<PAGE> 1
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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
</TABLE>
DUPREE MUTUAL FUNDS
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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<PAGE> 2
DUPREE MUTUAL FUNDS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
October 26, 1999
The Annual Meeting of Shareholders of Dupree Mutual Funds, a Kentucky business
trust, (the "Trust"), will be held at the Radisson Plaza Hotel, 369 West Vine
Street, Lexington, Kentucky 40507-1636, on Tuesday, October 26, 1999 at 10:00
A.M., Lexington time, for the following purposes:
1. Election of Trustees
2. Ratification or rejection of independent certified public accountants
3. Each of the six single state municipal bond series will be asked to
separately vote to amend the fundamental investment restrictions for the
series to allow additional nationally recognized statistical rating
organizations' ratings of municipal securities be utilized in the
determination of investment grade securities eligible for purchase by the
series.
4. Other business
Shareholders are cordially invited to meet with the officers and Trustees of the
Trust prior to the meeting, beginning at 9:30 A.M. at the Radisson Plaza Hotel.
This notice of annual meeting, proxy statement and proxy are first being
delivered or mailed to shareholders on September 27, 1999.
FRED L. DUPREE, JR.
Secretary
September 17, 1999
125 South Mill Street
Lexington, Kentucky 40507
YOUR VOTE IS IMPORTANT!
-----------------------
<PAGE> 3
Shareholders are urged to read carefully and follow the instructions on the
enclosed proxy card, indicate their choices as to each of the matters to be
acted upon, and to date, sign, and return the completed and signed proxy in the
accompanying envelope, which requires no postage if mailed in the United States.
Your prompt return of the proxy will help the Trust avoid the additional expense
of further solicitation to assure a quorum at the meeting.
<PAGE> 4
DUPREE MUTUAL FUNDS
ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 26, 1999
PROXY STATEMENT
This statement is furnished in connection with the solicitation of proxies by
the Board of Trustees of Dupree Mutual Funds, a Kentucky business trust, (the
"Trust"), for use at the Annual Meeting of Shareholders of the Trust to be held
on October 26, 1999, and at any and all adjournments thereof.
If the enclosed form of proxy is properly executed and returned in time to be
voted at the meeting, the shares covered thereby will be voted in accordance
with the instructions marked thereon by the shareholders. Executed proxies that
are unmarked will be voted:
1. FOR the nominees of the Board of Trustees of the Trust in the election
of Trustees, and
2. IN FAVOR OF the ratification of the selection of independent certified
public accountants for the Trust.
3. IN FAVOR OF amendment of the series' fundamental investment
restrictions to allow additional nationally recognized statistical
rating organizations' ratings of municipal securities be utilized in
the determination of investment grade securities eligible for
purchase by the series.
<TABLE>
<CAPTION>
SUMMARY OF PROPOSALS
1. ELECTION OF TRUSTEES 2. RATIFY OR REJECT 3. RATIFY OR REJECT
INDEPENDENT AMENDMENT TO INVESTMENT
CERTIFIED PUBLIC RESTRICTIONS
ACCOUNTANT
--------------------------- ---------------------- --------------------------
<S> <C> <C> <C>
Kentucky Tax-Free Income Series CUMULATIVE VOTE VOTE SEPARATE SERIES VOTE
Kentucky Tax-Free Short-to-Medium Series CUMULATIVE VOTE VOTE SEPARATE SERIES VOTE
North Carolina Tax-Free Income Series CUMULATIVE VOTE VOTE SEPARATE SERIES VOTE
North Carolina Tax-Free Short-to-Medium Series CUMULATIVE VOTE VOTE SEPARATE SERIES VOTE
Tennessee Tax-Free Income Series CUMULATIVE VOTE VOTE SEPARATE SERIES VOTE
Tennessee Tax-Free Short-to-Medium Series CUMULATIVE VOTE VOTE SEPARATE SERIES VOTE
Intermediate Government Bond Series CUMULATIVE VOTE VOTE NOT APPLICABLE
</TABLE>
Any proxy may be revoked at any time prior to its exercise by a written notice
of revocation addressed to and received by the Secretary of the Trust, by
delivering a duly executed proxy bearing a later date, or by attending the
meeting and voting in person.
As of September 17, 1999, there were 77,226,819.804 shares of beneficial
interest of the Trust outstanding, being comprised of:
58,047,573.787 shares of Kentucky Tax-Free Income Series
10,842,508.233 shares of Kentucky Tax-Free Short-to-Medium Series
1,912,309.179 shares of North Carolina Tax-Free Income Series
441,335.673 shares of North Carolina Tax-Free Short-to-Medium Series,
- 3 -
<PAGE> 5
4,167,158.873 shares of Tennessee Tax-Free Income Series
656,661.190 shares of Tennessee Tax-Free Short-to-Medium Series, and
1,159,272.866 shares of Intermediate Government Bond Series
all having no par value. As of that date no person was known to the Trust to be
the beneficial owner of more than five percent of the outstanding shares of the
Kentucky Tax-Free Income Series or the North Carolina Tax-Free Income Series.
As of that date, the following persons were known to the Trust to be beneficial
owners of more than five percent of the outstanding shares of the following
series:
<TABLE>
<CAPTION>
PERCENT OF
NAME(S) OF SHARE OWNERS AMOUNT OF BENEFICIAL OWNERSHIP SHARES HELD
<S> <C> <C>
KY TAX-FREE SHORT-TO-MEDIUM SERIES
- ----------------------------------
P. M. King 605,091.230 shares 5.58%
CEBANTCO 563,909.774 shares 5.20%
NC TAX-FREE SHORT-TO-MEDIUM SERIES
- ----------------------------------
Terry L. Lee 60,688.546 shares 13.75%
NEC Industries, Inc. 23,190.751 shares 5.25%
TN TAX-FREE INCOME SERIES
- -------------------------
Memphis Commerce Square 754,941.853 shares 18.12%
Bank of Mississippi 266,578.588 shares 6.40%
TN TAX-FREE SHORT-TO-MEDIUM SERIES
- ----------------------------------
Memphis Commerce Square 83,994.272 shares 12.79%
The Trust Company of Knoxville 60,620.757 shares 9.23%
Thomas F. Buchanan, Jr. 48,995.628 shares 7.46%
National Financial Services 39,342.074 shares 5.99%
Gail S. Mays 34,805.912 shares 5.30%
INTERMEDIATE GOVERNMENT BOND SERIES
- -----------------------------------
Shield Ayres Foundation 81,966.094 shares 7.07%
</TABLE>
As of that date, the Trustees and Officers of the Trust, as a group beneficially
owned, directly or indirectly 1,216,716.956 shares, representing approximately
1.58% of the outstanding shares.
A copy of the annual report of Dupree Mutual Funds for the fiscal year ended
June 30, 1999, including financial statements, has been mailed to shareholders
of record at the close of business on that date, and to persons who became
shareholders of record between that time and the close of business on September
17, 1999, the record date for the determination of the shareholders who are
entitled to be notified of and to vote at the meeting. Copies of the annual
report may be obtained by shareholders free of charge by contacting the Trust at
P.O. Box 1149, Lexington, KY 40588-1149 or calling 800 866 0614.
Shareholders are entitled to one vote for each full share, and a proportionate
vote for each fractional share, of the Trust held as of the record date except
with respect to the election of Trustees, as to which cumulative voting shall
apply. In accordance with Kentucky law, shares owed by three or more persons as
co-fiduciaries will be voted in accordance with the will of the majority of such
fiduciaries, unless a written instrument or court order providing to the
contrary has been filed with the Secretary of the Trust.
A majority of the shares of the Trust entitled to vote shall constitute a quorum
for the transaction of business. A majority of the shares voted, at a meeting
where a quorum is present, shall decide any questions, except where a different
vote is specified by the Investment Company Act of 1940, and a plurality shall
elect a Trustee. If no instruction is given on a
- 4 -
<PAGE> 6
proxy, the proxy will be voted in favor of the nominees as trustees, in favor of
selection of Ernst & Young LLP to serve as independent certified public
accountants and in favor of amending the fundamental investment restrictions to
expand the group of ratings services for municipal securities, whose ratings may
be considered. Abstentions and broker no-votes will not count toward a quorum
though they will be counted with the majority of votes cast on any item of
business if a quorum is present.
The costs of the meeting, including the solicitation of proxies, will be paid by
the Trust. Persons holding shares as nominees will be reimbursed, upon request,
for their reasonable expenses in sending soliciting material to the principals
of the accounts. In addition to the solicitation of proxies by mail, officers
and Trustees of the Trust may solicit proxies in person or by telephone.
The date of this Proxy Statement is September 17, 1999.
ELECTION OF TRUSTEES
The Trust's Board of Trustees has nominated the seven (7) persons listed below
for election as Trustees for the ensuing year, each to hold office until the
2000 Annual Meeting of Shareholders and until their successors are duly elected
and qualified. All of the nominees are members of the present Board of Trustees
of the Trust. A shareholder using the enclosed form of proxy can vote for all or
any of the nominees of the Board of Trustees or can withhold his or her vote
from all or any of such nominees. If the proxy card is properly executed but
unmarked it will be voted for all of the nominees. Each of the nominees has
agreed to serve as a Trustee if elected; however, should any nominee become
unable or unwilling to accept nomination or election, the persons named in the
proxy will exercise their voting power in favor of such other person or persons
as the Board of Trustees of the Trust may recommend. Two of the nominees, Thomas
P. Dupree, Sr. and Fred L. Dupree, Jr. are brothers.
In electing Trustees, shareholders are entitled to exercise cumulative voting
rights. Under cumulative voting, each shareholder has the right to cast, in
person or by proxy, an aggregate amount of votes equal to the number of shares
held by such shareholder, multiplied by the number of Trustees to be elected,
and the shareholder may cast the whole number of votes for one candidate, or
distribute such votes among two or more candidates. The accompanying form of
proxy confers cumulative voting rights on the persons named thereon as proxies.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED DIRECTLY OR
NAME, ADDRESS AND INDIRECTLY, AS OF
AGE OF NOMINEE PRINCIPAL OCCUPATIONS(1) SEPTEMBER 17, 1999
- ----------------- ------------------------ ------------------
<S> <C> <C>
THOMAS P. DUPREE, SR.* Chairman of the Board of Dupree & Company, Inc. 416,158.783
125 South Mill Street (President until 1996) .54%
Lexington, KY 40507
Age: 69
FRED L. DUPREE, JR.* Vice President, and Director of Dupree & 30,308.900
125 South Mill Street Company, Inc. .04%
Lexington, KY 40507
Age: 72
WILLIAM T. GRIGGS II* President, Dupree & Company, Inc. 717.705
125 South Mill Street (Vice President until 1996) .00%
Lexington, KY 40507
Age: 48
LUCY A. BREATHITT Alexander Farms, farming; KY Horse Park 150,486.134
1703 Fairway Drive Foundation Board; KY Horse Park Museum Board. .19%
Lexington, KY 40502
Age: 62
</TABLE>
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<PAGE> 7
<TABLE>
<CAPTION>
<S> <C> <C>
WILLIAM A. COMBS, JR. Secretary, Treasurer, Director, Dana Motor 421,153.211
111 Woodland Avenue, #510 Company, Cincinnati, OH; Secretary, Treasurer, .55%
Lexington, KY 40502 Director, Freedom Dodge, Lexington, KY;
Age: 59 Secretary, Treasurer, Director, Ellerslie
Reality, Inc., Lexington, KY; Partner, Forkland
Development Company, Lexington, KY; Partner,
Lexland, Lexington, KY; Director, First
Security Bank, Lexington, KY
</TABLE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED DIRECTLY OR
NAME, ADDRESS AND INDIRECTLY, AS OF
AGE OF NOMINEE PRINCIPAL OCCUPATIONS(1) SEPTEMBER 17, 1999
- ----------------- ------------------------ ------------------
<S> <C> <C>
ROBERT L. MADDOX Partner (retired 1994) Wyatt, Tarrant & Combs, 181,987.996
2800 Citizens Plaza Louisville, KY, Attorneys; Director, Nugent .24%
Louisville, KY 40202 Sand Company, Louisville, KY; Director, Orr
Age: 75 Safety Corp., Louisville, KY; Director,
Whip-Mix Corp., Louisville, KY.
WILLIAM S. PATTERSON President, CEO, Cumberland Surety Co., 2,049.677
367 West Short Street Lexington, KY; President, Patterson & Co., .00%
Lexington, KY 40507 Frankfort, KY (real estate development
Age: 67 thoroughbred horse-breeding, farming).
</TABLE>
* Thomas P. Dupree, Sr., Fred L. Dupree, Jr., and William T. Griggs II
are "interested persons" of the Trust's Investment Adviser and of the
Trust within the meaning of Section 2(a)(19) of the Investment Company
Act of 1940 by virtue of their officership, directorship and/or
employment with Dupree & Company, Inc. Dupree & Company, Inc. also
serves as the Trust's Transfer Agent. The other nominees are the
non-interested Trustees of the Trust. For the fiscal year ended June
30, 1999 the Trust paid to Dupree & Company, Inc. investment advisory
fees and transfer agent fees totaling $2,949,116.
(1) Except as otherwise noted, each individual has held the office
indicated, or other offices in the same company, for the last five
years.
- 6 -
<PAGE> 8
<TABLE>
<CAPTION>
PENSION OR
NAME OF PERSON, AGGREGATE RETIREMENT ESTIMATED ANNUAL TOTAL COMPENSATION
POSITION COMPENSATION BENEFITS ACCRUED BENEFITS UPON FROM TRUST AND
FROM TRUST AS PART OF TRUST RETIREMENT TRUST COMPLEX
EXPENSES PAID TO TRUSTEES
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas P. Dupree, Sr. -0- None - No Pension None -0-
President, Chairman or Retirement Plan
Trustee
Fred L. Dupree, Jr. -0- None - No Pension None -0-
Vice President, or Retirement Plan
Secretary, Treasurer
Trustee
William T. Griggs II* -0- None - No Pension None -0-
Vice President, Assistant or Retirement Plan
Secretary, Trustee
Lucy A. Breathitt $14,000 None - No Pension None $14,000
Trustee or Retirement Plan
William A. Combs, Jr. $14,000 None - No Pension None $14,000
Trustee or Retirement Plan
Robert L. Maddox $14,000 None - No Pension None $14,000
Trustee or Retirement Plan
William S. Patterson $14,000 None - No Pension None $14,000
Trustee or Retirement Plan
</TABLE>
<TABLE>
<CAPTION>
PENSION OR
NAME OF PERSON, AGGREGATE RETIREMENT ESTIMATED ANNUAL TOTAL COMPENSATION
POSITION COMPENSATION BENEFITS ACCRUED BENEFITS UPON FROM TRUST AND
FROM TRUST AS PART OF TRUST RETIREMENT TRUST COMPLEX
EXPENSES PAID TO TRUSTEES
- -------------------------------- -------------------- -------------------------- ----------------------- --------------------------
<S> <C> <C> <C> <C>
Michelle M. Dragoo -0- None - No Pension None -0-
Vice President since 1997 or Retirement Plan
Assistant Vice President
1992-1996
Alison L. Arnold -0- None - No Pension None -0-
Assistant Vice President or Retirement Plan
</TABLE>
The Board of Trustees has authorized the payment of a fee of $13,000 to each of
the non-interested Trustees for the fiscal year ending June 30, 2000, plus a fee
of $1,000 to each of the non-interested Trustees for each audit committee
meeting attended. Two audit committee meetings are anticipated to be held during
the fiscal year ending June 30, 2000.
The Board of Trustees has an audit committee comprised of the four
non-interested trustees, but does not have an executive committee or a
nominating committee. The audit committee met once during the fiscal year ended
June 30, 1999, with all members in attendance. All nominees attended at least
75% of the four meetings of the Board of Trustees during the fiscal year ended
June 30, 1999.
At the October 27, 1998 Annual Meeting of Shareholders 68,397,592.951 Dupree
Mutual Funds shares were outstanding and entitled to vote. Of the shares
outstanding and entitled to vote 44,977,039.146 shares were present and voting
in person or by proxy, for a percentage of 65.76%.
- 7 -
<PAGE> 9
RATIFICATION OR REJECTION OF SELECTION
OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The selection by the Board of Trustees of the firm of Ernst & Young LLP,
certified public accountants, as the independent certified public accountants
for the fiscal year ending June 30, 2000 will be submitted for ratification or
rejection by the shareholders at the annual meeting. If approved, Ernst & Young
LLP will perform audit, tax preparation and other accounting services for the
Trust for the fiscal year ending June 30, 2000.
The affirmative vote of a majority of the Trust's outstanding voting securities
is required for ratification of the selection of Ernst & Young LLP As defined in
the Investment Company Act of 1940, the phrase "vote of a majority of the
outstanding voting securities" means the vote of the holders of the lesser of
(a) 67% of the shares present in person or represented by proxy and entitled to
vote at the meeting, if the holders of more than 50% of the outstanding shares
are so present or represented, and (b) more than 50% of the outstanding shares.
Representatives of Ernst & Young LLP are expected to be available at the annual
meeting to respond to appropriate questions and have the opportunity to make a
statement.
FUNDAMENTAL INVESTMENT RESTRICTIONS/RATING SERVICES
Kentucky Tax-Free Income Series
Kentucky Tax-Free Short-to-Medium Series
North Carolina Tax-Free Income Series
North Carolina Tax-Free Short-to-Medium Series
Tennessee Tax-Free Income Series
Tennessee Tax-Free Short-to-Medium Series
Each of the individual single state municipal bond series of the Trust will be
asked to vote separately to allow for additional nationally recognized
statistical rating organizations' ratings of municipal securities to be utilized
in the determination of investment grade securities eligible for purchase by the
series. Each ballot is identified by series and will be tabulated by series.
Since its inception, each of the single state municipal bond series of the Trust
has followed the fundamental policy of investing at least 80% of the value of
the assets in securities meeting the investment grade quality standards defined
by Moody's Investors Service Inc. (Moody's) or Standard & Poor's Corporation
(S&P). These grades are defined as the four highest grades for bonds and the
three highest grades for notes. In addition, each of the single state municipal
bond series could include within the 80% category those notes or bonds secured
by the full faith and credit of the United States Government.
Over the years, several other nationally recognized statistical rating
organizations have emerged to rate the many municipal securities which are
issued in the states for which the Trust has established series. Municipal
issuers select rating services for a variety of reasons, including convenience,
familiarity with the issuer, price, etc. In order for the Trust to be able to
continually make the most appropriate purchases for each series' portfolio, the
Trust would be well served to allow its Investment Adviser for each series to
consider not only ratings provided by Moody's or Standard & Poor's but also
other recognized national ratings services who may be rating given issues of
municipal securities.
The Trust is not proposing to modify its commitment to the purchase of
investment grade securities for each of the series, but is seeking to expand
upon the available ratings organizations which may be utilized in the
consideration of market ratings for the several municipal securities issues
which may be attractive additions to the portfolios of the single state series.
The affirmative vote of a majority of the Trust's outstanding voting securities
is required to amend the fundamental investment restrictions. As defined in the
Investment Company Act of 1940, the phrase "vote of a majority of the
outstanding voting securities" means the vote of the holders of the lesser of
(a) 67% of the shares present in person or represented by proxy and entitled to
vote at the meeting, if the holders of more than 50% of the outstanding shares
are so present or represented, and (b) more than 50% of the outstanding shares.
- 8 -
<PAGE> 10
INVESTMENT ADVISORY AGREEMENTS - ALL SERIES
Dupree & Company, Inc., 125 South Mill Street, Suite 100, Lexington, KY 40507 is
the investment advisor for all series of the trust and was the original
Investment Advisor from 1979-1986 of the original series of the Trust, the
former Kentucky Tax-Free Income Fund, Inc. At the time that the shareholders of
the former Kentucky Tax-Free Income Fund, Inc. voted to change its form of
business to a business trust, Dupree & Company, Inc. created its subsidiary
corporation, Dupree Investment Advisers, Inc. to become the investment advisor
for the several series of the Trust which were later created. The creation of
Dupree Investment Advisers, Inc. was undertaken at that time by Dupree &
Company, Inc. for business and tax reasons associated with that company. In 1997
Dupree Investment Advisers, Inc. was absorbed by its parent company, Dupree &
Company, Inc.
Thomas P. Dupree, Sr., who is Chairman of the Board of Dupree & Company, Inc.
and owner of 51% of the stock of Dupree & Company, Inc. (Claire Dupree, Mr.
Dupree's wife is the owner of the remaining 49% of the stock of Dupree &
Company, Inc.) also serves as President and a member of the Trust's Board of
Trustees. William T. Griggs II is President of Dupree & Company, Inc., Mr.
Griggs also serves as a Vice President of the Trust. Fred L. Dupree, Jr. is Vice
President and a Director of Dupree & Company, Inc., Michelle M. Dragoo is Vice
President, Secretary and Treasurer of Dupree & Company, Inc., Dorine D. Kelly is
Vice President of Dupree & Company, Inc., Alison L. Arnold is Assistant Vice
President of Dupree & Company, Inc.
Each series is currently served by Dupree & Company, Inc., pursuant to
agreements previously approved by shareholders of each series. The affirmative
vote of a majority of the series' outstanding voting securities is required for
ratification of the Investment Advisory Agreement. As defined in the Investment
Company Act of 1940, the phrase "vote a majority of the outstanding voting
securities" means the vote of the holders of the lesser of (a) 67% of the shares
present in person or represented by proxy and entitled to vote at the meeting,
if the holders of more than 50% of the outstanding shares are so present or
represented, and (b) more than 50% of the outstanding shares. The Investment
Advisory Agreement for each series commenced November 1, 1997 and has been
continued in effect until October 31, 1999, and thereafter from year to year, if
such continuation is specifically approved. At least annually the proposed
agreement must be specifically approved by the Trust's Board of Trustees at a
meeting called for that purpose or by a vote of the holders of a majority of the
series' shares, and in either case, also by a vote of a majority of the Trust's
Trustees who are not "interested persons" of Dupree & Company, Inc. or the Trust
within the meaning of the Investment Company Act of 1940. The proposed agreement
is subject to termination by either party without penalty on 60 days written
notice to the other, and it terminates automatically in the event of assignment.
Pursuant to each agreement, the Investment Adviser provides investment
supervisory services, office space and facilities and corporate administration.
Specifically, the Investment Adviser obtains and evaluates relevant information
regarding the economy, industries, businesses, municipal issuers, securities
markets and securities to formulate a continuing program for the management of
each series' assets in a manner consistent with the series' investment
objectives; and to implement this program by selecting the securities to be
purchased or sold by the series and placing orders for such purchases and sales.
In addition, the Investment Adviser provides for the series' office needs,
maintains each series' books and records, assumes and pays all sales and
promotional expenses incurred in the distribution of each series' shares, staffs
the series with persons competent to perform all of its executive and
administrative functions, supervises and coordinates the activities of the
Trust's institutional and other agents (e.g. custodian, transfer agent,
independent accountants, outside legal counsel), and permits its officers and
employees to serve as Trustees and officers of the Trust, all without additional
cost to the Trust.
Under each agreement, neither the Investment Adviser nor any of its directors,
officers or employees performing executive or administrative functions for each
series will be liable to the Trust for any error of judgment, mistake of law or
other act or omission in connection with a matter to which the agreement
relates, unless such error, mistake, act or omission involves willful
misfeasance, bad faith, gross negligence or reckless disregard of duty or
otherwise constitutes a breach of fiduciary duty involving personal misconduct.
Each agreement permits the Investment Adviser to voluntarily reimburse any
series. The Trust currently sells to Kentucky, Indiana, Florida, Tennessee,
Texas and North Carolina residents. Kentucky, Florida, Tennessee and North
Carolina do not currently impose a limitation upon investment advisory fees
charged to mutual funds, but both Indiana and Texas do as follows: 1.5% of the
first $30,000,000 in net assets and 1% of any additional net assets for Indiana;
and 2%
- 9 -
<PAGE> 11
of the first $10,000,000 of average net assets, 1.5% of the next $20,000,000 of
average net assets and 1% of the remaining average net assets for Texas.
OTHER BUSINESS
The management of the Trust knows of no other business which may come before the
meeting. However, if any additional matters are properly presented at the
meeting, it is intended that the persons named in the enclosed proxy, or their
substitutes, will vote such proxy in accordance with their judgment on such
matters.
SHAREHOLDERS' PROPOSALS
If a shareholder wishes to present a proposal at the 2000 Annual Meeting of
Shareholders, scheduled for that year, such proposal must be received by the
Secretary of the Trust at the Trust's Lexington office prior to May 20, 2000.
The Trustees and officers of the Trust welcome the opportunity to discuss
proposals or suggestions any shareholder may have.
- 10 -
<PAGE> 12
<TABLE>
<S> <C>
PROXY
DUPREE MUTUAL FUNDS
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR ANNUAL MEETING
TO BE HELD AT THE RADISSON PLAZA HOTEL, 369 WEST VINE
STREET, LEXINGTON, KY 40507-1636 AT 10:00 A.M., LEXINGTON
TIME, TUESDAY, OCTOBER 26, 1999
THIS IS YOUR PROXY BALLOT, PLEASE: The signed hereby constitutes and appoints THOMAS
P. DUPREE, SR. and FRED L. DUPREE, JR. and each of them,
1. Complete the reverse side with full power of substitution, to represent the SIGNED at
the Annual Meeting of the Shareholders of DUPREE MUTUAL
2. Have all owner's sign as designated FUNDS (the "Trust") to be held at the Radisson Plaza Hotel,
369 West Vine Street, Lexington, KY 40507-1636 on Tuesday,
3. Tear the proxy at the perforation, and October 26, 1999 at 10:00 A.M., Lexington time, and at any
adjournments thereof, and there at to vote all of the shares
4. Return your proxy in the reply envelope provided. of the Trust which the signed would be entitled to vote,
with all powers the signed would possess if personally
YOUR VOTE IS IMPORTANT. Your prompt return of the proxy will help the present, in accordance with the following instructions:
Trust avoid the additional expense of further solicitation to assure
a quorum at the meeting. We hope you will be able to attend the THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
annual shareholder's meeting. MANNER INSTRUCTED HEREIN BY THE SIGNED SHAREHOLDER.
COMMENTS: IF NO INSTRUCTION IS GIVEN THIS PROXY WILL BE VOTED:
- --------------------------------------------------------------------- FOR THE ELECTION OF THE NOMINEES AS TRUSTEES,
- --------------------------------------------------------------------- IN FAVOR OF THE RATIFICATION OF THE SELECTION OF ERNST &
YOUNG LLP TO SERVE AS INDEPENDENT CERTIFIED PUBLIC
- --------------------------------------------------------------------- ACCOUNTANTS, AND
- --------------------------------------------------------------------- FOR EACH OF THE SIX SINGLE STATE MUNICIPAL BOND SERIES:
- --------------------------------------------------------------------- IN FAVOR OF AMENDMENT OF THE SERIES' FUNDAMENTAL INVESTMENT
RESTRICTIONS TO ALLOW ADDITIONAL NATIONALLY RECOGNIZED
STATISTICAL RATING ORGANIZATIONS' RATINGS OF MUNICIPAL
SECURITIES BE UTILIZED IN THE DETERMINATION OF INVESTMENT
GRADE SECURITIES ELIGIBLE FOR PURCHASE BY THE SERIES.
DUPREE MUTUAL FUNDS - ANNUAL MEETING TO BE HELD AT THE RADISSON PLAZA DUPREE MUTUAL FUNDS - ANNUAL MEETING:
HOTEL, 369 WEST VINE STREET, LEXINGTON, KY 40507-1636 AT 10:00 A.M., 10:00 A.M., TUESDAY, OCTOBER 26, 1999
LEXINGTON TIME, TUESDAY, OCTOBER 26, 1999
(1) ELECTION OF TRUSTEES, please indicate your vote:--------------- > ELECTION OF TRUSTEES
The Nominees are:
Thomas P. Dupree, Sr. Lucy A. Breathitt [ ] FOR ALL Trustees as nominated
Fred L. Dupree, Jr. William A. Combs, Jr.
William T. Griggs II Robert L. Maddox [ ] WITHHOLD authority to vote for any individual nominee,
William S. Patterson write the name of the nominee(s) to withhold below.
------------------------------------------------------------
Cumulative voting rights will be exercised in the election of [ ] WITHHOLD ALL Nominees - (ABSTAIN FROM)
Trustees. Total proxy votes as to this issue will be distributed
among those individuals selected.
(2) RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT--------- > [ ] FOR [ ] AGAINST [ ] ABSTAIN FROM
CERTIFIED PUBLIC ACCOUNTANTS
ratification of the selection of Ernst & Young LLP RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT
to serve as independent certified public accountants for the Trust CERTIFIED PUBLIC ACCOUNTANTS
for the fiscal year ending June 30, 2000.
(3) EACH SINGLE STATE MUNICIPAL BOND SERIES OF THE TRUST WILL----- > [ ] FOR [ ] AGAINST [ ] ABSTAIN FROM
VOTE SEPARATELY:
RATIFICATION OR REJECTION OF RESOLUTION THAT THE PROSPECTUS
RATIFICATION OR REJECTION OF RESOLUTION that the Prospectus forming BE REVISED TO ALLOW ADDITIONAL NATIONALLY RECOGNIZED
part of the N-1A be revised to reflect the several ratings services, STATISTICAL RATING ORGANIZATIONS' RATINGS OF MUNICIPAL
in addition to Moody's and Standard & Poor's, which may be consulted SECURITIES BE UTILIZED IN THE DETERMINATION OF INVESTMENT
for initial ratings of securities issues and on which the Trust GRADE SECURITIES ELIGIBLE FOR PURCHASE BY THE SERIES.
relies, in part, for the selection of investment grade securities for
purchase by one of the several portfolios of the Trust.
(4) OTHER BUSINESS------------------------------------------------ > [ ] FOR [ ] AGAINST [ ] ABSTAIN FROM
use of their discretion in acting upon any and all other matters
which may properly come before the meeting and any adjournments OTHER BUSINESS
thereof.
-----------------------------------------------------------
ATTENDANCE: [ ] Check this box if you plan to attend the meeting:
# _____ Attending
-----------------------------------------------------------
Your shares will be voted as indicated.
If your ballot is signed, and no direction is provided for a given
item, it will be voted as indicated on the reverse.
The signed hereby acknowledges receipt of the accompanying
Notice of Annual Meeting and Proxy Statement, each dated
September 17, 1999.
ALL JOINT OWNERS MUST SIGN.
Signed:_____________________________Dated:________________
Signed:_____________________________Dated:________________
When signing as attorney, trustee, executor, administrator,
custodian, guardian or corporate officer, please give full
title.
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