MIN1frES

BOARD OF TRUSTEES ME ETIN G

PAPER D\,D UST RY lJNION-MANAG El\f ENT PEL StON FUND
held at
PHOENIX, ARIZONA
A PRfL 26 - 30, 1997

I. CALL TO ORD~R: ROLL CALL

Boyd You ng, C hai rm an , called the me etin g to order at 1 p. m ., 011 Su nd a , Ap ril 27 , 1997 . T he

C hairm an then had t he Fund Administrato r call the roll.

T he T rus tees pr esent were.

Messrs . John H Bennett, Donald L. Langh am, James Mu rray, M ari o Scarsellctta, Jr ., M s. Gay le

Sp arapani and James T. W right.

Absent:

Daniel Girvan .

Also pr esent were:

Mr. Frank Kelly, Fund Admini strative Manager; Ms. Maria Wieck, Fund Financial O fficer; Mr .
Steve Dohrm ann, Fund Co nsultant; Messrs. Charles Maresca and Mike Kaplan of the Seg al

Company: Barry Slevin, E. q ., o f Slevin and H art , p .e, Fund Counsel.

Also attending were Messrs. Wayne E, Glenn, Joe J. Bradshaw and Fran P ot hier.

GOVERNMENT
EXHIBIT

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xrx . WRlGllT INVESTORS' SERVICE

At this time Messrs. Jose ph Bruno. AI Meric, Ken Singe r and Ms . Diane Timpany entered the
meeting. They gave their outloo k for the seco nd quarter of 1997. They believe that gro wth will
be stable and in line with the Fed' s targ et rate 01'2 ';'2% . Wages will go up and prices will still be
under co ntrol. March increase and short-t erm rates could be repeated if spending does not slow,
but an ext ended series of rate increases is very unlikely. The bond yields will fluctuate between
6 y~ to 7 WYO . .orporate earnings will slow to sing le digit growth rates. The equity markets
likely to face short term correction of 10 - 20%.

They reviewed the portfolio that they currently manage for the Fund. As of March J I. 1997, it
amounted to $29.6 million in equities. They also reviewed the international equities that they
manage. Overall for the calendar year 1996, they had a 21.6% return Since inception of the
Fund, their total return had been 24.5%.

They requested that the Trustees consider them to become a major investment manager for the
Fund. and requested the Trustees to provide (hem with more investment responsibility. They
discussed a proposal in their investment manager fees. There being no further business. the
representatives of Wright Investors' were excused from the meetin g.

XX. AVnlT CO MMJ TT EE

The Audit Committee, comprised of Mr. Mario Scarselletra and Ms. Gayle Sparapani reviewed
the Audit Committee meeting held on April 28, 1997. Attending the meeting were Frank Kelly,
Maria Wieck and Will Council from Arthur Andersen and the committee. They reviewed the
Auditor's responsibility under generally accepted auditing sta ndards. They noted there were no
significant accounting policy changes recommended for the year ending December 31, 1996.

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Foreign Investm ents

The Trustees decided to:

I. Amend the investment policy to eliminate foreign investments.

2. It was noted that :\ DR s were till an acceptable investme nt vehicle.
3. Terminate the international portfolio: with Seligman Henderson and Lazard and Wright
Investors' should be advised to terminate their international investing.

Lee. D a n ner and Ba ss

The Trustees decided to terminate the investment service, of Lee. Danner and Bass a soon as
p ,. ible, This fi rm was ter minated in order to reduce the number of investment manager. .

Transfer to W r ight Invc.c:tors'lB.ighland Ca p ital

With the Fund' s available, based on these decisions, the Trustees decided to transfer $35 million
to be invested in equities to Wright investor ' . T he Fund Office will negotiate with Wright their
fees with a goa l 01'30 basis points Any assets remaining over the $3 - million transferred to
Wright will be distribut ed to Highland Capital for equity investment, given their fee and
performance. The liquidation of sec uritie, shall be through Lynch, Jones and Ryan.

LaZi) rd Freres

T he Tru stees instructed the fund Office to talk to Lazard about a reduction in their investment
fees .

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