Dear Shareholder:
This letter arrives as an enclosure with your annual copy of the Fund’s prospectus. Except for minor updates this year’s prospectus is almost identical with last year’s. There are no substantive changes to note. However, regulations require that you be sent the new prospectus each and every year, and so we are complying.
At times shareholders scold us for wasting postage. There are legal reasons why we sometimes mail more than one prospectus to the same address where multiple accounts are involved. There is another complex set of rules for proxies. Rest assured we are aware of postage costs and try to save wherever possible.
Succession: “The time has come, the Walrus said, ‘to talk of many things: of shoes-and ships-and sealing wax—of cabbages and kings.’” (Lewis Carroll – Through the Looking Glass)
A shareholder with a good sized account has asked me to write about succession at Dupree & Company, Inc. Put simply, who is going to replace me at my death? When I telephoned him he explained that it looked like I was very much in charge, and anybody else was in a very secondary position. I think he is right. I am sorry that we have conveyed that impression, because it isn’t the way things really are. So, as Carroll’s walrus was saying indirectly, it’s time to get down to what’s really happening.
With regard to my succession, what’s really happening at Dupree & Company actually started ten years ago when I was diagnosed with Parkinson’s disease. Starting then I began training Bill Griggs and Michelle Dragoo to run the business. Unfortunately, three years ago Bill Griggs died in his sleep. He was only fifty two years old. We immediately began talking to Allen Grimes, my son-in-law, who was practicing law in a Lexington firm. Allen had been attending our Trustee’s meetings for about a year, representing the next generation of our family. Allen has a BA in Economics from Emory, a Master’s in Economics from the London School of Economics and a law degree from the University of Kentucky. Since coming here in December of 2004 Allen has earned his Series 7 General Securities Representative license, his Series 24 General Securities Principal license and his Series 27 Financial Operations Principal license.
We have made him President of Dupree & Company, Inc. and our Chief Compliance Officer. To put it succinctly, he is in charge.
My function is to come in for a few hours every day so that I can keep up with what is going on. After all, there are a few decisions that only the owner can make, and that requires keeping current. But Allen is in charge. Succession has already taken place. In U.S. Navy terms one would say “Allen has the conn”.
I have never heard the term “conn” used anywhere except aboard ship. I presume it is derived from the word “control” since it means one who is in control of the speed and direction of the ship. This does not mean the helmsman who steers the ship. It means the officer who gives the helmsman steering orders, engine orders and so on. In the Navy if you have the conn and the Captain is not on the ship’s bridge, you have an implied responsibility for everything the ship does, not just its speed and direction. He who has the conn in the Captain’s absence has the Captain’s responsibility until he is relieved by a more senior officer who may take over by simply saying, “I have the conn”.
I can remember the first time I was given the conn. We were at sea in the middle of the Pacific, headed for Japan having passed through the Panama Canal on the way from our East Coast base at Newport, Rhode Island. I had the mid-watch; the four hour watch from midnight to 4:00 AM. There is not much damage a young Ensign can do in the middle of the world’s largest ocean from midnight to 4:00 AM! But it was one of those important mile posts in my journey to manhood.
When I arrived at the ship’s bridge, ten minutes early in order to get briefed for my watch the Captain was there waiting for me. The lights were all in muted red to preserve the eyes for night vision, the helmsman, quartermaster and lookouts were standing silently at their stations, studying me I imagined.
The Captain asked me if I felt I was ready to take over. I gave him a somewhat tremulous “Yes, Sir” and with that he told me he would be sleeping in his sea cabin, just behind (aft) of the bridge and that I was not to hesitate to call him if anything unusual happened. Then he turned to the Quartermaster and said, “Mr. Dupree has the conn” and immediately left the bridge. I was alone and completely in charge of that ship. I remember thinking that the Navy and my Captain were perhaps putting more trust in me than I deserved. A destroyer is a big, expensive piece of equipment and it carries over 300 men. I resolved to do everything in my power to responsibly live up to that trust.
Then, before starting the round of routine checks required during each watch, I stood alone for a moment on the forward bridge outside the wheelhouse and felt the salt Pacific breeze blow in my face as the ship cut through the water at about twenty knots, vibrating gently. What a feeling! Wow!
Managing nine mutual funds with combined assets of nearly one billion dollars is another big responsibility. Someone has to be in close control of what is happening every day. That is Allen’s job. My role has become advisory. Actually, Allen has had the conn for over a year. He handles it well.
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