1. Description of the Collective
Trust
The American Bar
Association Members/Northern Trust Collective Trust (formerly known
as the American Bar Association Members/State Street Collective
Trust, referred to herein as the “Collective Trust”)
was organized on August 8, 1991. From December 1, 2004
and through June 30, 2010, State Street Bank and Trust Company
of New Hampshire (“State Street”) acted as trustee of
the Collective Trust. Effective July 1, 2010, Northern Trust
Investments, Inc. (“Northern Trust Investments” or the
“Trustee”) was substituted for State Street as trustee
of the Collective Trust. In connection therewith, the name of the
Collective Trust was changed from “American Bar Association
Members/State Street Collective Trust” to “American Bar
Association Members/Northern Trust Collective Trust.” From
and after July 1, 2010, Northern Trust Investments, as trustee
of the Collective Trust, has exclusive discretion and control over
the assets of the Collective Trust. Further, effective July 1,
2010, The Northern Trust Company (“Northern Trust”) was
substituted for State Street Bank and Trust Company (“State
Street Bank”) as trustee of the American Bar Association
Members Retirement Trust and the American Bar Association Members
Pooled Trust for Retirement Plans.
Northern Trust
Investments is an Illinois banking corporation with trust powers
and a wholly-owned subsidiary of Northern Trust, which is an
Illinois banking corporation and a wholly-owned subsidiary of
Northern Trust Corporation, a publicly-traded financial holding
company registered with the Board of Governors of the Federal
Reserve System pursuant to the Federal Bank Holding Company Act of
1956, as amended.
Northern Trust
Investments delegated to Northern Trust the responsibility to
provide certain services to the Collective Trust on behalf of
Northern Trust Investments. In addition, Northern Trust is the
primary custodian and, based on instructions from ING Institutional
Plan Services, LLC, a Delaware limited liability company
(“ING Services”), 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 respective trustees of such plans. ING Services or an
affiliate thereof provides recordkeeping, communication, marketing
and administration services to the ABA Retirement Funds Program
(the “Program”). ING Services is responsible for the
maintenance of individual account records or accrued benefit
information for participants whose employers choose to have the
Program’s administrator maintain those account records. ING
Services also provides certain account and investment information
to employers and participants, manages the receipt of all plan
contributions, forwards investment and transaction instructions to
the appropriate parties and forwards instructions relating to
distribution of benefits provided by the plans.
The Collective
Trust is maintained exclusively for the collective investment of
monies administered on behalf of participants in the Program. As of
December 31, 2012, the Collective Trust offered twenty-three
separate collective investment funds, comprised of six Managed
Funds, six Index Funds, the Real Asset Return Fund, the Alternative
Alpha Fund, six Retirement Date Funds and three Target Risk Funds
(collectively, the “Funds”). The Funds are
investment options under the Program, which is sponsored by ABA
Retirement Funds. Effective July 2, 2009, units of the
Balanced Fund ceased to be offered and thus the Balanced Fund is no
longer an investment option under the Program, although certain
assets held under the Program continue to be invested in the
Balanced Fund. The objectives and principal strategies of the Funds
and the Balanced Fund are as follows:
Managed
Funds
Stable Asset
Return Fund (“SARF”)—current income
consistent with the preservation of principal and liquidity. SARF
may invest in investment contracts (“Traditional Investment
Contracts”) and synthetic guaranteed investment contracts
(“SGICs”, “Security-Backed Contracts” or
“Wrap Contracts”) with associated underlying assets,
and high quality, fixed income instruments. Such investments may be
made directly by the Fund or indirectly through its investment in
other collective investment funds maintained by one or more banks,
including Northern Trust Investments.
Bond Core
Plus Fund—total return from current income and capital
appreciation through investment in a diversified portfolio of fixed
income securities with varying maturities.
Large Cap
Equity Fund—long-term growth of capital through
investment primarily in common stocks and equity-type securities of
larger-capitalization U.S. companies with market capitalizations,
at the time of purchase, of greater than $1 billion.
Small-Mid Cap
Equity Fund—long-term growth of capital through
investment primarily in common stocks and equity-type securities of
small- to medium-capitalization U.S. companies with market
capitalizations, at the time of purchase, of between $100 million
and $20 billion.
International
All Cap Equity Fund—long-term growth of capital primarily
through investment in common stocks and other equity securities of
non-U.S. domiciled companies.
Global All
Cap Equity Fund—long-term growth of capital primarily
through investment in common stocks and other equity securities of
companies located throughout the world. The Fund invests in U.S.
companies with market capitalizations in excess of $100 million at
the time of purchase and also in non-U.S. companies of any size
located in a number of countries throughout the world.
Index
Funds
Bond Index
Fund—replication of the total return of the Barclays
Capital U.S. Aggregate Bond Index, after taking into account Fund
expenses. As of December 31, 2012, 100% of the Fund’s
net assets were invested indirectly through the SSgA U.S. Bond
Index Non-Lending Series Fund Class A, which is a collective
investment fund maintained by State Street Bank that invests in
securities in the Barclays Capital U.S. Aggregate Bond
Index.
Large Cap
Index Equity Fund—replication of the total return of the
S&P 500®,
after taking into account Fund expenses. As of December 31,
2012, 100% of the Fund’s net assets were invested indirectly
through the SSgA S&P 500®
Index Non-Lending Series Fund Class A, which is a collective
investment fund maintained by State Street Bank that invests in
securities in the S&P 500®.
All Cap Index
Equity Fund—replication of the total return of the
Russell 3000®
Index, after taking into account Fund expenses. As of
December 31, 2012, 100% of the Fund’s net assets were
invested indirectly through the SSgA Russell All Cap®
Index Non-Lending Series Fund Class A, which is a collective
investment fund maintained by State Street Bank that invests in
securities contained in the Russell 3000®
Index.
Mid Cap Index
Equity Fund—replication of the total return of the
S&P MidCap 400®,
after taking into account Fund expenses. As of December 31,
2012, 100% of the Fund’s net assets were invested indirectly
through the SSgA S&P MidCap®
Index Non-Lending Series Fund Class A, which is a collective
investment fund maintained by State Street Bank that invests in
securities contained in the S&P MidCap 400®.
Small Cap
Index Equity Fund—replication of the total return of the
Russell 2000®
Index, after taking into account Fund expenses. As of
December 31, 2012, 100% of the Fund’s net assets were
invested indirectly through the SSgA Russell Small Cap®
Index Non-Lending Series Fund Class A, which is a collective
investment fund maintained by State Street Bank that invests in
securities in the Russell 2000®
Index.
International
Index Equity Fund—replication of the total return of the
Morgan Stanley Capital International All-Country World Ex-U.S.
(“MSCI ACWI ex-US”) Index, after taking into account
Fund expenses. As of December 31, 2012, 100% of the
Fund’s net assets were invested indirectly through the SSgA
Global Equity ex U.S. Index Non-Lending Series Fund Class A,
which is a collective investment fund maintained by State Street
Bank that invests in securities in the MSCI ACWI ex-US
Index.
Each of these underlying
funds’ annual financial statements are available to any
individual upon request and may also be accessed by Participants on
the password-protected portion of the Program’s
website.
Real Asset
Return Fund
Real Asset
Return Fund—capital appreciation in excess of inflation
as measured by the All Items Less Food and Energy Consumer Price
Index for All Urban Consumers for the U.S. City Average, 1982-84 =
100, which we refer to as the Core Consumer Price Index or Core CPI
(which excludes food and energy). The Fund invests in the SSgA Dow
Jones UBS-Commodity IndexSM Non-Lending Series Fund Class A,
SSgA/Tuckerman REIT Index Non-Lending Series Fund Class A and
SSgA U.S. Inflation Protected Bond Index Non-Lending Series Fund
Class A, which comprise a diversified portfolio of primarily
commodity futures, real estate investment trusts, which we refer to
as REITs, and Treasury Inflation Protected Securities, which we
refer to as U.S. TIPS.
Each of these underlying
funds’ annual financial statements are available to any
individual upon request and may also be accessed by Participants on
the password-protected portion of the Program’s
website.
Alternative
Alpha Fund
Alternative
Alpha Fund—long-term total returns in excess of the yield
on cash-equivalent investments through investments in a broad range
of liquid asset classes, including a diversified portfolio of
securities and instruments. The investment strategies used by the
Investment Advisors are non-traditional, and include the use of
derivatives, leverage, hedging and shorting. These strategies have
certain non-traditional risks.
Retirement
Date Funds
Retirement
Date Funds—a series of diversified investment funds each
of which is designed to correspond to a particular time horizon to
retirement. The six Retirement Date Funds, designated as the
Lifetime Income Retirement Date Fund, 2010 Retirement Date Fund,
2020 Retirement Date Fund, 2030 Retirement Date Fund, 2040
Retirement Date Fund and 2050 Retirement Date Fund,
respectively, offer six separate “target retirement
date” strategies. With the exception of the Lifetime Income
Retirement Date Fund and the 2010 Retirement Date Fund, which is
designed for those well into retirement, each Retirement Date
Fund’s asset mix will, over time, become progressively more
conservative as the specified target date of most conservative
investment mix draws nearer.
The Retirement
Date Funds utilize a broad range of asset classes and a quarterly
rebalancing process to provide diversification of returns and risks
consistent with the stated time horizon to most conservative asset
mix. Investment in each such asset class is obtained by investing
in index strategies or other pooled strategies designed for low
tracking error. As of December 31, 2012, each of the
Retirement Date Funds invested 100% of its net assets in separate
State Street Bank collective investment funds listed
below.
Lifetime
Income Retirement Date Fund—invests 100% of its net
assets in the SSgA Target Retirement Income Non-Lending Series Fund
Class A.
2010
Retirement Date Fund—invests 100% of its net assets in
the SSgA Target Retirement 2010 Non-Lending Series Fund Class
A.
2020
Retirement Date Fund—invests 100% of its net assets in
the SSgA Target Retirement 2020 Non-Lending Series Fund Class
A.
2030
Retirement Date Fund—invests 100% of its net assets in
the SSgA Target Retirement 2030 Non-Lending Series Fund Class
A.
2040
Retirement Date Fund—invests 100% of its net assets in
the SSgA Target Retirement 2040 Non-Lending Series Fund Class
A.
2050
Retirement Date Fund—invests 100% of its net assets in
the SSgA Target Retirement 2050 Non-Lending Series Fund Class
A.
Each of these underlying
funds’ annual financial statements is available to any
individual upon request and may also be accessed by Participants on
the password-protected portion of the Program’s
website.
Target Risk
Funds
Target Risk
Funds—a series of diversified investment funds each of
which is designed to correspond to a particular investment risk
level. The three Target Risk Funds, designated as the Conservative
Risk Fund, the Moderate Risk Fund and the Aggressive Risk Fund,
offer three separate strategies, each with a distinct asset
mix.
Conservative
Risk Fund—invests in a combination of U.S. stocks,
non-U.S. stocks, bonds and cash-equivalent investments, and
allocates its assets among these investments according to a fixed
strategic asset allocation strategy. The Fund invests in the SSgA
Global Equity ex U.S. Index Non-Lending Series Fund Class A,
SSgA U.S. Bond Index Non-Lending Series Fund Class A,
SSgA/Tuckerman REIT Index Non-Lending Series Fund Class A,
SSgA Russell All Cap®
Index Non-Lending Series Fund Class A, SSgA U.S. Inflation
Protected Bond Index Non-Lending Series Fund Class A and
Northern Trust Global Investments Collective Short-Term Investment
Fund. The Conservative Risk Fund is the most conservative strategy
among the Target Risk Funds. The Conservative Risk Fund is designed
for investors who prefer lower volatility of returns and higher
expected income.
Moderate Risk
Fund—invests in a combination of U.S. stocks, non-U.S.
stocks, bonds, commodities and cash-equivalent investments, and
allocates its assets among these investments according to a fixed
strategic asset allocation strategy. The Fund invests in the SSgA
Global Equity ex U.S. Index Non-Lending Series Fund Class A,
SSgA Dow Jones UBS-Commodity IndexSMNon-Lending Series Fund Class A, SSgA U.S. Bond Index
Non-Lending Series Fund Class A, SSgA/Tuckerman REIT Index
Non-Lending Series Fund Class A, SSgA Russell All
Cap®
Index Non-Lending Series Fund Class A, SSgA U.S. Inflation
Protected Bond Index Non-Lending Series Fund Class A, and
Northern Trust Global Investments Collective Short-Term Investment
Fund. The Moderate Risk Fund is designed for investors who seek a
combination of capital appreciation and income. This Fund is
expected to have higher volatility of returns than the Conservative
Risk Fund but lower volatility than the Aggressive Risk
Fund.
Aggressive
Risk Fund—invests in a combination of U.S. stocks,
non-U.S. stocks, bonds, commodities and cash-equivalent
investments, and allocates its assets among these investments
according to a fixed strategic asset allocation strategy. The Fund
invests in the SSgA Global Equity ex U.S. Index Non-Lending Series
Fund Class A, SSgA Dow Jones UBS-Commodity IndexSM Non-Lending
Series Fund Class A, SSgA U.S. Bond Index Non-Lending Series
Fund Class A, SSgA/Tuckerman REIT Index Non-Lending Series
Fund Class A, SSgA Russell All Cap®
Index Non-Lending Series Fund Class A, and SSgA U.S. Inflation
Protected Bond Index Non-Lending Series Fund Class A. The
Aggressive Risk Fund is designed for investors who want high growth
and capital appreciation. This Fund is expected to have the highest
volatility of returns among the Target Risk Funds.
Each of these underlying
funds’ annual financial statements is available to any
individual upon request and may also be accessed by Participants on
the password-protected portion of the Program’s
website.
Balanced
Fund
Balanced
Fund—current income and long-term capital appreciation
through investment in publicly traded common stocks, other
equity-type securities, medium- to long-term debt securities with
varying maturities and money market instruments. As of
December 31, 2012, 40.7% and 59.3% of the Fund’s net
assets were invested in the Bond Core Plus Fund and Large Cap
Equity Fund, respectively. The Fund ceased offering its units on
July 2, 2009.
All the Managed
Funds other than SARF (i.e., the Large Cap Equity Fund, Small-Mid
Cap Equity Fund, International All Cap Equity Fund, Global All Cap
Equity Fund and Bond Core Plus Fund) may invest in Northern Trust
Global Investments (“NTGI”) – Collective
Short-Term Investment Fund (“STIF”) and SARF may invest
directly or indirectly in the NTGI Collective Government Short-Term
Investment Fund (“GSTIF”). The annual financial
statements of STIF and GSTIF are available to any individual upon
request and may also be accessed by Participants on the
password-protected portion of the Program’s
website.
The Collective
Trust may offer and sell an unlimited number of units representing
interests in separate Funds of the Collective Trust, each unit to
be offered and sold at the per unit net asset value of the
corresponding Fund.
