
Net realized gain on investments................. 80,198,178 26,015,161
Net change in unrealized appreciation on invest-
ments........................................... (26,498,974) 5,122,866
------------ ------------
Net increase in net assets resulting from opera-
tions........................................... 62,406,009 39,125,448
------------ ------------
FROM UNITHOLDER TRANSACTIONS
Proceeds from units issued....................... 73,912,974 19,822,374
Cost of units redeemed........................... (73,217,548) (28,072,708)
------------ ------------
Net increase (decrease) in net assets resulting
from unitholder transactions.................... 695,426 (8,250,334)
------------ ------------
Net increase in net assets..................... 63,101,435 30,875,114
NET ASSETS
Beginning of year................................ 295,401,332 264,526,218
------------ ------------
End of year...................................... $358,502,767 $295,401,332
============ ============
NUMBER OF UNITS
Outstanding--beginning of year................... 8,036,685 8,264,600
Sold........................................... 1,578,134 584,936
Redeemed....................................... (1,544,620) (812,851)
------------ ------------
Outstanding--end of year......................... 8,070,199 8,036,685
============ ============
</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 the year)*
<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 2, 1992
FOR THE YEAR ENDED (COMMENCEMENT
DECEMBER 31, OF OPERATIONS) TO
------------------------------------------------ DECEMBER 31,
1997 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Investment income....... $ 1.42 $ 1.30 $ 1.19 $ 1.08 $ 1.00 $ .89
Expenses................ (.35) (.33) (.29) (.26) (.26) (.25)
-------- -------- -------- -------- -------- --------
Net investment income... 1.07 .97 .90 .82 .74 .64
Net realized and
unrealized gain (loss)
on investments......... 6.59 3.78 6.07 (.82) .82 (1.56)
-------- -------- -------- -------- -------- --------
Net increase in unit
value.................. 7.66 4.75 6.97 -- 1.56 (.92)
Net asset value at
beginning of year...... 36.76 32.01 25.04 25.04 23.48 24.40
-------- -------- -------- -------- -------- --------
Net asset value at end
of year................ $ 44.42 $ 36.76 $ 32.01 $ 25.04 $ 25.04 $ 23.48
======== ======== ======== ======== ======== ========
Ratio of expenses to
average net assets..... .84% .96% 1.00% 1.03% 1.07% 1.10%****
Ratio of net investment
income to average net
assets................. 2.62% 2.85% 3.08% 3.32% 3.05% 2.82%****
Portfolio turnover...... 122% 181% 155% 113% 153% 119%***
Total return............ 20.84% 14.84% 27.84% 0.00% 6.64% (3.77)%***
Average commissions
rate**................. $ 0.0510 $ 0.0550 -- -- -- --
Net assets at end of
year (in thousands).... $358,503 $295,401 $264,526 $198,945 $193,362 $167,242
</TABLE>
- --------
* Calculations prepared using the monthly average number of units
outstanding during the year.
** Average commissions rate paid is presented for fiscal periods beginning on
or after September 1, 1995.
*** Not annualized.
**** Ratios annualized.
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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCKS (62.9%)
BASIC INDUSTRIES (5.7%)
ALUMINUM
Aluminum Company America............................... 34,000 $ 2,392,750
------------
BUILDING MATERIALS
Applied Materials Inc.*................................ 194,900 5,871,363
------------
CHEMICALS
Air Products & Chemicals Inc. ......................... 35,200 2,895,200
Georgia Gulf Corp. .................................... 5,600 171,500
Praxair Inc. .......................................... 53,000 2,385,000
Zeneca Group PLC ADR**................................. 49,000 5,292,000
------------
10,743,700
------------
PLASTICS
Illinois Tool Wks Inc. ................................ 26,000 1,563,250
------------
TOTAL BASIC INDUSTRIES................................. 20,571,063
------------
CAPITAL GOODS (3.7%)
CONSTRUCTION AND MINING EQUIPMENT
Dover Corp. ........................................... 74,200 2,680,475
------------
ELECTRICAL EQUIPMENT
ASM Lithography Hldg N V ADR* **....................... 26,400 1,782,000
General Electric Company............................... 25,300 1,856,388
Johnson Ctls Inc. ..................................... 48,000 2,292,000
Philips Electrs N V ADR**.............................. 7,000 423,500
------------
6,353,888
------------
POLLUTION CONTROL
Browning Ferris Inds Inc. ............................. 59,600 2,205,200
Republic Industries Inc.*.............................. 82,800 1,930,275
------------
4,135,475
------------
TOTAL CAPITAL GOODS.................................... 13,169,838
------------
CONSUMER BASICS (9.8%)
DRUGS AND HEALTHCARE
Abbott Labs............................................ 31,600 2,071,775
Astra Ab ADR**......................................... 175,000 3,007,813
Guidant Corp. ......................................... 81,100 5,048,475
Merck & Company Inc. .................................. 27,000 2,868,750
Pacificare Health Systems*............................. 40,830 2,125,333
Pfizer Inc. ........................................... 87,000 6,486,938
United Healthcare Corp. ............................... 58,400 2,901,750
------------
24,510,834
------------
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
FOOD AND BEVERAGE
Conagra Inc. .......................................... 85,200 $ 2,795,625
Kellogg Company........................................ 39,600 1,965,150
Nestle S A............................................. 30,000 2,238,750
Pepsico Inc. .......................................... 55,800 2,033,213
------------
9,032,738
------------
TOBACCO
Philip Morris Companies Inc. .......................... 35,900 1,626,719
------------
TOTAL CONSUMER BASICS.................................. 35,170,291
------------
CONSUMER DURABLE GOODS (1.8%)
AUTO PARTS
Eaton Corp. ........................................... 3,600 321,300
------------
AUTOMOBILES
Ford Motor Company Del................................. 100,000 4,868,750
Volvo Aktiebolaget ADR* **............................. 40,500 1,093,500
------------
5,962,250
------------
TOTAL CONSUMER DURABLE GOODS........................... 6,283,550
------------
CONSUMER NON-DURABLE GOODS (4.4%)
APPAREL AND TEXTILES
Gucci Group N V ADR**.................................. 10,400 435,500
Nike Inc. ............................................. 49,500 1,942,875
V F Corp. ............................................. 38,400 1,764,000
------------
4,142,375
------------
LIQUOR
Anheuser Busch Companies Inc. ......................... 40,000 1,760,000
------------
RETAIL TRADE
Lowes Companies Inc. .................................. 65,000 3,099,688
Wal Mart Stores Inc. .................................. 35,500 1,400,031
Woolworth Corp. ....................................... 133,000 2,709,875
------------
7,209,594
------------
TOYS, AMUSEMENTS, AND SPORTING GOODS
Hasbro Inc. ........................................... 84,800 2,671,200
------------
TOTAL CONSUMER NON-DURABLE GOODS....................... 15,783,169
------------
CONSUMER SERVICES (0.4)%
LEISURE TIME
Disney Walt Company.................................... 15,000 1,485,938
------------
TOTAL CONSUMER SERVICES................................ 1,485,938
------------
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
ENERGY (4.6%)
DOMESTIC OIL
Atlantic Richfield Company............................. 19,400 $ 1,554,425
Noble Affiliates Inc. ................................. 20,500 722,625
------------
2,277,050
------------
GAS EXPLORATION
Oryx Energy Company.................................... 22,600 576,300
------------
INTERNATIONAL OIL
British Petroleum PLC ADR**............................ 15,000 1,195,313
Chevron Corp. ......................................... 24,200 1,863,400
Mobil Corp. ........................................... 11,900 859,031
Shell Trans & Trading PLC ADR**........................ 81,100 3,548,125
------------
7,465,869
------------
PETROLEUM SERVICES
Total S A ADR**........................................ 77,500 4,301,250
Western Atlas Inc.*.................................... 26,200 1,938,800
------------
6,240,050
------------
TOTAL ENERGY........................................... 16,559,269
------------
FINANCE (11.2%)
BANKS
Bankamerica Corp. ..................................... 62,400 4,555,200
Chase Manhattan Corp. (New)............................ 47,000 5,146,500
Citicorp............................................... 19,900 2,516,106
Mercantile Bancorporation Inc. ........................ 21,200 1,303,800
Wells Fargo & Company.................................. 12,800 4,344,800
------------
17,866,406
------------
FINANCIAL SERVICES
Capital One Financial Corp. ........................... 56,900 3,083,269
------------
INSURANCE
Cincinnati Financial Corp. ............................ 27,500 3,870,625
Exel Ltd. ADR**........................................ 99,200 6,286,800
General Re Corp. ...................................... 13,300 2,819,600
------------
12,977,025
------------
SAVINGS AND LOAN
Ahmanson H F and Company............................... 44,800 2,998,800
Golden West Financial Corp. ........................... 33,000 3,227,813
------------
6,226,613
------------
TOTAL FINANCE.......................................... 40,153,313
------------
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
GENERAL BUSINESS (6.1%)
BROADCASTING
TCI Satellite Entmt Inc.*.............................. 6,200 $ 42,625
U S West Inc.*......................................... 60,900 1,758,488
Viacom Inc.*........................................... 37,500 1,535,344
------------
3,336,457
------------
BUSINESS SERVICES
Donnelley RR & Sons Company............................ 45,000 1,676,250
Interpublic Group Companies Inc. ...................... 31,800 1,584,038
Nokia Corp. ADR**...................................... 20,000 1,400,000
------------
4,660,288
------------
NEWSPAPERS
News Corp. Ltd. ADR**.................................. 63,900 1,373,851
------------
OFFICE FURNISHINGS AND SUPPLIES
Avery Dennison Corp. .................................. 53,700 2,403,075
------------
PUBLISHING
Jostens Inc. .......................................... 91,600 2,112,525
Time Warner Inc. ...................................... 84,000 5,208,000
------------
7,320,525
------------
TELECOMMUNICATION SERVICES
Tele Communications Inc. New*.......................... 89,750 2,893,690
------------
TOTAL GENERAL BUSINESS................................. 21,987,886
------------
MISCELLANEOUS (4.1%)
CONGLOMERATES
Textron Inc. .......................................... 36,900 2,306,250
------------
MISCELLANEOUS
Dillards Inc. ......................................... 38,000 1,339,500
Fort James Corp. ...................................... 49,100 1,878,075
Pioneer Nat Res Company ADR**.......................... 87,000 2,517,563
KLA Tencor Corp.*...................................... 90,700 3,503,288
Slm Hldg Corp. ........................................ 21,800 3,032,925
------------
12,271,351
------------
TOTAL MISCELLANEOUS.................................... 14,577,601
------------
TECHNOLOGY (6.9%)
AEROSPACE
Boeing Company......................................... 69,900 3,420,731
United Technologies Corp. ............................. 28,500 2,075,156
------------
5,495,887
------------
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
COMPUTERS AND BUSINESS EQUIPMENT
Ascend Communications Inc.*............................ 70,000 $ 1,715,000
Cisco Sys Inc.*........................................ 28,200 1,572,150
Xerox Corp. ........................................... 33,000 2,435,813
------------
5,722,963
------------
ELECTRONICS
Electronic Data Sys Corp. New.......................... 44,500 1,955,219
Ericsson L M Tel Company ADR**......................... 102,600 3,828,263
Intel Corp. ........................................... 41,200 2,894,300
Micron Technology Inc. ................................ 63,000 1,638,000
Silicon Graphics Inc.*................................. 59,700 742,519
Teradyne Inc.*......................................... 80,300 2,569,600
------------
13,627,901
------------
TOTAL TECHNOLOGY....................................... 24,846,751
------------
TRANSPORTATION (0.5%)
RAIL TRANSPORTATION
Wisconsincent Transn Corp.*............................ 75,000 1,753,125
------------
TOTAL TRANSPORTATION................................... 1,753,125
------------
UTILITIES (3.7%)
ELECTRIC UTILITIES
Northeast Utilities.................................... 109,100 1,288,744
------------
GAS AND PIPELINE UTILITIES
Mcn Energy Group Inc. ................................. 55,100 2,224,663
Williams Companies Inc. ............................... 101,200 2,871,550
------------
5,096,213
------------
TELEPHONE
Airtouch Communications Inc.*.......................... 39,300 1,633,406
AT&T Corp. ............................................ 34,500 2,113,125
MCI Communications Corp. .............................. 48,200 2,063,563
Worldcom Inc. Ga....................................... 37,500 1,134,364
------------
6,944,458
------------
TOTAL UTILITIES........................................ 13,329,415
------------
TOTAL COMMON STOCKS (Cost $212,170,717)................ 225,671,209
------------
</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, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE
----------- ------------
<S> <C> <C>
FIXED INCOME (34.1%)
CORPORATE BONDS (9.0%)
ASSET BACKED
Arcadia Automobile Receivables........................ $ 600,000 $ 601,808
Banc One Auto Grantor Tr 6.29% 07/20/04............... 825,000 825,592
Chevy Chase Auto Receivables 6.25% 07/20/04........... 775,000 775,556
Cps Auto Grantor Tr 6.65% 10/15/02.................... 180,796 182,057
Daimler Benz Auto Grantor Tr 7.58% 03/20/05........... 510,237 510,554
First Merchants Auto Tr 6.70% 11/15/02****............ 214,064 216,095
First Secauto Grantor Tr 6.10% 04/15/03............... 881,290 880,836
Ford Credit Auto Owner Tr 6.05% 04/15/01.............. 1,025,000 1,024,135
Honda Auto Receivables Grantor 5.85% 02/15/03......... 893,159 891,756
Honda Auto Receivables Tr 5.95% 05/15/03.............. 969,359 967,498
Long Beach Addep Auto Grn Tr Tr 6.69% 09/25/04****.... 418,099 419,053
Nal Auto Tr 7.30% 12/15/00****........................ 98,473 96,930
Nal Auto Tr 8.00% 12/16/02****........................ 121,774 121,636
National Car Rental Financial Corp. 7.35% 10/20/03.... 250,000 258,583
Nissan Auto Recievables Grantor 6.15% 02/17/03****.... 930,293 931,744
Npf Xi Inc. 8.19% 07/01/01............................ 100,000 101,350
Rental Car Fin Grp 6.45% 04/25/03..................... 725,000 725,851
Team Fleet Fing Corp. 7.35% 05/15/03.................. 325,000 335,215
Team Fleet Fing Corp. 6.65% 12/15/02****.............. 250,000 251,266
Wfs Financial Owner Tr 6.25% 03/20/02................. 650,000 650,058
World Financial Propertys Tower B 6.91% 09/01/13...... 1,257,113 1,287,409
World Omni Automobile Lease 6.07% 11/25/03............ 675,000 674,531
------------
12,729,513
------------
ELECTRIC UTILITIES
Edison Mission Energy Funding Corp. 7.33%
09/15/08****......................................... 200,000 208,876
Israel Elec Corp. Ltd 7.25% 12/15/06****.............. 160,000 163,216
Israel Electric 7.75% 12/17/07........................ 350,000 355,313
Samsung Electrs Ltd 7.45% 10/01/02****................ 115,000 88,675
------------
816,080
------------
FINANCE AND BANKING
Bankamerica Institutional Capital A 8.07%
12/31/26****......................................... 725,000 775,373
Beneficial Corp. Mtn Bk Entry 6.47% 11/17/08.......... 405,000 401,817
Beverly Finance 8.36% 07/15/04........................ 250,000 269,883
BT Institutional Capital Tr A 8.09% 12/01/26****...... 650,000 682,676
Corestates Capital 8.00% 12/15/26****................. 725,000 765,216
Creekwood Cap Corp. 8.47% 03/16/15****................ 240,988 270,829
Equitable Life Assur Soc USA 6.95% 12/01/05****....... 250,000 255,398
Excel Paralubes Funding Corp. 7.43% 11/01/15****...... 250,000 266,160
</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, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE
----------- ------------
<S> <C> <C>
Farmers Insurance Exch 8.63% 05/01/24****............. $ 625,000 $ 723,094
First Chicago Nbd Institutional Capital 7.95%
12/01/26****......................................... 625,000 654,081
First Un Inst Capital I 8.04% 12/01/26................ 650,000 685,087
Great Wesn Financial Tr Ii 8.21% 02/01/27............. 140,000 148,487
John Hancock Mut Life Insurance Company 7.38%
02/14/24............................................. 250,000 262,298
Hutchison Whampoa Fin C I Ltd 7.45% 08/01/17 ADR**.... 320,000 309,568
Korea Devbk 7.38% 09/17/04............................ 665,000 532,140
Metropolitan Life Insurance Company 7.45%
11/01/23****......................................... 500,000 512,550
Nationwide Mutual Life 7.50% 02/15/24................. 500,000 504,175
NB Capital Triv 8.25% 04/15/27****.................... 485,000 529,261
New York Life Insurance Cor 7.50% 12/15/23............ 250,000 253,845
Petrozuata Fin Inc. 8.22% 04/01/17.................... 600,000 638,232
PNC Institutional Cap Tr A 7.95% 12/15/26............. 350,000 370,594
Rhone Poulenc A3 8.62% 01/05/21....................... 350,000 393,078
Scotia Pacific Hldg Corp. 7.95% 07/20/15.............. 207,770 216,961
Town & Ctry Funding Corp. 5.85% 08/15/98.............. 450,000 448,389
Washington Mut Capital I 8.38% 06/01/27............... 240,000 264,571
Wells Fargo Capital A 8.13% 12/01/26****.............. 495,000 532,457
Wells Fargo Capital I 7.96% 12/15/26.................. 225,000 236,567
Zurich Capital Trust 8.38% 06/01/37****............... 415,000 452,234
------------
12,355,021
------------
INDUSTRIALS
AST Resh Inc. 7.45% 10/01/02****...................... 475,000 366,268
Jet Equip Tr 10.00% 06/15/12****...................... 350,000 447,867
Oil Pur Company 7.10% 04/30/02****.................... 400,000 400,356
Paiton Energy 9.34% 02/15/14****...................... 225,000 193,106
Philip Morris Companies Inc. 6.38% 02/01/06........... 250,000 245,538
------------
1,653,135
------------
MISCELLANEOUS
Alcoa Aluminio S A 7.50% 12/16/08..................... 643,318 648,606
Anthem Insurance Companies Inc. Disc Coml 9.00%
04/15/27****......................................... 475,000 522,719
Florida Residential Property & Casualty 7.38%
07/01/03****......................................... 525,000 545,281
Florida Residential Property & Casualty 7.45%
07/01/04****......................................... 100,000 104,543
Florida Windstorm Underwriting 5.50% 03/31/23****..... 200,000 201,584
News Amerhldgs Inc. 7.75% 01/20/24.................... 100,000 104,058
News Amerhldgs Inc. 7.75% 02/01/24.................... 170,000 177,827
Petroliam Nasional Berhad 7.13% 10/18/06 ADR** ****... 575,000 545,543
Prime Property Funding Ii Inc. 7.00% 08/15/04****..... 495,000 506,519
Railcar Leasing Llc 7.13% 01/15/13****................ 375,000 394,886
------------
3,751,566
------------
</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, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE
----------- ------------
<S> <C> <C>
OTHER
Fifty Seventh Str Tr Assocs LLC 7.13% 06/01/17****..... $ 247,988 $ 254,726
Oxymar 7.50% 02/15/16.................................. 175,000 177,564
------------
432,290
------------
OTHER UTILITIES
Mobile Energy Services Company LLC 8.67% 01/01/17...... 208,582 234,042
Ras Laffan Liquefied Nat Gas 8.29% 03/15/14****........ 425,000 396,903
------------
630,945
------------
TOTAL CORPORATE BONDS.................................. 32,368,550
------------
FOREIGN BONDS (0.2%)
CORPORATE
Hyundai Semicon 8.63% 05/15/07 ADR**................... 370,000 271,813
------------
GOVERNMENT
Columbia Rep 8.70% 02/15/16 ADR**...................... 440,000 428,208
------------
TOTAL FOREIGN BONDS.................................... 700,021
------------
MORTGAGE RELATED (6.6%)
FEDERAL AGENCIES
FHLMC PC Gtd. 549859 11.00% 09/01/20................... 118,884 134,412
FHLMC PC Gtd. 554922 10.50% 12/01/20................... 300,352 334,805
FHLMC PC Gtd. 555283 10.00% 09/01/17................... 384,241 420,379
FHLMC PC Gtd. 555293 10.00% 11/01/20................... 340,589 372,359
FHLMC PC Gtd. D06744 10.50% 08/01/19................... 103,262 113,012
FHLMC PC Gtd. D06959 10.50% 04/01/16................... 117,257 129,174
FHLMC PC Gtd. G00035 10.50% 02/01/21................... 146,503 161,824
------------
1,665,965
------------
GOVERNMENT SPONSORED
FNMA Pool 303157 10.00% 05/01/22....................... 197,057 215,844
FNMA Pool 303554 11.50% 09/01/25....................... 142,214 161,767
------------
377,611
------------
OTHER COLLATERALIZED MORTGAGE OBLIGATIONS
AFC Mortgage Ln Tr 8.07% 09/25/27...................... 299,999 310,499
Alps 94 1Pass Thru Tr 7.80% 09/15/04................... 225,000 230,226
Alps 94/1Pass Thru Tr 9.35% 09/15/04................... 248,732 254,503
DLJ Mortgage Acceptance Corp. 7.58% 03/13/28****....... 250,000 266,446
DLJ Mortgage Acceptance Corp. 7.40% 06/01/03........... 417,060 433,328
DLJ Mortgage Acceptance Corp. 7.20% 07/14/03........... 265,331 273,937
Mid St Tr II 9.62% 04/01/03............................ 500,000 540,567
------------
2,309,506
------------
</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, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE
----------- ------------
<S> <C> <C>
OTHER MARKETABLE
Airplanes Pass Through Tr 6.60% 03/15/19*****......... $ 129,816 $ 129,813
FHLMC Pc Gtd 9.50% 04/15/20........................... 110,488 123,228
FHLMC Pc Gtd 10.00% 05/15/20.......................... 325,000 356,688
FHLMC Pc Gtd 10.00% 06/15/20.......................... 205,000 228,063
FNMA Remic 8.50% 09/25/20............................. 276,799 292,540
Prime Property Fd 6.63% 07/23/03****.................. 172,643 173,737
Rural Hsg Tr 1987 1 3.33% 04/01/26.................... 266,249 254,623
Wfs Financial Owner Tr 6.10% 03/20/02................. 640,000 638,459
------------
2,197,151
------------
U.S. GUARANTEED
GNMA II Arm TBA 6.00% 12/20/99***..................... 1,300,000 1,313,611
GNMA II Pool 080114 6.00% 09/20/27.................... 2,458,468 2,479,417
GNMA Pool 008611 7.00% 03/20/25....................... 591,483 608,393
GNMA Pool 008621 7.00% 04/20/25....................... 356,322 367,011
GNMA Pool 008631 7.38% 05/20/25....................... 1,187,647 1,223,086
GNMA Pool 008634 7.38% 05/20/25....................... 290,222 297,105
GNMA Pool 008664 7.00% 07/20/25....................... 2,878,074 2,942,276
GNMA Pool 033635 11.00% 12/15/09...................... 2,344 2,630
GNMA Pool 034701 11.00% 01/15/10...................... 16,185 18,157
GNMA Pool 038109 11.00% 02/15/10...................... 956 1,072
GNMA Pool 040492 11.00% 07/15/10...................... 15,796 17,721
GNMA Pool 041749 11.00% 07/15/10...................... 34,169 38,482
GNMA Pool 041987 11.00% 08/15/10...................... 4,464 5,028
GNMA Pool 042354 11.00% 08/15/10...................... 14,194 15,985
GNMA Pool 058816 11.00% 01/15/13...................... 1,723 1,951
GNMA Pool 134123 11.00% 09/15/15...................... 17,254 19,686
GNMA Pool 139478 10.50% 09/15/15...................... 35,732 40,039
GNMA Pool 141387 11.00% 10/15/15...................... 10,846 12,374
GNMA Pool 174472 10.00% 11/15/16...................... 145,321 161,119
GNMA Pool 180521 10.00% 12/15/16...................... 112,996 124,522
GNMA Pool 223520 10.00% 03/15/18...................... 126,313 140,467
GNMA Pool 231157 10.00% 06/15/18...................... 122,348 136,059
GNMA Pool 232061 10.50% 09/15/17...................... 154,273 173,382
GNMA Pool 269159 10.00% 06/15/19...................... 28,971 32,237
GNMA Pool 274800 10.50% 05/15/19...................... 1,732 1,951
GNMA Pool 277908 10.00% 10/15/19...................... 29,151 32,473
GNMA Pool 285191 10.50% 03/15/20...................... 32,986 37,072
GNMA Pool 287170 10.50% 08/15/20...................... 134,385 151,534
GNMA Pool 780056 11.00% 09/15/17...................... 332,553 377,751
GNMA Pool 780103 11.00% 02/15/25...................... 355,328 405,411
</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, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE
----------- ------------
<S> <C> <C>
GNMA Pool 780488 10.00% 10/15/21..................... $ 136,375 $ 151,918
GNMA Pool 780496 10.50% 12/15/17..................... 352,422 395,523
GNMA Pool 780554 10.00% 05/15/19..................... 3,012,840 3,352,448
GNMA Pool 780595 11.00% 08/15/17..................... 1,119,806 1,285,157
GNMA Pool II 6.00% 11/15/27.......................... 617,376 623,938
------------
16,986,986
------------
TOTAL MORTGAGE RELATED............................... 23,537,219
------------
U.S. TREASURY (18.2%)
DIRECT
United States Treasury Bonds 8.75% 08/15/20.......... 8,480,000 11,311,557
United States Treasury Notes 3.38% 01/15/07.......... 4,245,193 4,133,757
United States Treasury Notes 7.50% 02/15/05.......... 19,720,000 21,673,463
United States Treasury Notes 7.13% 02/29/00.......... 2,600,000 2,675,166
United States Treasury Notes 6.25% 05/31/99.......... 3,025,000 3,049,109
United States Treasury Notes 6.75% 06/30/99.......... 4,750,000 4,823,483
United States Treasury Notes 3.63% 07/15/02.......... 1,406,685 1,399,667
United States Treasury Notes 7.13% 09/30/99*******... 12,100,000 12,387,375
United States Tres Bd Strp Prn (PO) 0.00%
02/15/19******...................................... 13,100,000 3,674,943
------------
65,128,520
------------
TOTAL U.S. TREASURY.................................. 65,128,520
------------
YANKEE BOND (0.1%)
INDUSTRIALS
News Amerhldgs Inc. 8.880% 04/26/23.................. 330,000 386,091
------------
TOTAL FIXED INCOME (Cost $119,587,059)............... 122,120,401
------------
<CAPTION>
SHARES
-----------
<S> <C> <C>
PREFERRED STOCK (0.4%)
Entertainment Property Inc. Pfd.****................. 200 189,042
Home Ownership Pfd.****.............................. 1,250 1,215,581
Tier One Propertys Inc. Pfd.****..................... 125 121,398
------------
TOTAL PREFERRED STOCKS (Cost $1,579,307)............. 1,526,021
------------
<CAPTION>
UNITS
-----------
<S> <C> <C>
SHORT TERM INVESTMENTS (COST $12,060,699) (3.4%)
State Street Bank Yield Enhanced Short Term Invest-
ment Fund........................................... 12,060,699 12,060,699
------------
TOTAL INVESTMENTS (COST $345,397,782) (100.8%)....... 361,378,330
Liabilities less Other Assets (-0.8%)................ (2,875,563)
------------
NET ASSETS (100.0%).................................. $358,502,767
============
</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, 1997
- --------
* 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.
*** To be announced (TBA) securities are purchased (sold) on a forward
commitment basis with an approximate principal amount and no definite
maturity date. The actual principal amount and maturity date will be
determined upon settlement.
**** 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, 1997 were
$15,502,425 and $15,763,325, respectively.
***** Variable rate security. The rate shown reflects rate currently in
effect.
****** Stripped asset backed securities represent the splitting of cash
flows arising from U.S treasury securities into several classes which
vary by the proportion of the payments on the certificate
representing interest only (IO equals Int.), or principal only (PO
equals PRN).
******* Portion of the security is segregated as collateral for TBA
purchases.
The accompanying notes are an integral part of these financial statements.
F-31
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
GROWTH EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $784,740,022)......................... $970,886,148
Cash.............................................................. 61,632
Receivable for investments sold................................... 3,292,653
Receivable for fund units sold.................................... 336,426
Dividends and interest receivable................................. 1,032,505
Unamortized organizational costs.................................. 142,764
Other receivables................................................. 19,377
------------
Total Assets.................................................... 975,771,505
------------
LIABILITIES
Payable for investments purchased................................. 7,139,606
Investment advisory fee payable................................... 364,099
State Street Bank and Trust Co.--program fee payable.............. 272,444
Trustee, management and administration fees payable............... 57,459
American Bar Retirement Association--program fee payable.......... 41,506
Other accruals.................................................... 42,406
------------
Total Liabilities............................................... 7,917,520
------------
NET ASSETS (equivalent to $359.82 per unit based on 2,689,796
units outstanding)............................................... $967,853,985
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-32
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
GROWTH EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign tax expense of $148,162).............. $ 9,698,288
Interest........................................................ 1,590,872
------------
Total investment income....................................... 11,289,160
------------
EXPENSES
Investment advisory fee......................................... 2,288,957
State Street Bank and Trust Company--program fee................ 3,056,748
Trustee, management and administration fees..................... 639,718
American Bar Retirement Association--program fee................ 446,549
Reports to unitholders.......................................... 138,707
Amortization of organization costs.............................. 218,466
Legal and audit fees............................................ 117,590
Registration fee................................................ 131,502
Other expenses.................................................. 35,895
------------
Total expenses................................................ 7,074,132
------------
Net investment income............................................. 4,215,028
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain............................................... 219,100,674
Change in net unrealized appreciation........................... (1,756,692)
------------
Net realized and unrealized gain on investments............... 217,343,982
------------
Net increase in net assets resulting from operations............ $221,559,010
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-33
<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,
---------------------------
1997 1996
------------- ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income........................... $ 4,215,028 $ 7,885,241
Net realized gain on investments................ 219,100,674 77,526,269
Net change in unrealized appreciation on invest-
ments.......................................... (1,756,692) 50,117,149
------------- ------------
Net increase in net assets resulting from op-
erations..................................... 221,559,010 135,528,659
------------- ------------
FROM UNITHOLDER TRANSACTIONS
Proceeds from units issued...................... 283,226,911 36,326,804
Cost of units redeemed.......................... (289,729,985) (56,891,452)
------------- ------------
Net decrease in net assets resulting from
unitholder transactions...................... (6,503,074) (20,564,648)
------------- ------------
Net increase in net assets.................... 215,055,936 114,964,011
NET ASSETS
Beginning of year............................... 752,798,049 637,834,038
------------- ------------
End of year..................................... $ 967,853,985 $752,798,049
============= ============
NUMBER OF UNITS
Outstanding--beginning of year.................. 2,705,373 2,781,980
Sold.......................................... 865,694 146,346
Redeemed...................................... (881,271) (222,953)
------------- ------------
Outstanding--end of year........................ 2,689,796 2,705,373
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-34
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
GROWTH EQUITY FUND
SELECTED PER-UNIT DATA AND RATIOS
(For a unit outstanding throughout the year)*
<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 2, 1992
FOR THE YEAR ENDED (COMMENCEMENT
DECEMBER 31, OF OPERATIONS) TO
------------------------------------------------ DECEMBER 31,
1997 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Investment income....... $ 4.15 $ 5.07 $ 3.88 $ 3.48 $ 3.16 $ 3.20
Expenses................ (2.60) (2.22) (1.88) (1.60) (1.52) (1.45)
-------- -------- -------- -------- -------- --------
Net investment income... 1.55 2.85 2.00 1.88 1.64 1.75
Net realized and
unrealized gain on
investments............ 80.01 46.14 57.72 .61 12.99 3.00
-------- -------- -------- -------- -------- --------
Net increase............ 81.56 48.99 59.72 2.49 14.63 4.75
Net asset value at be-
ginning of year........ 278.26 229.27 169.55 167.06 152.43 147.68
-------- -------- -------- -------- -------- --------
Net asset value at end
of year................ $ 359.82 $ 278.26 $ 229.27 $ 169.55 $ 167.06 $ 152.43
======== ======== ======== ======== ======== ========
Ratio of expenses to av-
erage net assets....... .80% .88% .92% .95% .96% 1.01%****
Ratio of net investment
income to average net
assets................. .48% 1.13% .98% 1.12% 1.03% 1.22%****
Portfolio turnover...... 88% 64% 60% 59% 82% 46%***
Total return............ 29.31% 21.37% 35.23% 1.49% 9.60% 3.22%***
Average commissions
rate**................. $ 0.0516 $ 0.0564 -- -- -- --
Net assets at end of
year (in thousands).... $967,854 $752,798 $637,834 $479,435 $471,398 $427,933
</TABLE>
- --------
*Calculations prepared using the monthly average number of units outstanding
during the year.
** Average commissions rate paid is presented for fiscal periods beginning on
or after September 1, 1995.
***Not annualized.
****Ratios annualized.
The accompanying notes are an integral part of these financial statements.
F-35
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
GROWTH EQUITY FUND
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCK (97.6%)
BASIC INDUSTRIES (4.9%)
ALUMINUM
Aluminum Company Amer.................................. 36,600 $ 2,575,725
------------
CHEMICALS
Air Products & Chemicals Inc. ......................... 40,200 3,306,450
Betzdearborn Inc. ..................................... 1,000 61,063
Crompton & Knowles Corp. .............................. 5,200 137,800
Cytec Inds Inc.*....................................... 2,200 103,263
Du Pont EI De Nemours & Company........................ 39,400 2,366,463
Georgia Gulf Corp. .................................... 6,200 189,875
Goodrich B F Company................................... 1,600 66,300
Grace W R & Company Del................................ 82,400 6,628,051
Hercules Inc. ......................................... 5,800 290,363
Monsanto Company....................................... 244,300 10,260,600
Morton Int'l Inc. Industries New....................... 1,700 58,438
PPG Inds Inc. ......................................... 1,200 68,550
Praxair Inc. .......................................... 69,200 3,114,000
Sigma Aldrich.......................................... 2,500 99,375
Valspar Corp. ......................................... 1,200 38,250
Witco Corp. ........................................... 500 20,406
Zeneca Group PLC ADR**................................. 51,500 5,562,000
------------
32,371,247
------------
CONTAINERS AND GLASS
Bemis Inc. ............................................ 1,800 79,313
Crown Cork & Seal Inc. ................................ 2,300 115,288
Owens Illinois Inc.*................................... 5,800 220,038
Corning Inc. .......................................... 13,700 508,613
------------
923,252
------------
GOLD
Battle Mountain Gold Company........................... 2,300 13,513
Newmont Mining Corp. .................................. 9,900 290,813
------------
304,326
------------
MINING
Freeport Mcmoran Copper & Gold......................... 11,600 182,700
------------
NON-FERROUS METALS
Engelhard Corp. ....................................... 4,300 74,713
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-36
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
GROWTH EQUITY FUND
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
PAPER
Kimberly Clark Corp. .................................. 85,700 $ 4,226,082
Minnesota Mining & Manufacturing Company............... 11,600 951,925
------------
5,178,007
------------
PLASTICS
Illinois Tool Wks Inc. ................................ 71,900 4,322,988
Sealed Air Corp. ...................................... 2,300 142,025
------------
4,465,013
------------
STEEL
Allegheny Teldyne Inc. ................................ 7,900 204,413
Nucor Corp. ........................................... 4,400 212,575
Precisioncast Parts Corp. ............................. 900 54,281
------------
471,269
------------
TOTAL BASIC INDUSTRIES................................. 46,546,252
------------
CAPITAL GOODS (6.1%)
BUILDING CONSTRUCTION
Fluor Corp. ........................................... 2,500 93,438
------------
BUILDING SUPPLIES
Applied Materials Inc.*................................ 225,300 6,787,163
------------
CONSTRUCTION AND MINING EQUIPMENT
Dover Corp. ........................................... 85,800 3,099,525
Harnischfeger Industries Inc. ......................... 1,000 35,313
------------
3,134,838
------------
ELECTRICAL EQUIPMENT
American Power Conversion Corp.*....................... 5,300 125,213
Arrow Electronics Inc.*................................ 600 19,463
ASM Lithography Hldg N V ADR* **....................... 29,600 1,998,000
Atmel Corp.*........................................... 5,300 98,381
AVX Corp. New.......................................... 900 16,594
Dentsply Int'l Inc. New................................ 3,600 109,800
Emerson Electric Company............................... 7,400 417,638
General Electric Company............................... 467,500 34,302,813
Johnson Ctls Inc. ..................................... 53,000 2,530,750
Millipore Corp. ....................................... 1,800 61,088
Philips Electrs N V ADR**.............................. 4,500 272,250
Raychem Corp. ......................................... 5,800 249,763
Ucar Int'l Inc.*....................................... 2,300 91,856
------------
40,293,609
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-37
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
GROWTH EQUITY FUND
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
INDUSTRIAL MACHINERY
AES Corp. ............................................. 57,500 $ 2,680,938
American Standard Companies Inc. Del*.................. 5,000 191,563
Crane Company.......................................... 4,500 195,188
Pall Corp. ............................................ 8,600 177,913
Presstek Inc.*......................................... 1,000 25,750
Thermo Electron Corp.*................................. 8,100 360,450
U.S. Filter Corp.*..................................... 3,900 116,756
------------
3,748,558
------------
MISCELLANEOUS
Varian Assoc Inc. ..................................... 1,300 65,731
------------
POLLUTION CONTROL
Browning Ferris Industries Inc. ....................... 68,700 2,541,900
Republic Industries Inc.*.............................. 106,200 2,475,788
USA Waste Services Inc.*............................... 9,120 357,960
------------
5,375,648
------------
TOTAL CAPITAL GOODS.................................... 59,498,985
------------
CONSUMER BASICS (34.2%)
DRUGS AND HEALTHCARE
Abbott Labs............................................ 77,100 5,054,869
Alza Corp.*............................................ 74,300 2,363,669
American Home Products Corp. .......................... 62,800 4,804,200
Amgen Inc. ............................................ 41,700 2,257,013
Astra AB ADR**......................................... 195,666 3,363,009
Baxter Int'l Inc. ..................................... 15,300 771,694
Becton Dickinson & Company............................. 7,200 360,000
Bergen Brunswig Corp. ................................. 33,400 1,406,975
Biogen Inc.*........................................... 4,300 156,413
Biomet Inc. ........................................... 7,000 179,375
Boston Scientific Corp.*............................... 7,200 330,300
Bristol Myers Squibb Company........................... 123,400 11,676,725
Cardinal Health Inc. .................................. 53,050 3,985,381
Centocor Inc.*......................................... 74,700 2,483,775
Chiron Corp.*.......................................... 11,000 187,000
Columbia/HCA Healthcare Corp........................... 18,000 533,250
Dura Pharmaceuticals Inc.*............................. 2,800 128,450
Forest Labs Inc. ...................................... 1,800 88,763
General Nutrition Companies Inc.*...................... 5,600 190,400
Genesis Health Ventures Inc.*.......................... 1,600 42,200
Genzyme Corp.*......................................... 3,300 91,575
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-38
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
GROWTH EQUITY FUND
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
Guidant Corp. ......................................... 195,500 $ 12,169,875
Health Care & Retirement Corp.*........................ 1,600 64,400
Health Management Assoc.*.............................. 7,350 185,588
Healthcare Compare Corp.*.............................. 23,400 1,196,325
Healthsouth Corp.*..................................... 20,800 577,200
Immunex Corp. New*..................................... 1,500 81,000
Johnson & Johnson...................................... 117,100 7,713,963
Lilly Eli & Company.................................... 368,800 25,677,700
Lincare Holdings Inc.*................................. 2,300 131,100
McKesson Corp. New..................................... 1,200 129,825
Medtronic Inc. ........................................ 128,400 6,716,925
Merck & Company Inc. .................................. 166,000 17,637,500
Mylan Labs Inc. ....................................... 5,200 108,875
Omnicare Inc. ......................................... 3,800 117,800
Oxford Health Plans Inc.*.............................. 4,400 68,475
Pacificare Health Systems*............................. 38,300 2,001,713
Pfizer Inc. ........................................... 472,800 35,253,151
Phycor Inc.*........................................... 48,800 1,317,600
Quorum Health Group Inc.*.............................. 5,550 144,994
Sangstat Med Corp.*.................................... 46,800 1,895,400
Scherer Rp Corp. Del*.................................. 1,000 61,000
Schering Plough Corp. ................................. 42,100 2,615,463
Smithkline Beecham PLC................................. 264,500 13,605,219
Sofamor/Danek Group Inc.*.............................. 45,900 2,986,369
St Jude Med Inc. ...................................... 4,300 131,150
Stryker Corp. ......................................... 3,600 134,100
Sybron Int'l Corp. Wisconsin*.......................... 2,000 93,875
Tenet Healthcare Corp.*................................ 70,900 2,348,563
United Healthcare Corp. ............................... 95,400 4,740,188
United States Surgical Corp. .......................... 1,800 52,763
Vencor Inc.*........................................... 4,200 102,638
Warner Lambert Company................................. 64,800 8,035,200
Watson Pharmaceuticals Inc.*........................... 5,200 168,675
Wellpoint Health Networks Inc.*........................ 1,100 46,475
------------
188,766,123
------------
FOOD AND BEVERAGE
Campbell Soup Company.................................. 59,100 3,435,188
Coca Cola Company...................................... 371,100 24,724,538
Coca Cola Enterprises Inc. ............................ 122,900 4,370,632
Conagra Inc. .......................................... 121,500 3,986,719
Cpc Int'l Inc. ........................................ 6,900 743,475
</TABLE>
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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
General Mls Inc. ...................................... 7,200 $ 515,700
Heinz HJ Company....................................... 8,200 416,663
Hershey Foods Corp. ................................... 3,100 192,006
Interstate Bakeries Corp. ............................. 1,600 59,800
Kellogg Company........................................ 53,400 2,649,975
McCormick & Company Inc. .............................. 1,900 53,200
Nabisco Holdings Corp. ................................ 29,200 1,414,375
Nestle S A ADR**....................................... 26,000 1,940,250
Outback Steakhouse Inc.*............................... 3,400 97,750
Pepsico Inc. .......................................... 375,600 13,685,925
Pioneer Hi Bred Int'l Inc. ............................ 4,540 486,915
Quaker Oats Company.................................... 2,200 116,050
Ralston Purina Company................................. 5,300 492,569
Sara Lee Corp. ........................................ 16,000 901,000
Sysco Corp. ........................................... 9,100 414,619
Tyson Foods Inc. (Del)................................. 2,500 51,250
Whitman Corp. ......................................... 3,600 93,825
Wrigley Wm Jr Company.................................. 6,400 509,200
------------
61,351,624
------------
HOUSEHOLD PRODUCTS
Clorox Company......................................... 4,600 363,688
Colgate Palmolive Company.............................. 136,100 10,003,350
Dial Corp. New......................................... 4,700 97,819
Gillette Company....................................... 148,800 14,945,101
Hillenbrand Inds Inc. ................................. 2,100 107,494
Procter & Gamble Company............................... 296,600 23,672,388
Rubbermaid Inc. ....................................... 8,700 217,500
Tupperware Corp. ...................................... 3,000 83,625
Unilever N V ADR**..................................... 82,000 5,119,875
------------
54,610,840
------------
RETAIL GROCERY
Albertsons Inc. ....................................... 6,300 298,463
Kroger Company*........................................ 11,700 432,169
Safeway Inc.*.......................................... 49,400 3,124,550
Starbucks Corp.*....................................... 5,200 199,550
------------
4,054,732
------------
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
TOBACCO
Philip Morris Companies Inc. .......................... 487,700 $ 22,098,907
UST Inc. .............................................. 11,000 406,313
------------
22,505,220
------------
TOTAL CONSUMER BASICS.................................. 331,288,539
------------
CONSUMER DURABLE GOODS (0.8%)
AUTO PARTS
Autoliv................................................ 1,500 49,125
Borg Warner Automotive Inc. ........................... 400 20,800
Danaher Corp. ......................................... 1,400 88,375
Eaton Corp. ........................................... 4,000 357,000
------------
515,300
------------
AUTOMOBILES
Federal Signal Corp. .................................. 1,400 30,275
Ford Mtr Company Del................................... 95,000 4,625,313
Harley Davidson Inc. .................................. 7,800 213,525
Lear Corp.*............................................ 2,000 95,000
Volvo Aktiebolaget ADR**............................... 52,000 1,404,000
------------
6,368,113
------------
HOUSEHOLD APPLIANCES
Leggett & Platt Inc. .................................. 4,500 188,438
Newell Company......................................... 10,300 437,750
Sunbeam Corp. Del New.................................. 4,000 168,500
Westpoint Stevens Inc.*................................ 1,700 80,325
------------
875,013
------------
TOTAL CONSUMER DURABLE GOODS........................... 7,758,426
------------
CONSUMER NON-DURABLE GOODS (5.8%)
APPAREL AND TEXTILES
Cintas Corp. .......................................... 2,600 101,400
Fruit Of The Loom Inc.*................................ 1,600 41,000
Gucci Group N V ADR**.................................. 11,400 477,375
Jones Apparel Group Inc.*.............................. 2,600 111,800
Liz Claiborne Inc. .................................... 61,500 2,571,469
Nike Inc. ............................................. 61,500 2,413,875
Reebok Int'l Ltd. ..................................... 1,300 37,456
Unifi Inc. ............................................ 2,300 93,581
V F Corp. ............................................. 42,400 1,947,750
Warnaco Group Inc. .................................... 2,300 72,163
Wolverine Worldwide Inc. .............................. 2,900 65,613
------------
7,933,482
------------
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
COSMETICS
Avon Prods Inc. ....................................... 68,000 $ 4,173,500
International Flavours................................. 3,000 154,500
Lauder Estee Companies Inc. ........................... 2,700 138,881
Revlon Inc.*........................................... 37,700 1,331,282
------------
5,798,163
------------
LIQUOR
Anheuser Busch Companies Inc. ......................... 55,100 2,424,400
------------
PHOTOGRAPHY
Eastman Kodak Company.................................. 3,400 206,763
------------
RETAIL TRADE
Autozone Inc.*......................................... 9,900 287,100
Barnes & Noble Inc.*................................... 1,500 50,063
Bed Bath & Beyond Inc.*................................ 40,300 1,551,550
Borders Group Inc.*.................................... 3,600 112,725
Circuit City Stores Inc. .............................. 5,100 181,369
Compusa Inc.*.......................................... 4,900 151,900
Consolidated Stores Corp.*............................. 60,750 2,669,204
Costco Companies Inc. ................................. 10,800 481,950
CVS Corp. ............................................. 18,100 1,159,531
Dayton Hudson Corp. ................................... 3,300 222,750
Dollar General Corp. .................................. 5,750 208,438
Dollar Tree Stores Inc.*............................... 2,100 86,888
Family Dollar Stores Inc. ............................. 35,100 1,028,869
Federated Dept Stores Inc. Del*........................ 3,500 150,719
Gap Inc. .............................................. 19,350 685,716
Home Depot Inc. ....................................... 84,750 4,989,656
Kohls Corp.*........................................... 3,400 231,625
Lowes Companies Inc. .................................. 119,300 5,689,119
May Dept Stores Company................................ 48,500 2,555,344
Nordstrom Inc. ........................................ 900 54,338
Office Depot Inc.*..................................... 4,600 110,113
Pep Boys Manny Moe & Jack.............................. 3,000 71,625
Petsmart Inc.*......................................... 7,400 53,650
Rite Aid Corp. ........................................ 4,300 252,356
Ross Stores Inc. ...................................... 3,400 123,675
Sears Roebuck & Company................................ 51,200 2,316,800
Staples Inc.*.......................................... 10,600 294,150
Tiffany & Company New.................................. 1,300 46,881
TJX Companies Inc. New................................. 11,800 405,625
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
Wal Mart Stores Inc. .................................. 104,300 $ 4,113,331
Walgreen Company....................................... 27,800 872,225
Woolworth Corp. ....................................... 141,900 2,891,213
------------
34,100,498
------------
TOYS, AMUSEMENTS, & SPORTING GOODS
Callaway Golf Company.................................. 4,300 122,819
Hasbro Inc. ........................................... 96,300 3,033,450
Mattel Inc. ........................................... 77,200 2,875,700
------------
6,031,969
------------
TOTAL CONSUMER NON-DURABLE GOODS....................... 56,495,275
------------
CONSUMER SERVICES (2.3%)
AIR TRAVEL
Comair Hldgs Inc. ..................................... 5,650 136,306
------------
HOTELS & RESTAURANTS
Boston Chicken Inc.*................................... 1,400 9,013
Cracker Barrel Old Ctry Store.......................... 4,000 133,500
Hilton Hotels Corp. ................................... 6,800 202,300
Host Marriott Corp.*................................... 250,000 4,906,250
ITT Corp. New*......................................... 6,700 555,263
La Quinta Inns Inc. ................................... 2,400 46,350
Marriot Int'l Inc. .................................... 6,600 457,050
McDonalds Corp. ....................................... 36,100 1,723,775
Mirage Resorts Inc.*................................... 11,100 252,525
Wendys Int'l Inc. ..................................... 4,600 110,688
------------
8,396,714
------------
LEISURE TIME
Brunswick Corp. ....................................... 1,000 30,313
Carnival Corp. ADR**................................... 43,000 2,381,125
Circus Circus Enterprises Inc.*........................ 3,500 71,750
Disney Walt Company.................................... 108,879 10,785,826
International Game Technology.......................... 4,800 121,200
Regal Cinemas Inc.*.................................... 2,400 66,900
------------
13,457,114
------------
TOTAL CONSUMER SERVICES................................ 21,990,134
------------
ENERGY (3.6%)
DOMESTIC OIL
Atlantic Richfield Company............................. 21,600 1,730,700
Noble Affiliates Inc. ................................. 24,500 863,625
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
Pennzoil Company....................................... 1,200 $ 80,175
Pogo Producing Company................................. 1,400 41,300
Unocal Corp. .......................................... 3,200 124,200
------------
2,840,000
------------
GAS EXPLORATION
Anadarko Pete Corp. ................................... 3,200 194,200
Apache Corp. .......................................... 1,600 56,100
BJ Services Company*................................... 27,000 1,942,313
Burlington Res Inc. ................................... 2,987 133,855
Enron Corp. ........................................... 5,800 241,063
Oryx Energy Company.................................... 22,500 573,750
Union Pacific Resources Group Inc. .................... 11,600 281,300
Union Texpete Holdings Inc. ........................... 3,100 64,519
Weatherford Enterra Inc.*.............................. 900 39,375
------------
3,526,475
------------
INTERNATIONAL OIL
British Petroleum PLC ADR**............................ 43,000 3,426,563
Chevron Corp. ......................................... 26,800 2,063,600
Mobil Corp. ........................................... 38,100 2,750,344
Shell Trans & Trading PLC ADR**........................ 87,100 3,810,625
------------
12,051,132
------------
PETROLEUM SERVICES
Baker Hughes Inc. ..................................... 8,200 357,725
Camco Int'l Inc. ...................................... 26,500 1,687,719
Diamond Offshore Drilling Inc. ........................ 4,400 211,750
Dresser Inds Inc. ..................................... 5,300 222,269
Ensco Int'l Inc. ...................................... 7,800 261,300
Global Marine Inc.*.................................... 7,800 191,100
Halliburton Company.................................... 14,400 747,900
Lyondell Petrochemical Company......................... 1,300 34,450
Nabors Industries Inc.*................................ 6,800 213,775
Noble Drilling Corp.*.................................. 7,500 229,688
Reading & Bates Corp.*................................. 5,000 209,375
Renaissance Energy Ltd.*............................... 40,700 840,174
Rowan Companies Inc.*.................................. 4,500 137,250
Schlumberger Ltd. ADR**................................ 32,000 2,576,000
Smith Int'l Inc.*...................................... 2,700 165,713
Talisman Energy Inc.*.................................. 60,500 1,852,192
Tosco Corp. ........................................... 7,400 279,813
Total S A ADR**........................................ 62,000 3,441,000
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
Transocean Offshore Inc. .............................. 4,000 $ 192,750
Western Atlas Inc.*.................................... 30,200 2,234,800
------------
16,086,743
------------
TOTAL ENERGY........................................... 34,504,350
------------
FINANCE (10.1%)
BANKS
Bank New York Inc. .................................... 22,000 1,271,875
Bankamerica Corp. ..................................... 69,600 5,080,800
Chase Manhattan Corp. (New)............................ 94,600 10,358,700
Citicorp............................................... 16,100 2,035,644
Cooper Cameron Corp.*.................................. 2,500 152,500
Fifth Third Bancorp.................................... 7,500 613,125
MBNA Corp. ............................................ 25,400 693,738
Mercantile Bancorporation Inc. ........................ 29,400 1,808,100
Northern Trust Corp. .................................. 1,800 125,550
Norwest Corp. ......................................... 91,100 3,518,738
Star Banccorp.......................................... 3,200 183,600
Synovus Finl Corp. .................................... 7,700 252,175
US Bancorp Del......................................... 12,400 1,388,026
Wells Fargo & Company.................................. 13,700 4,650,294
Zions Bancorp.......................................... 2,900 131,588
------------
32,264,453
------------
FINANCIAL SERVICES
American Express Company............................... 21,100 1,883,175
Amresco Inc. .......................................... 72,000 2,178,000
Associates First Cap Corp. ............................ 3,800 270,275
Capital One Financial Corp. ........................... 62,600 3,392,138
Concord EFS Inc.*...................................... 4,000 99,500
Corporate Express Inc.*................................ 6,200 79,825
Countrywide Credit Inds Inc. .......................... 1,300 55,738
Federal Home Loan Mortgage Corp. ...................... 164,000 6,877,751
Federal National Mortgage Association.................. 55,500 3,166,969
Green Tree Financial Corp. ............................ 8,900 233,069
Household Int'l Inc. .................................. 58,200 7,424,138
Money Store Inc. ...................................... 2,700 56,700
Morgan Stanley Dean Witter............................. 900 53,213
Travelers Group Inc. .................................. 12,450 670,744
------------
26,441,235
------------
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
INSURANCE
Aetna Inc. ............................................ 2,600 $ 183,463
Aflac Inc. ............................................ 5,500 281,188
American Bankers Insurance Group Inc. ................. 1,000 45,938
American Int'l Group Inc. ............................. 96,800 10,527,000
Cincinnati Financial Corp. ............................ 30,529 4,296,957
Conseco Inc. .......................................... 4,000 181,750
Equifax Inc. .......................................... 9,300 329,569
Erie Indty Company..................................... 3,300 97,350
Everest Reinsurance Holdings........................... 1,600 66,000
Exel Ltd. ADR**........................................ 110,800 7,021,950
Foundation Health Sys Inc. ............................ 6,500 145,438
General Re Corp. ...................................... 14,700 3,116,400
Marsh & McLennan Companies Inc. ....................... 3,400 253,513
Medpartners Inc.*...................................... 8,900 199,138
Magic Invtcorp Wis..................................... 7,200 478,800
PMI Group Inc. ........................................ 800 57,850
Progressive Corp. Ohio................................. 2,200 263,725
Provident Companies Inc. .............................. 1,200 46,350
Sunamerica Inc. ....................................... 11,400 487,350
Unum Corp. ............................................ 3,100 168,563
------------
28,248,292
------------
INVESTMENT COMPANIES
Franklin Res Inc. ..................................... 5,100 443,381
Lehman Brothers Hldgs Inc. ............................ 900 45,900
Price T Rowe & Assoc Inc. ............................. 3,200 201,200
Schwab Charles Corp. .................................. 9,900 415,181
United Asset Management Corp. ......................... 2,700 65,981
------------
1,171,643
------------
SAVINGS AND LOAN
Ahmanson H F and Company............................... 50,200 3,360,263
Golden West Financial Corp. Del........................ 37,000 3,619,063
Washington Mutual Inc. ................................ 37,700 2,405,731
------------
9,385,057
------------
TOTAL FINANCE.......................................... 97,510,680
------------
GENERAL BUSINESS (7.0%)
BROADCASTING
Belo A H Corp. ........................................ 1,900 106,638
CBS Corp. ............................................. 47,000 1,383,563
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
Clear Channel Communications........................... 3,300 $ 262,144
Comcast Corp. ......................................... 20,000 631,250
HBO & Company.......................................... 39,400 1,891,200
HSN Inc.*.............................................. 1,700 87,550
Primedia Inc.*......................................... 5,600 70,700
TCI Satellite Entmt Inc.*.............................. 6,800 46,750
Tele Communications Inc. New*.......................... 97,589 3,173,606
US West Inc.*.......................................... 65,400 1,888,425
Viacom Inc. ........................................... 50,000 2,051,063
------------
11,592,889
------------
BUSINESS SERVICES
Accustaff Inc.*........................................ 5,400 124,200
America Online Inc. Del*............................... 40,600 3,621,013
Apollo Group Inc.*..................................... 2,000 94,500
Automaticdata Processing Inc. ......................... 121,200 7,438,651
Block H&R Inc. ........................................ 3,500 156,844
Cognizant Corp. ....................................... 10,500 467,906
Corrections Corp. America.............................. 4,700 174,194
De Luxe Corp. ......................................... 3,300 113,850
Donnelley RR & Sons Company............................ 900 33,525
Ecolab Inc. ........................................... 2,500 138,594
First Data Corp. ...................................... 105,200 3,077,100
Fiserv Inc.*........................................... 3,200 157,200
Gartner Group Inc. New*................................ 43,100 1,605,475
Gtech Hldgs Corp.*..................................... 1,800 57,488
Humana Inc. ........................................... 7,100 147,325
Information Res Inc.*.................................. 72,000 963,000
Interpublic Group Companies Inc. ...................... 42,150 2,099,597
Manpower Inc. Wis...................................... 5,300 186,825
Nokia Corp. ADR**...................................... 67,000 4,690,000
Omnicom Group.......................................... 8,400 355,950
Paychex Inc. .......................................... 37,000 1,873,126
Quintilestransnational Corp.*.......................... 51,000 1,950,750
Robert Half Int'l Inc.*................................ 4,650 186,000
Service Corp. Int'l.................................... 15,500 572,531
Stewart Enterprises Inc. .............................. 1,100 51,288
Sun Guard Data Systems*................................ 5,600 173,600
------------
30,510,532
------------
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
NEWSPAPERS
Gannett Inc. ....................................... 14,600 $ 902,463
Knight Ridder Inc. ................................. 1,100 57,200
New York Times Company.............................. 2,000 132,250
News Corp Ltd. ADR**................................ 71,100 1,528,651
Times Mirror Company New............................ 5,100 313,650
Tribune Company New................................. 5,600 348,600
------------
3,282,814
------------
OFFICE FURNISHINGS AND SUPPLIES
Avery Dennison Corp. ............................... 64,500 2,886,375
Hon Industries Inc. ................................ 1,200 70,800
Ikon Office Solutions Inc. ......................... 4,800 135,000
Lucent Technologies Inc. ........................... 77,100 6,158,363
Miller Herman Inc. ................................. 2,700 147,319
Office Max Inc.*.................................... 5,000 71,250
Reynolds & Reynolds Company......................... 5,600 103,250
Viking Office Prods Inc.*........................... 5,700 124,331
------------
9,696,688
------------
PUBLISHING
Hollinger International Inc. ....................... 300 4,200
Jostens Inc. ....................................... 92,158 2,125,394
McGraw Hill Companies Inc. ......................... 1,900 140,600
Meredith Corp. ..................................... 1,500 53,531
Readers Digest Association Inc. .................... 2,500 59,063
Time Warner Inc. ................................... 99,400 6,162,800
------------
8,545,588
------------
TELECOMMUNICATION SERVICES
Nextel Communications Inc.*......................... 100,000 2,600,000
Sterling Communications Inc.*....................... 38,300 1,472,157
Valassis Communications Inc. ....................... 800 29,600
------------
4,101,757
------------
TOTAL GENERAL BUSINESS.............................. 67,730,268
------------
MISCELLANEOUS (3.5%)
CONGLOMERATES
Harcourt Gen Inc. .................................. 1,900 104,025
Textron Inc. ....................................... 41,100 2,568,750
US Inds Inc. New.................................... 3,900 117,488
------------
2,790,263
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-48
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
GROWTH EQUITY FUND
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
MISCELLANEOUS
Blyth Inds Inc.*.................................... 1,800 $ 53,888
Cendant Corp. ...................................... 42,222 1,451,371
Chancellor Media Corp.*............................. 800 59,700
Choicepoint Inc.*................................... 930 44,408
Commscope Inc.*..................................... 1 13
Crescendo Pharmaceuticals Corp.*.................... 260 3,006
Dillards Inc. ...................................... 40,000 1,410,000
Evi Inc.*........................................... 1,000 51,750
Fort James Corp. ................................... 59,812 2,287,809
General Semiconductor Inc.*......................... 900 10,406
Golden Stbancorp Inc.*.............................. 76,000 2,840,500
Keane Inc.*......................................... 3,200 130,000
KLA Tencor Corp.*................................... 101,400 3,916,576
Meyer Fred Inc. Del New*............................ 1,800 65,475
Nextlevel Systems Inc.*............................. 3,900 69,713
Nine Westgroup Inc.*................................ 2,200 57,063
Pioneer Nat Res Company ADR**....................... 90,700 2,624,631
Promus Hotel Corp. New*............................. 43,927 1,844,934
Saks Holdings Inc.*................................. 3,900 80,681
Security Dynamics Tech Inc.*........................ 2,100 75,075
SLM Holding Corp. .................................. 27,200 3,784,201
Solutia Inc. ....................................... 47,460 1,266,589
Steris Corp.*....................................... 2,400 115,800
Tele Communications Inc. New*....................... 17,826 504,699
Teletech Hldgs Inc.*................................ 1,600 18,200
Tricon Global Restaurants Inc.*..................... 18,530 538,528
Tyco Int'l Ltd New.................................. 172,000 7,750,750
Unova Inc.*......................................... 1,700 27,944
------------
31,083,710
------------
REAL ESTATE
Catellus Dev Corp.*................................. 2,900 58,000
Vornado Realty Tr................................... 3,800 178,363
------------
236,363
------------
TOTAL MISCELLANEOUS................................. 34,110,336
------------
SHELTER (0.1%)
CONSTRUCTION MATERIALS
Armstrongworld Inds Inc. ........................... 600 44,850
Fastenal Company.................................... 2,100 80,325
Masco Corp. ........................................ 7,500 381,563
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-49
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
GROWTH EQUITY FUND
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
Sherwin Williams Company............................ 1,000 $ 27,750
USG Corp. .......................................... 1,000 49,000
------------
583,488
------------
HOMEBUILDERS
Rouse Company....................................... 3,900 127,725
------------
TOTAL SHELTER....................................... 711,213
------------
TECHNOLOGY (15.6%)
AEROSPACE
Allied Signal Inc. ................................. 27,800 1,082,463
Boeing Company...................................... 154,500 7,560,844
Computer Sciences Corp.*............................ 20,700 1,728,450
Gulfstream Aerospace Corp. New*..................... 4,000 117,000
Lockheed Martin Corp. .............................. 100 9,850
United Technologies Corp. .......................... 42,600 3,101,813
------------
13,600,420
------------
COMPUTERS AND BUSINESS EQUIPMENT
3Com Corp.*......................................... 52,100 1,820,244
Ascend Communications Inc.*......................... 89,630 2,195,935
Bay Networks Inc.*.................................. 11,100 283,744
Cabletronsystems Inc.*.............................. 6,600 99,000
Ceridian Corp.*..................................... 4,100 187,831
Cisco Sysinc*....................................... 278,300 15,515,226
Compaq Computer Corp. .............................. 75,700 4,272,319
Dell Computer Corp.*................................ 75,100 6,308,400
Diebold Inc. ....................................... 4,600 232,875
EMC Corp. Mass*..................................... 80,400 2,205,975
Fore Systems*....................................... 4,400 67,100
Gateway 2000 Inc.*.................................. 4,400 143,550
Hewlett Packard Company............................. 86,100 5,381,250
Ingram Micro Inc.*.................................. 2,000 58,250
International Business Machs........................ 18,000 1,882,125
Iomega Corp.*....................................... 12,600 156,713
Komag Inc.*......................................... 2,200 32,725
Micron Electronics Inc.*............................ 1,100 10,038
Netscape Communications Corp.*...................... 2,741 66,812
Networks Associates Inc.*........................... 3,000 158,625
Novellus Systems Inc.*.............................. 1,600 51,700
Pairgain Technologies Inc.*......................... 4,300 83,313
Peoplesoft Inc.*.................................... 78,800 3,073,200
Pitney Bowes Inc. .................................. 6,600 593,588
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-50
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
GROWTH EQUITY FUND
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
Qualcomm Inc.*...................................... 3,800 $ 191,900
Quantum Corp.*...................................... 6,000 120,375
Seagate Technology*................................. 14,400 277,200
Sun Microsystems Inc.*.............................. 51,500 2,053,563
Sundstrand Corp. ................................... 49,900 2,513,713
Symbol Technologies Inc. ........................... 1,200 45,300
Tandy Corp. ........................................ 2,100 80,981
Tech Datacorp*...................................... 1,900 73,863
Unisys Corp. ....................................... 3,500 48,563
Western Digital Corp.*.............................. 5,100 81,919
Xerox Corp. ........................................ 48,500 3,579,907
------------
53,947,822
------------
ELECTRONICS
Adaptec Inc.*....................................... 7,000 259,875
ADC Telecommunications Inc.*........................ 8,100 338,175
Advanced Fibre Communications*...................... 3,800 110,675
Advanced Micro Devices Inc.*........................ 3,900 69,956
Altera Corp.*....................................... 56,300 1,864,938
Amp Inc. ........................................... 4,000 168,000
Analog Devices Inc.*................................ 10,200 282,413
Andrew Corp.*....................................... 5,900 141,600
Avnet Inc. ......................................... 100 6,600
Cambridge Technology Partners M*.................... 2,600 108,225
Ciena Corp.*........................................ 5,700 348,413
Cypress Semiconductor Corp.*........................ 3,100 26,350
Dallas Semiconductor Corp. ......................... 1,700 69,275
DSC Communications Corp.*........................... 42,100 1,010,400
Electronic Data Systems Corp. New................... 75,600 3,321,675
Eletronics For Imaging Inc.*........................ 3,400 56,525
Ericsson LM Telephone Company ADR**................. 147,400 5,499,863
Honeywell Inc. ..................................... 29,100 1,993,350
Intel Corp. ........................................ 304,000 21,356,000
Lam Resh Corp.*..................................... 2,200 64,350
Lattice Semiconductor Corp.*........................ 1,600 75,800
Lexmark Int'l Group Inc.*........................... 4,900 186,200
Linear Technology Corp. ............................ 4,800 276,600
LSI Logiccorp*...................................... 7,700 152,075
Maxim Integrated Prods Inc.*........................ 7,600 262,200
Micron Technology Inc. ............................. 79,500 2,067,000
Molex Inc. ......................................... 39,000 1,126,313
Motorola Inc. ...................................... 32,400 1,848,825
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-51
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
GROWTH EQUITY FUND
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
National Semiconductor Corp.*....................... 1,500 $ 38,906
Newbridge Networks Corp. ADR* **.................... 84,300 2,939,879
Perkin Elmer Corp. ................................. 3,000 213,188
SCI Systems Inc.*................................... 2,900 126,331
Scientific Atlanta Inc. ............................ 4,300 72,025
Silicon Graphics Inc.*.............................. 52,500 652,969
Tellabs Inc.*....................................... 9,900 523,463
Teradyne Inc.*...................................... 94,300 3,017,600
Texas Instruments Inc. ............................. 22,400 1,008,000
Vitesse Semiconductor Corp.*........................ 2,500 94,375
Xilinx Inc.*........................................ 31,800 1,114,988
------------
52,893,395
------------
SOFTWARE
Adobe Sysinc........................................ 4,100 169,125
Autodesk Inc. ...................................... 3,000 111,000
BMC Software Inc.*.................................. 16,200 1,063,125
Cadence Design Systems Inc.*........................ 12,800 313,600
Computer Associates Int'l Inc. ..................... 79,700 4,214,138
Compuware Corp.*.................................... 9,000 288,000
Electronic Arts*.................................... 56,700 2,143,969
Informix Corp.*..................................... 6,000 28,500
Intuit*............................................. 2,800 115,500
Microchip Technology Inc.*.......................... 2,700 81,000
Microsoft Corp.*.................................... 154,500 19,969,125
Novell Inc.*........................................ 5,700 42,750
Oracle Corp.*....................................... 43,450 969,478
Parametric Technology Corp. ........................ 7,800 369,525
Shared Medical System............................... 1,900 125,400
Solectron Corp.*.................................... 6,400 266,000
Sybase Inc.*........................................ 3,100 41,269
Synopsys Inc.*...................................... 2,700 96,525
Transaction Systems Architects Inc.*................ 2,000 76,000
------------
30,484,029
------------
TOTAL TECHNOLOGY.................................... 150,925,666
------------
TRANSPORTATION (0.2%)
RAILROADS
Kansas City Southern Inds Inc. ..................... 3,300 104,775
Wisconsin Cent Transn Corp.*........................ 78,600 1,837,275
------------
1,942,050
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-52
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
GROWTH EQUITY FUND
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
TRUCKING AND FREIGHT FORWARDING
Federal Express Corp.*................................. 1,100 $ 67,169
Pittston Brinks Group.................................. 1,200 48,300
Tidewater Inc. ........................................ 3,200 176,400
------------
291,869
------------
TOTAL TRANSPORTATION................................... 2,233,919
------------
UTILITIES (3.4%)
ELECTRIC UTILITIES
Calenergy Inc.*........................................ 2,900 83,375
Northeast Utilities.................................... 103,400 1,221,413
------------
1,304,788
------------
GAS & PIPELINE UTILITIES
Falcon Drilling*....................................... 4,200 147,263
MCN Energy Group Inc. ................................. 61,400 2,479,025
Sonat Inc. ............................................ 3,000 137,250
Transtexas Gas Corp.*.................................. 800 11,850
Williams Companies Inc. ............................... 112,800 3,200,700
------------
5,976,088
------------
TELEPHONE
360 Communications Company*............................ 8,600 173,614
Airtouch Communications Inc.*.......................... 74,300 3,088,094
Ameritech Corp. ....................................... 2,500 201,250
AT&T Corp. ............................................ 38,391 2,351,449
Century Tel Enterprises Inc. .......................... 1,700 84,681
Cincinnati Bell Inc. .................................. 6,900 213,900
GTE Corp. ............................................. 9,800 512,050
LCI International Inc.*................................ 5,600 172,200
MCI Communications Corp. .............................. 53,800 2,303,313
SBC Communications Inc. ............................... 50,400 3,691,800
Teleport Communications Group*......................... 45,900 2,518,763
Worldcom Inc. Ga....................................... 347,080 10,499,170
------------
25,810,284
------------
TOTAL UTILTITIES....................................... 33,091,160
------------
TOTAL COMMON STOCKS (Cost $758,249,077)................ 944,395,203
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-53
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
GROWTH EQUITY FUND
DECEMBER 31, 1997
<TABLE>
<CAPTION>
UNITS VALUE
---------- ------------
<S> <C> <C>
SHORT TERM INVESTMENTS (COST $26,490,945) (2.7%)
State Street Bank Yield Enhanced Short Term Investment
Fund................................................. 26,490,945 $ 26,490,945
------------
TOTAL INVESTMENTS (COST $784,740,022) (103.0%)........ 970,886,148
Liabilities less Other Assets (-0.3%)................. (3,032,163)
------------
NET ASSETS (100.0%)................................... $967,853,985
============
</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 accompanying notes are an integral part of these financial statements.
F-54
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
STABLE ASSET RETURN FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS
Investments:
State Street Bank ABA Members/Pooled Stable Asset Fund Trust, at
value
(cost $633,755,115)............................................. $633,755,115
Receivable for fund units sold.................................... 1,065,874
Unamortized organizational costs.................................. 94,179
------------
Total Assets.................................................... 634,915,168
------------
LIABILITIES
State Street Bank and Trust Co.--program fee payable.............. 181,550
Trustee, management and administration fees payable............... 107,185
American Bar Retirement Association--program fee payable.......... 27,786
Other accruals.................................................... 33,826
------------
Total Liabilities............................................... 350,347
------------
NET ASSETS (equivalent to $1.00 per unit based on 634,564,821
units outstanding)............................................... $634,564,821
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-55
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
STABLE ASSET RETURN FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
INTEREST INCOME.................................................... $38,695,839
-----------
EXPENSES
State Street Bank and Trust Company--program fee................. 2,220,371
Trustee, management and administration fees...................... 1,277,664
American Bar Retirement Association--program fee................. 324,391
Amortization of organization costs............................... 166,591
Legal and audit fees............................................. 85,210
Reports to unitholders........................................... 100,513
Registration fee................................................. 95,302
Other expenses................................................... 43,593
-----------
Total expenses................................................. 4,313,635
-----------
Net investment income and net increase in net assets resulting from
operations........................................................ $34,382,204
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-56
<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,
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income and net increase in net
assets resulting from operations................ $ 34,382,204 $ 31,794,217
------------ ------------
Reinvestment of net investment income............ (34,382,204) (31,794,217)
------------ ------------
FROM UNITHOLDER TRANSACTIONS (at $1.00 per unit):
Proceeds from units issued....................... 165,192,903 102,727,142
Units issued in connection with reinvestment of
net investment income........................... 34,382,204 31,794,217
Cost of units redeemed........................... (199,773,055) (129,966,222)
------------ ------------
Net increase (decrease) in net assets resulting
from unitholder transactions.................... (197,948) 4,555,137
------------ ------------
Net increase (decrease) in net assets.......... (197,948) 4,555,137
NET ASSETS
Beginning of year................................ 634,762,769 630,207,632
------------ ------------
End of year...................................... $634,564,821 $634,762,769
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-57
<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 PERIOD
DECEMBER 5, 1991
FOR THE YEAR ENDED (COMMENCEMENT
DECEMBER 31, OF OPERATIONS TO
---------------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993 1992 1991)
-------- -------- -------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income....... $ .060 $ .058 $ .061 $ .043 $ .035 $ .042 $ .004
Expenses................ (.007) (.007) (.007) (.007) (.008) (.008) (.000)
-------- -------- -------- -------- -------- -------- --------
Net investment income... .053 .051 .054 .036 .027 .034 .004
Reinvestment of net
investment income...... (.053) (.051) (.054) (.036) (.027) (.034) (.004)
-------- -------- -------- -------- -------- -------- --------
Net asset value at
beginning and end
of year................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ========
Ratio of expenses to
average net assets..... .68% .68% .73% .73% .75% 79% --
Ratio of net investment
income to average net
assets................. 5.38% 5.15% 5.32% 3.55% 2.77% 3.45% --
Net assets at end of
year (in thousands).... $634,565 $634,763 $630,208 $491,979 $509,905 $589,882 $560,334
</TABLE>
- --------
* Calculations prepared using the monthly average number of units outstanding
during the year.
The accompanying notes are an integral part of these financial statements.
F-58
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
STABLE ASSET RETURN FUND
DECEMBER 31, 1997
UNITS OF COLLECTIVE INVESTMENT FUNDS
<TABLE>
<S> <C>
State Street Bank ABA Members/Pooled Stable Asset Fund Trust
("SAFT")
(Units 633,755,115) (a).......................................... $633,755,115
------------
TOTAL INVESTMENTS (Cost $633,755,115) (99.8%)..................... 633,755,115
OTHER ASSETS LESS LIABILITIES (.2%)............................... 809,706
------------
NET ASSETS (100.0%)............................................... $634,564,821
============
</TABLE>
- --------
(a) SAFT holds the following investments:
<TABLE>
<CAPTION>
EFFECTIVE ANNUAL INVESTMENTS AT
PERCENTAGE RATE CONTRACT VALUE
1997 (NOTE 2)
---------------- --------------
<S> <C> <C>
INVESTMENT CONTRACTS (52.03%)
AEGON USA, INC.
6 Investment Contracts
(Maturities ranging from April 30, 1998 to
March 31, 2002)........................... 6.07-7.03% $ 29,004,692
Allstate Life Insurance Company
3 Investment Contracts
(Maturities ranging from July 1, 1998 to
July 31, 1999)............................ 6.52-7.53 14,093,554
Continental Assurance Company
6 Investment Contracts
(Maturities ranging from July 31, 1998 to
December 31, 2002)........................ 6.00-7.32 38,055,739
Hartford Life Insurance Company
1 Investment Contract
(Matures December 31, 1998)............... 4.70 1,950,213
John Hancock Mutual Life Insurance Company
6 Investment Contracts
(Maturities ranging from January 31, 1998
to November 30, 2002)..................... 5.06-7.75 29,295,482
Life of Virginia
5 Investment Contracts, Indexed
(Maturities ranging from May 31, 1999 to
August 30, 2002 and upon funds request)... 5.35-7.10 27,738,346
Metropolitan Life Insurance Company
3 Investment Contracts
(Maturities ranging from February 28, 1998
to February 28, 2001)..................... 6.08-6.37 22,762,244
New York Life Asset Management
6 Investment Contracts
(Maturities ranging from January 15, 1998
to September 30, 2002).................... 5.51-6.93 37,087,009
Pacific Mutual Life Insurance Company
3 Investment Contracts, Indexed
(Maturities ranging from February 13, 1998
to January 31, 2002)...................... 5.74-6.91 23,561,548
Principal Mutual Life Insurance Company
6 Investment Contracts
(Maturities ranging from August 31, 1999
to August 30, 2002)....................... 5.70-7.23 32,130,076
Provident Life and Accident Assurance
Company
1 Investment Contract
(Matures March 31, 1998).................. 6.28-7.31 8,279,151
Prudential Asset Management
3 Investment Contracts
(Maturities ranging from January 31, 1998
to January 31, 2000)...................... 5.19-7.35 17,103,580
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-59
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
STABLE ASSET RETURN FUND
DECEMBER 31, 1997
<TABLE>
<CAPTION>
EFFECTIVE ANNUAL INVESTMENTS AT
PERCENTAGE RATE CONTRACT VALUE
1997 (NOTE 2)
---------------- ---------------
<S> <C> <C>
INVESTMENT CONTRACTS (CONTINUED)
Sun Life of Canada
2 Investment Contracts
(Maturities ranging from December 31,
1999 to April 30, 2001).................. 6.82-6.87% $ 18,957,835
Transamerica Asset Management
4 Investment Contracts
(Maturities ranging from August 31, 1998
to September 30, 2002)................... 6.25-7.24 24,464,406
Travelers Insurance Company
1 Investment Contract
(Maturities ranging from June 30, 1999 to
June 30, 2003)........................... 6.30 10,016,752
------------
Total Investment Contracts (Cost
$334,500,627)............................ 334,500,627
------------
SYNTHETIC INVESTMENT CONTRACTS* (4.21%)
CDC Investment Management Group
2 Investment Contracts
(Maturities ranging from February 15,
1998 to November 15, 2002)............... 6.42-7.70 10,547,700
Underlying Securities:
Bank of New York Cash Reserve market
value $393,884 units 393,884
FHLMC REMIC, 6.75%, 5/25/13, Principal
$900,000 market value $902,727
FHLMC REMIC, 6.75%, 10/15/13, Principal
$4,494,408 market value $4,499,172
FNMA Pool, 6.739%, 6/1/27, Principal
$4,478,153 market value $4,569,821
Total market value $10,365,604, wrapper
$182,096................................
J. P. Morgan
1 Investment Contract
(Maturities ranging from January 15, 1998
to January 15, 1999)..................... 5.28 5,347,206
Underlying Security:
U.S. Treasury Note, 6.375%, 1/15/99,
principal $4,207,000
Total market value $4,239,226, wrapper
$1,107,980..............................
Morgan Guaranty Trust Company
1 Investment Contract
(Maturities ranging from December 15,
1999 to May 15, 2001).................... 7.06 11,143,982
Underlying Security:
Advanta Credit Card Master Trust, 5.839%,
11/15/03, principal $10,000,000
Total market value $10,007,100, wrapper
$1,136,882
------------
Total Synthetic Investment Contracts (Cost
$27,038,888)............................. 27,038,888
------------
<CAPTION>
COST AMORTIZED VALUE
---------------- ---------------
<S> <C> <C>
SHORT TERM INVESTMENTS (43.76%)
State Street Bank
Yield Enhanced Short Term Investment
Fund--281,353,273 units.................. $281,353,273 281,353,273
------------
TOTAL INVESTMENTS (100.00%) (COST
$642,892,788)............................ $642,892,788**
============
</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.
** Stable Asset Return Fund holds 98.58% of State Street Bank ABA
Members/Pooled Stable Asset Fund Trust.
The accompanying notes are an integral part of these financial statements.
F-60
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INDEX EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS
Investments:
State Street Global Advisors Flagship S&P 500 Index Fund, at
value
(cost $84,979,125 and units 739,614)............................ $117,787,995
State Street Global Advisors Russell Special Small Company Common
Trust Fund, at value (cost $28,748,466 and units 1,977,773)..... 35,957,902
Receivable for fund units sold.................................... 198,695
Unamortized organizational costs.................................. 21,923
------------
Total Assets.................................................... 153,966,515
------------
LIABILITIES
Payable for fund units redeemed................................... 186,329
State Street Bank and Trust Co.--program fee payable.............. 43,092
Trustee, management and administration fees payable............... 19,704
American Bar Retirement Association--program fee payable.......... 6,261
Other accruals.................................................... 1,986
------------
Total Liabilities............................................... 257,372
------------
NET ASSETS (equivalent to $22.05 per unit based on 6,971,219 units
outstanding)..................................................... $153,709,143
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-61
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INDEX EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividend income.................................................. $ 507,403
-----------
Total investment income........................................ 507,403
-----------
EXPENSES
State Street Bank and Trust Co.--program fee..................... 433,768
Trustee, management and administration fees...................... 198,186
American Bar Retirement Association--program fee................. 63,363
Amortization of organization costs............................... 28,260
Legal and audit fees............................................. 16,728
Report to unitholders............................................ 19,732
Registration fee................................................. 18,707
Other expenses................................................... 3,511
-----------
Total expenses................................................. 782,255
-----------
Net investment loss................................................ (274,852)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain................................................ 6,358,747
Change in net unrealized appreciation on investments............. 26,647,934
-----------
Net realized and unrealized gain on investments................ 33,006,681
-----------
Net increase in net assets resulting from operations............... $32,731,829
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-62
<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,
-------------------------
1997 1996
------------ -----------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss)...................... $ (274,852) $ 757,732
Net realized gain on investments.................. 6,358,747 5,721,776
Net change in unrealized appreciation on invest-
ments............................................ 26,647,934 6,212,264
------------ -----------
Net increase in net assets resulting from opera-
tions............................................ 32,731,829 12,691,772
------------ -----------
FROM UNITHOLDER TRANSACTIONS
Proceeds from units sold.......................... 53,390,069 31,403,731
Cost of units redeemed............................ (15,293,758) (9,234,771)
------------ -----------
Net increase in net assets resulting from
unitholder transactions.......................... 38,096,311 22,168,960
------------ -----------
Net increase in net assets...................... 70,828,140 34,860,732
NET ASSETS
Beginning of year................................. 82,881,003 48,020,271
------------ -----------
End of year....................................... $153,709,143 $82,881,003
============ ===========
NUMBER OF UNITS
Outstanding--beginning of year.................... 4,914,409 3,437,843
Sold............................................ 2,867,768 2,077,161
Redeemed........................................ (810,958) (600,595)
------------ -----------
Outstanding--end of year.......................... 6,971,219 4,914,409
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-63
<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 YEAR ENDED APRIL 30, 1994
DECEMBER 31, (COMMENCEMENT)
--------------------------- OF OPERATIONS) TO
1997 1996 1995 DECEMBER 31, 1994
-------- ------- ------- -----------------
<S> <C> <C> <C> <C>
Investment income.............. $ .08 $ .28 $ .02 $ --
Expenses....................... (.12) (.11) (.08) (.04)
-------- ------- ------- -------
Net investment income (loss)... (.04) .17 (.06) (.04)
Net realized and unrealized
gain on investments........... 5.23 2.72 3.68 .39
-------- ------- ------- -------
Net increase in unit value..... 5.19 2.89 3.62 .35
Net asset value at beginning of
period........................ 16.86 13.97 10.35 10.00
-------- ------- ------- -------
Net asset value at end of peri-
od............................ $ 22.05 $ 16.86 $ 13.97 $ 10.35
======== ======= ======= =======
Ratio of expenses to average
net assets.................... .62 % .69% .68 % .94%**
Ratio of net investment income
(loss) to average net assets.. (.22)% 1.15% (.52)% .94%**
Portfolio turnover ***......... 11 % 17% 132 % 54%****
Total return................... 30.78 % 20.68% 34.98 % 3.50%****
Net assets at end of period (in
thousands).................... $153,709 $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.
**** Not annualized.
The accompanying notes are an integral part of these financial statements.
F-64
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INTERMEDIATE BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS
Investments:
PIMCO Total Return Fund, at value
(cost $55,142,561 and shares 5,244,525).......................... $55,591,967
MasterWorks Bond Index Fund, at value
(cost $26,736,280 and shares 2,789,373).......................... 27,168,493
Receivable for fund units sold..................................... 125,519
Unamortized organizational costs................................... 10,300
-----------
Total Assets................................................... 82,896,279
-----------
LIABILITIES
Payable for investments purchased.................................. 127,325
State Street Bank and Trust Co.--program fee payable............... 22,979
Trustee, management and administration fees payable................ 6,844
American Bar Retirement Association--program fee payable........... 3,347
Other accruals..................................................... 1,301
-----------
Total Liabilities.............................................. 161,796
-----------
NET ASSETS (equivalent to $11.91 per unit
based on 6,945,554 units outstanding)............................. $82,734,483
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-65
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INTERMEDIATE BOND FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends......................................................... $5,665,296
----------
Total investment income......................................... 5,665,296
----------
EXPENSES
State Street Bank and Trust Co.--program fee...................... 230,899
Trustee, management and administration fees....................... 66,716
American Bar Retirement Association--program fee.................. 33,730
Amortization of organization costs................................ 15,525
Reports to unitholders............................................ 10,490
Legal and audit fees.............................................. 8,893
Registration fee.................................................. 9,945
Other expenses.................................................... 3,350
----------
Total expenses.................................................. 379,548
----------
Net investment income............................................... 5,285,748
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain................................................. 10,090
Change in net unrealized appreciation............................. 1,061,117
----------
Net realized and unrealized loss on investments................. 1,071,207
----------
Net increase in net assets resulting from operations................ $6,356,955
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-66
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INTERMEDIATE BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
YEAR ENDED
DECEMBER 31,
------------------------
1997 1996
----------- -----------
<S> <C> <C>
FROM OPERATIONS
Net investment income.............................. $ 5,285,748 $ 2,589,601
Net realized gain (loss) on investments............ 10,090 (177,766)
Net change in unrealized appreciation
(depreciation) on investments..................... 1,061,117 (1,011,400)
----------- -----------
Net increase in net assets resulting from opera-
tions............................................. 6,356,955 1,400,435
----------- -----------
FROM UNITHOLDER TRANSACTIONS
Proceeds from units issued......................... 34,646,710 21,795,326
Cost of units redeemed............................. (7,880,999) (10,040,616)
----------- -----------
Net increase in net assets resulting from
unitholder transactions........................... 26,765,711 11,754,710
----------- -----------
Net increase in net assets....................... 33,122,666 13,155,145
NET ASSETS
Beginning of year.................................. 49,611,817 36,456,672
----------- -----------
End of year........................................ $82,734,483 $49,611,817
=========== ===========
NUMBER OF UNITS
Outstanding--beginning of year..................... 4,556,518 3,447,358
Sold............................................. 3,093,999 2,076,702
Redeemed......................................... (704,963) (967,542)
----------- -----------
Outstanding--end of year........................... 6,945,554 4,556,518
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-67
<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,
FOR THE 1995
YEAR ENDED (COMMENCEMENT
DECEMBER 31, OF OPERATIONS) TO
---------------- DECEMBER 31,
1997 1996 1995
------- ------- -----------------
<S> <C> <C> <C>
Investment income.......................... $ .97 $ .67 $ .34
Expenses................................... (.07) (.06) (.02)
------- ------- -------
Net investment income...................... .90 .61 .32
Net realized and unrealized gain (loss) on
investments............................... .12 (.30) .26
------- ------- -------
Net increase in unit value................. 1.02 .31 .58
Net asset value at beginning of period..... 10.89 10.58 10.00
------- ------- -------
Net asset value at end of period........... $ 11.91 $ 10.89 $ 10.58
======= ======= =======
Ratio of expenses to average net assets.... .57% .58% .69%**
Ratio of net investment income to average
net assets................................ 7.93% 5.82% 9.17%**
Portfolio turnover***...................... 14% 22% 2%****
Total return............................... 9.37% 2.93% 5.80%****
Net assets at end of period (in thousands). $82,734 $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.
**** Not annualized.
The accompanying notes are an integral part of these financial statements.
F-68
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS
T. Rowe Price International Stock Fund, at value (cost $63,984,771
and shares 4,396,738)............................................. $59,004,235
Receivable for fund units sold..................................... 196,627
Unamortized organizational costs................................... 15,736
-----------
Total Assets..................................................... 59,216,598
-----------
LIABILITIES
Payable for investments purchased.................................. 154,832
Payable for fund units repurchased................................. 41,795
State Street Bank and Trust Co.--program fee payable............... 16,645
Trustee, management and administration fees payable................ 3,543
American Bar Retirement Association--program fee payable........... 2,596
Other accruals..................................................... 240
-----------
Total Liabilities................................................ 219,651
-----------
NET ASSETS (equivalent to $18.21 per unit based on 3,239,192 units
outstanding)...................................................... $58,996,947
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-69
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends........................................................ $ 3,113,573
Other income..................................................... 37,721
-----------
Total investment income........................................ 3,151,294
-----------
EXPENSES
State Street Bank and Trust Co.--program fee..................... 182,992
Trustee, management and administration fees...................... 38,315
American Bar Retirement Association--program fee................. 26,731
Amortization of organization costs............................... 11,523
Reports to unitholders........................................... 8,320
Legal and audit fees............................................. 7,053
Registration fee................................................. 7,887
Other expenses................................................... 3,602
-----------
Total expenses................................................. 286,423
-----------
Net investment income.............................................. 2,864,871
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain................................................ 4,264,284
Change in net unrealized depreciation............................ (6,012,507)
-----------
Net realized and unrealized loss on investments................ (1,748,223)
-----------
Net increase in net assets resulting from operations............... $ 1,116,648
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-70
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
INTERNATIONAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
YEAR ENDED
DECEMBER 31,
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income................ $ 2,864,871 $ 830,951
Net realized gain on investments..... 4,264,284 1,492,478
Net change in unrealized appreciation
(depreciation) on investments....... (6,012,507) 1,022,272
------------ ------------
Net increase in net assets resulting
from operations..................... 1,116,648 3,345,701
------------ ------------
FROM UNITHOLDER TRANSACTIONS
Proceeds from sales of units......... 84,016,272 35,096,067
Cost of units redeemed............... (59,404,273) (16,022,030)
------------ ------------
Net increase in net assets resulting
from unitholder transactions........ 24,611,999 19,074,037
------------ ------------
Net increase in net assets......... 25,728,647 22,419,738
NET ASSETS
Beginning of year.................... 33,268,300 10,848,562
------------ ------------
End of year.......................... $ 58,996,947 $ 33,268,300
============ ============
NUMBER OF UNITS
Outstanding--beginning of year....... 1,868,547 705,954
Sold............................... 4,541,730 2,107,610
Redeemed........................... (3,171,085) (945,017)
------------ ------------
Outstanding--end of year............. 3,239,192 1,868,547
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-71
<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
FOR THE SEPTEMBER 5,
YEAR ENDED (COMMENCEMENT
DECEMBER 31, OF OPERATIONS) TO
---------------- DECEMBER 31,
1997 1996 1995
------- ------- -----------------
<S> <C> <C> <C>
Investment income.......................... $ 1.12 $ .70 $ .49
Expenses................................... (.10) (.10) (.03)
------- ------- -------
Net investment income...................... 1.02 .60 .46
Net realized and unrealized gain (loss) on
investments............................... (.61) 1.83 (.09)
------- ------- -------
Net increase............................... .41 2.43 .37
Net asset value at beginning of period..... 17.80 15.37 15.00
------- ------- -------
Net asset value at end of period........... $ 18.21 $ 17.80 $ 15.37
======= ======= =======
Ratio of expenses to average net assets.... .54% .59% .57%**
Ratio of net investment income to average
net assets................................ 5.41% 3.58% 9.2%**
Portfolio turnover ***..................... 101% 73% 4%****
Total return............................... 2.30% 15.81% 2.47%****
Net assets at end of period (in thousands). $58,997 $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.
**** Not annualized.
The accompanying notes are an integral part of these financial statements.
F-72
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
VALUE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $89,585,970).......................... $113,835,299
Cash.............................................................. 2,334
Receivable for fund units sold.................................... 254,467
Dividends and interest receivable................................. 370,675
Unamortized organizational costs.................................. 15,871
------------
Total Assets.................................................... 114,478,646
------------
LIABILITIES
Payable for investments purchased................................. 1,264,697
Investment advisory fee payable................................... 61,415
State Street Bank and Trust Co.--program fee payable.............. 31,560
Trustee, management and administration fees payable............... 6,755
American Bar Retirement Association--program fee payable.......... 4,596
Other accruals.................................................... 6,979
------------
Total Liabilities............................................... 1,376,002
------------
NET ASSETS (equivalent to $20.11 per unit based on 5,624,404 units
outstanding)..................................................... $113,102,644
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-73
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
VALUE EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign tax expense of $2,349)................. $ 1,642,376
Interest......................................................... 538,418
-----------
Total investment income........................................ 2,180,794
-----------
EXPENSES
Investment advisory fee.......................................... 304,776
State Street Bank and Trust Co.--program fee..................... 300,148
Trustee, management and administration fees...................... 62,881
American Bar Retirement Association--program fee................. 43,842
Amortization of organization costs............................... 18,570
Reports to unitholders........................................... 13,676
Legal and audit fees............................................. 11,594
Registration fee................................................. 12,966
Other expenses................................................... 11,204
-----------
Total expenses................................................. 779,657
-----------
Net investment income.............................................. 1,401,137
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain................................................ 1,090,426
Change in net unrealized appreciation............................ 17,294,659
-----------
Net realized and unrealized gain on investments................ 18,385,085
-----------
Net increase in net assets resulting from operations............... $19,786,222
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-74
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
VALUE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
YEAR ENDED
DECEMBER 31,
-------------------------
1997 1996
------------ -----------
<S> <C> <C>
OPERATIONS
Net investment income............................. $ 1,401,137 $ 651,044
Net realized gain on investments.................. 1,090,426 535,992
Net change in unrealized appreciation on invest-
ments............................................ 17,294,659 5,938,274
------------ -----------
Net increase in net assets resulting from opera-
tions............................................ 19,786,222 7,125,310
------------ -----------
UNITHOLDER TRANSACTIONS
Proceeds from sales of units...................... 53,837,540 28,084,938
Cost of units redeemed............................ (8,652,312) (7,695,572)
------------ -----------
Net increase in net assets resulting from
unitholder transactions.......................... 45,185,228 20,389,366
------------ -----------
Net increase in net assets...................... 64,971,450 27,514,676
NET ASSETS
Beginning of year................................. 48,131,194 20,616,518
------------ -----------
End of year....................................... $113,102,644 $48,131,194
============ ===========
NUMBER OF UNITS
Outstanding--beginning of year.................... 3,060,634 1,594,367
Sold............................................ 3,030,540 2,004,767
Redeemed........................................ (466,770) (538,500)
------------ -----------
Outstanding--end of year.......................... 5,624,404 3,060,634
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-75
<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,
FOR THE 1995
YEAR ENDED (COMMENCEMENT
DECEMBER 31, OF OPERATIONS) TO
----------------- DECEMBER 31,
1997 1996 1995
-------- ------- -----------------
<S> <C> <C> <C>
Investment income......................... $ .47 $ .40 $ .13
Expenses.................................. (.17) (.14) (.04)
-------- ------- -------
Net investment income..................... .30 .26 .09
Net realized and unrealized gain on in-
vestments................................ 4.08 2.54 .84
-------- ------- -------
Net increase in unit value................ 4.38 2.80 .93
Net asset value at beginning of period.... 15.73 12.93 12.00
-------- ------- -------
Net asset value at end of period.......... $ 20.11 $ 15.73 $ 12.93
======== ======= =======
Ratio of expenses to average net assets... .90% .99% 1.00%*
Ratio of net investment income to average
net assets............................... 1.61% 1.85% 2.12%*
Portfolio turnover........................ 13% 17% 4%***
Total return.............................. 27.84% 21.66% 7.75%***
Average commissions rate**** $ 0.0603 $0.0729 --
Net assets at end of period (in thou-
sands)................................... $113,103 $48,131 $20,617
</TABLE>
- --------
* Ratios annualized.
** Calculations prepared using the monthly average number of units
outstanding during the period.
*** Not annualized.
****Average commissions rate paid is presented for fiscal periods beginning on
or after September 1, 1995.
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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCKS (92.7%)
BASIC INDUSTRIES (7.1%)
ALUMINUM
Alcan Alum Ltd. ADR**.................................. 19,000 $ 524,875
Alumax Inc. ADR* **.................................... 1,800 61,200
Aluminum Co. Amer...................................... 4,300 302,613
------------
888,688
------------
CHEMICALS
Cabot Corp. ........................................... 11,100 306,638
Dow Chem Co. .......................................... 7,400 751,100
Du Pont EI De Nemours & Co............................. 2,200 132,138
Eastman Chem Co. ...................................... 8,600 512,238
Fmc Corp. ............................................. 2,900 195,206
Great Lakes Chemical Corp. ............................ 8,400 376,950
Hercules Inc. ......................................... 6,100 305,381
NalCo. Chem Co. ....................................... 2,300 90,994
Sigma Aldrich.......................................... 6,800 270,300
Union Carbide Corp. ................................... 8,200 352,088
------------
3,293,033
------------
GLASS AND CONTAINERS
Ball Corp. ............................................ 11,200 395,500
------------
PAPER
Champion Int'l Corp. .................................. 10,200 462,188
International Paper Co. ............................... 13,600 586,500
Mead Corp. ............................................ 11,600 324,800
Minnesota Mining & Manufacturing Co. .................. 2,400 196,950
Potlatch Corp. ........................................ 10,200 438,600
Union Camp Corp. ...................................... 9,200 493,925
Westvaco Corp. ........................................ 17,000 534,438
Willamette Industries Inc. ............................ 16,100 518,219
------------
3,555,620
------------
TOTAL BASIC INDUSTRIES................................. 8,132,841
------------
CAPITAL GOODS (5.1%)
CONSTRUCTION
Building Materials
Applied Materials Inc.*................................ 18,800 566,350
------------
ELECTRICAL EQUIPMENT
Arrow Electrs Inc.*.................................... 13,400 434,663
General Elec Co........................................ 34,700 2,546,113
------------
2,980,776
------------
</TABLE>
F-77
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
VALUE EQUITY FUND
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
INDUSTRIAL MACHINERY
Briggs & Stratton Corp. ............................... 9,100 $ 441,919
Cummins Engine Inc. ................................... 9,500 561,094
Ingersollrand Co....................................... 9,900 400,950
------------
1,403,963
------------
POLLUTION CONTROL
Browning Ferris Industries Inc......................... 18,100 669,700
Waste Management Inc. New.............................. 6,100 167,750
------------
837,450
------------
TOTAL CAPITAL GOODS.................................... 5,788,539
------------
CONSUMER BASICS (14.8%)
DRUGS AND HEALTHCARE
Abbott Labs............................................ 9,200 603,174
Allergan Inc. ......................................... 13,300 446,381
American Home Products Corp............................ 600 45,900
Bard C R Inc. ......................................... 12,200 382,013
Bausch & Lomb Inc. .................................... 12,800 507,200
Bristol Myers Squibb Co. .............................. 10,600 1,003,025
Columbia HCA Healthcare Corp .......................... 19,450 576,206
Johnson & Johnson...................................... 28,100 1,851,088
Lilly Eli & Co. ....................................... 800 55,700
Merck & Co. Inc. ...................................... 8,500 903,125
Pacificare Health System*.............................. 4,800 251,400
Pfizer Inc. ........................................... 6,200 462,288
Pharmacia & Upjohn Inc. ............................... 18,800 688,550
Smithkline Beecham PLC ADR**........................... 11,400 586,388
United Healthcare Corp. ............................... 6,000 298,125
------------
8,660,563
------------
FOOD AND BEVERAGE
Archer Daniels Midland Co. ............................ 34,805 754,833
Coca Cola Co. ......................................... 22,100 1,472,413
Heinz H J Co. ......................................... 5,800 294,713
Pepsico Inc. .......................................... 15,400 561,138
Supervalu Inc. ........................................ 6,000 251,250
Whitman Corp. ......................................... 23,900 622,894
------------
3,957,241
------------
</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, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
HOUSEHOLD PRODUCTS
Dial Corp. New......................................... 3,600 $ 74,925
Procter & Gamble Co. .................................. 6,000 478,875
------------
553,800
------------
RETAIL GROCERY
Albertsons Inc. ....................................... 14,700 696,413
------------
TOBACCO
Philip Morris Companies Inc. .......................... 48,900 2,215,781
RJR Nabisco Hldgs Corp. ............................... 16,000 600,000
------------
2,815,781
------------
TOTAL CONSUMER BASICS.................................. 16,683,798
------------
CONSUMER DURABLE GOODS (5.1%)
AUTO PARTS
Dana Corp. ............................................ 13,800 655,500
Genuine Parts Co. ..................................... 18,700 634,631
------------
1,290,131
------------
AUTOMOBILES
Chrysler Corp. ........................................ 14,500 510,219
Ford Mtr Co. Del ...................................... 28,100 1,368,119
General Mtrs Corp. .................................... 1,200 72,750
------------
1,951,088
------------
HOUSEHOLD APPLIANCES
Maytag Corp. .......................................... 11,900 444,019
Whirlpool Corp. ....................................... 8,800 484,000
------------
928,019
------------
MOBILE HOMES
Fleetwood Enterprises Inc. ............................ 6,100 258,869
------------
TIRES AND RUBBER
Cooper Tire & Rubber Co. .............................. 26,000 633,750
Goodyear Tire and Rubber .............................. 10,500 668,063
------------
1,301,813
------------
TOTAL CONSUMER DURABLE GOODS........................... 5,729,920
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-79
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
VALUE EQUITY FUND
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
CONSUMER NON-DURABLE GOODS (7.5%)
APPAREL AND TEXTILES
Reebok Int'l Ltd. ..................................... 6,800 $ 195,925
Russell Corp. ......................................... 12,800 340,000
Springs Industries Inc. ............................... 2,600 135,200
V F Corp. ............................................. 14,000 643,125
------------
1,314,250
------------
LIQUOR
Anheuser Busch Companies Inc. ......................... 18,800 827,200
------------
RETAIL TRADE
Dayton Hudson Corp. ................................... 10,100 681,750
Federated Dept. Stores Inc. Del........................ 16,600 710,097
Limited Inc. .......................................... 14,560 371,280
May Dept Stores Co. ................................... 13,900 732,356
Penney J C Inc. ....................................... 11,700 705,656
Sears Roebuck & Co. ................................... 15,300 692,325
TJX Companies Inc. New................................. 20,400 701,250
Toys R Us Inc.*........................................ 15,600 490,425
Wal Mart Stores Inc. .................................. 25,200 993,825
------------
6,078,964
------------
TOYS, AMUSEMENTS, & SPORTING GOODS
Mattel Inc. ........................................... 6,800 253,300
------------
TOTAL CONSUMER NON-DURABLE GOODS....................... 8,473,714
------------
CONSUMER SERVICES (1.3%)
AIR TRAVEL
AMR Corp. Del*......................................... 5,800 745,300
------------
HOTELS & RESTAURANTS
McDonalds Corp. ....................................... 1,200 57,300
------------
LEISURE TIME
Disney Walt Co. ....................................... 500 49,531
Harrahs Entertainment Inc. ............................ 32,000 604,000
------------
653,531
------------
TOTAL CONSUMER SERVICES................................ 1,456,131
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-80
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
VALUE EQUITY FUND
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
ENERGY (8.1%)
DOMESTIC OIL
Ashland Inc. .......................................... 8,000 $ 429,500
Atlantic Richfield Co. ................................ 5,200 416,650
Phillips Pete Co. ..................................... 13,800 671,025
Sun Inc. .............................................. 12,100 508,956
Unocal Corp............................................ 12,200 473,513
------------
2,499,644
------------
GAS EXPLORATION
Occidental Pete Corp. ................................. 25,900 759,218
------------
INTERNATIONAL OIL
Amoco Corp. ........................................... 12,400 1,055,550
Chevron Corp. ......................................... 10,000 770,000
Exxon Corp. ........................................... 21,000 1,284,938
Mobil Corp. ........................................... 18,100 1,306,593
Royal Dutch Petroleum Co. ADR** ....................... 19,600 1,062,075
Texaco Inc. ........................................... 7,400 402,375
------------
5,881,531
------------
TOTAL ENERGY........................................... 9,140,393
------------
FINANCE (16.0%)
BANKING
Bankamerica Corp. ..................................... 9,400 686,200
Chase Manhattan Corp. (New)............................ 10,800 1,182,600
Citicorp............................................... 2,500 316,094
First Chicago Nbd Corp. ............................... 2,600 217,100
First Union Corp. ..................................... 6,400 328,000
Fleet Financial Group Inc. ............................ 12,200 914,238
Keycorp New............................................ 5,000 354,063
Morgan J P & Co. Inc. ................................. 3,100 349,913
Nationsbank Corp....................................... 7,600 462,175
Republic NY Corp. ..................................... 2,900 331,144
------------
5,141,527
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-81
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
VALUE EQUITY FUND
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
FINANCIAL SERVICES
Countrywide Cr Industries Inc. ........................ 16,100 $ 690,288
Federal Home Loan Mortgage Corp. ...................... 25,200 1,056,825
Federal Nat'l Mortgage Assn ........................... 27,600 1,574,925
Merrill Lynch & Co. Inc. .............................. 12,000 875,250
Morgan Stanley Dean Witter............................. 16,215 958,712
------------
5,156,000
------------
INSURANCE
Aetna Inc. ............................................ 6,700 472,769
Ambac Financial Group Inc. ............................ 1,600 73,600
American General Corp. ................................ 18,852 1,019,186
American Int'l Group Inc. ............................. 1,950 212,063
Chubb Corp. ........................................... 10,100 763,813
Cigna Corp. ........................................... 4,300 744,169
Foundation Health Sys Inc. ............................ 20,250 453,091
Lincoln Nat'l Corp. ................................... 8,500 664,063
Loews Corp. ........................................... 3,100 328,988
Mbia Inc. ............................................. 7,000 467,688
Ohio Cas Corp. ........................................ 5,600 249,900
Old Rep Int'l Corp. ................................... 15,400 572,688
Safe Co. Corp. ........................................ 12,100 589,875
St Paul Companies Inc. ................................ 4,500 369,281
Torchmark Inc. ........................................ 12,800 538,400
------------
7,519,574
------------
SAVINGS AND LOAN
Golden West Financial Corp. Del........................ 3,200 313,000
------------
TOTAL FINANCE.......................................... 18,130,101
------------
GENERAL BUSINESS (0.9%)
BUSINESS SERVICES
De Luxe Corp. ......................................... 9,900 341,550
Humana Inc.*........................................... 15,800 327,850
------------
669,400
------------
NEWSPAPERS
Gannett Inc. .......................................... 3,200 197,800
------------
PUBLISHING
American Greetings Corp. .............................. 4,600 179,975
------------
TOTAL GENERAL BUSINESS................................. 1,047,175
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-82
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
VALUE EQUITY FUND
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
MISCELLANEOUS (3.6%)
CONGLOMERATES
Canadian Pacific Ltd. New ADR**........................ 17,900 $ 487,775
ITT Industries Inc. ................................... 15,400 483,175
Raytheon Co. .......................................... 11,676 589,548
Textron Inc. .......................................... 1,800 112,500
------------
1,672,998
------------
MISCELLANEOUS
Allegheny Energy Inc. ................................. 17,500 568,750
Consolidated Edison Inc. .............................. 19,300 791,300
Dillards Inc. ......................................... 17,300 609,825
Hartford Financial Svcs Grp............................ 4,100 383,606
Tricon Global Restaurants Inc.*........................ 1,540 44,756
------------
2,398,237
------------
TOTAL MISCELLANEOUS.................................... 4,071,235
------------
SHELTER (1.2%)
CONSTRUCTION MATERIALS
Armstrongworld Industries Inc. ........................ 4,800 358,800
Masco Corp. ........................................... 5,000 254,375
Owens Corning ADR**.................................... 5,300 180,863
------------
794,038
------------
HOMEBUILDERS
Centex Corp. .......................................... 4,800 302,100
Pulte Corp. ........................................... 6,200 259,238
------------
561,338
------------
TOTAL SHELTER.......................................... 1,355,376
------------
TECHNOLOGY (9.1%)
AEROSPACE
Boeing Co. ............................................ 200 9,788
Lockheed Martin Corp. ................................. 6,300 620,550
Northrop Grumman Corp. ................................ 5,000 575,000
Rockwell Int'l Corp. New............................... 2,400 125,400
------------
1,330,738
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-83
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
VALUE EQUITY FUND
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
COMPUTERS AND BUSINESS EQUIPMENT
Compaq Computer Corp. ................................. 19,750 $ 1,114,641
E M C Corp. Mass....................................... 10,200 279,863
Hewlett Packard Co. ................................... 20,000 1,250,000
International Business Machs........................... 19,300 2,018,376
Quantum Corp.*......................................... 18,200 365,138
Sun Microsystems Inc.*................................. 12,500 498,438
------------
5,526,456
------------
ELECTRONICS
Advanced Micro Devices Inc.*........................... 32,700 586,556
Intel Corp. ........................................... 13,600 955,400
Motorola Inc. ......................................... 3,200 182,600
National Semiconductor Corp.*.......................... 15,800 409,813
------------
2,134,369
------------
SOFTWARE
Microsoft Corp.*....................................... 10,200 1,318,350
------------
TOTAL TECHNOLOGY....................................... 10,309,913
------------
TRANSPORTATION (2.6%)
RAILROADS
Burlington Northern Santa Fe........................... 6,900 641,269
CSX Corp. ............................................. 12,600 680,400
Union Pacific Corp. ................................... 11,000 686,813
------------
2,008,482
------------
TRUCKING AND FREIGHT FORWARDING
Federal Express Corp.*................................. 6,000 366,375
Ryder Systems Inc. .................................... 16,300 533,825
------------
900,200
------------
TOTAL TRANSPORTATION................................... 2,908,682
------------
UTILITIES (10.3%)
ELECTRIC UTILITIES
American Electric Power Inc. .......................... 14,500 748,563
DQE Inc. .............................................. 16,400 576,050
GPU Inc................................................ 8,200 345,425
IES Industries Inc. ................................... 11,800 434,388
Pg&E Corp. ............................................ 26,200 797,463
Puget Sound Energy Inc. ............................... 10,200 307,913
Wisconsin Energy Corp. ................................ 19,000 546,250
------------
3,756,052
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-84
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
SCHEDULE OF INVESTMENTS
VALUE EQUITY FUND
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
GAS & PIPELINE UTILITIES
Transcanada Pipelines Ltd. ADR**...................... 11,400 $ 255,075
------------
TELEPHONE
Alltel Corp. ......................................... 8,800 361,350
Ameritech Corp. ...................................... 7,000 563,500
AT&T Corp. ........................................... 9,700 594,125
Bell Atlantic Corp. .................................. 9,792 891,072
Bellsouth Corp. ...................................... 25,500 1,435,969
GTE Corp. ............................................ 6,200 323,950
MCI Communications Corp. ............................. 11,200 479,500
SBC Communications Inc. .............................. 22,200 1,626,150
Sprint Corp. ......................................... 6,200 363,475
US West Inc. ......................................... 21,500 970,188
------------
7,609,279
------------
TOTAL UTILITIES....................................... 11,620,406
------------
TOTAL COMMON STOCKS (Cost $80,801,319)................ 104,848,224
------------
<CAPTION>
UNITS
----------
<S> <C> <C>
SHORT TERM INVESTMENTS (COST $3,283,148) (2.9%)
State Street Bank Yield Enhanced Short Term Investment
Fund................................................. 3,283,148 3,283,148
------------
FIXED INCOME (COST $5,501,503) (5.0%) PRINCIPAL
----------
United States Treasury Notes 07/15/06 7.00%........... $3,557,000 3,839,319
United States Treasury Notes 08/15/05 6.50%........... 1,787,000 1,864,608
------------
5,703,927
------------
TOTAL INVESTMENTS (COST $89,585,970) (100.6%)......... 113,835,299
Liabilities less Other Assets (-0.6%)................. (732,655)
------------
NET ASSETS (100.0%)................................... $113,102,644
============
</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 accompanying notes are an integral part of these financial statements.
F-85
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
STRUCTURED PORTFOLIO SERVICE
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE
------------ ----------- -----------
<S> <C> <C> <C>
ASSETS
State Street Bank collective investment
funds, at value:
Stable Asset Return Fund (cost of
$5,168,729, and $6,609,972 and units of
5,168,729 and 6,609,972, respectively). $ 5,168,729 $ 6,609,972 $ --
Intermediate Bond Fund (cost of
$5,515,882, $18,227,384, and $7,172,820
and units of 506,391, 1,665,235 and
653,397, respectively)................. 6,030,185 19,829,915 7,780,771
Value Equity Fund (cost of $992,533,
$5,878,407 and $6,273,776 and units of
59,974, 361,574 and 386,924,
respectively).......................... 1,206,036 7,270,969 7,780,771
Growth Equity Fund (cost of $987,044,
$5,866,241 and $6,228,203 and units of
3,351, 20,207 and 21,623,
respectively).......................... 1,206,036 7,270,969 7,780,771
Index Equity Fund (cost of $1,948,831,
$12,085,873 and $12,277,413 and units
of 109,395, 689,498 and 705,762,
respectively).......................... 2,412,073 15,202,935 15,561,540
International Equity Fund (cost of
$1,179,127, $9,648,167 and $10,148,505
and units of 66,216, 544,374 and
569,597, respectively)................. 1,206,036 9,914,957 10,374,360
Aggressive Equity Fund (cost of
$2,254,805 and units of 53,375)........ -- -- 2,593,590
Receivable for investments sold......... -- 135,133 136,429
Receivable for fund units sold.......... 108,272 248,960 102,122
----------- ----------- -----------
Total Assets.......................... 17,337,367 66,483,810 52,110,354
----------- ----------- -----------
LIABILITIES
Payable for investments purchased......... 35,747 384,093 238,551
Payable for fund units redeemed........... 72,525 -- --
Accrued expenses.......................... 1,277 4,836 3,794
----------- ----------- -----------
Total Liabilities..................... 109,549 388,929 242,345
----------- ----------- -----------
NET ASSETS (equivalent to $12.97, $13.93
and $14.91 per unit based on 1,328,560,
4,744,620 and 3,478,382 units
outstanding, respectively)............... $17,227,818 $66,094,881 $51,868,009
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-86
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
STRUCTURED PORTFOLIO SERVICE
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE
------------ ---------- ----------
<S> <C> <C> <C>
Investment income.......................... $ -- $ -- $ --
Service fees............................... 13,726 50,019 40,062
---------- ---------- ----------
Net investment loss........................ (13,726) (50,019) (40,062)
---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Net realized gain on investments......... 1,207,158 3,024,522 2,739,133
Change in net unrealized appreciation.... 616,834 4,925,526 4,820,721
---------- ---------- ----------
Net realized and unrealized gain on
investments........................... 1,823,992 7,950,048 7,559,854
---------- ---------- ----------
Net increase in net assets resulting from
operations................................ $1,810,266 $7,900,029 $7,519,792
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-87
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
STRUCTURED PORTFOLIO SERVICE
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE
------------ ----------- -----------
<S> <C> <C> <C>
FROM OPERATIONS
Net investment loss................... $ (13,726) $ (50,019) $ (40,062)
Net realized gain on investments...... 1,207,158 3,024,522 2,739,133
Net change in unrealized appreciation
on investments....................... 616,834 4,925,526 4,820,721
----------- ----------- -----------
Net increase in net assets resulting
from operations...................... 1,810,266 7,900,029 7,519,792
----------- ----------- -----------
FROM UNITHOLDER TRANSACTIONS
Proceeds from sales of units.......... 8,482,695 31,899,113 25,053,575
Cost of units redeemed................ (4,266,120) (6,321,601) (6,263,219)
----------- ----------- -----------
Net increase in net assets resulting
from unitholder transactions......... 4,216,575 25,577,512 18,790,356
----------- ----------- -----------
Net increase in net assets............ 6,026,841 33,477,541 26,310,148
NET ASSETS
Beginning of year..................... 11,200,977 32,617,340 25,557,861
----------- ----------- -----------
End of year........................... $17,227,818 $66,094,881 $51,868,009
=========== =========== ===========
NUMBER OF UNITS
Outstanding--beginning of year........ 977,202 2,733,228 2,060,096
Sold................................ 699,243 2,500,711 1,866,881
Redeemed............................ (347,885) (489,319) (448,595)
----------- ----------- -----------
Outstanding--end of year.............. 1,328,560 4,744,620 3,478,382
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-88
<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-89
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
STRUCTURED PORTFOLIO SERVICE
SELECTED PER-UNIT DATA AND RATIOS
FOR THE YEAR ENDED DECEMBER 31, 1997
(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................................. 1.52 2.01 2.51
------- ------- -------
Net increase................................. 1.51 2.00 2.50
Net asset value at beginning of year......... 11.46 11.93 12.41
------- ------- -------
Net asset value at end of year............... $ 12.97 $ 13.93 $ 14.91
======= ======= =======
Ratio of expenses to average net assets...... .09% .09% .09%
Ratio of net investment loss to average net
assets...................................... (.09%) (.09%) (.09%)
Portfolio turnover**......................... 33% 18% 18%
Total return................................. 13.18% 16.76% 20.15%
Net assets at end of year (in thousands)..... $17,228 $66,095 $51,868
</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
invest rather than turnover of such underlying funds.
The accompanying notes are an integral part of these financial statements.
F-90
<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 % 27 % 28 %
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
invest rather than turnover of such underlying funds.
The accompanying notes are an integral part of these financial statements.
F-91
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
STRUCTURED PORTFOLIO SERVICE
SELECTED PER-UNIT DATA AND RATIOS
(For a unit outstanding throughout the period)*
<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*** ****................... 3 % 4 % 3 %
Total return****............................. 4.70 % 5.40 % 5.70 %
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.
**** Not annualized.
The accompanying notes are an integral part of these financial statements.
F-92
<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 thereafter. 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 of insurance
companies, banks and financial institutions. Currently invests in the State
Street Bank ABA Members/Pooled Stable Asset Fund Trust ("SAFT"), a separate
State Street Bank and Trust Company ("State Street Bank" or the "Trustee")
collective investment fund. SAFT invests in investment contracts of
insurance companies, banks and financial institutions and in the State
Street Bank Yield Enhanced Short Term Investment Fund, a separate State
Street Bank collective investment fund.
Index Equity Fund--replication of the total return of the Russell 3,000
Index. Currently invests in the State Street Global Advisors Flagship S&P
500 Index Fund (the "500 Index Fund") and State Street Global Advisors
Russell Special Small Company Common Trust Fund (the "Russell Fund"),
separate State Street Bank collective investment funds. The 500 Index Fund
invests in equity securities which comprise the Standard & Poor's 500 Index
and the Russell Fund invests in securities contained in the Russell Special
Company Index.
Intermediate Bond Fund--total return from current income and capital
appreciation through investment in debt securities. Currently invests in
the PIMCO Total Return Fund (the "Total Return Fund") and MasterWorks Bond
Index Fund (the "Bond Index Fund"), registered investment companies. The
Total Return Fund invests primarily in intermediate-term investment grade
bonds. The Bond Index Fund invests in high grade bonds denominated in U.S.
dollars.
International Equity Fund--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, which invests worldwide primarily in well-
established, non-U.S. companies.
Value Equity Fund--long term growth of capital and dividend income
through investment in common stocks, primarily of large capitalization
companies believed to be undervalued.
F-93
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Structured Portfolio Service
Conservative--high current investment income and some capital
appreciation.
Moderate--higher 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, 1997.
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 and has 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
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 (SAFT) 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
F-94
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(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.
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.
F-95
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
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.
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., Dresdner RCM
Global Investors LLC (formerly RCM Capital Management), the institutional
investment management arm of Dresdner Bank Group, Sit Investment Associates,
Inc., Miller, Anderson & Sherrerd, LLP, a wholly owned subsidiary of Morgan
Stanley Asset Management Holdings, Inc., Lincoln Capital Management Company,
Sanford C. Bernstein & Co., Inc., and Bankers Trust Company 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,
Aggressive Equity and Balanced--effective June 30,
1997)............................................... .225% to .50%*
Columbus Circle Investors (Growth Equity--prior to
June 16, 1997)...................................... .30% to .50%
Dresdner RCM Global Investors LLC (Growth Equity).... .25% to .70%
Sit Investment Associates (Aggressive Equity)........ .60% to 1.00%
Miller, Anderson & Sherrerd, LLP (Balanced--prior to
June 30, 1997)...................................... .20% to .60%
Miller, Anderson & Sherrerd, LLP (Balanced--effective
June 30, 1997)...................................... .125% to .50%
Lincoln Capital Management Company (Balanced--prior
to June 30, 1997 and Growth Equity--effective June
30, 1997)........................................... .15% to .4675%
Sanford C. Bernstein & Co., Inc. (Value Equity)...... .15% to .50%
Bankers Trust Company (Growth Equity--effective June
16, 1997)........................................... .010% to .075%**
</TABLE>
- --------
* Subject to a 5% fee reduction based on aggregate fees.
**Minimum fee of $75,000.
F-96
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Effective June 30, 1997 the investment allocations by advisor for the
Balanced Fund and Growth Equity Fund were restructured. As a result,
$169,000,000 equities of the Growth Equity Fund managed by Capital Guardian
Trust Company were exchanged at value for $84,000,000 and $85,000,000 equities
of the Balanced Fund managed by Miller Anderson & Sherrerd, LLP and Lincoln
Capital Management Company, respectively.
Price-Fleming, manager of the T. Rowe Price International Stock Fund, pays a
.10% fee based on investment value for administrative services which is
credited to the International Equity Fund. The International Equity Fund
received $37,721 relating to this fee for the year ended December 31, 1997.
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 1997 1997
----------------------- ----------------- ------------
<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>
Program fees are allocated to each Fund based on net asset value. State
Street Bank and ABRA received Program fees of $8,656,387 and $1,264,595 for the
year ended December 31, 1997, respectively.
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>
F-97
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
- --------
* 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 $2,750,460 for the year ended December 31, 1997. These fees are
allocated to each Fund based on net asset value.
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 $103,807 for the
year ended December 31, 1997.
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, 1997
-------------------------
PURCHASES SALES
------------ ------------
<S> <C> <C>
Aggressive Equity Fund.......................... $140,277,473 $150,484,869
Growth Equity Fund.............................. 969,322,383 988,733,301
Balanced Fund................................... 384,830,700 371,973,516
Stable Asset Return Fund........................ 194,592,514 196,243,981
Index Equity Fund............................... 58,281,518 19,901,040
Value Equity Fund............................... 53,164,546 9,911,761
International Equity Fund....................... 84,464,937 57,676,494
Intermediate Bond Fund.......................... 41,795,362 9,281,155
Conservative Structured Portfolio Service....... 10,045,209 5,836,697
Moderate Structured Portfolio Service........... 38,223,214 12,646,303
Aggressive Structured Portfolio Service......... 29,335,539 10,465,964
</TABLE>
The aggregate cost of purchases and proceeds from sales of U.S. Government
securities were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
-------------------------
PURCHASES SALES
------------ ------------
<S> <C> <C>
Balanced Fund.................................... $273,356,285 $278,450,278
Value Equity Fund................................ 3,186,143 --
Growth Equity Fund............................... 9,034,914 3,665,583
</TABLE>
5. ORGANIZATIONAL EXPENSES
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.
F-98
<PAGE>
AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET COLLECTIVE TRUST
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
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
American Depository Receipts ("ADRs") represent ownership of foreign
securities on deposit with a domestic custodian bank. 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 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.
F-99
