UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-2918
DUPREE MUTUAL FUNDS
|
| (Exact Name of Registrant as Specified in Charter) |
125 South Mill Street, Vine Center, Suite 100
Lexington, Kentucky 40507
(Address of Principal Executive Offices) (Zip Code)
Thomas P. Dupree
125 South Mill Street, Vine Center, Suite 100
Lexington, Kentucky 40507
|
| (Name and address of agent for service) |
Registrant’s Telephone Number, including Area Code (859) 254-7741
Date of fiscal year end: June 30, 2007
Date of reporting period: July 1, 2006 through June 30, 2007
Item 1. Report to Stockholders
DUPREE MUTUAL FUNDS
June 30, 2007
ANNUAL REPORT
TO SHAREHOLDERS
ABOUT DUPREE MUTUAL FUNDS
In 1941, Dupree & Company, Inc. began business in Harlan, Kentucky as a small securities brokerage firm specializing in tax-exempt municipal bonds.
Over the years the firm, which in 1963 moved its offices to Lexington, Kentucky, grew to become a regional leader in public finance, helping to structure complex and innovative municipal bond financing for some of the largest public projects in the Commonwealth of Kentucky.
In 1979, Dupree & Company began what is now Dupree Mutual Funds with the Kentucky Tax-Free Income Series and became the Fund’s investment advisor. The Fund was one of the first single-state municipal bond funds in the country, and the first mutual fund to invest solely in Kentucky municipal bonds. Since then, several new offerings have been added to the Dupree Mutual Funds family:
Kentucky Tax-Free Short-to-Medium Series in 1987;
Intermediate Government Bond Series in 1992;
Tennessee Tax-Free Income Series in 1993;
Tennessee Tax-Free Short-to-Medium Series in 1994;
North Carolina Tax-Free Income Series in 1995;
North Carolina Tax-Free Short-to-Medium Series in 1995;
Alabama Tax-Free Income Series in 2000, and
Mississippi Tax-Free Income Series in 2000.
Today, after more than 60 years in business, Dupree continues to be a pioneer in the industry. Our Kentucky, Tennessee, and Mississippi Series are currently the ONLY 100% “no-load” municipal bond funds available in those states. No-load means simply that shares of the funds are offered directly to investors with no front or back-end sales charges, as opposed to load funds which are sold through brokerage firms or other institutions.
At Dupree Mutual Funds, our goal is a simple one: to offer investors a high-quality, low-cost way to invest in municipal and government bonds while providing superior service to our shareholders. We encourage you to let us know how we’re doing.
TABLE OF CONTENTS
Management’s Discussion of Fund Performance: | (Unaudited) |
Twelve Months Ended June 30, 2007
The investment objective of our municipal bond funds is to provide a high level of tax-free income derived from state specific municipal bonds without incurring undue risk to principal. Our investment objective for our government bond fund is to provide a high level of stable income derived from the securities of the U.S. government and its agencies, without incurring undue risk to principal.
This report covers the 12-month period from June 30, 2006 through June 30, 2007 (the “reporting period”). During the reporting period, the national economy grew at a moderate pace. Economic growth slowed somewhat from the previous year’s above trend rate, but has proceeded over the past twelve months at a rate consistent with sustainable expansion. Despite the downshift in growth, demand for labor has remained solid with the national unemployment rate remaining at 4.5% which is near a six year low. Key measures of inflation stayed stubbornly above the Federal Reserve’s stated “comfort zone” during the reporting period. The slower pace of economic growth has been due primarily to the downturn in the residential housing market where home sales and construction have slowed substantially and house prices have declined. The Federal Reserve kept the fed funds rate unchanged at 5.25% during the reporting period.
Despite occasional periods of volatility, municipal bonds performed relatively well during the reporting period. Municipal bonds staged an impressive rally early in the reporting period with long-term yields declining. However, beginning in early March long-term yields started rising and continued to rise through the end of the reporting period which resulted in a substantial steepening of the municipal yield curve. The municipal bond market was supported by a strong volume of newly-issued municipal bonds and robust demand for long-term securities which readily absorbed the available supply of newly issued bonds.
A discussion of the performance of each of our funds for the 12-month period ended June 30, 2007 follows:
The Kentucky Tax Free Income Series provided shareholders a total return of 4.51% during the reporting period.1 This performance compared favorably with the fund’s comparative index, the 7-year Lehman Brothers Municipal Bond Index, which had a total return of 4.21%. The Kentucky Short-to-Medium Series provided shareholders with a total return of 3.10% during the reporting period compared with a total return of 3.85% for the 3-year Lehman Brothers Municipal Bond Index.
1 | Total returns include changes in share price and reinvestment of dividends and capital gains, if any. Performance data quoted represents past performance which is no guarantee of future results. Share price, yield and investment return fluctuate such that upon redemption, fund shares may be worth more or less than their original cost. Capital gains, if any, are taxable. |
i
Kentucky’s economy grew at a moderate pace during the reporting period. General fund total tax receipts increased over the past twelve months and the seasonally adjusted unemployment rate as of June 2007 was 5.4% compared with the national average of 4.5%. The state had a 2005 per capita income of $28,317 compared with a national per capita income of $34,495.
Manufacturing remains Kentucky’s largest industrial sector, but it has declined as a percentage of Kentucky’s economy over the past few years. Kentucky experienced strong job growth in 2006. United Parcel Service (“UPS”) announced a second $1 billion expansion at its Worldport hub in Louisville which was the state’s largest investment in 2006. UPS’s presence in the state has been a catalyst for other companies to locate or expand existing operations in Kentucky. Kentucky ended the 2007 fiscal year with a surplus of about $182 million. Legislation passed in the 2007 session will reduce the budget surplus by about $25.5 million. The Commonwealth of Kentucky’s appropriation supported debt was rated A+ by Standard & Poor’s as of June 30, 2007.
The Tennessee Tax-Free Income Series provided shareholders with a total return of 4.05% during the reporting period. The fund slightly underperformed the 7-year Lehman Brothers Municipal Bond Index which had a total return of 4.21%. The Tennessee Short-to-Medium Series had a total return of 3.34 % during the reporting period compared with a total return of 3.85 % for the 3-year Lehman Brothers Municipal Bond Index.
Tennessee’s economy showed sustained strength over the past twelve month period. The service sector continues to be the driver for the state’s non-farm job growth, especially jobs in the leisure and hospitality services and education and health services. Tennessee’s economy has continued to transform as the manufacturing job base declines in importance and the service sector rises in importance. Tennessee had a 2005 per capita income of $30,952 compared with a national per capita income of $34,495. The state’s unemployment rate as of June 2007 was 4.1% compared with the national average of 4.5%. Tennessee maintained its AA general obligation credit rating as of June 30, 2007.
The North Carolina Tax-Free Income Series provided shareholders with a total return of 3.85% during the reporting period. The fund slightly underperformed the 7-year Lehman Brothers Municipal Bond Index which had a total return of 4.21%. The North Carolina Tax-Free Short-to-Medium Series had a total return of 2.97% during the reporting period compared with a total return of 3.85% for the 3-year Lehman Brothers Municipal Bond Index.
North Carolina’s economy continued to show impressive growth over the past twelve month period. The state’s real GDP for 2006 is estimated to have increased by 4.2% compared with a national average of 3.4%. Like many states, North Carolina’s economy is undergoing a transformation from that of a traditional manufacturing based economy to a new economy driven increasingly by professional and business services. North Carolina had a 2005 per capita income of $31,029 compared with a national per capita income of $34,495. The state’s unemployment rate as of June 2007 was 4.9%
ii
which was slightly above the national average of 4.5%. Professional and business services, along with healthcare services are the fast growing employment sectors in the state. Tourism is also another main driver of economic development in the state with tourists spending more than $15 billion in 2006. The state of North Carolina maintained its AAA general obligation bond rating during the period under review.
The Alabama Tax-Free Income Series provided shareholders with a total return of 4.70% during the reporting period. This compared favorably with the fund’s comparative index the 7-year Lehman Brothers Municipal Bond Index which returned 4.21%.
Alabama’s economy grew at a moderate pace during the period under review. The state’s real GDP for 2006 is estimated to have increased by 3.1% compared with the national average of 3.4%. The state’s unemployment rate was 3.5% as of June 2007 which is substantially below the national average of 4.5%. Employment growth in the state continues to be led by auto-related manufacturing and parts suppliers, transportation, and the aerospace industry. Alabama’s 2005 per capita income was $29,623 compared with the national average of $34,495. Alabama maintained its AA general obligation bond credit rating during the period under review.
The Mississippi Tax-Free Income Series provided shareholders with a total return of 4.39% during the reporting period. The fund slightly underperformed the 10-year Lehman Brothers Municipal Bond Index which had a total return of 4.77%.
Mississippi’s economy continued to recover during the period under review from the widespread devastation caused by Hurricane Katrina. Federal legislation known as the Gulf Opportunity Zone Act of 2005 was signed into law in December 2005 which provides for federal tax incentives to areas affected by Hurricane Katrina. The state’s real GDP for 2006 is estimated to have increased by 2.5% compared with the national average of 3.4%. The state’s unemployment rate as of June 2007 was 6.0% which is substantially above the national average of 4.5%. Mississippi’s 2005 per capita income of $24,925 was the second lowest in the nation and was 28% below the national average. Mississippi maintained its AA general obligation bond credit rating during the period under review.
The Intermediate Government Bond Series provided shareholders with a total return of 6.04% during the reporting period. This performance compared favorably with the fund’s comparative index the Lehman Brothers U.S. Government Intermediate Bond Index which had a total return of 5.43%.
It should be noted that indices such as the Lehman Brothers Municipal Bond Index and the Lehman Brothers U.S. Government Intermediate Bond Index do not take into account any operating or transaction costs associated with managing a real portfolio. Moreover, the Lehman Brothers Municipal Bond Index is national in scope so it does not necessarily reflect state-specific municipal bond fund performance.
iii
Recent economic data has been somewhat mixed. The Federal Reserve currently estimates that real GDP will expand roughly 2-1/4 to 2-1/2 percent in 2007 and 2-1/2 to 2-3/4 percent in 2008.2 The slightly lower growth estimates coupled with inflation that is still running at the top end of the Federal Reserve’s comfort zone, suggest that the Federal Reserve is likely to maintain its current monetary policy for some time before eventually reducing short-term interest rates. During the coming year we anticipate that we will continue to adhere to our longstanding strategy of purchasing high-quality investment grade bonds at the best price possible on the shoulder of the yield curve and holding them in down markets as well as up markets.3 For our Short-to-Medium Series municipal bond funds, we plan on gradually increasing each fund’s duration so that it is closer to five (5) years. This strategy is designed to help the funds capture incrementally higher income.
2 | Federal Reserve Bank: Testimony, Ben S. Bernanke—Semiannual Monetary Policy Report to the Congress, July 18, 2007. |
3 | Any opinions expressed herein are those of the funds’ portfolio management and are current as of June 30, 2007. They are not guarantees of performance or investment results and should not be taken as investment advice. |
iv
The illustrations below provide each Fund’s sector allocation. We hope it will be useful to shareholders as it summarizes key information about each Fund’s investments.
Kentucky Tax-Free Income Series
| | | |
| | | % of
Investments
at market | |
CREDIT QUALITY | | | |
Aaa/AAA | | 80.32 | % |
Aa/AA | | 14.38 | % |
A | | 4.17 | % |
Baa/BBB | | 0.72 | % |
Not Rated | | 0.41 | % |
| | | |
| | 100.00 | % |
| | | |
COMPOSITION | | | |
Variable Rate | | 0.51 | % |
Prerefunded | | 14.79 | % |
General Obligation | | 1.59 | % |
Certificates of Participation | | 0.36 | % |
Lease Revenue | | 7.84 | % |
Municipal Utilities | | 1.77 | % |
Hospitals/Healthcare | | 1.70 | % |
State and Local Mortgage | | 0.57 | % |
University Consolidated Education | | 0.30 | % |
Public Facilities | | 0.78 | % |
Insured Municipals | | 63.49 | % |
Escrowed to Maturity | | 6.30 | % |
| | | |
| | 100.00 | % |
| | | |
Kentucky Tax-Free Short-to-Medium Series
| | | |
| | | % of
Investments
at market | |
CREDIT QUALITY | | | |
Aaa/AAA | | 53.89 | % |
Aa/AA | | 37.25 | % |
A | | 5.06 | % |
Baa/BBB | | 3.49 | % |
Not Rated | | 0.31 | % |
| | | |
| | 100.00 | % |
| | | |
COMPOSITION | | | |
Prerefunded | | 7.42 | % |
General Obligation | | 4.73 | % |
Certificates of Participation | | 1.59 | % |
Lease Revenue | | 21.62 | % |
Municipal Utilities | | 1.74 | % |
Hospitals/Healthcare | | 3.20 | % |
Insured Municipals | | 54.89 | % |
Escrowed to Maturity | | 4.81 | % |
| | | |
| | 100.00 | % |
| | | |
Alabama Tax-Free Income Series
| | | |
| | | % of
Investments
at market | |
CREDIT QUALITY | | | |
Aaa/AAA | | 79.09 | % |
Aa/AA | | 15.80 | % |
A | | 4.13 | % |
Baa/BBB | | 0.89 | % |
Not Rated | | 0.09 | % |
| | | |
| | 100.00 | % |
| | | |
COMPOSITION | | | |
Prerefunded | | 4.16 | % |
General Obligation | | 12.55 | % |
Municipal Utilities | | 1.04 | % |
Industrial Revenue | | 0.89 | % |
Hospitals/Healthcare | | 0.70 | % |
University Consolidated Education | | 1.07 | % |
Public Facilities | | 1.77 | % |
Insured Municipals | | 77.82 | % |
| | | |
| | 100.00 | % |
| | | |
Mississippi Tax-Free Income Series
| | | |
| | | % of
Investments
at market | |
CREDIT QUALITY | | | |
Aaa/AAA | | 81.47 | % |
Aa/AA | | 10.67 | % |
A | | 3.77 | % |
Baa/BBB | | 2.87 | % |
Not Rated | | 1.22 | % |
| | | |
| | 100.00 | % |
| | | |
COMPOSITION | | | |
Prerefunded | | 10.45 | % |
General Obligation | | 13.96 | % |
Insured Municipals | | 74.52 | % |
Escrowed to Maturity | | 1.07 | % |
| | | |
| | 100.00 | % |
| | | |
v
The illustrations below provide each Fund’s sector allocation. We hope it will be useful to shareholders as it summarizes key information about each Fund’s investments.
Tennessee Tax-Free Income Series
| | | |
| | | % of
Investments
at market | |
CREDIT QUALITY | | | |
Aaa/AAA | | 62.69 | % |
Aa/AA | | 35.60 | % |
A | | 0.39 | % |
Baa/BBB | | 1.32 | % |
| | | |
| | 100.00 | % |
| | | |
COMPOSITION | | | |
Prerefunded | | 5.90 | % |
General Obligation | | 14.73 | % |
Lease Revenue | | 0.26 | % |
Municipal Utilities | | 2.07 | % |
Industrial Revenue | | 0.19 | % |
Hospitals/Healthcare | | 11.34 | % |
State and Local Mortgage | | 4.10 | % |
University Consolidated Education | | 1.74 | % |
Insured Municipals | | 58.42 | % |
Escrowed to Maturity | | 1.25 | % |
| | | |
| | 100.00 | % |
| | | |
Tennessee Tax-Free Short-to-Medium Series
| | | |
| | | % of
Investments
at market | |
CREDIT QUALITY | | | |
Aaa/AAA | | 72.86 | % |
Aa/AA | | 23.67 | % |
A | | 0 | % |
Baa/BBB | | 2.35 | % |
Not Rated | | 1.12 | % |
| | | |
| | 100.00 | % |
| | | |
COMPOSITION | | | |
Prerefunded | | 3.80 | % |
General Obligation | | 11.82 | % |
Lease Revenue | | 2.35 | % |
Municipal Utilities | | 1.60 | % |
Hospitals/Healthcare | | 0.94 | % |
State and Local Mortgage | | 1.11 | % |
University Consolidated Education | | 2.34 | % |
Insured Municipals | | 76.04 | % |
| | | |
| | 100.00 | % |
| | | |
North Carolina Tax-Free Income Series
| | | |
| | | % of
Investments
at market | |
CREDIT QUALITY | | | |
Aaa/AAA | | 74.80 | % |
Aa/AA | | 22.85 | % |
A | | 2.35 | % |
| | | |
| | 100.00 | % |
| | | |
COMPOSITION | | | |
Prerefunded | | 9.28 | % |
General Obligation | | 1.96 | % |
Certificates of Participation | | 9.09 | % |
Lease Revenue | | 3.32 | % |
Municipal Utilities | | 1.03 | % |
Hospitals/Healthcare | | 3.76 | % |
State and Local Mortgage | | 0.46 | % |
Insured Municipals | | 70.46 | % |
Escrowed to Maturity | | 0.64 | % |
| | | |
| | 100.00 | % |
| | | |
North Carolina Tax-Free Short-to-Medium Series
| | | |
| | | % of
Investments
at market | |
CREDIT QUALITY | | | |
Aaa/AAA | | 78.05 | % |
Aa/AA | | 19.04 | % |
A | | 2.91 | % |
| | | |
| | 100.00 | % |
| | | |
COMPOSITION | | | |
Prerefunded | | 3.05 | % |
General Obligation | | 5.15 | % |
Certificates of Participation | | 9.75 | % |
Lease Revenue | | 6.24 | % |
Hospitals/Healthcare | | 4.28 | % |
University Consolidated Education | | 1.81 | % |
Insured Municipals | | 69.72 | % |
| | | |
| | 100.00 | % |
| | | |
vi
The illustrations below provide each Fund’s sector allocation. We hope it will be useful to shareholders as it summarizes key information about each Fund’s investments.
Intermediate Government Bond Series
| | | |
| | | % of
Investments
at market | |
CREDIT QUALITY | | | |
Aaa/AAA | | 100.00 | % |
| | | |
COMPOSITION | | | |
Federal Farm Credit Banks | | 22.69 | % |
Federal Home Loan Banks | | 47.57 | % |
Federal Home Loan Mortgage | | 2.18 | % |
Federal National Mortgage | | 22.54 | % |
Student Loan Mortgage | | 5.02 | % |
| | | |
| | 100.00 | % |
| | | |
vii
PERFORMANCE COMPARISON (Unaudited)
The following graphs compare the change in value of a $10,000 investment in each series of Dupree Mutual Funds with the change in value of a $10,000 investment in a comparable index. The comparisons are made over ten years or since the inception of the series, if shorter than ten years. Results are for the fiscal years ended June 30.
viii
Notes on Graphs:
Results reflect reinvestment of all dividend and capital gain distributions. For each series, we have chosen an index that approximates the average maturity of the compared series. The investor should understand that an index is a mathematical hypothesis and does not reflect a real market situation. For example, the portfolio of each index is replaced with an entirely different portfolio each year without reflecting operating expenses or transaction costs, an impossibility in reality. On the other hand, the fund’s performance reflects not only these factors but management costs as well. Past performance is not indicative of future results.
The performance tables and the graphs above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
DUPREE MUTUAL FUNDS - ALABAMA TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Alabama Municipal Bonds — 100%
June 30, 2007
| | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | Rating# | | Par Value | | Market
Value |
INSURED MUNICIPAL REVENUE BONDS | | | | | | | | | | | | | |
77.18% of Net Assets | | | | | | | | | | | | | |
AL Agriculture & Mechanical University Revenue | | 5.000 | % | | 11/01/2025 | | Aaa/AAA*/AAA@ | | $ | 100,000 | | $ | 102,822 |
AL Agriculture & Mechanical University Revenues Refunding | | 5.000 | | | 11/01/2024 | | Aaa* | | | 100,000 | | | 104,337 |
AL Housing Financial Authority Single Family Mortgage | | 5.050 | | | 10/01/2013 | | Aaa | | | 10,000 | | | 10,063 |
AL Private College & Universities Facilities Authority Revenue | | 4.750 | | | 09/01/2026 | | AAA* | | | 400,000 | | | 401,100 |
AL State Board Education Bishop State Community College | | 4.600 | | | 01/01/2021 | | Aaa/AAA@ | | | 100,000 | | | 100,968 |
AL State Board of Education Revenue Calhoun Community | | 5.000 | | | 05/01/2022 | | Aaa/AAA@ | | | 450,000 | | | 468,621 |
AL State Docks Department Docks Facilities Revenue | | 5.500 | | | 10/01/2022 | | Aaa/AAA*/AAA@ | | | 110,000 | | | 114,211 |
AL State University Revenue General Tuition & Fee -Series A | | 5.000 | | | 01/01/2019 | | Aaa/AAA*/AAA@ | | | 50,000 | | | 51,923 |
AL State University Revenue General Tuition & Fee | | 5.000 | | | 08/01/2026 | | Aaa/AAA*/AAA@ | | | 150,000 | | | 154,973 |
AL Water Pollution Control Authority Revolving Fund Loan | | 5.500 | | | 08/15/2016 | | Aaa/AAA* | | | 10,000 | | | 10,018 |
AL Water Pollution Control Authority Revolving Fund Loan | | 4.800 | | | 08/15/2018 | | Aaa/AAA*/AAA@ | | | 50,000 | | | 51,205 |
AL Water Pollution Control Authority Revolving Fund Loan | | 4.800 | | | 08/15/2022 | | Aaa/AAA*/AAA@ | | | 170,000 | | | 173,009 |
AL Water Pollution Control Authority Revolving Fund Loan | | 5.000 | | | 08/15/2026 | | Aaa/AAA*/AAA@ | | | 130,000 | | | 133,518 |
Alexander City AL Warrants | | 4.700 | | | 05/01/2021 | | Aaa/AAA*/AAA@ | | | 200,000 | | | 203,048 |
Auburn AL Capital Improvement School Warrants | | 5.000 | | | 08/01/2030 | | Aaa/AAA*/AAA@ | | | 260,000 | | | 268,544 |
Baldwin County AL Water and Sewer Series A General Obligation | | 5.000 | | | 01/01/2025 | | Aaa/AAA* | | | 295,000 | | | 306,596 |
Birmingham AL General Obligation - Series A | | 5.125 | | | 11/01/2022 | | Aaa/AAA*/AAA@ | | | 100,000 | | | 105,795 |
Birmingham AL Special Care Facilities Financing | | 5.000 | | | 06/01/2020 | | Aaa/AAA* | | | 100,000 | | | 102,448 |
Birmingham AL Multifamily Housing Revenue - Beaconview | | 5.600 | | | 07/01/2020 | | Aaa/AAA*/AAA@ | | | 20,000 | | | 20,244 |
Birmingham AL Waterworks & Sewer Revenue Warrants - Series A | | 5.000 | | | 01/01/2023 | | Aaa/AAA* | | | 125,000 | | | 130,774 |
Central Elmore AL Water & Sewer | | 5.000 | | | 07/01/2021 | | Aaa/AAA*/AAA@ | | | 100,000 | | | 102,910 |
Choctaw County AL Revenue School Warrants | | 4.700 | | | 03/01/2017 | | A* | | | 200,000 | | | 199,986 |
Daphne AL Warrants | | 5.000 | | | 04/01/2023 | | Aaa/AAA* | | | 250,000 | | | 260,230 |
East AL Health Care Authority Health Care Facilities Revenue | | 5.200 | | | 09/01/2023 | | AAA*/AAA@ | | | 260,000 | | | 266,570 |
Elmore County AL Limited Obligation School Warrants | | 5.000 | | | 02/01/2022 | | AAA*/AAA@ | | | 190,000 | | | 197,155 |
Enterprise AL Water General Obligation | | 5.000 | | | 10/01/2019 | | Aaa/AAA*/AAA@ | | | 55,000 | | | 57,688 |
Enterprise AL Water General Obligation | | 5.000 | | | 10/01/2023 | | Aaa/AAA*/AAA@ | | | 450,000 | | | 467,154 |
Gasden AL Warrants - Series B | | 4.600 | | | 08/01/2022 | | Aaa/AAA@ | | | 100,000 | | | 101,021 |
Homewood AL Educational Building Authority Revenue Samford | | 5.000 | | | 12/01/2034 | | Aaa | | | 200,000 | | | 206,208 |
Hoover AL Board of Education Capital Outlay Warrants | | 5.250 | | | 02/15/2026 | | Aaa/AAA*/AAA@ | | | 35,000 | | | 36,211 |
Huntsville AL Capital Improvement Warrants - Series C | | 4.500 | | | 11/01/2021 | | Aaa/AAA*/AAA@ | | | 200,000 | | | 200,644 |
Huntsville AL Health Care Authority - Series A | | 5.000 | | | 06/01/2023 | | Aaa/AAA*/AAA@ | | | 140,000 | | | 142,904 |
Huntsville AL Health Care Authority - Series A | | 5.000 | | | 06/01/2024 | | Aaa/AAA* | | | 100,000 | | | 103,230 |
Huntsville AL Public Building Authority Lease Revenue | | 5.125 | | | 10/01/2022 | | Aaa/AAA*/AAA@ | | | 200,000 | | | 209,622 |
Huntsville AL Public Educational Building - A&M | | 5.600 | | | 06/01/2014 | | A* | | | 20,000 | | | 20,836 |
Huntsville AL Public Educational Building | | 6.050 | | | 06/01/2020 | | A* | | | 150,000 | | | 157,556 |
Jasper AL Waterworks & Sewer Board Water & Sewer Revenue | | 5.200 | | | 06/01/2021 | | Aaa/AAA*/AAA@ | | | 50,000 | | | 52,585 |
Jefferson County AL Public Building Authority Lease Revenue | | 5.000 | | | 04/01/2026 | | Aaa/AAA* | | | 150,000 | | | 155,367 |
Jefferson County AL Sewer Revenue Capital Improvement | | 5.000 | | | 02/01/2020 | | Aaa/AAA*/AAA@ | | | 50,000 | | | 51,736 |
Lauderdale County & Florence AL Health Care Authority | | 5.250 | | | 07/01/2019 | | Aaa/AAA*/AAA@ | | | 30,000 | | | 30,817 |
Lee County AL School Warrants | | 5.000 | | | 02/01/2018 | | Aaa/AAA@ | | | 100,000 | | | 104,248 |
Lee County AL School Warrants Limited Obligation | | 5.000 | | | 02/01/2021 | | Aaa/AAA@ | | | 75,000 | | | 77,618 |
Limestone County AL Water & Sewer Authority Water Revenue | | 5.000 | | | 12/01/2029 | | Aaa | | | 275,000 | | | 284,100 |
Linden AL Warrants | | 5.250 | | | 06/01/2023 | | AA* | | | 25,000 | | | 25,808 |
Madison AL School Warrants - Series B | | 5.000 | | | 02/01/2023 | | Aaa/AAA*/AAA@ | | | 150,000 | | | 153,131 |
Madison AL Refunding Warrants | | 5.000 | | | 04/01/2021 | | Aaa/AAA*/AAA@ | | | 350,000 | | | 367,336 |
Mobile AL Limited Obligation Tax Warrants | | 5.500 | | | 02/15/2023 | | A1 | | | 35,000 | | | 36,475 |
Montgomery AL Waterworks & Sanitation Sewer Board Revenue | | 5.000 | | | 09/01/2019 | | Aaa/AAA*/AAA@ | | | 50,000 | | | 51,957 |
Montgomery AL Waterworks & Sanitation Sewer Board Revenue | | 5.000 | | | 03/01/2025 | | Aaa/AAA*/AAA@ | | | 250,000 | | | 258,673 |
Morgan County AL Water and Sewer General Obligation Warrant | | 5.000 | | | 04/01/2028 | | Aaa | | | 100,000 | | | 102,702 |
Muscle Shoals AL Refunded Warrants | | 4.600 | | | 08/01/2024 | | Aaa/AAA*/AAA@ | | | 250,000 | | | 251,960 |
Roanoke AL Warrants | | 4.450 | | | 05/01/2020 | | Aaa/AAA*/AAA@ | | | 150,000 | | | 150,771 |
St Clair County AL Board Education School Tax Warrants | | 4.400 | | | 02/01/2022 | | Aaa/AAA*/AAA@ | | | 50,000 | | | 49,415 |
Shelby County AL Board of Education Special Tax School Warrants | | 5.000 | | | 02/01/2025 | | Aaa/AAA* | | | 300,000 | | | 309,927 |
Talladega County AL Industrial Development Revenue | | 4.700 | | | 01/01/2022 | | Aaa/AAA@ | | | 100,000 | | | 102,027 |
Trussville AL Warrants | | 4.800 | | | 10/01/2021 | | Aaa/AAA@ | | | 85,000 | | | 86,883 |
Tuskegee AL Utilities Board Utilities Revenue | | 5.500 | | | 02/01/2022 | | Aaa/AAA* | | | 70,000 | | | 71,434 |
University AL University Revenue Hospital - Series A | | 5.400 | | | 09/01/2013 | | Aaa/AAA*/AAA@ | | | 50,000 | | | 52,565 |
University of Southern AL University Revenue & Capital Improvement | | 5.000 | | | 03/15/2021 | | Aaa/AAA@ | | | 370,000 | | | 385,592 |
West Morgan - East Lawrence Water Authority AL Water Revenue | | 5.000 | | | 08/15/2025 | | Aaa/AAA*/AAA@ | | | 150,000 | | | 158,454 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 9,115,723 |
GENERAL OBLIGATION BONDS | | | | | | | | | | | | | |
12.45% of Net Assets | | | | | | | | | | | | | |
AL State - Series A | | 5.000 | | | 06/01/2019 | | Aa3/AA* | | | 30,000 | | | 30,777 |
AL State - Series A | | 5.000 | | | 06/01/2020 | | Aa3/AA* | | | 100,000 | | | 102,645 |
AL State - Series B | | 5.000 | | | 06/01/2021 | | Aa3/AA* | | | 30,000 | | | 30,545 |
The accompanying notes are an integral part of the financial statements.
1
DUPREE MUTUAL FUNDS - ALABAMA TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Alabama Municipal Bonds — 100%
June 30, 2007
| | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | Rating# | | Par Value | | Market Value |
AL State - Series A | | 4.625 | % | | 09/01/2022 | | Aa3/AA* | | $ | 100,000 | | $ | 101,150 |
AL 21st Century Authority Tobacco Settlement Revenue | | 5.750 | | | 12/01/2020 | | Baa1/A-* | | | 50,000 | | | 52,237 |
AL 21st Century Authority Tobacco Settlement Revenue | | 5.850 | | | 12/01/2013 | | Baa1/A-* | | | 15,000 | | | 15,909 |
Birmingham AL Warrants | | 4.900 | | | 01/01/2018 | | Aa3/AA*/AA-@ | | | 150,000 | | | 152,507 |
Birmingham AL Warrants | | 4.750 | | | 01/01/2023 | | Aa3/AA*/AA-@ | | | 225,000 | | | 226,793 |
Birmingham AL Capital Improvement Warrants - Series A | | 5.500 | | | 08/01/2025 | | Aa3/AA*/AA-@ | | | 100,000 | | | 104,634 |
Madison AL Warrants - Series C | | 5.000 | | | 09/01/2018 | | Aaa/AAA*/AAA@ | | | 50,000 | | | 51,577 |
Montgomery AL Warrants - Series C General Obligation Unlimited | | 5.000 | | | 01/01/2023 | | Aa2/AA*/AAA@ | | | 580,000 | | | 601,135 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 1,469,909 |
PREREFUNDED BONDS | | | | | | | | | | | | | |
4.12% of Net Assets | | | | | | | | | | | | | |
Blount County AL Water Authority Revenue | | 5.750 | | | 08/01/2019 | | Aaa/AAA*/AAA@ | | | 125,000 | | | 131,762 |
Hoover AL Warrants - Series A | | 5.650 | | | 01/01/2014 | | Aa3/AA* | | | 10,000 | | | 10,488 |
Huntsville AL Health Care Authority - Series A | | 5.400 | | | 06/01/2022 | | Aaa/AAA*/AAA@ | | | 50,000 | | | 53,895 |
Jasper AL Waterworks & Sewer Board Water & Sewer Revenue | | 5.100 | | | 06/01/2018 | | Aaa/AAA*/AAA@ | | | 30,000 | | | 31,487 |
Jasper AL Waterworks & Sewer Board Water & Sewer Revenue | | 5.125 | | | 06/01/2026 | | Aaa/AAA*/AAA@ | | | 75,000 | | | 78,842 |
Montgomery AL Baptist Medical Center Special Care | | 5.000 | | | 11/15/2029 | | Aaa/AAA* | | | 85,000 | | | 86,516 |
Northwest AL Gas District Gas System Revenue | | 5.900 | | | 05/01/2020 | | Aaa/AAA@ | | | 35,000 | | | 36,268 |
Phenix City AL School Warrants | | 5.450 | | | 08/01/2016 | | Aaa/AAA*/AAA@ | | | 10,000 | | | 10,606 |
St Clair County AL Board of Education School Tax Anticipation | | 5.500 | | | 02/01/2016 | | Aaa/AAA*/AAA@ | | | 10,000 | | | 10,357 |
Southeast AL Gas District System Revenue - Series A | | 5.500 | | | 06/01/2020 | | Aaa/AAA@ | | | 10,000 | | | 10,602 |
University of Alabama Revenue - Birmingham | | 6.000 | | | 10/01/2020 | | Aaa/AAA*/AAA@ | | | 25,000 | | | 26,176 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 486,999 |
PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | | | |
1.76% of Net Assets | | | | | | | | | | | | | |
AL State Public Schools & College Authority - Series B | | 5.000 | | | 12/01/2021 | | Aa3/AA* | | | 190,000 | | | 197,482 |
Rockford AL Public Building Authority Building Revenue | | 5.750 | | | 09/01/2015 | | NR | | | 10,000 | | | 10,323 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 207,805 |
UNIVERSITY CONSOLIDATED EDUCATION & HOUSING | | | | | | | | | | | | | |
1.06% of Net Assets | | | | | | | | | | | | | |
Mobile AL Spring Hill College Educational Building | | 5.100 | | | 09/01/2019 | | Aa3 | | | 120,000 | | | 124,910 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 124,910 |
MUNICIPAL UTILITIES | | | | | | | | | | | | | |
1.03% of Net Assets | | | | | | | | | | | | | |
Birmingham AL Water & Sewer Revenue Warrants - Series A | | 5.125 | | | 01/01/2017 | | A2/AA-* | | | 20,000 | | | 20,537 |
Birmingham AL Water & Sewer Revenue Warrants - Series A | | 4.750 | | | 01/01/2021 | | A2/AA-* | | | 100,000 | | | 100,609 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 121,146 |
INDUSTRIAL REVENUE BONDS | | | | | | | | | | | | | |
0.88% of Net Assets | | | | | | | | | | | | | |
Auburn AL Industrial Development Board Facilities Revenue | | 5.800 | | | 11/01/2011 | | BBB* | | | 75,000 | | | 78,437 |
Auburn AL Industrial Development Board Facilities Revenue | | 6.200 | | | 11/01/2020 | | BBB* | | | 25,000 | | | 26,087 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 104,524 |
HOSPITALS AND HEALTHCARE | | | | | | | | | | | | | |
0.69% of Net Assets | | | | | | | | | | | | | |
Mobile AL Second Medical Clinic Board Revenue Franklin | | 5.050 | | | 03/01/2018 | | Aa3 | | | 50,000 | | | 51,310 |
Montgomery AL Baptist Medical Center Special Care | | 5.375 | | | 09/01/2022 | | Aaa/AAA* | | | 30,000 | | | 30,671 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 81,981 |
| | | | | | | | | | | | | |
Total Investments (cost $11,684,642)(See (a) below for further explanation) 99.17% of Net Assets | | | | | | | | | | | | $ | 11,712,997 |
| | | | | | | | | | | | | |
| * | Standard and Poor’s Corporation |
| @ | Fitch’s Investors Service |
All other ratings by Moody’s Investors Service, Inc.
| # | Bond ratings are unaudited. |
| (a) | Represents cost for financial reporting and federal income tax purposes and differs from market value by net unrealized appreciation of securities as follows: |
| | | | |
Unrealized appreciation | | $ | 120,416 | |
Unrealized depreciation | | | (92,061 | ) |
| | | | |
Net unrealized appreciation | | $ | 28,355 | |
| | | | |
The accompanying notes are an integral part of the financial statements.
2
ALABAMA TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2007
| | | | | |
ASSETS: | | | | | |
Investments in securities, at value (Cost: $11,684,642) | | | | $ | 11,712,997 |
Cash | | | | | 10,205 |
Interest receivable | | | | | 169,029 |
Prepaid expenses | | | | | 381 |
| | | | | |
Total assets | | | | | 11,892,612 |
LIABILITIES: | | | | | |
Payable for: | | | | | |
Distributions to shareholders | | 39,107 | | | |
Fund shares redeemed | | 1,448 | | | |
Borrowings under line of credit | | 37,216 | | | |
Investment advisory fee | | 1,716 | | | |
Transfer agent fee | | 2,125 | | | |
Accrued expenses | | 671 | | | |
| | | | | |
Total liabilities | | | | | 82,283 |
| | | | | |
NET ASSETS: | | | | | |
Capital | | | | | 11,768,912 |
Net accumulated realized gain on investment transactions | | | | | 13,062 |
Net unrealized appreciation in value of investments | | | | | 28,355 |
| | | | | |
Net assets at value | | | | $ | 11,810,329 |
| | | | | |
NET ASSET VALUE, offering price and redemption price per share ($11,810,329 -:- 1,019,411 shares outstanding; unlimited number of shares authorized; no par value) | | | | $ | 11.59 |
| | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2007
| | | | |
Net investment income: | | | | |
Interest income | | $ | 510,737 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 57,593 | |
Transfer agent fee | | | 17,278 | |
Custodian expense | | | 4,800 | |
Pricing fees | | | 4,982 | |
Professional fees | | | 3,785 | |
Trustee fees | | | 1,160 | |
Other expenses | | | 6,763 | |
| | | | |
Total expenses | | | 96,361 | |
Fees waived by Adviser | | | (42,120 | ) |
Custodian expense reduction | | | (4,800 | ) |
| | | | |
Net expenses | | | 49,441 | |
| | | | |
Net investment income | | | 461,296 | |
| | | | |
Realized and unrealized gain on investments: | | | | |
Net realized gain | | | 19,580 | |
Net increase in unrealized appreciation | | | 33,183 | |
| | | | |
Net realized and unrealized gain on investments | | | 52,763 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 514,059 | |
| | | | |
The accompanying notes are an integral part of the financial statements.
3
ALABAMA TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2007 and 2006
| | | | | | | | |
| | | 2007 | | | 2006 | |
Increase in net assets: | | | | | | | | |
Operations: | | | | | | | | |
Net investment income | | $ | 461,296 | | | $ | 368,623 | |
Net realized gain/(loss) on investments | | | 19,580 | | | | (2,170 | ) |
Net increase/(decrease) in unrealized appreciation | | | 33,183 | | | | (320,339 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 514,059 | | | | 46,114 | |
Distributions to shareholders from net investment income | | | (461,296 | ) | | | (368,623 | ) |
Net fund share transactions (Note 4) | | | 1,003,649 | | | | 3,275,939 | |
| | | | | | | | |
Total increase | | | 1,056,412 | | | | 2,953,430 | |
Net assets: | | | | | | | | |
Beginning of year | | | 10,753,917 | | | | 7,800,487 | |
| | | | | | | | |
End of year | | $ | 11,810,329 | | | $ | 10,753,917 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
| | | | | | | | | | | | | | | | | | | | |
| | | For the years ended June 30, | |
| | | 2007 | | | 2006 | | | 2005 | | | 2004 | | | 2003 | |
Net asset value, beginning of year | | $ | 11.52 | | | $ | 11.91 | | | $ | 11.45 | | | $ | 11.80 | | | $ | 11.22 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.47 | | | | 0.47 | | | | 0.48 | | | | 0.51 | | | | 0.52 | |
Net gains/(losses) on securities, both realized and unrealized | | | 0.07 | | | | (0.39 | ) | | | 0.46 | | | | (0.35 | ) | | | 0.58 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.54 | | | | 0.08 | | | | 0.94 | | | | 0.16 | | | | 1.10 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.47 | ) | | | (0.47 | ) | | | (0.48 | ) | | | (0.51 | ) | | | (0.52 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | $ | 11.59 | | | $ | 11.52 | | | $ | 11.91 | | | $ | 11.45 | | | $ | 11.80 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 4.70 | % | | | 0.65 | % | | | 8.36 | % | | | 1.36 | % | | | 9.98 | % |
Net assets, end of year (in thousands) | | $ | 11,810 | | | $ | 10,754 | | | $ | 7,800 | | | $ | 5,273 | | | $ | 4,615 | |
Ratio of net expenses to average net assets (a) | | | 0.43 | % | | | 0.46 | % | | | 0.46 | % | | | 0.40 | % | | | 0.33 | % |
Ratio of net investment income to average net assets | | | 4.00 | % | | | 3.97 | % | | | 4.08 | % | | | 4.36 | % | | | 4.46 | % |
Portfolio turnover | | | 5.43 | % | | | 7.72 | % | | | 3.96 | % | | | 16.43 | % | | | 6.24 | % |
| (a) | Percentages are after expenses waived by Adviser and custodian/interest expense reductions. |
Expenses waived by Adviser and custodian/interest expense reductions were:
.37% and .04% for 2007; .38% and .05% for 2006; .36% and .08% for 2005; .41% and .10% for 2004; and .50% and .12% for 2003, respectively.
The accompanying notes are an integral part of the financial statements.
4
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100%
June 30, 2007
| | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | Rating# | | Par Value | | Market Value |
INSURED MUNICIPAL REVENUE BONDS | | | | | | | | | | | | | |
62.71% of Net Assets | | | | | | | | | | | | | |
Ballard County KY School District Finance Corporation | | 5.000 | % | | 06/01/2020 | | Aaa/AAA@ | | $ | 1,240,000 | | $ | 1,292,192 |
Bardstown KY Combined Utilities Revenue | | 5.000 | | | 12/01/2017 | | Aaa/AAA@ | | | 1,290,000 | | | 1,337,059 |
Bardstown KY Combined Utilities Revenue | | 5.000 | | | 12/01/2018 | | Aaa/A2*/AAA@ | | | 1,510,000 | | | 1,570,989 |
Barren County KY School District Finance Corporation | | 4.750 | | | 08/01/2022 | | Aaa/Aa3*/AAA@ | | | 3,085,000 | | | 3,157,960 |
Boone County KY Pollution Control Revenue - Dayton Power | | 4.700 | | | 01/01/2028 | | Aaa/AAA*/AAA@ | | | 9,595,000 | | | 9,582,431 |
Boone County KY School District Finance Corporation | | 5.000 | | | 05/01/2023 | | Aaa/AAA* | | | 4,070,000 | | | 4,236,992 |
Boone County KY School District Finance Corporation | | 5.000 | | | 05/01/2024 | | Aaa/AAA* | | | 4,265,000 | | | 4,427,198 |
Boone County KY Water - Florence | | 5.000 | | | 12/01/2015 | | Aaa/AAA* | | | 1,000,000 | | | 1,047,280 |
Boone-Florence KY Water Supply System Revenue | | 5.000 | | | 12/01/2017 | | Aaa/AAA* | | | 1,805,000 | | | 1,876,207 |
Boone-Florence KY Water Supply System Revenue | | 5.000 | | | 12/01/2018 | | Aaa/AAA* | | | 1,900,000 | | | 1,984,322 |
Boone-Florence KY Water Supply System Revenue | | 5.000 | | | 12/01/2020 | | Aaa/AAA* | | | 2,100,000 | | | 2,176,797 |
Bullitt County KY School District Finance Corporation | | 4.750 | | | 07/01/2022 | | Aaa/AAA@ | | | 2,440,000 | | | 2,498,365 |
Bullitt County KY School District Finance Corporation | | 4.500 | | | 10/01/2024 | | Aaa/AAA@ | | | 2,720,000 | | | 2,726,501 |
Campbell & Kenton Counties Sanitation District Number 1 | | 5.000 | | | 08/01/2017 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,042,790 |
Campbell County KY School District Finance Corporation | | 4.500 | | | 08/01/2023 | | Aaa/AAA@ | | | 980,000 | | | 970,004 |
Carter County KY Detention Center | | 5.125 | | | 05/01/2029 | | Aaa/AAA* | | | 960,000 | | | 999,302 |
Eastern Kentucky University Consolidated Educational Building | | 5.000 | | | 05/01/2021 | | Aaa/AAA* | | | 1,580,000 | | | 1,642,931 |
Fayette County KY School District Finance Corporation | | 5.250 | | | 04/01/2021 | | Aaa/AAA*/AAA@ | | | 2,285,000 | | | 2,393,423 |
Fayette County KY School District Finance Corporation | | 5.000 | | | 04/01/2024 | | Aaa/AAA*/AAA@ | | | 6,985,000 | | | 7,280,675 |
Fayette County KY School District Finance Corporation | | 5.000 | | | 04/01/2025 | | Aaa/AAA*/AAA@ | | | 7,340,000 | | | 7,631,031 |
Fayette County KY School District Finance Corporation | | 4.500 | | | 03/01/2022 | | Aaa/AA-*/AAA@ | | | 4,100,000 | | | 4,111,972 |
Franklin County School Building Revenue ** | | 4.750 | | | 05/01/2027 | | Aaa/AAA@ | | | 3,570,000 | | | 3,623,086 |
Greater KY Housing Assistance Corporation - Chenowith Woods | | 6.100 | | | 01/01/2024 | | Aaa/AAA*/AAA@ | | | 780,000 | | | 780,421 |
Greater KY Housing Assistance Corporation - Northside Apts | | 6.200 | | | 02/01/2025 | | AAA* | | | 3,340,000 | | | 3,344,242 |
Greater KY Housing Assistance Corporation Mortgage Revenue | | 5.450 | | | 05/20/2027 | | Aaa | | | 1,245,000 | | | 1,284,193 |
Harden County School District Finance Corporation | | 4.750 | | | 06/01/2027 | | Aaa | | | 1,250,000 | | | 1,269,738 |
Jefferson County KY Health Facilities - Jewish Hospital | | 5.650 | | | 01/01/2017 | | Aaa/AAA* | | | 3,450,000 | | | 3,522,174 |
Jefferson County KY Health Facilities - Jewish Hospital | | 5.700 | | | 01/01/2021 | | Aaa/AAA* | | | 4,520,000 | | | 4,614,875 |
Jefferson County KY Health Facilities University Medical Center | | 5.500 | | | 07/01/2017 | | Aaa/AAA* | | | 8,675,000 | | | 8,762,444 |
Jefferson County KY School District Finance Corporation | | 4.750 | | | 12/01/2026 | | Aaa/AAA* | | | 3,770,000 | | | 3,809,811 |
Jefferson County KY School District Finance Corporation | | 5.250 | | | 01/01/2016 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,033,680 |
Jefferson County KY School District Finance Corporation | | 5.250 | | | 01/01/2019 | | Aaa/AAA*/AAA@ | | | 2,000,000 | | | 2,068,520 |
Jefferson County KY School District Finance Corporation | | 4.500 | | | 07/01/2023 | | Aaa/AAA*/AAA@ | | | 2,500,000 | | | 2,485,900 |
Jefferson County KY School District Finance Corporation | | 4.625 | | | 07/01/2025 | | Aaa/AAA*/AAA@ | | | 7,545,000 | | | 7,586,347 |
Jefferson County KY School District Finance Corporation | | 5.000 | | | 07/01/2026 | | Aaa/AAA* | | | 5,025,000 | | | 5,247,155 |
Jefferson County KY Health Facilities - Alliant Health | | 5.125 | | | 10/01/2017 | | Aaa/AAA*/AAA@ | | | 2,940,000 | | | 2,979,425 |
Jefferson County School District Finance Corporation ** | | 4.750 | | | 06/01/2027 | | Aaa/AAA* | | | 3,000,000 | | | 3,011,640 |
Kenton County KY School District Finance Corporation | | 5.000 | | | 06/01/2021 | | Aaa/Aa3*/AAA@ | | | 4,055,000 | | | 4,218,295 |
Kenton County KY School District Finance Corporation | | 5.000 | | | 06/01/2023 | | Aaa/AAA@ | | | 4,465,000 | | | 4,644,806 |
Kenton County KY School District Finance Corporation | | 5.000 | | | 06/01/2024 | | Aaa/AAA@ | | | 4,665,000 | | | 4,850,061 |
KY Asset Liability Commission General Fund | | 5.000 | | | 05/01/2020 | | Aaa/AAA*/AAA@ | | | 2,000,000 | | | 2,094,920 |
KY Asset Liability Commission Project Notes | | 5.000 | | | 05/01/2023 | | Aaa/AAA*/AAA@ | | | 5,600,000 | | | 5,843,040 |
KY Asset Liability Commission General Fund | | 5.000 | | | 05/01/2024 | | Aaa/AAA*/AAA@ | | | 5,880,000 | | | 6,131,194 |
KY Asset Liability Commission | | 5.000 | | | 05/01/2025 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,039,350 |
KY Asset Liability Project Notes | | 5.000 | | | 09/01/2015 | | Aaa/AAA*/AAA@ | | | 6,000,000 | | | 6,360,180 |
KY Asset Liability Commission University of Ky Project Note | | 5.000 | | | 10/01/2023 | | Aaa/AAA* | | | 8,075,000 | | | 8,446,612 |
KY Asset Liability Commission University of Ky Project Note | | 5.000 | | | 10/01/2024 | | Aaa/AAA* | | | 7,405,000 | | | 7,751,036 |
KY Asset Liability Commission University of Ky Project Note | | 5.000 | | | 10/01/2025 | | Aaa/AAA* | | | 3,700,000 | | | 3,867,684 |
KY Economic Development Finance Authority - Ashland Hospital | | 5.000 | | | 02/01/2018 | | Aaa/AAA*/AAA@ | | | 1,500,000 | | | 1,526,880 |
KY Development Finance Authority - St Claire Medical | | 5.875 | | | 09/01/2013 | | AAA* | | | 2,000,000 | | | 2,001,080 |
KY Development Finance Authority - St Claire Medical | | 5.625 | | | 09/01/2021 | | AAA* | | | 2,500,000 | | | 2,501,200 |
KY Development Finance Authority - Methodist Hospital | | 5.625 | | | 02/01/2017 | | AAA* | | | 6,500,000 | | | 6,637,800 |
KY Development Finance Authority - Appalachian Regional | | 5.850 | | | 10/01/2017 | | A* | | | 1,000,000 | | | 1,027,810 |
KY Housing Corporation | | 4.750 | | | 07/01/2017 | | Aaa/AAA* | | | 1,335,000 | | | 1,353,049 |
KY Housing Corporation | | 4.650 | | | 07/01/2023 | | Aaa/AAA* | | | 3,595,000 | | | 3,595,000 |
KY Housing Corporation | | 4.400 | | | 01/01/2017 | | Aaa/AAA* | | | 1,000,000 | | | 1,001,040 |
KY Housing Corporation | | 4.850 | | | 01/01/2024 | | Aaa/AAA* | | | 2,000,000 | | | 2,016,560 |
KY State Property & Building #73 | | 5.000 | | | 11/01/2021 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,038,820 |
KY State Property & Building #76 | | 5.500 | | | 08/01/2021 | | Aaa/AAA/AAA | | | 500,000 | | | 562,320 |
KY State Property & Building #83 | | 5.000 | | | 10/01/2013 | | Aaa/AAA*/AAA@ | | | 610,000 | | | 643,080 |
KY State Property & Building #83 | | 5.000 | | | 10/01/2017 | | Aaa/AAA*/AAA@ | | | 5,000,000 | | | 5,338,800 |
KY State Property & Building #83 | | 5.000 | | | 10/01/2018 | | Aaa/AAA*/AAA@ | | | 17,750,000 | | | 19,028,533 |
KY State Property & Building #83 | | 5.250 | | | 10/01/2020 | | Aaa/AAA*/AAA@ | | | 24,220,000 | | | 26,550,448 |
KY State Property & Building #73 | | 5.500 | | | 11/01/2017 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,066,950 |
KY State Property & Building #73 | | 5.000 | | | 11/01/2019 | | Aaa/AAA*/AAA@ | | | 1,360,000 | | | 1,417,419 |
KY State Property & Building #73 | | 5.000 | | | 11/01/2020 | | Aaa/AAA*/AAA@ | | | 3,255,000 | | | 3,384,516 |
KY State Property & Building #84 | | 5.000 | | | 08/01/2019 | | Aaa/AAA*/AAA@ | | | 10,000,000 | | | 10,693,100 |
KY State Property & Building #84 | | 5.000 | | | 08/01/2022 | | Aaa/AAA*/AAA@ | | | 17,500,000 | | | 18,708,200 |
KY State Property & Building #80 | | 5.250 | | | 05/01/2018 | | Aaa/AAA*/AAA@ | | | 2,940,000 | | | 3,209,069 |
KY State Property & Building #80 | | 5.250 | | | 05/01/2020 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,089,820 |
The accompanying notes are an integral part of the financial statements.
5
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100%
June 30, 2007
| | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | Rating# | | Par Value | | Market Value |
KY State Property & Building #81 | | 5.000 | % | | 11/01/2017 | | Aaa/AAA*/AAA@ | | $ | 2,060,000 | | $ | 2,161,290 |
KY State Property & Building #81 | | 5.000 | | | 11/01/2018 | | Aaa/AAA*/AAA@ | | | 1,720,000 | | | 1,808,477 |
KY State Property & Building #81 | | 5.000 | | | 11/01/2019 | | Aaa/AAA*/AAA@ | | | 2,385,000 | | | 2,498,192 |
KY State Property & Building #81 | | 5.000 | | | 11/01/2020 | | Aaa/AAA*/AAA@ | | | 3,560,000 | | | 3,720,876 |
KY State Property & Building #81 | | 5.000 | | | 11/01/2022 | | Aaa/AAA*/AAA@ | | | 3,930,000 | | | 4,074,349 |
KY State Turnpike Economic Development | | 5.150 | | | 07/01/2019 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,039,540 |
KY State Turnpike Economic Development | | 5.000 | | | 07/01/2023 | | Aaa/AAA*/AAA@ | | | 4,325,000 | | | 4,516,252 |
KY State Turnpike Economic Development | | 5.000 | | | 07/01/2024 | | Aaa/AAA*/AAA@ | | | 3,770,000 | | | 3,931,545 |
KY State Turnpike Economic Development | | 5.000 | | | 07/01/2025 | | Aaa/AAA*/AAA@ | | | 2,000,000 | | | 2,089,820 |
KY State Turnpike Economic Development | | 5.000 | | | 07/01/2026 | | Aaa/AAA@/AAA* | | | 4,720,000 | | | 4,925,084 |
KY State Property & Building #87 | | 5.000 | | | 03/01/2025 | | Aaa/AAA*/AAA@ | | | 4,000,000 | | | 4,183,920 |
Laurel County KY School District Finance Corporation | | 4.625 | | | 08/01/2026 | | Aaa/AAA@ | | | 3,150,000 | | | 3,160,301 |
Laurel County School District Finance Corporation | | 4.750 | | | 06/01/2026 | | Aaa | | | 1,000,000 | | | 1,015,790 |
Letcher County KY School District Finance Corporation | | 5.000 | | | 06/01/2022 | | Aaa/Aa3*/AAA@ | | | 1,755,000 | | | 1,831,009 |
Letcher County KY School District Finance Corporation | | 5.000 | | | 06/01/2024 | | Aaa/Aa3*/AAA@ | | | 1,930,000 | | | 2,004,228 |
Louisville & Jefferson County KY Metropolitan Sewer | | 5.000 | | | 05/15/2019 | | Aaa/AAA*/AAA@ | | | 2,500,000 | | | 2,542,550 |
Louisville & Jefferson County KY Metropolitan Sewer | | 4.750 | | | 05/15/2028 | | Aaa/AAA*/AAA@ | | | 10,425,000 | | | 10,513,613 |
Louisville & Jefferson County KY Metropolitan Sewer | | 5.000 | | | 05/15/2022 | | Aaa/AAA*/AAA@ | | | 2,855,000 | | | 2,981,362 |
Louisville & Jefferson County KY Metropolitan Sewer | | 5.000 | | | 05/15/2023 | | Aaa/AAA*/AAA@ | | | 2,990,000 | | | 3,118,301 |
Louisville & Jefferson County KY Metropolitan Sewer | | 5.000 | | | 05/15/2024 | | Aaa/AAA*/AAA@ | | | 3,135,000 | | | 3,275,887 |
Louisville & Jefferson County KY Metropolitan Sewer | | 5.000 | | | 05/15/2025 | | Aaa/AAA*/AAA@ | | | 3,285,000 | | | 3,419,291 |
Louisville & Jefferson County KY Metropolitan Sewer | | 5.000 | | | 05/15/2026 | | Aaa/AAA*/AAA@ | | | 5,000,000 | | | 5,197,650 |
Louisville & Jefferson County KY Metropolitan Sewer | | 5.000 | | | 05/15/2025 | | Aaa/AAA* | | | 3,270,000 | | | 3,415,188 |
Louisville & Jefferson County KY Metropolitan Sewer | | 5.000 | | | 05/15/2026 | | Aaa/AAA* | | | 3,230,000 | | | 3,370,990 |
Louisville & Jefferson County KY Regional Airport Authority | | 5.500 | | | 07/01/2017 | | Aaa/AAA*/AAA@ | | | 2,655,000 | | | 2,810,556 |
Louisville & Jefferson County KY Visitors & Convention Center | | 4.500 | | | 12/01/2023 | | Aaa/AAA*/AAA@ | | | 2,340,000 | | | 2,346,739 |
Louisville & Jefferson County KY Visitors & Convention Center | | 4.500 | | | 12/01/2024 | | Aaa/AAA*/AAA@ | | | 2,250,000 | | | 2,249,910 |
Louisville & Jefferson County KY Visitors & Convention Center | | 4.600 | | | 12/01/2025 | | Aaa/AAA*/AAA@ | | | 1,490,000 | | | 1,512,842 |
Louisville & Jefferson County KY Student Housing | | 5.000 | | | 06/01/2025 | | AAA* | | | 2,030,000 | | | 2,114,793 |
Louisville KY General Obligation - Series A | | 5.000 | | | 10/01/2020 | | Aaa/AAA*/AAA@ | | | 7,165,000 | | | 7,456,329 |
Louisville KY Health Care Facilities | | 6.650 | | | 12/20/2030 | | Aaa | | | 4,874,000 | | | 5,402,293 |
Louisville KY Parking Authority-River City First Mortgage | | 5.000 | | | 12/01/2017 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,012,830 |
Madison County KY School District Finance Corporation | | 4.500 | | | 04/01/2016 | | Aaa/AAA*/AAA@ | | | 695,000 | | | 708,726 |
Marshall County KY School District Finance Corporation | | 5.000 | | | 06/01/2022 | | Aaa/Aa3*/AAA@ | | | 1,400,000 | | | 1,460,634 |
McCracken County KY School District Finance Corporation | | 4.650 | | | 07/01/2019 | | Aaa/AAA@ | | | 1,655,000 | | | 1,687,554 |
McCracken County KY School District Finance Corporation | | 4.700 | | | 07/01/2020 | | Aaa/AAA@ | | | 1,725,000 | | | 1,756,550 |
McCracken County KY School District Finance Corporation | | 5.000 | | | 07/01/2022 | | Aaa/AAA@ | | | 4,000,000 | | | 4,137,600 |
McCreary County KY Courthouse & Public Square Corporation | | 5.400 | | | 09/01/2020 | | Aaa/AAA*/AAA@ | | | 1,550,000 | | | 1,622,401 |
Nelson County KY School District Finance Corporation | | 4.500 | | | 04/01/2021 | | Aaa/Aa3*/AAA@ | | | 1,130,000 | | | 1,132,769 |
Nelson County KY School District Finance Corporation | | 4.500 | | | 04/01/2023 | | Aaa/Aa3*/AAA@ | | | 2,505,000 | | | 2,511,137 |
Northern KY University Certificate of Participation | | 4.900 | | | 12/01/2021 | | Aaa/AAA* | | | 2,725,000 | | | 2,797,921 |
Northern KY University Certificate of Participation | | 5.000 | | | 12/01/2024 | | Aaa/AAA* | | | 2,000,000 | | | 2,068,940 |
Northern KY Water District | | 4.750 | | | 02/01/2019 | | Aaa/AAA* | | | 1,000,000 | | | 1,018,520 |
Northern KY Water District | | 5.000 | | | 02/01/2020 | | Aaa/AAA@ | | | 3,080,000 | | | 3,190,849 |
Northern KY Water District | | 5.000 | | | 02/01/2021 | | Aaa/AAA@ | | | 2,635,000 | | | 2,729,834 |
Northern KY Water District | | 4.125 | | | 02/01/2021 | | Aaa | | | 1,380,000 | | | 1,326,415 |
Northern KY Water District | | 4.500 | | | 02/01/2022 | | Aaa | | | 1,385,000 | | | 1,389,944 |
Pike County KY Mortgage Revenue - Phelps Regional Health | | 5.350 | | | 09/20/2012 | | AAA* | | | 145,000 | | | 148,342 |
Radcliff KY Mortgage Revenue - Lincoln Trail Care | | 5.650 | | | 01/20/2019 | | AAA* | | | 3,110,000 | | | 3,175,186 |
Shelby County KY School District Finance Corporation | | 5.000 | | | 05/01/2022 | | Aaa/Aa3*/AAA@ | | | 1,815,000 | | | 1,892,755 |
Shelbyville KY Certificate of Participation | | 5.150 | | | 07/01/2018 | | Aaa/AAA@ | | | 4,165,000 | | | 4,288,409 |
Spencer County KY School District Finance Corporation | | 5.000 | | | 07/01/2023 | | Aaa/AAA@ | | | 1,000,000 | | | 1,038,270 |
Taylor County Detention Facility | | 4.750 | | | 09/01/2027 | | Aaa | | | 2,110,000 | | | 2,134,919 |
Warren County KY Hospital Facility Revenue | | 4.625 | | | 04/01/2012 | | Aaa/AAA*/AAA@ | | | 1,500,000 | | | 1,522,725 |
Warren County KY Hospital Facility Revenue | | 5.000 | | | 04/01/2016 | | AAA/Aaa*/AAA@ | | | 1,000,000 | | | 1,017,310 |
Warren County KY Hospital Facility Revenue | | 5.000 | | | 04/01/2017 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,015,660 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 440,523,911 |
PREREFUNDED BONDS | | | | | | | | | | | | | |
14.59% of Net Assets | | | | | | | | | | | | | |
Boone County KY School District Finance Corporation | | 5.500 | | | 09/01/2019 | | Aa3 | | | 1,860,000 | | | 1,937,599 |
Boone County KY School District Finance Corporation | | 5.750 | | | 02/01/2020 | | Aa3 | | | 1,200,000 | | | 1,264,068 |
Christian County KY Public Courthouse Lease Revenue | | 5.125 | | | 08/01/2017 | | Aa3 | | | 1,090,000 | | | 1,141,644 |
Christian County KY Public Courthouse Lease Revenue | | 5.125 | | | 08/01/2018 | | Aa3 | | | 1,145,000 | | | 1,199,250 |
Covington Independent School District Finance Corporation | | 5.250 | | | 06/01/2019 | | Aa3 | | | 1,225,000 | | | 1,269,909 |
Georgetown College Project - Series A | | 6.000 | | | 11/15/2016 | | A* | | | 1,000,000 | | | 1,070,970 |
Georgetown College Project - Series A | | 6.250 | | | 11/15/2020 | | A* | | | 4,000,000 | | | 4,315,160 |
Jefferson County KY College Project - Bellarmine College | | 5.250 | | | 05/01/2019 | | Baa2 | | | 2,000,000 | | | 2,060,940 |
KY Economic Development Finance Authority - Catholic Health | | 5.500 | | | 09/01/2014 | | Aa2/AA*/AA@ | | | 1,375,000 | | | 1,453,980 |
KY Development Finance Authority - South Central Nursing | | 6.000 | | | 07/01/2027 | | Aaa/AAA*/AAA@ | | | 1,720,000 | | | 1,807,359 |
KY Development Finance Authority - Catholic Health | | 5.000 | | | 12/01/2018 | | Aa2/AA*/AA@ | | | 6,950,000 | | | 7,089,834 |
KY Development Finance Authority - Catholic Health | | 5.750 | | | 12/01/2015 | | Aa2/AA*/AA@ | | | 2,000,000 | | | 2,116,760 |
The accompanying notes are an integral part of the financial statements.
6
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100%
June 30, 2007
| | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | Rating# | | Par Value | | Market Value |
KY Development Finance Authority - Catholic Health | | 5.250 | % | | 09/01/2021 | | Aa2/AA*/AA@ | | $ | 2,000,000 | | $ | 2,095,860 |
KY State Property & Building #67 | | 5.125 | | | 09/01/2018 | | Aa3/AAA*/AA-@ | | | 1,000,000 | | | 1,034,050 |
KY State Property & Building #85 | | 5.000 | | | 08/01/2020 | | Aaa/AAA*/AAA@ | | | 5,760,000 | | | 6,129,965 |
KY State Property & Building #85 | | 5.000 | | | 08/01/2022 | | Aaa/AAA*/AAA@ | | | 8,200,000 | | | 8,726,686 |
KY State Property & Building #85 | | 5.000 | | | 08/01/2023 | | Aaa/AAA*/AAA@ | | | 12,500,000 | | | 13,302,875 |
KY State Property & Building #85 | | 5.000 | | | 08/01/2024 | | Aaa/AAA*/AAA@ | | | 13,300,000 | | | 14,154,259 |
KY State Property & Building #85 | | 5.000 | | | 08/01/2025 | | Aaa/AAA*/AAA@ | | | 5,000,000 | | | 5,321,150 |
KY State Property & Building #67 | | 5.125 | | | 09/01/2016 | | Aa3/AAA*/AA-@ | | | 1,000,000 | | | 1,035,860 |
KY State Property & Building #77 | | 5.250 | | | 08/01/2015 | | AAA/Aaa*/AAA@ | | | 1,140,000 | | | 1,215,650 |
KY State Property & Building #79 | | 4.750 | | | 10/01/2023 | | Aaa/AAA*/AAA@ | | | 3,000,000 | | | 3,119,880 |
Knox County General Obligation | | 5.625 | | | 06/01/2036 | | AAA*/AAA@ | | | 2,490,000 | | | 2,763,651 |
Laurel County KY School District School Building Revenue | | 5.750 | | | 06/01/2020 | | Aa3 | | | 1,250,000 | | | 1,334,850 |
Lexington Fayette Urban County Government Public Facilities | | 5.125 | | | 10/01/2015 | | AAa/AAA* | | | 1,770,000 | | | 1,826,304 |
Lexington Fayette Urban County Government Public Facilities | | 5.125 | | | 10/01/2017 | | Aaa/AAA* | | | 1,830,000 | | | 1,888,212 |
Lexington Fayette Urban County Government Public Facilities | | 5.125 | | | 10/01/2018 | | Aaa/AAA* | | | 2,135,000 | | | 2,202,914 |
Lexington Fayette Urban County Government Public Facilities | | 5.125 | | | 10/01/2019 | | Aaa/AAA* | | | 2,415,000 | | | 2,491,821 |
Lexington Fayette Urban County Government General Obligation | | 4.750 | | | 05/01/2020 | | Aa2/AA+* | | | 1,000,000 | | | 1,024,020 |
Lexington Fayette Urban County Government Detention Center | | 4.750 | | | 05/01/2018 | | Aa2/AA+* | | | 3,120,000 | | | 3,194,942 |
University of Kentucky Housing and Dining | | 4.400 | | | 06/01/2017 | | Aaa/AAA@ | | | 2,815,000 | | | 2,866,346 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 102,456,768 |
LEASE REVENUE BONDS | | | | | | | | | | | | | |
7.74% of Net Assets | | | | | | | | | | | | | |
Boone County KY School District Finance Corporation | | 5.000 | | | 08/01/2019 | | Aa3 | | | 1,040,000 | | | 1,081,683 |
Boone County KY School District Finance Corporation | | 5.000 | | | 02/01/2022 | | Aa3 | | | 3,000,000 | | | 3,113,700 |
Bullitt County KY School District Finance Corporation | | 5.000 | | | 07/01/2021 | | Aa3 | | | 1,000,000 | | | 1,040,680 |
Danville KY Multi-City Lease Campbellsville Water & Sewer | | 3.500 | | | 07/01/2012 | | Baa1 | | | 1,950,000 | | | 1,907,900 |
Daviess County KY School District Finance Corporation | | 5.000 | | | 06/01/2021 | | Aa3 | | | 1,155,000 | | | 1,201,512 |
Green County KY School District Finance Corporation | | 5.000 | | | 04/01/2021 | | Aa3 | | | 1,085,000 | | | 1,123,702 |
Greenup County KY School District Finance Corporation | | 4.650 | | | 03/01/2021 | | Aa3 | | | 1,650,000 | | | 1,685,129 |
Hopkins County KY School District Finance Corporation | | 5.125 | | | 06/01/2019 | | Aa3 | | | 4,120,000 | | | 4,311,127 |
KY Area Development Districts Financing Lease - Ewing ^ | | 5.700 | | | 06/01/2015 | | AA* | | | 1,500,000 | | | 1,587,780 |
KY Area Development Districts Financing Lease - Ewing ^ | | 5.600 | | | 06/01/2022 | | AA* | | | 1,055,000 | | | 1,106,706 |
KY Area Development Districts Financing Lease - Ewing ^ | | 5.350 | | | 12/01/2022 | | AA* | | | 2,560,000 | | | 2,650,445 |
KY Area Development Districts Financing Lease - Ewing ^ | | 5.400 | | | 12/01/2021 | | AA* | | | 710,000 | | | 741,347 |
KY Area Development Districts Financing Lease - Ewing ^ | | 5.400 | | | 12/01/2021 | | AA* | | | 1,095,000 | | | 1,143,892 |
KY Area Development Districts Financing Lease - Ewing ^ | | 4.700 | | | 06/01/2024 | | AA* | | | 2,625,000 | | | 2,646,499 |
KY Interlocal Transportation Equipment Lease Revenue | | 6.000 | | | 12/01/2020 | | Aa3/A+* | | | 400,000 | | | 402,148 |
KY Infrastructure Authority - Series A | | 5.000 | | | 06/01/2019 | | Aa3/A+*/AA-@ | | | 1,000,000 | | | 1,028,980 |
KY Infrasturcture Authority - Series E | | 5.000 | | | 06/01/2017 | | Aa3/AA-* | | | 1,035,000 | | | 1,053,278 |
KY State Property & Building #68 | | 5.250 | | | 10/01/2018 | | Aa3/A+*/AA-@ | | | 1,500,000 | | | 1,560,435 |
KY State Property & Building #68 | | 5.000 | | | 10/01/2019 | | Aa3/A+*/AA-@ | | | 5,500,000 | | | 5,664,505 |
KY State Property & Building #73 | | 5.500 | | | 11/01/2013 | | Aa3/A+*/AA-@ | | | 1,500,000 | | | 1,587,495 |
Martin County KY School District Finance Corporation | | 5.375 | | | 09/01/2020 | | Aa3 | | | 1,100,000 | | | 1,149,918 |
Montgomery County KY School District Finance Corporation | | 4.375 | | | 04/01/2023 | | Aa3 | | | 3,105,000 | | | 3,033,896 |
Oldham County KY School District Finance Corporation | | 5.000 | | | 12/01/2021 | | Aa3 | | | 2,090,000 | | | 2,179,306 |
Pendleton County KY Multi-County Lease Revenue ^^ | | 6.400 | | | 03/01/2019 | | A* | | | 3,000,000 | | | 3,393,300 |
Pendleton County KY School District Finance Corporation | | 5.125 | | | 06/01/2019 | | Aa3 | | | 1,140,000 | | | 1,186,102 |
Pike County School District Finance Corporation | | 5.000 | | | 09/01/2016 | | Aa3 | | | 1,850,000 | | | 1,918,561 |
Pike County KY School District Finance Corporation | | 5.100 | | | 09/01/2020 | | Aa3 | | | 1,000,000 | | | 1,037,280 |
Scott County KY School District | | 5.000 | | | 03/01/2021 | | Aa3 | | | 1,240,000 | | | 1,290,208 |
Trigg County KY School District Finance Corporation | | 4.600 | | | 04/01/2018 | | Aa3 | | | 1,700,000 | | | 1,723,290 |
Whitley County KY School Finance | | 4.800 | | | 02/01/2021 | | Aa3 | | | 800,000 | | | 821,320 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 54,372,124 |
ESCROWED TO MATURITY BONDS | | | | | | | | | | | | | |
6.21% of Net Assets | | | | | | | | | | | | | |
Ashland KY Pollution Control Revenue - Ashland Inc | | 5.700 | | | 11/01/2009 | | Ba1 | | | 1,000,000 | | | 1,039,350 |
Danville KY Multi-City Lease Revenue - Hopkinsville | | 6.875 | | | 06/01/2012 | | Baa1 | | | 1,480,000 | | | 1,582,830 |
Jefferson County KY Health Facilities - Alliant Health | | 5.125 | | | 10/01/2018 | | Aaa/AAA*/AAA@ | | | 33,000,000 | | | 33,713,130 |
Jefferson County KY Health Facilities - Alliant Health | | 5.125 | | | 10/01/2017 | | Aaa/AAA*/AAA@ | | | 4,980,000 | | | 5,046,782 |
KY Development Finance Authority - Norton Health | | 6.125 | | | 10/01/2010 | | A-@ | | | 2,170,000 | | | 2,232,171 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 43,614,263 |
MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | |
1.75% of Net Assets | | | | | | | | | | | | | |
KY Rural Water Financial Corporation Public Project Revenue | | 5.375 | | | 02/01/2020 | | AA-* | | | 1,140,000 | | | 1,205,744 |
Louisville & Jefferson County KY Waterworks & Water System | | 5.000 | | | 11/15/2031 | | Aa1/AA+* | | | 10,695,000 | | | 11,066,749 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 12,272,493 |
HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | |
1.67% of Net Assets | | | | | | | | | | | | | |
Jefferson County KY Health Facilities - Jewish Hospital | | 5.700 | | | 01/01/2011 | | A1/AA-* | | | 1,200,000 | | | 1,224,744 |
The accompanying notes are an integral part of the financial statements.
7
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100%
June 30, 2007
| | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | Rating# | | Par Value | | Market Value |
KY Development Finance Authority - Green River | | 6.000 | % | | 11/01/2010 | | Aaa | | $ | 1,000,000 | | $ | 1,021,070 |
KY Development Finance Authority - Norton Health | | 6.125 | | | 10/01/2010 | | A-@ | | | 3,995,000 | | | 4,107,260 |
KY Development Finance Authority - Catholic Health | | 5.125 | | | 10/01/2021 | | A1/AA*/AA-@ | | | 1,000,000 | | | 1,034,910 |
Madison County KY Industrial Building Revenue - McCready Manor | | 5.500 | | | 06/01/2020 | | AA-* | | | 1,785,000 | | | 1,865,039 |
Pike County KY Mortgage Revenue - Phelps Regional Health | | 5.650 | | | 09/20/2027 | | AAA* | | | 2,435,000 | | | 2,493,075 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 11,746,098 |
GENERAL OBLIGATION BONDS | | | | | | | | | | | | | |
1.57% of Net Assets | | | | | | | | | | | | | |
Bowling Green KY General Obligation | | 5.300 | | | 06/01/2018 | | Aa3 | | | 1,000,000 | | | 1,042,700 |
Bowling Green KY General Obligation | | 4.600 | | | 06/01/2018 | | Aa2 | | | 1,290,000 | | | 1,316,135 |
Hardin County KY General Obligation | | 5.125 | | | 06/01/2019 | | A1 | | | 2,255,000 | | | 2,315,547 |
Jefferson County KY - Series A | | 4.900 | | | 12/01/2018 | | Aa2/AA* | | | 1,605,000 | | | 1,659,040 |
KY State Property & Building #62 | | 4.625 | | | 09/01/2013 | | Aa3/A+*/AA-@ | | | 2,750,000 | | | 2,811,078 |
Louisville KY General Obligation | | 5.000 | | | 11/01/2019 | | Aa2/AA* | | | 1,775,000 | | | 1,854,662 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 10,999,162 |
PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | | | |
0.77% of Net Assets | | | | | | | | | | | | | |
Boone County KY Public Property Corporation - AOC Judicial | | 5.000 | | | 09/01/2019 | | Aa3 | | | 1,000,000 | | | 1,045,320 |
Boone County KY Public Property Corporation - Judicial Facilities | | 5.125 | | | 09/01/2022 | | Aa3 | | | 1,750,000 | | | 1,839,390 |
Calloway County KY Public Property Corporation - Courthouse | | 5.625 | | | 03/01/2018 | | A* | | | 1,000,000 | | | 1,020,300 |
Danville KY Multi-City Lease Revenue - Mt Sterling | | 5.000 | | | 09/01/2011 | | NR | | | 410,000 | | | 414,157 |
Florence KY Public Property Corporation Revenue | | 5.250 | | | 03/01/2017 | | A3 | | | 1,060,000 | | | 1,071,406 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 5,390,573 |
STATE AND LOCAL MORTGAGE REVENUE BONDS | | | | | | | | | | | | | |
0.56% of Net Assets | | | | | | | | | | | | | |
Florence KY Housing Facility Revenue | | 6.300 | | | 08/15/2019 | | A/A* | | | 2,615,000 | | | 2,720,672 |
Kentucky Housing Corporation | | 4.750 | | | 07/01/2032 | | Aaa/AAA* | | | 1,265,000 | | | 1,246,784 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 3,967,456 |
VARIABLE RATE BONDS | | | | | | | | | | | | | |
0.50% of Net Assets | | | | | | | | | | | | | |
KY Economic Development Finance Authority Medical Center | | 3.750 | | | 02/01/2031 | | Aaa/AAA*/AAA@ | | | 2,500,000 | | | 2,500,000 |
KY Asset Liablity Commission General Fund | | 4.108 | | | 11/01/2027 | | AAA/Aaa*/AAA@ | | | 1,000,000 | | | 1,000,000 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 3,500,000 |
CERTIFICATES OF PARTICIPATION BONDS | | | | | | | | | | | | | |
0.35% of Net Assets | | | | | | | | | | | | | |
Shelbyville KY Certificate of Participation | | 5.350 | | | 10/01/2013 | | NR | | | 1,295,000 | | | 1,323,568 |
Shelbyville KY Certificate of Participation | | 5.450 | | | 10/01/2017 | | NR | | | 1,130,000 | | | 1,148,735 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 2,472,303 |
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | | | | | | |
0.30% of Net Assets | | | | | | | | | | | | | |
Berea KY Educational Facilities Revenue | | 4.125 | | | 06/01/2022 | | Aaa | | | 2,190,000 | | | 2,105,970 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 2,105,970 |
Total Investments (cost $688,079,891)(See (a) below for further explanation) 98.72% of Net Assets | | | | | | | | | | | | $ | 693,421,121 |
| | | | | | | | | | | | | |
| ** | When-Issued security or extended settlement - see footnote 1(D) p.39 |
| * | Standard and Poor’s Corporation |
| @ | Fitch’s Investors Service |
All other ratings by Moody’s Investors Service, Inc.
| # | Bond ratings are unaudited. |
| ^ | Certain bonds within the same Kentucky Area Development Districts (KADD) financial pool are in default, however, the bonds held by the Fund are not in default at June 30, 2007. |
| ^^ | On May 9, 2006, the Issuer received a proposed adverse determination from the IRS which asserts that the interest paid to holders of the subject bonds is not excludable from gross income under section 103 of the Internal Revenue Code. The issuer is pursuing an appeal of the proposed adverse determination. |
| (a) | Represents cost for financial reporting and federal income tax purposes and differs from market value by net unrealized appreciation of securities as follows: |
| | | | |
Unrealized appreciation | | $ | 11,578,063 | |
Unrealized depreciation | | | (6,236,833 | ) |
| | | | |
Net unrealized appreciation | | $ | 5,341,230 | |
| | | | |
The accompanying notes are an integral part of the financial statements.
8
KENTUCKY TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2007
| | | | | | |
ASSETS: | | | | | | |
Investments in securities, at value (Cost: $688,079,891) | | | | $ | 693,421,121 | |
Cash | | | | | 6,364,659 | |
Broker receivable | | | | | 21,745 | |
Receivable from investments sold | | | | | 2,364,039 | |
Interest receivable | | | | | 9,180,616 | |
| | | | | | |
Total assets | | | | | 711,352,180 | |
LIABILITIES: | | | | | | |
Payable for: | | | | | | |
Investments purchased | | 5,620,979 | | | | |
Distributions to shareholders | | 2,648,307 | | | | |
Fund shares redeemed | | 252,163 | | | | |
Investment advisory fee | | 231,493 | | | | |
Transfer agent fee | | 69,295 | | | | |
Trustee fee | | 3,604 | | | | |
Accrued expenses | | 53,548 | | | | |
| | | | | | |
Total liabilities | | | | | 8,879,389 | |
| | | | | | |
NET ASSETS: | | | | | | |
Capital | | | | | 697,441,771 | |
Net accumulated realized loss on investment transactions | | | | | (310,210 | ) |
Net unrealized appreciation in value of investments | | | | | 5,341,230 | |
| | | | | | |
Net assets at value | | | | $ | 702,472,791 | |
| | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($702,472,791 -:- 94,571,284 shares outstanding; unlimited number of shares authorized; no par value) | | | | $ | 7.43 | |
| | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2007
| | | | |
Net investment income: | | | | |
Interest income | | $ | 31,830,317 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 2,842,530 | |
Transfer agent fee | | | 852,010 | |
Custodian expense | | | 34,156 | |
Professional fees | | | 152,995 | |
Trustee fees | | | 71,420 | |
Other expenses | | | 139,812 | |
| | | | |
Total expenses | | | 4,092,923 | |
Custodian expense reduction | | | (34,156 | ) |
| | | | |
Net expenses | | | 4,058,767 | |
| | | | |
Net investment income | | | 27,771,550 | |
| | | | |
Realized and unrealized gain on investments: | | | | |
Net realized gain | | | 596,796 | |
Net increase in unrealized appreciation | | | 2,175,301 | |
| | | | |
Net realized and unrealized gain on investments | | | 2,772,097 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 30,543,647 | |
| | | | |
The accompanying notes are an integral part of the financial statements.
9
KENTUCKY TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2007 and 2006
| | | | | | | | |
| | | 2007 | | | 2006 | |
Increase in net assets: | | | | | | | | |
Operations: | | | | | | | | |
Net investment income | | $ | 27,771,550 | | | $ | 27,614,512 | |
Net realized gain on investments | | | 596,796 | | | | 2,316,678 | |
Net increase/(decrease) in unrealized appreciation | | | 2,175,301 | | | | (26,775,398 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 30,543,647 | | | | 3,155,792 | |
Distributions to shareholders from net investment income | | | (27,771,550 | ) | | | (27,614,512 | ) |
Distributions to shareholders from capital gains | | | (649,014 | ) | | | — | |
Net fund share transactions (Note 4) | | | 13,421,142 | | | | 28,091,439 | |
| | | | | | | | |
Total increase | | | 15,544,225 | | | | 3,632,719 | |
Net assets: | | | | | | | | |
Beginning of year | | | 686,928,566 | | | | 683,295,847 | |
| | | | | | | | |
End of year | | $ | 702,472,791 | | | $ | 686,928,566 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
| | | | | | | | | | | | | | | | | | | | |
| | | For the years ended June 30, | |
| | | 2007 | | | 2006 | | | 2005 | | | 2004 | | | 2003 | |
Net asset value, beginning of year | | $ | 7.40 | | | $ | 7.67 | | | $ | 7.49 | | | $ | 7.73 | | | $ | 7.48 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.30 | | | | 0.30 | | | | 0.32 | | | | 0.33 | | | | 0.34 | |
Net gains/(losses) on securities, both realized and unrealized | | | 0.04 | | | | (0.27 | ) | | | 0.18 | | | | (0.24 | ) | | | 0.25 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.34 | | | | 0.03 | | | | 0.50 | | | | 0.09 | | | | 0.59 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.30 | ) | | | (0.30 | ) | | | (0.32 | ) | | | (0.33 | ) | | | (0.34 | ) |
Distributions from capital gains | | | (0.01 | ) | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | $ | 7.43 | | | $ | 7.40 | | | $ | 7.67 | | | $ | 7.49 | | | $ | 7.73 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 4.51 | % | | | 0.41 | % | | | 6.79 | % | | | 1.23 | % | | | 8.04 | % |
Net assets, end of year (in thousands) | | $ | 702,473 | | | $ | 686,929 | | | $ | 683,296 | | | $ | 614,357 | | | $ | 612,593 | |
Ratio of net expenses to average net assets (a) | | | 0.58 | % | | | 0.58 | % | | | 0.58 | % | | | 0.58 | % | | | 0.58 | % |
Ratio of net investment income to average net assets | | | 3.94 | % | | | 4.00 | % | | | 4.20 | % | | | 4.37 | % | | | 4.45 | % |
Portfolio turnover | | | 6.76 | % | | | 17.60 | % | | | 19.38 | % | | | 7.89 | % | | | 10.69 | % |
| (a) | Percentages are after custodian/interest expense reductions. |
Percentages before custodian/interest expense reductions were:
.58% for 2007; .59% for 2006; .60% for 2005; .60% for 2004; and ..60% for 2003 respectively.
The accompanying notes are an integral part of the financial statements.
10
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100%
June 30, 2007
| | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | Rating# | | Par Value | | Market Value |
INSURED MUNICIPAL REVENUE BONDS | | | | | | | | | | | | | |
52.20% of Net Assets | | | | | | | | | | | | | |
Boone-Florence Water Supply System Revenue | | 4.300 | % | | 12/01/2011 | | Aaa/AAA@ | | $ | 505,000 | | $ | 510,868 |
Carrollton & Henderson Ky Public Energy Authority Gas Revenue | | 5.000 | | | 01/01/2009 | | Aaa/AAA*/AAA@ | | | 3,650,000 | | | 3,705,444 |
Eastern KY University Consolidated Education Building | | 4.300 | | | 05/01/2009 | | Aaa/AAA*/AAA@ | | | 500,000 | | | 503,580 |
Hardin County KY Hospital Revenue Refunding | | 3.500 | | | 10/01/2010 | | Aaa/AAA@ | | | 1,050,000 | | | 1,032,497 |
Jefferson County KY Health Facility University Medical Center | | 5.000 | | | 07/01/2008 | | Aaa/AAA*/AAA@ | | | 300,000 | | | 303,021 |
Jefferson County KY School District Finance Corporation | | 5.000 | | | 01/01/2009 | | Aaa/AAA*/AAA@ | | | 750,000 | | | 763,260 |
Jefferson County KY School District Finance Corporation | | 3.125 | | | 01/01/2011 | | Aaa/AAA*/AAA@ | | | 2,240,000 | | | 2,162,966 |
KY Asset Liability Project Notes | | 5.000 | | | 09/01/2016 | | Aaa/AAA*/AAA@ | | | 2,000,000 | | | 2,105,220 |
KY Asset Liability University of Kentucky Project Notes | | 5.000 | | | 10/01/2016 | | Aaa/AAA*/AAA@ | | | 1,250,000 | | | 1,326,238 |
KY Economic Development Finance Authority Appalachian Hospital | | 5.700 | | | 10/01/2010 | | A* | | | 1,000,000 | | | 1,029,810 |
KY State Property & Building #69 | | 5.500 | | | 08/01/2008 | | Aaa/AAA*/AAA@ | | | 1,140,000 | | | 1,160,805 |
KY State Property & Building #69 | | 5.000 | | | 08/01/2009 | | Aaa/AAA*/AAA@ | | | 1,620,000 | | | 1,658,945 |
KY State Property & Building #65 | | 5.750 | | | 02/01/2009 | | Aaa/AAA*/AAA@ | | | 750,000 | | | 772,545 |
KY State Property & Building #82 | | 5.250 | | | 10/01/2015 | | Aaa/AAA*/AAA@ | | | 2,000,000 | | | 2,156,660 |
KY State Property & Building #82 | | 5.250 | | | 10/01/2017 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,086,690 |
KY State Property & Building #74 | | 5.375 | | | 02/01/2011 | | Aaa/AAA*/AAA@ | | | 1,005,000 | | | 1,051,069 |
KY State Property & Building #74 | | 5.375 | | | 02/01/2009 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,022,310 |
KY State Turnpike Authority Economic Development | | 5.000 | | | 07/01/2017 | | Aaa/AAA*/AAA@ | | | 2,570,000 | | | 2,734,737 |
Northern KY Water Services District Water District Revenue | | 4.750 | | | 02/01/2011 | | Aaa | | | 1,025,000 | | | 1,041,738 |
Oldham County School Building Corporation ** | | 4.375 | | | 06/01/2018 | | Aaa | | | 2,570,000 | | | 2,597,782 |
University of KY Consolidated Education Building - Series S | | 3.500 | | | 05/01/2010 | | Aaa/AAA@ | | | 1,190,000 | | | 1,175,387 |
Warren County KY School District Finance Corporation | | 4.000 | | | 02/01/2015 | | Aaa | | | 785,000 | | | 778,885 |
Warren County KY School District Finance Corporation | | 4.000 | | | 02/01/2016 | | Aaa | | | 1,330,000 | | | 1,316,607 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 31,997,064 |
LEASE REVENUE BONDS | | | | | | | | | | | | | |
20.55% of Net Assets | | | | | | | | | | | | | |
KY Area Development District Financing City of Ewing | | 5.100 | | | 06/01/2010 | | AA* | | | 820,000 | | | 830,389 |
KY Infrastructure Authority Government Agency Program | | 4.000 | | | 08/01/2010 | | AA* | | | 1,000,000 | | | 1,002,560 |
KY Infractructure Authority | | 5.000 | | | 06/01/2010 | | Aa3/A+*/AA-@ | | | 2,000,000 | | | 2,057,340 |
KY Infrastructure Authority | | 5.250 | | | 08/01/2013 | | AA* | | | 1,185,000 | | | 1,262,321 |
KY State Property & Building #71 | | 5.500 | | | 08/01/2008 | | Aa3/A+*/AA-@ | | | 10,000 | | | 10,163 |
KY State Property & Building #60 | | 5.500 | | | 10/01/2008 | | Aa3/A+*/AA-@ | | | 500,000 | | | 510,785 |
KY State Property & Building #73 | | 3.700 | | | 11/01/2008 | | Aa3/A+*/AA-@ | | | 1,000,000 | | | 996,600 |
KY State Property & Building #73 | | 5.250 | | | 11/01/2011 | | Aa3/A+*/AA-@ | | | 750,000 | | | 786,960 |
KY State Property & Building #73 | | 5.250 | | | 11/01/2009 | | Aa3/A+*/AA-@ | | | 540,000 | | | 554,893 |
KY State Property & Building #73 | | 5.250 | | | 11/01/2010 | | Aa3/A+*/AA-@ | | | 3,000,000 | | | 3,116,880 |
Laurel County KY School District Finance Corporation | | 4.600 | | | 03/01/2010 | | Aa3 | | | 1,000,000 | | | 1,015,260 |
Madison County KY School District Finance Corporation Revenenue | | 3.500 | | | 05/01/2013 | | Aa3 | | | 470,000 | | | 455,468 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 12,599,619 |
PREREFUNDED BONDS | | | | | | | | | | | | | |
7.05% of Net Assets | | | | | | | | | | | | | |
KY Economic Development Finance Authority - Catholic Health | | 5.500 | | | 12/01/2010 | | Aa2/AA*/AA@ | | | 2,100,000 | | | 2,205,231 |
KY Economic Development Finance Authority - Catholic Health | | 5.750 | | | 12/01/2015 | | Aa2/AA | | | 2,000,000 | | | 2,117,900 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 4,323,131 |
ESCROWED TO MATURITY BONDS | | | | | | | | | | | | | |
4.57% of Net Assets | | | | | | | | | | | | | |
Ashland KY Pollution Control Revenue Ashland Inc Project | | 5.700 | | | 11/01/2009 | | Ba1 | | | 500,000 | | | 519,675 |
Jefferson County KY Capital Projects Corporation | | 6.375 | | | 12/01/2007 | | NR | | | 1,500,000 | | | 1,515,642 |
KY Economic Development Finance Authority Norton Health | | 6.125 | | | 10/01/2010 | | A-@ | | | 310,000 | | | 318,882 |
KY State Property & Building #71 | | 5.500 | | | 08/01/2008 | | Aaa/AAA*/AAA@ | | | 440,000 | | | 448,356 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 2,802,555 |
GENERAL OBLIGATION BONDS | | | | | | | | | | | | | |
4.49% of Net Assets | | | | | | | | | | | | | |
Jefferson County KY General Obligation | | 5.500 | | | 08/15/2010 | | Aa2/AA* | | | 2,635,000 | | | 2,753,918 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 2,753,918 |
HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | |
3.04% of Net Assets | | | | | | | | | | | | | |
KY Economic Development Finance Authority-Catholic Health | | 4.250 | | | 10/01/2009 | | A1/AA-*/AA-@ | | | 255,000 | | | 255,747 |
KY Economic Development Finance Authority-Catholic Health | | 4.500 | | | 10/01/2011 | | A1/AA-*/AA-@ | | | 1,000,000 | | | 1,011,900 |
KY Economic Development Finance Authority-Norton Health | | 6.125 | | | 10/01/2010 | | A-@ | | | 575,000 | | | 594,332 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 1,861,979 |
MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | |
1.66% of Net Assets | | | | | | | | | | | | | |
Louisville KY Waterworks Board Water System Revenue | | 4.500 | | | 11/15/2010 | | Aa1/AA* | | | 1,000,000 | | | 1,016,240 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 1,016,240 |
The accompanying notes are an integral part of the financial statements.
11
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100%
June 30, 2007
| | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | Rating# | | Par Value | | Market Value |
CERTIFICATES OF PARTICIPATION BONDS | | | | | | | | | | | | | |
1.51% of Net Assets | | | | | | | | | | | | | |
KY Interlocal School Transportation Assistance Equipment | | 3.750 | % | | 03/01/2015 | | Aa3 | | $ | 770,000 | | $ | 746,453 |
Shelbyville KY Certificate of Participation Refinancing | | 4.900 | | | 10/01/2007 | | NR | | | 180,000 | | | 180,355 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 926,808 |
| | | | | | | | | | | | | |
Total Investments (cost $58,362,706)(See (a) below for further explanation) 95.07% of Net Assets | | | | | | | | | | | | $ | 58,281,314 |
| | | | | | | | | | | | | |
| ** | When-Issued security - see footnote 1(D) p.39 |
| * | Standard and Poor’s Corporation |
| @ | Fitch’s Investors Service |
All other ratings by Moody’s Investors Service, Inc.
| # | Bond ratings are unaudited. |
| (a) | Represents cost for financial reporting and federal income tax purposes and differs from market value by net unrealized depreciation of securities as follows: |
| | | | |
Unrealized appreciation | | $ | 333,691 | |
Unrealized depreciation | | | (415,083 | ) |
| | | | |
Net unrealized depreciation | | $ | (81,392 | ) |
| | | | |
The accompanying notes are an integral part of the financial statements.
12
KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2007
| | | | | | |
ASSETS: | | | | | | |
Investments in securities, at value (Cost: $58,362,706) | | | | $ | 58,281,314 | |
Cash | | | | | 340,691 | |
Receivable from investments sold | | | | | 4,450,000 | |
Interest receivable | | | | | 913,076 | |
| | | | | | |
Total assets | | | | | 63,985,081 | |
LIABILITIES: | | | | | | |
Payable for: | | | | | | |
Investments purchased | | 2,584,729 | | | | |
Distributions to shareholders | | 53,059 | | | | |
Fund shares redeemed | | 303 | | | | |
Investment advisory fee | | 25,288 | | | | |
Transfer agent fee | | 6,560 | | | | |
Trustee fee | | 3,585 | | | | |
Accrued expenses | | 9,547 | | | | |
| | | | | | |
Total liabilities | | | | | 2,683,071 | |
| | | | | | |
NET ASSETS: | | | | | | |
Capital | | | | | 62,922,402 | |
Net accumulated realized loss on investment transactions | | | | | (1,539,000 | ) |
Net unrealized depreciation in value of investments | | | | | (81,392 | ) |
| | | | | | |
Net assets at value | | | | $ | 61,302,010 | |
| | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($61,302,010 -:- 11,952,660 shares outstanding; unlimited number of shares authorized; no par value) | | | | $ | 5.13 | |
| | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2007
| | | | |
Net investment income: | | | | |
Interest income | | $ | 2,752,011 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 346,978 | |
Transfer agent fee | | | 89,275 | |
Custodian expense | | | 4,800 | |
Professional fees | | | 20,576 | |
Trustee fees | | | 7,181 | |
Other expenses | | | 30,255 | |
| | | | |
Total expenses | | | 499,065 | |
Custodian expense reduction | | | (4,800 | ) |
| | | | |
Net expenses | | | 494,265 | |
| | | | |
Net investment income | | | 2,257,746 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized loss | | | (356,429 | ) |
Net increase in unrealized appreciation | | | 460,535 | |
| | | | |
Net realized and unrealized gain on investments | | | 104,106 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 2,361,852 | |
| | | | |
The accompanying notes are an integral part of the financial statements.
13
KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2007 and 2006
| | | | | | | | |
| | | 2007 | | | 2006 | |
Decrease in net assets: | | | | | | | | |
Operations: | | | | | | | | |
Net investment income | | $ | 2,257,746 | | | $ | 2,644,939 | |
Net realized loss on investments | | | (356,429 | ) | | | (313,247 | ) |
Net increase/(decrease) in unrealized appreciation | | | 460,535 | | | | (2,272,100 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 2,361,852 | | | | 59,592 | |
Distributions to shareholders from net investment income | | | (2,257,746 | ) | | | (2,644,939 | ) |
Net fund share transactions (Note 4) | | | (22,850,206 | ) | | | (11,307,454 | ) |
| | | | | | | | |
Total decrease | | | (22,746,100 | ) | | | (13,892,801 | ) |
Net assets: | | | | | | | | |
Beginning of year | | | 84,048,110 | | | | 97,940,911 | |
| | | | | | | | |
End of year | | $ | 61,302,010 | | | $ | 84,048,110 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
| | | | | | | | | | | | | | | | | | | | |
| | | For the years ended June 30, | |
| | | 2007 | | | 2006 | | | 2005 | | | 2004 | | | 2003 | |
Net asset value, beginning of year | | $ | 5.14 | | | $ | 5.28 | | | $ | 5.27 | | | $ | 5.44 | | | $ | 5.30 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.17 | | | | 0.15 | | | | 0.15 | | | | 0.16 | | | | 0.19 | |
Net gains/(losses) on securities, both realized and unrealized | | | (0.01 | ) | | | (0.14 | ) | | | 0.01 | | | | (0.17 | ) | | | 0.14 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.16 | | | | 0.01 | | | | 0.16 | | | | (0.01 | ) | | | 0.33 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.17 | ) | | | (0.15 | ) | | | (0.15 | ) | | | (0.16 | ) | | | (0.19 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | $ | 5.13 | | | $ | 5.14 | | | $ | 5.28 | | | $ | 5.27 | | | $ | 5.44 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 3.10 | % | | | 0.22 | % | | | 3.11 | % | | | (0.19 | %) | | | 6.23 | % |
Net assets, end of year (in thousands) | | $ | 61,302 | | | $ | 84,048 | | | $ | 97,941 | | | $ | 97,571 | | | $ | 99,529 | |
Ratio of net expenses to average net assets (a) | | | 0.72 | % | | | 0.71 | % | | | 0.69 | % | | | 0.68 | % | | | 0.69 | % |
Ratio of net investment income to average net assets | | | 3.25 | % | | | 2.92 | % | | | 2.87 | % | | | 2.98 | % | | | 3.43 | % |
Portfolio turnover | | | 4.87 | % | | | 17.86 | % | | | 9.51 | % | | | 18.63 | % | | | 22.30 | % |
| (a) | Percentages are after custodian/interest expense reductions. |
Percentages before custodian/interest expense reductions were:
.72% for 2007; .72% for 2006; .71% for 2005; .72% for 2004; and ..71% for 2003, respectively.
The accompanying notes are an integral part of the financial statements.
14
DUPREE MUTUAL FUNDS - MISSISSIPPI TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Mississippi Municipal Bonds — 100%
June 30, 2007
| | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | Rating# | | Par Value | | Market
Value |
INSURED MUNICIPAL REVENUE BONDS | | | | | | | | | | | | | |
73.09% of Net Assets | | | | | | | | | | | | | |
De Soto County MS School District | | 4.500 | % | | 04/01/2016 | | Aaa/AAA* | | $ | 30,000 | | $ | 30,546 |
Gautier MS Utility District Utility System Revenue | | 5.125 | | | 03/01/2018 | | Aaa/AAA@ | | | 75,000 | | | 78,364 |
Hinds County MS Revenue Refunding-MS Methodist Hospital | | 5.600 | | | 05/01/2012 | | Aaa/AAA*/AAA@ | | | 20,000 | | | 20,691 |
Itawamba Community College District MS Educational Facility | | 5.000 | | | 02/01/2020 | | AAA*/AAA@ | | | 100,000 | | | 103,388 |
Jackson MS Municipal Airport Authority | | 5.000 | | | 10/01/2031 | | Aaa/AAA*/AAA@ | | | 320,000 | | | 328,688 |
Medical Center Educational Building Corporation MS Revenue | | 5.500 | | | 12/01/2023 | | AAA* | | | 120,000 | | | 133,673 |
MS Business Finance Corporation MS Pollution Control Revenue | | 4.600 | | | 04/01/2022 | | Aaa/AAA* | | | 100,000 | | | 100,312 |
MS Development Bank Special Obligation Capital Project | | 5.000 | | | 07/01/2031 | | Aaa/AAA*/AAA@ | | | 75,000 | | | 77,668 |
MS Development Bank Special Obligation Flowood Revenue Project | | 5.625 | | | 11/01/2019 | | Aaa/AAA*/AAA@ | | | 10,000 | | | 10,062 |
MS Development Bank Special Obligation Meridian Community | | 5.500 | | | 07/01/2016 | | Aaa/AAA*/AAA@ | | | 30,000 | | | 30,439 |
MS Development Bank Special Obligation Multi-Purpose | | 5.000 | | | 07/01/2021 | | Aaa/AAA* | | | 50,000 | | | 51,554 |
MS Development Bank Special Obligation Jackson Water/Sewer | | 4.750 | | | 09/01/2019 | | Aaa/AAA*/AAA@ | | | 100,000 | | | 102,870 |
MS Development Bank Special Obligation Jackson Water/Sewer | | 5.000 | | | 09/01/2029 | | Aaa/AAA*/AAA@ | | | 40,000 | | | 41,236 |
MS Development Bank Special Obligation Horn Lake | | 5.000 | | | 10/01/2020 | | AAA* | | | 50,000 | | | 51,658 |
MS Development Bank Special Obligation Lee County School | | 4.500 | | | 09/01/2021 | | Aaa/AAA@ | | | 100,000 | | | 100,223 |
MS Development Bank Special Obligation Southaven Water | | 5.000 | | | 03/01/2025 | | AAA*/AAA@ | | | 325,000 | | | 338,387 |
MS Development Bank Special Obligation Municipal Energy | | 5.000 | | | 03/01/2031 | | Aaa/AAA*/AAA@ | | | 100,000 | | | 102,611 |
MS Development Bank Special Obligation Covington Hospital | | 5.000 | | | 07/01/2027 | | AAA* | | | 150,000 | | | 155,841 |
MS Development Bank Special Obligation Capital Projects ^^ | | 5.875 | | | 07/01/2024 | | Aaa/AAA*/AAA@ | | | 55,000 | | | 58,198 |
MS Development Bank Special Obligation Capital Projects ^^ | | 5.000 | | | 07/01/2024 | | Aaa/AAA*/AAA@ | | | 370,000 | | | 363,347 |
MS Development Bank Special Obligation Combination | | 5.000 | | | 07/01/2018 | | Aaa/AAA*/AAA@ | | | 100,000 | | | 104,207 |
MS Home Corporation Housing Revenue - 8A | | 4.750 | | | 12/01/2018 | | A* | | | 125,000 | | | 125,545 |
MS Hospital Equipment and Facilities Forrest County | | 5.500 | | | 01/01/2024 | | Aaa/AAA@ | | | 45,000 | | | 47,232 |
MS State Refunding Notes Projects - Series C | | 5.000 | | | 12/01/2022 | | Aaa/AAA*/AAA@ | | | 200,000 | | | 208,505 |
Ms Development BK Special Obligation Culkin Water District | | 5.800 | | | 07/01/2018 | | Aaa/AAA*/AAA@ | | | 25,000 | | | 25,952 |
MS State University Educational Building Corporate Revenue | | 5.500 | | | 08/01/2014 | | Aaa/AAA@ | | | 75,000 | | | 79,173 |
MS State University Educational Building Corporate Revenue | | 5.000 | | | 08/01/2024 | | Aaa/AAA*/AAA@ | | | 350,000 | | | 363,423 |
Olive Branch MS Public Improvement | | 4.125 | | | 06/01/2022 | | Aaa/AAA@ | | | 100,000 | | | 95,221 |
Olive Branch MS Water & Sewer Revenue | | 4.500 | | | 03/01/2014 | | Aaa/AAA@ | | | 30,000 | | | 30,555 |
Pearl River County MS Certificate of Participation | | 4.500 | | | 04/01/2021 | | Aaa/AAA@ | | | 200,000 | | | 201,400 |
Stone County MS School District | | 4.000 | | | 06/01/2016 | | Aaa/AAA@ | | | 50,000 | | | 49,481 |
University Southern MS Education Building - Series A | | 5.000 | | | 03/01/2022 | | Aaa | | | 100,000 | | | 104,280 |
Winston County MS Urban Renewal Revenue | | 5.150 | | | 12/01/2017 | | AAA*/AAA@ | | | 15,000 | | | 15,095 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 3,729,825 |
GENERAL OBLIGATION BONDS | | | | | | | | | | | | | |
13.69% of Net Assets | | | | | | | | | | | | | |
Hinds County MS School District | | 4.750 | | | 03/01/2015 | | NR | | | 50,000 | | | 50,484 |
Jackson MS Redevelopment Authority Urban Renewal Revenue | | 5.600 | | | 11/01/2021 | | A2 | | | 20,000 | | | 20,926 |
MS Development Bank Special Obligation Public Improvement | | 4.750 | | | 12/01/2019 | | BBB+* | | | 145,000 | | | 143,920 |
MS State General Obligation | | 5.100 | | | 11/15/2012 | | Aa3/AA*/AA@ | | | 10,000 | | | 10,522 |
Mississippi State General Obligation - Series A | | 5.500 | | | 12/01/2015 | | Aa3/AA*/AA@ | | | 100,000 | | | 109,509 |
MS State Refunding - Series A | | 5.250 | | | 11/01/2019 | | Aa3/AA*/AA@ | | | 325,000 | | | 353,005 |
Richland MS Tax Increment | | 5.600 | | | 06/01/2013 | | NR | | | 10,000 | | | 10,362 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 698,728 |
PREREFUNDED BONDS | | | | | | | | | | | | | |
10.23% of Net Assets | | | | | | | | | | | | | |
Biloxi MS Tax Increment - LTD Obligation - Series A | | 5.900 | | | 10/01/2019 | | A* | | | 35,000 | | | 36,464 |
MS Development Bank Special Obligation Madison County | | 5.250 | | | 06/01/2023 | | Aaa | | | 50,000 | | | 53,292 |
MS Development Bank Special Obligation Madison County | | 5.250 | | | 06/01/2024 | | Aaa | | | 50,000 | | | 53,292 |
MS Development Bank Special Obligation Southaven | | 6.200 | | | 03/01/2020 | | A* | | | 10,000 | | | 10,367 |
MS Development Bank Special Obligation Adams County Juvenile | | 5.900 | | | 07/01/2017 | | A* | | | 10,000 | | | 10,386 |
MS Development Bank Special Obligation Natchez Convention | | 5.800 | | | 07/01/2019 | | Aaa/AAA*/AAA@ | | | 25,000 | | | 27,578 |
MS Development Bank Special Obligation Gulfport Combined Water | | 5.500 | | | 07/01/2015 | | Aaa/AAA*/AAA@ | | | 10,000 | | | 10,824 |
MS Development Bank Special Obligation Desoto County | | 5.900 | | | 07/01/2021 | | Aaa/AAA*/AAA@ | | | 5,000 | | | 5,350 |
MS Development Bank Special Obligation Rankin County | | 5.400 | | | 07/01/2014 | | Aaa/AAA*/AAA@ | | | 10,000 | | | 10,416 |
MS Development Bank Special Obligation Wastewater | | 5.375 | | | 02/01/2021 | | Aaa/AAA*/AAA@ | | | 100,000 | | | 106,564 |
MS Development Bank Special Obligation Okolona Electric | | 5.350 | | | 07/01/2021 | | A* | | | 50,000 | | | 52,532 |
Southern MS Education Building Corporation Revenue | | 5.100 | | | 03/01/2020 | | Aaa/AAA* | | | 70,000 | | | 73,186 |
Southern MS University Educational Building Corporation | | 5.750 | | | 03/01/2021 | | Aaa | | | 10,000 | | | 10,696 |
University MS Educational Building - Stadium A | | 5.500 | | | 12/01/2017 | | Aaa/AAA* | | | 5,000 | | | 5,036 |
Vicksburg Warren MS School District | | 4.700 | | | 02/01/2017 | | AA-* | | | 40,000 | | | 40,202 |
Walnut Grove MS Correctional Authority Certificate of Participation | | 6.000 | | | 11/01/2019 | | Aaa/AAA*/AAA@ | | | 15,000 | | | 15,977 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 522,162 |
The accompanying notes are an integral part of the financial statements.
15
DUPREE MUTUAL FUNDS - MISSISSIPPI TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Mississippi Municipal Bonds — 100%
June 30, 2007
| | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | Rating# | | Par Value | | Market Value |
ESCROWED TO MATURITY BONDS | | | | | | | | | | | | | |
1.05% of Net Assets | | | | | | | | | | | | | |
Harrison County MS Wastewater Management District | | 5.000 | % | | 02/01/2015 | | Baa1/Aaa | | $ | 25,000 | | $ | 26,471 |
MS Gulf Coast Regional Wastewater Treatment Facilities | | 7.000 | | | 07/01/2012 | | AAA* | | | 25,000 | | | 27,176 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 53,647 |
| | | | | | | | | | | | | |
Total Investments (cost $5,010,862) (See (a) below for further explanation) 98.06% of Net Assets | | | | | | | | | | | | $ | 5,004,362 |
| | | | | | | | | | | | | |
| * | Standard and Poor’s Corporation |
| @ | Fitch’s Investors Service |
All other ratings by Moody’s Investors Service, Inc.
| # | Bond ratings are unaudited. |
| ^^ | On May 30, 2006, the Issuer received a proposed adverse determination from the IRS which asserts that the interest paid to holders of the subject bonds is not excludable from gross income under section 103 of the Internal Revenue Code. The issuer is pursuing an appeal of the proposed adverse determination. |
| (a) | Represents cost for financial reporting and federal income tax purposes and differs from market value by net unrealized depreciation of securities as follows: |
| | | | |
Unrealized appreciation | | $ | 66,215 | |
Unrealized depreciation | | | (72,715 | ) |
| | | | |
Net unrealized depreciation | | $ | (6,500 | ) |
| | | | |
The accompanying notes are an integral part of the financial statements.
16
MISSISSIPPI TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2007
| | | | | | |
ASSETS: | | | | | | |
Investments in securities, at value (Cost: $5,010,862) | | | | $ | 5,004,362 | |
Cash | | | | | 33,231 | |
Receivable from investments sold | | | | | 10,000 | |
Interest receivable | | | | | 74,737 | |
Receivable from Adviser | | | | | 589 | |
Prepaid expenses | | | | | 124 | |
| | | | | | |
Total assets | | | | | 5,123,043 | |
LIABILITIES: | | | | | | |
Payable for: | | | | | | |
Distributions to shareholders | | 16,576 | | | | |
Fund sharees redeemed | | 90 | | | | |
Transfer agent fee | | 2,278 | | | | |
Accrued expenses | | 726 | | | | |
| | | | | | |
Total liabilities | | | | | 19,670 | |
| | | | | | |
NET ASSETS: | | | | | | |
Capital | | | | | 5,119,585 | |
Net accumulated realized loss on investment transactions | | | | | (9,712 | ) |
Net unrealized depreciation in value of investments | | | | | (6,500 | ) |
| | | | | | |
Net assets at value | | | | $ | 5,103,373 | |
| | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($5,103,373 -:- 454,186 shares outstanding; unlimited number of shares authorized; no par value) | | | | $ | 11.24 | |
| | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2007
| | | | |
Net investment income: | | | | |
Interest income | | $ | 234,995 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 26,572 | |
Transfer agent fee | | | 7,972 | |
Custodian expense | | | 4,800 | |
Pricing fees | | | 4,359 | |
Professional fees | | | 2,618 | |
Trustee fees | | | 536 | |
Other expenses | | | 4,663 | |
| | | | |
Total expenses | | | 51,520 | |
Fees waived by Adviser | | | (22,962 | ) |
Custodian expense reduction | | | (4,800 | ) |
| | | | |
Net expenses | | | 23,758 | |
| | | | |
Net investment income | | | 211,237 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized loss | | | (9,775 | ) |
Net increase in unrealized appreciation | | | 16,180 | |
| | | | |
Net realized and unrealized gain on investments | | | 6,405 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 217,642 | |
| | | | |
The accompanying notes are an integral part of the financial statements.
17
MISSISSIPPI TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2007 and 2006
| | | | | | | | |
| | | 2007 | | | 2006 | |
Increase in net assets: | | | | | | | | |
Operations: | | | | | | | | |
Net investment income | | $ | 211,237 | | | $ | 186,687 | |
Net realized (loss)/gain on investments | | | (9,775 | ) | | | 22,573 | |
Net increase/(decrease) in unrealized appreciation | | | 16,180 | | | | (242,729 | ) |
| | | | | | | | |
Net increase/(decrease) in net assets resulting from operations | | | 217,642 | | | | (33,469 | ) |
Distributions to shareholders from net investment income | | | (211,237 | ) | | | (186,687 | ) |
Distributions to shareholders from capital gains | | | (22,573 | ) | | | (17,756 | ) |
Net fund share transactions (Note 4) | | | 149,254 | | | | 422,283 | |
| | | | | | | | |
Total increase | | | 133,086 | | | | 184,371 | |
Net assets: | | | | | | | | |
Beginning of year | | | 4,970,287 | | | | 4,785,916 | |
| | | | | | | | |
End of year | | $ | 5,103,373 | | | $ | 4,970,287 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
| | | | | | | | | | | | | | | | | | | | |
| | | For the years ended June 30, | |
| | | 2007 | | | 2006 | | | 2005 | | | 2004 | | | 2003 | |
Net asset value, beginning of year | | $ | 11.25 | | | $ | 11.84 | | | $ | 11.34 | | | $ | 11.74 | | | $ | 11.00 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.45 | | | | 0.46 | | | | 0.47 | | | | 0.48 | | | | 0.50 | |
Net gains/(losses) on securities, both realized and unrealized | | | 0.04 | | | | (0.54 | ) | | | 0.50 | | | | (0.40 | ) | | | 0.74 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.49 | | | | (0.08 | ) | | | 0.97 | | | | 0.08 | | | | 1.24 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.45 | ) | | | (0.46 | ) | | | (0.47 | ) | | | (0.48 | ) | | | (0.50 | ) |
Distributions from capital gains | | | (0.05 | ) | | | (0.05 | ) | | | 0.00 | | | | 0.00 | | | | 0.00 | |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | $ | 11.24 | | | $ | 11.25 | | | $ | 11.84 | | | $ | 11.34 | | | $ | 11.74 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 4.39 | % | | | (0.76 | )% | | | 8.66 | % | | | 0.72 | % | | | 11.53 | % |
Net assets, end of year (in thousands) | | $ | 5,103 | | | $ | 4,970 | | | $ | 4,786 | | | $ | 3,146 | | | $ | 2,728 | |
Ratio of net expenses to average net assets (a) | | | 0.45 | % | | | 0.46 | % | | | 0.41 | % | | | 0.40 | % | | | 0.33 | % |
Ratio of net investment income to average net assets | | | 3.98 | % | | | 3.95 | % | | | 3.99 | % | | | 4.16 | % | | | 4.37 | % |
Portfolio turnover | | | 11.57 | % | | | 16.33 | % | | | 8.91 | % | | | 0.18 | % | | | 2.36 | % |
| (a) | Percentages are after expenses waived by Adviser and custodian/interest expense reductions. |
Expenses waived by Adviser and custodian/interest expense reductions were:
.43% and .09% for 2007; .44% and .10% for 2006; .45% and .12% for 2005; .46% and .17% for 2004; and .55% and .20% for 2003, respectively.
The accompanying notes are an integral part of the financial statements.
18
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds — 100%
June 30, 2007
| | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | Rating# | | Par Value | | Market Value |
INSURED MUNICIPAL BONDS | | | | | | | | | | | | | |
68.66% of Net Assets | | | | | | | | | | | | | |
Burke County NC Certificate of Participation | | 5.000 | % | | 04/01/2023 | | Aaa/AAA* | | $ | 1,000,000 | | $ | 1,038,720 |
Catawba County NC Catawba Memorial Hospital Revenue | | 5.000 | | | 10/01/2017 | | Aaa/AAA@ | | | 500,000 | | | 512,825 |
Charlotte NC Airport Revenue | | 5.250 | | | 07/01/2023 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,056,320 |
Cumberland County NC Certificate of Participation Civic Center | | 5.000 | | | 12/01/2018 | | Aaa/AAA*/AAA@ | | | 500,000 | | | 511,620 |
Dare County NC Utility System Revenue | | 5.250 | | | 06/01/2018 | | Aaa/AAA*/AAA@ | | | 250,000 | | | 257,798 |
Dare County NC Certificate of Participation | | 5.125 | | | 06/01/2018 | | Aaa/AAA*/AAA@ | | | 500,000 | | | 527,465 |
Davie County NC Public School & Community College Facility | | 5.000 | | | 06/01/2023 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,041,590 |
Davie County NC Public School & Community College Facility | | 5.000 | | | 06/01/2025 | | Aaa/AAA*/AAA@ | | | 1,690,000 | | | 1,752,716 |
Greenville NC Housing Development Corporation | | 5.800 | | | 07/01/2024 | | Aaa/AAA*/AAA@ | | | 35,000 | | | 35,266 |
Harnett County NC Certificate of Participation | | 5.000 | | | 12/01/2018 | | Aaa/AAA*/AAA@ | | | 1,475,000 | | | 1,544,989 |
Henderson County NC Certificates of Participation | | 5.000 | | | 05/01/2025 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,032,660 |
Iredell County NC Certificate of Participation Public Facility | | 5.250 | | | 10/01/2020 | | Aaa/AAA@ | | | 1,000,000 | | | 1,061,120 |
Iredell County NC Certificates of Participation School Project | | 5.000 | | | 06/01/2024 | | Aaa/AAA* | | | 1,000,000 | | | 1,038,600 |
Lee County NC Certificate of Participation | | 5.000 | | | 04/01/2025 | | Aaa/AAA* | | | 550,000 | | | 571,483 |
Lenoir NC Housing Authority Mortgage Revenue | | 5.700 | | | 08/20/2024 | | AAA* | | | 100,000 | | | 101,988 |
Montgomery County NC Certificates of Participation Series A | | 5.000 | | | 02/01/2030 | | Aaa/AAA* | | | 1,680,000 | | | 1,738,145 |
New Hanover County NC Hospital Revenue | | 5.000 | | | 10/01/2019 | | Aaa/AAA*/AAA@ | | | 1,110,000 | | | 1,137,017 |
New Hanover County NC Certificate of Participation | | 5.000 | | | 12/01/2022 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,037,800 |
NC Educational Facilities Finance Agency St Augustines | | 5.250 | | | 10/01/2018 | | AA* | | | 600,000 | | | 613,992 |
NC Educational Facilities Finance Agency St Augustines | | 5.250 | | | 10/01/2028 | | AA* | | | 630,000 | | | 646,607 |
NC Medical Care Community Hospital Morehead Memorial Hospital | | 5.000 | | | 11/01/2026 | | Aaa/AAA*/AAA@ | | | 2,000,000 | | | 2,065,320 |
NC Eastern Municipal Power Agency Power System Revenue | | 5.500 | | | 01/01/2017 | | Aaa/AAA*/AAA@ | | | 150,000 | | | 150,021 |
NC Eastern Municipal Power Agency Power System Refunding | | 5.375 | | | 01/01/2024 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,015,700 |
NC Eastern Municipal Power Agency Power System Revenue | | 6.000 | | | 01/01/2018 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,150,710 |
NC Eastern Municipal Power Agency Power System Revenue | | 5.000 | | | 01/01/2021 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,041,460 |
NC Municipal Power Agency Number 1 Catawba Electric Revenue | | 5.250 | | | 01/01/2019 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,051,630 |
NC Medical Care Community Hospital Revenue-High Point | | 5.000 | | | 10/01/2019 | | Aaa/AAA*/AAA@ | | | 500,000 | | | 515,220 |
NC Medial Care Community Hospital Northeast Medical Center | | 4.600 | | | 11/01/2020 | | Aaa/AAA*/AAA@ | | | 350,000 | | | 353,112 |
NC Medical Care Community Hospital Revenue-Rex Hospital | | 5.000 | | | 06/01/2017 | | Aaa/AAA*/AAA@ | | | 500,000 | | | 509,790 |
NC Medical Care Community Hospital Revenue-St Joseph | | 5.100 | | | 10/01/2014 | | Aaa/AAA*/AAA@ | | | 5,000 | | | 5,002 |
NC Medical Care Community Hospital Revenue-Stanly Hospital | | 5.375 | | | 10/01/2014 | | Aaa/AAA | | | 50,000 | | | 50,756 |
NC Medical Care Community Hospital Revenue-Wilson Memorial | | 5.625 | | | 11/01/2018 | | Aaa/AAA* | | | 80,000 | | | 80,385 |
NC Municipal Power Agency Number 1 Catawba Electric Revenue | | 5.125 | | | 01/01/2017 | | Aaa/AAA*/AAA@ | | | 500,000 | | | 510,270 |
NC Municipal Power Agency Number 1 Catawba Electric Revenue | | 5.125 | | | 01/01/2017 | | Aaa/AAA*/AAA@ | | | 700,000 | | | 718,151 |
Raleigh Durham NC Airport Authority | | 5.250 | | | 11/01/2018 | | Aaa/AAA@ | | | 1,000,000 | | | 1,050,420 |
Raleigh/Durham NC Airport Revenue | | 5.000 | | | 11/01/2020 | | Aaa/AAA@ | | | 1,000,000 | | | 1,033,320 |
Sampson County NC Certificate of Participation | | 5.000 | | | 06/01/2022 | | Aaa/AAA*/AAA@ | | | 1,250,000 | | | 1,305,638 |
Sampson County NC Certificate of Participation | | 5.000 | | | 06/01/2026 | | Aaa/AAA* | | | 1,000,000 | | | 1,037,190 |
University of NC at Chapel Hill Hospital Revenue | | 5.250 | | | 02/15/2017 | | Aaa/AAA*/AAA@ | | | 500,000 | | | 515,055 |
University of NC System Pool Revenue | | 5.000 | | | 04/01/2019 | | Aaa/AAA@ | | | 1,000,000 | | | 1,042,980 |
University of NC Wilmington Certificate of Participation | | 5.250 | | | 06/01/2025 | | AAA*/AAA@ | | | 1,000,000 | | | 1,061,110 |
University of NC Wilmington Student Housing Project | | 5.000 | | | 06/01/2025 | | AAA* | | | 580,000 | | | 602,387 |
Wilmington NC Certificate of Participation | | 5.000 | | | 06/01/2032 | | Aaa/AAA*/AAA@ | | | 1,500,000 | | | 1,542,405 |
Wilson NC Certificate of Participation Public Facilities | | 5.000 | | | 05/01/2021 | | Aa1/AAA*/AAA@ | | | 780,000 | | | 810,052 |
Wilson NC Certificate of Participation Public Facilities | | 5.000 | | | 05/01/2025 | | Aa1/AAA*/AAA@ | | | 750,000 | | | 775,883 |
Wilson Combined Enterprise System | | 4.700 | | | 12/01/2022 | | Aaa/AAA* | | | 500,000 | | | 509,080 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 37,761,768 |
PREREFUNDED BONDS | | | | | | | | | | | | | |
9.05% of Net Assets | | | | | | | | | | | | | |
Cary NC Combined Enterprise System Revenue | | 5.000 | | | 12/01/2022 | | Aa2/AA*/AAA@ | | | 700,000 | | | 728,952 |
Charlotte NC Certificate of Participation Convention Facilities | | 5.500 | | | 12/01/2020 | | Aa2/AA+* | | | 700,000 | | | 741,895 |
Cumberland County NC Hospital Facilities Revenue | | 5.250 | | | 10/01/2019 | | A3/A-*/A-@ | | | 1,000,000 | | | 1,036,660 |
Cumberland County NC Hospital Facilities Revenue | | 5.250 | | | 10/01/2019 | | AA*/AA@ | | | 1,000,000 | | | 1,040,840 |
New Hanover County NC Certificates of Participation | | 5.000 | | | 12/01/2017 | | Aaa/AAA*/AAA@ | | | 250,000 | | | 256,157 |
NC Eastern Municipal Power Agency Power System | | 6.000 | | | 01/01/2026 | | Aaa/BBB*/BBB+@ | | | 545,000 | | | 645,520 |
Pitt County NC Certificate of Participation School Facilities | | 5.500 | | | 04/01/2020 | | Aaa/AAA*/AAA@ | | | 500,000 | | | 524,905 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 4,974,929 |
CERTIFICATES OF PARTICIPATION BONDS | | | | | | | | | | | | | |
8.85% of Net Assets | | | | | | | | | | | | | |
Cabarrus County NC Certificate of Participation | | 5.000 | | | 04/01/2021 | | Aa3/AA-*/AA-@ | | | 650,000 | | | 673,608 |
Charlotte NC Certificate of Participation Convention Facilities | | 5.000 | | | 12/01/2024 | | Aa2/AA+* | | | 1,000,000 | | | 1,034,690 |
Charlotte NC Certificate of Participation Government Facilities | | 5.250 | | | 06/01/2020 | | Aa2/AA+*/AA@ | | | 1,000,000 | | | 1,043,320 |
Forsyth County NC Certificates of Participation | | 5.000 | | | 10/01/2018 | | Aa1/AA+*/AA+@ | | | 5,000 | | | 5,125 |
Forsyth County NC Certificate of Participation | | 5.000 | | | 02/01/2026 | | Aa1/AA+*/AA+@ | | | 550,000 | | | 566,065 |
NC Infrastructure Finance Corporation Certificates of Participation | | 5.000 | | | 02/01/2025 | | Aa2/AA+*/AA@ | | | 1,500,000 | | | 1,546,725 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 4,869,533 |
The accompanying footnotes are an integral part of the financial statements.
19
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds — 100%
June 30, 2007
| | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | Rating# | | Par Value | | Market Value |
HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | |
3.67% of Net Assets | | | | | | | | | | | | | |
Charlotte/Mecklenburg NC Hospital Authority Revenue | | 5.000 | % | | 01/15/2017 | | Aa3/AA* | | $ | 750,000 | | $ | 762,457 |
NC Medical Care Health Care Facilities Revenue Novant Health | | 5.000 | | | 11/01/2017 | | Aa3/AA-*/AA-@ | | | 1,000,000 | | | 1,030,580 |
NC Medical Care Community Hospital Revenue-Gaston Memorial | | 5.500 | | | 02/15/2019 | | A1/A+* | | | 150,000 | | | 151,485 |
NC Medical Care Community Hospital Revenue Unrefunded Balance | | 5.250 | | | 12/01/2013 | | A1 | | | 45,000 | | | 46,200 |
NC Medical Care Community Hospital Revenue Unrefunded Balance | | 5.000 | | | 12/01/2018 | | A1 | | | 25,000 | | | 25,547 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 2,016,269 |
LEASE REVENUE BONDS | | | | | | | | | | | | | |
3.23% of Net Assets | | | | | | | | | | | | | |
Charlotte NC Water and Sewer Systems Revenue | | 4.500 | | | 07/01/2028 | | Aa1/AAA*/AAA@ | | | 750,000 | | | 735,008 |
NC Infrastructure Financial Corporation Lease Purchase | | 5.000 | | | 10/01/2021 | | Aa2/AA+*/AA@ | | | 1,000,000 | | | 1,042,420 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 1,777,428 |
GENERAL OBLIGATION BONDS | | | | | | | | | | | | | |
1.91% of Net Assets | | | | | | | | | | | | | |
Cary NC General Obligation | | 5.000 | | | 03/01/2019 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,048,260 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 1,048,260 |
MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | |
1.00% of Net Assets | | | | | | | | | | | | | |
Charlotte NC Storm Water Revenue Refunding | | 5.250 | | | 06/01/2019 | | Aa2/AA+* | | | 520,000 | | | 550,888 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 550,888 |
ESCROWED TO MATURITY BONDS | | | | | | | | | | | | | |
0.63% of Net Assets | | | | | | | | | | | | | |
Pitt County NC Memorial Hospital Revenue | | 5.500 | | | 12/01/2015 | | Aaa/AA-@ | | | 325,000 | | | 344,055 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 344,055 |
STATE AND LOCAL MORTGAGE REVENUE BONDS | | | | | | | | | | | | | |
0.45% of Net Assets | | | | | | | | | | | | | |
NC Housing Finance Agency Single Family Revenue Series Y | | 6.300 | | | 09/01/2015 | | Aa2/AA* | | | 30,000 | | | 30,063 |
NC Housing Finance Agency Single Family Revenue Series II | | 6.200 | | | 03/01/2016 | | Aa2/AA* | | | 30,000 | | | 31,186 |
NC Housing Finance Agency Single Family Revenue Series KK | | 5.875 | | | 09/01/2017 | | Aa2/AA* | | | 45,000 | | | 45,492 |
NC Housing Finance Agency Home Ownership Revenue | | 5.125 | | | 07/01/2013 | | Aa2/AA* | | | 45,000 | | | 45,593 |
Vance County NC Housing Mortgage Revenue Henderson Project | | 6.150 | | | 03/01/2022 | | Aa2 | | | 95,000 | | | 95,026 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 247,360 |
| | | | | | | | | | | | | |
Total Investments (cost $53,102,986) (See (a) below for further explanation) 97.45% of Net Assets | | | | | | | | | | | | $ | 53,590,490 |
| | | | | | | | | | | | | |
| * | Standard and Poor’s Corporation |
| @ | Fitch’s Investors Service |
All other ratings by Moody’s Investors Service, Inc.
| # | Bond ratings are unaudited. |
| (a) | Represents cost for financial reporting and federal income tax purposes and differs from market value by net unrealized appreciation of securities as follows: |
| | | | |
Unrealized appreciation | | $ | 949,633 | |
Unrealized depreciation | | | (462,129 | ) |
| | | | |
Net unrealized appreciation | | $ | 487,504 | |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
20
NORTH CAROLINA TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2007
| | | | | | |
ASSETS: | | | | | | |
Investments in securities, at value (Cost: $53,102,986) | | | | $ | 53,590,490 | |
Cash | | | | | 1,031,004 | |
Interest receivable | | | | | 593,277 | |
Prepaid expenses | | | | | 2,494 | |
| | | | | | |
Total assets | | | | | 55,217,265 | |
LIABILITIES: | | | | | | |
Payable for: | | | | | | |
Distributions to shareholders | | 147,377 | | | | |
Fund shares redeemed | | 42,927 | | | | |
Investment advisory fee | | 23,982 | | | | |
Transfer agent fee | | 6,265 | | | | |
Accrued expenses | | 2,449 | | | | |
| | | | | | |
Total liabilities | | | | | 223,000 | |
| | | | | | |
NET ASSETS: | | | | | | |
Capital | | | | | 55,194,383 | |
Net accumulated realized loss on investment transactions | | | | | (687,622 | ) |
Net unrealized appreciation in value of investments | | | | | 487,504 | |
| | | | | | |
Net assets at value | | | | $ | 54,994,265 | |
| | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($54,994,265 -:- 5,118,963 shares outstanding; unlimited number of shares authorized; no par value) | | | | $ | 10.74 | |
| | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2007
| | | | |
Net investment income: | | | | |
Interest income | | $ | 2,359,859 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 261,488 | |
Transfer agent fee | | | 68,757 | |
Custodian expense | | | 4,800 | |
Professional fees | | | 11,248 | |
Trustee fees | | | 5,229 | |
Other expenses | | | 33,121 | |
| | | | |
Total expenses | | | 384,643 | |
Custodian expense reduction | | | (4,800 | ) |
| | | | |
Net expenses | | | 379,843 | |
| | | | |
Net investment income | | | 1,980,016 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized gain | | | 86,767 | |
Net decrease in unrealized appreciation | | | (161,744 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (74,977 | ) |
| | | | |
Net increase in net assets resulting from operations | | $ | 1,905,039 | |
| | | | |
The accompanying notes are an integral part of the financial statements.
21
NORTH CAROLINA TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2007 and 2006
| | | | | | | | |
| | | 2007 | | | 2006 | |
Increase in net assets: | | | | | | | | |
Operations: | | | | | | | | |
Net investment income | | $ | 1,980,016 | | | $ | 1,797,666 | |
Net realized gain on investments | | | 86,767 | | | | 261,193 | |
Net decrease in unrealized appreciation | | | (161,744 | ) | | | (1,795,512 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 1,905,039 | | | | 263,347 | |
Distributions to shareholders from net investment income | | | (1,980,016 | ) | | | (1,797,666 | ) |
Net fund share transactions (Note 4) | | | 6,298,775 | | | | 5,566,268 | |
| | | | | | | | |
Total increase | | | 6,223,798 | | | | 4,031,949 | |
Net assets: | | | | | | | | |
Beginning of year | | | 48,770,467 | | | | 44,738,518 | |
| | | | | | | | |
End of year | | $ | 54,994,265 | | | $ | 48,770,467 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
| | | | | | | | | | | | | | | | | | | | |
| | | For the years ended June 30, | |
| | | 2007 | | | 2006 | | | 2005 | | | 2004 | | | 2003 | |
Net asset value, beginning of year | | $ | 10.74 | | | $ | 11.10 | | | $ | 10.78 | | | $ | 11.12 | | | $ | 10.68 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.41 | | | | 0.42 | | | | 0.44 | | | | 0.44 | | | | 0.47 | |
Net gains/(losses) on securities, both realized and unrealized | | | 0.00 | | | | (0.36 | ) | | | 0.32 | | | | (0.34 | ) | | | 0.44 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.41 | | | | 0.06 | | | | 0.76 | | | | 0.10 | | | | 0.91 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.41 | ) | | | (0.42 | ) | | | (0.44 | ) | | | (0.44 | ) | | | (0.47 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | $ | 10.74 | | | $ | 10.74 | | | $ | 11.10 | | | $ | 10.78 | | | $ | 11.12 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 3.85 | % | | | 0.59 | % | | | 7.13 | % | | | 0.95 | % | | | 8.70 | % |
Net assets, end of year (in thousands) | | $ | 54,994 | | | $ | 48,770 | | | $ | 44,739 | | | $ | 38,791 | | | $ | 39,668 | |
Ratio of net expenses to average net assets (a) | | | 0.73 | % | | | 0.72 | % | | | 0.69 | % | | | 0.69 | % | | | 0.68 | % |
Ratio of net investment income to average net assets | | | 3.79 | % | | | 3.89 | % | | | 3.97 | % | | | 4.05 | % | | | 4.29 | % |
Portfolio turnover | | | 5.20 | % | | | 12.73 | % | | | 7.96 | % | | | 10.51 | % | | | 7.99 | % |
| (a) | Percentages are after expenses waived by Adviser and custodian/interest expense reductions. |
Expenses waived by Adviser and custodian/interest expense reductions were:
0% and .01% for 2007; 0% and .02% for 2006; 0% and .03% for 2005; 0% and .03% for 2004; and .02% and .03% for 2003, respectively.
The accompanying notes are an integral part of the financial statements.
22
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds — 100%
June 30, 2007
| | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | Rating# | | Par Value | | Market
Value |
INSURED MUNICIPAL REVENUE BONDS | | | | | | | | | | | | | |
68.87% of Net Assets | | | | | | | | | | | | | |
Catawba County Certificate of Participation Public School | | 5.250 | % | | 06/01/2016 | | Aaa/NR*/AAA@ | | $ | 125,000 | | $ | 133,040 |
Catawba County NC Certificate of Participation | | 5.250 | | | 06/01/2019 | | Aaa/AAA*/AAA@ | | | 200,000 | | | 212,772 |
Centennial Authority NC Hotel Tax Revenue Bond Arena Project | | 5.000 | | | 09/01/2012 | | Aaa/AAA*/AAA@ | | | 100,000 | | | 102,235 |
Charlotte NC Certificate of Participation | | 5.000 | | | 08/01/2012 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,045,590 |
Davie County NC Community College | | 4.000 | | | 06/01/2013 | | Aaa/AAA* | | | 250,000 | | | 249,863 |
Greenville NC Certificate of Participation Public Facilities | | 4.600 | | | 06/01/2011 | | Aaa/AAA*/AAA@ | | | 100,000 | | | 101,300 |
Harnett County NC Certificate of Participation | | 5.250 | | | 12/01/2009 | | Aaa/AAA*/AAA@ | | | 240,000 | | | 247,411 |
Haywood NC Certificate of Participation Refunding | | 5.000 | | | 10/01/2016 | | Aaa/AAA*/AAA@ | | | 635,000 | | | 668,477 |
Iredell County NC Certificate of Participation School Project | | 5.000 | | | 06/01/2018 | | Aaa/AAA*/AAA@ | | | 425,000 | | | 448,770 |
Johnston County NC Certificate of Participation Judicial Annex | | 5.200 | | | 09/01/2007 | | Aaa/AAA*/AAA@ | | | 100,000 | | | 100,269 |
Johnston County NC Finance Corporation School & Museum Project | | 4.650 | | | 08/01/2008 | | Aaa/AAA*/AAA@ | | | 200,000 | | | 201,876 |
Lee County NC Certificate of Participation | | 5.000 | | | 04/01/2016 | | Aaa/AAA*/AAA@ | | | 215,000 | | | 225,529 |
Lincolnton NC Enterprise System Revenue | | 5.000 | | | 05/01/2016 | | Aaa/AAA*/AAA@ | | | 385,000 | | | 406,156 |
New Hanover County NC Regional Medical Center Hospital Revenue | | 4.250 | | | 10/01/2009 | | Aaa/AAA*/AAA@ | | | 100,000 | | | 100,571 |
NC Medical Care Community Hospital Rowan Medical Center | | 5.250 | | | 09/01/2016 | | Aaa/AAA*/AAA@ | | | 1,100,000 | | | 1,171,511 |
North Carolina Medical Care Community Hospital - Chatham Memorial | | 3.625 | | | 10/01/2010 | | AA*/AA@ | | | 100,000 | | | 98,561 |
NC Eastern Municipal Power Agency Power System Revenue | | 6.125 | | | 01/01/2009 | | BAA2/A* | | | 120,000 | | | 123,547 |
NC Municipal Power Agency Number 1 Catawba Electric Revenue | | 6.000 | | | 01/01/2010 | | Aaa/AAA*/AAA@ | | | 200,000 | | | 209,542 |
NC Municipal Power Agency Number 1 Catawba Electric Revenue | | 5.250 | | | 01/01/2009 | | Aaa/AAA*/AAA@ | | | 50,000 | | | 50,991 |
NC Medical Care Community Hospital - Scotland Memorial | | 5.375 | | | 10/01/2011 | | AA* | | | 40,000 | | | 40,025 |
NC Medical Care Community Hospital - Wilson Memorial | | 4.900 | | | 11/01/2007 | | Aaa/AAA* | | | 75,000 | | | 75,302 |
NC Medical Community Hospital - Wayne Memorial | | 4.750 | | | 10/01/2011 | | Aaa/AAA@ | | | 350,000 | | | 356,451 |
NC Medical Care Community Hospital - Rex Healthcare | | 5.250 | | | 06/01/2008 | | Aaa/AAA*/AAA@ | | | 450,000 | | | 456,578 |
Pitt County NC Certificate of Participation School Facility | | 4.750 | | | 04/01/2010 | | Aaa/AAA*/AAA@ | | | 100,000 | | | 102,142 |
Randolph County NC Certificate of Participation | | 5.200 | | | 06/01/2008 | | Aaa/AAA*/AAA@ | | | 145,000 | | | 146,871 |
Union County NC Certificate of Participation | | 5.000 | | | 06/01/2020 | | Aaa/AAA*/AAA@ | | | 250,000 | | | 262,090 |
University NC System Pool Revenue | | 5.000 | | | 10/01/2009 | | Aaa/AAA*/AAA@ | | | 170,000 | | | 174,258 |
Wilson County NC General Obligation | | 5.000 | | | 06/01/2010 | | Aaa/AAA*/AAA@ | | | 250,000 | | | 257,865 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 7,769,593 |
CERTIFICATES OF PARTICIPATION BONDS | | | | | | | | | | | | | |
9.63% of Net Assets | | | | | | | | | | | | | |
Cabarrus County NC Certificate of Participation | | 4.500 | | | 04/01/2009 | | Aa3/AA-*/AA-@ | | | 100,000 | | | 100,817 |
Cary County NC Certificate of Participation | | 5.000 | | | 12/01/2017 | | Aa1/AA+*/AA+@ | | | 250,000 | | | 260,338 |
Charlotte NC Certificate of Participation | | 5.750 | | | 06/01/2008 | | Aa1/AA+* | | | 100,000 | | | 101,811 |
Durham County NC Certificate of Participation | | 4.750 | | | 05/01/2009 | | Aa1/AA+* | | | 210,000 | | | 213,240 |
Durham NC Certificate of Participation | | 5.000 | | | 04/01/2010 | | Aa1/AA+*/AA+@ | | | 300,000 | | | 307,656 |
Forsyth County NC Certificate of Participation | | 5.000 | | | 10/01/2009 | | Aa1/AA+*/AA+@ | | | 100,000 | | | 102,325 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 1,086,187 |
LEASE REVENUE BONDS | | | | | | | | | | | | | |
6.16% of Net Assets | | | | | | | | | | | | | |
Greensboro NC Enterprise System Revenue Combination | | 4.800 | | | 06/01/2012 | | Aa3/AA+*/AA+@ | | | 75,000 | | | 76,444 |
Greensboro NC Enterprise System Revenue | | 5.000 | | | 06/01/2011 | | Aa3/AA+*/AA+@ | | | 500,000 | | | 518,515 |
Winston-Salem NC Certificate of Participation | | 3.950 | | | 06/01/2009 | | Aa1/AA+*/AA+@ | | | 100,000 | | | 100,144 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 695,103 |
GENERAL OBLIGATION BONDS | | | | | | | | | | | | | |
5.09% of Net Assets | | | | | | | | | | | | | |
Forsyth County NC Public Improvement General Obligation | | 4.500 | | | 03/01/2009 | | Aaa/AAA*/AAA@ | | | 250,000 | | | 253,241 |
NC State Public Improvement General Obligation | | 4.500 | | | 03/01/2010 | | Aa1/AAA*/AAA@ | | | 150,000 | | | 152,180 |
NC State Public School Building General Obligation | | 4.600 | | | 04/01/2010 | | Aa1/AAA*/AAA@ | | | 50,000 | | | 50,802 |
NC Public School Building General Obligation | | 4.600 | | | 04/01/2011 | | Aa1/AAA*/AAA@ | | | 115,000 | | | 117,697 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 573,920 |
HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | |
4.22% of Net Assets | | | | | | | | | | | | | |
Cumberland County NC Hospital Facility Revenue | | 4.500 | | | 10/01/2007 | | A3/A-*/A-@ | | | 200,000 | | | 200,204 |
NC Medical Care Community Hospital - Pitt Memorial | | 4.400 | | | 12/01/2011 | | Aa3/AA-*/AA-@ | | | 275,000 | | | 276,392 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 476,596 |
PREREFUNDED BONDS | | | | | | | | | | | | | |
3.01% of Net Assets | | | | | | | | | | | | | |
NC State General Obligation | | 4.750 | | | 04/01/2010 | | Aa1/AAA*/AAA@ | | | 100,000 | | | 101,674 |
Piedmont Triad NC Airport Authority Revenue | | 5.250 | | | 07/01/2011 | | Aaa/AAA*/AAA@ | | | 200,000 | | | 207,048 |
University NC System Pool Revenue - Series B | | 5.000 | | | 10/01/2009 | | Aaa/AAA*/AAA@ | | | 30,000 | | | 30,703 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 339,425 |
The accompanying footnotes are an integral part of the financial statements.
23
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds — 100%
June 30, 2007
| | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | Rating# | | Par Value | | Market Value |
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | | | | | | |
1.79% of Net Assets | | | | | | | | | | | | | |
University of NC Revenue Refunding | | 5.000 | % | | 12/01/2010 | | Aa1/AA+*/AA+@ | | $ | 195,000 | | $ | 201,423 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 201,423 |
| | | | | | | | | | | | | |
Total Investments (cost $11,201,673) (See (a) below for further explanation) 98.77% of Net Assets | | | | | | | | | | | | $ | 11,142,247 |
| | | | | | | | | | | | | |
| * | Standard and Poor’s Corporation |
| @ | Fitch’s Investors Service |
All other ratings by Moody’s Investors Service, Inc.
| # | Bond ratings are unaudited. |
| (a) | Represents cost for financial reporting and federal income tax purposes and differs from market value by net unrealized depreciation of securities as follows: |
| | | | |
Unrealized appreciation | | $ | 23,042 | |
Unrealized depreciation | | | (82,468 | ) |
| | | | |
Net unrealized depreciation | | $ | (59,426 | ) |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
24
NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2007
| | | | | | |
ASSETS: | | | | | | |
Investments in securities, at value (Cost: $11,201,673) | | | | $ | 11,142,247 | |
Cash | | | | | 41,897 | |
Interest receivable | | | | | 124,256 | |
Prepaid expenses | | | | | 27 | |
| | | | | | |
Total assets | | | | | 11,308,427 | |
LIABILITIES: | | | | | | |
Payable for: | | | | | | |
Distributions to shareholders | | 7,925 | | | | |
Fund shares redeemed | | 4,580 | | | | |
Investment advisory fee | | 4,541 | | | | |
Transfer agent fee | | 1,374 | | | | |
Accrued expenses | | 8,544 | | | | |
| | | | | | |
Total liabilities | | | | | 26,964 | |
| | | | | | |
NET ASSETS: | | | | | | |
Capital | | | | | 11,507,935 | |
Net accumulated realized loss on investment transactions | | | | | (167,046 | ) |
Net unrealized depreciation in value of investments | | | | | (59,426 | ) |
| | | | | | |
Net assets at value | | | | $ | 11,281,463 | |
| | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($11,281,463 -:- 1,095,578 shares outstanding; unlimited number of shares authorized; no par value) | | | | $ | 10.30 | |
| | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2007
| | | | |
Net investment income: | | | | |
Interest income | | $ | 468,926 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 61,423 | |
Transfer agent fee | | | 18,427 | |
Custodian expense | | | 4,800 | |
Professional fees | | | 6,722 | |
Trustee fees | | | 1,263 | |
Other expenses | | | 11,391 | |
| | | | |
Total expenses | | | 104,026 | |
Custodian expense reduction | | | (4,800 | ) |
| | | | |
Net expenses | | | 99,226 | |
| | | | |
Net investment income | | | 369,700 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized loss | | | (49,085 | ) |
Net increase in unrealized appreciation | | | 54,347 | |
| | | | |
Net realized and unrealized gain on investments | | | 5,262 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 374,962 | |
| | | | |
The accompanying notes are an integral part of the financial statements.
25
NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2007 and 2006
| | | | | | | | |
| | | 2007 | | | 2006 | |
Decrease in net assets: | | | | | | | | |
Operations: | | | | | | | | |
Net investment income | | $ | 369,700 | | | $ | 415,263 | |
Net realized loss on investments | | | (49,085 | ) | | | (56,077 | ) |
Net increase/(decrease) in unrealized appreciation | | | 54,347 | | | | (347,256 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 374,962 | | | | 11,930 | |
Distributions to shareholders from net investment income | | | (369,700 | ) | | | (415,263 | ) |
Distributions to shareholders from realized gains | | | (2,550 | ) | | | — | |
Net fund share transactions (Note 4) | | | (1,907,965 | ) | | | (3,238,467 | ) |
| | | | | | | | |
Total decrease | | | (1,905,253 | ) | | | (3,641,800 | ) |
Net assets: | | | | | | | | |
Beginning of year | | | 13,186,716 | | | | 16,828,517 | |
| | | | | | | | |
End of year | | $ | 11,281,463 | | | $ | 13,186,717 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
| | | | | | | | | | | | | | | | | | | | |
| | | For the years ended June 30, | |
| | | 2007 | | | 2006 | | | 2005 | | | 2004 | | | 2003 | |
Net asset value, beginning of year | | $ | 10.31 | | | $ | 10.60 | | | $ | 10.57 | | | $ | 10.85 | | | $ | 10.47 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.32 | | | | 0.30 | | | | 0.30 | | | | 0.32 | | | | 0.35 | |
Net gains/(losses) on securities, both realized and unrealized | | | (0.01 | ) | | | (0.29 | ) | | | 0.03 | | | | (0.28 | ) | | | 0.38 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.31 | | | | 0.01 | | | | 0.33 | | | | 0.04 | | | | 0.73 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.32 | ) | | | (0.30 | ) | | | (0.30 | ) | | | (0.32 | ) | | | (0.35 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | $ | 10.30 | | | $ | 10.31 | | | $ | 10.60 | | | $ | 10.57 | | | $ | 10.85 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 2.97 | % | | | 0.06 | % | | | 3.14 | % | | | 0.33 | % | | | 7.10 | % |
Net assets, end of year (in thousands) | | $ | 11,281 | | | $ | 13,187 | | | $ | 16,829 | | | $ | 15,695 | | | $ | 13,871 | |
Ratio of net expenses to average net assets (a) | | | 0.81 | % | | | 0.74 | % | | | 0.56 | % | | | 0.51 | % | | | 0.50 | % |
Ratio of net investment income to average net assets | | | 3.01 | % | | | 2.83 | % | | | 2.81 | % | | | 2.94 | % | | | 3.28 | % |
Portfolio turnover | | | 13.33 | % | | | 19.07 | % | | | 5.93 | % | | | 8.37 | % | | | 19.12 | % |
| (a) | Percentages are after expenses waived by Adviser and custodian/interest expense reductions. |
Expenses waived by Adviser and custodian/interest expense reductions were:
0% and .04% for 2007; .05% and .03% for 2006; .21% and .03% for 2005; .25% and .05% for 2004; and .26% and .04% for 2003, respectively.
The accompanying notes are an integral part of the financial statements.
26
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds — 100%
June 30, 2007
| | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | Rating# | | Par Value | | Market Value |
INSURED MUNICIPAL REVENUE BONDS | | | | | | | | | | | | | |
57.57% of Net Assets | | | | | | | | | | | | | |
Blount County TN Public Building Authority General Obligation | | 5.250 | % | | 06/01/2019 | | Aaa | | $ | 1,050,000 | | $ | 1,118,187 |
Blount County TN Public Building Authority Local Government | | 5.000 | | | 06/01/2027 | | Aaa | | | 1,500,000 | | | 1,569,975 |
Blount County TN Public Building Authority Local Government | | 4.750 | | | 06/01/2031 | | Aaa | | | 750,000 | | | 757,463 |
Chattanooga TN Industrial Development Board Lease Rent Revenue | | 5.000 | | | 10/01/2027 | | AAA*/AAA@ | | | 1,000,000 | | | 1,041,480 |
Clarksville TN Electric System Revenue Bonds | | 5.000 | | | 09/01/2032 | | Aaa | | | 1,250,000 | | | 1,293,250 |
Cleveland TN General Obligation - Series A | | 5.000 | | | 06/01/2027 | | Aaa | | | 680,000 | | | 706,758 |
Columbia TN Broadband Network Revenue & Tax | | 5.000 | | | 03/01/2025 | | Aaa | | | 1,000,000 | | | 1,037,320 |
Columbia TN Refunded - Sewer System | | 5.000 | | | 12/01/2024 | | Aaa | | | 1,235,000 | | | 1,285,746 |
Franklin County TN Health & Educational Facilities Board | | 5.000 | | | 09/01/2025 | | AAA* | | | 1,000,000 | | | 1,040,750 |
Giles County TN | | 4.500 | | | 02/01/2018 | | Aaa/AAA@ | | | 1,000,000 | | | 1,017,980 |
Greene County TN General Obligation - Series B | | 5.000 | | | 06/01/2024 | | Aaa/AAA@ | | | 505,000 | | | 526,382 |
Hallsdale-Powell Utility District Knox County TN Water and Sewer Revenue | | 5.000 | | | 04/01/2031 | | AAA* | | | 740,000 | | | 769,496 |
Harpeth Valley Utilities TN Davidson and Williamson Counties | | 5.000 | | | 09/01/2029 | | Aaa/AAA@ | | | 1,410,000 | | | 1,456,206 |
Harpeth Valley Utilities TN Davidson and Williamson Counties ** | | 5.000 | | | 09/01/2032 | | Aaa | | | 1,420,000 | | | 1,467,968 |
Hawkins County TN Refunding General Obligation | | 4.750 | | | 05/01/2017 | | Aaa/AAA*/AAA@ | | | 200,000 | | | 204,760 |
Johnson City TN Health & Educational Facilities | | 6.500 | | | 07/01/2014 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,133,800 |
Kingsport TN Water & Sewer System | | 4.350 | | | 06/01/2017 | | Aaa/AAA@ | | | 710,000 | | | 714,423 |
Kingsport TN Industrial Development Board Multifamily | | 5.400 | | | 04/20/2021 | | AAA* | | | 455,000 | | | 477,705 |
Knox County TN Health Educational & Housing Facilities - Baptist | | 5.500 | | | 04/15/2017 | | Baa3/AAA* | | | 1,315,000 | | | 1,332,739 |
Knox County TN Health Educational & Housing Facilities - Ft Sanders | | 6.250 | | | 01/01/2013 | | Aaa/AAA*/AAA@ | | | 10,000 | | | 11,009 |
Knox County TN Health Educational & Housing - Covenant Health | | 5.000 | | | 01/01/2022 | | Aaa/AAA*/AAA@ | | | 450,000 | | | 462,186 |
Knox County TN Utility District Water & Sewer | | 5.625 | | | 12/01/2019 | | Aaa/AAA*/AAA@ | | | 220,000 | | | 224,000 |
Knoxville TN Gas Revenue - Series K | | 4.750 | | | 03/01/2020 | | Aaa/AAA*/AAA@ | | | 1,500,000 | | | 1,523,130 |
Knoxville TN Gas Revenue Refunded System - Series K | | 4.750 | | | 03/01/2022 | | Aaa/AAA*/AAA@ | | | 1,550,000 | | | 1,573,250 |
Knoxville TN Wastewater System Revenue - Series A | | 4.750 | | | 04/01/2021 | | Aaa/AAA*/AAA@ | | | 1,150,000 | | | 1,167,526 |
Marion County TN Schools | | 5.000 | | | 06/01/2025 | | Aaa | | | 1,050,000 | | | 1,095,245 |
Metro Nashville & Davidson County TN General Obligation | | 5.000 | | | 01/01/2023 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,039,940 |
Metro Nashville & Davidson County TN General Obligation | | 5.000 | | | 01/01/2024 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,039,290 |
Metro Nashville & Davidson County TN Multi Family | | 4.600 | | | 11/01/2026 | | AAA* | | | 1,000,000 | | | 1,000,000 |
Metro Nashville & Davidson County TN Water & Sewer | | 5.000 | | | 01/01/2017 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,016,320 |
Metro Government Nashville & Davidson County TN Water & Sewer | | 4.750 | | | 01/01/2022 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,011,280 |
Metro Government Nashville & Davidson County TN Sports Authority | | 5.000 | | | 07/01/2021 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,045,030 |
Montgomery County TN | | 4.750 | | | 05/01/2016 | | Aaa/AAA@ | | | 1,850,000 | | | 1,931,326 |
Montgomery County TN | | 4.750 | | | 05/01/2020 | | Aaa/AAA@ | | | 1,000,000 | | | 1,033,340 |
Oak Ridge TN Industrial Development Board Refunding Revenue | | 5.250 | | | 08/20/2018 | | Aaa | | | 255,000 | | | 260,271 |
Overton County TN Refunding - Schools | | 5.000 | | | 04/01/2018 | | Aaa | | | 1,000,000 | | | 1,058,040 |
Robertson County TN | | 4.500 | | | 06/01/2015 | | Aaa/AAA@ | | | 300,000 | | | 306,615 |
Robertson County TN General Obligation | | 5.000 | | | 04/01/2018 | | Aaa/AAA@ | | | 760,000 | | | 799,839 |
Rutherford County TN Construction Utility District Waterworks | | 5.000 | | | 02/01/2031 | | Aaa/AAA@ | | | 1,435,000 | | | 1,485,584 |
Shelby County TN Health Educational & Housing Methodist | | 5.300 | | | 08/01/2015 | | Aaa/AAA*/AAA@ | | | 505,000 | | | 515,650 |
Shelby County TN Health Educational & Housing Methodist | | 5.375 | | | 04/01/2013 | | Aaa/AAA*/AAA@ | | | 690,000 | | | 703,227 |
Shelby County TN Health Educational & Housing Methodist | | 5.000 | | | 04/01/2018 | | Aaa/AAA*/AAA@ | | | 500,000 | | | 508,280 |
Smith County TN General Obligation | | 5.000 | | | 04/01/2021 | | Aaa/AAA@ | | | 720,000 | | | 758,002 |
Sullivan County TN Health Educational & Housing Facilities | | 5.000 | | | 09/01/2016 | | AA*/AA@ | | | 1,000,000 | | | 1,030,420 |
Sullivan County TN Health Educational & Housing Wellmont | | 5.000 | | | 09/01/2017 | | AA*/AA@ | | | 2,500,000 | | | 2,574,700 |
Sullivan County TN Health Educational & Housing Facilities | | 4.500 | | | 09/01/2019 | | AA*/AA@ | | | 1,000,000 | | | 987,950 |
TN Housing Development Agency Homeownership Program Series | | 5.150 | | | 07/01/2022 | | Aaa/AAA*/AAA@ | | | 690,000 | | | 708,554 |
TN State School Board Authority Refunding Higher Education | | 5.000 | | | 05/01/2024 | | Aaa/AAA*/AAA@ | | | 1,395,000 | | | 1,451,777 |
TN State School Board Authority Refunding Higher Education | | 5.000 | | | 05/01/2025 | | Aaa/AAA*/AAA@ | | | 1,440,000 | | | 1,499,586 |
Washington County TN General Obligation School and Public | | 5.000 | | | 04/01/2016 | | Aaa/AAA@ | | | 1,120,000 | | | 1,192,597 |
West Wilson Utility District TN Waterworks Revenue | | 4.750 | | | 06/01/2028 | | Aaa | | | 2,460,000 | | | 2,487,084 |
White House Utility District TN | | 5.000 | | | 01/01/2028 | | Aaa | | | 1,235,000 | | | 1,283,301 |
White House Utility District TN | | 5.000 | | | 01/01/2030 | | Aaa/AAA@ | | | 2,505,000 | | | 2,599,013 |
Wilson County TN Referendum | | 5.000 | | | 04/01/2018 | | Aaa/AAA@ | | | 1,000,000 | | | 1,056,200 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 57,391,950 |
GENERAL OBLIGATION BONDS | | | | | | | | | | | | | |
14.52% of Net Assets | | | | | | | | | | | | | |
Franklin TN School District Limited Tax Refunding | | 4.625 | | | 06/01/2018 | | Aa2 | | | 1,000,000 | | | 1,027,680 |
Franklin TN Water & Sewer Revenue & Tax | | 5.000 | | | 04/01/2024 | | Aaa | | | 750,000 | | | 799,221 |
Knoxville TN General Obligation - Series A | | 5.000 | | | 05/01/2020 | | Aa2/AA*/AA+@ | | | 1,430,000 | | | 1,527,884 |
Memphis TN Referendum - General Improvement | | 5.000 | | | 11/01/2015 | | Aa2/AA*/AA-@ | | | 1,250,000 | | | 1,319,663 |
Memphis TN General Improvement | | 5.000 | | | 11/01/2021 | | Aa2/AA*/AA-@ | | | 500,000 | | | 519,835 |
Memphis TN General Improvement | | 5.000 | | | 05/01/2020 | | Aa2/AA*/AA-@ | | | 2,000,000 | | | 2,068,780 |
Metro Government Nashville & Davidson County TN -Series B | | 5.000 | | | 08/01/2024 | | Aa2/AA*/AA+@ | | | 1,500,000 | | | 1,570,185 |
Shelby County TN - Series A | | 4.600 | | | 11/01/2022 | | Aa2/AA+*/AA@ | | | 500,000 | | | 504,920 |
Williamson County TN Refunding General Obligation | | 5.000 | | | 03/01/2020 | | Aa1 | | | 645,000 | | | 682,636 |
Williamson County TN Series A General Obligation | | 4.750 | | | 04/01/2021 | | Aa1 | | | 750,000 | | | 776,805 |
Williamson County TN Series B General Obligation | | 5.000 | | | 05/01/2023 | | Aa1 | | | 1,400,000 | | | 1,462,650 |
Williamson County TN General Obligation | | 5.000 | | | 05/01/2022 | | Aa1 | | | 1,400,000 | | | 1,459,808 |
Wilson County TN General Obligation Refunding | | 5.100 | | | 05/01/2016 | | Aaa/AAA@ | | | 745,000 | | | 753,866 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 14,473,933 |
The accompanying footnotes are an integral part of the financial statements.
27
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds — 100%
June 30, 2007
| | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | Rating# | | Par Value | | Market Value |
HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | |
11.17% of Net Assets | | | | | | | | | | | | | |
Knox County TN Health - Fort Sanders Alliance | | 5.250 | % | | 01/01/2015 | | Aaa/AAA*/AAA@ | | $ | 2,175,000 | | $ | 2,307,784 |
Knox County TN Health Educational & Housing Facilities University | | 5.750 | | | 04/01/2019 | | Baa1/A-@ | | | 1,000,000 | | | 1,039,160 |
Metro Nashville & Davidson County TN - Open Arms | | 5.100 | | | 08/01/2016 | | AA* | | | 2,500,000 | | | 2,521,200 |
Metro Nashville & Davidson County TN - Open Arms | | 5.100 | | | 08/01/2019 | | AA* | | | 1,660,000 | | | 1,671,968 |
Shelby County TN Health Education & Housing Facilities | | 5.000 | | | 07/01/2031 | | Aa2/AA+@ | | | 3,500,000 | | | 3,597,055 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 11,137,167 |
PREREFUNDED BONDS | | | | | | | | | | | | | |
5.81% of Net Assets | | | | | | | | | | | | | |
Chattanooga TN Health Educational & Housing Revenue | | 5.000 | | | 12/01/2018 | | Aa2/AA*/AA@ | | | 1,000,000 | | | 1,020,120 |
Johnson City TN Health & Educational Facilities | | 5.125 | | | 07/01/2025 | | AAA*/AAA@ | | | 2,000,000 | | | 2,044,900 |
Knox County TN Health Educational & Housing - Covenant Health | | 5.000 | | | 01/01/2022 | | Aaa/AAA*/AAA@ | | | 550,000 | | | 574,997 |
Metro Nashville & Davidson County TN Modal | | 5.500 | | | 05/01/2023 | | Aa2/AA* | | | 2,030,000 | | | 2,084,952 |
Metro Nashville & Davidson County TN Water & Sewer | | 6.500 | | | 12/01/2014 | | Aaa/AAA* | | | 60,000 | | | 69,257 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 5,794,226 |
STATE AND LOCAL MORTGAGE REVENUE | | | | | | | | | | | | | |
4.04% of Net Assets | | | | | | | | | | | | | |
TN Housing Development Agency Homeownership Program | | 5.850 | | | 01/01/2011 | | Aa2/AA* | | | 200,000 | | | 201,490 |
TN Housing Development Agency Homeownership Program | | 5.500 | | | 07/01/2020 | | Aa2/AA* | | | 410,000 | | | 415,310 |
TN Housing Development Agency Series 2001 - 3B | | 5.250 | | | 01/01/2020 | | Aa2/AA* | | | 265,000 | | | 271,235 |
TN Housing Development Agency Mortgage Financing - Series A | | 5.200 | | | 07/01/2023 | | Aa2/AA* | | | 3,040,000 | | | 3,141,171 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 4,029,206 |
MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | |
2.04% of Net Assets | | | | | | | | | | | | | |
Metro Nashville & Davidson County TN Electric System | | 5.125 | | | 05/15/2016 | | Aa3/AA*/AA@ | | | 700,000 | | | 721,259 |
Metro Nashville & Davidson County TN Electric System | | 5.125 | | | 05/15/2021 | | Aa3/AA*/AA@ | | | 1,085,000 | | | 1,123,257 |
Metro Nashville & Davidson County TN Water & Sewer | | 5.500 | | | 01/01/2016 | | Aa3/A+* | | | 185,000 | | | 185,078 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 2,029,594 |
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | | | | | | |
1.71% of Net Assets | | | | | | | | | | | | | |
Metro Nashville & Davidson County TN - McKendree | | 5.125 | | | 01/01/2020 | | AA* | | | 1,700,000 | | | 1,707,939 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 1,707,939 |
ESCROWED TO MATURITY BONDS | | | | | | | | | | | | | |
1.23% of Net Assets | | | | | | | | | | | | | |
Jackson TN Water & Sewer Revenue | | 7.200 | | | 07/01/2012 | | Aaa/AAA* | | | 5,000 | | | 5,360 |
Johnson City TN Health & Educational Revenue | | 5.000 | | | 07/01/2018 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 1,023,000 |
Metro Nashville & Davidson County TN - Dandridge Tower | | 6.375 | | | 01/01/2011 | | A2 | | | 200,000 | | | 202,166 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 1,230,526 |
LEASE REVENUE BONDS | | | | | | | | | | | | | |
0.26% of Net Assets | | | | | | | | | | | | | |
Memphis/Shelby County TN Special Facilities Revenue - FedEx | | 5.050 | | | 09/01/2012 | | Baa2/BBB* | | | 250,000 | | | 258,128 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 258,128 |
INDUSTRIAL REVENUE AND POLLUTION CONTROL REVENUE BONDS | | | | | | | | | | | | | |
0.18% of Net Assets | | | | | | | | | | | | | |
Chattanooga TN Industrial Development Board F L Haney Co | | 7.200 | | | 08/15/2010 | | AAA* | | | 20,000 | | | 21,980 |
Chattanooga TN Industrial Development Board F L Haney Co | | 7.200 | | | 02/15/2009 | | AAA* | | | 25,000 | | | 26,247 |
Chattanooga TN Industrial Development Board F L Haney Co | | 7.200 | | | 08/15/2009 | | AAA* | | | 25,000 | | | 26,784 |
Chattanooga TN Industrial Development Board F L Haney Co | | 7.200 | | | 02/15/2010 | | AAA* | | | 100,000 | | | 108,238 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 183,249 |
| | | | | | | | | | | | | |
Total Investments (cost $98,298,389) (See (a) below for further explanation) 98.53% of Net Assets | | | | | | | | | | | | $ | 98,235,918 |
| | | | | | | | | | | | | |
| ** | When-Issued security - see footnote 1(D) p.39 |
| * | Standard and Poor’s Corporation |
| @ | Fitch’s Investors Service |
All other ratings by Moody’s Investors Service, Inc.
| # | Bond ratings are unaudited. |
| (a) | Represents cost for financial reporting and federal income tax purposes and differs from market value by net unrealized depreciation of securities as follows: |
| | | | |
Unrealized appreciation | | $ | 937,147 | |
Unrealized depreciation | | | (999,618 | ) |
| | | | |
Net unrealized depreciation | | $ | (62,471 | ) |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
28
TENNESSEE TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2007
| | | | | | |
ASSETS: | | | | | | |
Investments in securities, at value (Cost: $98,298,389) | | | | $ | 98,235,918 | |
Cash | | | | | 2,421,414 | |
Broker receivable | | | | | 400 | |
Receivable from investments sold | | | | | 100,000 | |
Prepaid expenses | | | | | 4,602 | |
Interest receivable | | | | | 1,429,855 | |
| | | | | | |
Total assets | | | | | 102,192,189 | |
LIABILITIES: | | | | | | |
Payable for: | | | | | | |
Investments purchased | | 1,463,196 | | | | |
Distributions to shareholders | | 526,143 | | | | |
Fund shares redeemed | | 431,315 | | | | |
Investment advisory fee | | 40,588 | | | | |
Transfer agent fee | | 10,234 | | | | |
Accrued expenses | | 23,652 | | | | |
| | | | | | |
Total liabilities | | | | | 2,495,128 | |
| | | | | | |
NET ASSETS: | | | | | | |
Capital | | | | | 100,520,989 | |
Net accumulated realized loss on investment transactions | | | | | (761,457 | ) |
Net unrealized depreciation in value of investments | | | | | (62,471 | ) |
| | | | | | |
Net assets at value | | | | $ | 99,697,061 | |
| | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($99,697,061 -:- 9,170,543 shares outstanding; unlimited number of shares authorized; no par value) | | | | $ | 10.87 | |
| | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2007
| | | | |
Net investment income: | | | | |
Interest income | | $ | 4,229,296 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 478,153 | |
Transfer agent fee | | | 120,790 | |
Custodian expense | | | 4,947 | |
Professional fees | | | 30,472 | |
Trustee fees | | | 9,607 | |
Other expenses | | | 52,447 | |
| | | | |
Total expenses | | | 696,416 | |
Custodian expense reduction | | | (4,947 | ) |
| | | | |
Net expenses | | | 691,469 | |
| | | | |
Net investment income | | | 3,537,827 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized gain | | | 160,245 | |
Net decrease in unrealized appreciation | | | (134,883 | ) |
| | | | |
Net realized and unrealized gain on investments | | | 25,362 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 3,563,189 | |
| | | | |
The accompanying notes are an integral part of the financial statements.
29
TENNESSEE TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2007 and 2006
| | | | | | | | |
| | | 2007 | | | 2006 | |
Increase in net assets: | | | | | | | | |
Operations: | | | | | | | | |
Net investment income | | $ | 3,537,827 | | | $ | 3,246,995 | |
Net realized gain on investments | | | 160,245 | | | | 170,910 | |
Net decrease in unrealized appreciation | | | (134,883 | ) | | | (3,026,240 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 3,563,189 | | | | 391,665 | |
Distributions to shareholders from net investment income | | | (3,537,827 | ) | | | (3,246,995 | ) |
Net fund share transactions (Note 4) | | | 11,404,073 | | | | 8,483,109 | |
| | | | | | | | |
Total increase | | | 11,429,435 | | | | 5,627,779 | |
Net assets: | | | | | | | | |
Beginning of year | | | 88,267,626 | | | | 82,639,847 | |
| | | | | | | | |
End of year | | $ | 99,697,061 | | | $ | 88,267,626 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
| | | | | | | | | | | | | | | | | | | | |
| | | For the years ended June 30, | |
| | | 2007 | | | 2006 | | | 2005 | | | 2004 | | | 2003 | |
Net asset value, beginning of year | | $ | 10.84 | | | $ | 11.21 | | | $ | 10.87 | | | $ | 11.26 | | | $ | 10.82 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.41 | | | | 0.42 | | | | 0.43 | | | | 0.45 | | | | 0.48 | |
Net gains/(losses) on securities, both realized and unrealized | | | 0.03 | | | | (0.37 | ) | | | 0.34 | | | | (0.39 | ) | | | 0.44 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.44 | | | | 0.05 | | | | 0.77 | | | | 0.06 | | | | 0.92 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.41 | ) | | | (0.42 | ) | | | (0.43 | ) | | | (0.45 | ) | | | (0.48 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | $ | 10.87 | | | $ | 10.84 | | | $ | 11.21 | | | $ | 10.87 | | | $ | 11.26 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 4.05 | % | | | 0.45 | % | | | 7.21 | % | | | 0.55 | % | | | 8.65 | % |
Net assets, end of year (in thousands) | | $ | 99,697 | | | $ | 88,268 | | | $ | 82,640 | | | $ | 70,499 | | | $ | 58,816 | |
Ratio of net expenses to average net assets (a) | | | 0.72 | % | | | 0.71 | % | | | 0.67 | % | | | 0.67 | % | | | 0.65 | % |
Ratio of net investment income to average net assets | | | 3.70 | % | | | 3.82 | % | | | 3.89 | % | | | 4.05 | % | | | 4.32 | % |
Portfolio turnover | | | 8.55 | % | | | 6.14 | % | | | 9.49 | % | | | 16.11 | % | | | 8.36 | % |
| (a) | Percentages are after expenses waived by Adviser and custodian/interest expense reductions. |
Expenses waived by Adviser and custodian/interest expense reductions were:
0% and .01% for 2007; 0% and .01% for 2006; 0% and .02% for 2005; 0% and .03% for 2004; and .01% and .02% for 2003, respectively.
The accompanying notes are an integral part of the financial statements.
30
DUPREE MUTUAL FUNDS -TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds — 100%
June 30, 2007
| | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | Rating# | | Par Value | | Market Value |
INSURED MUNICIPAL REVENUE BONDS | | | | | | | | | | | | | |
75.39% of Net Assets | | | | | | | | | | | | | |
Chattanooga-Hamilton County TN Hospital Authority Erlanger | | 5.625 | % | | 10/01/2009 | | Aaa/AAA*/AAA@ | | $ | 715,000 | | $ | 741,491 |
Dickson County TN Refunding | | 5.000 | | | 06/01/2015 | | Aaa/AAA@ | | | 140,000 | | | 146,560 |
Hawkins County TN General Obligation | | 4.500 | | | 05/01/2008 | | Aaa/AAA*/AAA@ | | | 315,000 | | | 317,205 |
Johnson City TN General Obligation | | 5.250 | | | 06/01/2008 | | Aaa/AAA*/AAA@ | | | 125,000 | | | 126,533 |
Johnson City TN Refunding | | 4.000 | | | 06/01/2015 | | Aaa | | | 400,000 | | | 397,840 |
Knox County TN Health Education & Housing Facilities Board | | 5.500 | | | 04/15/2011 | | Baa/AAA* | | | 300,000 | | | 304,770 |
Marshall County TN General Obligation | | 4.450 | | | 12/01/2010 | | Aaa/AAA@ | | | 270,000 | | | 274,965 |
Maury County TN School & Public Improvement | | 5.000 | | | 04/01/2016 | | Aaa/AAA@ | | | 1,000,000 | | | 1,056,200 |
Memphis-Shelby TN Sports Authority Memphis Arena Project | | 5.500 | | | 11/01/2012 | | Aaa/AAA*/AAA@ | | | 500,000 | | | 535,950 |
Memphis-Shelby County TN Sports Authority Memphis Arena | | 5.000 | | | 11/01/2008 | | Aaa/AAA*/AAA@ | | | 150,000 | | | 152,537 |
Memphis TN General Obligation General Improvement | | 5.000 | | | 10/01/2016 | | Aaa/AAA*/AAA@ | | | 450,000 | | | 474,300 |
Memphis TN Electric System Revenue - Series A | | 5.000 | | | 12/01/2015 | | Aaa/AAA*/AAA@ | | | 1,200,000 | | | 1,256,940 |
Municipal Energy Acquisition Corporation TN Gas Revenue | | 4.125 | | | 03/01/2008 | | Aaa/AAA*/AAA@ | | | 250,000 | | | 250,853 |
Municipal Energy Acquisition Gas Corporation Revenue | | 4.125 | | | 03/01/2009 | | Aaa/AAA*/AAA@ | | | 200,000 | | | 201,098 |
Shelby County TN Methodist Hospital Healthcare Revenue | | 5.500 | | | 04/01/2008 | | Aaa/AAA*/AAA@ | | | 250,000 | | | 253,008 |
Shelby County TN Health Education & Housing Facility Rhodes | | 4.500 | | | 08/01/2008 | | Aaa/AAA*/AAA@ | | | 100,000 | | | 100,725 |
Shelby County TN Health Education & Housing Facility Rhodes | | 4.500 | | | 08/01/2009 | | Aaa/AAA*/AAA@ | | | 100,000 | | | 101,430 |
Sullivan County TN Health Educational & Housing Facility | | 5.000 | | | 09/01/2011 | | AA*/AA@ | | | 335,000 | | | 342,564 |
Tennergy Corporation TN Gas Revenue | | 5.000 | | | 06/01/2008 | | Aaa/AAA*/AAA@ | | | 500,000 | | | 506,140 |
Tennergy Corporation TN Gas Revenue | | 5.000 | | | 06/01/2009 | | Aaa/AAA*/AAA@ | | | 150,000 | | | 153,078 |
TN Energy Acquisition Corporation Gas Revenue - Series A | | 5.000 | | | 09/01/2007 | | Aaa/AAA*/AAA@ | | | 210,000 | | | 210,434 |
TN Energy Acquisition Corporation Gas Revenue - Series B | | 4.500 | | | 09/01/2008 | | Aaa/AAA*/AAA@ | | | 295,000 | | | 297,127 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 8,201,748 |
GENERAL OBLIGATION BONDS | | | | | | | | | | | | | |
11.71% of Net Assets | | | | | | | | | | | | | |
Chattanooga TN General Obligation Unlimited | | 5.500 | | | 09/01/2010 | | Aa2/AA*/AA@ | | | 500,000 | | | 523,015 |
Hamilton County TN General Obligation - Series A | | 4.550 | | | 08/01/2009 | | Aa1/AA+@ | | | 100,000 | | | 100,757 |
Knox County TN Public Improvement General Obligation | | 5.100 | | | 05/01/2008 | | Aa2/AA* | | | 90,000 | | | 90,944 |
Rutherford County TN General Obligation | | 5.000 | | | 04/01/2009 | | Aa2/AA* | | | 250,000 | | | 255,160 |
Rutherford County TN Public Improvement General Obligation | | 4.250 | | | 04/01/2009 | | Aa2/AA* | | | 200,000 | | | 201,606 |
Shelby County TN Public Improvement General Obligation S:A | | 5.500 | | | 04/01/2009 | | Aa2/AA+*/AA@ | | | 100,000 | | | 102,871 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 1,274,353 |
PREREFUNDED BONDS | | | | | | | | | | | | | |
3.77% of Net Assets | | | | | | | | | | | | | |
Metro Government Nashville & Davidson County TN General Obligation | | 5.125 | | | 11/15/2013 | | Aa2/AA* | | | 300,000 | | | 309,036 |
TN State School Board Authority Higher Education Facility | | 4.800 | | | 05/01/2014 | | Aa2/AA-* | | | 100,000 | | | 100,763 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 409,799 |
LEASE REVENUE BONDS | | | | | | | | | | | | | |
2.33% of Net Assets | | | | | | | | | | | | | |
Memphis-Shelby County Airport Special Facilities-Federal Ex | | 5.000 | | | 09/01/2009 | | Baa2/BBB* | | | 250,000 | | | 253,628 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 253,628 |
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | | | | | | |
2.32% of Net Assets | | | | | | | | | | | | | |
Metro Government Of Nashville & Davidson County Vandebilt | | 5.750 | | | 01/01/2008 | | Aa2/AA* | | | 250,000 | | | 252,280 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 252,280 |
MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | |
1.59% of Net Assets | | | | | | | | | | | | | |
Knoxville TN Gas Revenue System - Series J | | 4.750 | | | 03/01/2010 | | Aa3/AA* | | | 170,000 | | | 173,018 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 173,018 |
STATE AND LOCAL MORTGAGE REVENUE BONDS | | | | | | | | | | | | | |
1.10% of Net Assets | | | | | | | | | | | | | |
Shelby County TN Multi-Family Housing Memphis - Series A ^ | | 0.000 | | | 01/01/2009 | | NR | | | 240,000 | | | 120,000 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 120,000 |
The accompanying footnotes are an integral part of the financial statements.
31
DUPREE MUTUAL FUNDS -TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds — 100%
June 30, 2007
| | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | Rating# | | Par Value | | Market Value |
HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | |
0.93% of Net Assets | | | | | | | | | | | | | |
Knox County TN Hospital Facility Revenue Catholic Healthcare | | 4.500 | % | | 10/01/2011 | | A1/AA-*/AA-@ | | $ | 100,000 | | $ | 101,035 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 101,035 |
| | | | | | | | | | | | | |
Total Investments (cost $10,975,792) (See (a) below for further explanation) 99.14% of Net Assets | | | | | | | | | | | | $ | 10,785,861 |
| | | | | | | | | | | | | |
| * | Standard and Poor’s Corporation |
| @ | Fitch’s Investors Service |
All other ratings by Moody’s Investors Service, Inc.
| # | Bond ratings are unaudited. |
| ^ | Security in default and therefore non-income producing. The security is illiquid and is therefore valued at fair value (see footnote 1(A) p.38). |
At June 30, 2007, fair valued securities represent 1.10% of net assets.
| (a) | Represents cost for financial reporting and federal income tax purposes and differs from market value by net unrealized depreciation of securities as follows: |
| | | | |
Unrealized appreciation | | $ | 14,325 | |
Unrealized depreciation | | | (204,256 | ) |
| | | | |
Net unrealized depreciation | | $ | (189,931 | ) |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
32
TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2007
| | | | | | |
ASSETS: | | | | | | |
Investments in securities, at value (Cost: $10,975,792) | | | | $ | 10,785,861 | |
Cash | | | | | 6,427 | |
Interest receivable | | | | | 112,652 | |
| | | | | | |
Total assets | | | | | 10,904,940 | |
LIABILITIES: | | | | | | |
Payable for: | | | | | | |
Distributions to shareholders | | 6,175 | | | | |
Fund shares redeemed | | 30 | | | | |
Borrowings under line of credit | | 9,005 | | | | |
Investment advisory fee | | 4,420 | | | | |
Transfer agent fee | | 1,334 | | | | |
Trustee fee | | 349 | | | | |
Accrued expenses | | 4,024 | | | | |
| | | | | | |
Total liabilities | | | | | 25,337 | |
| | | | | | |
NET ASSETS: | | | | | | |
Capital | | | | | 11,288,493 | |
Net accumulated realized loss on investment transactions | | | | | (218,959 | ) |
Net unrealized depreciation in value of investments | | | | | (189,931 | ) |
| | | | | | |
Net assets at value | | | | $ | 10,879,603 | |
| | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($10,879,603 -:- 1,054,699 shares outstanding; unlimited number of shares authorized; no par value) | | | | $ | 10.32 | |
| | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2007
| | | | |
Net investment income: | | | | |
Interest income | | $ | 481,757 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 63,601 | |
Transfer agent fee | | | 19,080 | |
Custodian expense | | | 4,800 | |
Professional fees | | | 8,585 | |
Trustee fees | | | 1,326 | |
Other expenses | | | 7,871 | |
| | | | |
Total expenses | | | 105,263 | |
Custodian expense reduction | | | (4,800 | ) |
| | | | |
Net expenses | | | 100,463 | |
| | | | |
Net investment income | | | 381,294 | |
| | | | |
Realized and unrealized loss on investments: | | | | |
Net realized loss | | | (41,349 | ) |
Net increase in unrealized appreciation | | | 126,752 | |
| | | | |
Net realized and unrealized gain on investments | | | 85,403 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 466,697 | |
| | | | |
The accompanying notes are an integral part of the financial statements.
33
TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2007 and 2006
| | | | | | | | |
| | | 2007 | | | 2006 | |
Increase in net assets: | | | | | | | | |
Operations: | | | | | | | | |
Net investment income | | $ | 381,294 | | | $ | 492,563 | |
Net realized loss on investments | | | (41,349 | ) | | | (73,714 | ) |
Net increase/(decrease) in unrealized appreciation | | | 126,752 | | | | (436,428 | ) |
| | | | | | | | |
Net increase/(decrease) in net assets resulting from operations | | | 466,697 | | | | (17,579 | ) |
Distributions to shareholders from net investment income | | | (381,296 | ) | | | (492,563 | ) |
Net fund share transactions (Note 4) | | | (4,262,014 | ) | | | (3,756,852 | ) |
| | | | | | | | |
Total decrease | | | (4,176,613 | ) | | | (4,266,994 | ) |
Net assets: | | | | | | | | |
Beginning of year | | | 15,056,216 | | | | 19,323,210 | |
| | | | | | | | |
End of year | | $ | 10,879,603 | | | $ | 15,056,216 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
| | | | | | | | | | | | | | | | | | | | |
| | | For the years ended June 30, | |
| | | 2007 | | | 2006 | | | 2005 | | | 2004 | | | 2003 | |
Net asset value, beginning of year | | $ | 10.29 | | | $ | 10.60 | | | $ | 10.58 | | | $ | 10.91 | | | $ | 10.50 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.31 | | | | 0.30 | | | | 0.30 | | | | 0.32 | | | | 0.35 | |
Net gains/(losses) on securities, both realized and unrealized | | | 0.03 | | | | (0.31 | ) | | | 0.02 | | | | (0.33 | ) | | | 0.41 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.34 | | | | (0.01 | ) | | | 0.32 | | | | (0.01 | ) | | | 0.76 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.31 | ) | | | (0.30 | ) | | | (0.30 | ) | | | (0.32 | ) | | | (0.35 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | $ | 10.32 | | | $ | 10.29 | | | $ | 10.60 | | | $ | 10.58 | | | $ | 10.91 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 3.34 | % | | | (0.10 | )% | | | 3.05 | % | | | (0.07 | )% | | | 7.37 | % |
Net assets, end of year (in thousands) | | $ | 10,880 | | | $ | 15,056 | | | $ | 19,323 | | | $ | 20,311 | | | $ | 16,000 | |
Ratio of net expenses to average net assets (a) | | | 0.79 | % | | | 0.71 | % | | | 0.56 | % | | | 0.51 | % | | | 0.50 | % |
Ratio of net investment income to average net assets | | | 3.00 | % | | | 2.86 | % | | | 2.81 | % | | | 2.99 | % | | | 3.29 | % |
Portfolio turnover | | | | | | | 23.21 | % | | | 13.91 | % | | | 5.92 | % | | | 20.27 | % |
| (a) | Percentages are after expenses waived by Adviser and custodian/interest expense reductions. |
Expenses waived by Adviser and custodian/interest expense reductions were:
0% and .04% for 2007; .04% and .03% for 2006; .19% and .04% for 2005; .22% and .04% for 2004; and .23% and .04% for 2003, respectively.
The accompanying notes are an integral part of the financial statements.
34
DUPREE MUTUAL FUNDS - INTERMEDIATE GOVERNMENT BOND SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
U.S. Government Securities and Agencies — 100%
June 30, 2007
| | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | Rating# | | Par Value of
Shares | | Market Value |
FEDERAL HOME LOAN BANK | | | | | | | | | | | | | |
39.25% of Net Assets | | | | | | | | | | | | | |
Medium Term Note | | 7.000 | % | | 08/15/2014 | | Aaa/AAA | | $ | 500,000 | | $ | 547,075 |
Medium Term Note | | 5.625 | | | 02/12/2018 | | Aaa/AAA | | | 1,500,000 | | | 1,459,826 |
Medium Term Note | | 5.620 | | | 08/06/2018 | | AAA/Aaa | | | 3,000,000 | | | 2,913,572 |
Medium Term Note | | 5.220 | | | 12/15/2014 | | Aaa/AAA | | | 1,000,000 | | | 971,093 |
Medium Term Note | | 5.375 | | | 04/22/2015 | | Aaa/AAA*/AAA@ | | | 3,025,000 | | | 2,961,542 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 8,853,108 |
FEDERAL FARM CREDIT | | | | | | | | | | | | | |
21.75% of Net Assets | | | | | | | | | | | | | |
Medium Term Note | | 5.300 | | | 06/24/2014 | | Aaa/AAA | | | 2,050,000 | | | 2,039,248 |
Medium Term Note | | 5.625 | | | 10/20/2015 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 983,348 |
Medium Term Note | | 5.875 | | | 08/16/2021 | | AAA*/AAA@ | | | 1,900,000 | | | 1,883,366 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 4,905,962 |
FEDERAL NATIONAL MORTGAGE ASSOCIATION | | | | | | | | | | | | | |
21.68% of Net Assets | | | | | | | | | | | | | |
Medium Term Note | | 5.300 | | | 08/15/2013 | | AAA/Aaa | | | 2,000,000 | | | 1,972,938 |
Medium Term Note | | 5.500 | | | 12/09/2014 | | Aaa/AAA | | | 1,000,000 | | | 981,402 |
Medium Term Note | | 5.250 | | | 12/30/2015 | | Aaa/AAA | | | 1,000,000 | | | 967,415 |
Medium Term Note | | 5.210 | | | 06/30/2015 | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | 968,225 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 4,889,980 |
FEDERAL HOME LOAN MORTGAGE | | | | | | | | | | | | | |
8.48% of Net Assets | | | | | | | | | | | | | |
Medium Term Note | | 5.000 | | | 03/27/2018 | | Aaa/AAA | | | 500,000 | | | 469,894 |
Medium Term Note | | 5.125 | | | 06/08/2015 | | Aaa/AAA*/AAA@ | | | 1,500,000 | | | 1,441,745 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 1,911,639 |
STUDENT LOAN MARKETING ASSOCIATION | | | | | | | | | | | | | |
4.83% of Net Assets | | | | | | | | | | | | | |
Medium Term Note | | 7.300 | | | 08/01/2012 | | Aaa/AAA | | | 1,000,000 | | | 1,090,280 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 1,090,280 |
CASH EQUIVALENTS | | | | | | | | | | | | | |
2.59% of Net Assets | | | | | | | | | | | | | |
US Bank U.S. Treasury Money Market Fund | | | | | | | | | | | | | 584,211 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | 584,211 |
| | | | | | | | | | | | | |
Total Investments (cost $22,520,456) (See (a) below for further explanation) 98.58% of Net Assets | | | | | | | | | | | | $ | 22,235,180 |
| | | | | | | | | | | | | |
| * | Standard and Poor’s Corporation |
| @ | Fitch’s Investors Service |
All other ratings by Moody’s Investors Service, Inc.
| # | Bond ratings are unaudited. |
| (a) | Represents cost for financial reporting and federal income tax purposes and differs from market value by net unrealized depreciation of securities as follows: |
| | | | |
Unrealized appreciation | | $ | 113,915 | |
Unrealized depreciation | | | (399,191 | ) |
| | | | |
Net unrealized depreciation | | $ | (285,276 | ) |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
35
INTERMEDIATE GOVERNMENT BOND SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2007
| | | | | | |
ASSETS: | | | | | | |
Investments in securities, at value (Cost: $22,520,456) | | | | $ | 22,235,180 | |
Cash | | | | | 56,790 | |
Interest receivable | | | | | 287,637 | |
Prepaid expenses | | | | | 2,474 | |
| | | | | | |
Total assets | | | | | 22,582,081 | |
LIABILITIES: | | | | | | |
Payable for: | | | | | | |
Distributions to shareholders | | 22,414 | | | | |
Fund shares redeemed | | 80 | | | | |
Investment advisory fee | | 3,696 | | | | |
Transfer agent fee | | 2,804 | | | | |
| | | | | | |
Total liabilities | | | | | 28,994 | |
| | | | | | |
NET ASSETS: | | | | | | |
Capital | | | | | 23,298,389 | |
Net accumulated realized loss on investment transactions | | | | | (460,026 | ) |
Net unrealized depreciation in value of investments | | | | | (285,276 | ) |
| | | | | | |
Net assets at value | | | | $ | 22,553,087 | |
| | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($22,553,087 -:- 2,334,929 shares outstanding; unlimited number of shares authorized; no par value) | | | | $ | 9.66 | |
| | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2007
| | | | |
Net investment income: | | | | |
Interest income | | $ | 1,253,301 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 45,082 | |
Transfer agent fee | | | 33,049 | |
Custodian expense | | | 4,800 | |
Professional fees | | | 4,897 | |
Trustee fees | | | 2,278 | |
Postage expense | | | 7,000 | |
Printing expense | | | 13,000 | |
Other expenses | | | 9,467 | |
| | | | |
Total expenses | | | 119,573 | |
Custodian expense reduction | | | (4,800 | ) |
| | | | |
Net expenses | | | 114,773 | |
| | | | |
Net investment income | | | 1,138,528 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized loss | | | (4,983 | ) |
Net increase in unrealized appreciation | | | 203,062 | |
| | | | |
Net realized and unrealized gain on investments | | | 198,079 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 1,336,607 | |
| | | | |
The accompanying notes are an integral part of the financial statements.
36
INTERMEDIATE GOVERNMENT BOND SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2007 and 2006
| | | | | | | | |
| | | 2007 | | | 2006 | |
Increase in net assets: | | | | | | | | |
Operations: | | | | | | | | |
Net investment income | | $ | 1,138,528 | | | $ | 1,109,863 | |
Net realized loss on investments | | | (4,983 | ) | | | (53,327 | ) |
Net increase/(decrease) in unrealized appreciation | | | 203,062 | | | | (1,091,150 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 1,336,607 | | | | (34,614 | ) |
Distributions to shareholders from net investment income | | | (1,161,912 | ) | | | (1,086,481 | ) |
Net fund share transactions (Note 4) | | | 890,949 | | | | 239,381 | |
| | | | | | | | |
Total increase/(decrease) | | | 1,065,644 | | | | (881,714 | ) |
Net assets: | | | | | | | | |
Beginning of year | | | 21,487,443 | | | | 22,369,157 | |
| | | | | | | | |
End of year | | $ | 22,553,087 | | | $ | 21,487,443 | |
| | | | | | | | |
Undistributed net investment income | | $ | — | | | $ | 23,384 | |
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
| | | | | | | | | | | | | | | | | | | | |
| | | For the years ended June 30, | |
| | | 2007 | | | 2006 | | | 2005 | | | 2004 | | | 2003 | |
Net asset value, beginning of year | | $ | 9.58 | | | $ | 10.07 | | | $ | 9.94 | | | $ | 10.35 | | | $ | 10.07 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.49 | | | | 0.48 | | | | 0.47 | | | | 0.52 | | | | 0.53 | |
Net gains/(losses) on securities, both realized and unrealized | | | 0.08 | | | | (0.49 | ) | | | 0.13 | | | | (0.41 | ) | | | 0.28 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.57 | | | | (0.01 | ) | | | 0.60 | | | | 0.11 | | | | 0.81 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.49 | ) | | | (0.48 | ) | | | (0.47 | ) | | | (0.52 | ) | | | (0.53 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | $ | 9.66 | | | $ | 9.58 | | | $ | 10.07 | | | $ | 9.94 | | | $ | 10.35 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 6.04 | % | | | (0.14 | )% | | | 6.17 | % | | | 1.09 | % | | | 8.23 | % |
Net assets, end of year (in thousands) | | $ | 22,553 | | | $ | 21,487 | | | $ | 22,369 | | | $ | 18,075 | | | $ | 18,758 | |
Ratio of net expenses to average net assets (a) | | | 0.51 | % | | | 0.45 | % | | | 0.44 | % | | | 0.45 | % | | | 0.45 | % |
Ratio of net investment income to average net assets | | | 5.05 | % | | | 4.97 | % | | | 4.68 | % | | | 5.12 | % | | | 5.19 | % |
Portfolio turnover | | | 6.40 | % | | | 17.67 | % | | | 28.88 | % | | | 42.35 | % | | | 53.62 | % |
| (a) | Percentages are after custodian/interest expense reductions. |
Percentages before custodian/interest expense reductions were:
.53% for 2007; .47% for 2006; .48% for 2005; .48% for 2004; and ..48% for 2003 respectively.
The accompanying notes are an integral part of the financial statements.
37
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2007
| 1. | Organization and Significant Accounting Policies |
Dupree Mutual Funds is registered under the Investment Company Act of 1940, as amended, as a no-load, open-end investment company. The Declaration of Trust of Dupree Mutual Funds (the “Trust”) permits the Trustees to create an unlimited number of series of investment portfolios (each a “Fund” and collectively the “Funds”) and with respect to each series to issue an unlimited number of full or fractional shares of a single class. The Trust currently offers nine series:
Alabama Tax-Free Income Series
Kentucky Tax-Free Income Series
Kentucky Tax-Free Short-to-Medium Series
Mississippi Tax-Free Income 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
Intermediate Government Bond Series
The investment strategy of the eight state tax-free funds is to maintain 100% of their investments in Alabama, Kentucky, Mississippi, North Carolina, or Tennessee municipal securities.
The Intermediate Government Bond Series’ investment strategy is to invest only in obligations of the U.S. Treasury and Agencies of the U.S. Government. The Intermediate Government Bond Series will buy bonds and notes that will maintain an average maturity of no more than ten years.
The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. The policies are in conformity with accounting principles generally accepted in the United States.
Securities held by the Intermediate Government Bond Series are valued using market quotations as provided by an independent pricing service. Securities held by the eight state tax-free funds are valued as determined in good faith in accordance with consistently applied procedures established by and under the general supervision of the Board of Trustees. These procedures involve the use of a matrix pricing model which takes into consideration price quotations or appraisals for these securities, yield, stability, risk, quality, coupon rate, maturity, type of issue, trading characteristics, special circumstances of a security or trading market, and any other factors or market data considered relevant in determining the value. The procedures also include weekly verification of market quotations provided by two independent pricing services. A bond valuation that is not supported by a valuation source requires management to fair value the security in consultation with the Board’s Valuation committee. Shares of open-end mutual funds in which the Funds invest are valued at their respective net asset values as reported by the underlying funds.
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement on Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements.” This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. SFAS No. 157 applies to fair value measurements already required or permitted by existing standards. SFAS No.157 is effective for
38
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2007
| 1. | Significant Accounting Policies, continued: |
financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The changes to current generally accepted accounting principles from the application of this Statement relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. As of June 30, 2007 the Funds do not believe the adoption of SFAS No. 157 will impact the amounts reported in the financial statements, however, additional disclosures may be required about the inputs used to develop the measurements and the effect of certain of the measurements reported on the statement of changes in net assets for a fiscal period.
Security transactions are accounted for on a trade date basis. Gains and losses on securities sold are determined on an identified cost basis.
Interest income, which includes the amortization of premiums and the accretion of discounts, is recorded on an accrual basis.
| | D. | When-Issued and Extended Settlement Securities |
The Funds may purchase securities with delivery or payment to occur at a later date. At the time the Funds enter into a commitment to purchase a security, the transaction is recorded and the value of the security is reflected in the net asset value. The value of the security may vary with market fluctuations. No interest accrues to the Funds until the security is delivered and payment takes place. At the time the Funds enter into this type of transaction, they are required to segregate cash or other liquid assets equal to the value of the securities purchased.
Each of the Funds is a separate entity for federal income tax purposes. It is each Funds’ policy to qualify as a regulated investment company by complying with the requirements of the Internal Revenue Code (the “code”) applicable to regulated investment companies, including the distribution of all taxable income to their shareholders. The Funds have met the requirements of the code applicable to regulated investment companies for the year ended June 30, 2007. Therefore, no federal income tax provision is required.
On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Funds’ tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. Management is evaluating the implications of FIN 48 and its impact on the Funds’ financial statements when adopted, has not yet been determined.
Substantially all of the net investment income of the Funds is declared as a dividend to shareholders of record as of the close of business each day. Distributions are payable in cash or in additional shares at the net asset value on the payable date. Distributions are determined in accordance with income tax regulations. Distributions are payable:
39
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2007
| 1. | Significant Accounting Policies, continued: |
| | |
| Monthly for: | | Kentucky Tax-Free Short-to-Medium Series |
| | North Carolina Tax-Free Short-to-Medium Series |
| | Tennessee Tax-Free Short-to-Medium Series |
| | Intermediate Government Bond Series |
| |
| Quarterly for: | | Alabama Tax-Free Income Series |
| | Kentucky Tax-Free Income Series |
| | Mississippi Tax-Free Income Series |
| | North Carolina Tax-Free Income Series |
| | Tennessee Tax-Free Income Series |
Permanent book and tax basis differences relating to shareholder distributions have been reclassified to capital.
The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual amounts could differ from those estimates.
| 2. | Investment Advisory Fee and Other Transactions with Affiliates |
Subject to the direction of the Trustees, Dupree & Company, Inc. (the Adviser) is responsible for the management of the Funds’ portfolios. Under the terms of the Investment Advisory Agreements for the Alabama, Kentucky, Mississippi, North Carolina, and Tennessee Series, the Funds have agreed to pay to the Adviser as compensation for all services rendered, facilities furnished and expenses paid or assumed by it under the Agreements, a fee at the annual rate of .50 of 1% of the first $100,000,000 average daily net assets of each Fund determined separately; .45 of 1% of the average daily net assets between $100,000,001 and $150,000,000 of each Fund determined separately; .40 of 1% of the average daily net assets between $150,000,001 and $500,000,000 of each Fund determined separately; and .35 of 1% of the average daily net assets in excess of $500,000,000. For the Intermediate Government Bond Series, the Fund has agreed to pay to the Adviser, as compensation for all services rendered, facilities furnished and expenses paid or assumed by it under the Agreement, a fee at the annual rate of .20 of 1% of average daily net assets.
The Adviser may voluntarily waive investment advisory fees payable to it under the Investment Advisory Agreement with each Fund, and assume and pay other operating expenses. The Adviser will not seek to recoup any waived fees or other operating expenses it has assumed.
For the year ended June 30, 2007, investment advisory fees and waived amounts were as follows:
| | | | | | |
| | | Investment
Advisory fees | | Waived Investment
Advisory fees |
Alabama Tax-Free Income Series | | $ | 57,593 | | $ | 42,120 |
Kentucky Tax-Free Income Series | | $ | 2,842,530 | | | — |
Kentucky Tax-Free Short-to-Medium Series | | $ | 346,978 | | | — |
Mississippi Tax-Free Income Series | | $ | 26,572 | | $ | 22,962 |
North Carolina Tax-Free Income Series | | $ | 261,488 | | | — |
North Carolina Tax-Free Short-to-Medium Series | | $ | 61,423 | | | — |
Tennessee Tax-Free Income Series | | $ | 478,153 | | | — |
Tennessee Tax-Free Short-to-Medium Series | | $ | 63,601 | | | — |
Intermediate Government Bond Series | | $ | 45,082 | | | — |
40
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2007
| 2. | Investment Advisory Fee and Other Transactions with Affiliates, continued: |
In addition, each Fund has entered into a Shareholder Service Agreement with Dupree & Company, Inc, the Funds’ transfer agent. The agreement provides for a fee computed on the average daily net asset value at the annual rate of .15 of 1% on the first $20,000,000 of average net assets and .12 of 1% of all amounts in excess of $20,000,000 of average net assets for each Fund.
| 3. | Purchases and Sales of Securities |
During the year ended June 30, 2007, the cost of purchases and the proceeds from sales and maturities of securities (excluding short-term securities) for each of the Funds were as follows:
| | | | | | |
| | | Purchases | | Sales/Calls |
Alabama Tax-Free Income Series | | $ | 1,802,014 | | $ | 615,980 |
Kentucky Tax-Free Income Series | | | 54,485,101 | | | 47,225,943 |
Kentucky Tax-Free Short-to-Medium Series | | | 3,340,140 | | | 27,260,573 |
Mississippi Tax-Free Income Series | | | 881,879 | | | 604,256 |
North Carolina Tax-Free Income Series | | | 8,722,818 | | | 2,671,116 |
North Carolina Tax-Free Short-to-Medium Series | | | 1,609,992 | | | 3,231,373 |
Tennessee Tax-Free Income Series | | | 19,047,622 | | | 8,063,617 |
Tennessee Tax-Free Short-to-Medium Series | | | — | | | 4,071,081 |
Intermediate Government Bond Series | | | 1,900,000 | | | 1,395,674 |
At June 30, 2007 and 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
ALABAMA TAX-FREE INCOME SERIES
| | | | | | | | | | | | | | |
| | | Year Ended June 30, 2007 | | | Year Ended June 30, 2006 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | 217,192 | | | $ | 2,549,134 | | | 342,799 | | | $ | 4,022,275 | |
Shares issued for reinvestment of distributions | | 26,093 | | | | 306,525 | | | 21,144 | | | | 246,797 | |
Shares redeemed | | (157,732 | ) | | | (1,852,010 | ) | | (84,890 | ) | | | (993,133 | ) |
Net increase | | 85,553 | | | $ | 1,003,649 | | | 279,053 | | | $ | 3,275,939 | |
KENTUCKY TAX-FREE INCOME SERIES
| | | | | | | | | | | | | | |
| | | Year Ended June 30, 2007 | | | Year Ended June 30, 2006 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | 9,650,442 | | | $ | 72,716,213 | | | 10,839,447 | | | $ | 81,805,770 | |
Shares issued for reinvestment of distributions and capital gain | | 2,219,370 | | | | 16,712,266 | | | 2,141,082 | | | | 16,060,512 | |
Shares redeemed | | (10,077,019 | ) | | | (76,007,337 | ) | | (9,271,622 | ) | | | (69,774,843 | ) |
Net increase | | 1,792,792 | | | $ | 13,421,142 | | | 3,708,907 | | | $ | 28,091,439 | |
KENTUCKY TAX-FREE
SHORT-TO-MEDIUM SERIES
| | | | | | | | | | | | | | |
| | | Year Ended June 30, 2007 | | | Year ended June 30, 2006 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | 2,426,071 | | | $ | 12,578,488 | | | 2,763,577 | | | $ | 14,382,688 | |
Shares issued for reinvestment of distributions | | 293,040 | | | | 1,518,346 | | | 341,936 | | | | 1,778,012 | |
Shares redeemed | | (7,131,122 | ) | | | (36,947,040 | ) | | (5,279,537 | ) | | | (27,468,154 | ) |
Net decrease | | (4,412,011 | ) | | ($ | 22,850,206 | ) | | (2,174,025 | ) | | ($ | 11,307,454 | ) |
41
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2007
| 4. | Capital Shares, continued: |
MISSISSIPPI TAX-FREE
INCOME SERIES
| | | | | | | | | | | | | | |
| | | Year Ended June 30, 2007 | | | Year ended June 30, 2006 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | 146,878 | | | $ | 1,685,190 | | | 94,179 | | | $ | 1,081,515 | |
Shares issued for reinvestment of distributions and capital gain | | 13,380 | | | | 152,943 | | | 12,595 | | | | 144,512 | |
Shares redeemed | | (147,742 | ) | | | (1,688,878 | ) | | (69,436 | ) | | | (803,744 | ) |
Net increase | | 12,517 | | | $ | 149,254 | | | 37,338 | | | $ | 422,283 | |
NORTH CAROLINA TAX-FREE
INCOME SERIES
| | | | | | | | | | | | | | |
| | | Year Ended June 30, 2007 | | | Year ended June 30, 2006 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | 1,009,262 | | | $ | 11,001,946 | | | 885,785 | | | $ | 9,680,978 | |
Shares issued for reinvestment of distributions | | 125,366 | | | | 1,366,179 | | | 115,290 | | | | 1,253,668 | |
Shares redeemed | | (556,875 | ) | | | (6,069,350 | ) | | (491,003 | ) | | | (5,368,378 | ) |
Net increase | | 577,752 | | | $ | 6,298,775 | | | 510,072 | | | $ | 5,566,268 | |
NORTH CAROLINA TAX-FREE
SHORT-TO-MEDIUM SERIES
| | | | | | | | | | | | | | |
| | | Year Ended June 30, 2007 | | | Year Ended June 30, 2006 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | 217,217 | | | $ | 2,258,131 | | | 243,043 | | | $ | 2,541,633 | |
Shares issued for reinvestment of distributions and ordinary income | | 25,624 | | | | 266,880 | | | 27,436 | | | | 286,409 | |
Shares redeemed | | (426,003 | ) | | | (4,432,976 | ) | | (579,853 | ) | | | (6,066,509 | ) |
Net decrease | | (186,163 | ) | | ($ | 1,907,965 | ) | | (309,374 | ) | | ($ | 3,238,467 | ) |
TENNESSEE TAX-FREE INCOME SERIES
| | | | | | | | | | | | | | |
| | | Year Ended June 30, 2007 | | | Year ended June 30, 2006 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | 2,146,643 | | | $ | 23,718,638 | | | 1,500,530 | | | $ | 16,536,991 | |
Shares issued for reinvestment of distributions | | 137,737 | | | | 1,518,224 | | | 128,726 | | | | 1,412,690 | |
Shares redeemed | | (1,255,779 | ) | | | (13,832,789 | ) | | (859,498 | ) | | | (9,466,572 | ) |
Net increase | | 1,028,600 | | | $ | 11,404,073 | | | 769,758 | | | $ | 8,483,109 | |
TENNESSEE TAX-FREE
SHORT-TO-MEDIUM SERIES
| | | | | | | | | | | | | | |
| | | Year Ended June 30, 2007 | | | Year ended June 30, 2006 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | 85,707 | | | $ | 892,357 | | | 186,108 | | | $ | 1,950,956 | |
Shares issued for reinvestment of distributions | | 27,954 | | | | 290,963 | | | 35,229 | | | | 367,897 | |
Shares redeemed | | (522,310 | ) | | | (5,445,334 | ) | | (580,700 | ) | | | (6,075,705 | ) |
Net decrease | | (408,649 | ) | | ($ | 4,262,014 | ) | | (359,363 | ) | | ($ | 3,756,852 | ) |
42
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2007
| 4. | Capital Shares, continued: |
INTERMEDIATE GOVERNMENT BOND
SERIES
| | | | | | | | | | | | | | |
| | | Year Ended June 30, 2007 | | | Year ended June 30, 2006 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | 249,741 | | | $ | 2,434,050 | | | 312,018 | | | $ | 3,074,113 | |
Shares issued for reinvestment of distributions | | 87,142 | | | | 851,183 | | | 83,901 | | | | 822,217 | |
Shares redeemed | | (245,018 | ) | | | (2,394,284 | ) | | (373,577 | ) | | | (3,656,949 | ) |
Net increase | | 91,865 | | | $ | 890,949 | | | 22,342 | | | $ | 239,381 | |
| 5. | Concentration of credit risk |
The Alabama Tax-Free Income Series, Kentucky Tax-Free Income Series, Kentucky Tax-Free Short-to-Medium Series, Mississippi Tax-Free Income Series, North Carolina Tax-Free Income Series, North Carolina Tax-Free Short-to-Medium Series, Tennessee Tax-Free Income Series, and Tennessee Tax-Free Short-to-Medium Series each invest solely in debt obligations issued by the states of Alabama, Kentucky, Mississippi, North Carolina, and Tennessee, respectively, and their respective political subdivisions, agencies and public authorities to obtain funds for various public purposes. Each of these state-specific Funds is more susceptible to economic and political factors adversely affecting issuers of their states’ respective municipal securities than a fund that is not concentrated in these issuers to the same extent.
As of June 30, 2007, the 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, and Intermediate Government Bond Series have capital loss carryforwards which are available to offset future capital gains, if any. As of June 30, 2007 the Alabama Tax-Free Income Series and the Kentucky Tax-Free Income Series do not have any capital loss carryforwards.
The capital loss carryforwards expire as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2008 | | 2009 | | 2010 | | 2011 | | 2012 | | 2013 | | 2014 | | 2015 | | Total |
Kentucky Tax-Free Short-to-Medium Series | | $ | 135,232 | | $ | 312,672 | | $ | 34,064 | | $ | — | | $ | 44,500 | | $ | 329,431 | | $ | 74,336 | | $ | 608,765 | | $ | 1,539,000 |
North Carolina Tax-Free Income Series | | | — | | | — | | | — | | | — | | | 687,622 | | | — | | | — | | | — | | | 687,622 |
North Carolina Tax-Free Short-to-Medium Series | | | 5,915 | | | 22,226 | | | — | | | — | | | 10,514 | | | 4,659 | | | 43,905 | | | 50,449 | | | 137,668 |
Tennessee Tax-Free Income Series | | | — | | | 469,234 | | | 69,806 | | | 18,314 | | | 175,434 | | | 28,669 | | | — | | | — | | | 761,457 |
Tennessee Tax-Free Short-to-Medium Series | | | 5,991 | | | 37,349 | | | — | | | — | | | — | | | 797 | | | 61,617 | | | 92,566 | | | 198,320 |
Intermediate Government Bond Series | | | 209,853 | | | 46,873 | | | — | | | — | | | 117,848 | | | 2 | | | 64,307 | | | 21,143 | | | 460,026 |
43
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2007
| 6. | Federal Income Taxes, continued: |
During the year ended June 30, 2007 the following Funds utilized capital loss carryforwards as follows:
| | | |
| | | Amount |
Alabama Tax-Free Income Series | | $ | 1,043 |
Kentucky Tax-Free Income Series | | | 257,992 |
North Carolina Tax-Free Income Series | | | 86,767 |
Tennessee Tax-Free Income Series | | | 160,246 |
Capital losses incurred after October 31 (“Post-October” losses) within the taxable year are deemed to arise on the first business day of the Funds’ next taxable year. The following Funds incurred and will elect to defer net capital losses during the fiscal year 2007 as follows:
| | | | |
| | | Post October Losses | |
Kentucky Tax-Free Income Series | | $ | (319,813 | ) |
Kentucky Tax-Free Short-to-Medium Series | | | (162,119 | ) |
Mississippi Tax-Free Income Series | | | (9,775 | ) |
North Carolina Tax-Free Short-to-Medium Series | | | (26,827 | ) |
Tennessee Tax-Free Short-to-Medium Series | | | (20,637 | ) |
The tax character of distributions paid for the years ended June 30, 2007 and 2006 were as follows:
| | | | | | | | | | | | | | | | | | |
| | | 2007 | | 2006 |
| | | Tax Exempt
Income | | Ordinary
Income | | Long-term
Capital Gain | | Tax Exempt
Income | | Ordinary
Income | | Long-term
Capital Gain |
Alabama Tax-Free Income Series | | $ | 461,296 | | $ | — | | $ | — | | $ | 368,623 | | $ | — | | $ | — |
Kentucky Tax-Free Income Series | | | 27,771,550 | | | — | | | 649,014 | | | 27,614,512 | | | — | | | — |
Kentucky Tax-Free Short-to-Medium Series | | | 2,257,746 | | | — | | | — | | | 2,644,939 | | | — | | | — |
Mississippi Tax-Free Income Series | | | 211,237 | | | — | | | 22,573 | | | 186,687 | | | — | | | 17,756 |
North Carolina Tax-Free Income Series | | | 1,980,016 | | | — | | | — | | | 1,797,666 | | | — | | | — |
North Carolina Tax-Free Short-to-Medium Series | | | 369,700 | | | 2,550 | | | — | | | 415,263 | | | — | | | — |
Tennessee Tax-Free Income Series | | | 3,537,827 | | | — | | | — | | | 3,246,995 | | | — | | | — |
Tennessee Tax-Free Short-to-Medium Series | | | 381,296 | | | — | | | — | | | 492,563 | | | — | | | — |
Intermediate Government Bond Series | | | — | | | 1,161,912 | | | — | | | — | | | 1,086,481 | | | — |
| 7. | Contingencies and Commitments |
The Funds indemnify the Trust’s officers and Trustees for certain liabilities that might arise from their performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties and which may provide for indemnification. The Funds’ maximum exposure under these arrangements is unknown, as this would involve predicting future claims that may be made against the Funds, if any, that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.
44
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2007
| 8. | Line of Credit Agreement and Custodian Agreement |
Under the terms of an agreement with the Funds’ custodian, principal amounts up to 5% of a Fund’s net assets are available on an uncommitted line of credit. The principal amounts borrowed are due on demand. The agreement expires on September 30, 2007, but may be renewed annually. Interest is payable based on the published prime rate of the bank. Securities with a minimum value of three times the loan proceeds will be assigned as collateral until the balance of the note and unpaid interest is paid in full and terminated.
During the year ended June 30, 2007, the weighted average borrowings for each Fund were as follows:
| | | |
| | | Weighted average borrowings |
Alabama Tax-Free Income Series | | $ | 5,414 |
Kentucky Tax Free Income Series | | | 43,101 |
Kentucky Tax-Free Short-to-Medium Series | | | 10,575 |
Mississippi Tax-Free Income Series | | | 3,227 |
North Carolina Tax-Free Income Series | | | 90 |
North Carolina Tax-Free Short-to-Medium Series | | | 6,784 |
Tennessee Tax-Free Income Series | | | 14,211 |
Tennessee Tax-Free Short-to-Medium Series | | | 3,759 |
Intermediate Government Bond Series | | | — |
The Funds have a contractual agreement with the custodian whereby the bank will provide custodial services for $1.00 per year. Through arrangements with the Funds’ custodian, credits realized as a result of unninvested cash balances were used to reduce each Fund’s expenses. During the year, these credits reduced each of the Funds’ expenses by the amount shown on the Statements of Operation as “Custodian expense reduction.”
45
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees of
Dupree Mutual Funds
We have audited the accompanying statements of assets and liabilities of Dupree Mutual Funds (comprised of Alabama Tax-Free Income Series, Kentucky Tax-Free Income Series, Kentucky Tax-Free Short-to-Medium Series, Mississippi Tax-Free Income 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, and Intermediate Government Bond Series) (the Funds), including the schedules of portfolio investments, as of June 30, 2007, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of June 30, 2007, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds comprising the Dupree Mutual Funds at June 30, 2007, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Cincinnati, Ohio
August 16, 2007
46
DUPREE MUTUAL FUNDS
OTHER UNAUDITED INFORMATION
June 30, 2007
Trustee and officer information
The following table sets forth information as to the Trustees and officers:
| | | | | | | | | | |
Name, Address and Age | | Position(s) Held with Funds | | Term of Office and Length of Time Served | | Principal Occupation(s) During Past 5 Years | | Number of Portfolios in Fund
Complex
Overseen
by Trustee | | Other Director- ships Held by Trustee |
Officers: | | | | | | | | | | |
| | | | | |
Thomas P. Dupree Sr. 125 South Mill Street Lexington, KY 40507 Age: 76 | | President | | Annual Term; 28 years of service | | Chairman of the Board of Dupree & Company, Inc. | | N/A | | N/A |
| | | | | |
Gay M. Elste P.O. Box 28 Versailles, KY 40383 Age: 56 | | Compliance
Officer | | Annual Term; 3 years of service | | Attorney at Law, Darsie & Elste. Anstruther Farm, beef cattle farming | | N/A | | N/A |
| | | | | |
Allen E. Grimes, III 125 South Mill Street Lexington, KY 40507 Age: 44 | | Executive
Vice
President | | Annual Term; 2 years of service | | President, Dupree & Company, Inc. Attorney, Dinsmore & Shohl LLP (2001-2004) | | N/A | | N/A |
| | | | | |
Michelle M. Dragoo 125 South Mill Street Lexington, KY 40507 Age: 46 | | Vice
President,
Secretary,
Treasurer | | Annual Term; 9 years of service as Vice President, 7 years of service as Secretary, Treasurer | | Vice President, Secretary, Treasurer of Dupree & Company, Inc. | | N/A | | N/A |
| | | | | |
Alison L. Arnold 125 South Mill Street Lexington, KY 40507 Age: 47 | | Assistant
Secretary | | Annual Term; 14 years of service | | Dupree & Company, Inc. | | N/A | | N/A |
| | | | | |
Trustees: | | | | | | | | | | |
| | | | | |
William A. Combs, Jr. 111 Woodland Ave., #510 Lexington, KY 40502 Age: 67 | | Chairman,
Trustee | | Annual Term; 6 years of service as Chairman; 18 years of service as Trustee | | Officer, Director: Mercedes-Benz of Cincinnati, Ohio; Mercedes-Benz of West Chester, Ohio and Freedom Dodge, Lexington, KY | | 9 | | N/A |
| | | | | |
Lucy A. Breathitt 1703 Fairway Drive Lexington, KY 40502 Age: 70 | | Trustee | | Annual Term; 11 years of service | | Alexander Farms, farming | | 9 | | KY Historical
Society
Foundation,
KY Natural
Lands Trust,
Bluegrass
Conservancy |
| | | | | |
C. Timothy Cone 201 West Short Street Lexington, KY 40507 Age: 63 | | Trustee | | Annual Term; 5 years of service | | President, Gess, Mattingly & Atchison, P.S.C. (law firm) | | 9 | | N/A |
47
DUPREE MUTUAL FUNDS
OTHER UNAUDITED INFORMATION
June 30, 2007
Trustee and officer information, continued:
| | | | | | | | | | |
Name, Address and Age | | Position(s) Held with Funds | | Term of Office and Length of Time Served | | Principal Occupation(s) During Past 5 Years | | Number of
Portfolios in Fund
Complex
Overseen
by Trustee | | Other
Director- ships Held by Trustee |
J. William Howerton 3954 Primrose Place Paducah, KY 42001 Age: 75 | | Trustee | | Annual Term; 7 years of service | | Judge (retired November 1996) KY Court of Appeals; Self-Employed Mediator (through 2006), Arbitrator and Special Judge. Trustee 4 accounts; Co-trustee 2 accounts. | | 9 | | KY Lottery
Corporation;
Carson Four
Rivers
Center for
the
Performing
Arts |
| | | | | |
William S. Patterson 367 West Short Street Lexington, KY 40507 Age: 74 | | Trustee | | Annual Term; 28 years of service | | President, CEO, Cumberland Surety Co., Lexington, KY, President, Patterson & Co., Frankfort, KY, (real estate development, thoroughbred horse breeding and farming) | | 9 | | N/A |
As of June 30, 2007, none of the Trustees nor members of their immediate family held any beneficial interest in the Trust’s Investment Adviser. Further, the Trust does not have an underwriter.
The Statement of Additional Information (“SAI”) includes additional information about Trustees and officers and is available upon request without charge. Please call (800) 866-0614 to request the SAI.
Proxy Voting Information
A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available without charge upon request by calling (800) 866-0614, or on the Securities and Exchange Commission’s website at http://www.sec.gov. For the year ending June 30, 2007, the Funds exercised no proxy votes due to the fact that the debt instruments in which the Funds invest carry no voting rights.
Quarterly Portfolio Disclosure
The Trust files with the Securities and Exchange Commission a complete listing of portfolio holdings for each Fund as of the end of the first and third quarters of each fiscal year on Form N-Q. The complete listing (i) is available on the commission’s website and (ii) will be made available to shareholders upon request by calling (800) 866-0614. Information on the operation of the S.E.C.’s Public Reference Room may be obtained by calling 1-800-SEC-0300.
48
DUPREE MUTUAL FUNDS
OTHER UNAUDITED INFORMATION
June 30, 2007
Schedule of Shareholder Expenses
As a shareholder of the Funds, you incur transaction costs including investment advisory fees and other Fund expenses. The following examples are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Six Months Ended June 30, 2007” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses which is not the Funds’ actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
| | | | | | | | | | | | |
| | | Net Expense
Ratio
Annualized
June 30, 2007 | | | Beginning
Account Value
January 1,
2007* | | Ending
Account Value
June 30,
2007** | | Expenses Paid During the Six Months Ended June 30, 2007 |
Alabama Tax-Free Income Series | | | | | | | | | | | | |
Actual | | .45 | % | | $ | 1,000.00 | | $ | 1,000.70 | | $ | 2.23 |
Hypothetical | | .45 | | | | 1,000.00 | | | 1,024.70 | | | 2.26 |
Kentucky Tax-Free Income Series | | | | | | | | | | | | |
Actual | | .57 | | | | 1,000.00 | | | 1,000.70 | | | 2.83 |
Hypothetical | | .57 | | | | 1,000.00 | | | 1,024.70 | | | 2.86 |
Kentucky Tax-Free Short-to-Medium Series | | | | | | | | | | | | |
Actual | | .71 | | | | 1,000.00 | | | 1,004.70 | | | 3.53 |
Hypothetical | | .71 | | | | 1,000.00 | | | 1,024.70 | | | 3.56 |
Mississippi Tax-Free Income Series | | | | | | | | | | | | |
Actual | | .45 | | | | 1,000.00 | | | 997.80 | | | 2.23 |
Hypothetical | | .45 | | | | 1,000.00 | | | 1,024.70 | | | 2.26 |
North Carolina Tax-Free Income Series | | | | | | | | | | | | |
Actual | | .72 | | | | 1,000.00 | | | 998.50 | | | 3.57 |
Hypothetical | | .72 | | | | 1,000.00 | | | 1,024.70 | | | 3.61 |
49
DUPREE MUTUAL FUNDS
OTHER UNAUDITED INFORMATION
June 30, 2007
Schedule of Shareholder Expenses, continued:
| | | | | | | | | | | | |
| | | Net Expense Ratio
Annualized
June 30, 2007 | | | Beginning
Account Value January 1,
2007* | | Ending
Account Value
June 30,
2007** | | Expenses Paid
During the Six Months Ended June 30, 2007 |
North Carolina Tax-Free Short-to-Medium Series | | | | | | | | | | | | |
Actual | | .80 | | | | 1,000.00 | | | 1,002.50 | | | 3.97 |
Hypothetical | | .80 | | | | 1,000.00 | | | 1,024.70 | | | 4.02 |
Tennessee Tax-Free Income Series | | | | | | | | | | | | |
Actual | | .71 | % | | $ | 1,000.00 | | $ | 998.20 | | $ | 3.52 |
Hypothetical | | .71 | | | | 1,000.00 | | | 1,024.70 | | | 3.56 |
Tennessee Tax-Free Short-to-Medium Series | | | | | | | | | | | | |
Actual | | .79 | | | | 1,000.00 | | | 1,005.20 | | | 3.93 |
Hypothetical | | .79 | | | | 1,000.00 | | | 1,024.70 | | | 3.97 |
Intermediate Government Bond Series | | | | | | | | | | | | |
Actual | | .50 | | | | 1,000.00 | | | 1,014.30 | | | 2.50 |
Hypothetical | | .50 | | | | 1,000.00 | | | 1,024.70 | | | 2.51 |
| * | The example is based on an investment of $1,000 invested at the beginning of the period. |
| ** | Expenses are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period multiplied by [181/365] (to reflect one-half year period). |
50
The registrant has adopted a code of ethics that applies to the principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions. The full text of the Code of Ethics is incorporated by reference from the registrant’s Post Effective Amendment No. 44. There have been no amendments to or waivers from the Code of Ethics during the reporting period. The Registrant’s Code of Ethics is posted on its web site. A copy of the Code of Ethics will be provided to any person free of charge upon request by telephoning or writing the Registrant.
| Item 3. | Audit Committee Financial Expert: |
The board does not have a financial expert serving on the audit committee. The registrant’s audit committee is comprised of all Trustees all of who are non-interested and independent. The audit committee believes that the collective experience and expertise of the members in assessing the performance of companies and the evaluation of financial statements is sufficient to assess the issues which can reasonably be expected to be raised by the Trust’s financial statements.
| Item 4. | Principal Accountant Fees and Services: |
This information is incorporated by reference in the registrant’s definitive proxy statement to be filed within 120 days after June 30, 2007.
| Item 6. | Included as part of item 1. |
| Item 10. | There have been no changes to the procedures by which shareholders may recommend nominees to the board of trustees nominating committee. |
| Item 11. | Controls and Procedures: |
On August 31, 2007 the Registrant’s President and Treasurer assessed the disclosure controls and procedures to evaluate the effectiveness of the Registrant’s disclosure controls and procedures designed to ensure that information required to be disclosed by the investment company on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an investment company in the reports that it files on Form N-CSR is accumulated and communicated to the investment company’s management, including its principal executive and principal financial officers or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Further, on August 31, 2007 the Registrant’s President and Treasurer assessed the internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the investment company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the investment company are being made only in accordance with authorizations of management and trustees of the investment company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the investment company’s assets that could have a material effect on the financial statements.
The Registrant’s President and Treasurer have deemed the disclosure controls and procedures and the internal control over financial reporting effective. There were no changes in the Registrant’s disclosure controls and procedures or internal control over financial reporting that occurred during the fourth quarter of the fiscal year that materially affected or is reasonably likely to materially affect the Registrant’s financial statements.
| | |
| |
| (a) (1) | | Incorporated by reference from Post Effective Amendment No. 44 |
| |
| (a) (2) | | Certifications |
| |
| (a) (3) | | Not applicable |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | |
DUPREE MUTUAL FUNDS (Registrant) |
| |
| By | | /s/ Thomas P. Dupree, Sr. |
| | Thomas P. Dupree, President |
|
| Date 31st August, 2007 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | |
| |
| By | | /s/ Thomas P. Dupree, Sr. |
| | Thomas P. Dupree, Sr., President |
|
| Date 31st August, 2007 |
| |
| By | | /s/ Michelle M Dragoo |
| | Michelle M. Dragoo, Treasurer |
|
| Date 31st August, 2007 |
