<PAGE>
 
                                                                     EXHIBIT 3.5


                 AMERICAN BAR ASSOCIATION MEMBERS/STATE STREET
                               COLLECTIVE TRUST

                  THIRD AMENDED AND RESTATED FUND DECLARATION

                                 BALANCED FUND


          Pursuant to Sections 3.03 and 7.01 of the Declaration of Trust, dated
December 5, 1991, as amended as of July 31, 1995 and as further amended as of
the date hereof, which authorizes State Street Bank and Trust Company as trustee
("State Street" or the "Trustee") of the American Bar Association Members/State
Street Collective Trust (the "Collective Trust") to amend the Fund Declarations
of the investment funds established under the Collective Trust, effective as of
January 1, 1999 State Street hereby amends and restates the Fund Declaration
dated April 12, 1996 of the Balanced Fund, an investment fund established under
the Collective Trust (the "Fund"). The provisions of the Declaration of Trust
are incorporated herein by reference.  In addition, the Trustee agrees and
declares that it will hold, administer and deal with all money and property
received or purchased by it as Trustee of the Collective Trust on behalf of the
Fund subject to the additional terms and conditions set forth in this Fund
Declaration.  Capitalized terms used and not otherwise defined shall have the
meanings set forth in the Declaration of Trust.

          1.   Investment Objective.  The primary investment objective of the
               --------------------                                          
Fund is to achieve both capital appreciation and increasing income.  The Fund
will seek to achieve growth of capital through increases in the value of the
securities it holds and to realize income principally from dividends on such
securities.  The Fund will seek 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.

          2.   Investment Guidelines and Restrictions.  The assets of the Fund
               --------------------------------------                         
shall be invested and reinvested primarily in publicly traded common stocks and
other equity-type securities, long-term debt securities (including bonds, notes,
debentures, equipment trust certificates and mortgage related securities), and
money market instruments, provided that the Trustee may invest all or any
portion of the assets of the Fund in accordance with Section 3.03(c) of the
Declaration of Trust.  It is expected that (i) at least 40%, but not more than
70%, of the assets of the Fund will be invested in common stocks and other
equity-type instruments, including convertible securities and, (ii) at least
30%, but not more than 60%, of the assets of the Fund will be invested in
nonconvertible debt securities and money market instruments. Securities of non-
U.S. companies may be held by the Fund directly or indirectly through American
Depository Receipts or European Depository Receipts.
<PAGE>
 
          It is the intention of the Trustee not to cause the Fund to invest in
derivative securities, except to the extent set forth in the Prospectus of the
Collective Trust from time to time in effect pursuant to which the Units of the
Fund may be issued.  The Trustee, subject to consultation with ABRA, may in the
future review such investment policy.

          The Fund may invest in any of the money market securities described in
Section 3.03(c) of the Declaration of Trust subject to the following
restrictions, provided that such restrictions shall apply only at the time of
purchase of the securities:

          (a)  commercial paper must be either rated P-1 by Moody's Investors
               Service, Inc. ("Moody's") or at least A-1 by Standard & Poor's
               Corporation ("S&P");

          (b)  master demand notes or variable amount floating rate notes must
               be issued by an issuer that has an outstanding issue of unsecured
               debt that is currently rated at least A by Moody's or at least A
               by S&P; and

          (c)  debt securities with less than one year until maturity must be
               issued or guaranteed by an issuer which is currently rated at
               least A by Moody's or at least A by S&P.

          The Fund will not:

          (a)  trade in foreign currency (except transactions incidental to the
               settlement of purchases or sales of securities for the Fund);

          (b)  make an investment in order to exercise control or management
               over a company;

          (c)  make short sales, unless the Fund has, 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 the Fund is in a short position;

          (d)  trade in commodities or commodity contracts, except futures
               contracts (including options on futures contracts) with respect
               to securities and securities indices for hedging purposes or
               pursuant to the investment policy regarding derivative securities
               referred to above;

          (e)  write uncovered options;
<PAGE>
 
          (f)  purchase real estate or mortgages, provided that the Fund may buy
               shares of real estate investment trusts listed on U.S. stock
               exchanges or reported on the Nasdaq National Market if such
               purchases are consistent with the investment objective and
               restrictions set forth in this Fund Declaration;

          (g)  invest in the securities of registered invested companies;

          (h)  invest in oil, gas or mineral leases;

          (i)  purchase any security on margin or borrow money, except for
               short-term credit necessary for clearance of securities
               transactions; or

          (j)  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.

          3.   Initial Value of Units of the Fund.  The initial value of Units
               ----------------------------------                             
of the Fund was the Unit value as of December 31, 1991 of the units maintained
in Separate Account No. 100 under Group Annuity Contract No. AC 2550 effective
on August 30, 1984 and issued by The Equitable Life Assurance Society of The
United States to the trustees of the American Bar Association Members Retirement
Trust and the American Bar Association Members Pooled Trust for Retirement
Plans.

          4.   Restrictions on Withdrawals.  There is no restriction on
               ---------------------------                             
withdrawal and transfer.  A Participating Trust may request withdrawal of any
number of Units of the Fund on each Business Day.

          5.   Trustee, Management and Administrative Fees.  For services
               -------------------------------------------               
rendered as trustee of the Fund, the Trustee will be entitled to receive
compensation in the amount and at the times set forth in Schedule A attached
hereto.

          6.   Investment Advisors.  The Trustee retains the right to appoint
               -------------------                                           
Investment Advisors to assist the Trustee in managing the assets of the Fund.
Any such Investment Advisors shall be designated from time to time in Schedule B
attached hereto, and the Trustee shall enter into investment advisory agreements
with such Investment Advisors setting forth the terms and conditions (including
any volume or percentage limitations applicable to types, categories or classes
of securities) under which any such Investment Advisor will advise and make
recommendations to the Trustee and the compensation to be paid to such
Investment Advisors.

          7.   Conflicts.  In the event of a conflict between the terms of this
               ---------                                                       
document and the Declaration of Trust, the Declaration of Trust shall control
unless 
<PAGE>
 
the Declaration of Trust specifically permits the Trustee to vary the particular
provision set forth therein.


          IN WITNESS WHEREOF, STATE STREET BANK AND TRUST COMPANY has caused its
name to be signed to this Amended and Restated Fund Declaration for the Balanced
Fund by its proper officer as of January 1, 1999.



ATTEST:                             STATE STREET BANK AND TRUST
                                     COMPANY

By: /s/ Gary E. Jenkins             By: /s/ Nancy P. Antin
   _____________________________       ______________________________
   Name:  Gary E. Jenkins              Name:  Nancy P. Antin
   Title: Vice President               Title: Vice President
<PAGE>
 
                                 BALANCED FUND

                  THIRD AMENDED AND RESTATED FUND DECLARATION

                                   SCHEDULE A



          For services rendered to the Balanced Fund, State Street shall be
entitled to receive with respect to the assets of the Fund a Trustee, Management
and Administrative fee, charged at the following annual rates, which will accrue
on a daily basis and will be paid monthly, provided that such fee shall be
reduced by the amount of any fee received by the Trustee (which for these
purposes shall not exceed the amount set forth below) on account of the
investment of any assets of the Fund in any other collective investment fund
maintained by the Trustee:

     Aggregate Value of Assets in Aggressive
     Equity, Balanced, Growth Equity, Index Equity,
     Intermediate Bond, International Equity,
     Stable Asset Return and Value Equity Funds             Rate
     -----------------------------------------------        ----

     First $1.0 billion                                      .15%
     Next $1.8 billion                                      .058%
     Over $2.8 billion                                      .025%
<PAGE>
 
                                   SCHEDULE B
                                   ----------

                                 BALANCED FUND
                  THIRD AMENDED AND RESTATED FUND DECLARATION


The Trustee has entered into an Investment Advisor Agreement for the Fund with
the following entities, and the Investment Advisors are entitled to payment of
compensation as specified therein:

                         CAPITAL GUARDIAN TRUST COMPANY
                          MILLER, ANDERSON & SHERRERD