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Dear Shareholder:
Greenspan Watching - 2nd Edition: Our November 17th letter is turning out to be prophecy. In that letter I said the Federal Reserve might start lowering rates after the first of the year. That now seems to be a sure thing. Bond prices are rising, something above 2% on average since that letter was written, and may continue to rise rapidly if the Fed begins a series of rate cuts. Now is the time to buy bonds, not later.
Dupree Mutual Funds is a Treasure of No-Load Opportunities: The advertising professionals all remind us that it does no good to wink at a pretty girl in a dark room. You have to advertise. There are so many things we have added to the Dupree Mutual Funds package over the years that I thought it might pay to summarize some of them for you. We suspect that we have shareholders who are completely unaware of how many things you can do with only one stop at our store.
Advice: About half our employees are registered brokers with a Series 7 license, the same license brokers have in commercial brokerage houses. You can get excellent advice here, and it will be advice uninfluenced by the prospect of a commission.
Money Market Funds: Through an arrangement with Federated Investors Funds we are able to offer a Money Market Fund at very attractive rates. This fund offers check-writing privileges free, and only a $100 minimum is required to open an account. This is a great place to park uninvested cash temporarily.
Short Single-State Tax-Free Bond Funds: In Kentucky, Tennessee and North Carolina we have Short Term Funds free from Federal and State Income Tax. Unlike a Money Market Fund, these funds will vary a little in price as interest rates change. They make a good substitute for Money Market Funds if you are in a 28% tax bracket or higher. You can switch between funds at no cost, and checks are free, subject to minimum and maximum limits. Interest is paid monthly. All three funds are currently rated five-star by Morningstar Rating Services.
Single State Tax-Exempt Bond Funds of Longer Maturities: Our Income Series in Kentucky, Tennessee, North Carolina, Mississippi and Alabama carry the highest tax-free yields and provide a surprisingly high taxable equivalent return for investors in the 28% tax bracket and above. Interest is paid quarterly. All five funds are currently rated five-star by Morningstar Rating Services.
Intermediate Government Bond Series: This series, currently rated four-star by Morningstar Rating Services, pays a generous taxable yield. It makes an excellent choice for retired folks in a low tax bracket, children and Tax Deferred Retirement Plans such as IRA's. I use it as an investment medium for charities and church groups.Again, there are free exchange privileges.
Stock Funds of all types: We can offer all the Federated Funds investing in equities, including Growth Funds, Equity Income Funds, Small Cap and Large Cap Funds, International Equity Funds and many others, more than 40 in all. Equities are finally experiencing a time of being out of favor. But if sentiment gets even more bearish than the present, that is, no interest in equities at any price, that's the time to buy.
None of the funds above have a sales or load charge, nor trailing 12b-1 fee.
For shareholders skilled in the use of computers and the Internet it is possible to pull up our Web page at www.dupree-funds.com where you can find a Prospectus and Application blank to open new accounts. There is also a record of share prices over past months and other statistical information. A complete collection of past shareholder letters, such as this, can be found there. You can E-Mail us thru this Web page and we will respond promptly. It is not yet possible to look at a current statement of your account on this page, but we expect we will be able provide this feature in the near future.
Occasionally we have an account closed by a broker or bank trust department when a shareholder, for whatever reason, has placed their assets in those new hands. In the past, these professionals often felt it necessary to liquidate our shares and invest them otherwise, even if this triggered capital gains taxes or reduced the yield on your investment, on the theory that they could not readily trade our shares. They can now! And the means to include our shares on their combined statement is available. Since June of this year we can now clear with brokers, investment advisors and trust companies through NSCC (National Securities Clearing Corporation) and they can check account balances with us regularly through the Internet.
We wish You a Happy New Year!: This year started with the greatest non-event in history. Y2K! Media hype by media types led the way, goaded on by folks who had programming services to sell. (Follow the money!) This stirred up the regulators in banking and finance who demanded that we all spend millions, or even billions, to prove thereby that we were "ready". They swarmed around like flies; which reminds me of Ogden Nash's verse: "God in his wisdom made the fly, and then forgot to tell us why."
May your next year be equally free of troubles, including pieces of falling sky, Chicken Little to the contrary.
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